Wisconsin insurance law is in chapters 600 to 655 of the Wisconsin Statutes, with rules in the Ins chapters of the Wisconsin Administrative Code. Wisconsin uses the term intermediary for anyone who solicits, negotiates or places insurance. An agent is an intermediary acting for an insurer, and a broker acts for the applicant. This guide covers the Wisconsin rules on the regulator, licensing, appointments, CE, unfair practices, penalties, policy and cancellation basics, and the Insurance Security Fund. The general concepts are in the national Insurance Regulation guide.

About the exam

Wisconsin's exams are given by PSI. Each exam has 100 scored items, a 120-minute limit and a passing score of 70%. 35 items test Wisconsin insurance law, the largest single section.

• Wisconsin has no combined Life and Health or Property and Casualty exam. Candidates take the two exams separately.
• Unless exempt from the product knowledge portion, a candidate must pass both portions in one sitting.
• Prelicensing: residents complete at least 20 hours with an approved provider: 8 hours of insurance principles, Wisconsin law and ethics, plus 12 line-specific hours (ch. Ins 26).
  • The education is good for one year.
  • The 8 general hours count toward another line within 12 months.
  • Designations such as CLU, ChFC or CFP (life), RHU (health) and CPCU, ARM or AAI (P&C) exempt the line.
• Exam scores are valid for 180 days. Apply within that time or retest (Ins 6.59(4)(c)). Failed exams may be retaken as often as needed, paying the fee each time.
• Applicants are at least 18 and submit fingerprints for a Department of Justice and FBI check (Ins 6.59).
• Selling auto or homeowners requires both property and casualty authority, or the personal lines authority.

The regulator

• The Office of the Commissioner of Insurance (OCI) regulates insurers and intermediaries (Wis. Stat. 15.73, 601.41).
• The Commissioner is nominated by the Governor, appointed with Senate consent and serves at the Governor's pleasure (Wis. Stat. 15.06(1)(b)).
• The Commissioner may issue any order needed to secure compliance. Criminal charges go through the courts (601.41(4)).
• The Commissioner must examine every domestic insurer and every licensed rate service organization (601.43(2)(a)).
• Licensees must reply promptly in writing to the Commissioner's written inquiries (601.42(4)).
• A person may demand a hearing within 30 days after an order is mailed. It is held 10 to 60 days after the demand (601.62(3)). Orders generally take effect 10 days after notice (601.63).
• Life insurers pay an annual license fee (Wis. Stat. 76.65), not a premium tax. Surplus lines carries a 3% tax (618.43).

Licensing (chapter 628)

• An unlicensed person may not act as an intermediary, and no one may knowingly use an unlicensed intermediary (628.03). A contract sold by an unlicensed person is still valid. The penalties fall on the violator.
• A licensed agent may act as an agent or a broker (628.04(1m)). Advice given without any compensation isn't intermediary activity.
• Variable life and annuity authority requires verified FINRA Series 6 or 7 registration. There is no separate state exam for it (Ins 6.59).
• Nonresidents: the exam is waived when the home-state license is equivalent and in good standing (628.07).
• A resident license is revoked 60 days after the licensee moves to another state (628.10(2)(e)).
• Temporary licenses last up to 12 months and can't be extended (628.09). They go to the representative of an intermediary who dies, becomes disabled or is called to military service, to sell the business, wait for the agent's return or train new staff. The Commissioner may require a sponsor.
• Renewal: licenses expire every two years on the last day of the licensee's birth month. Renewal opens 90 days before.
• A license revoked for unpaid fees, missed CE or tax delinquency may be reinstated within 12 months without retesting by curing the problem and paying twice the renewal fee (628.10(5)).
• Child support delinquency requires refusal or suspension. Certified tax delinquency requires revocation.

CE (Ins 28.04)

• 24 credit hours every two years, including 3 hours of ethics, banked by the license expiration date.
• No carry-forward of extra hours. A course counts only once per biennium.
• A license terminates on its expiration date if the credits aren't banked.
• OCI sends the renewal notice at least 60 days before the reporting date.
• Exempt:
  • holders of only limited lines such as credit, crop, surety, title or travel
  • nonresidents who meet their home state's CE, though required product training such as flood still applies
• Product training:
  • annuities: one-time 4 credits
  • long-term care: 8 hours initially (2 Wisconsin-specific), then 4 hours every 24 months
  • flood: 3 hours

Appointments and terminations (Ins 6.57)

• The insurer files the appointment before, or within 15 days after, the agent contract is signed or the first application is submitted, whichever is earlier. An appointment covers only the lines requested.
• An insurer may not accept business from an agent it hasn't appointed.
• Termination: the insurer notifies OCI before or within 30 calendar days of the termination. It notifies the agent in writing within 15 days of filing, including a demand to return agency materials. If forgery, misappropriation or similar problems are involved, it sends a full written explanation within 30 days.
• An agent must promptly return all indicia of agency on demand (628.34(9)). The insurer stays bound until it makes reasonable efforts to recover them (628.40).

Reporting and records (Ins 6.61)

Within 30 days, an intermediary reports in writing:

• any change of name, residence, email, business or mailing address
• felony convictions, and misdemeanor convictions other than traffic and fish-and-game violations
• the initial pretrial hearing date of any criminal prosecution
• formal action by any other licensing agency
• lawsuits alleging misrepresentation, fraud, breach of fiduciary duty, theft or embezzlement

Records are kept 3 years, and policyholder records at least 3 years after the policy ends. This includes proof that suitability and replacement procedures were followed.

Compensation, controlled business and exchanges

• No commission to unlicensed persons. Deferred commissions to formerly licensed agents are allowed (628.61).
• Fees require clear written disclosure of the amount and any other compensation before the insured incurs the obligation (628.32).
• Controlled business: an intermediary may be paid on their own risks only if other business placed with that insurer in the past 12 months had larger total premiums (628.51).
• Brokering business to another agent (Ins 6.66):
  • Both agents must be licensed for the line and both sign the application.
  • Commission may be split, but referral fees aren't allowed.
  • More than 5 risks a year with one unlisted insurer, or 25 in total, is presumed excessive.

Unfair trade practices (Wis. Stat. 628.34; Ins 6.60)

• Misrepresentation, including statements misleading because incomplete. An agent's violation creates a rebuttable presumption that the insurer also violated.
• Twisting is treated as misrepresentation (Ins 2.07(9); Ins 3.39(24)).
• Unfair inducements (rebating): benefits not specified in the policy. Premium reductions from mass-marketing expense savings are allowed.
• Unfair discrimination: only classifications tied to risk or expense are allowed. Discrimination based on sex is barred (Ins 6.55).
• Boycott, coercion and intimidation.
• Restricting the choice of insurer in lending (628.34(5)). Corporate form isn't a reasonable ground to disapprove an insurer.
• Using Insurance Security Fund protection as a sales point (628.34(10)).
• Personal dealings with customers (Ins 6.60):
  • borrowing from a customer, except relatives or safeguarded arm's-length deals
  • being named beneficiary of a customer's policy without an insurable interest
  • using titles like "retirement planner" that don't describe the services offered
• Using senior designations that are self-conferred or not actually earned (Ins 6.90).
• A telephone or door-to-door seller says who they are and that they are selling insurance, and may not pose as conducting a survey (Ins 20.01).

Penalties (Wis. Stat. 601.64)

• Each week of delay in a required report is a new violation.
• A firm that regularly uses an agent is liable for up to $1,000 per violation by that agent (601.65).
• License revocation, suspension or limitation follows a hearing (628.10(2)(b)). A revoked person can't reapply for the period set, up to 5 years, or 5 years if none is set.
• Insurance fraud is a crime (Wis. Stat. 943.395).

Policy and claim basics (chapter 631)

• Oral contracts and binders are allowed. The policy is issued as soon as reasonably possible (631.05).
• What the agent knows is imputed to the insurer unless there was collusion (631.09).
• Misrepresentation voids coverage only if the insurer relied on a material or intentionally deceptive misstatement, or the misstated fact contributed to the loss (631.11).
• Late notice or proof is accepted if given as soon as reasonably possible and within one year, unless the insurer was prejudiced (631.81).
• A claim is overdue if unpaid 30 days after written notice of the loss and amount. Overdue payments bear 7.5% simple interest (628.46).
• Prompt claim response means within 10 days (Ins 6.11(4)).
• Cancellation and nonrenewal (631.36):
  • midterm cancellation: 10 days' notice (30 for workers compensation)
  • nonrenewal: 60 days, with reasons
  • renewal premium notice: 10 to 75 days before due
  • The reason limits don't apply in the first 60 days.
  • Personal lines: less favorable renewal terms need 45 days' notice.
• Forms may be filed 30 days before use with a compliance certification. Workers comp, Medicare supplement, LTC and some others need prior approval (631.20).
• Insurers tell policyholders of their right to complain to OCI (631.28).

Insurance Security Fund (chapter 646)

• The fund pays claims of authorized insurers in liquidation. Town mutuals and other assessable mutuals are excluded.
• Limits:
  • $300,000 per risk, loss or life
  • $500,000 aggregate for property, liability and comprehensive health
  • Workers compensation claims aren't capped
• Its board includes the Attorney General, State Treasurer and Commissioner.

Common exam traps

• Wisconsin uses intermediary for producer. A licensed agent may act as an agent or a broker.
• 20 hours of prelicensing are required. Exam scores are good for 180 days.
• There's no combined L&H or P&C exam.
• CE is 24 hours with 3 ethics. A license terminates if credits aren't banked.
• Temporary licenses last up to 12 months, not 180 days.
• Ordinary forfeitures are $1,000, and $5,000 when fraud or someone 60 or older is involved.
• Overdue claim interest is 7.5% after 30 days.
• Cancellation takes 10 days. Nonrenewal takes 60 days.
• Life insurers pay a license fee, not a premium tax.