Compensation Rules | Insurance Health Wisconsin Laws & Ethics

Controlled Business

“Controlled business” is the unflattering term for an intermediary writing a lot of insurance on their own life, property, or risk. Wisconsin doesn’t prohibit it outright, but it limits the compensation: no intermediary may receive any compensation from an insurer for procuring insurance on the intermediary’s own property, life, or other risk unless during the prior twelve months the intermediary placed other insurance with the same insurer with aggregate premiums exceeding the premiums on the intermediary’s own risks. The rule exists to stop someone from getting an insurance license purely to capture commissions on their own family’s policies. If you want commissions on your own coverage, you need to be writing real outside business in larger amounts.

Fee Disclosure

An agent may charge a fee to an insured for the purchase of insurance or for advice on insurance needs and coverages — yes, fees beyond commission are permitted in Wisconsin. But before the insured incurs any obligation to pay that compensation, the agent must clearly and conspicuously disclose to the applicant in writing:

The amount of compensation to be paid by the insured (other than commission paid by the insurer).
The fact, if applicable, that compensation will also be paid by another source. The point is informed consent. The buyer needs to know what they’re paying you, and they need to know it in writing before the fee is incurred.

Sharing Commissions

No intermediary or insurer may pay any commission or reimburse out-of-pocket expenses to any person for services performed within Wisconsin as an intermediary, if the intermediary or insurer knows or should know that the person isn’t licensed. No person may accept compensation for services performed as an intermediary unless the person is licensed under Wisconsin law. An intermediary may direct that their commissions be paid to a partnership or corporation of which they’re a member, officer, employee, or agent. The law does NOT prohibit:

Payment of deferred commissions to formerly licensed agents or brokers (or their assignees).
Proper exchange of business between intermediaries and brokers lawfully licensed in Wisconsin.

Proper Exchange of Business

“Proper exchange of business” means the forwarding of insurance business from one agent to another because the forwarding agent is not able to place the business with any of their listed companies — due to capacity problems, the company’s refusal to accept the risk, or onerous conditions the company would impose on the insured. The agent forwarding the business is entitled to split the commission. Important: “referral fees” — paying someone just for sending you a name — are not allowed. Conditions for a proper exchange:

The agent forwarding the business must be licensed in the same line of business being exchanged.
The agent receiving the business (who will place it) must be licensed in the line of insurance involved.
Both agents must sign the insurance application — or, if no application is completed, both agents’ names must appear on the policy. Limits to prevent abuse:
An agent is presumed to have exceeded the allowed exchange if they place more than five insurance risks per calendar year with any single insurer they’re not listed with.
Or if they exchange in total more than twenty-five insurance risks per calendar year. The mechanism exists to handle real-world placement problems, not to be a backdoor for unlicensed referrals.

Controlled Business

Fee Disclosure

The amount of compensation to be paid by the insured (other than commission paid by the insurer).
The fact, if applicable, that compensation will also be paid by another source. The point is informed consent. The buyer needs to know what they’re paying you, and they need to know it in writing before the fee is incurred.

Sharing Commissions

Payment of deferred commissions to formerly licensed agents or brokers (or their assignees).
Proper exchange of business between intermediaries and brokers lawfully licensed in Wisconsin.

Proper Exchange of Business

The agent forwarding the business must be licensed in the same line of business being exchanged.
The agent receiving the business (who will place it) must be licensed in the line of insurance involved.
Both agents must sign the insurance application — or, if no application is completed, both agents’ names must appear on the policy. Limits to prevent abuse:
An agent is presumed to have exceeded the allowed exchange if they place more than five insurance risks per calendar year with any single insurer they’re not listed with.
Or if they exchange in total more than twenty-five insurance risks per calendar year. The mechanism exists to handle real-world placement problems, not to be a backdoor for unlicensed referrals.

Controlled Business

Fee Disclosure

The amount of compensation to be paid by the insured (other than commission paid by the insurer).
The fact, if applicable, that compensation will also be paid by another source. The point is informed consent. The buyer needs to know what they’re paying you, and they need to know it in writing before the fee is incurred.

Sharing Commissions

Payment of deferred commissions to formerly licensed agents or brokers (or their assignees).
Proper exchange of business between intermediaries and brokers lawfully licensed in Wisconsin.

Proper Exchange of Business

The agent forwarding the business must be licensed in the same line of business being exchanged.
The agent receiving the business (who will place it) must be licensed in the line of insurance involved.
Both agents must sign the insurance application — or, if no application is completed, both agents’ names must appear on the policy. Limits to prevent abuse:
An agent is presumed to have exceeded the allowed exchange if they place more than five insurance risks per calendar year with any single insurer they’re not listed with.
Or if they exchange in total more than twenty-five insurance risks per calendar year. The mechanism exists to handle real-world placement problems, not to be a backdoor for unlicensed referrals.

Controlled Business

Fee Disclosure

The amount of compensation to be paid by the insured (other than commission paid by the insurer).
The fact, if applicable, that compensation will also be paid by another source. The point is informed consent. The buyer needs to know what they’re paying you, and they need to know it in writing before the fee is incurred.

Sharing Commissions

Payment of deferred commissions to formerly licensed agents or brokers (or their assignees).
Proper exchange of business between intermediaries and brokers lawfully licensed in Wisconsin.

Proper Exchange of Business

The agent forwarding the business must be licensed in the same line of business being exchanged.
The agent receiving the business (who will place it) must be licensed in the line of insurance involved.
Both agents must sign the insurance application — or, if no application is completed, both agents’ names must appear on the policy. Limits to prevent abuse:
An agent is presumed to have exceeded the allowed exchange if they place more than five insurance risks per calendar year with any single insurer they’re not listed with.
Or if they exchange in total more than twenty-five insurance risks per calendar year. The mechanism exists to handle real-world placement problems, not to be a backdoor for unlicensed referrals.