Wisconsin State Regulations & NAIC Insurance Law

Licensing

To apply for a Wisconsin resident producer’s license, you must:

• Be at least 18 years old
• Be a Wisconsin resident before you submit your application

Pre-licensing course and exam

Wisconsin requires an applicant for a property, personal lines, casualty, life, or accident and health license to complete at least 20 hours of approved prelicensing education no more than one year before the examination (Wis. Admin. Code § Ins 26.04(1)).

A candidate must answer 70% of the questions correctly to pass the Wisconsin licensing examination (PSI, Wisconsin Insurance Candidate Information Bulletin).

Fingerprints/background check

Wisconsin requires a resident applicant to provide fingerprints as a condition of the license, for a state and federal criminal history check (Wis. Stat. § 628.04(1c)).

Controlled business

Controlled business is insurance written on the producer’s own life, property or interests, or on those of the producer’s family, employer or a business the producer controls. A producer may insure themselves and their family, but a license exists to sell insurance to the public, so states generally restrict obtaining or using a license principally to write controlled business.

A Wisconsin intermediary may not receive compensation from an insurer for insuring the intermediary’s own property, life or other risk unless, during the preceding 12 months, the intermediary placed other insurance with the same insurer with total premiums greater than the premiums on the intermediary’s own risks (Wis. Stat. § 628.51).

Non-resident license

A producer licensed in another state can obtain a Wisconsin nonresident license without taking Wisconsin’s examination. Wisconsin’s own test is not reciprocity: the Commissioner must waive the examination if the applicant’s home state or state of residence has issued a license with equivalent qualifications that is in good standing (Wis. Stat. § 628.07). Under the NAIC’s Producer Licensing Model Act, which most states have adopted in some form, a nonresident receives the license if the person:

• Is currently licensed as a resident, and in good standing, in the home state
• Has applied (the home-state application or the Uniform Application) and paid the fees
• Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Under the same model, a producer who moves to another state files a change of address, with certification from the new home state, within 30 days. A licensed producer who moves into a state applies for a resident license there within 90 days and does not repeat prelicensing education or the examination for lines already held.

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. In Wisconsin, the Commissioner may require an examination before issuing one (Wis. Stat. § 628.09(3)). Typical cases are:

• The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
• A member or employee of a business entity producer, on the death or disability of its designated producer
• The designee of a producer entering active military service

The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.

The Wisconsin Commissioner may issue a temporary intermediary license for up to 12 months, which may not be extended, to the personal representative of an intermediary who has died or is mentally disabled, or to a person designated by an intermediary who is otherwise disabled or has entered active military duty (Wis. Stat. § 628.09(1)).

Military service

A Wisconsin license held by a service member does not expire while the service member is on active duty; it expires 180 days after the service member is discharged (Wis. Stat. § 321.60(2)).

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

A Wisconsin license renews every two years, with the renewal fee due on the last day of the licensee’s birth month (Wis. Admin. Code § Ins 6.63(2)).

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

A Wisconsin intermediary whose license was revoked for failing to pay the renewal fee or complete continuing education may have it reinstated within 12 months of the revocation without repeating prelicensing education or the examination, by meeting the requirement that was missed and paying twice the renewal fee (Wis. Stat. § 628.10(5)(a)).

Continuing education

All states, including Wisconsin, require continuing education (CE) to renew major lines (life, health, property, liability) insurance licenses.

In Wisconsin:

• You must complete continuing education before renewing your license. The number of hours required is set by state law and published by the state insurance department.

Notice of change of name or address

A Wisconsin intermediary must notify the Commissioner in writing within 30 days of any change in name, residence, email, business or mailing address (Wis. Admin. Code § Ins 6.61(15)).

The model also requires a producer to report to the regulator within 30 days any administrative action taken against the producer in another state or by another government agency, counted from the final disposition, and any criminal prosecution in any jurisdiction, counted from the initial pretrial hearing date. A producer who does business under any name other than their legal name must notify the regulator before using it.

Company regulations

An insurance company must be authorized by the Office of the Commissioner of Insurance to conduct business in Wisconsin.

To receive a certificate of authority, the company applies to the Commissioner and files its charter or articles of incorporation, financial statements showing that it meets the state’s capital and surplus requirements, and the other documents and fees the state requires.

Capital and surplus requirement

An insurer authorized to conduct insurance business in Wisconsin must maintain minimum corporate standards.

• The certificate of authority allows the insurer to do business in Wisconsin only if it maintains the minimum capital or permanent surplus required.

Duties of the Commissioner of Insurance

The Wisconsin Commissioner of Insurance is an appointed position in Wisconsin state government. The legislature created the position in 1871 to ensure the insurance industry “responsibly and adequately met the insurance needs of Wisconsin citizens.” Wisconsin’s Commissioner of Insurance is nominated by the Governor and appointed with the advice and consent of the Senate, and serves at the Governor’s pleasure (Wis. Stat. § 15.06(1)(b)).

The Commissioner establishes and enforces regulations in the Wisconsin insurance market in a way that protects consumers and encourages economic development.

Duties of the Commissioner include:

• Investigate all claims and complaints of legal violations relating to insurance.

• If the Commissioner finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution.

• Monitor transactions of all companies including domestic, foreign, and alien insurance companies.

• Audit the books and records of any resident producer as frequently as necessary.

• Collect all fees associated with producers and insurers.

• Determine and administer fines associated with violations for insurers and producers.

• Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.

• Approve documentation used by insurance companies such as forms and rates. In Wisconsin, most forms first used on or after August 1, 2008 are exempt from approval and are instead filed with a certification before use (Wis. Stat. § 631.20).

Sidenote

Know this...

The Commissioner does not have the authority to arrest, issue injunctions or sentence jail time. They can get the process started, but It takes a law officer to arrest and a judge or court of law to issue injunctions or sentence jail time. The Commissioner may refer illegal activity for criminal prosecution.

Suspend, revoke or non-renew

The Commissioner has the authority to suspend, revoke, or refuse to renew a license for:

• Providing false information on the application for an insurance license.

• Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license.

• Being found guilty of a violation or the noncompliance of insurance regulations and laws…

• Committing fraud while attempting to obtain an insurance license.

• Improperly withholding, misappropriating or converting any money or property received in the course of doing insurance business.

• Providing false information in reference to the terms and conditions of an insurance contract.

• Having been convicted of a felony or misdemeanor substantially related to the circumstances of holding an insurance license, a conviction including a plea of guilty or no contest (Wis. Admin. Code § Ins 6.59(5)).

• Having admitted or been found to have committed any insurance unfair trade practice or fraud.

• Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.

• Having had a prior insurance license revoked or suspended in a state other than Wisconsin.

• Using another person’s identity and forging their name on an insurance application.

• Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

If the Commissioner finds that a producer has violated the state’s insurance laws, the Commissioner may order the producer to cease and desist.

A cease and desist order:

• Does not automatically mean the producer’s registration has been suspended or revoked.
• Requires the recipient to stop or limit the activity addressed in the order.

Hearing and penalties

A person facing action by the Commissioner is entitled to notice and an opportunity for a hearing, within time limits set by Wisconsin law, and may ask a court to review the final order.

A person aggrieved by an order the Commissioner issued without a hearing may demand a hearing within 30 days after notice of the order was mailed, and the hearing is held 10 to 60 days after the demand is served (Wis. Stat. § 601.62(3)(a)).

A violation of the insurance laws can bring a civil penalty in addition to action against a license. State law sets the maximum, usually per violation and often with a cap on the total, and a higher tier commonly applies to a violation that was knowing or flagrant. Some violations are also crimes.

A person who violates an insurance statute or rule forfeits up to $1,000 for each violation, or up to $5,000 when the violation involves an adult at risk, a person 60 or older, or fraud or misrepresentation (Wis. Stat. § 601.64(3)©).

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

• The intentional obstruction and delay of claims payment or the delay of a claims investigation is a violation of regulation.

• Neglecting to provide a prompt response and written explanation of insurance policy terms, conditions, and laws related to the contract are examples of unfair claims settlement practices.

• Failure to provide claims without launching a thorough investigation is a violation of regulation.

• Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.

• Denying a claim without conducting a thorough investigation.

• Attempting to settle a claim for less than fair market value.

Policy forms

Insurers file their policy forms with the Commissioner.

Most Wisconsin policy forms first used since August 1, 2008 do not need prior approval. The forms that still do, such as workers’ compensation, Medicare supplement and long-term care forms, are deemed approved if the Commissioner does not disapprove them within 30 days after filing, or within one 30-day extension (Wis. Stat. § 631.20(1)).

If a policy provision conflicts with Wisconsin law, the policy is read as amended to conform to the law.

Record maintenance

A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Commissioner’s inspection.

A Wisconsin intermediary keeps records of cash received and paid out, commission statements, policyholder records and business checking accounts for 3 years, unless another period applies (Wis. Admin. Code § Ins 6.61(8)).

Fraudulent producer representation

An insurance producer who represents to the public that they are licensed to conduct insurance business in Wisconsin, but has not passed the appropriate licensing examination, is in violation of regulation.

This includes public communications such as:

• Advertisements
• Letterheads
• Circulars
• Business cards
• Other methods of representation

A producer found guilty of conducting business in Wisconsin in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

• Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited.

• Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.

• Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation as well (twisting).

False advertising

Making, publishing or circulating an advertisement, announcement or statement about the business of insurance that is untrue, deceptive or misleading is an unfair trade practice under state law, based on the NAIC’s model act. The medium does not matter: the rule reaches newspapers, magazines, radio and television, and also notices, circulars, pamphlets, letters, posters and any other way of placing the statement before the public. The model act’s test is whether the statement is untrue, deceptive or misleading, not whether the person meant to deceive.

Defamation

Defamation of an insurer is an unfair trade practice under state law, based on the NAIC’s model act: making, publishing or circulating an oral or written statement that is false, or maliciously critical of or derogatory to the financial condition of an insurer, and that is calculated to injure that insurer or any other person engaged in the business of insurance. Wisconsin has no separate defamation provision; its rule bars any communication about an insurance contract, the insurance business, an insurer or an intermediary that contains false or misleading information, including information misleading because it is incomplete (Wis. Stat. § 628.34(1)(a)). Spreading an untrue rumor that a competing insurer is about to fail is the classic example.

Boycott, coercion and intimidation

Entering into an agreement to commit, or by concerted action committing, any act of boycott, coercion or intimidation that results or tends to result in unreasonable restraint of, or monopoly in, the business of insurance is prohibited.

False financial statements

Any licensed producer who makes false statements containing any information that involves inaccurate material facts or false statements on an application for insurance is in violation of the state’s unfair trade practices law.

Illegal inducements

Offering anything of value not specified in the policy (money, a service, a favor or a gift) as an inducement to buy insurance is prohibited unless state law expressly allows it, and any agreement made as part of the sale must be written into the policy.

No Wisconsin insurer, insurer employee or intermediary may try to induce a person to buy or to terminate an insurance contract by offering benefits not specified in the policy, and no insurer may make an agreement of insurance not clearly expressed in the policy (Wis. Stat. § 628.34(2)(a)).

States differ on promotional gifts. The NAIC’s model act lets producers and insurers give customers non-cash gifts, meals or charitable donations up to an amount the state considers reasonable, as long as the gift is not conditioned on buying or renewing a policy and is offered without unfair discrimination. Wisconsin’s statute names no gift allowance: it bars seeking to induce anyone to buy or end an insurance contract by offering benefits not specified in the policy, and its only stated exception is for premium savings from mass marketing (Wis. Stat. § 628.34(2)(a)).

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:

• Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
• Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
• Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
• In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind.

Errors & Omissions

Errors & Omissions (E&O) insurance is a type of professional liability insurance that protects insurance agents if they are sued for negligent performance of their duties.

• E&O covers honest mistakes that result in (financial) damage to customers/prospects.
• E&O does not cover violations of insurance regulation.

Rebating

Wisconsin licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance. Wisconsin’s rule does not preclude reducing premiums because of expense savings, including commission reductions, that result from mass marketing (Wis. Stat. § 628.34(2)(a)).

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

The splitting or sharing of commissions with a licensed producer is allowed.

• Both parties must be licensed in the line of business in which the proposed commission is to be split. Under the NAIC’s model act, a commission may also be paid to an insurance agency, or to a person who does not sell, solicit or negotiate insurance.

Twisting

Providing false information or expressing derogatory ideas about the financial conditions of a competitor company with the intent to lapse or surrender an existing policy is a violation of the law.

Under the NAIC’s model act, twisting is a misrepresentation made to induce a policyholder to lapse, forfeit, surrender, exchange or convert a policy. A false or maliciously critical statement about a competing insurer’s finances, made to injure it, is defamation.

Any written or oral statements used to induce the lapse, termination, exchange, or surrender of an insurance contract based on inaccurate information is prohibited.

Unfair marketing practices

The Office of the Commissioner of Insurance establishes minimum standards for full and fair disclosure of policy content. The Department also requires standardization and simplification of the terms used to describe insurance coverage.

Advertising may not involve the following:

• Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.

• Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

This law repealed the Glass-Steagall Act of 1933, allowing consolidation of commercial banks, investment institutions and insurance companies.

GLBA established a framework of responsibilities for federal and state regulators across these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.

McCarran-Ferguson Act

Federal law signed in 1945 in which Congress declared that the insurance industry would be regulated at the state level. Grants insurers a limited exemption from federal antitrust legislation. Since 2021 the exemption does not cover the business of health insurance, apart from narrow activities such as sharing historical loss data (15 U.S.C. § 1013©).

National Association of Insurance Commissioners (NAIC)

The U.S. standard-setting and regulatory support organization is created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories.

Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA, 15 U.S.C. 1681) regulates consumer reporting agencies and the use of consumer reports, such as credit reports, MIB records and investigative reports, including in insurance underwriting.

• When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
• When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

The federal Privacy Act of 1974 governs how federal agencies handle personal information. It does not apply to private insurers. An insurer’s use of an applicant’s personal information is governed by the FCRA, the Gramm-Leach-Bliley Act and state insurance privacy law.

Under Wisconsin’s law on disclosure of personal medical information, an authorization used for an insurance application, reinstatement or change in benefits may not run longer than 30 months from the date it is signed (Wis. Stat. § 610.70(2)(b)).

Telemarketing

The National Do Not Call Registry is a list of telephone numbers whose owners do not want to receive telemarketing calls. Telemarketers may not call registered numbers without the person’s permission or an established business relationship, and unsolicited sales calls:

• May be made only between 8 a.m. and 9 p.m. in the recipient’s local time
• Must disclose the caller’s identity, the company the caller represents and that the purpose is a sale

CAN-SPAM

A commercial email must:

• Be identified clearly as an advertisement
• Carry accurate header information and a subject line that is not deceptive
• Include the sender’s valid physical postal address
• Offer a way to opt out, and the sender must honor an opt-out within 10 business days

Insurance guaranty association

Every state has a property and casualty insurance guaranty association that pays covered claims when a member insurer becomes insolvent. Insurers licensed to write the covered lines in the state must belong to it, and it is funded by assessments on its members.

The Wisconsin Insurance Security Fund, which covers life, health, property and casualty lines together, pays no more than $300,000 on a single risk, loss or life, and no more than $500,000 in all for property, liability and disability benefits on a single risk, loss or life; workers’ compensation is not subject to these limits (Wis. Stat. § 646.31(4)).

Auto insurance state minimum

A state’s financial responsibility law sets the minimum liability an auto policy must carry, written as a split limit: the first number is bodily injury liability per person, the second bodily injury liability per accident, and the third property damage liability per accident, each in thousands of dollars.

Wisconsin requires every vehicle on the road to be insured, with minimum liability limits of $25,000 for bodily injury to one person, $50,000 per accident and $10,000 for property damage, or 25/50/10 (Wis. Stat. § 344.33(2)).