Notice is hereby given that pursuant to the authority granted under s.
601.41 (3), Stats., and the procedure set forth in under s.
227.18, Stats., OCI will hold a public hearing to consider the adoption of the attached proposed rulemaking order affecting s.
Ins 6.59, relating to revising Wisconsin agent licensing rules to be reciprocal and more uniform under Gramm Leach Bliley Act and the NAIC Producer model.
Hearing Date, Time and Location
Date: July 25, 2001
Time: 10:00 a.m., or as soon thereafter as the matter may be reached
Place: Room 6, OCI, 121 East Wilson Street, Madison, WI
Written comments on the proposed rule will be accepted into the record and receive the same consideration as testimony presented at the hearing if they are received at OCI within 14 days following the date of the hearing. Written comments should be addressed to: Robert Luck, OCI, PO Box 7873, Madison WI 53707
Analysis Prepared by the Office of the Commissioner of Insurance
Under the recently enacted federal Gramm Leach Bliley Act (the “GLBA"), Wisconsin and other states must become reciprocal or uniform. These changes would accomplish reciprocity.
The changes would also attempt to make insurance producer licensing more uniform and simplify multi-state licensing. If Wisconsin and at least 27 other states do not enact “reciprocal" or “uniform" rules regarding licensing, a federal licensing body similar to the “NASD" would be created to take over insurance agent licensing functions from the states. The National Association of Insurance Commissioners (the “NAIC") model Producer Act was developed by state insurance regulatory bodies to accomplish this and this rule adopts many provisions of the NAIC model. New limited lines licenses are created for rental car insurance and legal expense insurance. Certain modifications in the licensing procedures are required by new agent licensing software purchased and currently being installed by OCI. The following analysis discusses the specific changes.
The lines of intermediary licenses issued by Wisconsin have been changed to reflect the lines required for reciprocity and 2 new limited lines. Reciprocity requires Wisconsin to issue licenses for the same authority which a non resident applicant has in their home state. The NAIC model sets out the major lines required including the new “personal lines" license and this rule change conforms Wisconsin to these. In addition, to deal with the various limited line licenses issued by other states, the rules creates a Miscellaneous Limited line which grants the nonresident agent only the authority which the resident state granted under its limited line license.
New software purchased by OCI requires that insurers appoint agents by line of authority so that a cross check can be made to insure that both the agent and the insurer hold the authorities being requested. These revisions do not change the amount of fees required to be paid. Insurers will be billed for each appointment submitted for an agent. An additional appointment may have to be submitted if the insurer doesn't not specify all lines of authority in the initial appointment or the agent later is granted additional authority and thus the insurer would need to add this new authority with an additional appointment. Currently, this additional authority is granted without additional fees, but new software purchased for agent licensing will not accommodate this. The current term, “listing," used for these “appointments" is changed to conform to the description used by most other states. The effective date of the appointment is made to be 15 prior to the date it is entered on the OCI system to conform to the NAIC model. Also, in conformance with the NAIC model, insurers must appoint agents when they contract with the intermediary or when they receive an application from the intermediary.
The NAIC model changes the information that OCI currently collects regarding possible problems encountered by insurers with agents. The model only requires insurers to categorize terminations as “Not for Cause" or “For Cause." This change adopts that procedure but still requires insurers to inform OCI in writing of the same possible problems encountered by the insurer as currently reported.
OCI licenses intermediary corporations or other “unnatural" persons on a voluntary basis but requires the licensing of all individuals in the firm who solicit insurance. (This corporate licensing is done primarily so that Wisconsin firms can get licensed in other states which require licensing in the corporation's resident state.) This rule broadens the definition of what entities can receive a “firm" license to conform to the NAIC model.
The GLBA requires that states accept either the NAIC model nonresident application (which OCI has done for many years) or the application that the nonresident originally submitted to their resident state. This rule conforms Wisconsin to this requirement. Specific NAIC standards for denial of licensure and defining “for cause" terminations by insurers are incorporated. A licensing requirement that an applicant is over age 18 is also added.
The definitions of some terms used to define when a license is required and exemptions to licensing are defined using the same language as the NAIC model. The exemptions to licensing in the model are very similar to the current exemptions contained in s.
628.02, Stats.
The reporting requirements of agents to inform OCI of administrative actions, criminal proceedings and lawsuits against the agent involving misrepresentation, fraud, theft etc., are conformed to the NAIC model and clarified to more clearly define the actions to be reported and what information must be submitted.
Since a new major line of authority called “Personal Lines" has been created in the NAIC model, prelicensing educational requirements are defined for this line. The continuing education requirements are defined for all the new major and limited lines of insurance created. Two new self study courses are listed as being recognized for continuing education. The requirements for crediting continuing education for courses taken to maintain an identified designation are clarified to allow this only for individuals who currently hold that designation.
Initial Regulatory Flexibility Analysis
This rule does not impose any additional requirements on small businesses.
Fiscal Estimate
There will be no state or local government fiscal effect.
Contact Person
Patrick Bass, Services Section, Office of the Commissioner of Insurance, at (608) 266-0110 or at 121 East Wilson Street, PO Box 7873, Madison WI 53707-7873.
Notice of Hearing
Commissioner of Insurance
Notice is hereby given that pursuant to the authority granted under s.
601.41 (3), Stats., and the procedure set forth in under s.
227.18, Stats., OCI will hold a public hearing to consider the adoption of the attached proposed rulemaking order affecting s.
Ins 6.60, relating to agent transactions with customers.
Hearing Information
Date: August 3, 2001
Time: 10:00 a.m., or as soon thereafter as the matter may
be reached
Place: Room 6, OCI, 121 East Wilson Street, Madison, WI
Written comments on the proposed rule will be accepted into the record and receive the same consideration as testimony presented at the hearing if they are received at OCI within 14 days following the date of the hearing. Written comments should be addressed to: Stephen Mueller, OCI, PO Box 7873, Madison WI 53707
Analysis Prepared by the Office of the Commissioner of Insurance
Statutes interpreted: ss.
600.01, 618. 39 (1), 628.04 (1), 628.10 (2) (b), 628.34 (12), Stats.
In general insurance agents occupy a position of trust and credibility with their customers. Customers permit these agents to enter their homes and to acquire financial and other personal information. Most agents merit this trust and respect the responsibility it engenders. Unfortunately a few agents abuse this confidence and engage in non-insurance transactions with customers that are not in the customer's best interest.
There are recent examples of this type of abuse:
1. Out of state promoters of illegal “corporate promissory note" programs have specifically recruited insurance agents (most not licensed as securities agents) to illegally market millions of dollars in illiquid unregistered securities to their customers in Wisconsin. These programs resulted in devastating financial loss to Wisconsin citizens who placed their trust in the agents partly due to their credibility as licensed insurance agents.
2.
Several insurance agents have sold investments in viatical settlements to their customers for commissions without exploring or understanding the risks and securities law implications of these sales.
3.
Several agents borrowed money from customers or encouraged customers to invest in businesses controlled by the agents. Often the funds loaned or invested are derived from life insurance settlements or liquidated annuities.
Wisconsin and federal securities law prohibits certain personal financial transactions with customers by securities agents as “dishonest or unethical business practices" or “taking unfair advantage of a customer". This conduct includes borrowing from a customer and acting as custodian for money or securities of a customer. Securities agents are required to disclose all securities transactions to their employing broker-dealers and obtain the broker-dealer's written authorization for any “off the books" transactions. Some insurers also prohibit their listed insurance agents from borrowing from customers. The proposed rule incorporates normal standards of ethical behavior that prudent agents practice and their customers deserve and expect. This rule does not place an unnecessary burden on the legitimate business of insurance.
Section
628.10 (2) (b) Stats. allows the commissioner to “
…revoke, suspend,
…the license of any intermediary if the commissioner finds that the licensee is unqualified as an intermediary, is not of good character or has repeatedly or knowingly violated an insurance statute or rule
… of the commissioner
… , or if the intermediary's methods and practices in the conduct of business endanger, or financial resources are inadequate to safeguard, the legitimate interests of customers and the public
…". The proposed rule will specifically prohibit conduct that falls within the proscriptions of this statute without limiting the types of conduct that constitute grounds for license sanction. The rule will assist agents and others to determine when conduct with customers is prohibited and places an agent's insurance license at risk.
The rule defines personal financial transactions and prohibits agents from engaging in such transactions with persons with whom they have conducted insurance business within 3 years prior to the transaction. Transactions with relatives and bona fide business transactions with customers are allowed as long as there are sufficient safeguards to protect the customer's interests. The rule incorporates violations of state and federal securities and other related laws and prohibits misleading statements regarding an agent's training and qualifications.
This proposed rule incorporates specific guidelines concerning insurance agents who engage in sales of illegal multiple employer welfare trusts and other forms of group health insurance by unauthorized insurers. Typically conducted under the false guise of being “ERISA" or federally-governed and thus exempt from state regulation these plans frequently are self-funded and fail, leaving unpaid claims and lost premiums. OCI has held agents who participate in these programs to strict standards of accountability. This rule codifies the position of OCI that agents may not escape responsibility by citing their reliance on the pronouncements of the promoters that the program is “exempt from state regulation" under ERISA. This strict standard is in keeping with the professional standards that everyone expects from their insurance professionals. This rule makes it clear that an agent who participates in sales of these illegal plans commits an unfair trade practice in violation of s.
628.34 (12) Stats. and violates s.
618.39 Stats. by assisting an unauthorized insurer.
Section
628.34 Stats. defines and prohibits unfair marketing (trade) practices. Sub. (11) prohibits “other unfair trade practices" including “any other unfair or deceptive act or practice in the business of insurance, as defined in sub. (12)." Sub. (12) allows the commissioner to define additional “ specific unfair trade practices by rule, after a finding that they are misleading, deceptive, unfairly discriminatory, provide an unfair inducement, or restrain competition unreasonably." This is the statutory authority for the proposed rule. While the conduct proscribed by this rule may involve misrepresentation or unfair inducement as described in sections
628.34 (1) &
(2) Stats. it also constitutes unfair trade practices and unfair or deceptive acts or practices in the business of insurance within the meaning of s.
628.34 (11) Stats. The Commissioner finds that the conduct prohibited by this rule is misleading, deceptive, unfairly discriminatory, provides an unfair inducement and restrains competition unreasonably within the meaning of s.
628.34 (12) Stats. and finds further that sales of unauthorized insurance as ERISA-exempt in violation of s.
618.39 Stats. are harmful to the public and that agents who become involved in the marketing or placement of these plans must be held strictly accountable for their actions.
Initial Regulatory Flexibility Analysis
This rule does not impose any additional requirements on small businesses.
Fiscal Estimate
There will be no state or local government fiscal effect.
Contact Person
A copy of the full text of the proposed rule changes and fiscal estimate may be obtained from the OCI internet WEB site at
http://www.state.wi.us/agencies/oci/ocirules.htm or by contacting Inger Williams, Services Section, Office of the Commissioner of Insurance, at (608) 266-0110 or at 121 East Wilson Street, PO Box 7873, Madison WI 53707-7873.
Notice of Hearing
Public Service Commission
NOTICE IS GIVEN that pursuant to s.
227.16 (2) (b), Stats., a hearing will be held on
Friday, July 27, 2001, at 9:00 a.m. in the Amnicon Falls Hearing Room at the Public Service Commission Building, 610 North Whitney Way, Madison, Wisconsin, to consider the creation of ch.
PSC 130, Wis. Adm. Code, relating to municipal rights-of-way issues before the Commission.
This building is accessible to people in wheelchairs through the Whitney Way first floor (lobby) entrance. Parking for people with disabilities is available on the south side of the building. Any person with a disability who needs additional accommodations should contact the docket coordinator listed below.
Written Comments
Any person may submit written comments on these proposed rules. The hearing record will be open for written comments from the public, effective immediately, and until Friday, July 20, 2001, at noon (Thursday, July 19, 2001, at noon, if filed by fax). All written comments must include a reference on the filing to docket 1-AC-188. File by one mode only.
If filing by mail, courier, or hand delivery: Address as shown in the box. Industry parties should submit an original and 15 copies. Members of the general public need only file an original.
If filing by fax: Send fax comments to (608) 266-3957. Fax filing
cover sheet MUST state
“Official Filing," the docket number (1-AC-188), and the number of pages (limited to 20 pages for fax comments).
Hearing Date:
|
Friday, July 27, 2001
at 9:00 a.m.
|
Hearing Location:
|
Public Service Commission
610 North Whitney Way
Madison, WI
|
Comments Due:
Friday
July 20, 2001 - Noon
FAX Due:
Thursday
July 19, 2001 - Noon
|
Address comments to:
Lynda L. Dorr
Secretary to the Commission
Public Service Commission
P.O. Box 7854
Madison, WI 53707-7854
FAX (608) 266-3957
|
Analysis prepared by the Public Service Commission of Wisconsin
Upon complaint, the Commission has authority to determine the reasonableness of an ordinance, contract or resolution (ordinance) promulgated by a municipality that regulates the location of utility facilities in municipal rights-of-way (ROW). This rule creates several criteria the Commission will apply when considering a complaint involving utility access to and use of ROW within a municipality. These include the following:
Under the rules, the Commission will consider an ordinance to be unreasonable if it unduly discriminates between utilities seeking access to municipal ROW or if it denies a utility access to ROW without good cause.
The rules recognize that a municipality may require a utility to pay the actual cost of functions undertaken by a municipality to manage utility access to ROW, and identifies specific costs that may be collected through a pre-excavation permit fee.
The rules specify that it is unreasonable for a municipality to require a utility to install underground a 100 kilovolt or greater electric transmission line at the utility's expense, but such a requirement would be reasonable if the municipality or a third party agrees to pay the difference in construction costs between overhead and underground installation.
Similarly, it is unreasonable for a municipality to require special construction conditions to be followed at the utility's expense unless there is an adequate health or safety justification. Aesthetics alone is not a reasonable basis for requiring underground construction. Special construction conditions would be reasonable if the municipality or a third party agrees to pay the difference in construction costs between the standard and special construction conditions.
Under the rules it is unreasonable for a municipality to require a utility to restore a ROW to a condition that is better than the pre-excavation condition.
The rules specify that it is reasonable for a municipality to require a utility to provide adequate bonding and insurance if the municipality has reasonable grounds to question the utility's financial responsibility or compliance ability. The rules also identify advance workplan notification requirements and mapping requirements.
A Statement of Scope on this rule was approved by the Commission on June 2, 1999, and was published in the Wisconsin Administrative Register on June 30, 1999.
Text of Proposed Rule
SECTION 1.
Chapter
PSC 130 is created to read:
Chapter PSC 130
Municipal Regulation of Utility Rights-of-Way
PSC 130.01 Definitions. In this chapter:
(1) “Actual cost" means identifiable costs that are reasonably incurred by a municipality, but does not include a contribution of surplus income to general revenues.
(2) “Municipality" means a city, village, or town.
(3) “Ordinance" includes any ordinance or resolution adopted by the governing body of a municipality relating to municipal rights-of-way or any contract entered into by a municipality relating to municipal rights-of-way.
(4) “Transmission and distribution facilities" includes any utility pipe, pipeline, wire, cable, duct, conduit, fiber optics or radio signal transmission equipment and associated utility plant and equipment, whether underground or above ground, in a municipal right-of-way.
(5) “Utility" means a public utility, as defined in s.
196.01 (5), Stats., and includes a telecommunications carrier, as defined in s.
196.01 (8m), Stats.
PSC 130.02 Scope. This chapter applies to complaints involving utility access to and use of rights-of-way within a municipality under ss.
196.499 (14) and
196.58 (4), Stats.
PSC 130.03 Undergrounding and special construction conditions. (1) (a) Except as provided in par. (b), an ordinance that requires a utility to install underground a 100 kilovolt or greater transmission line at the expense of the utility is unreasonable.
(b) Paragraph (a) does not apply if the municipality or a third party agrees to reimburse the utility for the difference in cost between above ground and underground construction.
(2) (a) Except as provided in par. (b), an ordinance that requires a utility to install, at the utility's expense, transmission or distribution facilities which are not consistent with the utility's practice for design or construction of utility facilities is unreasonable unless there is an adequate health, safety, or public welfare justification for the requirement. Aesthetics alone is not an adequate basis to justify an undergrounding requirement.
(b) Paragraph (a) does not apply if all of the following conditions are met:
