AB541: Bill Text

LRB-2386/3

TJD:kjf&cjs:ph

2011 - 2012 LEGISLATURE

2011 Assembly BILL 541

February 7, 2012 - Introduced by Representatives Nygren, Brooks and Molepske Jr, cosponsored by Senators Lasee and Schultz. Referred to Committee on Insurance.

AB541,1,2 An Act to create 628.02 (1) (b) 9. and 632.975 of the statutes; relating to: portable electronics insurance and providing a penalty.

Analysis by the Legislative Reference Bureau

This bill establishes criteria for selling and offering portable electronics insurance and sets other requirements regarding the sale of portable electronics insurance. Under current law, a person may not solicit, negotiate, or place insurance or advise others about insurance needs and coverage without a certificate of authority or a license as an insurance intermediary, either as an agent or a broker. The bill allows a vendor or an employee or authorized representative of a vendor of portable electronics to sell or offer portable electronics insurance without a certificate of authority or a license as an intermediary if: 1) the vendor complies with the requirements created in the bill; 2) the insurer issuing the portable electronics insurance supervises, or hires an entity to supervise, the administration of the sale of portable electronics insurance; 3) any supervising entity that is appointed by an insurer to supervise the administration of a portable electronics insurance program maintains a registry of the vendor locations that are authorized to sell or offer portable electronics insurance; and 4) the employee or authorized representative intending to sell or offer portable electronics insurance completes a training program as described in the bill.

A vendor of portable electronics is prohibited under the bill from compensating an employee or authorized representative based primarily on the number of customers enrolled in portable electronics insurance coverage, but the vendor may compensate an employee or authorized representative, in a manner that is incidental to his or her overall compensation, for activities related to the sale or offering of portable electronics insurance. A vendor of portable electronics may bill and collect the charges for portable electronics insurance coverage under the requirements set in the bill. The insurer, or supervising entity hired by the insurer, may compensate the vendor for its billing and collection services.

The bill requires the vendor to make available for customers a brochure or other written material that discloses all of the following: 1) that portable electronics insurance may duplicate coverage already provided by a customer's other insurance; 2) that a customer is not required to enroll in portable electronics insurance as a condition of purchasing or leasing a portable electronics device; 3) a summary of the material terms of the portable electronics coverage including the identity of the insurer, the identity of any supervising entity, the amount of the deductible and how to pay that deductible, the benefits of coverage, and the key terms and conditions of coverage; 4) a summary of the process for filing a claim; and 5) that the enrolled customer may cancel enrollment for coverage under a portable electronics insurance policy at any time and that upon cancellation the person paying the premium receives a refund of any applicable unearned premium.

Under the bill, the insurer is required to establish eligibility and underwriting standards for customers electing to enroll in coverage for each portable electronics insurance program. An insurer may terminate or otherwise change the terms and conditions of a portable electronics insurance policy only after providing the policyholder and all enrolled customers at least 30 days' notice before the termination or change except that an insurer may terminate enrollment of a customer after providing 15 days' notice when the enrolled customer committed fraud or made a material misrepresentation in obtaining coverage or presenting a claim and an insurer may terminate immediately the enrollment of a customer for nonpayment of the premium or if the customer ceases to have active service with the vendor. The bill allows an insurer to terminate the enrollment of a customer under a portable electronics insurance policy if the customer exhausts the aggregate limit of liability under the policy's terms and if the insurer sends notice of the termination within 30 days after exhaustion of the limit. If the insurer does not send the notice in a timely manner, the insurer must continue coverage, notwithstanding the aggregate limit of liability, until the insurer sends the notice. If the vendor of portable electronics terminates the insurance policy, the vendor shall provide written notice to each enrolled customer advising of the termination at least 30 days before the termination. The bill also sets requirements for providing notice or correspondence that is required under the provisions of the bill.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB541, s. 1 Section 1. 628.02 (1) (b) 9. of the statutes is created to read:

AB541,3,3 628.02 (1) (b) 9. A vendor, as defined in s. 632.975 (1) (i), or an employee or authorized representative of a vendor selling or offering portable electronics insurance under s. 632.975.

AB541, s. 2 Section 2. 632.975 of the statutes is created to read:

AB541,3,5 632.975 Portable electronics insurance. (1) Definitions. In this section:

AB541,3,6 (a) "Customer" means a person who purchases a portable electronic device.

AB541,3,8 (b) "Enrolled customer" means a customer who elects coverage under a portable electronics insurance policy issued to a vendor of portable electronics.

AB541,3,10 (c) "Location" means any physical location in the state or any Internet site, call center site, or similar location directed to residents of the state.

AB541,3,13 (d) "Portable electronics" or "portable electronic devices" means electronic devices that are portable in nature, including accessories and services related to the use of the device.

AB541,3,16 (e) 1. "Portable electronics insurance" means insurance providing coverage for the repair or replacement of portable electronics that may provide coverage for a portable electronic device against any of the following causes of loss:

AB541,3,17 a. Loss.

AB541,3,18 b. Theft.

AB541,3,19 c. Inoperability due to mechanical failure.

AB541,3,20 d. Malfunction.

AB541,3,21 e. Damage.

AB541,3,22 f. Other similar causes of loss.

AB541,3,23 2. "Portable electronics insurance" does not include any of the following:

AB541,4,2 a. A service contract or extended warranty providing coverage limited to the repair, replacement, or maintenance of property for the operational or structural failure of property due to a defect in materials, workmanship, accidental damage from handling, power surges, or normal wear and tear.

AB541,4,4 b. A policy of insurance covering a vendor's or a manufacturer's obligations under a warranty.

AB541,4,6 c. A homeowner's, renter's, private passenger automobile, commercial multi-peril, or similar insurance policy.

AB541,4,9 (f) "Portable electronics insurance program" means the coverage options made available to customers of a vendor who elect to enroll for coverage of a portable electronic device under a policy of portable electronics insurance.

AB541,4,11 (g) "Portable electronics transaction" means the sale or lease of a portable electronic device to a customer.

AB541,4,15 (h) "Supervising entity" means a business entity that is a licensed insurer or licensed intermediary that is appointed by an insurer to supervise the administration of a portable electronics insurance program offered by a vendor to its customers.

AB541,4,17 (i) "Vendor" means a person in the business of engaging in portable electronics transactions directly or indirectly.

AB541,4,21 (2) Authority. (a) Requirements. A vendor or an employee or authorized representative of a vendor may sell or offer portable electronics insurance to customers without holding a certificate of authority under s. 601.04 or a license as an intermediary only if all of the following apply:

AB541,4,22 1. The vendor complies with the requirements of this section.

AB541,5,2 2. The insurer issuing the portable electronics insurance either directly supervises, or appoints a supervising entity to supervise, the administration of the sale of portable electronics insurance, including development of a training program, as described under sub. (4), for employees and authorized representatives of the vendors.

AB541,5,7 3. The supervising entity, if any, maintains a registry of vendor locations at which an employee or authorized representative is authorized to sell or offer portable electronics insurance in this state. Upon request by the commissioner after providing 10 days' notice to the supervising entity, the supervising entity shall make available the registry for inspection and examination by the commissioner.

AB541,5,10 4. Any employee or authorized representative who intends to sell or offer portable electronics insurance to customers shall complete a training program under sub. (4).

AB541,5,14 (b) Prohibited representations. No employee or authorized representative of a vendor of portable electronics may advertise, represent, or otherwise hold himself or herself out as a licensed insurance intermediary, if the employee or authorized representative does not hold a license as an intermediary in this state.

AB541,5,18 (c) Scope. Compliance by a vendor with this section shall authorize any employee or authorized representative of a vendor to sell or offer coverage under a policy of portable electronics insurance to a customer at each location at which the vendor engages in portable electronics transactions.

AB541,5,21 (3) Penalties. If a vendor of portable electronics or an employee or authorized representative of a vendor violates any provision of this section, the commissioner may do any of the following:

AB541,5,23 (a) After notice and hearing, impose forfeitures not to exceed $500 per violation or $5,000 in the aggregate for violations.

AB541,5,24 (b) Order, under s. 601.41 (4), any of the following:

AB541,6,2 1. Suspension of the selling or offering of portable electronics insurance at the specific business location where the violation occurred.

AB541,6,4 2. Suspension of the selling or offering of portable electronics insurance by an employee or authorized representative of a vendor.

AB541,6,7 (4) Training. The insurer or supervising entity shall develop and administer the training program required under sub. (2) (a) 4. that complies with all of the following:

AB541,6,10 (a) The insurer or supervising entity shall deliver training to employees and authorized representatives of a vendor who are directly engaged in selling or offering portable electronics insurance.

AB541,6,15 (b) The insurer or supervising entity may provide the training in electronic form. If the training is in electronic form, the insurer or supervising entity shall implement a supplemental education program regarding portable electronics insurance that is conducted and overseen by licensed employees of the insurer or supervising entity.

AB541,6,19 (c) The insurer or supervising entity shall provide to every employee and authorized representative of a vendor basic instruction about the portable electronics insurance offered to customers and the disclosures required under sub. (6).

AB541,6,25 (5) Compensation. (a) A vendor of portable electronics may not compensate an employee or authorized representative based primarily on the number of customers enrolled in portable electronics insurance coverage but the vendor may compensate an employee or authorized representative, in a manner that is incidental to his or her overall compensation, for activities related to the sale or offering of portable electronics insurance.

AB541,7,2 (b) 1. A vendor of portable electronics may bill and collect the charges for portable electronics insurance coverage.

AB541,7,5 2. The vendor shall separately itemize on the enrolled customer's bill any charge to the enrolled customer for coverage that is not included in the cost associated with the purchase or lease of the portable electronics.

AB541,7,9 3. If the portable electronics insurance coverage is included with the purchase or lease of a portable electronic device, the vendor shall clearly and conspicuously disclose to the enrolled customer that the coverage is included with the purchase or lease of the portable electronic device.

AB541,7,16 4. A vendor that bills and collects charges from an enrolled customer is not required to maintain those moneys in a segregated account if the insurer authorizes the vendor to hold those moneys in a manner other than a segregated account and if the vendor remits the moneys to the insurer or supervising entity within 60 days of receiving those moneys. The vendor shall consider all moneys received by that vendor from an enrolled customer for the sale of portable electronics insurance to be held in trust by that vendor in a fiduciary capacity for the benefit of the insurer.

AB541,7,18 5. The insurer or supervising entity may compensate the vendor for billing and collection services.

AB541,7,21 (6) Disclosures. At every location where portable electronics insurance is offered to customers, a vendor shall make available to prospective customers brochures or other written materials that contain all of the following:

AB541,7,24 (a) A disclosure that portable electronics insurance may provide a duplication of coverage already provided by a customer's homeowner's insurance policy, renter's insurance policy, or other source of insurance coverage.

AB541,8,2 (b) A statement that a customer is not required to enroll in portable electronics insurance as a condition of purchasing or leasing a portable electronic device.

AB541,8,4 (c) A summary of the material terms of the portable electronics insurance coverage including all of the following:

AB541,8,5 1. The identity of the insurer.

AB541,8,6 2. The identity of the supervising entity, if any.

AB541,8,7 3. The amount of any applicable deductible and how to pay that deductible.

AB541,8,8 4. The benefits of coverage.

AB541,8,12 5. The key terms and conditions of coverage such as whether a portable electronic device covered under the policy may be repaired or replaced with parts or equipment of a similar make and model that are reconditioned or are nonoriginal manufacturer parts or equipment.

AB541,8,15 (d) A summary of the process for filing a claim, including a description of how to return a portable electronic device and the maximum fee applicable in the event the enrolled customer fails to comply with any equipment return requirement.

AB541,8,19 (e) A statement that the enrolled customer may cancel enrollment for coverage under a portable electronics insurance policy at any time and that upon cancellation the person paying the premium receives a refund of any applicable unearned premium.

AB541,8,23 (7) Permitted offering. A vendor may offer portable electronics insurance on a month to month or other periodic basis as a group or master commercial inland marine policy that is issued to a vendor of portable electronics for its enrolled customers.

AB541,9,3 (8) Underwriting. An insurer shall establish eligibility and underwriting standards for customers electing to enroll in coverage for each portable electronics insurance program offered by a vendor to its customers.

AB541,9,8 (9) Termination of insurance; changes to policy. (a) Except as provided in par. (c), an insurer may terminate or otherwise change the terms and conditions of a policy of portable electronics insurance only after providing the policyholder and all enrolled customers at least 30 days' notice before terminating the coverage or making the change.

AB541,9,13 (b) If the insurer changes the terms and conditions in accordance with par. (a), the insurer shall provide the vendor policyholder with a revised policy or endorsement and shall provide each enrolled customer a revised certificate, endorsement, updated brochure, or other evidence indicating that a change in the terms and conditions has occurred and a summary of the material changes.