Analysis Prepared by the Office of the Commissioner of Insurance (OCI)
Statutes interpreted
Statutory authority
Explanation of agency authority
OCI has authority to set the initial licensing procedures and renewal requirements for insurance agents in the state of Wisconsin. These changes modify the existing requirements to conform to NAIC model requirements for agents in all states.
Related statutes or rules
None.
Plain language analysis
This rule changes the agent licensing requirements to conform to the NAIC model requirements for licensing and regulation of insurance agents. Three new lines of authority, variable life, crop and surety are created to bring Wisconsin in conformance with the lines in the NAIC model. For the variable line, there will be a 6 month transition period where an agent can solicit under either the current licensing requirements or the new ones. After that period, the agent would only be able to solicit under the new requirements.
These proposals will now allow online, self study and correspondence course credits to satisfy the existing prelicensing education requirements. This conforms Wisconsin to requirements under the NAIC model.
The NAIC model requires that the state of residence use fingerprint identification for crime checks. There are 16 States that now require fingerprinting of their resident insurance agent applicants including AK, AZ, CA, CT, FL, ID, MT, NJ, NV, PA, OH, OR, TN, UT, WA and WV. Wisconsin statutes permit the commissioner to require fingerprints for this purpose (see 628.04(1c), Stats.) Currently, resident agent applicant's criminal records are checked using only the Department of Justice, Crime Information Bureau (“CIB"). The CIB database contains no information about federal convictions or convictions in other states. The CIB matches are currently done using a name match and can result in inaccurate matches. A fingerprint match is the only method that the CIB match can be verified. Thus a person who applies for a Wisconsin insurance license could fail to disclose significant convictions under federal law, in other states or even Wisconsin and OCI would have no method to catch the falsehood. OCI would license the person not knowing that the public may be at significant risk. The FBI requires fingerprint in order to provide criminal records to the Commissioner. Other Wisconsin agencies currently require fingerprint crime checks with the FBI including those holding securities licenses, teachers, private detectives, and health professionals. The current testing vendor contracted with OCI holds the current statewide contract for fingerprinting, and provides those services for the licenses identified above. Pursuant to the current contract, the fingerprints collected would be used only to do an FBI and CIB crime check and then destroyed.
Another change proposed is to raise the application fee for the initial licensing of insurance agents. Currently, the fees OCI collects from insurance agent applicants are less than what OCI pays to have the licensing examination administered. As with most state contracts, the contract for the administration of the licensing examination was recently rebid with the new contract effective July 1, 2009. This new contract contains higher charges for examination and processing and makes the current fee structure even more inadequate. Unless the initial licensing fees are raised, OCI will not be able to administer the licensing program without incurring substantial debt.
A similar situation exists with the agent renewal fees. The cost of continuing regulation of agents after they are licensed has increased and the current fee is inadequate.
Comparison with federal regulations
None.
Comparison of rules in adjacent states
All states are modifying their procedures regarding continuing education, prelicensing education and lines of authority to conform to the NAIC models as Wisconsin is doing in this revision. There are 16 States that now require fingerprinting of their residents insurance agent applicants including AK, AZ, CA, CT, FL, ID, MT, NJ, NV, PA, OH, OR, TN, UT, WA and WV.
Fees do vary by state and are as follows for Wisconsin's 4 adjacent states. (Wisconsin includes the testing fee in the current and proposed fees.)
Illinois:
Resident Application: $180 plus testing fee of $103/line
Nonresident Application: $250
Resident Renewal: Biennial fee of $180/line of
authority
Nonresident Renewal: Biennial fee of $250
Iowa:
Resident Application: $50 plus testing fee of $71/line
Nonresident Application: $50
Resident Renewal: Biennial fee of $50
Nonresident Renewal: Biennial fee of $50
Michigan:
Resident Application: $10 plus testing fee of $51/line
Nonresident Application: $10
Resident Renewal: Biennial fee of $10
Nonresident Renewal: No Renewal Fees
Minnesota:
Resident Application: $40 plus $50/line plus testing
fee of $51/line
Nonresident Application: $40 plus $50/line of authority
Resident Renewal: Biennial fee of $40 plus $50/line
Nonresident Renewal: Biennial fee of $40 plus $50/line
Factual data and analytical methodologies
NAIC Model Agent Licensing laws
Analysis and supporting documentation used to determine effect on small businesses
The fee increases are minimal.
Small Business Impact
This rule may have an effect on small businesses.
Raising the application fees will affect the cost for new agents and agents seeking to expand their authority. It would be a one time fee at the time of licensing and thus have minimal impact. The fee increase is needed to cover the increased costs of testing for that line of authority and in issuing new licenses.
The biennial renewal fee increases would increase the costs for currently licensed agents every 2 two years when the fee is due. The increases are very minimal — $5 per year for resident agents and $10 per year for non resident agents.
Other changes would allow agents to take continuing education credits online, by correspondence course or by self study, thus giving agents more choices in how to gain the required credits. This probably would reduce costs for agents and would not require the agents to physically attend the continuing education classes.
Initial regulatory flexibility analysis
Types of small businesses affected: Insurance agents and agencies.
Description of reporting and bookkeeping procedures required: None beyond those currently required.
Description of professional skills required: None beyond those currently required.
Small business regulatory coordinator
The OCI small business coordinator is Eileen Mallow and may be reached at phone number (608) 266-7843 or at email address
eileen.mallow@wisconsin.gov
Fiscal Estimate
Summary
This rule change will have no significant effect on the private sector regulated by OCI.
The Office of the Commissioner of Insurance (OCI) currently has a contract with a vendor to provide resident agent licensing exams and tracking of continuing education credits for insurance agents. The cost of the contract to provide these services to resident agents is currently more than the revenues that OCI brings in from the resident agents. This increase in fees will bring the costs and revenues more into alignment.
OCI projects issuing a total of 19,257 resident and nonresident agent licenses each year. The increased revenue from the increase in agent license fees is projected to be $1,109,300 per year with $110, 900 of the revenue going to GPR-Earned and $998,400 being retained by OCI.
OCI projects a total of 56,007 resident and nonresident agent biennial renewals each year. The increased revenue from the increase in the biennial renewal fee is projected to be $908,800 per year with $90,900 going to GPR-Earned and $817,900 being retained by OCI.
Total GPR-Earned $201,800
Total PR $1,816,300
Total Revenue $2,018,100
State fiscal effect
Increase existing revenues.
Local government fiscal effect
None.
Long-range fiscal implications
OCI will no longer be paying its vendor more per resident agent licensing examination than it receives in revenues from these resident agents.
Agency Contact Person
Inger Williams, OCI Services Section, at:
Phone: (608) 264-8110
Address: 125 South Webster St – 2nd Floor,
Madison WI 53703-3474
Mail: PO Box 7873, Madison, WI 53707-7873
Notice of Hearing
Natural Resources
Environmental Protection — Air Pollution Control,
Chs.
NR 400—
NOTICE IS HEREBY GIVEN
that pursuant to ss.
227.11 (2) (a),
285.11 (1) and
(16),
285.60 (6), and
285.67, Stats., the Department of Natural Resources, hereinafter the DNR, will hold a public hearing to consider proposed rule revisions to Chapters
NR 406,
407,
419,
439, and
484, relating to federal hazardous air pollutant regulations, biodiesel fuel, incorporation of statutory changes, and air permit applications.
The proposed revisions relate to issues for State Implementation Plan approvability, and the State Implementation Plan developed under s.
285.11 (6), Stats., will be revised.
Hearing Information
Date and Time: Location:
April 16, 2009 Dept. of Natural Resources Bldg.
11:00 a.m. - 12:30 p.m. (GEF 2).— Room 613
101 South Webster Street
Madison, WI 53703
The public hearing site is accessible to people with disabilities. If you have special needs or circumstances that may make communication or accessibility difficult, please contact Robert Eckdale in writing at the DNR, Bureau of Air Management, P.O. Box 7921, Madison, WI 53707; by E-mail to
robert.eckdale@wisconsin.gov; or by calling (608) 266-2856. A request must include specific information and be received at least 10 days before the date of the scheduled hearing.
Copies of Proposed Rule
