AB485: Bill Text

LRB-2881/2

PJK:kaf:km

1997 - 1998 LEGISLATURE

1997 Assembly BILL 485

August 26, 1997 - Introduced by Representatives Coggs, L. Young, Morris-Tatum, Turner, Vrakas, Johnsrud, Hasenohrl, R. Young, Hanson, Ziegelbauer, Schneider, Underheim, Plouff and Musser, cosponsored by Senators Chvala and Roessler. Referred to Committee on Insurance, Securities and Corporate Policy.

AB485,1,2 An Act to create 628.115 and 628.15 of the statutes; relating to: prohibitions against certain practices of insurers with respect to insurance agents.

Analysis by the Legislative Reference Bureau

This bill places certain restrictions on the actions of insurers with respect to insurance agents. Insurers may not cancel the contract of an insurance agent who writes property or casualty insurance, or reduce or restrict such an agent's authority to underwrite property or casualty insurance, if the insurer's action is based solely on the amount of claims paid or incurred on business written by the agent and if the agent submitted to the insurer for underwriting approval all applications for property or casualty insurance, the applications were substantially complete and the agent did not alter or omit any information provided by the applicants. The bill prohibits an insurer from requiring an insurance agent to sell a certain level of life insurance or health insurance (called disability insurance in the statutes) on behalf of the insurer in order to sell property or casualty insurance on behalf of the insurer. An insurer is also prohibited from reducing or restricting an insurance agent's authority to underwrite property or casualty insurance on the basis of the insurance agent's sale of life or health insurance on behalf of the insurer. Finally, an insurer is prohibited from terminating the appointment of an insurance agent solely because the agent contacted a state agency about a problem or complaint that the agent or an insured had with respect to the insurer. Current law contains no similar restrictions or prohibitions.

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

AB485, s. 1 Section 1. 628.115 of the statutes is created to read:

AB485,2,4 628.115 Prohibition against termination of appointment for contacting state agency. (1) In this section, "state agency" has the meaning given in s. 20.001 (1).

AB485,2,8 (2) An insurer may not terminate the appointment of, or otherwise penalize, an insurance agent solely because the insurance agent contacted a state agency about a problem or complaint that the insurance agent or an insured had with respect to the insurer.

AB485, s. 2 Section 2. 628.15 of the statutes is created to read:

AB485,2,11 628.15 Cancellation of agency contracts, underwriting restrictions and conditions on sale of property insurance. (1) Definitions. In this section:

AB485,2,16 (a) "Agency contract" means a written agreement between an insurer and an insurance agent under which the insurance agent agrees to solicit, negotiate and place insurance or annuities on behalf of the insurer, whether acting exclusively on behalf of the insurer or otherwise, for a fee, commission or other form of compensation.

AB485,2,17 (b) "Disability insurance policy" has the meaning given in s. 632.895 (1) (a).

AB485,2,20 (c) "Loss ratio experience" means the total dollar amount of premiums paid during a given period of time divided by the total dollar amount of claims paid, or the total dollar amount of claims incurred, during that same period of time.

AB485,3,6 (2) Prohibiting cancellation of agency contracts and underwriting restrictions. An insurer may not cancel an agency contract of an insurance agent who writes property or casualty insurance or, without the insurance agent's prior written approval, reduce or restrict the authority of an insurance agent who has an agency contract with the insurer to underwrite property or casualty insurance, if all of the following apply:

AB485,3,8 (a) The insurer's action is based solely on the loss ratio experience on property or casualty insurance written by the insurance agent on behalf of the insurer.

AB485,3,13 (b) With respect to the property or casualty insurance written by the insurance agent on behalf of the insurer, the insurer required the insurance agent to submit all applications to the insurer for underwriting approval, all material information on the applications was substantially complete and the insurance agent did not omit or alter any information provided by the applicants.

AB485,3,19 (3) Prohibiting certain conditions on the sale or underwriting of property insurance. (a) An insurer may not require an insurance agent to sell a specified number of life or disability insurance policies on behalf of the insurer or a specified dollar amount of insurance under life or disability insurance policies on behalf of the insurer as a condition of selling property or casualty insurance on behalf of the insurer.

AB485,3,23 (b) An insurer may not reduce or restrict the authority of an insurance agent to underwrite property or casualty insurance on behalf of the insurer on the basis of the insurance agent's sale of life or disability insurance policies on behalf of the insurer.

AB485, s. 3 Section 3. Initial applicability.

AB485,4,6 (1) If a contract or written agreement in existence on the effective date of this subsection between an insurer and an insurance agent contains a provision that is inconsistent with section 628.115 of the statutes, as created by this act, the treatment of section 628.115 of the statutes first applies to the appointment of that insurance agent by that insurer on the day on which the contract or written agreement terminates or is renewed, whichever is earlier.

AB485,4,14 (2) If a contract or written agreement in existence on the effective date of this subsection between an insurer and an insurance agent contains a provision that is inconsistent with section 628.15 (2) of the statutes, as created by this act, the treatment of section 628.15 (2) of the statutes first applies to an agency contract, as defined in section 628.15 (1) (a) of the statutes, as created by this act, between that insurer and that insurance agent or to that insurance agent's underwriting authority on the day on which the contract or written agreement terminates or is renewed, whichever is earlier.

AB485,4,21 (3) If a contract or written agreement in existence on the effective date of this subsection between an insurer and an insurance agent contains a provision that is inconsistent with section 628.15 (3) of the statutes, as created by this act, the treatment of section 628.15 (3) of the statutes first applies to insurance sale requirements with respect to that insurance agent or to that insurance agent's underwriting authority on the day on which the contract or written agreement terminates or is renewed, whichever is earlier.

AB485,4,22 (End)