628.34(2)(b) (b) Absorption of tax. No agent, broker or insurer may absorb the tax under s. 618.43 (2).
628.34(3) (3)Unfair discrimination.
628.34(3)(a)(a) No insurer may unfairly discriminate among policyholders by charging different premiums or by offering different terms of coverage except on the basis of classifications related to the nature and the degree of the risk covered or the expenses involved, subject to ss. 632.365, 632.746 and 632.748. Rates are not unfairly discriminatory if they are averaged broadly among persons insured under a group, blanket or franchise policy, and terms are not unfairly discriminatory merely because they are more favorable than in a similar individual policy.
628.34(3)(b) (b) No insurer may refuse to insure or refuse to continue to insure, or limit the amount, extent or kind of coverage available to an individual, or charge an individual a different rate for the same coverage because of a mental or physical disability except when the refusal, limitation or rate differential is based on either sound actuarial principles supported by reliable data or actual or reasonably anticipated experience, subject to ss. 632.746 to 632.7495.
628.34(4) (4)Restraint of competition. No person who is or should be licensed under chs. 600 to 646, no employee or agent of any such person, no person whose primary interest is as a competitor of a person licensed under chs. 600 to 646, and no one acting on behalf of any of the foregoing persons, may commit or enter into any agreement to participate in any act of boycott, coercion or intimidation tending to unreasonable restraint of the business of insurance or to monopoly in that business.
628.34(5) (5)Free choice of insurer. No person may restrict in the choice of an insurer or insurance intermediary another person required to pay the cost of insurance coverage whenever the procurement of insurance coverage is required as a condition for the conclusion of a contract or other transaction or for the exercise of any right under a contract. However, the person requiring the coverage may reserve the right to disapprove on reasonable grounds the insurer or the coverage selected. The form of corporate organization of an insurer authorized to do business in this state is not a reasonable ground for disapproval, and the commissioner may by rule specify that additional grounds are not reasonable.
628.34(6) (6)Extra charges. No person may make any charge other than premiums and premium financing charges for the protection of property or of a security interest in property, as a condition for obtaining, renewing or continuing the financing of a purchase of the property or the lending of money on the security of an interest in the property.
628.34(7) (7)Influencing employers. No insurer or insurance intermediary or employee or agent of either may, in connection with an insurance transaction, encourage, persuade or attempt to influence any employer to refuse employment to or to discharge any person arbitrarily or unreasonably.
628.34(8) (8)Use of official position. No person holding an elective, appointive or civil service position in federal, state or local government may use decision-making power or influence in that position to coerce the placement of insurance for any prospective policyholder through any particular intermediary or with any particular insurer.
628.34(9) (9)Refusal to return indicia of agency. No agent may refuse or fail to return promptly all indicia of agency to the principal on demand.
628.34(10) (10)Insurance security fund. No insurer or insurance intermediary may make use in any manner of the protection given policyholders by ch. 646 as a reason for buying insurance from the insurer or intermediary.
628.34(11) (11)Other unfair trade practices. No person may engage in any other unfair method of competition or any other unfair or deceptive act or practice in the business of insurance, as defined under sub. (12).
628.34(12) (12)Rules defining unfair trade practices. The commissioner may define specific unfair trade practices by rule, after a finding that they are misleading, deceptive, unfairly discriminatory, provide an unfair inducement, or restrain competition unreasonably.
628.34 Cross-reference Cross Reference: See also ss. Ins 3.27, 6.67, and 6.68, Wis. adm. code.
628.34 Annotation Any administrative rule requiring dissemination of cost disclosure information that is misleading due to incompleteness is beyond the scope of the insurance commissioner's authority in that it violates sub. (1) (a). Aetna Life Insurance Co. v. Mitchell, 101 Wis. 2d 90, 303 N.W.2d 639 (1981).
628.34 Annotation There is no private right of action to enforce sub. (3). NAACP v. American Family Mutual Insurance Co. 978 F.2d 287 (1992).
628.345 628.345 Prohibited practices during license revocation or surrender.
628.345(1)(1) In this section:
628.345(1)(a) (a) "Disciplinary period" means the period of time beginning on the effective date of the termination of the license of an intermediary under par. (b) 1. and ending on the date on which a new license is issued to the intermediary. The "disciplinary period" of a person under par. (b) 2., 3. or 4. is the disciplinary period of the intermediary under par. (b) 1. through which the person attains the status of "disciplined person".
628.345(1)(b) (b) "Disciplined person" means any of the following:
628.345(1)(b)1. 1. An intermediary whose license is revoked under s. 628.10 (2) (b) or surrendered under a stipulation.
628.345(1)(b)2. 2. An affiliate of an intermediary under subd. 1.
628.345(1)(b)3. 3. A person in which an intermediary under subd. 1. has, directly or indirectly, more than a 10% ownership interest.
628.345(1)(b)4. 4. An agent or employee of a person described in subd. 1., 2. or 3.
628.345(2) (2) During the disciplinary period of a disciplined person, the disciplined person may not be employed by, act as agent for, or be affiliated with, a person engaged in the business of an insurance intermediary.
628.345(3) (3) No person may do any of the following with respect to activities performed in this state:
628.345(3)(a) (a) Pay consideration to, or expenses of, a disciplined person that directly or indirectly relate to services performed as an intermediary by the disciplined person during the disciplinary period of the disciplined person.
628.345(3)(b) (b) Pay consideration to, or expenses of, a disciplined person that directly or indirectly relate to services performed as an intermediary by the person making the payment, or by an agent, employee or affiliate of that person, during the disciplinary period of the disciplined person.
628.345(3)(c) (c) Pay consideration to, or expenses of, a disciplined person for information directly or indirectly provided by the disciplined person during the disciplinary period of the disciplined person for the purpose of assisting in the sale of insurance.
628.345(3)(d) (d) Seek to obtain information from, or use information directly or indirectly provided by, a disciplined person during the disciplinary period of the disciplined person for the purpose of assisting in the sale of insurance.
628.345(3)(e) (e) During the disciplinary period of a disciplined person, permit the disciplined person to be present during solicitation of the sale of insurance, or knowingly solicit the sale of insurance with the assistance of the disciplined person, regardless of whether the disciplined person acts as an intermediary.
628.345(3)(f) (f) During the disciplinary period of a disciplined person, use or refer to an endorsement or referral by the disciplined person for the purpose of soliciting the sale of insurance.
628.345(4) (4)
628.345(4)(a)(a) Except as provided in par. (b), this section applies to all of the following:
628.345(4)(a)1. 1. A disciplined person for whom the disciplinary period is in effect on or after January 1, 1997.
628.345(4)(a)2. 2. That portion of a disciplinary period in effect on or after January 1, 1997, that occurs on and after January 1, 1997.
628.345(4)(b) (b) This section does not apply to an obligation incurred before January 1, 1997, for the payment of consideration to, or expenses of, a disciplined person related to services performed or information provided during the disciplinary period of the disciplined person but before January 1, 1997.
628.345 History History: 1995 a. 396.
628.347 628.347 Suitability of annuity sales to consumers.
628.347(1)(1)Definitions. In this section:
628.347(1)(a) (a) "Annuity" means a fixed or variable annuity that is individually solicited, whether the product is classified as individual or group.
628.347(1)(b) (b) "Recommendation" means advice provided by an insurance intermediary, or an insurer if no intermediary is involved, to an individual consumer that results in the purchase or exchange of an annuity in accordance with that advice.
628.347(2) (2)Duties of insurers and insurance intermediaries with regard to recommendations.
628.347(2)(a)(a) Except as provided in par. (c), an insurance intermediary, or insurer if no intermediary is involved, may not recommend to a consumer the purchase or exchange of an annuity if the recommendation results in an insurance transaction or series of insurance transactions unless the intermediary or insurer has reasonable grounds to believe that the recommendation is suitable for the consumer on the basis of facts disclosed by the consumer as to his or her investments, other insurance products, and financial situation and needs.
628.347(2)(b) (b) Before making a recommendation described in par. (a), an insurance intermediary, or insurer if no intermediary is involved, shall make reasonable efforts to obtain information concerning all of the following:
628.347(2)(b)1. 1. The consumer's financial status.
628.347(2)(b)2. 2. The consumer's tax status.
628.347(2)(b)3. 3. The consumer's investment objectives.
628.347(2)(b)4. 4. Any other information that is reasonably appropriate for determining the suitability of a recommendation to the consumer.
628.347(2)(c) (c) An insurance intermediary, or insurer if no intermediary is involved, has no obligation under par. (a) to a consumer related to a recommendation if the consumer does any of the following:
628.347(2)(c)1. 1. Refuses to provide relevant information requested by the insurer or insurance intermediary.
628.347(2)(c)2. 2. Fails to provide complete or accurate information.
628.347(2)(c)3. 3. Decides to enter into an insurance transaction that is not based on a recommendation of the insurer or insurance intermediary.
628.347(2)(d) (d) Any recommendation of an insurer or insurance intermediary that, under par. (c), is not subject to the obligation under par. (a) shall be reasonable under all circumstances actually known to the insurer or insurance intermediary at the time the recommendation is made.
628.347(3) (3)Insurer's supervisory responsibility.
628.347(3)(a)(a) An insurer either shall ensure that a system to supervise recommendations that is reasonably designed to achieve compliance with this section is established and maintained by complying with pars. (c) to (e), or shall establish and maintain such a system, which shall include at least all of the following:
628.347(3)(a)1. 1. Maintaining written procedures.
628.347(3)(a)2. 2. Conducting periodic reviews of its records that are reasonably designed to assist in detecting and preventing violations of this section.
628.347(3)(b) (b) A general agent or independent agency either shall adopt a system established by an insurer to supervise recommendations of its insurance intermediaries that is reasonably designed to achieve compliance with this section, or shall establish and maintain such a system, which shall include at least all of the following:
628.347(3)(b)1. 1. Maintaining written procedures.
628.347(3)(b)2. 2. Conducting periodic reviews of records that are reasonably designed to assist in detecting and preventing violations of this section.
628.347(3)(c) (c) An insurer may contract with a 3rd party, which may be a general agent or independent agency, to establish and maintain a system of supervision as required under par. (a) with respect to insurance intermediaries under contract with or employed by the 3rd party.
628.347(3)(d) (d) An insurer shall make reasonable inquiry to ensure that any 3rd party with which the insurer contracts under par. (c) is performing the functions required under par. (a) and shall take such action as is reasonable under the circumstances to enforce the contractual obligation to perform the functions. An insurer may comply with its obligation to make reasonable inquiry in all of the following ways:
628.347(3)(d)1. 1. The insurer annually obtains from a senior manager of the 3rd party who has responsibility for the delegated functions a representation that the 3rd party is performing the required functions and that the senior manager has a reasonable basis for making the representation.
628.347(3)(d)2. 2. The insurer, based on reasonable selection criteria, periodically selects 3rd parties contracting under par. (c) for reviews to determine whether the 3rd parties are performing the required functions. The insurer shall perform those procedures to conduct the reviews that are reasonable under the circumstances.
628.347(3)(e) (e) An insurer that contracts with a 3rd party under par. (c) and that complies with the supervisory requirement under par. (d) satisfies its responsibilities under par. (a) as to insurance intermediaries under contract with or employed by the 3rd party.
628.347(3)(f) (f) An insurer is not required under par. (a), and a general agent or independent agency is not required under par. (b), to do any of the following:
628.347(3)(f)1. 1. Review, or provide for the review of, all insurance intermediary solicited transactions.
628.347(3)(f)2. 2. Include in its system of supervision an insurance intermediary's recommendations made to consumers of products other than annuities offered by the insurer, general agent, or independent agency.
628.347(3)(g) (g) A general agent or independent agency contracting with an insurer under par. (c) shall promptly, upon request by the insurer under par. (d), provide a representation as described in par. (d) 1. or give a clear statement that it is unable to meet the representation criteria.
628.347(3)(h) (h) No person may provide a representation under par. (d) 1. unless the person satisfies all of the following:
628.347(3)(h)1. 1. The person is a senior manager with responsibility for the delegated functions.
628.347(3)(h)2. 2. The person has a reasonable basis for making the representation.
628.347(4) (4)National Association of Securities Dealers Conduct Rules. Compliance with the National Association of Securities Dealers Conduct Rules pertaining to suitability satisfies the requirements under sub. (2) for the recommendation of variable annuities. Nothing in this subsection, however, limits the commissioner's ability to enforce this section.
628.347(5) (5)Remedial measures. The commissioner may do any of the following:
628.347(5)(a) (a) Order an insurer to take reasonably appropriate corrective action for any consumer harmed by a violation of this section by the insurer or the insurer's insurance intermediary.
628.347(5)(b) (b) Order an insurance intermediary to take reasonably appropriate corrective action for any consumer harmed by a violation of this section by the insurance intermediary.
628.347(5)(c) (c) Order a general agent or independent agency that employs or contracts with an insurance intermediary to sell, or solicit the sale of, annuities to consumers to take reasonably appropriate corrective action for any consumer harmed by a violation of this section by the insurance intermediary.
628.347(6) (6)Penalties; mitigation.
628.347(6)(a)(a) Any person who violates this section is subject to the penalties provided under s. 601.64, suspension or revocation of a license or certificate of authority, and an order under s. 601.41 (4).
628.347(6)(b) (b) A penalty under par. (a) for a violation of sub. (2) (a), (b), or (d), including a forfeiture, may be reduced or eliminated to the extent provided by rule of the commissioner if corrective action is taken for the consumer promptly after the violation is discovered.
628.347(6)(c) (c) The commissioner may promulgate rules related to the reduction or elimination of penalties for violations of this section on the basis of prompt action taken to correct any harm caused to consumers by the violations.
628.347(7) (7)Record keeping. An insurer and an insurance intermediary, including a general agent and an independent agency, shall maintain, or be able to make available to the commissioner, records of the information collected from a consumer and other information used in making a recommendation that was the basis for an insurance transaction for 6 years after the insurance transaction is completed by the insurer, except as otherwise permitted by the commissioner by rule. An insurer may, but is not required to, maintain records on behalf of an insurance intermediary, including a general agent and an independent agency.
628.347(8) (8)Exemptions. This section does not apply to any of the following:
628.347(8)(a) (a) Direct response solicitations in which no recommendation is made based on information collected from the consumer.
628.347(8)(b) (b) Recommendations related to contracts used to fund any of the following:
628.347(8)(b)1. 1. An employee pension or welfare benefit plan that is covered by the federal Employee Retirement and Income Security Act.
628.347(8)(b)2. 2. A plan described in section 401 (a) or (k), 403 (b), or 408 (k) or (p) of the Internal Revenue Code, if the plan is established or maintained by an employer.
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