618.37 History
History: 1971 c. 260.
618.39
618.39
Assisting unauthorized insurers. 618.39(1)
(1)
Conduct prohibited. No person may do an insurance business in this state if the person knows or should know that the result is or might be the illegal placement of insurance with an unauthorized insurer or the subsequent servicing of an insurance policy illegally placed with an unauthorized insurer.
618.39(2)
(2) Personal liability for violation. Any person who violates
sub. (1) is personally liable to any claimant under the policy for any damage proximately caused by the person's violation. That damage may include damage resulting from the necessity of replacing the insurance in an authorized insurer or the failure of the unauthorized insurer to perform the insurance contract.
618.39(3)(a)(a) The office may by rule promulgate standards for any of the following:
618.39(3)(a)1.
1. Establishing that a person should know that the result of insurance business is or might be the illegal placement of insurance with an unauthorized insurer or the subsequent servicing of an insurance policy illegally placed with an unauthorized insurer.
618.39(3)(a)2.
2. Imposing requirements under
s. 601.42 or
628.04 or sanctions or remedial measures under
sub. (2) or
s. 601.64, or any other applicable penalty or remedial provision of
chs. 600 to
646, for a violation of this section.
618.39(3)(b)
(b) Notwithstanding
par. (a) 1., it is not necessary for the office to promulgate a rule under
par. (a) 1. to establish that a person violated
sub. (1).
618.39 Annotation
Legislative Council Note, 1975: Sub. (2) is added as an effective sanction to suppress knowing placement of insurance with unauthorized insurers. It is adapted from Conn. Insurance Laws, Sec. 38-90. Insurance agents and others should guarantee performance of insurance contracts they negotiate knowingly with unlicensed insurers, unless legally negotiated under the surplus lines law. In addition, the sanctions of s. 601.64 apply to violators of this provision. [Bill 16-S]
PERMISSIBLE BUSINESS BY
UNAUTHORIZED INSURERS
618.40
618.40
Definitions. In this subchapter, unless the context requires otherwise:
618.40(1)
(1) "Affiliated group" means all persons that control, are controlled by, or are under common control with, an insured.
618.40(2)
(2) "Authorized insurer" means an insurer that is licensed, or authorized, to transact the business of insurance under the law of the home state.
618.40(3)
(3) "Control" means, with respect to a person having control over another person, that the person does any of the following:
618.40(3)(a)
(a) Directly or indirectly, or acting through one or more other persons, owns, controls, or has the power to vote 25 percent or more of any class of voting securities of a person.
618.40(3)(b)
(b) Controls in any manner the election of a majority of the directors or trustees of a person.
618.40(4)(a)(a) Except as provided in
par. (b), "home state" means, with respect to an insured, one of the following:
618.40(4)(a)1.
1. The state in which the insured maintains its principal place of business or, in the case of an insured who is an individual, the individual's principal residence.
618.40(4)(a)2.
2. If 100 percent of the insured risk is located outside of the state referred to in
subd. 1., the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated.
618.40(4)(b)
(b) If more than one insured from an affiliated group are named insureds on a single surplus lines insurance contract, "home state" means the state, as determined under
par. (a), of the member of the affiliated group that has the largest percentage of premium attributed to it under the insurance contract.
618.40(5)
(5) "Premium tax" means, with respect to unauthorized insurance, any tax, fee, assessment, or other charge imposed by this state directly or indirectly based on any payment made as consideration for an insurance contract for such insurance, including premium deposits, assessments, registration fees, and any other compensation given in consideration for a contract of insurance.
618.40(6)
(6) "Principal place of business" means, with respect to determining the home state of an insured, the state where the insured maintains its headquarters and where the insured's high-level officers direct, control, and coordinate the business activities of the insured.
618.40(7)
(7) "Principal residence" means, with respect to determining the home state of an insured who is an individual, the state where the individual resides for the greatest number of days during a calendar year.
618.40(8)
(8) "State" includes any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa.
618.40(9)
(9) "Surplus lines broker" means a person that is licensed in a state to sell, solicit, or negotiate insurance on properties, risks, or exposures located or to be performed in that state with unauthorized insurers.
618.40(10)
(10) "Surplus lines insurance" means any insurance to which all of the following apply:
618.40(10)(b)
(b) The insurance is permitted under this subchapter to be placed through a surplus lines agent or broker with an unauthorized insurer eligible to accept the insurance.
618.40(11)
(11) "Unauthorized insurance" means any insurance permitted in a state to be placed directly or through a surplus lines broker with an unauthorized insurer eligible to accept such insurance.
618.40 History
History: 2011 a. 224.
618.41
618.41
Surplus lines insurance. 618.41(1)
(1)
General permission. A nondomestic insurer which has not obtained a certificate of authority to do business in this state under
s. 618.12 may negotiate for and make insurance contracts with persons in this state and on risks located in this state, subject to the limitations and requirements specified in this section.
618.41(2)
(2) Incidental acts permitted. With respect to contracts made under this section, the insurer may in this state also inspect risks to be insured, collect premiums and adjust losses, and do all other acts reasonably incidental to the contract.
618.41(3)
(3) Solicitation prohibited. Nothing in
subs. (1) and
(2) permits the solicitation of business in this state by or on behalf of an insurer without a certificate of authority. The commissioner may by rule prescribe the manner in which insurance agents or brokers may advertise the availability of their services in procuring, on behalf of persons seeking insurance, contracts with insurers without a certificate of authority.
618.41(4)
(4) Information to policyholder. The insurer and any agent or broker are obligated promptly to furnish the policyholder a statement in a form prescribed or approved by the commissioner, informing the policyholder that the insurer has not obtained a certificate of authority to do business in this state and is not regulated in this state except as provided in this section.
618.41(5)
(5) Trade practices. With respect to contracts made under this section, nondomestic insurers are subject to
s. 628.34 and rules promulgated thereunder.
618.41(6)
(6) Prohibited and restricted surplus lines business. 618.41(6)(a)(a) Prohibited classes. The commissioner may by rule prohibit the making of contracts under
sub. (1) in a specified class of insurance if authorized insurers provide an established market for the class in this state which is adequate and reasonably competitive with reputable unauthorized insurers.
618.41(6)(b)
(b)
Restricted classes. The commissioner may by rule place restrictions and limitations on and create special procedures for the making of contracts under
sub. (1) for a specified class of insurance if there have been abuses of placements in the class or if the policyholders in the class, because of limited financial resources, business experience or knowledge, cannot be expected to protect their own interests adequately.
618.41(6)(c)
(c)
Exclusion of individual insurers. The commissioner may prohibit an individual insurer or group policyholder, including but not limited to a risk purchasing group, from making any contracts under
sub. (1) or issuing evidence of coverage and may prohibit all insurance agents and brokers from dealing with the insurer or group policyholder, if:
618.41(6)(c)3.
3. The commissioner has reason to believe that the insurer, or the insurer which issued the policy to a group policyholder, is in an unsound condition or the insurer or group policyholder is operated in a fraudulent, dishonest or incompetent manner or in violation of the law of its domicile.
618.41(6)(d)
(d)
Evaluations. The commissioner may issue lists of unauthorized nondomestic insurers whose solidity he or she believes to be doubtful or whose practices he or she believes to be objectionable. The commissioner may issue lists of unauthorized nondomestic insurers he or she believes to be reliable and solid. The commissioner may also issue other relevant evaluations of unauthorized insurers. No action may lie against the commissioner or any employee of the office for anything said in the issuance of such lists and evaluations.
618.41(6m)
(6m) Rustproofing warranties insurance. An insurer issuing a policy of insurance under this section to cover a warranty, as defined in
s. 100.205 (1) (g), shall comply with
s. 632.18 and the policy shall be on a form approved by the commissioner under
s. 631.20.
618.41(7)(a)(a) The commissioner may, pursuant to
s. 628.04 (2), issue to any licensed agent or broker a surplus lines license granting authority to procure insurance under this section.
618.41(7m)
(7m) Risk purchasing groups; licensed agents. A natural person may not solicit, negotiate or obtain liability insurance for a risk purchasing group from an unauthorized insurer unless the natural person is licensed as a surplus lines agent under
sub. (7).
618.41(8)
(8) Surplus lines agents, brokers and group policyholders. 618.41(8)(a)(a)
Responsibility. An agent or broker may not place insurance under this section with, and a person who offers liability insurance coverage under a group policy may not solicit the purchase of coverage under a group policy issued by, an unauthorized insurer if all of the following exist:
618.41(8)(a)1.
1. The insurer is financially unsound, engaging in unfair practices or otherwise substandard.
618.41(8)(a)2.
2. The agent, broker or other person fails to give the applicant written notice of the insurer's deficiencies.
618.41(8)(a)3.
3. The agent, broker or other person either knows of, or fails to adequately investigate, the insurer's financial condition and general reputation.
618.41(8)(b)
(b)
Retention of notice. An agent, broker or group policyholder shall keep in its office for at least 5 years any notice provided under
par. (a) 2.
618.41(8)(c)
(c)
Financially sound. To be financially sound for purposes of
par. (a) 1., an insurer must be able to satisfy standards comparable to those applied under the laws of this state to authorized insurers, unless this state is the insured's home state, in which case
s. 618.416 applies.
618.41(9)
(9) Requirements for surplus lines policies. 618.41(9)(a)(a)
Required information. Every new or renewal insurance policy procured and delivered under this section shall bear the name and address of the insurance agent or broker who procured it and shall have stamped or affixed upon it the following: "This insurance contract is with an insurer which has not obtained a certificate of authority to transact a regular insurance business in the state of Wisconsin, and is issued and delivered as a surplus line coverage pursuant to
s. 618.41 of the Wisconsin Statutes.
Section 618.43 (1), Wisconsin Statutes, requires payment by the policyholder of 3 percent tax on gross premium."
618.41(9)(b)
(b)
Additional required information. The policy shall include a description of the subject of the insurance, and indicate the coverage, conditions and term of the insurance, the premium charged and premium taxes to be collected from the policyholder, and the name and address of the policyholder and insurer. If the direct risk is assumed by more than one insurer, the policy shall state the names and addresses of all insurers and the portion of the entire direct risk each has assumed.
618.41(10)
(10) Issuance of evidence of insurance. Upon placing a new or renewal coverage under this section, the agent or broker shall promptly deliver to the policyholder or his or her agent evidence of the insurance consisting either of the policy as issued by the insurer or, if the policy is not then available, a certificate, cover note or other confirmation of insurance.
618.41(11)
(11) Form regulation. The commissioner may by rule subject policies written under this section to as much of the regulation provided by
chs. 600 to
646 and
655 for comparable policies written by authorized insurers as the commissioner finds to be necessary to protect the interests of insureds and the public in this state.
618.41(12)
(12) Application when this state is not the insured's home state. The placement of insurance under this section is not subject to
subs. (4),
(7m),
(8),
(9), or
(10) if this state is not the insured's home state and the placement complies with the laws of the insured's home state.
618.41 Annotation
Independent actual notice to a policyholder, in the absence of stamping or affixing the information required under sub. (9) (a) to the policy, was insufficient. Combined Investigative v. Scottsdale Ins.,
165 Wis. 2d 262,
477 N.W.2d 82 (Ct. App. 1991).
618.415
618.415
Group liability insurance issued by an unauthorized insurer. 618.415(1)(1)
Notice before taking application. A person may not take an application for liability insurance coverage under a group liability insurance policy which is issued by an unauthorized insurer and which is for a risk that resides or is otherwise located in this state, unless before taking the application the person gives the applicant clear and prominent written notice of all of the following:
618.415(1)(b)
(b) That the insurer has not obtained a certificate of authority in this state and is not regulated in this state.
618.415(1)(c)
(c) That the risk is not protected by the Wisconsin insurance security fund.
618.415(1)(d)
(d) Any other information required by the commissioner by rule.
618.415(2)
(2) Notice in the evidence of insurance. A person may not provide liability insurance coverage under a group insurance policy which is issued by an unauthorized insurer to a member for a risk that resides or is otherwise located in this state, unless the evidence of insurance clearly and prominently includes all of the following:
618.415(2)(b)
(b) That the risk is not protected by the Wisconsin insurance security fund.
618.415(2)(c)
(c) Any other information required by the commissioner by rule.
618.415 History
History: 1987 a. 247.
618.416
618.416
Qualification for placement of surplus lines insurance with an unauthorized insurer. An intermediary may not place surplus lines insurance under
s. 618.41 with an unauthorized insurer if this state is the home state of the proposed insured, unless at the time of placement all of the following apply to the unauthorized insurer:
618.416(1)
(1) If the unauthorized insurer is domiciled in a United States jurisdiction, the insurer satisfies all of the following:
618.416(1)(a)
(a) In its domiciliary jurisdiction, the unauthorized insurer is authorized to write the type of insurance to be placed with the insurer.
618.416(1)(b)
(b) Either the unauthorized insurer has capital and surplus or its equivalent under the laws of its domiciliary jurisdiction that equals the greater of either the minimum capital and surplus requirements under the laws of this state or $15,000,000 or the commissioner affirmatively finds that the unauthorized insurer's capital and surplus are acceptable. The commissioner's finding shall be based on factors that include quality of management, capital and surplus of any parent company, company underwriting profit and investment income trends, market availability, and company record and reputation within the industry. In no event may the commissioner find that the unauthorized insurer's capital and surplus are acceptable if the unauthorized insurer's capital and surplus are less than $4,500,000.
618.416(1)(c)
(c) The unauthorized insurer provides to the commissioner, no more than 6 months after the close of the period reported on, a certified copy of its current annual statement that is filed and approved by the regulatory authority in the unauthorized insurer's domicile and certified by an accounting or auditing firm licensed in the jurisdiction of the unauthorized insurer's domicile.
618.416(2)
(2) If the unauthorized insurer is an alien insurer, the insurer is listed on the quarterly listing of alien insurers maintained by the international insurers department of the National Association of Insurance Commissioners and meets additional requirements regarding the use of the list established by rule of the commissioner.
618.416 History
History: 2011 a. 224.
618.42
618.42
Direct procurement of insurance. 618.42(1)
(1)
Permitted direct procurement. Subject to the restrictions of this section, any person seeking insurance may obtain it if no agent or broker resident or doing business in this state is involved and if negotiations occur primarily outside this state. Negotiations by mail occur within this state if a letter is sent from or to an address in this state.
618.42(2)
(2) Reports and taxation. Every policyholder who procures or renews insurance otherwise subject to
chs. 600 to
646 and
655 from any insurer not authorized to do business in this state, other than insurance procured under
s. 618.41 and the renewal of guaranteed renewable insurance lawfully issued outside this state, shall within 60 days after the insurance procured or renewed report to the commissioner in such form as he or she requires and pay the taxes specified by
s. 618.43.
