Chapter Ins 3

Ins 3.31(3)(a)3. 3. ‘Underwriting.’

Ins 3.31(3)(a)3.a. a. An insurer shall make provision for adequate underwriting personnel and procedures so as to process without undue delay each enrollment form for insurance received by it.

Ins 3.31(3)(a)3.b. b. An insurer shall give due consideration to all statements in each enrollment form for insurance submitted to it and shall duly evaluate the proposed insured person before issuing evidence of coverage for such person.

Ins 3.31(3)(a)3.c. c. An insurer which issues evidence of coverage for a person shall not use the statements, information or material set out in subds. 1., 2. and 3. to void the coverage on the basis of misrepresentation in the enrollment form, or deny a claim on the basis of a pre-existing condition defense, unless the insurer has resolved patently conflicting or incomplete statements in the enrollment form for the coverage, duly considered information furnished to it in connection with the processing of such enrollment form, or duly considered the material which it would have obtained through reasonable inquiry following due consideration of such statements or information.

Ins 3.31(3)(a)3.d. d. An insurer shall furnish to the certificate holder or subscriber a notice printed prominently in contrasting color on the first page of the certificate or amendment, or in the form of a sticker or other form to be attached to the first page of the certificate or amendment, or furnish to the group policyholder or other such entity within 10 days after the issuance or amendment of coverage for delivery to the certificate holder or subscriber, a notice in the form of a letter or other form, such notice to contain substantially the following:

IMPORTANT NOTICE CONCERNING STATEMENTS IN THE ENROLLMENT FORM FOR YOUR INSURANCE

Please read the copy of the enrollment form attached to this notice or to your certificate or which has been otherwise previously delivered to you by the insurer or group policyholder. Omissions or misstatements in the enrollment form could cause an otherwise valid claim to be denied. Carefully check the enrollment form and write to the insurer within 10 days if any information shown on the form is not correct and complete or if any requested medical history has not been included. The insurance coverage was issued on the basis that the answers to all questions and any other material information shown on the enrollment form are correct and complete.

Ins 3.31(3)(a)3.e. e. An insurer shall file with the commissioner a description of the procedure it will follow and the form or forms it will use to meet the requirements of subd. 3. d.

Ins 3.31(3)(a)3.f. f. An insurer which, after evidence of coverage for a person has been issued, receives information regarding such person which would reasonably be considered a sufficient basis to void or reform such person’s coverage, shall effect such voiding or reformation, as provided in s. 631.11 (4), Stats., or the insurer shall be held to have waived its rights to such action.

Ins 3.31(3)(a)3.g. g. An insurer may use statements in an enrollment form as a defense to the claim or to void or reform coverage only if it has complied with the requirements of subd. 3. d.

Ins 3.31(3)(a)4. 4. ‘Claims administration.’

Ins 3.31(3)(a)4.a. a. If the existence of a disease or physical condition was duly disclosed in the enrollment form for coverage in response to the questions therein, the insurer shall not use the pre-existence defense, under coverage providing such a defense, to deny benefits for such disease or condition unless such disease or condition is excluded from coverage by name or specific description effective on the date of loss. This paragraph does not apply to a preexisting condition exclusion permitted under s. 632.746 (1), Stats.

Ins 3.31(3)(a)4.b. b. If an enrollment form contains no question concerning the proposed insured person’s health history or medical treatment history and regardless of whether it contains a question concerning the proposed insured person’s general health at the time of enrollment, the insurer may use the pre-existence defense, under coverage providing such a defense, only with respect to losses incurred or disability commencing within 12 months from the effective date of the person’s coverage, unless the disease or physical condition causing the loss or disability is excluded from coverage by name or specific description effective on the date of loss or the date the disability commenced. If after 12 months from the effective date of coverage, there is a reoccurrence of the disease or condition causing the loss or disability, then the pre-existence defense may not be used. Under a disability income policy a disease or condition shall be deemed to have not reoccurred if the insured performs all important duties of a comparable occupation on the same basis as before the disability, for at least 6 months. Under a policy other than disability income a disease or condition shall be deemed to have not reoccurred if a period of 6 months elapses during which no expenses are incurred for the same or a related disease or condition.

Ins 3.31(3)(a)4.c. c. An insurer shall not void coverage or deny a claim on the ground that the enrollment form for such coverage did not disclose certain information considered material to the risk if the form did not clearly require the disclosure of such information.

Ins 3.31(3)(b) (b) Be subject to the following:

Ins 3.31(3)(b)1. 1. A claim shall not be reduced or denied on the grounds that the disease or physical condition resulting in the loss or disability had existed prior to the effective date of coverage, under coverage providing such a defense, unless the insurer has evidence that such disease or physical condition, as distinguished from the cause of such disease or physical condition, had manifested itself prior to such date. Such manifestation may be established by evidence of:

Ins 3.31(3)(b)1.a. a. Medical diagnosis or treatment of such disease or physical condition prior to the effective date, or

Ins 3.31(3)(b)1.b. b. The existence of symptoms of such disease or physical condition prior to the effective date which would cause an ordinarily prudent person to seek diagnosis, care, or treatment and for which such diagnosis, care or treatment was not sought prior to such date.

Ins 3.31(3)(b)2. 2. Coverage which contains wording which requires the cause of the disease or physical condition, as distinguished from the disease or physical condition itself, to originate after the effective date of coverage shall be administered in accordance with subd. 1.

Ins 3.31(3)(b)3. 3. An insurer shall not exclude or limit benefits for a particular condition where the claimant’s medical records indicate a reasonable basis for, and the policy language permits, distinguishing between the eligible condition or conditions which necessitated the hospital confinement or medical or surgical treatment for which claim is made, or which resulted in the disability for which the claim is made, and a concurrently non-eligible existing condition or conditions which did not contribute to the need for the confinement or treatment, or contribute to the disability. The exclusion or limitation of benefits includes the use of:

Ins 3.31(3)(b)3.a. a. A pre-existence defense;

Ins 3.31(3)(b)3.b. b. A waiting period, such as for pregnancy, surgery or other stated condition or procedure;

Ins 3.31(3)(b)3.c. c. A benefit maximum; or

Ins 3.31(3)(b)3.d. d. Other policy limitation.

Ins 3.31(3)(c) (c) Where the group or group type plan is issued to trustees of a fund, use the plan’s provisions regarding individual eligibility for coverage and individual termination of coverage to deny liability for or to defend against a claim only if the certificate issued pursuant to the plan, under an appropriate caption or captions, includes the applicable requirements regarding an individual’s eligibility for coverage and the conditions under which an individual’s coverage terminates under the plan.

Ins 3.31(4) (4) Blanket insurance. An insurer issuing insurance under s. 600.03 (4), Stats., shall

Ins 3.31(4)(a) (a) Include in an enrollment form used in connection with such insurance no question relating to the medical history or other matter concerning the insurability of the person or persons to be insured and

Ins 3.31(4)(b) (b) Be subject to the following:

Ins 3.31(4)(b)1. 1. A claim shall not be reduced or denied on the grounds that the disease or physical condition resulting in the loss or disability had existed prior to the effective date of coverage, under coverage providing such a defense, unless the insurer has evidence that such disease or physical condition had manifested itself prior to such date. Such manifestation may be established by evidence of:

Ins 3.31(4)(b)1.a. a. Medical diagnosis or treatment of such disease or physical condition prior to the effective date, or

Ins 3.31(4)(b)1.b. b. The existence of symptoms of such disease or physical condition prior to the effective date which would cause an ordinarily prudent person to seek diagnosis, care or treatment and for which such diagnosis, care or treatment was not sought prior to such date.

Ins 3.31(4)(b)2. 2. Coverage which contains wording which requires the cause of the disease or physical condition, as distinguished from the disease or physical condition itself, to originate after the effective date of coverage shall be administered in accordance with subd. 1. b.

Ins 3.31(4)(b)3. 3. An insurer shall not exclude or limit benefits for a particular condition where the claimant’s medical records indicate a reasonable basis for, and the policy language permits, distinguishing between the eligible condition or conditions which necessitated the hospital confinement or medical or surgical treatment for which claim is made, or which resulted in the disability for which the claim is made, and a concurrently non-eligible existing condition or conditions which did not contribute to the need for the confinement or treatment, or contribute to the disability. The exclusion or limitation of benefits includes the use of:

Ins 3.31(4)(b)3.a. a. A pre-existence defense;

Ins 3.31(4)(b)3.b. b. A waiting period, such as for pregnancy, surgery or other stated condition or procedure;

Ins 3.31(4)(b)3.c. c. A benefit maximum; or

Ins 3.31(4)(b)3.d. d. Other policy limitation.

Ins 3.31(5) (5) Effective date. This rule shall apply to all solicitation, underwriting, and claims activities relating to Wisconsin residents after December 1, 1974, except that sub. (3) (a) 4. a. and b. shall apply to coverage issued after said date and sub. (3) (a) 3. d., e. and g. shall apply to such activities after February 1, 1975.

Ins 3.31 History History: Cr. Register, November, 1974, No. 227, eff. 12-1-74; emerg. am. (1), (2), (3) (intro.) and (c) and (4), eff. 6-22-76; am. (1), (2), (3) (intro.) and (c) and (4), Register, September, 1976, No. 249, eff. 10-1-76; am. (1) and (2), Register, March, 1979, No. 279, eff. 4-1-79; am. (1), (2), (3) (intro.), (3) (a) 3. d., f. and 4. b., (3) (c) and (4), r. and recr. (3) (a) 3. c., (3) (b) 1. and 3., (4) (b) 1. and 3., Register, April, 1982, No. 316, eff. 5-1-82; correction in (2) and (3) (intro.) made under s. 13.93 (2m) (b) 7., Stats., Register, April, 1992, No. 436; am. (3) (a) 4. a., Register, November, 1993, No. 455, eff. 2-1-94; correction in (3) (a) 4. a. and (4) (intro.) made under s. 13.93 (2m) (b) 7., Stats., Register, July, 1999, No. 523.

Ins 3.32 Ins 3.32 Title insurance; prohibited practices.

Ins 3.32(1) (1) Purpose. This rule implements and interprets s. 601.01 (3), Stats., and ch. 628, Stats., for the purpose of prohibiting unfair practices in the transaction of the business of title insurance.

Ins 3.32(2) (2) Scope. This section applies to all title insurers and title insurance agents.

Ins 3.32(3) (3) Definitions. In this section:

Ins 3.32(3)(a) (a) “Affiliate” has the meaning provided under s. 600.03 (1), Stats.

Ins 3.32(3)(am) (am) “Agent” has the meaning provided under s. 600.03 (1r), Stats.

Ins 3.32(3)(b) (b) “Affiliate producer” means an affiliate of a producer of title insurance, but only for the 12-month period commencing after June 30, 1987, and after the end of any quarter calendar year in which the affiliate’s gross revenue from operation in this state from title insurance directly or indirectly referred by affiliated producers of title insurance exceeds 40% of the affiliate’s gross revenue from operations in this state for title insurance in the previous quarter calendar year. However, if the previous quarter calendar year commences prior to July 1, 1988, the percentage is 80%; and if it commences prior to July 1, 1989, the percentage is 60%. “Affiliate producer” does not include a person who is affiliated with producers of title insurance who are all attorneys if the affiliate examines the title for each title insurance policy it issues.

Ins 3.32(3)(bm) (bm) “Control” has the meaning provided under s. 600.03 (13), Stats.

Ins 3.32(3)(c) (c) “Producer of title insurance” means any of the following, other than a title insurer, who order or influence, directly or indirectly, the ordering of title insurance and related services:

Ins 3.32(3)(c)1. 1. Any owner or prospective owner of real or personal property or any interest therein;

Ins 3.32(3)(c)2. 2. Any lender or prospective lender in a transaction involving an obligation secured or to be secured either in whole or in part by real or personal property or any interest therein; and

Ins 3.32(3)(c)3. 3. Any agent, representative, attorney or employee of any owner or prospective owner or of any lender or prospective lender.

Ins 3.32(3)(c)4. 4. An affiliate producer.

Ins 3.32(3)(cm) (cm) “Supplementary rate information” has the meaning provided under s. 625.02 (3), Stats.

Ins 3.32(3)(d) (d) “Title insurance rates” means all charges made by a title insurer in connection with the issuance of a title insurance policy or a commitment to issue a title insurance policy and includes, but is not limited to, search and examination charges.

Ins 3.32(3)(e) (e) “Title insurer” means all insurance companies authorized to write title insurance as defined by s. Ins 6.75 (2) (h) and their affiliates, and includes all officers, employees and representatives of the insurance companies or their affiliates.

Ins 3.32(4) (4) Prohibited practices. No title insurer or agent of a title insurer may engage in any of the following practices:

Ins 3.32(4)(a) (a) Charging an amount for a title insurance policy or commitment for a title insurance policy other than the amount developed by application of the appropriate title insurance rate developed from the rates and supplementary rate information on file with the commissioner for use by the title insurer.

Ins 3.32(4)(b) (b) Waiving, or offering to waive, all or any part of the applicable title insurance rate or premium developed by proper application of the appropriate title insurance rate developed from the rates and supplementary rate information on file with the commissioner.

Ins 3.32(4)(c) (c) Charging a reduced title insurance rate under a so-called “take-off” or subdivision policy when the property involved is ineligible for such reduced rate.

Ins 3.32(4)(d) (d) Charging a reduced title insurance rate under a so-called “take-off” or subdivision policy when such rate is not applicable in the particular transaction because the volume required to qualify for such reduced rate includes ineligible property.

Ins 3.32(4)(e) (e) Paying or offering to pay the cancellation fee, the fee for a preliminary title report or other fee on behalf of any producer of title insurance after inducing the person to cancel an order with another title insurer.

Ins 3.32(4)(f) (f) Making or guaranteeing, or offering to make or guarantee, directly or indirectly, any loan to any producer of title insurance regardless of the terms of the note or guarantee. This prohibition is not applicable to customary business collection procedures, claims settlement and salvage activities and other business activities totally unrelated to the solicitation of business for which a charge is made.

Ins 3.32(4)(g) (g) Providing or offering to provide, directly or indirectly, a “compensating balance” or deposit in a lending institution either for the express or implied purpose of influencing the extension of credit by the lending institution to any producer of title insurance, or for the express or implied purpose of influencing the placement or channeling of title insurance business by the lending institution. This paragraph does not prohibit the maintenance by a title insurer or agent of demand deposits or escrow deposits which are reasonably necessary for use in the ordinary course of the business of the title insurer or agent.

Ins 3.32(4)(h) (h) Paying or offering to pay the fees or charges of an outside professional, including but not limited to, an attorney, engineer, appraiser, or surveyor, whose services are required by any producer of title insurance to structure or complete a particular transaction.

Ins 3.32(4)(i) (i) Paying or offering to pay all or part of the salary of an employee of a producer of title insurance.

Ins 3.32(4)(j) (j) Paying or offering to pay a fee to a producer of title insurance for services unless the fee bears a reasonable relation to the services performed. The determination of whether a fee bears a reasonable relation to the services performed means a recognition of time and effort spent, risk and expenses incurred, and an allowance for a reasonable level of profit. After June 30, 1987, for purposes of this paragraph, a payment determined by applying a percentage amount or formula to the premium paid for title insurance is presumed, unless rebutted, not to bear a reasonable relation to services performed. The presumption may be rebutted in a particular case by satisfying the commissioner that the service to be performed and the compensation to be received, with recognition of time and effort spent and risk and expenses incurred, are substantially comparable to the services performed and compensation received by agents, or to the services performed by underwriters, in this state who are not producers of title insurance.

Ins 3.32(4)(k) (k) Paying or offering to pay for services by a producer of title insurance if the services are required to be performed by the person in his or her capacity as a real estate or mortgage broker or salesperson or agent.

Ins 3.32(4)(L) (L) Furnishing or offering to furnish, or paying or offering to pay for, furniture, office supplies, telephones, equipment or automobiles to a producer of title insurance, or paying for, or offering to pay for, any portion of the cost of renting, leasing, operating or maintaining any of these items. Marketing and title insurance promotional items clearly of an advertising nature of token or nominal value, or supplies such as title insurance application blanks and related forms are prohibited under this paragraph if they are made available to all producers of title insurance on the same terms and conditions.

Ins 3.32(4)(m) (m) Paying for, furnishing, or waiving, or offering to pay for, furnish, or waive, all or any part of the rent for space occupied by a producer of title insurance.

Ins 3.32(4)(n) (n) Renting or offering to rent space from a producer of title insurance, at a rent which is excessive when compared with rents for comparable space in the geographic area, or paying or offering to pay, rent based in whole or in part on the volume of business generated by a producer of title insurance except for a bona fide percentage lease based on the total volume of receipts of the title insurer when the services of that title insurer are offered from that location to the public generally.

Ins 3.32(4)(o) (o) Paying or offering to pay for gifts, vacations, business trips, convention expenses, travel expenses, membership fees, registration fees, lodging or meals on behalf of a producer of title insurance, directly or indirectly, or supplying letters of credit, credit cards or any such benefits. This paragraph does not preclude reasonable, moderate and customary business entertainment and trade association activities and expense incurred and recorded by the title insurer or agent in the course of marketing its products and services.

Ins 3.32(4)(p) (p) Paying or offering to pay money, prizes or other things of value to, or on behalf of, a producer of title insurance in a contest or promotional endeavor. This paragraph does not apply to offers or payments to trade associations or charitable or other functions where the thing of value is a contribution or donation rather than a business solicitation.

Ins 3.32(4)(q) (q) Paying or offering to pay for advertising concerning the title insurer or agent in material distributed or promoted by a producer of title insurance, unless the payment is reasonable compensation for the advertising, is not greater than the amount charged for comparable advertising and any title insurer is permitted to advertise in the material on the same terms and conditions.

Ins 3.32(4)(r) (r) Paying for or furnishing, or offering to pay for or furnish any brochures, billboards, or advertisements of a producer of title insurance, products or services appearing in newspapers, on the radio, or on television, or other advertising or promotional material published or distributed by, or on behalf of, a producer of title insurance.

Ins 3.32(5) (5) Referral of title insurance applications. For the purpose of sub. (3) (b), an application or order for title insurance is presumed to be referred to an agent by an affiliate producer of title insurance if the affiliated producer of title insurance acts as a broker, agent, lender, representative or attorney in the transaction which results in the application or order and the application was not referred to the affiliate producer by an unaffiliated producer of title insurance.

Ins 3.32 History History: Cr. Register, December, 1975, No. 240, eff. 1-1-76; emerg. am. (1), (2) and (3) (a), eff. 6-22-76; am. (1) (2), (3) (a) and (4) (o), Register, September, 1976, No. 249, eff. 10-1-76; am. (2) and (3) (a), Register, March, 1979, No. 279, eff. 4-1-79; am. (2), (3) (c) (intro.), (d), (4) (intro.), (e) to (p) and (r), renum. (3) (a) and (e) to be (3) (e) and (cm) and am., cr. (3) (intro.), (a), (am), (bm) and (c) 4., r. and recr. (3) (b), (4) (q) and (5), Register, November, 1986, No. 371, eff. 12-1-86; emerg. am. (4) (j), eff. 7-5-88; am. (4) (j), Register, October, 1988, No. 396, eff. 1-1-89; correction in (5) made under s. 13.93 (2m) (b) 7., Stats., Register December 2002 No. 564.

Ins 3.33 Ins 3.33 Individual uniform application for health insurance.

Ins 3.33(1) (1) Definitions. For purposes of this section:

Ins 3.33(1)(a) (a) “Individual major medical health insurance policy” means a comprehensive health care plan offered by an insurer authorized to write individual health or disability insurance for an individual or family. Individual major medical health insurance policies excludes limited-scope dental and vision policies, specified disease policies, short-term medical, hospital indemnity, and other limited-benefit individual insurance products and policies issued by an association plan under a group policy that may be underwritten on an individual basis.

Ins 3.33(1)(b) (b) “Individual uniform application” means the uniform questions and format for applications that are to be used by insurers offering individual major medical health insurance policies or certificates, including an individual major medical health insurance coverage provided through an association as individual coverage and underwritten on an individual basis and issued to individuals or families, as it appears as form OCI 26-503 in Appendix 1.

Ins 3.33(2) (2) Application format and requirements.

Ins 3.33(2)(a) (a) In accordance with s. 601.41 (10), Stats., insurers offering individual major medical health insurance policies or certificates must use the questions in the same format as in form OCI 26-503 contained in Appendix 1 as the individual uniform application. The contents of the individual uniform application must not vary, except as permitted in sub. (3) (b), from the text or format including bold character, line spacing, the use of boxes around text and must use a type size of at least 10 points.

Ins 3.33 Note Note: A copy of the individual uniform application form OCI 26-503 (c. 06/2010), required in par. (a), may be obtained at no cost from the Office of the Commissioner of Insurance, P.O. Box 7873, Madison, WI 53707-7873, or at the Office’s web address: oci.wi.gov.

Ins 3.33(2)(b) (b) Insurers offering individual major medical health insurance policies or certificates must implement procedures and policies necessary to implement and utilize the individual uniform application.

Ins 3.33(2)(c) (c) Insurers offering individual major medical health insurance policies or certificates must treat and accept a paper copy of the individual major medical health insurance application as an original provided the application is received by the insurer within 45 days from the date the application form was originally signed.

Ins 3.33(3) (3) Web-based applications.

Ins 3.33(3)(a) (a) Insurers offering individual major medical health insurance policies or certificates that permit applicants to complete the application through the insurer’s web site may not automatically populate or fill in answers to health questions on the application. An applicant shall answer each question. Insurers may change the order of questions but may not alter the content of any question from the individual uniform application. Insurers must separately request that the applicant respond to questions or information identified in sub. (5). Insurers must send a paper copy of the completed application to the applicant. The paper copy of the completed application must be in the same format as appears in form OCI 26-503 as contained in Appendix 1 and comply with sub. (6).

Ins 3.33(3)(b) (b) If the insurer requires additional or clarifying information related to a response provided on the individual uniform application, an insurer may ask those questions as part of gathering the information contained in sub. (5) or during a separate contact. Insurers must not gather information unrelated to responses requested on the individual uniform application. If an applicant discloses information that is not requested on the individual uniform application, an insurer must not use that information for purposes of underwriting or making a rescission or reformation decision.

Ins 3.33(4) (4) Telephonic applications.