Chapter Ins 6

Ins 6.66 History History: Cr. Register, March, 1979, No. 279, eff. 4-1-79; am. (4) (d), Register, May, 1979, No. 281, eff. 6-1-79; am. (1), (2) (intro.) and (3), r. (2) (a) and (4), renum. (2) (b), to (d) to be (2) (a) to (c) and am., Register, September, 1982, No. 321, eff. 10-1-82; renum. (1) to (3) and (7) to be (2) to (4) and (6) and am. (6), cr. (1), r. (6), Register, August, 1988, No. 392, eff. 9-1-88.

Ins 6.67 Ins 6.67 Unfair discrimination in life and disability insurance.

Ins 6.67(1) (1) Purpose. The purpose of this rule is to identify specific acts or practices in life and disability insurance found to be unfairly discriminatory under s. 628.34 (3) (b), Stats.

Ins 6.67 Note Note: The need for a rule has arisen because of questions as to whether life and disability insurers are in all cases fairly “charging different premiums or offering different terms of coverage except on the basis of classifications related to the nature and degree of the risk covered.” (s. 628.34 (3), Stats.) The main purpose of the rule is to make clear that life and disability insurers cannot classify individuals arbitrarily—without a rational basis for each decision.

Ins 6.67(2) (2) Applicability and scope. This rule shall apply to all life and disability insurance policies delivered or issued for delivery in Wisconsin on or after January 1, 1980 and to all existing life and disability group, blanket and franchise insurance policies subject to Wisconsin insurance law which are amended or renewed on or after January 1, 1980.

Ins 6.67(2m) (2m) Definitions. In this section:

Ins 6.67(2m)(a) (a) “Disability insurance” has the meaning given under s. Ins 6.75 (1) (c).

Ins 6.67(2m)(b) (b) “Territorial classification” means an arrangement of persons into categories based upon geographic characteristics other than zip code.

Ins 6.67(3) (3) Specific examples. The following are specific examples of unfair discrimination under s. 628.34 (3) (b), Stats.

Ins 6.67(3)(a) (a) Refusing to insure, or refusing to continue to insure, or limiting the amount, extent or kind of coverage available to an individual or charging a different rate for the same coverage solely because of physical or mental impairment, other than blindness or partial blindness, except where the refusal, limitation or rate differential is based on sound actuarial principles or is related to actual or reasonably anticipated experience.

Ins 6.67(3)(b) (b) Except as provided in subds. 1. and 2., refusing to insure, or refusing to continue to insure, or limiting the amount, extent or kind of coverage available to an individual, or charging an individual a different rate for the same coverage solely because of blindness or partial blindness.

Ins 6.67(3)(b)1. 1. Individuals who are blind or partially blind may be subject to standards based on sound actuarial principles or actual or reasonably anticipated experience with respect to any other condition they may have, including a condition which is the cause of the blindness or partial blindness.

Ins 6.67(3)(b)2. 2. Refusal to insure under sub. (3) includes a denial of disability insurance on the basis that the policy presumes disability if the insured loses his or her eyesight. However, an insurer may exclude from coverage, or apply a waiting period, to coverage of treatment of blindness or partial blindness if that condition exists at the time the policy is issued.

Ins 6.67(4) (4) Insurer responsibility. An insurer has the burden of proof to show that an act, standard or practice of the insurer is based on sound actuarial principles or is related to actual or reasonably anticipated experience in any action to enforce s. 628.34 (3) (b), Stats. For the anticipated experience to be reasonable it must be based on medical or actuarial research on morbidity or mortality.

Ins 6.67(5) (5) Sexual orientation.

Ins 6.67(5)(a) (a) An insurer may not use sexual orientation in the underwriting process or in the determination of insurability, premium, terms of coverage, or nonrenewal.

Ins 6.67(5)(b) (b) No insurer may include any inquiry about the applicant’s or insured’s sexual orientation in an application for disability or life insurance coverage or directly or indirectly investigate in connection with an application for disability or life insurance coverage the applicant’s or insured’s sexual orientation.

Ins 6.67(5)(c) (c) No insurer may use the marital status, occupation, gender, medical history, beneficiary designation, or the zip code or territorial classification of an applicant or insured or any other factor to establish, or aid in establishing, the applicant’s or insured’s sexual orientation.

Ins 6.67 History History: Cr. Register, December, 1979, No. 288, eff. 1-1-80; r. (4) under s. 13.93 (2m) (b) 16., Stats., Register, December, 1984, No. 348; am. (1), r. and recr. (3), cr. (4), Register, April, 1987, No. 376, eff. 5-1-87; correction in (2), (3) (b) 2. and (4) made under s. 13.93 (2m) (b) 14., 12. and 1., Stats., Register, April, 1987, No. 376; cr. (5), Register, May, 1987, No. 377, eff. 6-1-87.

Ins 6.68 Ins 6.68 Unfair discrimination based on geographic location or age of risk.

Ins 6.68(1) (1) Purpose. The purpose of this rule is to identify specific acts or practices found to be unfair trade practices that are unfairly discriminatory under s. 628.34, Stats.

Ins 6.68(2) (2) Applicability and scope. This rule shall apply to property and casualty insurance contracts delivered or issued for delivery in Wisconsin on or after the effective date of the rule.

Ins 6.68(3) (3) Specific examples of unfair trade practices under s. 628.34, Stats. The following are hereby identified as specific acts or practices which are unfairly discriminatory.

Ins 6.68(3)(a) (a) Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, cancelling or limiting the amount of insurance coverage on a property or casualty risk because of the geographic location of the risk, unless:

Ins 6.68(3)(a)1. 1. The refusal, cancellation or limitation is for a business purpose which is not a mere pretext for unfair discrimination, or

Ins 6.68(3)(a)2. 2. The refusal, cancellation or limitation is required by law or regulatory mandate.

Ins 6.68 Note Note: Paragraph (a) is intended to prohibit insurance underwriting shortcuts which unfairly label risks as poor risks because of their geographic location. A refusal, nonrenewal, cancellation or limitation of insurance coverage is prohibited if the reason for such refusal, nonrenewal, cancellation or limitation is the geographic location of the risk. An exception to this general rule is provided, however, in situations where the refusal, nonrenewal, cancellation or limitation is based upon a legitimate business need and the refusal, nonrenewal, cancellation or limitation is not a mere pretext for unfair discrimination. Examples of such situations include refusals to insure when the risk is located in areas prone to natural catastrophes, i.e., earthquakes, floods, hurricanes, and refusals to insure because the insurer already has a very high concentration of risks in a particular geographic area. It is intended that the person charged with a violation of this rule be given the burden of proof in establishing any “business purpose” exception. The burden of proving that a refusal, nonrenewal, cancellation or limitation of insurance coverage is not subterfuge for unfair discrimination should likewise fall upon the person charged with a violation of this rule.

Ins 6.68(3)(b) (b) Making or permitting any unfair discrimination between individuals or risks of the same class and of essentially the same hazards by refusing to issue, refusing to renew, cancelling or limiting the amount of insurance coverage on a residential property risk of 4 units or less, or the personal property contained therein, because of the age of the residential property, unless:

Ins 6.68(3)(b)1. 1. The refusal, cancellation or limitation is for a business purpose which is not a mere pretext for unfair discrimination, or

Ins 6.68(3)(b)2. 2. The refusal, cancellation or limitation is required by law or regulatory mandate.

Ins 6.68(3)(c) (c) Refusing to insure a risk solely because the applicant was previously denied coverage, terminated by another insurer or had obtained coverage in a residual market.

Ins 6.68 History History: Cr. Register, September, 1979, No. 285, eff. 10-1-79; r. (4) under s. 13.93 (2m) (b) 16., Stats., Register, December, 1984, No. 348.

Ins 6.70 Ins 6.70 Combinations of lines and classes of insurance. This rule defines and delimits the permissible combinations of the lines and classes of insurance defined and delimited by s. Ins 6.75 which may be written in the same policy. Except as provided in this rule, lines and classes of insurance may not be combined in the same policy.

Ins 6.70(1) (1) Combination with separate premium charges. Subject to s. Ins 2.05, any combination of the lines and classes of insurance defined and delimited by s. Ins 6.75, except for those described in s. Ins 6.75 (2) (h), (i) and (k), may be written in the same policy if a statement of separate premium charge is shown on the declarations page or on the face of the policy or in a separate written statement furnished to the policyholder. The requirement for a statement of separate premium charge does not prohibit such charges equitably reflecting differences in expected losses or expenses as contemplated by s. 625.11 (4), Stats.

Ins 6.70(2) (2) Combination with or without separate premium charges. Any combination of the lines and classes of insurance defined and delimited by s. Ins 6.75 (2) (a), (b), (d), (e), (f) and (j) may be written in the same policy with or without showing separate premium charges.

Ins 6.70 History History: Emerg. cr. eff. 6-22-76; cr. Register, September, 1976, No. 249, eff. 10-1-76; r. and recr. Register, August, 1977, No. 260, eff. 9-1-77.

Ins 6.72 Ins 6.72 Risk limitations.

Ins 6.72(1) (1) Except as otherwise provided by law or by order of the commissioner, no single risk assumed by any insurance company shall exceed 10% of surplus as regards policyholders, except that in an assessable mutual company it may be a greater amount not exceeding 3 times the average policy or 1/4 of 1% of the insurance in force, whichever is the greater. Upon the business mentioned in s. Ins 6.75 (2) (h), the maximum single risk may be a greater amount not exceeding 50% of the admitted assets. Any reinsurance taking effect simultaneously with the policy shall be deducted from the original risk assumed in determining compliance with this subsection.

Ins 6.72(2) (2) In a mutual company organized for the insurance or guaranty of depositors or deposits in banks or trust companies, the maximum single risk may be fixed at a higher amount by the bylaws. Any such company may effect reinsurance in any authorized or unauthorized company that complies with s. 627.23, Stats. Insurance in any unauthorized company shall be reported annually and the same taxes paid upon the premiums as are paid by authorized companies.

Ins 6.72 History History: Emerg. cr. eff. 6-22-76; cr. Register, September, 1976, No. 249, eff. 10-1-76; r. and recr. Register, August, 1981, No. 308, eff. 9-1-81; am. (1), Register, January, 1992, No. 433, eff. 2-1-92.

Ins 6.74 Ins 6.74 Suretyship and risk limitations of surety obligations.

Ins 6.74(1) (1) Purpose. The purpose of this rule is to establish minimum requirements for the transaction of surety obligations.

Ins 6.74(2) (2) Scope. This rule shall apply to the limitations on bond penal amounts imposed on insurers engaged in the business of suretyship. This section shall not apply to insurers issuing only that type of surety insurance known as municipal bond insurance.

Ins 6.74(3) (3) Definitions.

Ins 6.74(3)(a) (a) For purposes of this rule suretyship shall be construed to be insurance.

Ins 6.74(3)(b) (b) An insurance corporation authorized to write fidelity insurance may guarantee the fidelity of, or become the surety for: 1. persons holding positions of public or private trust; 2. the performance of any act, duty or obligation or the refraining from any act; 3. the performance of any contract; 4. bonds of insurance companies required by law as a condition of transacting business; 5. indemnifying banks, brokers and other financial or moneyed associations or corporations, against the loss of documents and money, except against loss caused by marine risks or risks of transportation or navigation; 6. indemnifying any federal land bank against loss by reason of defective title to or incumbrances on real property on which such bank may have a mortgage.

Ins 6.74(3)(c) (c) As used in this rule any one surety risk shall be equivalent to the penal amount established on the surety bond.

Ins 6.74(4) (4) Risk limitations on surety obligations.

Ins 6.74(4)(a) (a) No corporation shall execute any suretyship obligation or expose itself to any loss on any one surety bond in an amount in excess of one-tenth of its capital and surplus as reported in its most recent filed annual statement, unless it shall be protected in the excess of that amount:

Ins 6.74(4)(a)1. 1. By reinsurance in a corporation licensed to transact surety business where the risk is located; or

Ins 6.74(4)(a)2. 2. By the cosuretyship of a surety corporation likewise licensed.

Ins 6.74(4)(b) (b) A surety corporation may execute transportation or warehousing bonds for the United States internal revenue taxes to an amount equal to 5 times the underwriting limitation specified in par. (a) of this rule.

Ins 6.74(4)(c) (c) No corporation writing surety shall guarantee the deposits of any single financial institution in an aggregate amount in excess of the underwriting limitation set forth in par. (a) unless it shall be protected in excess of that amount by reinsurance or cosuretyship as specified in par. (a).

Ins 6.74(4)(d) (d) A surety corporation shall not issue multiple bonds on a single contract (splitting bonds) and a surety corporation’s liability on a single contract shall not be in excess of the limitations established in par. (a).

Ins 6.74(4)(e) (e) No domestic corporation writing surety business shall execute, reinsure or be cosurety on a suretyship obligation in favor of the U.S. governments, or any other obligee, whereby a surety issues a bond to an obligee for a penal amount which is 10%, or an amount substantially less than, the total contract amount, unless the surety reinsures or obtains a cosurety for at least 50% of the bond penal amount with a corporation licensed to transact surety business where the risk is located. This is tantamount to a maximum exposure for any single loss on any one surety bond of this type of not more than one-twentieth of a domestic surety corporation’s capital and surplus.

Ins 6.74 History History: Emerg. cr. eff. 6-22-76; cr. Register, September, 1976, No. 249, eff. 10-1-76; emerg. am. (2), eff. 6-5-84; am. (2) Register, October, 1984, No. 346, eff. 11-1-84.

Ins 6.75 Ins 6.75 Classifications of insurance. This rule defines and delimits lines and classes of insurance for any purposes within the commissioner’s regulatory power unless the language or context of a statute or rule otherwise provides.

Ins 6.75(1) (1) Life and disability insurance. Life and disability insurance includes the following:

Ins 6.75(1)(a) (a) Life insurance and annuities — except insurance or annuities included in par. (b), insurance or annuities upon the lives of persons, and annuity contracts without life contingencies, as provided in s. 632.66, Stats.;

Ins 6.75(1)(a)1. 1. Credit life insurance — insurance on the lives of borrowers or purchasers of goods in connection with specific loans or credit transactions when all or a portion of the insurance is payable to the creditor to reduce or extinguish the debt;

Ins 6.75(1)(b) (b) Variable life insurance and variable annuities — insurance or annuities which provide for immediate or future benefits, the cost of which is funded and the payment of which is computed on the basis of experience factors derived from one or more segregated investments accounts established and managed as provided in ss. 611.24, 611.25, and 620.02, Stats.;

Ins 6.75(1)(c) (c) Disability insurance — insurance covering injury or death of persons caused by accident, or insurance covering health of persons;

Ins 6.75(1)(c)1. 1. Credit accident and sickness insurance — insurance in connection with specific loans or credit transactions against loss of time of debtors resulting from accident or sickness when all or a portion of the insurance is payable to the creditor to reduce or extinguish the debt;

Ins 6.75(2) (2) Property and casualty insurance. Property and casualty includes all lines or classes of insurance which may lawfully be the subject of insurance other than those classes defined in sub. (1) (a) or (b), including but not limited to the following:

Ins 6.75(2)(a) (a) Fire, inland marine and other property insurance — insurance against loss or damage to real and personal property, while stationary or in transit, arising out of fire or any other peril but not including any insurance defined in any other paragraph of this rule;

Ins 6.75(2)(b) (b) Ocean marine insurance — insurance against the perils of seas and other related perils usually insured against by ocean marine insurance.

Ins 6.75(2)(c) (c) Disability insurance — insurance covering injury or death of persons caused by accident, or insurance covering health of persons;

Ins 6.75(2)(c)1. 1. Credit accident and sickness insurance — insurance in connection with specific loans or credit transactions against loss of time of debtors resulting from accident or sickness when all or a portion of the insurance is payable to the creditor to reduce or extinguish the debt;

Ins 6.75(2)(d) (d) Liability and incidental medical expense (other than automobile) insurance — insurance against liability for damages to persons or property, and incidental insurance for medical expenses when written in the same policy, but not including any liability insurance defined in other paragraphs of this rule;

Ins 6.75(2)(e) (e) Automobile insurance — insurance against loss, medical or other expense, and liability for damages arising out of the ownership, maintenance or use of and automobile or other motor vehicle;

Ins 6.75(2)(f) (f) Fidelity insurance — insurance against loss arising out of the acts or defaults of persons in positions of trust, excluding commercial bail bond insurance except as a surety under s. 345.61, Stats.

Ins 6.75(2)(g) (g) Surety insurance — payment for loss arising out of failure to perform contracts or obligations, excluding commercial bail bond insurance except as a surety under s. 345.61, Stats.

Ins 6.75(2)(h) (h) Title insurance — insurance against loss by reason of defects in titles to property;

Ins 6.75(2)(i) (i) Mortgage guaranty insurance — insurance against loss arising from failure of:

Ins 6.75(2)(i)1. 1. Debtors to meet financial obligations to creditors under evidences of indebtedness which are secured by either:

Ins 6.75(2)(i)1.a. a. A first lien or charge on residential real estate designed for occupancy by not more than four families; or

Ins 6.75(2)(i)1.b. b. i. A first lien or charge on residential real estate designed for occupancy by 5 or more families; or

ii. A first lien or charge on real estate designed for industrial or commercial purposes; or

Ins 6.75(2)(i)1.c. c. A stock or membership certificate issued to the tenant stockholders or resident members of a completed fee simple cooperative housing corporation as defined in 26 U.S.C. s. 216 (b) (1); or

Ins 6.75(2)(i)1.d. d. A junior lien or charge on residential real estate.

Ins 6.75(2)(i)2. 2. Lessees to make payment of rentals under leases of real estate in which the lease extends for 3 years or longer.

Ins 6.75(2)(j) (j) Credit insurance — insurance against loss arising from failure of debtors to meet financial obligations to creditors, except as defined in par. (i) 1. a., b., c., and 2.;

Ins 6.75(2)(k) (k) Worker’s compensation insurance — insurance against obligations under ch. 102, Stats., or any similar law, and including employers’ liability insurance when written in the same policy;

Ins 6.75(2)(L) (L) Legal expense insurance — insurance against expense for the professional services of licensed lawyers;

Ins 6.75(2)(m) (m) Credit unemployment insurance — insurance against loss of income of debtors resulting from either labor disputes or involuntary unemployment;

Ins 6.75(2)(n) (n) Miscellaneous — insurance against any other property or casualty insurance risk which lawfully may be the subject of insurance not specifically defined in any other paragraph of this rule;

Ins 6.75(2)(o) (o) Aircraft insurance — insurance against loss, medical or other expense, and liability for damages arising out of the ownership, maintenance or use of any aircraft.

Ins 6.75 History History: Cr. Register, August, 1977, No. 260, eff. 9-1-77; am. (2) (f) and (g), Register, March, 1980, No. 291, eff. 4-1-80; am. (2) (i) and (j), Register, October, 1982, No. 322, eff. 11-1-82; emerg. am. (1) (a), eff. 10-4-88, am. (1) (a) (intro.), Register, December, 1988, No. 396, eff. 1-1-89; CR 01-074: am. (2) (e) and (n), cr. (2) (o), Register January 2002 No. 553, eff. 2-1-02.

Ins 6.76 Ins 6.76 Grounds for disapproval of and authorized clauses for fire, inland marine and other property insurance forms.