Chapter 618

618.41(13)(a)3. 3. The insurer has capital and surplus of no less than $15,000,000.

618.41(13)(a)4. 4. If the insurer applying for a certificate under this subsection has issued insurance policies in this state as a domestic insurer, the insurer includes in its application a plan for the insurer’s proposed treatment of those policies in compliance with chs. 600 to 655.

618.41(13)(b) (b) A domestic surplus lines insurer is subject to chs. 600 to 655 as follows:

618.41(13)(b)1. 1. A domestic surplus lines insurer is subject to all requirements of this subchapter and the requirements that apply to a domestic insurer organized under ch. 611.

618.41(13)(b)2. 2. Notwithstanding subd. 1., a surplus lines insurance policy issued in this state by a domestic surplus lines insurer is only subject to the requirements of this section and the rules promulgated under this section and shall be exempt from all statutory requirements, including requirements relating to insurance rating plans, policy forms, policy cancellation and nonrenewal, and premium charged to the insured, in the same manner as a surplus lines insurance policy issued by a nondomestic insurer.

618.41(13)(b)3. 3. Nothing in this section shall be construed to affect the application of ch. 646 to insurance policies that were issued by a domestic insurer prior to that domestic insurer obtaining a certificate to do business as a domestic surplus lines insurer under this subsection.

618.41(13)(c) (c) A domestic surplus lines insurer shall be considered a nonadmitted insurer as defined in 15 USC 8206 with respect to surplus lines insurance the domestic surplus lines insurer issues in this state.

618.41(13)(d) (d) Insurance transacted by a domestic surplus lines insurer under this section is subject to taxation as specified under s. 618.43.

618.41(13)(e) (e) A surplus lines insurance policy issued in this state by a domestic surplus lines insurer under this section is not subject to the Wisconsin insurance security fund under ch. 646.

618.41(13)(f) (f) No domestic surplus lines insurer may offer insurance other than under this section.

618.41(13)(g) (g) A domestic surplus lines insurer, after obtaining a certificate to do business as a domestic surplus lines insurer under this section, may not apply to the commissioner to issue policies other than as a domestic surplus lines insurer.

618.41 History History: 1971 c. 260; 1975 c. 371 ss. 45, 50; 1979 c. 89; 1979 c. 102 ss. 147, 236 (6), (13), (21), 237; 1981 c. 20 s. 2202 (26) (a); 1985 a. 29, 332; 1987 a. 247; 1989 a. 187 s. 29; 2009 a. 177; 2011 a. 224; 2017 a. 16.

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).

618.41 Annotation Surplus-lines insurance must be “placed” with an insurer through an agent or broker who holds a Wisconsin surplus-lines license. However, no provision requires a person to hold a surplus-lines license to negotiate a policy or perform the underwriting unless the policy is for a risk purchasing group under sub. (7m). In addition, a broker can perform the role under sub. (8) with respect to a given insurer and then allow others to place policies with that insurer under the broker’s license. Midwest Commercial Funding, LLC v. Cincinnati Specialty Underwriters Insurance Co., 399 F. Supp. 3d 736 (2019).

618.41 Annotation The proposal requirement under sub. (4) is distinct from the stamping requirement under sub. (9) (a), and each disclosure must be made at a different time. The proposal letter must be furnished to the policyholder promptly, which means before the policy has been procured, for it informs the insured that the agent or broker intends to procure the policy on a surplus-lines basis and instructs the insured to contact the agent or broker if the proposal is not satisfactory. In contrast, the information required to be stamped on the policy must be disclosed at the time the policy is procured and delivered. Midwest Commercial Funding, LLC v. Cincinnati Specialty Underwriters Insurance Co., 399 F. Supp. 3d 736 (2019).

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)(a) (a) The insurer’s deficiencies, if any, under s. 618.41 (8) (a) 1.

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)(a) (a) The information and notice required under s. 618.41 (9).

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(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; 2019 a. 66.

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.

618.42(3) (3) Prohibited placement with unauthorized insurers.

618.42(3)(a) (a) Sales of personal property. Any insurance on personal property sold on the installment plan or under a conditional sales contract or equivalent security agreement under chs. 401 to 411 for which a charge is made to the buyer as a part of the consideration in the agreement of sale shall be placed with an insurer authorized to do business in this state.

618.42(3)(c) (c) Compulsory insurance. Whenever the law of this state requires a person to purchase insurance on risks in this state, the person shall obtain it from an insurer authorized to do business in this state, or under s. 618.41.

618.42 History History: 1971 c. 260; 1979 c. 89; 1979 c. 102 s. 236 (5), (8); 1981 c. 314; 1989 a. 187 s. 29; 1991 a. 148, 304, 315; 1993 a. 213.

618.42 Cross-reference Cross-reference: See also ss. Ins 6.17 and 6.19, Wis. adm. code.

618.43 618.43 Taxation of insurance written by unauthorized insurers.

618.43(1) (1) Business subject to taxation.

618.43(1)(a) (a) Subject to par. (bc), insurers, agents, brokers, and policyholders are liable, as provided in sub. (2), for a premium tax of 3 percent of gross premiums charged for insurance, excluding annuities, if any of the following is satisfied:

618.43(1)(a)1. 1. The insurance is transacted under s. 618.41 (1) or 618.42.

618.43(1)(a)2. 2. The insurance is transacted by an unauthorized insurer that is a risk retention group, including a foreign risk retention group authorized to provide health care liability insurance under s. 655.23 (3) (am) that has not been issued a certificate of authority under s. 618.12.

618.43(1)(a)3. 3. The insurance is transacted by an unauthorized insurer for a risk purchasing group.

618.43(1)(bc) (bc) Notwithstanding any other provision of this section, with respect to premiums charged on policies issued or renewed on or after July 21, 2011, for insurance to which par. (a) applies, the tax under par. (a) is required only if the home state of the insured is this state, and it shall be levied on the entire gross premium charged, including premium attributable to those portions of the risk located outside of this state.

618.43(1)(c) (c) If the tax required under this subsection is not paid within the time prescribed under sub. (3), the commissioner shall impose a penalty of 25 percent, plus one percent per month from default until payment.

618.43(1)(d) (d) Any insurance business transacted in violation of the law is subject to a premium tax of 5 percent of gross premiums charged for the insurance.

618.43(2) (2) Payment of tax. The insurance agent or broker and the policyholder are jointly and severally liable for the payment of the tax required under sub. (1) on business written under s. 618.41 (1), and the insurer, insurance agent or broker and policyholder are jointly and severally liable for the payment of any other tax required under sub. (1). The tax shall ultimately be paid by the policyholder. Absorption of the tax by either the agent or broker or the insurer is an unfair method of competition under s. 628.34 (2) (b).

618.43(3) (3) Accounting and reporting. The commissioner shall by rule prescribe accounting and reporting forms and procedures for insurers, agents or brokers and policyholders for the purpose of determining the amount of the taxes owed, and the manner and time of payment.

618.43(4) (4) Applicability of tax law. Section 76.68 is applicable to any tax payable under this section.

618.43(5) (5) Exclusive nature. The tax under this section is in lieu of all other taxes on insurance business and of fire department dues.

618.43(6) (6) Allocation of tax. With respect to gross premiums charged on policies issued or renewed before July 21, 2011, if a policy covers risks that are only partially located in this state, the premium shall be reasonably allocated among the states on the basis of risk locations in computing the tax, except that all premiums received in this state or charged on policies written or negotiated in this state shall be taxable in full under this section, with a credit for any tax actually paid in another state to the extent of a reasonable allocation on the basis of risk locations.

618.43(7) (7) Taxes as trust funds. All premium taxes collected under this section by an agent or broker or by an insurer are the property of this state, to be held in trust for the state.

618.43(8) (8) Taxes as preferred claims. If the property of any agent or broker is seized upon any process in any court in this state, or when his or her business is suspended by the action of creditors or put into the hands of any assignee, receiver or trustee, all taxes and penalties due the state from him or her under this section are preferred claims and the state is to that extent a preferred creditor.

618.43 History History: 1971 c. 260; 1975 c. 371 s. 50; 1979 c. 102 ss. 148, 237; 1987 a. 247; 2001 a. 65; 2011 a. 224; 2015 a. 55.

618.43 Cross-reference Cross-reference: See also ss. Ins 6.17 and 6.19, Wis. adm. code.

618.44 618.44 Effect of illegal contracts. An insurance contract entered into in violation of this chapter is unenforceable by, but enforceable against, the insurer. The terms of the contract are governed by chs. 600 to 646 and 655 and rules promulgated thereunder. If the insurer does not pay a claim or loss payable under the contract, any person who assisted in the procurement of the contract is liable to the insured for the full amount of the claim or loss, if the person knew or should have known the contract was illegal.

618.44 History History: 1971 c. 260; 1979 c. 89; 1979 c. 102 s. 236 (8); 1979 c. 177; 1989 a. 187 s. 29.

618.44 Annotation Nothing in the text of this section suggests that an insurer’s having been joined as a defendant prevents a plaintiff from also seeking relief from an insurance agency. What matters under the statute is whether the insurer has refused to pay a covered claim before the plaintiff files suit against the agency. Midwest Commercial Funding, LLC v. Cincinnati Specialty Underwriters Insurance Co., 271 F. Supp. 3d 1040 (2017).

618.44 Annotation An insurer “enforces” an insurance policy against the insured by collecting the policy premiums. Refusing to pay a claim is not enforcing the policy. It is the insured who seeks to enforce the policy by making a claim for benefits. When the insurer denies the claim based on a policy exclusion, it is simply defending against the insured’s claim, not prosecuting its own claim for enforcement of the contract. Midwest Commercial Funding, LLC v. Cincinnati Specialty Underwriters Insurance Co., 399 F. Supp. 3d 736 (2019).

618.45 618.45 Servicing of contracts made out of state.

618.45(1) (1) Servicing permitted. A nondomestic insurer which does not have a certificate of authority to do business in this state under s. 618.12 may in this state collect premiums and adjust losses and do all other acts reasonably incidental thereto, with respect to contracts lawfully made outside this state.

618.45(2) (2) Contract changes prohibited. Nothing in sub. (1) shall be interpreted to permit any renewal, extension, increase or other substantial change in the terms of any contract under sub. (1) unless:

618.45(2)(a) (a) It is permitted by s. 618.41; or

618.45(2)(b) (b) The contract is for life or disability insurance; or

618.45(2)(c) (c) It is permitted by a rule promulgated by the commissioner, under circumstances in which the interests of the policyholder and the public appear to be sufficiently protected.

618.45 History History: 1971 c. 260.

618.47 618.47 Defense of action by unauthorized person.

618.47(1) (1) Conditions for filing. No pleading, notice, order or process in any court action or in any administrative proceeding before the commissioner instituted against an unauthorized person under ss. 601.72 or 601.73 may be filed by or on behalf of the unauthorized person unless the person either:

618.47(1)(a) (a) Deposits with the clerk of the court in which the action or proceeding is pending, or with the commissioner in administrative proceedings before the commissioner, bond with sureties in an amount fixed by the court or the commissioner, sufficient to secure the payment of any probable final judgment or order. The court, or the commissioner in administrative proceedings before the commissioner, may make an order dispensing with a deposit or bond where the person makes a satisfactory showing that in a state of the United States he or she maintains funds or securities, in trust or otherwise, sufficient and available to satisfy any probable final judgment or order; or

618.47(1)(b) (b) Procures proper authorization to do an insurance business in this state.

618.47(2) (2) Postponement. The court in any such action or proceeding, or the commissioner in any administrative proceeding before the commissioner, may order any postponement necessary to afford the unauthorized person reasonable opportunity to comply with sub. (1).

618.47(3) (3) Exception. Subsection (1) does not prevent an unauthorized person from filing a motion to quash a writ or to set aside service on the ground that he or she has not done an insurance business in this state.

618.47 History History: 1971 c. 260; 1979 c. 102 ss. 149, 236 (5), (8).

618.48 618.48 Attorney fees. In an action against an unauthorized person upon a contract of insurance issued in violation of this chapter, if the unauthorized person fails to make payment in accordance with the contract for 30 days after the payment is due and demand is made, and it appears to the court that the refusal was without reasonable cause, the court may allow the plaintiff a reasonable attorney fee and include the fee in any judgment that may be rendered in the action. Failure of the unauthorized person to defend any such action is prima facie evidence that the failure to pay was without reasonable cause. If the unauthorized person knew or should have known that the contract was in violation of this chapter, the court may also award punitive damages.

618.48 History History: 1971 c. 260.

618.49 618.49 Investigation, disclosure and taxation of insurance contracts.

618.49(1) (1) Report on insurance. Whenever the commissioner has reason to believe that insurance has been effectuated by or for any person in this state with an unauthorized insurer, the commissioner may in writing order the person to produce for examination all insurance contracts and other documents evidencing insurance contracts and other documents evidencing insurance with both authorized and unauthorized insurers and to disclose to the commissioner the amount of insurance, name and address of each insurer, gross amount of premium and the name and address of any person who has assisted in the effectuation of the insurance.

618.49(2) (2) Uninsured property. The commissioner may order any owner of property situated in this state, other than property owned by a unit of government that maintains a public fire department and furnishes full fire protection for the property, to furnish in addition to the information furnished under sub. (1) information about amounts paid to or credited to any insurance fund or other reserve against loss or damage by fire. If the owner of the property has not insured it, the owner shall pay under s. 601.93 (2) an amount equal to 2 percent of the annual premium that would have been charged for insuring such property by authorized insurers using the rates promulgated by the rate service organization of which the state insurance fund is a member or subscriber under s. 604.04 (5), or which is designated for that purpose by the commissioner.

618.49 History History: 1971 c. 260; 1973 c. 336; 1975 c. 372 s. 41; 1975 c. 421; 1979 c. 34 s. 2102 (26) (a).

618.50 618.50 Reporting of illegal insurance.

618.50(1) (1) Adjusters’ duty to report. Every person investigating or adjusting any loss or claim on a subject of insurance in this state shall promptly report to the commissioner every insurance policy or contract connected with his or her investigation or settlement, of which he or she knows, which has been entered into illegally by any insurer not authorized to transact business in this state.

618.50(3) (3) Exceptions. This section does not apply to transactions in this state involving a policy lawfully solicited, written, and delivered outside of this state covering only subjects of insurance not resident, located or expressly to be performed in this state at the time of issuance.

618.50 History History: 1971 c. 260; 1979 c. 102; 1981 c. 38.

618.61 618.61 Reciprocal enforcement of foreign decrees.

618.61(1) (1) Definitions. In this section:

618.61(1)(a) (a) “Foreign decree” means any decree or order of a court located in a reciprocal state, including a court of the United States located therein, against any insurer authorized to do business in this state.