Chapter 628

628.49   Regulation of managing general agents, reinsurance brokers and managers and controlling producers.

SUBCHAPTER IV

COMPENSATION OF INTERMEDIARIES

628.51   Controlled business.

628.61   Sharing commissions.

628.78   Benefit plans for agents.

SUBCHAPTER V

REGULATION OF NAVIGATORS

628.90   Definitions.

628.91   Requirement of licensure or registration.

628.92   Issuance of license and registration.

628.93   Other applicable provisions.

628.95   Navigator and nonnavigator assister conduct.

628.96   Nonnavigator assisters.

628.98   Rules.

Ch. 628 Cross-reference Cross-reference: See definitions in s. 600.03.

Ch. 628 Note NOTE: Chapter 371, laws of 1975, which created this chapter, contains explanatory notes.

subch. I of ch. 628 SUBCHAPTER I

GENERAL PROVISIONS

628.01 628.01 Purposes. The purposes of this chapter are:

628.01(1) (1) To encourage improvement in the professional competence of insurance intermediaries;

628.01(2) (2) To provide maximum freedom of marketing methods for insurance, consistent with the interests of the public in this state;

628.01(3) (3) To preserve and encourage competition at the consumer level;

628.01(4) (4) To limit the adverse effects of imperfect competition on the cost of insurance; and

628.01(5) (5) To regulate insurance marketing practices in conformity with the general purposes of chs. 600 to 655.

628.01 History History: 1975 c. 371; 1979 c. 89; 1989 a. 187 s. 29.

628.02 628.02 Definitions. In chs. 600 to 655, unless the context otherwise requires:

628.02(1) (1) Insurance marketing intermediaries.

628.02(1)(a) (a) Activities constituting intermediary. Except as provided under par. (b), a person is an “intermediary” if the person does or assists another in doing any of the following:

628.02(1)(a)1. 1. Solicits, negotiates or places insurance or annuities on behalf of an insurer or a person seeking insurance or annuities; or

628.02(1)(a)2. 2. Advises other persons about insurance needs and coverages.

628.02(1)(b) (b) Exceptions. The following persons are not intermediaries:

628.02(1)(b)1. 1. A regular salaried officer, employee, or other representative of an insurer or licensed intermediary, other than a risk retention group or risk purchasing group, who devotes substantially all working time to activities other than those in par. (a), and who receives no compensation that is directly dependent upon the amount of insurance business obtained.

628.02(1)(b)2. 2. A regular salaried officer or employee of a person seeking to procure insurance, other than for members of a risk purchasing group, who receives no compensation that is directly dependent upon the amount of insurance coverage procured, with respect to such insurance.

628.02(1)(b)3. 3. A person who gives incidental advice in the normal course of a business or professional activity other than insurance consulting if neither the person nor the person’s employer receives compensation directly or indirectly on account of any insurance transaction that results from that advice.

628.02(1)(b)4. 4. A person who without special compensation performs incidental services for another at the other’s request without providing advice or technical or professional services of a kind normally provided by an intermediary.

628.02(1)(b)5. 5. A holder of a group insurance policy, or any other person involved in mass marketing, with respect to administrative activities in connection with such a policy, if he or she receives no compensation therefor beyond actual expenses, estimated on a reasonable basis.

628.02(1)(b)6. 6. A person who provides information, advice, or service for the principal purpose of reducing loss or the risk of loss.

628.02(1)(b)7. 7. A person who gives advice or assistance without compensation, direct or indirect.

628.02(1)(b)7m. 7m. A person who acts solely as an agent, as defined in s. 616.71 (1).

628.02(1)(b)8. 8. A travel retailer, as defined in s. 632.977 (1) (k), or an employee or authorized representative of a travel retailer, that offers and disseminates, as defined in s. 632.977 (1) (f), travel insurance under s. 632.977.

628.02(1)(b)9. 9. A vendor, as defined in s. 632.975 (1) (i), or an employee or authorized representative of a vendor selling or offering portable electronics insurance under s. 632.975.

628.02(1)(b)9m. 9m. A person whose activities are limited to marketing, selling, or offering for sale a warranty contract, as defined in s. Ins 15.01 (4) (d), Wis. Adm. Code, maintenance agreement, as defined in s. 616.50 (5), or service contract, as defined in s. 616.50 (11).

628.02(3) (3) Insurance broker. An intermediary is an insurance broker if the intermediary acts in the procuring of insurance on behalf of an applicant for insurance or an insured, and does not act on behalf of the insurer except by collecting premiums or performing other ministerial acts.

628.02(4) (4) Insurance agent. An intermediary is an insurance agent if the intermediary acts as an intermediary other than as a broker.

628.02(4g) (4g) Managing general agent. An intermediary is a managing general agent if the intermediary does all of the following:

628.02(4g)(a) (a) Manages all or a portion of the insurance business of an insurer.

628.02(4g)(b) (b) Adjusts claims, negotiates reinsurance for the insurer or is affiliated or associated with a person who adjusts claims or negotiates reinsurance for the insurer.

628.02(4m) (4m) Reinsurance broker. A person is a reinsurance broker if the person solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer.

628.02(4p) (4p) Reinsurance manager. A person is a reinsurance manager if the person has authority to bind, or manages, all or a portion of the assumed reinsurance business of an insurer.

628.02(5) (5) Surplus lines agent or broker. A surplus lines agent or broker is one licensed to place insurance with unauthorized insurers, under s. 628.04 (2).

628.02 History History: 1975 c. 371, 421; 1979 c. 89; 1981 c. 38, 314; 1987 a. 166, 247; 1989 a. 187 s. 29; 1991 a. 269; 2001 a. 38; 2011 a. 225, 226; 2013 a. 151; 2013 a. 165 s. 114; 2013 a. 212; 2021 a. 111.

subch. II of ch. 628 SUBCHAPTER II

LICENSING OF INTERMEDIARIES

628.03 628.03 Requirement of license.

628.03(1) (1) General. No natural person may perform, offer to perform, or advertise any service as an intermediary in this state, unless the natural person obtains a license under s. 628.04 or 628.09, and no person may utilize the services of another as an intermediary if the person knows or should know that the other does not have a license as required by law. The licensing requirements of this subsection do not apply to a person who solely procures unauthorized insurance, as defined in s. 618.40 (11), that is not surplus lines insurance, as defined in s. 618.40 (10).

628.03(1m) (1m) Risk purchasing groups. No natural person may solicit, negotiate or obtain insurance on behalf of a risk purchasing group which does business in this state unless the natural person obtains a license under s. 628.04 or 628.09. A risk purchasing group may not allow a natural person to solicit, negotiate or obtain insurance on its behalf if the risk purchasing group knows that the natural person is not licensed as required by this subsection.

628.03(2) (2) Exemptions. The commissioner may by rule exempt certain classes of natural persons from the requirement of obtaining a license:

628.03(2)(a) (a) If the functions they perform do not require special competence or trustworthiness or the regulatory surveillance made possible by licensing; or

628.03(2)(b) (b) If other existing safeguards make regulation unnecessary.

628.03(3) (3) Validity of contract. No insurance contract is invalid as a result of a violation of this section.

628.03 History History: 1975 c. 371, 421; 1981 c. 38; 1987 a. 247; 2011 a. 224.

628.03 Cross-reference Cross-reference: See also chs. Ins 45 and 47 and ss. Ins 6.50 and 6.58, Wis. adm. code.

628.04 628.04 Issuance of license.

628.04(1) (1) Conditions and qualifications. Except as provided in s. 628.095 or 628.097, the commissioner shall issue a license to act as an agent to any applicant who:

628.04(1)(a) (a) Subject to s. 601.31 (2m), pays the applicable fee;

628.04(1)(b) (b) Shows to the satisfaction of the commissioner:

628.04(1)(b)1. 1. That if a natural person, the applicant has the intent in good faith to do business as an intermediary or, if a corporation, partnership or limited liability company, has that intent and has included that purpose in the articles of incorporation, certificate of limited partnership or general partnership agreement or limited liability company operating agreement;

628.04(1)(b)2. 2. That if a natural person, the applicant is competent and trustworthy, or that if a partnership, limited liability company or corporation, all partners, members, directors or principal officers or persons in fact having comparable powers are competent and trustworthy, and that it will transact business in such a way that all acts that may only be performed by a licensed intermediary are performed exclusively by natural persons who are licensed under this section; and

628.04(1)(b)3. 3. That the applicant intends to comply with s. 628.51 with reference to compensation for effecting insurance upon the applicant’s own property or other risk; and

628.04(1)(c) (c) If a nonresident, executes in a form acceptable to the commissioner an agreement to be subject to the jurisdiction of the commissioner and the courts of this state on any matter related to the applicant’s insurance activities in this state, on the basis of service of process under ss. 601.72 and 601.73.

628.04(1c) (1c) Fingerprints. The commissioner may by rule require an applicant under sub. (1) who is a resident and a natural person to provide fingerprints as an additional condition for the granting of a license to act as an agent. The commissioner may use the fingerprints, if required, to conduct a state criminal history background investigation of the applicant and a national criminal history background investigation of the applicant with the federal bureau of investigation.

628.04(1m) (1m) Agent may act as broker. A licensed agent may act as an agent or as a broker.

628.04(2) (2) Surplus lines agents or brokers. Except as provided in s. 628.095 or 628.097, the commissioner may issue a license as an agent or broker authorized to place business under s. 618.41 if the applicant shows to the satisfaction of the commissioner that in addition to the qualifications necessary to obtain a general license under sub. (1), the applicant has the competence to deal with the problems of surplus lines insurance. The commissioner may by rule require an agent or broker authorized to place business under s. 618.41 to supply a bond not larger than $100,000, conditioned upon proper performance of obligations as a surplus lines agent or broker.

628.04(3) (3) Classification and examination. The commissioner may by rule prescribe classifications of intermediaries in addition to agent and surplus lines agent or broker, by kind of authority, or kind of insurance, or in other ways, and may prescribe different standards of competence, including examinations and educational prerequisites, for each class. The commissioner may by rule set prelicensing and annual continuing education standards, but may not require a licensed intermediary to complete a course of study requiring more than 30 hours, per license, of approved continuing education, including continuing education programs approved by the commissioner and presented by the insurers, in any 2-year period. The commissioner may approve courses or programs that an applicant for an intermediary’s license may attend to fulfill a prelicensing education requirement, or that a licensed intermediary may attend to fulfill a continuing education requirement, and may approve organizations that may offer approved courses or programs. The commissioner may, by rule, exempt any class of intermediaries from the continuing education requirements. So far as practicable, the commissioner shall issue a single license to each individual intermediary for a single fee.

628.04(4) (4) Intermediaries representing nonprofit service plans. Intermediaries dealing with or representing nonprofit service plans must be licensed under ss. 628.03 and 628.04, and are subject to all provisions of this chapter.

628.04(5) (5) Managing general agents and reinsurance brokers and managers. The commissioner may, by rule, require every managing general agent that is not a natural person, every reinsurance broker and every reinsurance manager to obtain a license in order to do business in this state or with an insurer doing business in this state. The commissioner may, by rule, prescribe classifications for reinsurance brokers and managers, exemptions from the license requirement for managing general agents that are not natural persons, reinsurance brokers and reinsurance managers and grounds for suspension or revocation of a license. The commissioner shall consider the applicable model acts adopted by the National Association of Insurance Commissioners before promulgating rules under this section.

628.04 History History: 1975 c. 371, 421; 1977 c. 363; 1979 c. 154; 1981 c. 38; 1991 a. 269; 1993 a. 112; 1995 a. 27, 400; 1997 a. 191; 2007 a. 169; 2011 a. 209.

628.04 Cross-reference Cross-reference: See also chs. Ins 26, 28, 42, 45, and 47, and s. Ins 6.59, Wis. adm. code.

628.05 628.05 Licensing of town mutual agents.

628.05(1) (1) General exemption. Except as otherwise provided in sub. (2), or by rule promulgated by the commissioner, persons engaged in soliciting insurance exclusively for town mutuals are not subject to the licensing requirements of s. 628.03 (1).

628.05(2) (2) Agents soliciting insurance requiring reinsurance. No person may solicit any application for a contract providing coverage of the kind specified in s. 612.31 (3) unless the person first obtains a license to do so under this chapter. The license need be only for those coverages the town mutual is authorized to write and any examination of applicants shall be appropriately limited.

628.05 History History: 1975 c. 371, 421; 2011 a. 224.

628.06 628.06 Licensing of fraternal agents.

628.06(1) (1) General provision. Subject to sub. (2), an agent of a fraternal is subject to the same licensing requirements as an agent for any other insurer doing the same lines of business, unless the agent was an agent for a fraternal immediately prior to October 2, 1963, and is still such an agent on June 19, 1976. The agent’s authority under this exception ceases upon ceasing, for however short a period, to be an agent for a fraternal.

628.06(2) (2) Part-time fraternal agents. An agent for one or more fraternals who devotes or intends to devote less than half-time to the solicitation of insurance business is not subject to the requirements of sub. (1). A person is presumed to have devoted half-time to the solicitation of insurance business if in the preceding calendar year the person procured life insurance contracts in a face amount in excess of $50,000, or, in the case of other kinds of insurance, on the persons of more than 25 individuals, and if the person received compensation therefor.

628.06 History History: 1975 c. 373, 421.

628.06 Annotation Legislative Council Note, 1975: These subsections continue the general thrust of s. 208.21. The grandfather clause is considerably restricted. The part-time exception in sub. (2) reflects the informal and nonprofessional nature of some of the marketing methods of the smaller fraternals; some question may be raised about the merits of the exception, but it reflects strongly held views. It clearly permits nonprofessional solicitation of new members by existing members, when no compensation is involved. [Bill 643-S]