Chapter Ins 2

Ins 2.17(9)(a)1.g. g. For fixed premium policies, in addition to the information described in subd. 1. a. through f. if, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments, the policy’s net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect shall be included in the report.

Ins 2.17(9)(a)1.h. h. For flexible premium policies, in addition to the information described in subd. 1. a. through f. if, assuming guaranteed interest, mortality and expense loads, the policy’s net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect shall be included in the report.

Ins 2.17(9)(a)2. 2. For all other policies, where applicable:

Ins 2.17(9)(a)2.a. a. Current death benefit.

Ins 2.17(9)(a)2.b. b. Annual contract premium.

Ins 2.17(9)(a)2.c. c. Current cash surrender value.

Ins 2.17(9)(a)2.d. d. Current dividend.

Ins 2.17(9)(a)2.e. e. Application of current dividend.

Ins 2.17(9)(a)2.f. f. Amount of outstanding loan.

Ins 2.17(9)(b) (b) Insurers writing life insurance policies that do not build nonforfeiture values shall only be required to provide an annual report with respect to these policies for those years when a change has been made to nonguaranteed policy elements by the insurer.

Ins 2.17(9)(c) (c) If the annual report does not include an in force illustration, it shall contain the following notice displayed prominently: “IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling [insurer’s phone number], writing to [insurer’s name] at [insurer’s address] or contacting your agent. If you do not receive a current illustration of your policy within 30 days from your request, you should contact your state insurance department.” The insurer may vary the sequential order of the methods for obtaining an in force illustration.

Ins 2.17(9)(d) (d) Within 25 calendar days of receipt of a request from the policy owner, the insurer shall furnish an in force illustration of current and future benefits and values based on the insurer’s present illustrated scale. This illustration shall comply with the requirements of subs. (5) (a), (5) (b), (6) (a) and (6) (e). No signature or other acknowledgment of receipt of this illustration is required.

Ins 2.17(9)(e) (e) If an adverse change in non-guaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report shall contain a notice of that fact and the nature of the change prominently displayed.

Ins 2.17(10) (10) Annual certifications.

Ins 2.17(10)(a) (a) The board of directors of each insurer shall appoint one or more illustration actuaries.

Ins 2.17(10)(b) (b) The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the actuarial standard of practice for compliance with the national association of insurance commissioners model regulation on life insurance illustrations promulgated by the actuarial standards board, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this section.

Ins 2.17(10)(c) (c) The illustration actuary shall:

Ins 2.17(10)(c)1. 1. Be a member in good standing of the American academy of actuaries.

Ins 2.17(10)(c)2. 2. Be familiar with the standard of practice regarding life insurance policy illustrations.

Ins 2.17(10)(c)3. 3. Not have been found by the commissioner, following appropriate notice and hearing to have done any of the following:

Ins 2.17(10)(c)3.a. a. Violated any provision of, or any obligation imposed by, the insurance law or other law in the course of the actuary’s dealings as an illustration actuary.

Ins 2.17(10)(c)3.b. b. Been found guilty of fraudulent or dishonest practices.

Ins 2.17(10)(c)3.c. c. Demonstrated the actuary’s incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary.

Ins 2.17(10)(c)3.d. d. Resigned or been removed as an illustration actuary within the past 5 years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards.

Ins 2.17(10)(c)4. 4. Not fail within 30 calendar days to notify the commissioner of any action taken by a commissioner of another state similar to that under subd. 3.

Ins 2.17(10)(c)5. 5. Disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous 5 years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If nonguaranteed elements illustrated for new policies are not consistent with those illustrated for similar in force policies, this shall be disclosed in the annual certification. If nonguaranteed elements illustrated for both new and in force policies are not consistent with the non-guaranteed elements actually being paid, charged or credited to the same or similar forms, this shall be disclosed in the annual certification.

Ins 2.17(10)(c)6. 6. Disclose in the annual certification which of the following methods is used to allocate overhead expenses for all illustrations:

Ins 2.17(10)(c)6.a. a. Fully allocated expenses.

Ins 2.17(10)(c)6.b. b. Marginal expenses.

Ins 2.17(10)(c)6.c. c. A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the commissioner.

Ins 2.17(10)(d) (d) The illustration actuary shall file a certification with the board and with the commissioner annually for all policy forms for which illustrations are used and before a new policy form is illustrated. If an error in a previous certification is discovered, the illustration actuary shall notify the board of directors of the insurer and the commissioner within 30 calendar days of discovery.

Ins 2.17(10)(e) (e) If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the commissioner of the actuary’s inability to certify within 30 calendar days of that determination.

Ins 2.17(10)(f) (f) A responsible officer of the insurer, other than the illustration actuary, shall certify annually all of the following:

Ins 2.17(10)(f)1. 1. That the illustration formats meet the requirements of this section and that the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary.

Ins 2.17(10)(f)2. 2. That the insurer has provided its agents with information about the expense allocation method used by the insurer in its illustrations and disclosed as required in par. (c) 6.

Ins 2.17(10)(g) (g) The annual certifications shall be provided to the commissioner each year by a date determined by the insurer.

Ins 2.17(10)(h) (h) If an insurer changes the illustration actuary responsible for all or a portion of the insurer’s policy forms, the insurer shall notify the commissioner of that fact within 30 calendar days and disclose the reason for the change.

Ins 2.17(11) (11) Penalties. In addition to any other penalties provided by the laws of this state, an insurer or agent that violates a requirement of this section is guilty of a violation of s. 628.34, Stats.

Ins 2.17 History History: Cr. Register, September, 1997, No. 501, eff. 1-1-98.

Ins 2.18 Ins 2.18 Life settlement contracts.

Ins 2.18(1) (1) Purpose. The purpose of this regulation is to interpret and implement s. 632.69, Stats.

Ins 2.18(2) (2) Definitions. In addition to the definitions contained in s. 632.69 (1), Stats., in this section:

Ins 2.18(2)(a) (a) “Commissioner” means the commissioner of insurance.

Ins 2.18(2)(b) (b) “Firm” means a corporation, partnership or other legal entity.

Ins 2.18(2)(c) (c) “Office” means the office of the commissioner of insurance.

Ins 2.18(2)(d) (d) “Term life insurance” means life insurance which provides coverage at a fixed rate of payment for a limited period of time and which provides no guaranteed nonforfeiture or endowment benefits.

Ins 2.18(3) (3) Licensing.

Ins 2.18(3)(a) (a) Application. An individual or firm applying for an initial or renewal license as a broker or provider shall submit an application to the office in the form prescribed by the office. With the application, the individual or firm shall submit all of the following:

Ins 2.18(3)(a)1. 1. If the applicant is a broker, with the initial application, a professional liability insurance policy in the amount of $1 million total annual aggregate for all claims during the policy period. Proof that the required professional liability insurance policy continues in force shall accompany each renewal application.

Ins 2.18(3)(a)2. 2. If the applicant is a provider, applicants shall provide satisfactory evidence of financial responsibility in compliance with s. 632.69 (2) (g) 4. a., Stats.

Ins 2.18(3)(a)3. 3. If the applicant is a provider, audited financial statements of the applicant for the most recently completed fiscal year. The financial statements shall be available for public inspection.

Ins 2.18(3)(a)4. 4. Electronic confirmation of completion of the training requirements under s. 632.69 (3), Stats., and sub. (4) if electronic confirmation is available. If electronic confirmation is not available the applicant shall provide evidence satisfactory to the commissioner of completion of the training requirements.

Ins 2.18(3)(a)5. 5. Any documentation required in answer to questions on the application.

Ins 2.18(3)(a)6. 6. If the applicant is an individual, his or her social security number or, if the applicant does not have a social security number, a statement made or subscribed under oath or affirmation that the applicant does not have a social security number, and a statement that he or she intends to act as a broker or provider in good faith and in compliance with all applicable laws of this state and rules and orders of the commissioner.

Ins 2.18(3)(a)7. 7. If the applicant is a firm applying for a broker’s license, the applicant must identify a designated responsible Wisconsin-licensed individual representative on the application.

Ins 2.18(3)(a)8. 8. If the applicant is a firm, its federal identification number, the state and year of its incorporation, or year of its formation and a statement that it intends to act as a broker or provider in good faith and in compliance with all applicable laws of this state, and with rules and orders of the commissioner and the courts of this state with respect to all matters pertaining to activities as a licensee.

Ins 2.18(3)(a)9. 9. If the applicant is an individual who is not a resident of this state or a firm that is not organized under the laws of this state, a statement that the applicant agrees to be subject to the jurisdiction of the commissioner and the courts of this state with respect to all matters pertaining to activities as a licensee and to accept service of process as provided under ss. 601.72 and 601.73, Stats. A firm that is organized under the laws of another state shall provide a certificate of good standing from the state of domicile.

Ins 2.18(3)(a)10. 10. Fingerprint identification may be required for individual resident broker applicants and the Wisconsin-licensed individual representative of a broker firm, in a format specified by the commissioner, and an electronic confirmation of criminal history from the Wisconsin department of justice, crime information bureau, and the federal bureau of investigation, to be completed not more than 180 days prior to making application.

Ins 2.18(3)(a)11. 11. Any other information requested by the office.

Ins 2.18(3)(a)12. 12. The fee specified under s. 601.31 (1) (mm) or (mp), Stats., as appropriate for a provider, or s. 601.31 (1) (mr) or (ms), Stats., as appropriate for a broker, which fee shall be nonrefundable.

Ins 2.18(3)(b) (b) Renewal application deadline. Applications for license renewal shall be submitted pursuant to par. (a) on or before July 1 of each year.

Ins 2.18(3)(c) (c) Competence and trustworthiness. The following criteria may be used in assessing trustworthiness and competence:

Ins 2.18(3)(c)1. 1. ‘Criminal record.’ The conviction for crimes which are substantially related to the circumstances of holding a broker or provider license.

Ins 2.18(3)(c)2. 2. ‘Accuracy of information.’ Any material misrepresentation in the information submitted on the application form.

Ins 2.18(3)(c)3. 3. ‘Regulatory action.’ Any regulatory action taken with regard to any occupational license held, including insurance licenses, real estate licenses, and security licenses.

Ins 2.18(3)(c)4. 4. ‘Other criteria.’ Other criteria which the commissioner considers relevant in assessing trustworthiness or competence, including any of the following:

Ins 2.18(3)(c)4.a. a. Providing incorrect, misleading, incomplete, or materially untrue information in the license application.

Ins 2.18(3)(c)4.b. b. Violating any insurance laws, or violating any rule, subpoena, or order of the insurance commissioner or of another state’s insurance commissioner.

Ins 2.18(3)(c)4.c. c. Obtaining or attempting to obtain a license through misrepresentation or fraud.

Ins 2.18(3)(c)4.d. d. Improperly withholding, misappropriating, or converting any monies or properties received in the course of engaging in the business of life settlements.

Ins 2.18(3)(c)4.e. e. Misrepresenting the terms of an actual or proposed life settlement contract.

Ins 2.18(3)(c)4.f. f. Having been convicted of any felony or misdemeanor of which criminal fraud is an element or having plead other than not guilty with respect to any felony or misdemeanor of which criminal fraud or moral turpitude is an element, regardless whether a judgment of conviction has been entered by the court.

Ins 2.18(3)(c)4.g. g. Having admitted or been found to have committed any unfair trade practice or fraud.

Ins 2.18(3)(c)4.h. h. Using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness, or financial irresponsibility in the conduct of business in this state or elsewhere.

Ins 2.18(3)(c)4.i. i. Having a life settlement license or its equivalent, denied, suspended, or revoked in any other state, province, district, or territory.

Ins 2.18(3)(c)4.j. j. Forging another’s name to an application or to any document related to a life settlement transaction.

Ins 2.18(3)(c)4.k. k. Failing to comply with an administrative or court order imposing a child support obligation.

Ins 2.18(3)(c)4.L. L. Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.

Ins 2.18(4) (4) Training.

Ins 2.18(4)(a) (a) An individual licensed as a broker shall comply with the training requirements set forth in s. 632.69 (3), Stats.

Ins 2.18(4)(b) (b) A firm licensed as a broker shall certify to the commissioner on its application for initial and renewal licensing that the firm’s designated responsible Wisconsin-licensed individual representative has complied with the training requirements set forth in s. 632.69 (3), Stats.

Ins 2.18(4)(c) (c) Each compliance period for recurring training required under s. 632.69 (3), Stats., shall commence on July first immediately following the preceding compliance period and shall end 24 months later on June 30.

Ins 2.18(4)(d) (d) Recurring training required under s. 632.69 (3) (e), Stats., shall be completed and reported at a rate of not less than 2 hours each 12 months of each compliance period.

Ins 2.18(5) (5) Notification of formal administrative actions, criminal proceedings and lawsuits. A licensed broker or provider shall notify the commissioner in writing of the following within 30 days:

Ins 2.18(5)(a) (a) Except for action taken by the Wisconsin office of the commissioner of insurance, any formal administrative action against the broker or provider taken by any state’s regulatory agency, commission or board or other regulatory agency which licenses the person for any occupational activity. The notification shall include a description of the basis for the administrative action and any action taken as a result of the proceeding, a copy of the notice of hearing and other documents describing the problem, a copy of the order, consent to order, stipulation, final resolution, and other relevant documents.

Ins 2.18(5)(b) (b) Any initial pretrial hearing date related to any criminal prosecution of the broker or provider taken in any jurisdiction, other than a misdemeanor charge related to the use of a motor vehicle or the violation of a fish and game regulation. The notification shall include a copy of the initial criminal complaint filed, the order resulting from the hearing and any other relevant legal documents.

Ins 2.18(5)(c) (c) Any felony conviction or misdemeanor conviction of the licensee in any jurisdiction, other than a misdemeanor conviction related to the use of a motor vehicle or the violation of a fish and game regulation. The notification shall include a copy of the initial criminal complaint or criminal charging document filed, the judgment of conviction, the sentencing document, the broker’s explanation of what happened to cause criminal proceedings, the licensee’s reasons why no action should be taken regarding the life settlement and any other relevant legal documents.

Ins 2.18(5)(d) (d) Any lawsuit filed against the licensee in which there are allegations of misrepresentation, fraud, theft or embezzlement involving the licensee. The notification shall include a copy of the initial suit documents, the licensee’s explanation of what happened to cause the civil proceedings, why no action should be taken regarding the life settlement broker’s license, and any other relevant legal documents.

Ins 2.18(6) (6) Notification to office. A licensee shall notify the office in writing of any of the following within 30 days after the date of the occurrence: