618.37618.37 Revocation of certificate of authority. Whenever there are grounds for delinquency proceedings against a nondomestic insurer under ch. 645, the commissioner may, after a hearing, revoke, suspend or limit its certificate of authority. No such action shall affect insurance already issued and the insurer shall remain subject to regulation until released under s. 618.36.

618.39(1)(1) Conduct prohibited. No person may do an insurance business in this state if the person knows or should know that the result is or might be the illegal placement of insurance with an unauthorized insurer or the subsequent servicing of an insurance policy illegally placed with an unauthorized insurer.

618.39(2)(2) Personal liability for violation. Any person who violates sub. (1) is personally liable to any claimant under the policy for any damage proximately caused by the person’s violation. That damage may include damage resulting from the necessity of replacing the insurance in an authorized insurer or the failure of the unauthorized insurer to perform the insurance contract.

618.39(3)(a)1.1. Establishing that a person should know that the result of insurance business is or might be the illegal placement of insurance with an unauthorized insurer or the subsequent servicing of an insurance policy illegally placed with an unauthorized insurer.

618.39(3)(a)2.2. Imposing requirements under s. 601.42 or 628.04 or sanctions or remedial measures under sub. (2) or s. 601.64, or any other applicable penalty or remedial provision of chs. 600 to 646, for a violation of this section.

618.39(3)(b)(b) Notwithstanding par. (a) 1., it is not necessary for the office to promulgate a rule under par. (a) 1. to establish that a person violated sub. (1).

618.39 AnnotationLegislative Council Note, 1975: Sub. (2) is added as an effective sanction to suppress knowing placement of insurance with unauthorized insurers. It is adapted from Conn. Insurance Laws, Sec. 38-90. Insurance agents and others should guarantee performance of insurance contracts they negotiate knowingly with unlicensed insurers, unless legally negotiated under the surplus lines law. In addition, the sanctions of s. 601.64 apply to violators of this provision. [Bill 16-S]

618.40(1)(1) “Affiliated group” means all persons that control, are controlled by, or are under common control with, an insured.

618.40(2)(2) “Authorized insurer” means an insurer that is licensed, or authorized, to transact the business of insurance under the law of the home state.

618.40(3)(3) “Control” means, with respect to a person having control over another person, that the person does any of the following:

618.40(3)(a)(a) Directly or indirectly, or acting through one or more other persons, owns, controls, or has the power to vote 25 percent or more of any class of voting securities of a person.

618.40(3)(b)(b) Controls in any manner the election of a majority of the directors or trustees of a person.

618.40(3m)(3m) “Domestic surplus lines insurer” means an insurer that has a certificate to do business as a domestic surplus lines insurer under s. 618.41 (13).

618.40(4)(a)(a) Except as provided in par. (b), “home state” means, with respect to an insured, one of the following:

618.40(4)(a)1.1. The state in which the insured maintains its principal place of business or, in the case of an insured who is an individual, the individual’s principal residence.

618.40(4)(a)2.2. If 100 percent of the insured risk is located outside of the state referred to in subd. 1., the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.

618.40(4)(b)(b) If more than one insured from an affiliated group are named insureds on a single surplus lines insurance contract, “home state” means the state, as determined under par. (a), of the member of the affiliated group that has the largest percentage of premium attributed to it under the insurance contract.

618.40(5)(5) “Premium tax” means, with respect to unauthorized insurance, any tax, fee, assessment, or other charge imposed by this state directly or indirectly based on any payment made as consideration for an insurance contract for such insurance, including premium deposits, assessments, registration fees, and any other compensation given in consideration for a contract of insurance.

618.40(6)(6) “Principal place of business” means, with respect to determining the home state of an insured, the state where the insured maintains its headquarters and where the insured’s high-level officers direct, control, and coordinate the business activities of the insured.