Taxation of insurance written by unauthorized insurers. 618.43(1)(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:
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
The insurance is transacted by an unauthorized insurer for a risk purchasing group.
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.
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.
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.
(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)
(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.
(4) Applicability of tax law.
is applicable to any tax payable under this section.
(5) Exclusive nature.
The tax under this section is in lieu of all other taxes on insurance business and of fire department dues.
(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.
(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.
(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.
Cross-reference: See also ss. Ins. 6.17 and 6.19, Wis. adm. code.
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
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.
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
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
Servicing of contracts made out of state. 618.45(1)(1)
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.
(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)
The contract is for life or disability insurance; or
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.
History: 1971 c. 260
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
may be filed by or on behalf of the unauthorized person unless the person either:
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
Procures proper authorization to do an insurance business in this state.
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)
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.
History: 1971 c. 260
; 1979 c. 102
, 236 (5)
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.
History: 1971 c. 260
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.
(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.
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.
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.
Reciprocal enforcement of foreign decrees. 618.61(1)(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.
“Reciprocal state" means any state the laws of which contain procedures substantially similar to those specified in this section for the enforcement of decrees or orders issued by courts located in other states against any insurer authorized to do business in the reciprocal state, and which in turn recognizes this state as a reciprocal state under its law.
(2) List of reciprocal states.
The commissioner shall determine which states qualify as reciprocal states and shall maintain a list of them.
(3) Enforcement of Wisconsin decrees or orders.
The attorney general upon request of the commissioner may proceed in the courts of this state or any other state to enforce an order or decision issued in this state in any court proceeding or in any administrative proceeding before the insurance commissioner.
(4) Enforcement of foreign decrees or orders. 618.61(4)(a)(a)
A copy of any foreign decree authenticated in accordance with the statutes of this state may be filed in the office of the clerk of the circuit court for Dane County. The clerk, upon verifying with the commissioner that the decree or order qualifies as a “foreign decree", shall treat it in the same manner and it shall have the same effect as a decree of a circuit court of this state. It is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a decree of a circuit court of this state and may be enforced or satisfied in like manner.
At the time of the filing of the foreign decree, the filer shall deposit with the clerk of the court an affidavit setting forth the name and last-known post-office address of the defendant in this state.
Promptly upon the filing of the foreign decree and the affidavit, the clerk of circuit court shall mail notice of the filing of the foreign decree to the defendant at the address given and to the commissioner and shall note the mailing in the court record. In addition, the attorney general may mail a notice of the filing of the foreign decree to the defendant and to the commissioner or the commissioner may mail such a notice to the defendant, and either may file proof of mailing with the clerk of circuit court. Failure of the clerk of circuit court to mail notice of filing shall not affect the enforcement proceedings if the attorney general or commissioner has filed proof of mailing.
No execution or other process for enforcement of a foreign decree shall issue until 30 days after the decree is filed.
If the defendant shows the court that an appeal from the foreign decree is pending or will be taken, or that a stay of execution has been granted, the court shall stay enforcement of the foreign decree until the appeal is concluded, the time for appeal expires, or the stay of execution expires or is vacated, upon proof that the defendant has furnished the security for the satisfaction of the decree required by the state in which it was rendered.
If the defendant shows the court any ground upon which enforcement of a decree of any county or circuit court of this state would be stayed, the court shall stay enforcement of the foreign decree for an appropriate period, upon requiring the same security for satisfaction of the decree as is required in this state.
Any person filing a foreign decree shall pay to the clerk of court the same fees for any enforcement proceeding as are provided for decrees of the circuit courts.