Wisconsin Administrative Code
Office of the Commissioner of Insurance
Chapter Ins 6 - General
Section Ins 6.60 - Prohibited business practices
Universal Citation: WI Admin Code ยง Ins 6.60
Current through August 26, 2024
(1) In this section:
(a) "Affiliate" means any person who
is under the control of or acts at the direction of the agent.
(b) "Agent" means an intermediary as defined
in s.
628.02,
Stats.
(c) "Customer" means a
natural person with whom the agent or affiliate is doing or has, within 3 years
from the act or transaction regulated by this section, done an insurance
business as that term is defined in s.
618.02(2) and (3), Stats.
(d) "Personal financial transaction" includes
a transaction in which the agent or an affiliate of the agent borrows money,
property or securities from a customer; loans money, property or securities to
a customer; acts as custodian for money, property or securities of a customer;
obtains power of attorney over money, property or securities of a customer;
obtains a guarantee of any loan from a customer; shares directly or indirectly
in profits or losses with a customer; or without furnishing equal consideration
obtains title to or ownership of any property of a customer. In this section
"personal financial transaction" does not include transactions conducted by an
agent or affiliate in the normal course of doing an insurance business such as
holding an insurance policy for analysis or servicing, or receiving an
insurance premium from a customer provided the transaction is properly recorded
on the records of the agent or affiliate as required by s.
Ins 6.61,
including the name of the insurer for whom the premium was received, and the
agent or affiliate immediately issues a written receipt to the customer for the
policy or premium.
(2) The following are deemed to be unfair trade practices by an agent or affiliate pursuant to s. 628.34(12), Stats., without limiting those terms to the practices specified in this section:
(a) Effecting or attempting to
effect a personal financial transaction with a customer unless any of the
following apply:
1. The customer is a
relative of the agent or affiliate as defined in s.
13.62(12g),
Stats.
2. The customer is a person
residing in the household of the agent or affiliate at the time of the
transaction.
3. The transaction is
a bona fide arm's length business transaction where the customer is either
qualified to understand and assess the transaction or has been advised or
represented in the transaction by a qualified individual who is not the agent
or affiliate.
4. The agent or
affiliate is acting lawfully pursuant to authority given under federal or state
law governing the securities or investment advisory business.
(b) Knowingly being listed as a
beneficiary of any proceeds of a life insurance policy or annuity issued to a
customer unless the agent or affiliate has an insurable interest in the life of
the customer.
(c) Engaging in
transactions with a customer in violation of ch. 551, Stats., the Wisconsin
uniform securities law, ch. 553, Stats., the Wisconsin franchise investment
law, the U.S. securities act of 1933 (15 USCS 77a et seq), the U. S. securities
exchange act of 1934 (15 USCS 78a - 78kk), the U. S. investment company act of
1940 (15 USCS 80 a-1 - 80a-52), or any rules or regulations promulgated under
any of such laws.
(d) Making
misleading statements to a customer regarding or otherwise misrepresenting
one's qualifications or services. This includes using terms such as
"financial", "investment" or "retirement" in conjunction with terms such as
"planner", "planning" or "consulting" when, under the circumstances, the
statements, representations or use of these terms do not accurately describe
the nature of the services offered or the qualifications of the person offering
the services.
(e) Selling,
soliciting the sale, or assisting the sale, of health coverage that is:
1. Provided by a person who is not licensed
as an insurer in this state; and
2.
Represented to be authorized under, or exempt from state insurance regulation
under, the federal employee retirement income security act ( 29 USCS 1001 et
seq).
(3)
(a) For the purpose of s.
618.39(1),
Stats., an agent should know that placement of insurance is illegal if the
agent:
1. Sells, solicits the sale, or
assists in the sale, of health coverage offered by a person not licensed as an
insurer in this state; and
2. Knows
that the health coverage is represented to be authorized, or exempt from state
insurance regulation, under the federal employee retirement income security act
( 29 USCS 1001 et seq).
(b) An agent's lack of knowledge of any of
the following is not a defense to a violation of s.
618.39(1),
Stats.:
1. That the person providing the
coverage is not licensed in this state.
2. That the person is an insurer as defined
under s.
600.03(27),
Stats.
3. That the represented
authorization or exemption under the federal employee retirement income
security act is false ( 29 USCS 1001 et seq).
(4) The commissioner shall order, for any agent who violates s. 618.39, Stats., not less than revocation of the agent's license and that the agent pay any claims not paid within 60 days by the unauthorized insurer. An agent may establish the basis for a lesser penalty for a violation of s. 618.39, Stats., only if the agent shows all of the following:
(a) Substantial mitigating factors.
(b) The agent made, and solicited to make,
only a few sales of the coverage.
(c) The agent did not serve as a general
agent, was not eligible for override commissions, and was not responsible for
recruiting, and did not recruit, other agents to sell the coverage.
(5) A violation of sub. (2) is a cause for denial of an agent license application under s. 628.04(1), Stats., and a cause for agent license suspension, revocation or limitation under s. 628.10(2) (b), Stats.
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