Section 6.60. Prohibited business practices.

 

(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.

History: CR 01-072 : cr. Register January 2002 No. 553 , eff. 2-1-02.