Section 6.61. Intermediary records.

 

(1)   Purpose. This section protects insurance policyholders by prescribing minimum standards and techniques of accounting and data handling of intermediaries to ensure that timely and reliable information will exist and be available to the commissioner. This section implements and interprets ss. 601.42 and 628.34 , Stats., by establishing minimum records to be maintained by intermediaries.

(2)   Scope. This section applies to all intermediaries transacting insurance business in this state and to Wisconsin insurance transactions of nonresident intermediaries unless the nonresident is required to maintain records in a similar specified manner by the intermediary's state of domicile.

(3)   Definitions. As used in this section:

(a) "Business checking account" means any account utilized by an intermediary for insurance-related transactions.

(b) "Cash disbursed record" means a record showing all monies paid out by the intermediary in connection with insurance.

(c) "Cash receipts record" means a record showing all monies received by the intermediary in connection with insurance.

(d) "Commission statements" means records or statements which show the commissions and fees allocated to the intermediary for insurance transactions.

(e) "Formal administrative action" means consent decrees, cease and desist orders, stipulations, suspensions, revocations, license denials, fines, forfeitures, settlement agreements, license restrictions or actions limiting the intermediary's method of conducting an insurance business but does not include administrative actions based solely on failing to comply with continuing education requirements or solely on failing to pay a regulation fee for licensing.

(f) "Intermediary" means an agent, broker or producer and any person, partnership or corporation requiring a license under the provisions of ch. 628 , Stats.

(g) "Personnel records" means those records pertaining to anyone who is directly retained or employed by an intermediary in connection with insurance including subagents, secretaries, phone solicitors, and independent contractors.

(h) "Policyholder records" means all records, applications, request for changes, claims, and complaints associated with a policy generated by or through the intermediary.

(4)   Cash disbursed record. The cash disbursed record shall show the name of the party to whom the payment was made, date of payment, and reason for payment.

(5)   Cash receipts record. The cash receipts record shall show the name of the party who remitted the money, date of receipt, and reason for payment.

(6)   Commission statements. The commission statements shall show the insured name, policy number, premium, amount of commission, and date allocated or paid or both.

(7)   Personnel records. Personnel records shall include dates of employment, position, description of principal duties, name of employee, and last known address and phone number of employee.

(8)   Recordkeeping requirements. Beginning on January 1, 1988, each intermediary shall maintain, for a 3-year period, unless a specific period is provided elsewhere, the following records:

(a) Cash receipts record.

(b) Cash disbursed record.

(c) Commission statements.

(d) Policyholder records.

(e) Business checking account.

(f) Personnel records.

(9)   Special requirements for newly issued contracts. Each intermediary shall maintain records for a 3-year period giving the effective date of the coverage on all newly issued contracts.

(10)   Special requirements for individually-issued life and accident and health contracts. Each intermediary shall maintain records for a 3-year period indicating that the necessary suitability inquiry and replacement procedures required by ss. Ins 2.07 , 2.14 (5) (f) , 2.15 (9) (f) , 3.27 (7) , and 3.29 were followed for each individually-issued life and accident and health contract written or replaced or both.

(11)   Special requirements for title insurance. Each intermediary who is employed by, or is, an affiliate of a producer of title insurance shall maintain records for 3 years for each application or order for title insurance accepted in this state. The records shall state whether the application or order was directly or indirectly referred as provided by s. Ins 3.32 (5) by a producer of title insurance which is an affiliate as defined by s. Ins 3.32 (3) (a) , (bm) and (c) and the name of each producer of title insurance who is an affiliate and acts as broker, agent, lender, representative or attorney in the transaction which resulted in the application or order. Each intermediary who is an affiliate of a producer of title insurance shall maintain a record of gross revenue from operations in this state from title insurance by quarter calendar year which shall separately show gross revenue from operations in this state derived from applications or orders for title insurance directly or indirectly referred by the affiliate.

(12)   Place of maintaining records. The intermediary shall maintain records required by subs. (8) , (9) , (10) and (11) at the business address of the intermediary or the insurer recorded with the commissioner of insurance, or at another location only if the intermediary provides written notice of the other location to the commissioner of insurance.

(13)   Updating records. The intermediary shall update all intermediary records at reasonable intervals or as necessary and shall maintain all financial intermediary records according to accepted accounting principles.

(14)   Maintaining policyholder records. The intermediary shall retain policyholder records for a period of at least 3 years after termination or lapse of the policy.

(15)   Change of name or address. Each intermediary shall, within 30 days, notify the commissioner of insurance in writing of any change in the intermediary's name, residence address, and mailing address.

(16)   Notification of formal administrative actions, criminal proceedings and lawsuits. Each intermediary shall notify the commissioner in writing of the following within 30 days:

(a) Except for action taken by the Wisconsin office of the commissioner of insurance, any formal administrative action against the intermediary taken by any state's insurance 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.

(b) Any initial pretrial hearing date related to any criminal prosecution of the intermediary 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.

(c) Any felony conviction or misdemeanor conviction 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 judgement of conviction, the sentencing document, the intermediary's explanation of what happened to cause criminal proceedings, the intermediary's reasons why no action should be taken regarding the intermediary's license and any other relevant legal documents.

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

(17)   Records maintained by insurers. An insurer shall inform its intermediaries in writing of the requirements of this section and may, by written agreement, assume the responsibility to maintain these records for an individual intermediary if the records can be made immediately available to the commissioner of insurance on demand.

History: Cr. Register, March, 1977, No. 255 , eff. 4-1-77; am., Register, March, 1979, No. 279 , eff. 4-1-79; cr. (5), Register, September, 1981, No. 309 , eff. 10-1-81; cr. (2m), Register, November, 1986, No. 371 , eff. 12-1-86; r. and recr. Register, December, 1987, No. 384 , eff. 1-1-88; am. (16), Register, August, 1988, No. 392 , eff. 9-1-88; am. (16), Register, April, 1992, No. 436 , eff. 5-1-92; am. (15), Register, January, 1999, No. 517 , eff. 2-1-99; CR 01-074 ; am. (3) (e), r. and recr. (16), Register January 2002 No. 553 , eff. 2-1-02; CR 05-111 : am. (3) (f) Register October 2006 No. 610 , eff. 11-1-06; CR 09-022 : am. (15) Register August 2009 No. 644 , eff. 9-1-09.