Section 3.29. Replacement of accident and sickness insurance.

 

(1)   Purpose. The purpose of this section is to safeguard the interests of persons covered under accident and sickness insurance who consider the replacement of their insurance by making available to them information regarding replacement and thereby reducing the opportunity for misrepresentation and other unfair practices and methods of competition in the business of insurance. This section implements and interprets ss. 601.01 (2) and 628.34 , Stats.

(2)   Scope. This rule shall apply to the solicitation of accident and sickness insurance covering residents of this state and issued by insurance corporations, fraternal benefit societies or nonprofit service plans in accordance with s. Ins 6.75 (1) (c) or (2) (c) , s. 614.01 , Stats., and ch. 613 , Stats.

(3)   Exempt insurance. This rule shall not apply to the solicitation of the following accident and sickness insurance:

(a) Group, blanket or group type, except Medicare supplement and replacement insurance subject to s. Ins 3.39 (4) , (4s) , (5) , (5m) and (7) .

(b) Accident only.

(c) Single premium nonrenewable.

(d) Nonprofit dental care.

(e) Nonprofit prepaid optometric service.

(f) A limited policy conforming to s. Ins 3.13 (2) (h) .

(g) Under which dental expenses only, prescription expenses only, vision care expenses only or blood service expenses only are covered.

(h) Conversion to another individual or family policy in the same insurer with continuous coverage.

(i) Conversion to an individual or family policy to replace group, blanket or group type coverage in the same insurer.

(4)   Definitions. For the purposes of this rule:

(a) "Replacement" is any transaction wherein new accident and sickness insurance is to be purchased, and it is known to the agent or company at the time of application that as part of the transaction, existing accident and sickness insurance has been or is to be lapsed or the benefits thereof substantially reduced.

(b) "Continuous coverage" means that the benefits are not less than the benefits under the previous policy, and the policy also covers loss resulting from injury sustained or sickness contracted while coverage was in force under the previous policy to the extent such loss is not covered under any extended benefit or similar provision of the previous policy.

(c) "Group type coverage" is as defined in s. Ins 6.51 (3) .

(d) "Direct response insurance" is insurance issued to an applicant who has completed the application and forwarded it directly to the insurer in response to a solicitation coming into his or her possession by any means of mass communication.

(5)   Replacement question in application forms. An application form for insurance subject to this rule shall contain a question to elicit information as to whether the insurance to be issued is to replace any insurance presently in force. A supplementary application or other form to be signed by the applicant containing such a question may be used.

(6)   Notice to be furnished.

(a) An agent soliciting the sale of insurance shall, upon determining that the sale would involve replacement, furnish to the applicant, at the time of taking the application, the notice described in sub. (7) to be signed by the applicant.

(b) An insurer soliciting direct response insurance shall, upon determining that the sale would involve replacement, furnish to the applicant, before the policy is issued, the notice described in sub. (7) to be signed by the applicant.

(c) A copy of such notice shall be left with or retained by the applicant and a signed copy shall be retained by the insurer.

(7)   Notice to applicant.

(a) The notice required by sub. (6) shall provide, in substantially the following form:

NOTICE TO APPLICANT
REGARDING REPLACEMENT OF ACCIDENT AND SICKNESS INSURANCE

According to (your application) (the information furnished by you), you intend to lapse or otherwise terminate your present policy and replace it with a policy to be issued by _________ Insurance Company. For your own information and protection, certain facts should be pointed out to you which should be considered before you make this change.

1. Health conditions which you may presently have may not be covered under the new policy. This could result in a claim for benefits being denied which may have been payable under your present policy. (This language may be modified if pre-existing conditions are covered under the new policy.)

2. Even though some of your present health conditions may be covered under the new policy, these conditions may be subject to certain waiting periods under the new policy before coverage is effective. (This language may be modified if pre-existing conditions are covered under the new policy.)

3. Questions in the application for the new policy must be answered truthfully and completely; otherwise, the validity of the policy and the payment of any benefits thereunder may be voided.

4. The new policy will be issued at a higher age than that used for issuance of your present policy; therefore, the cost of the new policy, depending upon the benefits, may be higher than you are paying for your present policy.

5. The renewal provisions of the new policy should be reviewed so as to make sure of your rights to periodically renew the policy.

6. It may be to your advantage to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. You should be certain that you understand all the relevant factors involved in replacing your present coverage. The above "Notice to Applicant" was delivered to me on

________________

Date

________________

Applicant

(b) The notice required by sub. (6) for a Medicare supplement policy subject to s. Ins 3.39 (4) , (4s) , (5) , (5m) , and (7) , shall include an introductory statement in substantially the following form: Your new policy provides _____ days within which you may decide without cost whether you desire to keep the policy.

(8)   Violation. A violation of this rule shall be considered to be a misrepresentation for the purpose of inducing a person to purchase insurance. A person guilty of such violation shall be subject to s. 601.64 , Stats.

(10)   Effective date. This rule shall become effective September 1, 1974.

Cr. Register, June, 1974, No. 222 , eff. 9-1-74; emerg. am. (1) and (2), eff. 6-22-76; am. (1) and (2), Register, September, 1976, No. 249 , eff. 10-1-76; am. (2), Register, March, 1979, No. 279 , eff. 4-1-79; am. (3) (a) and (i), r. (3) (j), renum. (7) to be (7) (a) and am., cr. (7) (b), Register, June, 1982, No. 318 , eff. 7-1-82; r. (9) under s. 13.93 (2m) (b) 16., Stats., Register, December, 1984, No. 348 ; corrections in (1), (3) (a) and (4) (d) made under s. 13.93 (2m) (b) 5. and 7., Stats., Register, April, 1992, No. 436 ; CR 08-112 : am. (3) (a) and (7) (b) Register June 2009 No. 642 , eff. 7-1-09.