Don't Be a Victim of Unlicensed Insurers

An unexpected illness or injury is tragic enough when you're insured. But imagine lying in the hospital and learning that your insurance company took your money without ever intending to protect you in return. Now you face huge medical bills and, if you can't pay, grave damage to your credit.

Small employers know how difficult it is to find affordable health coverage for their employees. With the cost of health care rising, companies claiming to sell health insurance that are not properly licensed in Wisconsin are targeting small business owners and their employees.

Employers and consumers must take the time to be sure they are dealing with a licensed insurance company. It is a simple step to ensure that you and your employees will have coverage when it is needed.

Verify before you buy! All insurance companies and agents doing business in Wisconsin are required by state law to be properly licensed to sell insurance in the state. The Office of the Commissioner of Insurance (OCI) is responsible for licensing insurance companies and agents in Wisconsin. Licensed insurance companies are subject to regular monitoring and oversight that can help the OCI identify potential problems and prevent large losses.

There is no safety net when an insurer operates without a license. Unlicensed insurers are not regulated, may not be actuarially sound, and do not guarantee payment of claims if the company goes bankrupt.

Small business owners who purchased unlicensed health plans may find it difficult to secure new coverage for their employees because of preexisting conditions and the subsequent lapse in continuous coverage.

Consumer Tips:

  • If it sounds too good to be true, it usually is. Beware of prices that are significantly lower than others you've been quoted.
  • Give yourself enough time to investigate. Don't be rushed into a decision.
  • Check out the company's brochure and other materials. If getting a quote is too easy, be suspicious.
  • Beware of claims that you are buying a "membership" or that what you are buying "is not insurance."
  • Examine the policy to determine the actual coverage to make sure the promised benefits are FULLY insured by a licensed insurance company.
  • Ask for references of employers enrolled with the provider and get information from employers about benefit payment history and claim turn around time.
  • BEWARE of plans that tout "stop loss" or "reinsurance" coverage, even if it is purportedly from a licensed insurer, are sold by a "union," are "self-funded" plans sold by a professional employee organization ("PEO") or employee leasing firm, or claim they are solely governed by the ERISA, a federal law, and the U.S. Department of Labor.

Remember: Verify Before you Buy! Call the OCI toll-free at 1-800-236-8517 to see if the insurance agent and company are licensed to do business in Wisconsin. You can also e-mail the OCI Agent's Licensing Section at or Financial Regulation (for companies) at