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In this edition:
Nationwide Issues Will Affect Wisconsin RegulationBy Connie L. O’Connell, Commissioner of Insurance At the end of 2000, state insurance regulators are considering several far-ranging proposals that will substantially affect insurance regulation across the United States. I am pleased with the progress our agency is making in deliberating over and addressing these issues. The national agent licensing, consumer privacy and "speed-to-market" proposals are illustrative of weighty insurance issues being dissected in state insurance departments, Congress, agency offices and industry boardrooms. "Speed-to-Market" Through the National Association of Insurance Commissioners (NAIC), our state is participating in the planning and potential adoption of the Coordinated Advertising, Rate and Form Review Authority (CARFRA). CARFRA would allow insurers to move new insurance products to the market more quickly by permitting them a one-stop national review, rather than a state-by-state process. This authority would effectively create a national standard and single point of review and approval. State regulators would retain control of insurance regulation while gaining access to a pool of greater expertise for consideration of rate, form and advertising filings. There will be no need for a greater Federal role in insurance regulation if a plan like CARFRA is accepted by all the states. While each state has not yet agreed to a single approach, there is a growing consensus around principles in the CARFRA model. States will contribute appropriate staff members to a pool of people that will perform the reviews. Review teams would be selected from the pool each time a filing is made. A board of directors elected by the participating regulators - the states, District of Columbia and U.S. Territories - would administer the authority. The CAFRA model establishes definite review times. The decision of the CARFRA will be assumed to apply to all states except those that decline participation in the authority. Individual team members would complete their responsibilities in their home states using CARFRA's electronic filing repository. The electronic repository might take its form from the NAIC's State Electronic Rate and Form Filings system (SERFF) and would require a small staff. Privacy Proposals At the time of this writing, many states were wrestling with deadlines for privacy requirements created by the Gramm-Leach-Bliley Financial Services Modernization Act (GLBA). Wisconsin is on schedule to release a draft privacy rule for public comment before the end of the year. Our rule will deal with both financial and medical records privacy, the latter already covered to a large degree in Wisconsin statute. In October, the NAIC adopted its model privacy regulation. The model parallels federal rules on financial information including a consumer's opt-out provision in relation to unaffiliated companies. The model requires an opt-in for consumers concerning the sharing of their health information for marketing and nonmarketing purposes with unaffiliated companies. Although the NAIC has completed work on model legislation, questions remain. For example in the area of worker's compensation, debate is continuing between those who want greater restrictions on medical data and those who need medical record information for claims. The rapid expansion of electronic recordkeeping and growing integration of financial industries makes it clear that insurers must have clear and safe procedures for maintaining client record privacy. However, some insurance companies fear new regulations may draw a big blanket over all sorts of important data causing business delays. Others say that federal regulations may infringe on state regulation of worker's compensation. A second concern is ensuring that the rules prevent information about the diseases of individuals from affecting the insurability or financial status of their children, for example. Finally, there is the integration of privacy regulations being developed by the federal Department of Health and Human Services (DHHS) as required by the Health Insurance Portability and Accountability Act (HIPAA). The NAIC model states that its rules will not apply to states that already meet the DHHS privacy rules based on HIPAA. National Agent Licensing A third item of discussion has been a system to ensure uniformity or reciprocity in the licensing of insurance agents in the U.S. GLBA stipulates that at least 29 states must pass reciprocal or uniform agent licensing laws by November of 2002. If not, the National Association of Registered Agents and Brokers (NARAB) will supplant states' licensing systems. I am confident that states will meet this deadline. In early October, the NAIC adopted a Producer Licensing Model Act, which would guarantee the licensing reciprocity among states mandated by the GLBA. Four states have already adopted the model act. Many states, including Wisconsin, will not require statutory change in order to implement a reciprocal system. OCI is currently drafting an administrative rule that will make the changes necessary for us to meet this test. Details about the model act can be found at the NAIC's Internet web site at www.naic.org under Committee Activities, NARAB Working Group. Return to top of this page.Topics in Brief"Frequently Asked Questions on Health Insurance" is the title of a new Web page on the OCI’s Internet site. The page debuted in October and is designed to make answers to common questions available to state residents even at night and on weekends. Questions and answers are sorted into four catagories: General Health Insurance, Group Health Insurance, Managed Care Plans and Long-Term Care and Medigap Insurance. The Page address is badger.state.wi.us/agencies/oci/faq/health.htm. Wisconsin adopted the National Association of Insurance Commissioners’ (NAIC) Uniform Certificate of Authority Application (UCAA) on October 18. Insurance companies that intend to expand into uniform states can use the UCAA and can apply simultaneously in several states. Insurers can find the application on the OCI’s Web site under Information for Companies, Application for Licensure, Nondomestic Insurers. There is a link there to the NAIC Web site. Or the document can be found directly at www.naic.org/ucaa. Thirty-seven states had adopted the UCAA by the end of October. Return to top of this page.Continuing Education Update for Winter 2000Basic Requirements All agents who hold a license in any of the four major lines of property, casualty, life, accident and health insurance, or the limited line of automobile, must meet the continuing education requirements. Course credits may be completed at any time during the two-year period. The 1999-2001 reporting period began January 1, 1999. Agents originally licensed prior to January 1, 1999, in the lines identified above are required to complete 24 continuing education credit hours between January 1, 1999, and February 15, 2001. Agents originally licensed after January 1, 1999, are required to complete the requirements between January 1, 2001, and February 15, 2003. Each agent’s reporting period is identified on his or her individual license copy. Carryover of credits from one reporting period to another is not allowed. A transcript of completed courses was mailed to all agents requiring continuing education in early December. The OCI urges agents to complete their education requirements well in advance of the February 15 suspension date. Course credit is provided on the date the record is banked, not on the date of course completion. Therefore, agents who wait until early February to attend a course may have their license suspended if the credits are not banked by February 15. A list of approved providers and courses is available at ASI’s Web site through a link at OCI’s Web site by logging on to http://badger.state.wi.us/agencies/oci/oci_home.htm, then click on "Information for Agents"followed by "Continuing Education for Insurance Agents." Or log on directly to www.asisvcs.com. Reminder: If an agent completed requirements prior to January 1, 1999, for the 1997-99 reporting period, classes she/he completed between January 1 and April 16, 1999 were banked for the 1999-2001 reporting period. Internet and FaxBack Transcripts Available from ASI ASI has developed two new ways to assist agents in determining their progress toward meeting the continuing education requirements. To request the most current Licensee Continuing Education Transcript, use either of the following options: Call ASI’s Transcript FaxBack System toll-free at (877) 687-8886. Agents will be required to provide their Wisconsin license numbers. Once the license number is verified, the latest transcript will be faxed to the number they choose. Log on to www.asisvcs.com. Click on "Insurance Professionals" and select Wisconsin Insurance. Under Continuing Education Services, click on "Licensee Course Transcript," and enter the Wisconsin license number and last name. Transcripts can be viewed and printed. The transcript will permit an agent to take any action that is necessary to add, delete, or change information that is inaccurate. To correct credit discrepancies, agents are required to contact their continuing education provider(s) directly. These discrepancies can only be resolved between the agent, the provider and ASI. Who to Call Contact ASI for answers to general questions, to gain information on course availability, and to confirm if credits have been banked in an agent’s individual record. They may be reached at (800) 274-4679. Reminder: Dial the (800) prefix whenever using this number. Requests for information may also be faxed to ASI at (610) 617-9303. ASI representatives are available Monday through Friday from 7:00 a.m. to 5:00 p.m., CST. Nonresident Reporting Requirements Nonresidents are required to submit a letter of certification at the reporting date identifying they have completed the continuing education requirements in their home state. Requests will be mailed to nonresidents in December of this year. Please do not submit the letter of certification until requested to do so. Residents of Hawaii and Vermont must complete Wisconsin’s requirements or provide evidence of completion in another state. Resident Requests for Waivers from Continuing Education Requirements Section Ins 28.05, Wis. Adm. Code, identifies that continuing education requirements may be waived in writing by the Commissioner for good cause shown. "Good cause" includes long-term illness or incapacity, serving full-time in the armed forces of the United States of America on active duty outside of the state of Wisconsin during a substantial part of the biennium, and other emergency situations deemed appropriate by the Commissioner. Requests for waivers by resident licensees of continuing education requirements shall be made in writing in a form and manner prescribed by the Commissioner, and shall be submitted to the Commissioner no later than 90 days prior to the end of the biennium for which such waiver is requested. Any waiver granted pursuant to this section shall be valid only for the biennium for which waiver application was made. Therefore, in order to qualify for a waiver for the 1999-2001 reporting period, a completed waiver form, including any required documentation, must be received no later than November 1, 2000. Agents can receive a waiver form by contacting ASI at (800) 274-4679. Agent Licensing Forms on Web The following Wisconsin application and service request forms are now available at the OCI Web site. Get access to these forms by logging on to http://badger.state.wi.us/agencies/oci/oci_home.htm, then click on "Information for Agents." Please begin using the new forms as soon as possible. The OCI will no longer accept any of the previous forms after January 15, 2001.
Wisconsin’s Statutes and Adminstrative Codes on the Internetwww.legis.state.wi.us/rsb/statutes.html for state statutes. www.legis.state.wi.us/rsb/code/ins/ins.html for state codes. Return to top of this page.Grievance Procedure Rules Now In EffectBy Barbara Belling, OCI Managed Care Specialist 1999 Wisconsin Act 155 required every insurer who issues health benefit plans to establish an internal grievance procedure no later than December 1, 2000. The procedure must allow an insured to submit a written grievance in any form, establish a grievance panel for the prompt investigation of each grievance, provide for notification to each grievant of the disposition of his or her grievance, and provide for retention of records pertaining to each grievance for at least three years. Insurers must also provide insureds with complete and understandable information describing its internal grievance procedure. The OCI is now promulgating administrative rules to establish standards for the internal grievance procedure and for independent review. The rules are expected to be finalized early in 2001. An insured who receives a final disposition on a grievance on or after December 1 is entitled to an independent review if the insured requests the review within four months of the date noticed in the Register. Return to top of this page.Agent QuestionsQ. Is there a place on the Internet where I can print a form to fill out for the required Wisconsin background check, for insurance licensing? If not can you mail or even better fax me one? A. There are several ways to access the CIB form. On our Web site, click on Information for Agents, then select Major Line Prelicensing Education and Examination Information. Scroll down the page until you see a hotlink to ASI’s Web site. Once at their Web site, follow the prompts to find Wisconsin’s Candidate Handbook. The CIB form is located on page five of the handbook. Please keep in mind that if you are signed up to complete the prelicensing education for a major-line license, you will receive a Candidate Handbook when you enter the class. You can also log on directly to the Department of Justice at www.doj.state.wi.us. Click on Criminal Record Information, and follow the prompts. Return to top of this page.Private Employer Program Under ConstructionBy A.B. Orlik, Department of Employe Trust Funds Imagine that each employee at the local body shop, grocery store, or tavern can choose a different health insurance plan. Imagine each business owner receiving one consolidated monthly bill, regardless of which plan(s) employees choose, and saving money by benchmarking the business’ contribution to the lowest-cost plan available. Imagine being the insurance agent who presents this program of choice in the community: Ask employees to fill out one health questionnaire and receive from the program one spreadsheet of rates for all participating health plans. The Department of Employee Trust Funds’ Office of Private Employer Health Care Coverage (OPEHCC) is working to make this vision a reality as the Private Employer Health Care Coverage Program (PEHCCP). Specific details about the program are not yet available. OPEHCC staff are learning from the experience of similar programs all across the country to ensure that Wisconsin’s program offers a long-term solution to the volatility small businesses experience in the health insurance market, not a short-term fix. Currently, the OPEHCC is in the final stages of developing a request for proposals for administrative and marketing services. The selected vendor will serve as the backbone of the program, by contracting with health plans; conducting enrollment and dual-choice periods; maintaining eligibility files; billing, collecting and distributing premium; and providing reports about program performance. The contracted administrator will also be agents’ connection to the program. The administrator’s representatives will be available to answer questions, generate quotes, provide enrollment/renewal/dual- choice materials and guidance, and offer frequent in-service workshops to keep agents up-to-date. Agents/brokers are a vital link to the small business community and OPEHCC will insist that the program’s administrative vendor provide the highest level of service. According to OPEHCC staff, the agency is on track to choose an administrator by the end of 2000. That staff will keep the OCI and Wisconsin Insurance News informed of the program’s progress. Return to top of this page.Agents Should Know State Title Insurance RulesBy Phil Kress, OCI Property & Casualty Section Chief There are several parts of Wisconsin Administrative Code that apply specifically to title insurance, and agents should stay aware of the specific sections mentioned below. One important section is s. Ins 3.32, Wis. Adm. Code, which defines the point at which an affiliate or some other entity becomes an "affiliate producer of title insurance." Subsection Ins 3.32 (4), lists the prohibited practices that apply to title insurers, title agents or producers of title insurance. Although the rule does not bar an affiliate arrangement to obtain business, the rule’s list of prohibited practices states that certain business assets or services, such as copy machines or the paying of a fee, cannot be provided to a producer of title business by the title insurer or agent. A producer of title insurance is defined in the rule as a person who orders or influences the ordering of title insurance and related services. The current text of rules is available at the Wisconsin legislative Internet site at http://www.legis.state.wi.us/rsb/code/ins/ins.html. Click on Ins 3, Casualty Insurance, and scroll down to 3.32 and click again to open the code’s subtitles. The full text of the code is available by clicking on the PDF icon and scrolling down to the desired subsection. Another section is s. Ins 6.61 (11), Wis. Adm. Code, which requires the intermediary of title business, the title insurance agent, to retain information about affiliated business for a period of three years. The code describes the required records. Section Ins 6.78 (4), Wis. Adm. Code, requires title insurers to retain certain information describing and justifying a rate it offers that is less than the rate filed with the Commissioner of Insurance by the title insurer. The code contains a list of items that must be retained for five years. Finally, s. Ins 6.85 (5) (c), Wis. Adm. Code, requires title insurers to deliver, at the time a claim is denied, the notification of the claimant’s right to file a complaint with the Commissioner of Insurance. The summaries above are brief. Title agents and underwriters should review the complete versions of the rules contained in the Administrative Code. Return to top of this page.Viatical Scam Bleeds State Senior Citizen InvestorAgents are Still Being Recruited Across the Nation By Stephen Mueller, OCI Staff Attorney Ted Bass (His name has been changed, but the story is true.) was born in 1929, the year of the Great Depression. But his real depression began 70 years later when his insurance agent recommended he invest in viatical settlements offered by companies in Florida, Maryland and Ohio. Bass invested a total of $133,000, a lifetime of savings, rolling over his brokerage IRA account to a "self-directed" IRA account administered by a company in Colorado. None of the viatical settlement investments have paid-off. Now, at 71, Bass is looking for work. He cannot withdraw anything from his IRA, the account administrator continues to charge him fees of $116 annually, and he is being asked for additional money to pay the policy premium or risk the lapse of the policy. Credit Bass’ predicament to the actions of a licensed insurance professional. The OCI has issued warnings concerning sales of noninsurance financial products by insurance agents, the potential violations of state and federal securities law, and the resulting possibility of insurance license sanctions. Bass is a human example. Each of Bass’ three viatical settlement investments is a fractional interest in a life insurance policy issued to an unknown person. Typically, the beneficiary of the policy is a "trust" set up by the seller of the investments. The insurance agent who solicited Bass was paid a commission by each program for his sales efforts. The viatical program and the selling agent facilitated the IRA rollover to an account administrator for the sole purpose of purchasing the life insurance interests. Unfortunately for Bass and apparently unknown to the agent, one of the policies was issued in 1996 to a 74-year-old male for a face amount of $650,000. The annual premium is $20,000. He received a 6.23% interest in this policy in 1998 along with a medical "assessment" saying that, although the insured had no immediate life-threatening illness, he was expected to live only two years. Bass is now 71, and the insured is 78 and still alive. Besides needing the money for living expenses, Bass is required to draw down this account according to Internal Revenue Service rules governing IRA’s. Bass also just received a letter from an escrow agent informing him that amount escrowed by the trustee to pay premium on another policy has been expended and has no cash value to pay premiums. The letter warned that unless he sent $129.41 immediately, the policy might lapse and he might be subject to "legal actions against you by other parties who hold an interest in the . . . policy." Return to top of this page.Eye on OCIGreg Luft Keeps Account of the State Life FundBy Kyle Richmond, OCI Public Information 
Greg Luft helps keep the balance in a very unique part of Wisconsin's insurance universe, the State Life Insurance Fund (SLIF). A self-sufficient, mutual life insurer overseen by the OCI, the SLIF has a staff of one half-time and four full-time people, and Luft is its accountant. "The best part of the job is (that) you're doing more than one thing, being a small office," Luft said. Luft was the last employee to join the SLIF in 1984. The staff's stability and size gives him a varied workload. He pays the general bills, coordinates the Fund's information needs with the OCI's IS department, and keeps the general ledger. The SLIF has about 31,000 active policies, and sends out from 800 to 1,000 dividend checks at the beginning of every month. The Fund, established in 1911, has a page on the agency's Web site at badger.state.wi.us/agencies/oci/slif.htm. The state's Legislative Audit Bureau audits the SLIF every two years and Luft also prepares for that audit, and answers directly to the bureau concerning any other financial transactions. In addition, he serves as a liaison with the Department of Administration, and the Treasurer. "It's kind of challenging. We're on a calendar year for accounting purposes, and the state runs on a (July through June) fiscal year basis," he said. The OCI requires the Fund to run on a calendar year just as other insurers do. Luft must reconcile two different accounting systems-the state government's WISMART software and FIMMAS, the standard insurance-oriented software. He said that's the hardest part of his job. Luft processes all kinds of transactions that have to do with individual policies: death claims, surrenders, matured endowments, term expires, policy loans, dividend withdrawals, premium payments, loan payments, etc. He also helps review RFPs for actuarial contracts. "I thought it was kind of a unique opportunity because we're running a business out of state government," he said. " My dad was a sole proprietor (of a vehicle repair shop)…It makes you feel like you're accomplishing something." "I handle any complex questions from policyholders," Luft said. "Whereas we cannot give them consultation on the policies--we are not agents--I feel I can give them all the options that are available to them so they can make educated choices." Return to top of this page.Administrative Actions Taken by OCIIn many of the proceedings listed below, the Respondent denied the allegations but consented to the actions. Detailed information regarding the proceedings is available from the OCI Legal Unit. The following are actions completed from July 2000 through September 2000. AgentsRenee L. Backus Florence E. Boldt Jeffery R. Clark Martin Harrell Kanipe Kevin Michael Lawson Henry R. Mosley Michael K. O'Malley George K. Pavlopoulos Christopher I. Severson Alfred I. Shuaibe Dennis J. Stepanek Michael P. Swenson Peter J. Venhousen Christopher Kemp Washburn George T. Whitehead Gordon G. Williamson Administrative Actions Taken by OCIIn many of the proceedings listed below, the Respondent denied the allegations but consented to the actions. Detailed information regarding the proceedings is available from the OCI Legal Unit. The following are actions completed from July 2000 through September 2000. CompaniesAetna Life Insurance Company of America Ambac Assurance Corporation American Fire & Casualty Company American General Life Insurance Company of New York American Horizon Insurance Company Associates Insurance Company Atrium Health Plan, Inc. Blue Cross & Blue Shield United of Wisconsin Combined Insurance Company of America Connie Lee Insurance Company Constitution Life Insurance Company Coventry Health and Life Insurance Company Electric Insurance Company Employee Group Services Ltd. Group Health Cooperative of Eau Claire Group Health Cooperative of South Central Wisconsin Guaranty National Insurance Company Intercontinental Warranty Services, Inc. Interstate National Dealer Services Inc. Liberty Insurance Underwriters Inc. Life Investors Insurance Company of America National Auto Care Corp. New England Life Insurance Company North Central Health Protection Plan Ohio Security Insurance Company Old Republic National Title Insurance Company Physicians Mutual Ins. Co. Protective DentalCare, Inc. Quality Care Chiropractic Insurance ReliaStar Life Insurance Company of New York Service and Business Workers of America Local 125 (SWBA) Texas Life Insurance Company Travelers Insurance Company, The Ultimate Warranty Corporation Valley Health Plan, Inc. Vision Service Plan Insurance Company West American Insurance Company Reminder to AgentsAgents are required by statute to notify OCI of a residential address change within 30 days. Failure to do so may result in revocation of a license due to nonpayment of the biennial regulation fee. Relicensing requires retesting for resident agents. Retesting requires the completion of prelicensing education. If you have an address change, please notify the Agent Licensing Section in writing at P.O. Box 7872, Madison, Wisconsin 53707-7872, by fax at (608) 264-8115, or by e-mail at agentlicensing@oci.state.wi.us. Telephone requests for change of address are not accepted. Return to top of this page.The Wisconsin Insurance News is published quarterly by the Office of the Commissioner of Insurance, State of Wisconsin, to inform interested parties about Wisconsin's insurance market and its regulation. Governor: Tommy G. ThompsonCommissioner: Connie L. O'Connell Editor: Kyle R. Richmond, (608) 267-9336
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| Updated: December 7, 2000 |
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