The small business regulatory coordinator for the Department of Commerce is Carol Dunn, who may be contacted at telephone (608) 267-0297, or Email at cdunn@commerce.state.wi.us.

NOTICE IS HEREBY GIVEN That pursuant to Sections 38.50 (2), (3), (10) (c) 4. & (cm), and 227.11 (2), Wis. Stats., and interpreting Sections 38.50 (2), (3), (7) and (10), Wis. Stats., and according to the procedure set forth in s. 227.16 (2) (e), Wis. Stats., the Educational Approval Board (EAB) will adopt the following rule as proposed in this notice, without public hearing unless, within 30 days after publication of this notice December 15, 2005, the EAB is petitioned for a public hearing by 25 natural persons who will be affected by the rule; a municipality which will be affected by the rule; or an association which is representative of a farm, labor, business or professional group which will be affected by the rule.

Rule Analysis

Under s. EAB 4.06, schools regulated by the EAB are assessed a student protection fee. The amount of the fee is currently based on a rate of $0.50 per $1,000 of adjusted gross annual school revenue as reported by the schools. These fees are deposited into an appropriation under s. 20.292 (2) (gm) and are used to indemnify certain persons suffering loss from such events as a catastrophic school closure.

This proposed rule would allow the EAB to assess a student protection fee at a rate the board determines necessary to protect the viability of the appropriation, not to exceed an amount of $10,000 for any individual school and only if the balance is less than $500,000. The EAB has expressed concern about being able to fulfill its statutory obligation of protecting students in the event of a catastrophic school closure.

Because the fund balance is currently less than $500,000, the proposed rule would give the EAB the authority to assess a fee at a rate higher than the current rate of $0.50 per $1,000. However, the rule does not require the board to assess the higher rate, and once the fund balance is in excess of $500,000, the board would be specifically prohibited from assessing a higher fee. In addition, the EAB would be limited in assessing any individual school a student protection fee that exceeds $10,000.

Text of Rule

SECTION 1. EAB 4.06 (2)(b) is amended to read:

EAB 4.06 (2)( b) The fee shall be based on a rate of $0.50 per $1,000 of adjusted gross annual school revenue as reported in accordance with ss. EAB 4.01 (4) and 4.10 (2) (d), or if the appropriation balance of s.20.292 (2)(gm) is less than $500,000, a fee determined by the board to protect the viability of the appropriation under s.20.292 (2)(gm), but not to exceed $10,000 for an individual school.

The potential impact of this rule on small businesses is limited to the extent that such businesses meet the statutory definition of a school and are subject to the EAB approval. The EAB currently approves 140 for-profit and non-profit postsecondary schools. These schools consist of technical, career, distance-learning, and degree-granting institutions that offer more than 600 degree and non-degree programs to over 30,000 Wisconsin adults annually. Typical programs includes truck driving, massage therapy, home inspection, teacher licensure, IT certifications, CAD drafting, as well as traditional bachelor and master degrees.

At the present time, the student protection fund appropriation contains $79,582. Based on reported school revenues for the 2006 renewal year, it is estimated that the FY 06 fund balance will increase to approximately $141,300 as a result of the standard fee assessment. This increase is based on total reported school revenues of approximately $123.5 million.

In addition, provisions contained in the 2005-07 biennial budget (2005 Wisconsin Act 25) will transfer $250,000 of retained earnings from the EAB's general operating budget into the appropriation on June 30, 2006. After the transfer, the estimated balance for the student protection fund will be $391,300.

Because of the permissive nature of the proposed rule order, it is not possible to determine the fiscal effect. Based on a FY 06 fund balance of $391,300, the EAB would not be able to assess more than $108,700 before the $500,000 cap is reached. However, the EAB has indicated that its primary intent is to address a situation in which the balance falls below the $500,000 due to a catastrophic school closure. In addition, no one school could be assessed more than $10,000. To gain some insight about how the proposal might affect an individual school, one should consider the student protection fees assessed in 2005 totaled $55,746, ranging from no fee to $9,941. While the average fee was $446, the median fee was only $58.

Questions and requests for copies of the proposed rule should be directed to:

David C. Dies

Educational Approval Board

30 W. Mifflin Street, 9th Floor

P.O. Box 8696

Madison, Wisconsin 53708

608/266-1996

Notice is hereby given that pursuant to the authority granted under s. 601.41 (3), Stats., and the procedures set forth in under s. 227.18, Stats., OCI will hold a public hearing to consider the adoption of the attached proposed rulemaking order affecting ch. Ins 6, Wis. Adm. Code, relating to agent's licensing procedure changes which will affect small business.

Date: January 11, 2006

Time: 10:00 a.m., or as soon thereafter as the matter may be reached

Place: OCI, Room 227, 125 South Webster St 2nd Floor, Madison, WI

Written comments or comments submitted through the Wisconsin Administrative Rule website at:
http://adminrules.wisconsin.gov on the proposed rule will be considered. The deadline for submitting comments is 4:00 p.m. on the 14th day after the date for the hearing stated in this Notice of Hearing.

Written comments should be sent to:

Robert Luck

Legal Unit - OCI Rule Comment for Rule Ins 6

Office of the Commissioner of Insurance

PO Box 7873

Madison WI 53707-7873

For a summary of the rule see the analysis. There will be a state or local government fiscal effect. The full text of the proposed changes, a summary of the changes and the fiscal estimate are available at the OCI website (see below).

Notice is hereby further given that pursuant to s. 227.114, Stats., the proposed rule may have an effect on small businesses. The initial regulatory flexibility analysis is as follows:

a. Types of small businesses affected:

Insurance agents

b. Description of reporting and bookkeeping procedures required:

None beyond those currently required.

c. Description of professional skills required:

None beyond those currently required.

The OCI small business coordinator is Eileen Mallow and may be reached at phone number (608) 266- 7843 or at email address Eileen.Mallow@oci.state.wi.us

A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the OCI internet WEB site at http://oci.wi.gov/ocirules.htm or by contacting Inger Williams, Services Section, OCI, at: Inger.Williams@OCI.State.WI.US, (608) 264-8110, 125 South Webster Street – 2nd Floor, Madison WI or PO Box 7873, Madison WI 53707-7873.

Analysis Prepared by the Office of the Commissioner of Insurance (OCI)

1. Statutes interpreted: ss. 600.01 and 628.04, Stats.

2. Statutory authority: ss. 601.31 (m), 601.41 (3), 601.42, 628.04, 628.10 and 628.11, Stats.

Note: OCI is submitting a Technical Bill that changes the procedure for licensees that don't pay fees or complete continuing education requirements and the relaxed reinstatement requirements. If this bill has not been signed into law prior to OCI submitting the rule to the legislature, OCI will modify the procedures to conform to existing law and the existing rule. The billing and CE due dates will change regardless of whether the Technical bill is enacted.

3. Explanation of the OCI's authority to promulgate the proposed rule under these statutes:

These statutes permit the commissioner of insurance to set standards by for prelicensing education, continuing education, agent fees and other procedural requirements of licensing. These changes change the existing procedures which have been in effect for many years. They do not attempt to extend the commissioner's authority to areas not previously regulated by the existing rules.

See the Note in item #2 above relating to the OCI Technical bill.

4. Related Statutes or rules:

None.

5. The plain language analysis and summary of the proposed rule:

These changes attempt to move OCI to the NAIC model standards for licensing producers. In May of 2006, OCI is also converting the licensing software used from “COSMOS" to “SIRCON" requiring certain changes.

In addition, OCI is introducing a Technical bill which will change certain requirements needed to implement the NAIC standard and the conversion to SIRCON. If this OCI Technical bill is not enacted, certain provisions of these changes would have to be modified. These modifications would be done before the rule is sent to the legislature for the review period. The modifications would deal mainly with the revocation of licenses for non payment of fees or CE non compliance and the relaxed reinstatement requirements.

Fee and CE Reporting Changes

The NAIC model has renewal billings and continuing education (“CE") compliance due based on the agents month and year of birth. In order to change from our current system of billing and requiring CE compliance once every two years, there needs to be a transition period. This proposed transition would ensure that all agents pay the same overall fees and require 12 CE credit hours per year. The following is a description of how the new billing/CE procedures would be transitioned:

The fees are being raised slightly, but still far below what most states require. These increases will partially cover some additional costs of the new system, the costs of electronic processing of the renewals, the cost of paying renewal fees with a credit card and certain other fees which are being deleted in the OCI technical bill being introduced in the legislature. The revocation referenced above and relaxed reinstatement provisions depend on the passage of the OCI technical bill. If this does not pass, the current system of suspending and revoking 60 days later as required in s. 628.10, Stats., would continue.

The changes would require all insurers to do appointments and termination of agents on line. Currently, most insurers utilize this method.

The SIRCON system will automatically check the current status of nonresident agents licensing in their home state, alleviating the need for agents to provide a paper Certificate of Licensing. In addition, the Department of Justice crime checks will be done electronically. This will eliminate another paper item that applicants currently have to obtain and bring to the testing site.

Prelicensing Education Changes

Other changes clarify how the hours for prelicensing education are calculated and expand the exemptions for prelicensing education for agents who hold certain professional designations.

Programs that offer courses will be required to notify OCI electronically of all agents who have taken any course, eliminating the paper certification now required with the agent's application. Most providers that offer prelicensing education also offer continuing education and currently provide the continuing education information electronically. The requirement to also provide the prelicensing education information electronically should not be a burden for the providers.

Continuing Education (“CE") Changes

OCI would require that 3 hours of the 24 CE hours needed every two years be devoted to the ethics of insurance. This exposure to discussions of ethics would hopefully inform or expand agent's views of how insurance should be marketed. Programs that offer courses will be required to notify OCI electronically of all agents who have taken any course, eliminating the paper notifications. Most providers do this already.

In the past, there have been relatively few “correspondence courses" approved for CE. These changes would specifically allow correspondence courses and set some criteria for approval.

6. Summary of and preliminary comparison with any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule:

There is no similar federal regulation covering these activities. Insurance is generally regulated on the state level with the National Association of Insurance Commissioners producing model procedures for states.