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.

7. Comparison of similar rules in adjacent states as found by OCI:

Iowa:

Application fees: $50 per line

Renewal fees: $100, triennially on April 1

CE: 36 hours triennially due December 31 prior to license renewal

Illinois: 215 ILCS 5, Illinois Insurance Code

Application fees: $180 for residents & $250 for nonresidents

Renewal fees: $180 for residents & $250 for nonresidents

biennially on registration issuance date

CE: 30 hours biennially due on registration issuance date

Minnesota: Statutes chapter 60K and Rules chapter 2795

Application fees: $50 per line

Renewal fees: $50 per line, biennially on October 31

CE: 30 hours biennially due on October 31

Michigan:

Application fees: $10 application fee per line plus $60 testing fee per line

Renewal fees: Perpetual license

CE: 30 hours biennially due on individual compliance date based on last digit of the social security number and the first letters of producer's last name

8. A summary of the factual data and analytical methodologies that OCI used in support of the proposed rule and how any related findings support the regulatory approach chosen for the proposed rule:

These changes bring Wisconsin into conformance with the system used by many other states and preferred by the NAIC for uniformity. Once all states start billing in the agent's birth month, agents who are licensed in more than one state will have a better idea of when fees and continuing education is due in the various states.

9. Any analysis and supporting documentation that OCI used in support of OCI's determination of the rule's effect on small businesses under s. 227.114:

The small increase in fees will offset increased costs by OCI incurred for using on-line renewal and allowing credit card payment of fees. Agents using these services will not pay additional fees to use them with the costs being included in the renewal fee.

In addition, in the OCI technical bill, if passed, will eliminate certain existing fees for agent letters of certification, agent letters of clearance, replacement copies of new licenses and issuing of duplicate licenses. The net effect of all changes, including those in the OCI technical bill, will end up with no or a very small increase in revenue to OCI.

It is difficult to determine agent savings from reduced paperwork in the licensing process but there clearly is a reduction in cost. Similarly, agents licensed in other states will benefit from more uniform billing and renewal procedures but it is difficult to place a single dollar amount on this type of benefit.

10. If these changes may have a significant fiscal effect on the private sector, the anticipated costs that will be incurred by private sector in complying with the rule:

These changes will not have a significant fiscal effect on the private sector.

11. A description of the Effect on Small Business:

This rule will have an effect on small businesses but will not be a significant impact on small businesses. Many insurance agents are small businesses. This rule would minimally raise a biennial fee by $5 per year for resident agents and $10 per year for nonresident agents. These increases are very small. In addition, the increased fees will cover the additional cost of agents being able to renew on-line and pay with a credit card.

The changes promote efficiency by eliminating paperwork that agents currently are required to complete, mainly in the licensing process.

For agents that are licensed in other states, the new billing procedures are uniform with the direction others states are going. After all states adopt the new procedures, Wisconsin agents will be able to deal with licensing issues in all states on a more uniform basis.

12. Agency contact person:

A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the WEB sites at: http://oci.wi.gov/ocirules.htm or by contacting Inger Williams, OCI Services Section, at:

Phone:   (608) 264-8110