|Date:||February 4, 2005|
|To:||All Insurance Companies and Resident Intermediary Firms|
|From:||Jorge Gomez, Commissioner of Insurance|
|Subject:||Disclosure Required by s. 628.32, Wis. Stat.|
This bulletin is a reminder that an insurance intermediary (insurance agent or broker) who accepts compensation from an insured is required by Wisconsin law to make certain disclosures. Under s. 628.32 (1), Wis. Stat., the intermediary must disclose that the intermediary also will be compensated by the insurer. This disclosure must be made prior to engaging the customer as a client and must be clear, conspicuous and in writing. The written disclosure must, at minimum, tell the customer:
- The amount of the compensation the customer must pay the intermediary for intermediary services.
- That the insurance intermediary will also receive compensation from the issuing insurer.
You are also encouraged to follow the best practices in the industry on this topic, which may include providing:
- A description of the nature of the compensation arrangements with the insurer, including, but not limited to, any commission or contingent commission arrangements.
- A description of how the customer may request additional information.
Section 628.32 (1), Wis. Stat., reads as follows:
"628.32 (1) Disclosure Required. An intermediary may not accept compensation from an insured or from both an insured and another source due to the insured's purchase of insurance or for advice regarding the insured's insurance needs or coverage unless the intermediary, before the insured incurs an obligation to pay compensation, clearly and conspicuously and in writing discloses to the insured all of the following:
(a) The amount of compensation to be paid by the insured, excluding commissions paid by the insurer to the intermediary.
(b) If compensation will be paid by another source, the fact that the intermediary will also receive compensation from the other source." (Emphasis added)
If you have questions regarding this bulletin, please send your questions in writing to firstname.lastname@example.org.