Commentary from Counsel - OCI Reporting Requirements - An Overview

We frequently get inquiries from client agencies as well as on the IIAW Hotline regarding the obligation to report particular events to the Wisconsin Office of the Commissioner of Insurance (OCI). As the new year begins, it seems like a good time to give an overview of the issues presented. Keeping in mind that each situation is unique and that you and your agency need to be vigilant to ensure you meet your obligations, including getting legal advice if in doubt, here are some basic principles to keep in mind.

Generally, reporting obligations fall on the licensed intermediary. Certain occurrences must be reported to the OCI by the intermediary within 30 days. Customer or client complaints—a frequent inquiry item—do not alone, by definition require reporting to the OCI. If a customer complaint ultimately leads to the discovery of a mandatory reporting event, then the intermediary would be obligated to report such occurrence to the OCI. Those mandatory reporting events are identified in Wis. Admin. Code s. INS 6.61 as: • An initial pretrial hearing date related to any criminal prosecution (either misdemeanor or felony) • A conviction of a crime (either misdemeanor or felony) • An administrative action taken by any state agency which licenses individuals for any occupational activity • A lawsuit filed alleging misrepresentation, fraud, theft, or embezzlement (individual or business)

Also keep in mind, as a corollary consideration when receiving communications from policyholder customers, that intermediaries are also required to maintain policyholder records, including consumer complaints, for at least three years after termination or lapse of the policy. Wis. Admin. Code s. INS 6. 61(14).

Many agencies are also licensed as an intermediary firm. Generally speaking, there are no specific reporting requirements that apply to intermediary firms for actions of their intermediaries. However, because of the broad powers of the OCI to request records and information and take action against intermediaries or intermediary firms, it is still important for an intermediary firm to exercise oversight of its agents. In certain situations, it may also be in the intermediary firm’s interest to report an agent’s activity to the OCI.

For example, if an agency learns of a termination of an appointment by an insurer based on circumstances that call into question the agent’s conduct, the licensed intermediary firm may want to consider notifying the OCI. This is because Wis. Admin. Code s. INS 6.57 requires insurers to submit notices of termination of appointment to the OCI and, if the reason for termination relates to trustworthiness or competency criteria in Wis. Admin. Code s. INS 6.59(5)(d), or is because the insurer has knowledge of complaints received or problems experienced by the intermediary or the intermediary’s agency involving indebtedness, forgery, altering policies, fraud, misappropriation, misrepresentation, failure to promptly submit application or premiums, or poor policyholder service that involved the intermediary being terminated, the insurer must information relating to this termination to the OCI. In these situations, it may be advisable for the intermediary firm to voluntarily report the actions of the agent to the OCI. Whether this reporting is advisable would depend upon a variety of factors including the allegations of the complaint, the harm to the policyholder, whether there has been a pattern of behavior, and whether the insurer in fact intends to terminate the appointment.

As you can see, while there are certain events that meet clear reporting thresholds, there may be many others that fall into gray areas ripe for discussion and advice. If in doubt, reach out for assistance.