(1) APPOINTMENT OF ADMINISTRATOR. A provider may, but is not required to, appoint an administrator to be responsible for any or all of the administration of service contracts and compliance with this subchapter. Except as provided in s. 616.58 (2) (b) , a provider shall be liable for the acts of an administrator appointed by the provider to assist with the administration of the provider’s service contracts to the extent such acts relate to the provider’s service contracts offered in or from this state. No person may act as an administrator of service contracts sold in this state unless the person registers with the commissioner by providing the following information: (a) The name, business address, and other information required by the commissioner for an employee or officer of the administrator that is designated by the applicant as the person responsible for the administration of service contracts in this state. (b) The location of the administrator’s home office. (c) The names of the service contract providers for whom the administrator performs administration. (2) RECEIPT AND COPY OF CONTRACT. A service contract may not be issued, sold, or offered for sale in this state unless the provider of the service contract has done all of the following: (a) Provided a receipt for, or other written evidence of, the purchase of the service contract to the service contract holder. (b) Provided a copy of the service contract to the service contract holder within a reasonable period of time from the date of purchase. (3) SAMPLE CONTRACT. A provider shall provide a consumer with a complete sample copy of the service contract terms and conditions prior to the time of sale upon a request for the same by the consumer. A provider may comply with this subsection by providing the consumer with a complete sample copy of the terms and conditions or by directing the consumer to an Internet website containing a complete sample of the terms and conditions of the service contract. (4) LICENSURE. (a) No person may act as a provider in this state unless the commissioner issues a license to the person under par. (c). (b) A person seeking to act as a provider in this state shall submit an application for licensure with the commissioner consisting of all of the following: 1. The applicant’s name. 2. The applicant’s full business address. 3. The applicant’s telephone number. 4. The name and full business address of a person in this state designated for service of process. 5. A copy of the service contracts proposed to be sold in this state that comply with s. 616.56. 6. Documentation of compliance with sub. (5). 7. The names of any administrator appointed by the applicant to assist with the administration of the provider’s service contract business in this state. 8. An initial licensure fee in the amount specified in s. 601.31 (1) (kr). (c) Upon receipt of an application that complies with par. (b) as determined by the commissioner, the commissioner shall issue a license to the applicant. (d) The information submitted with an applicant’s application for licensure need only be updated by written notification to the commissioner if material changes occur in the license application on file with the commissioner. (e) By March 31 of each year after issuance of a license under par. (c), a provider shall pay the commissioner an annual fee in the amount specified in s. 601.31 (1) (kr). (5) ASSURANCE OF PERFORMANCE; IN GENERAL. In order to assure the faithful performance of a provider’s obligations to its service contract holders, each provider shall be responsible for complying with the requirements specified in sub. (6) or (7). (6) ASSURANCE OF PERFORMANCE; INSURANCE. (a) A provider may satisfy sub. (5) by insuring all service contracts under a reimbursement insurance policy that has been filed with and approved by the commissioner under s. 631.20, that is issued by an insurer authorized to do business in this state, and that satisfies, at a minimum, all of the following: 1. The policy states that, if the provider covered under the policy does not provide, or reimburse or pay for, a service that is covered under a service contract insured under the policy within 60 days after a service contract holder provides proof of loss, or in the event of the provider’s insolvency or other financial impairment, the service contract holder may file a claim with the insurer issuing the reimbursement insurance policy for reimbursement, payment, or provision of the service. 2. The policy states that the insurer issuing the policy shall assume full responsibility for administering and paying claims and other obligations under service contracts insured under the policy if the provider or designated administrator fails to do so. 3. The policy states that the insurer issuing the policy may not terminate or refuse to renew the policy unless the insurer has provided a written notice of termination or nonrenewal to the commissioner at least 60 days before the date of the termination or, in the case of nonrenewal, the expiration of the policy. (b) If a reimbursement insurance policy by which a provider is satisfying this subsection is terminated, cancelled, or not renewed for any reason, or if the insurer issuing the policy is not in compliance with applicable financial standards, all of the following apply: 1. The provider shall immediately notify the commissioner of the termination, cancellation, or nonrenewal of the policy, if applicable. 2. The provider shall cease selling service contracts in this state until the provider either files with the commissioner a new reimbursement insurance policy that covers its obligations under service contracts sold in the state and that satisfies the requirements under par. (a) or provides a deposit or irrevocable letter of credit in accordance with sub. (7). 3. If the commissioner so requests, the provider shall file with the commissioner copies of its audited financial statements or financial statements that are certified as accurate by a corporate officer of the provider if the provider does not have audited financial statements. (c) An insurer issuing a reimbursement insurance policy to a provider is considered to have received the premium for that insurance policy upon payment by a consumer of the fee for a service contract issued by the insured provider. (d) The termination or nonrenewal of a provider’s reimbursement insurance policy does not reduce the insurer’s responsibility with respect to service contracts issued by the provider before the date of the termination or, in the case of nonrenewal, the expiration of the policy. (e) Nothing in this subsection prevents, or limits the right of, an insurer that issued a reimbursement insurance policy to seek indemnification from or subrogation against a provider if the insurer pays or is obligated to pay the service contract holder any amount that the provider was obligated to pay under the service contract. (7) ASSURANCE OF PERFORMANCE; DEPOSIT OR IRREVOCA- BLE LETTER OF CREDIT. (a) A provider may satisfy sub. (5) by providing security to compensate any service contract holder who sustains a loss due to the failure of the provider to perform its obligations under a service contract as a result of insolvency or other financial impairment. The commissioner shall approve the amount and form of the security. (b) The security under this subsection shall be in one or a combination of the following forms: 1. A deposit of securities under s. 601.13 for the benefit of Wisconsin consumers. 2. An irrevocable letter of credit that is from a bank properly chartered by the federal government or any state, that is acceptable to the commissioner, and that is issued for a term of at least 5 years with provision for renewal 2 years before termination. The letter of credit shall be payable to the commissioner or the commissioner’s designee for the benefit of Wisconsin consumers upon a finding by the commissioner that a provider is insolvent or financially impaired and unable to meet its obligations under service contracts issued in Wisconsin. The provider shall notify the commissioner in writing of the nonrenewal of a letter of credit within 30 days after receiving a notice of nonrenewal. No provider whose letter of credit has been nonrenewed may offer or sell or renew any service contract on or after the date of nonrenewal until the provider obtains security satisfying the requirements of this subsection or satisfies the requirements of sub. (6). (c) The security under this subsection shall be not less than $50,000 plus one of the following: 1. If the provider has not appointed an administrator under s. 616.54 (1), 15 percent of the provider fees collected from service contract holders for all unexpired service contracts in force in Wisconsin on January 1 of each year. 2. If the provider has appointed an administrator under s. 616.54 (1), 22.5 percent of the provider fees collected from service contract holders for all unexpired service contracts in Wisconsin on January 1 of each year. (d) The security under this subsection shall continue until released by the commissioner pursuant to a finding that it is not necessary for the reasonable protection of Wisconsin consumers. (8) FINANCIAL STATEMENTS. A provider using a deposit or irrevocable letter of credit as specified in sub. (7) to satisfy sub. (5) shall, by each March 31, submit financial statements for the most recent fiscal year to the commissioner that are prepared on an accrual basis in accordance with generally accepted accounting principles and that are audited by an independent certified public accountant. (9) COMMISSIONER LIMITATION. Except for the requirements specified in sub. (5), no other financial security requirements shall be required by the commissioner for providers. (10) PAYMENT OF CLAIMS. A provider shall be subject to and shall pay claims under a service contract in accordance with s. 628.46 (1) and (2). (11) SERVICE CONTRACT SELLERS. A service contract seller is not subject to licensure or registration under this subchapter.
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