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Terms Used In Wisconsin Statutes 138.12

  • Contract: A legal written agreement that becomes binding when signed.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Following: when used by way of reference to any statute section, means the section next following that in which the reference is made. See Wisconsin Statutes 990.01
  • Fraud: Intentional deception resulting in injury to another.
  • Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
  • Interrogatories: Written questions asked by one party of an opposing party, who must answer them in writing under oath; a discovery device in a lawsuit.
  • Month: means a calendar month unless otherwise expressed. See Wisconsin Statutes 990.01
  • Mortgagee: The person to whom property is mortgaged and who has loaned the money.
  • Oath: A promise to tell the truth.
  • Oath: includes affirmation in all cases where by law an affirmation may be substituted for an oath. See Wisconsin Statutes 990.01
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Officers: when applied to corporations include directors and trustees. See Wisconsin Statutes 990.01
  • Person: includes all partnerships, associations and bodies politic or corporate. See Wisconsin Statutes 990.01
  • Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
  • Qualified: when applied to any person elected or appointed to office, means that such person has done those things which the person was by law required to do before entering upon the duties of the person's office. See Wisconsin Statutes 990.01
  • State: when applied to states of the United States, includes the District of Columbia, the commonwealth of Puerto Rico and the several territories organized by Congress. See Wisconsin Statutes 990.01
  • Subpoena: A command to a witness to appear and give testimony.
  • Sworn: includes "affirmed" in all cases where by law an affirmation may be substituted for an oath. See Wisconsin Statutes 990.01
  • Year: means a calendar year, unless otherwise expressed; "year" alone means "year of our Lord". See Wisconsin Statutes 990.01
   (1)    Definitions. For purposes of this section:
      (a)    “Division” means the division of banking.
      (b)    “Insurance premium finance company” means a person engaged in the business of entering into insurance premium finance agreements.
      (c)    “Licensee” means an insurance premium finance company holding a license issued by the division under this section.
      (d)    “Premium finance agreement” means an agreement by which an insured or prospective insured promises to pay to an insurance premium finance company the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent or broker in payment of premiums on an insurance contract together with a service charge or interest charge as authorized and limited by this chapter.
   (2)   Scope. This section shall not apply to:
      (a)    Any insurance company or agent defined in s. 628.02, any savings and loan association, savings bank, sales finance company, motor vehicle installment seller, bank, trust company, licensed lender or credit union authorized to do business in this state, but such organizations, if otherwise eligible, are exempt from the licensing under this section, but subs. (9) to (12) and any rules promulgated by the division pertaining to such subsections shall be applicable to all premium finance transactions entered into by such organizations in this state if an insurance policy or any rights thereunder is made the security or collateral for repayment of the debt.
      (b)    The inclusion of insurance in connection with an installment sale of a motor vehicle or other goods and services.
      (d)    Life insurance.
   (3)   Licenses.
      (a)    No person except those listed in sub. (2) (a) shall engage in the business of financing insurance premiums in this state without first having obtained a license. Any person who engages in the business of financing insurance premiums in this state without obtaining a license may be fined not more than $200.
      (b)    The annual license fee is $500 and shall be paid to the division. Licenses may be renewed May 1 of each year upon payment of the annual fee.
      (c)    The person to whom the license or the renewal thereof is issued shall file sworn answers, subject to the penalties of perjury, to such interrogatories as the division requires. The division may, at any time, require the applicant fully to disclose the identity of all stockholders, partners, members, managers, officers and employees, and the division may refuse to issue or renew a license in the name of any person if the division is not satisfied that any officer, employee, stockholder, partner, member or manager thereof, who may materially influence the applicant’s conduct, meets the standards of this section.
      (d)   
         1.    Except as provided in par. (e), an application for a license under this section shall contain the following:
            a.    If the applicant is an individual, the applicant’s social security number.
            b.    If the applicant is not an individual, the applicant’s federal employer identification number.
         2.    The division may not disclose any information received under subd. 1. to any person except as follows:
            a.    The division may disclose information under subd. 1. to the department of revenue for the sole purpose of requesting certifications under s. 73.0301 and to the department of workforce development for the sole purpose of requesting certifications under s. 108.227.
            b.    The division may disclose information under subd. 1. a. to the department of children and families in accordance with a memorandum of understanding under s. 49.857.
      (e)   
         1.    If an applicant who is an individual does not have a social security number, the applicant, as a condition of applying for or applying to renew a license under this section, shall submit a statement made or subscribed under oath or affirmation to the division that the applicant does not have a social security number. The form of the statement shall be prescribed by the department of children and families.
         2.    Any license issued or renewed in reliance upon a false statement submitted by an applicant under subd. 1. is invalid.
   (4)   Investigation.
      (a)    Upon the filing of an application and the payment of the required fees under par. (am) 1., the division shall make an investigation of each applicant and shall issue a license if the division finds the applicant is qualified in accordance with this section. If the division does not so find, the division shall, within 30 days after the division has received the application, notify the applicant and, at the request of the applicant, give the applicant a full hearing, except as follows:
         1.    An applicant whose application is denied under par. (b) 5. is entitled to a hearing under s. 73.0301 (5) (a) but is not entitled to a hearing under this paragraph.
         1m.    An applicant whose application is denied under par. (b) 5m. is entitled to a hearing under s. 108.227 (5) (a) but is not entitled to a hearing under this paragraph.
         2.    An applicant whose application is denied under par. (b) 6. is entitled to notice and a hearing only as provided in a memorandum of understanding entered into under s. 49.857 and is not entitled to a hearing under this paragraph.
      (am)   
         1.    An applicant shall pay to the division a nonrefundable $300 license investigation fee and a $500 annual license fee for the period ending on the next April 30.
         2.    If the cost of the investigation exceeds $300, the applicant shall, upon demand of the division, pay the amount by which the cost of the investigation exceeds the nonrefundable fee.
      (b)    The division shall issue or renew a license when the division is satisfied that the person to be licensed satisfies all of the following, as applicable:
         1.    Is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for.
         2.    Has a good business reputation and has had experience, training or education so as to be qualified in the business for which the license is applied for.
         3.    If a corporation, is a corporation incorporated under the laws of this state or a foreign corporation authorized to transact business in this state.
         3L.    If a limited liability company, is organized under the laws of this state or a foreign limited liability company authorized to transact business in this state.
         4.    Has provided the information required under sub. (3) (d) 1.
         5.    Has not been certified by the department of revenue under s. 73.0301 as being liable for delinquent taxes.
         5m.    Has not been certified by the department of workforce development under s. 108.227 as being liable for delinquent unemployment insurance contributions.
         6.    If an individual, has not failed to comply, after appropriate notice, with a subpoena or warrant issued by the department of children and families or a county child support agency under s. 59.53 (5) and related to paternity or child support proceedings and is not delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under s. 49.857.
   (5)   Revocation or suspension.
      (a)    The division may revoke or suspend the license of any insurance premium finance company if the division finds any of the following:
         1.    Any license issued to such company was obtained by fraud.
         2.    There was any misrepresentation in the application for the license.
         3.    The holder of such license has otherwise shown himself or herself untrustworthy or incompetent to act as a premium finance company.
         4.    The company has violated any provision of this section.
         5.    The company has been rebating part of the service charge as allowed and permitted herein to any insurance agent or insurance broker or any employee of an insurance agent or insurance broker or to any other person as an inducement to the financing of any insurance policy with the premium finance company.
      (am)   
         1.    The division shall deny an application for a license renewal if any of the following applies:
            a.    The applicant has failed to provide the information required under sub. (3) (d) 1.
            b.    The department of revenue has certified under s. 73.0301 that the applicant is liable for delinquent taxes under s. 73.0301 or the department of workforce development has certified under s. 108.227 that the applicant is liable for delinquent unemployment insurance contributions under s. 108.227. An applicant whose renewal application is denied under this subd. 1. b. is entitled to a hearing under s. 73.0301 (5) (a) or 108.227 (5) (a) but is not entitled to a hearing under par. (b).
            c.    In the case of a licensee who is an individual, the applicant fails to comply, after appropriate notice, with a subpoena or warrant that is issued by the department of children and families or a county child support agency under s. 59.53 (5) and that is related to paternity or child support proceedings or the applicant is delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under s. 49.857. An applicant whose renewal application is denied under this subd. 1. c. is entitled to a notice and hearing under s. 49.857 but is not entitled to a hearing under par. (b).
         2.    The division shall restrict or suspend the license of any insurance premium finance company if the division finds that, in the case of a licensee who is an individual, the licensee fails to comply, after appropriate notice, with a subpoena or warrant that is issued by the department of children and families or a county child support agency under s. 59.53 (5) and that is related to paternity or child support proceedings or the licensee is delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under s. 49.857. A licensee whose license is restricted or suspended under this subdivision is entitled to a notice and hearing under s. 49.857 but is not entitled to a hearing under par. (b).
         3.    The division shall revoke the license of any insurance premium finance company if the department of revenue has certified under s. 73.0301 that the licensee is liable for delinquent taxes or if the department of workforce development has certified under s. 108.227 that the licensee is liable for delinquent unemployment insurance contributions. A licensee whose license is revoked under this subdivision for delinquent taxes or unemployment insurance contributions is entitled to a hearing under s. 73.0301 (5) (a) or 108.227 (5) (a), whichever is applicable, but is not entitled to a hearing under par. (b).
      (b)    Before the division revokes, suspends or refuses to renew the license of any premium finance company, the division shall give the company an opportunity to be fully heard and to introduce evidence in the company’s behalf. In lieu of revoking or suspending the license for any of the causes enumerated in this subsection, after hearing, the division may subject the premium finance company to a penalty of not more than $200 for each offense when in the division’s judgment the division finds that the public interest would not be harmed by the continued operation of such company. The amount of any penalty under this paragraph shall be paid by the company to the division for the use of the state. At any hearing under this subsection, the division may administer oaths to witnesses. Anyone testifying falsely, after having been administered the oath, shall be subject to the penalty of perjury.
      (c)    Any action of the division in refusing to issue or renew a license shall be subject to review under subch. III of ch. 227.
   (5m)   Disciplinary orders.
      (a)    In this subsection:
         1.    “General order” means an order of the division other than a special order.
         2.    “Special order” means an order of the division to or affecting a person.
      (b)    The division may issue general orders or special orders necessary to prevent or correct actions by an insurance premium finance company that constitute cause under this section for revoking, suspending, or restricting a license.
   (6)   Records.
      (a)    Every licensee shall maintain records of its premium finance transactions and the records shall be open to an examination and investigation by the division. The division may make an examination of the books, records and accounts of any licensee as the division deems necessary. The division shall determine the cost of an examination and that cost shall be assessed against and paid by the licensee so examined. The division may, at any time, require any licensee to bring such records as the division directs to the division for examination.
      (b)    Every licensee shall preserve its records of such premium finance transactions, including cards used in a card system, for at least 3 years after making the final entry in respect to any premium finance agreement. The preservation of records in photographic form or other form authorized under s. 220.285 shall constitute compliance with this requirement.
   (7)   Rules and regulations. The division may make and enforce such reasonable rules as are necessary to carry out this section, but such rules shall not be contrary to nor inconsistent with this section.
   (8)   Premium finance agreements.
138.12(8)(a)    (a) A premium finance agreement shall:
         1.    Be dated, signed by or on behalf of the insured, and the printed portion thereof shall be in at least 8-point type,
         2.    Contain the name and place of business of the insurance agent or insurance broker negotiating the related insurance contract, the name and residence or the place of business of the insured as specified by the insured, the name and place of business of the premium finance company to which installment or other payments are to be made, a description of the insurance contracts, including term and type of policy, the premiums for which are advanced or to be advanced under the agreement and the amount of the premiums therefor; and
         3.    Set forth the following items where applicable:
            a.    The total amount of the premiums,
            b.    The amount of the down payment,
            c.    The principal balance (the difference between items a and b),
            d.    The amount of the service charge,
            e.    The balance payable by the insured (sum of items c and d),
            f.    The number of installments required, the amount of each installment expressed in dollars, and the due date or period thereof.
      (b)    The items set forth in par. (a) 3. need not be stated in the sequence or order in which they appear and additional items may be included to explain the computations made in determining the amount to be paid by the insured.
   (9)   Service charges. A premium finance company shall not charge, contract for, receive or collect a service charge other than as permitted by this subsection unless it is a licensed lender regulated under sub. (10).
      (a)    The service charge shall be computed on the balance of the premiums due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable.
      (b)    The service charge may not exceed the interest rate authorized under s. 422.201 (2) (bm) per year plus an additional charge of $10 per premium finance agreement, but, if the principal balance is $50 or less there shall be no additional charge, and if the principal balance is more than $50 but not more than $100, the additional charge is $6.
      (bm)    Paragraph (b) applies only to a premium finance agreement in which the related insurance contract is for personal, family or household use entered into before November 1, 1984. The service charge for any other premium finance agreement shall be as agreed by the parties to the agreement.
      (c)    The service charge shall be computed on the principal balance of a premium finance agreement payable in successive monthly installments substantially equal in amount for a period of one year. On a premium finance agreement providing for installments extending for a period less than or greater than one year, the service charge shall be computed proportionately.
      (d)    Notwithstanding the provisions of any premium finance agreement, any insured may prepay the obligation in full at any time. In such event, the insured shall receive a refund credit. The amount of such refund credit shall represent at least as great a proportion of the service charge as the sum of the periodic balances after the month in which prepayment is made bears to the sum of all periodic balances under the schedule of installments in the agreement. Where the amount of the refund credit is less than $1, no refund need be made. If in addition to the service charge an additional charge was imposed, such additional charge need not be refunded nor taken into consideration in computing the refund credit.
   (10)   Charges by licensed lenders; rebates.
138.12(10)(a)    (a) A lender licensed under s. 138.09 may charge interest as provided in that section for a loan involving a premium finance agreement.
      (b)    The interest shall be computed on the balance of the premiums due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the premium finance agreement is payable.
      (c)    Notwithstanding the provisions of any premium finance agreement, any insured may prepay the obligation in full at any time. In such event the insured shall receive a rebate as provided under s. 138.09.
      (d)    Except as provided in sub. (12) to the contrary, s. 138.09 applies to a loan involving a premium finance agreement made by a licensed lender.
   (11)   Delinquency or default charge.
138.12(11)(a)    (a) A premium finance agreement may provide for the payment by the insured of a delinquency or default charge of $1 to a maximum of 5 percent of any delinquent installment which is in default for a period of 5 days or more. If the default results in the cancellation of any insurance contract listed in the agreement, the agreement may provide for the payment by the insured of a cancellation charge of $15. A premium finance agreement may also provide for the payment of statutory attorney fees and statutory court costs if the agreement is referred for collection to an attorney not a salaried employee of the insurance premium finance company.
      (b)    This subsection does not apply to loans by licensed lenders regulated under s. 138.09.
   (12)   Cancellation. When a premium finance agreement contains a power of attorney or other authority enabling the insurance premium finance company to cancel any insurance contract listed in the agreement, the following applies:
      (a)    Not less than 10 days’ written notice shall be mailed to the insured of the intent of the insurance premium finance company to cancel the insurance contract unless the default is cured prior to the date stated in the notice. The insurance agent or insurance broker indicated on the premium finance agreement shall also be mailed 10 days’ notice of such action.
      (b)    Pursuant to the power of attorney or other authority referred to above, the insurance premium finance company may cancel on behalf of the insured by mailing to the insurer written notice stating when thereafter the cancellation shall be effective, and the insurance contract shall be canceled as if such notice of cancellation had been submitted by the insured himself or herself, but without requiring the return of the insurance contract. The insurance premium finance company shall also mail a notice of cancellation to the insured at the insured’s last-known address and to the insurance agent or insurance broker indicated on the premium finance agreement. Compliance by the premium finance company with the provisions of the premium finance agreement or par. (a), shall not be a condition of effective cancellation hereunder.
      (c)    Where statutory, regulatory or contractual restrictions provide that the insurance contract may not be canceled unless notice is given to a governmental agency, mortgagee or other 3rd party, the insurer shall give the prescribed notice on behalf of itself or the insured to such governmental agency, mortgagee or other 3rd party within a reasonable time after the day it receives the notice of cancellation from the premium finance company. When the above restrictions require the continuation of insurance beyond the effective date of cancellation specified by the premium finance company such insurance shall be limited to the coverage to which such restrictions relate and to the persons they are designed to protect.
      (d)    Whenever a financed insurance contract is canceled the insurer shall return whatever unearned premiums are due under the insurance contract to the insurance premium finance company for the account of the insured, and such action by the insurer shall be deemed to satisfy the insurer’s obligations under the insurance contract which relate to the return of unearned premiums. If the crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured, the premium finance company shall refund such excess to the insured but no such refund shall be required if it amounts to less than $1.
   (13)   No filing necessary. No filing of the premium finance agreement or recording of a premium finance transaction shall be necessary to perfect the validity of such agreement as a secured transaction as against creditors, subsequent purchasers, pledgees, encumbrancers, successors or assigns.
   (14)   Established insurance premium finance companies. Any person or corporation engaged in the business of an insurance premium finance company on May 19, 1970, may continue in operation under this section but shall obtain a license by January 1, 1970.
   (15)   Applicability of chs. 421 to 427 to this section. All consumer loans as defined in chs. 421 to 427 made by licensees under this section shall be governed by this section to the extent that chs. 421 to 427 are inconsistent with this section.

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