State lawmakers in Wisconsin have passed Senate Bill 581, a bill that would change long-term care insurance (LTCI) sales compensation rules.
The state Assembly and the state Senate approved the bill Tuesday through a fast “suspension calendar” process.
Under current Wisconsin law, LTCI renewal compensation has to be at least 25 percent of the amount paid for first-year compensation. The carrier must pay renewal compensation for at least five renewal years.
An issuer can pay compensation when an agent replaces an LTCI policy only if the first-year sales compensation is no greater than the renewal compensation the agent would get for keeping the old policy in place. If the issuer of the existing policy pays a first-year commission of $100 and a $25 renewal commission, the compensation paid for replacing the policy can be no greater than $25.
Under S.B. 581, renewal compensation would have to be the same as first-year compensation.
A carrier could pay an intermediary to replace an LTCI policy “for which the compensation is not greater than the first-year compensation provided by the replacing insurer for the replacing policy or certificate,” if the replacement met standards spelled out in the bill.