Wisconsin Commissioner Issues Order Against Prepaid Traffic Ticket Program

Wisconsin Insurance Commissioner Connie L. O’Connell has ordered the National Motorists Association (NMA) to stop offering a program to pay traffic tickets.

The Office of the Commissioner of Insurance (OCI) issued a cease and desist order to halt the marketing of the NMA’s prepaid traffic ticket program.

The program collects monthly payments from participating members and then reimburses any member who may receive tickets for moving violations.

“Our agency is responsible for investigating any product marketed in the state that appears to be insurance,” O’Connell said. “Our interest is not only to protect the financial interests of consumers, but also to make sure the insurer itself doesn’t get in over its head.”
The OCI regulates insurance, and all warranties and service contracts where a third party is involved, including, for example, appliance warranties.

The agency concluded that the program makes the NMA a third-party insurer of a potential financial loss–the traffic ticket. A program that holds its customers’ money and promises to pay or reimburse them for financial loss is insurance.

The result of the Commissioner’s order is closure of the program. The agency’s intent is that the program will not be solicited, marketed or sold in Wisconsin.

In order to sell a prepaid ticket service in the state, the NMA would be required to become a licensed insurer or contract with a licensed insurer to offer the program.

The program’s forms and policies would then be regularly reviewed and its financial status monitored by the OCI. The association has 30 days to contest the order.