LRB-4594/1
AJM&TJD:ahe
2017 - 2018 LEGISLATURE
January 29, 2018 - Introduced by Representative Duchow, cosponsored by Senator
Craig. Referred to Committee on Insurance.
AB877,1,6 1An Act to repeal 601.427; to amend 626.31 (1) (b); and to create 601.465 (1m)
2(d), 601.465 (2m) (e) to (i), 601.465 (3) (e), 610.80 and 645.31 (16) of the statutes;
3relating to: disclosures to the commissioner of insurance and other changes
4to the insurance laws, extending the time limit for emergency rule procedures,
5providing an exemption from emergency rule-making procedures, and
6granting rule-making authority.
Analysis by the Legislative Reference Bureau
This bill eliminates the medical malpractice insurance report, adds certain
biographical information to the information that the commissioner of insurance may
refuse to disclose to others, adds provisions that apply to the privilege relating to
confidential information provided to the commissioner, changes the membership of
the rating committee of the Wisconsin worker's compensation rating bureau, creates
a corporate governance annual disclosure requirement, and adds corporate
deficiencies to the list of grounds for which an insurer may be rehabilitated.
Corporate governance annual disclosure
The bill requires an insurer or an insurance holding company system of which
an insurer is a member to annually submit to the commissioner a corporate
governance annual disclosure containing information specified in the bill. If the
insurer is a member of an insurance holding company system the system shall

submit the disclosure to the insurance commissioner of the lead state, and the state
shall provide a copy to Wisconsin's commissioner upon the commissioner's request.
The bill allows the commissioner to request additional information from the insurer
or insurance holding company system to understand the corporate governance
policies and implementation of those policies. The bill specifies how, when, and with
whom documents, materials, and other information disclosed to the commissioner
in conjunction with a corporate governance annual disclosure may be released,
shared, or disclosed, including providing that the documents, materials, and other
information is considered proprietary and contains trade secrets and is confidential
and privileged. The commissioner may petition a court for an order directing
rehabilitation of an insurer on one of the grounds specified in current law, and the
bill adds to those grounds corporate governance deficiencies in which continued
operation of the insurer may be hazardous to policyholders, creditors, or the public.
Nondisclosure of information
Currently the Office of the Commissioner of Insurance may refuse to disclose
and may prevent others from disclosing certain information obtained by the
commissioner including testimony, reports, records, and information obtained in the
court of an inquiry made by the commissioner or an examination conducted by the
commissioner. Under the bill, OCI may also refuse to disclose biographical
information of directors or principal officers of a corporation reported, as required by
current law, by a domestic stock or mutual insurance corporation.
Current law specifies the nature of the privilege surrounding the confidential
information obtained by the commissioner such as specifying that the privilege may
not be constructively waived and may be waived only by affirmative written and
specific consent of the commissioner. Under the bill, privileged information is not
subject to inspection or copying under open records law and is not subject to subpoena
or discovery or admissible as evidence in a private civil action. The commissioner
may not be compelled to testify concerning privileged information in a private civil
action, and no person, while acting under the authority of the commissioner, is
allowed to testify concerning privileged action in a private civil action. The bill also
specifies that the privilege is not waived as a result of the commissioner sharing the
information as authorized under current law. Confidentiality of corporate
governance annual disclosures and related information is excluded from the general
nondisclosure provisions and subject only to the specific confidentiality provisions
created for such disclosures and information in the bill.
Medical malpractice report
Current law requires insurers who are authorized to write medical malpractice
insurance to file an annual medical malpractice insurance report with the
commissioner. This bill eliminates the medical malpractice report filing
requirement.
Rating bureau
Currently, the rating committee of the Wisconsin Compensation Rating Bureau
that establishes rating plans for worker's compensation insurance consists of ten
members: two members representing employer interests, four members chosen by
stock insurers, and four chosen by mutual insurers. The bill changes the total of

members to an even number no fewer than 8 and no more than 12. Two members
of the committee will still represent employer interests and be appointed by the
governor. Of the remaining members, the bill designates that half are chosen by stock
insurers and half are chosen by mutual insurers.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB877,1 1Section 1. 601.427 of the statutes is repealed.
AB877,2 2Section 2 . 601.465 (1m) (d) of the statutes is created to read:
AB877,3,43 601.465 (1m) (d) Biographical data reported under s. 611.54 (1) relating to
4directors or principal officers of a corporation.
AB877,3 5Section 3 . 601.465 (2m) (e) to (i) of the statutes are created to read:
AB877,3,76 601.465 (2m) (e) Privileged information is not subject to inspection or copying
7under s. 19.35 (1).
AB877,3,98 (f) Privileged information is not subject to subpoena or discovery and is not
9admissible as evidence in any private civil action.
AB877,3,1110 (g) The commissioner may not be compelled to testify concerning privileged
11information in any private civil action.
AB877,3,1312 (h) No person, while acting under the authority of the commissioner, may
13testify concerning privileged information in any private civil action.
AB877,3,1514 (i) The privilege is not waived as a result of the commissioner sharing
15information as authorized under sub. (1m).
AB877,4 16Section 4 . 601.465 (3) (e) of the statutes is created to read:
AB877,4,3
1601.465 (3) (e) All information protected under s. 610.80 (4), including the
2corporated governance annual disclosures and related information, which are
3subject only to the confidentiality provisions in s. 610.80 (4).
AB877,5 4Section 5. 610.80 of the statutes is created to read:
AB877,4,6 5610.80 Corporate governance annual disclosure. (1) Definitions. In this
6section:
AB877,4,77 (a) “Insurance holding company system” has the meaning given in s. 622.03 (2).
AB877,4,88 (b) “Insurer” has the meaning given in s. 622.03 (3).
AB877,4,99 (c) “Lead state” has the meaning given in s. 622.03 (4).
AB877,4,17 10(2) Disclosure requirement. (a) An insurer or insurance holding company
11system of which an insurer is a member shall, annually no later than June 1, submit
12to the commissioner a corporate governance annual disclosure that contains the
13information described in sub. (3). If the insurer is a member of an insurance holding
14company system, the insurance holding company system shall submit the disclosure
15to the commissioner of the lead state in accordance with the laws of the lead state.
16Upon the commissioner's request, the insurer shall provide a copy of the disclosure
17when this state is not the lead state.
AB877,4,2218 (b) The commissioner may request additional information from an insurer or
19insurance holding company system that the commissioner determines is necessary
20for the commissioner to understand an insurer's or insurer member of an insurance
21holding company system's corporate governance policies and the reporting or
22information system or controls implementing the policies.
AB877,5,323 (c) With respect to an insurer member of an insurance holding company system,
24if the commissioner wishes to review the disclosure under par. (a) or make a request
25for additional information about the disclosure under par. (a), the commissioner

1shall request the disclosure or additional information through the lead state before
2seeking the information from the insurer member of the insurance holding company
3system.
AB877,5,104 (d) The insurer or insurance holding company system has discretion over
5responses to inquiries regarding the disclosure under this section, provided that the
6disclosure is consistent with rules established by the commissioner regarding the
7disclosure and contains the material information necessary to permit the
8commissioner to gain an understanding of the insurer's or insurer member of an
9insurance holding company system's corporate governance structure, policies, and
10practices.
AB877,5,1611 (e) Insurers providing information substantially similar to the information
12required by this section in other documents provided to the commissioner, including
13proxy statements or other state or federal filings provided to the commissioner, are
14not required to also provide that information in the corporate governance annual
15disclosure but are required to reference in the corporate governance annual
16disclosure the document in which the information is included.
AB877,5,18 17(3) Contents of disclosure. The disclosure under sub. (2) (a) shall include all
18of the following:
AB877,5,2419 (a) The signature of the chief executive officer or corporate secretary of the
20insurer or insurance holding company system attesting that, to the best of that
21individual's knowledge, the insurer has implemented the corporate governance
22practices described in the disclosure and that a copy of the disclosure was provided
23to the insurer's board of directors or an appropriate committee of the insurer's board
24of directors.
AB877,6,11
1(b) An explanation of the level of corporate governance at which the disclosure
2provides its reporting, the criteria used to determine the level of reporting, and, if
3applicable, any change in the level of reporting from the previous disclosure. The
4insurer or insurance holding company system may provide information regarding
5corporate governance at the ultimate controlling parent, intermediate holding
6company, or individual legal entity level, depending upon how the insurer or
7insurance holding company system has structured its corporate governance. In
8determining at which level of reporting an insurer or insurance holding company
9system will make its disclosure, the insurer or insurance holding company system
10shall consider at which level the insurer or insurance holding company system does
11each of the following:
AB877,6,1212 1. Determines risk appetite.
AB877,6,1313 2. Collectively oversees earnings, capital, liquidity, operations, and reputation.
AB877,6,1514 3. Coordinates and exercises supervision over earnings, capital, liquidity,
15operations, and reputation.
AB877,6,1616 4. Places liability for failure to perform corporate governance duties.
AB877,6,20 17(4) Confidentiality. (a) All of the following apply to documents, materials, and
18other information in the possession or control of the commissioner that are obtained
19by, created by, or disclosed to the commissioner or any other person under this
20section:
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