AB681,19,3
1(c) The interest rate used to determine minimum nonforfeiture amounts shall
2be an annual rate of interest that is the lower of 3 percent and the higher of either
3of the following:
AB681,19,104 1. The 5-year constant maturity treasury rate reported by the federal reserve
5board as of a date, or average over a period, specified in the contract no longer than
615 months prior to the contract issue date or redetermination date under par. (d), less
7125 basis points or, if the contract provides substantive participation in an equity
8indexed benefit during the period or term, the contract may increase the reduction
9by up to an additional 100 basis points to reflect the value of the equity index benefit,
10and rounded to the nearest one-twentieth of 1 percent.
AB681,19,1111 2. One percent.
AB681,19,1812 (d) The interest rate determined under par. (c) shall apply for an initial period
13and may be redetermined for additional periods. The redetermination date, basis,
14and period, if any, shall be stated in the contract. The basis is the date or average
15over a specified period that produces the value of the 5-year constant maturity
16treasury rate to be used at each redetermination date. The method for determining
17the interest rate under par. (c) shall be specified in the contract if the interest rate
18will be reset.
AB681,19,2519 (e) The present value at the contract issue date, and at each redetermination
20date, of the additional reduction under par. (c) 1. for substantive participation in an
21equity index benefit may not exceed the market value of the benefit. The
22commissioner may require a demonstration that the present value of the additional
23reduction does not exceed the market value of the benefit. The commissioner may
24disallow or limit the additional reduction if the commissioner determines that the
25demonstration is unacceptable.
AB681,20,5
1(f) The commissioner may promulgate rules for the implementation of par. (e)
2and to provide for further adjustments to the calculation of minimum nonforfeiture
3amounts for contracts that provide substantive participation in an equity index
4benefit and for other contracts for which the commissioner determines adjustments
5are justified.
AB681, s. 31 6Section 31. 632.435 (5) of the statutes is amended to read:
AB681,20,127 632.435 (5) Any paid-up annuity benefit available under a contract shall be
8such that its present value on the date annuity payments are to commence is at least
9equal to the minimum nonforfeiture amount on that date. Such present value shall
10be computed using the mortality table, if any, and the interest rate or rates specified
11in the contract for determining the minimum paid-up annuity benefits guaranteed
12in the contract.
AB681, s. 32 13Section 32. 632.435 (12) of the statutes is repealed.
AB681, s. 33 14Section 33. Chapter 641 of the statutes, as affected by 2001 Wisconsin Act 109,
15is repealed.
AB681, s. 34 16Section 34. 645.58 (1) (intro.) of the statutes, as affected by 2003 Wisconsin
17Act 44
, is amended to read:
AB681,20,2318 645.58 (1) Liability. (intro.) Except as provided in this subsection and in s.
19646.35 (8) (e)
, the amount recoverable by the liquidator from a reinsurer shall not be
20reduced as a result of delinquency proceedings, regardless of any provision in the
21reinsurance contract or other agreement. Payment made directly to an insured or
22other creditor shall not diminish the reinsurer's obligation to the insurer's estate
23except when any of the following applies:
AB681, s. 35 24Section 35. 646.01 (1) (a) 2. k. of the statutes is created to read:
AB681,20,2525 646.01 (1) (a) 2. k. Risk-sharing plans under chs. 149 and 619.
AB681, s. 36
1Section 36. 646.01 (1) (a) 2. L. of the statutes is created to read:
AB681,21,22 646.01 (1) (a) 2. L. The patients compensation fund under s. 655.27.
AB681, s. 37 3Section 37. 646.01 (1) (b) 1. of the statutes is repealed and recreated to read:
AB681,21,64 646.01 (1) (b) 1. Any portion of a life insurance policy or annuity contract that
5is not guaranteed by the insurer or under which the risk is borne by the policy or
6policyholder.
AB681, s. 38 7Section 38. 646.01 (1) (b) 9. (intro.) of the statutes is renumbered 646.01 (1)
8(b) 9. and amended to read:
AB681,21,139 646.01 (1) (b) 9. Any self-funded, self-insured, or partially or wholly uninsured
10plan of an employer or other person to provide life insurance, annuity , or disability
11benefits to its employees or members to the extent that the plan is self-funded,
12self-insured,
or uninsured, including benefits payable by an employer or other
13person under any of the following:
.
AB681, s. 39 14Section 39. 646.01 (1) (b) 9. a. of the statutes is repealed.
AB681, s. 40 15Section 40. 646.01 (1) (b) 9. b. of the statutes is repealed.
AB681, s. 41 16Section 41. 646.01 (1) (b) 9. c. of the statutes is repealed.
AB681, s. 42 17Section 42. 646.01 (1) (b) 9. d. of the statutes is repealed.
AB681, s. 43 18Section 43. 646.01 (1) (b) 11. of the statutes is repealed and recreated to read:
AB681,21,1919 646.01 (1) (b) 11. Any warranty or service contract.
AB681, s. 44 20Section 44. 646.01 (1) (b) 11m. of the statutes is created to read:
AB681,21,2421 646.01 (1) (b) 11m. Any contractual liability policy that is issued to a warrantor,
22warranty plan, warranty plan administrator, or service contract provider and that
23provides coverage of any liability or performance arising out of or in connection with
24a warranty or service contract.
AB681, s. 45 25Section 45. 646.01 (1) (b) 15. of the statutes is created to read:
AB681,22,1
1646.01 (1) (b) 15. An unallocated annuity contract.
AB681, s. 46 2Section 46. 646.01 (1) (b) 16. of the statutes is created to read:
AB681,22,63 646.01 (1) (b) 16. A contractual agreement that obligates an insurer to provide
4a book value accounting guarantee for defined contribution benefit plan participants
5by reference to a portfolio of assets that is owned by the benefit plan or its trustee,
6neither of which is an affiliate of the insurer.
AB681, s. 47 7Section 47. 646.01 (1) (b) 17. of the statutes is created to read:
AB681,22,188 646.01 (1) (b) 17. Any liability under a policy or contract to the extent that it
9provides for interest or other changes in value that are to be determined by the use
10of an index or other external reference stated in the policy or contract and to the
11extent that the interest or other changes in value have not been credited to the policy
12or contract as of the date of the entry of the order of liquidation and are subject to
13forfeiture. If a policy's or contract's interest or other changes in value are credited
14less frequently than annually, for purposes of determining the values that have been
15credited and that are not subject to forfeiture, the interest or change in value
16determined by using the procedures specified in the policy or contract will be credited
17as if the contractual date of crediting interest or other changes in value was the date
18of entry of the order of liquidation and will not be subject to forfeiture.
AB681, s. 48 19Section 48. 646.01 (1) (b) 18. of the statutes is created to read:
AB681,23,220 646.01 (1) (b) 18. The deductible, self-funded, or self-insured portion of a claim
21under a liability or worker's compensation insurance policy, regardless of the timing
22or method provided in the policy, endorsement, or any other agreement for payment
23of the deductible, self-funded, or self-insured amount by the insured. This
24subdivision does not apply to a worker's compensation insurance policy if the insured

1under the policy is a debtor under 11 USC 701, et seq., as of the deadline set by the
2liquidator for filing claims against the insolvent insurer.
AB681, s. 49 3Section 49. 646.03 (1m) of the statutes is created to read:
AB681,23,54 646.03 (1m) "Direct insurance" does not include a policy or contract of
5reinsurance, except for the following:
AB681,23,76 (a) Reinsurance for which the reinsurer has issued assumption certificates
7under the reinsurance policy or contract.
AB681,23,88 (b) Reinsurance ceded by an assessable town mutual company.
AB681, s. 50 9Section 50. 646.03 (2n) of the statutes is created to read:
AB681,23,1210 646.03 (2n) "Impaired insurer" means an insurer subject to this chapter that
11is placed under an order of rehabilitation or conservation by a court of competent
12jurisdiction.
AB681, s. 51 13Section 51. 646.03 (2p) of the statutes is created to read:
AB681,23,1614 646.03 (2p) "Insolvent insurer" means an insurer subject to this chapter that
15is placed under an order of liquidation by a court of competent jurisdiction with a
16finding of insolvency.
AB681, s. 52 17Section 52. 646.03 (4) of the statutes is created to read:
AB681,23,2418 646.03 (4) With respect to a life or disability insurance policy or an annuity
19contract, "owner" or "policyholder" means the person who is identified as the legal
20owner under the terms of the policy or contract or who is otherwise vested with legal
21title to the policy or contract through a valid assignment completed in accordance
22with the terms of the policy or contract and properly recorded as the owner on the
23books of the insurer. "Owner" or "policyholder" does not include a person with only
24a beneficial interest in a policy or contract.
AB681, s. 53 25Section 53. 646.03 (5) of the statutes is created to read:
AB681,24,4
1646.03 (5) "Unallocated annuity contract" means an annuity contract or group
2annuity certificate that is not issued to and owned by an individual, except to the
3extent of any annuity benefits guaranteed to an individual by an insurer under the
4contract or certificate.
AB681, s. 54 5Section 54. 646.11 (1) of the statutes is renumbered 646.11 (1) (intro.) and
6amended to read:
AB681,24,107 646.11 (1) (intro.) Organization. There is created a fund an organization to be
8known as the "insurance security fund".." All insurers subject to this chapter are
9contributors to the fund as a result of their authority to transact business in this
10state. The fund shall consist of all of the following:
AB681,24,11 11(a) All payments made by insurers under s. 646.51 , of the.
AB681,24,12 12(b) The earnings resulting from investments under s. 646.21 (2) and of the.
AB681,24,14 13(c) The amounts recovered under s. 645.72 (2) or a substantially similar law in
14the state of domicile of the insolvent insurer
.
AB681, s. 55 15Section 55. 646.11 (1) (d) of the statutes is created to read:
AB681,24,1716 646.11 (1) (d) Amounts reimbursed to the fund through its subrogation and
17assignment rights.
AB681, s. 56 18Section 56. 646.11 (1) (e) of the statutes is created to read:
AB681,24,1919 646.11 (1) (e) Any other moneys received by the fund from time to time.
AB681, s. 57 20Section 57. 646.12 (2) (d) of the statutes is amended to read:
AB681,25,321 646.12 (2) (d) Employ or retain the personnel necessary to carry out its the
22fund's
duties and set compensation for the personnel, sue or be sued, make contracts
23and borrow money necessary to carry out its duties in the most efficient way,
24including money with which to pay claims under s. 646.31 or to continue coverage
25under s. 646.35. The board may offer as security for such loans its claims against the

1liquidator or its power to levy assessments under this chapter
. Personnel employed
2under this paragraph are not employees of the state and are not subject to s. 20.922
3or ch. 230.
AB681, s. 58 4Section 58. 646.12 (2) (f) 2. of the statutes is amended to read:
AB681,25,85 646.12 (2) (f) 2. Keep confidential the records under subd. 1. pertaining to
6specific liquidation proceedings involving an insurer until the termination of the
7liquidation proceedings or until sooner ordered to make the records public by a court
8of competent jurisdiction.
AB681, s. 59 9Section 59. 646.12 (2) (f) 3. of the statutes is amended to read:
AB681,25,1210 646.12 (2) (f) 3. Keep confidential the records under subd. 1. pertaining to
11specific rehabilitation proceedings involving an insurer unless ordered to make the
12records public by a court of competent jurisdiction.
AB681, s. 60 13Section 60. 646.12 (4) of the statutes is amended to read:
AB681,25,1714 646.12 (4) Other powers. The board fund may join an organization consisting
15of one or more entities of other states performing comparable functions, in order to
16assist the board fund in carrying out its powers and duties under this chapter and
17otherwise further the purposes of this chapter.
AB681, s. 61 18Section 61. 646.13 (title) of the statutes is amended to read:
AB681,25,20 19646.13 (title) Special duties and powers of the board fund related to loss
20claims.
AB681, s. 62 21Section 62. 646.13 (1) (intro.) of the statutes is amended to read:
AB681,25,2222 646.13 (1) Duties. (intro.) The board fund shall:
AB681, s. 63 23Section 63. 646.13 (1) (b) of the statutes is amended to read:
AB681,26,324 646.13 (1) (b) Stand in the position of the insurer in the investigation,
25compromise, settlement, denial, and payment of claims under s. 646.31 and the

1defense of 3rd party claims against insureds, subject to the limitations of s. 645.43.
2The board fund shall consult and cooperate with the liquidator in carrying out these
3duties.
AB681, s. 64 4Section 64. 646.13 (2) (intro.) of the statutes is amended to read:
AB681,26,55 646.13 (2) Powers. (intro.) The board fund may:
AB681, s. 65 6Section 65. 646.13 (2) (b) of the statutes is amended to read:
AB681,26,97 646.13 (2) (b) Exercise with respect to loss claims the powers that the liquidator
8has with respect to other claims under ch. 645 or a substantially similar law in the
9state of domicile of the insolvent insurer
.
AB681, s. 66 10Section 66. 646.13 (2) (c) of the statutes is amended to read:
AB681,26,1311 646.13 (2) (c) With respect to any action against an insurer which is in
12liquidation, exercise the powers of the liquidator under s. 645.49 (1) or a
13substantially similar law in the state of domicile of the insolvent insurer
.
AB681, s. 67 14Section 67. 646.13 (2) (d) of the statutes is amended to read:
AB681,26,2415 646.13 (2) (d) Have standing to appear in any liquidation proceedings in this
16state involving an insurer in liquidation, and have authority to appear or intervene
17before a court or agency of any other state having jurisdiction over an impaired or
18insolvent insurer, in accordance with the laws of that state, with respect to which the
19fund is or may become obligated or that has jurisdiction over any person or property
20against which the fund may have subrogation or other rights. Standing shall extend
21to all matters germane to the powers and duties of the fund, including proposals for
22reinsuring, modifying, or guaranteeing the policies or contracts of the impaired or
23insolvent insurer and the determination of the policies or contracts and contractual
24obligations
.
AB681, s. 68 25Section 68. 646.13 (2) (g) of the statutes is created to read:
AB681,27,4
1646.13 (2) (g) Sue and be sued, make contracts, and borrow money necessary
2to carry out its duties, including money with which to pay claims under s. 646.31 or
3to continue coverage under s. 646.35. The fund may offer as security for such loans
4its claims against the liquidator or its power to levy assessments under this chapter.
AB681, s. 69 5Section 69. 646.13 (3) (intro.) of the statutes is amended to read:
AB681,27,76 646.13 (3) No duty or liability. (intro.) The board fund has no duty or liability
7with respect to any claim filed as follows:
AB681, s. 70 8Section 70. 646.13 (3) (a) of the statutes is amended to read:
AB681,27,139 646.13 (3) (a) With the liquidator under s. 645.61 after the original date for
10filing specified by the liquidator under s. 645.47 (2), unless the liquidator determines
11that the claim is considered to have been timely filed under s. 645.61 (2) and the claim
12participates fully in every distribution to the same extent as other timely filed claims
13in the same class.
AB681, s. 71 14Section 71. 646.13 (3) (b) of the statutes is amended to read:
AB681,27,1915 646.13 (3) (b) With a liquidator or court under the laws of any other state after
16the original date for filing specified by the liquidator or court, unless the liquidator
17or court determines that the claim is considered to have been timely filed under a law
18substantially similar to s. 645.61 (2) and the claim participates fully in every
19distribution to the same extent as other timely filed claims in the same class.
AB681, s. 72 20Section 72. 646.13 (3) (c) (intro.) of the statutes is amended to read:
AB681,27,2521 646.13 (3) (c) (intro.) Except for claims under life insurance policies, annuities
22and, or noncancelable or guaranteed renewable disability insurance policies, and
23except for claims determined to be excused late filings as provided in pars. (a) and
24(b), if the original date for filing is extended by the liquidator or court, with a
25liquidator or court after the earlier of the following:
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