Initial expendable surplus.
An assessable mutual organized under this chapter shall have an initial expendable surplus of at least $100,000, after payment of all organizational expenses.
Initial applications; general.
Except under pars. (d)
, no certificate of authority shall be issued to an assessable mutual until it has at least 400 bona fide applications for insurance from not less than 400 separate applicants on separate risks located in this state in each of the classes of business upon which assessments may be separately levied. A full year's premium shall be paid with each application and the aggregate premium shall be at least $50,000 for each such class. If at any time while the corporation is an assessable mutual, the business plan is amended to include an additional class of business on which assessments may be separately levied, identical requirements shall be applicable to each additional class.
Same; worker's compensation.
Five employers or more may join in the formation of an assessable mutual to write only worker's compensation insurance if, instead of the requirements of par. (c)
, policies are simultaneously put into effect that cover at least 1,500 employees, counting no more than 300 for any employer. A full year's premium shall be paid by each employer, aggregating at least $100,000.
Initial surplus in lieu of initial applications.
In place of initial applications and premium payments for any class of business, the corporation may provide the minimum permanent surplus and initial expendable surplus that the commissioner would require for a nonassessable mutual organizing to do that class of business under like conditions. The class of business shall nevertheless be assessable until conversion under s. 611.77 (1)
(5) Mutuals with open contracts.
A mutual organized under this chapter need not have a permanent surplus if it issues only contracts the benefits of which may be reduced by action of the board if assets are not sufficient to provide the protection specified in the contracts. The terms and format of any such open contract provision must be approved by the commissioner before the mutual is given a certificate of incorporation.
(6) Providers' contracts.
Any corporation under this chapter which promises in its policies to supply services in lieu of or in addition to indemnity, on a basis giving the insurer no option whether it will supply services or pay indemnity, shall maintain such contracts with providers that it can be reasonably expected that services will be provided as promised in its contracts.
(7) Reduction of minimum surplus.
The commissioner may by order reduce the minimum amounts of surplus required under subs. (1)
if in the commissioner's opinion the extent and nature of providers' contracts under sub. (6)
, financial guarantees and other support by financially sound private or public corporations, a pressing social need in a particular community for the formation of a mutual insurance corporation to provide needed insurance coverage, or other special circumstances, justify the proposed reduction in the required surplus. A person who will directly compete with the proposed insurer is aggrieved within the meaning of s. 601.62 (3) (a)
(8) Health maintenance organization insurer.
This section does not apply to a health maintenance organization insurer that is subject to s. 609.96
Certificate of authority. 611.20(1)
The corporation may apply for a certificate of authority at any time prior to the expiration of its organization permit. The application shall include a statement by a principal officer of any material changes that have already taken place or are likely to take place in the facts on which the issuance of the organization permit was based, and if any material changes are proposed in the business plan, the additional information about such changes that would be required if an organization permit were then being applied for.
The commissioner shall issue a certificate of authority, if he or she finds:
That all other applicable requirements of the law have been met.
The certificate of authority shall specify any limits placed on the insurance business that may be carried on by the corporation and may, within the powers given the commissioner by law, specify limits on its methods of operation.
Upon the issuance of the certificate:
The board shall authorize and direct the issuance of shares, bonds or notes subscribed to under the organization permit, and of insurance policies upon qualifying applications made under the organization permit; and
The commissioner shall authorize the release to the corporation of all funds held in escrow under s. 611.15
(4) Alteration of certificate of authority. 611.20(4)(a)(a)
A corporation may at any time apply to the commissioner for a new or amended certificate of authority, removing, altering or adding limits on its business or methods of operation. The application shall contain or be accompanied by so much of the information in s. 611.13 (2)
as the commissioner reasonably requires. The commissioner shall issue the new certificate as requested if he or she finds:
That the corporation's capital and surplus are adequate to support the proposed operations under the new certificate; and
That the proposed business would not be contrary to the law or to the interests of insureds or the public.
If the commissioner issues a summary order under s. 645.21
against a corporation, he or she may also revoke the corporation's certificate and issue a new one with the limits the commissioner deems necessary.
Accelerated organization procedure. 611.22(1)
The incorporators may apply for determination of the minimum capital or minimum permanent surplus under s. 611.19
and for a certificate of authority without first obtaining an organization permit if:
They purchase for their own accounts all the shares proposed to be issued in the case of a stock corporation, or in the case of a mutual they supply all the minimum permanent surplus and initial expendable surplus by contribution notes or otherwise.
(2) Contents of application.
The application for a certificate of authority shall be accompanied by proof that the purchase price for the shares or the proceeds of contribution notes have been deposited on behalf of the proposed corporation or if other than money are held in trust for the proposed corporation and by so much of the information in s. 611.13 (2)
as the commissioner reasonably requires.
(3) Issuance of certificates of incorporation and authority.
The commissioner shall issue both a certificate of incorporation and a certificate of authority if:
The commissioner finds that all requirements of law have been met;
The commissioner is satisfied that all natural persons who are incorporators, the directors and principal officers of corporate incorporators, and the proposed directors and officers of the corporation being formed are trustworthy and competent and collectively have the competence and experience to engage in the particular insurance business proposed; and
The commissioner is satisfied that the business plan is consistent with the interests of the corporation's potential insureds and of the public.
(4) Legal existence.
Upon the issuance of the certificate of incorporation the legal existence of the corporation shall begin, the articles and bylaws shall become effective and the proposed directors and officers shall take office. The certificate shall be conclusive evidence of compliance with this section, except in a proceeding by the state against the corporation.
History: 1971 c. 260
; 1991 a. 316
Transfer of an insurer's place of domicile. 611.223(1)(1)
Foreign insurer becomes a domestic insurer. 611.223(1)(a)(a)
A foreign insurer which desires to become a domestic insurer may submit to the commissioner an application for a certificate of incorporation and a certificate of authority. The application shall comply with par. (b)
and shall include or have attached any other relevant documents or information that the commissioner reasonably requires. Upon review of the application, the commissioner may issue a certificate of incorporation and certificate of authority if the commissioner determines that all of the following are satisfied:
The applicant is in compliance with the provisions of chs. 600
that apply to domestic insurers.
The directors and officers of the applicant are trustworthy and competent and collectively have the competence and experience to engage in the particular insurance business proposed.
The proposed business is consistent with the interests of insureds and the public.
The commissioner shall by rule specify the required contents and form of an application submitted under par. (a)
. In determining the required contents, the commissioner shall consider the information and documents which will permit the commissioner to determine whether the requirements of par. (a) 1.
The commissioner may by order relax one or more of the requirements of this subsection for a foreign insurer which desires to become a domestic insurer if, after a hearing conducted in accordance with ch. 227
, the commissioner determines that the requirements are unnecessary to protect policyholders and the public because of the developed status of the foreign insurer.
(2) Domestic insurer becomes a foreign insurer.
Upon approval by the commissioner, a domestic insurer may transfer its place of domicile to any other state in which it is admitted. As a condition of approving the transfer of domicile, the commissioner may require a special deposit, reinsurance or other protective measures by the insurer. After or simultaneous with the transfer of domicile, the insurer may apply under ch. 618
for authority to do business in this state as a foreign insurer.
(3) Effect on existing contracts.
The transfer of an insurer's place of domicile under sub. (1)
does not affect the obligations of the insurer under its existing insurance contracts or any other existing contracts.
History: 1987 a. 247
See also s. Ins 6.03
, Wis. adm. code.
Municipal insurance mutuals. 611.23(1)
On application by the organizers of a municipal insurance mutual under s. 611.11 (4)
, the commissioner may by order, after a hearing, relax any requirements of this chapter to facilitate the formation, financing and governance of the mutual. In the same order, the commissioner shall impose substitute requirements designed to implement the purposes of s. 611.02 (2)
as elaborated in this chapter.
Except as provided in sub. (3)
, the provisions of chs. 600
that apply to other mutuals organized or operating under this chapter apply also to municipal insurance mutuals.
(3) Inapplicable provisions. Chapters 604
do not apply to such mutuals. The commissioner may by order, after a hearing, exempt such a mutual from any other provisions on a finding that they are unnecessary for the protection of the interests of the municipalities and their citizens.
Segregated accounts in general. 611.24(1)
Mandatory segregated accounts.
A corporation shall establish segregated accounts for the following classes of insurance business, if it also does other classes of insurance business:
Unless the corporation is exempted by the commissioner by rule or order, financial guaranty insurance, if the corporation commences this class of insurance business on or after March 25, 1988, or if the corporation engages in this class of business on or after November 1, 1988; and
Life insurance including fixed and variable annuities. Disability insurance may be included in a life insurance account.
(2) Optional segregated accounts.
With the approval of the commissioner, a corporation may establish a segregated account for any part of its business. The commissioner shall approve unless he or she finds that the segregated account would be contrary to the law or to the interests of any class of insureds.
(3) Special provisions for segregated accounts. 611.24(3)(a)(a)
Capital and surplus.
The commissioner shall specify in the certificate of authority of a newly organized corporation the minimum capital or the minimum permanent surplus and the initial expendable surplus to be provided for each segregated account. If a segregated account is established after a certificate of authority has been issued, the commissioner shall require the corporation to have and maintain an adequate amount of capital and surplus in the segregated account.
The income and assets attributable to a segregated account shall always remain identifiable with the particular account but unless the commissioner so orders, the assets need not be kept physically separate from other assets of the corporation. The income, gains and losses, whether or not realized, from assets attributable to a segregated account shall be credited to or charged against the account without regard to other income, gains or losses of the corporation.
Except under par. (e)
, assets attributable to a segregated account shall not be chargeable with any liabilities arising out of any other business of the corporation, nor shall any assets not attributable to the account be chargeable with any liabilities arising out of it, except under par. (i)
Incidental business done by a corporation under s. 610.21
may be done under the general account or under any segregated account approved by the commissioner. Expenses and income for such business shall be allocated among the general account and all segregated accounts in accordance with generally accepted accounting principles.
Each segregated account shall be deemed an insurer within the meaning of s. 645.03 (1) (f)
. A liquidation order under s. 645.42
for the general account or for any segregated account shall have effect as a rehabilitation order under s. 645.32
for all other accounts of the corporation. Claims remaining unpaid after completion of the liquidation under ch. 645
shall have liens on the interests of shareholders, if any, in all of the corporation's assets that are not liquidated, and the rehabilitator may transform the liens into ownership interests under s. 645.33 (5)
Assets allocated to segregated accounts are the property of the corporation, which is not and shall not hold itself out to be a trustee of the assets.
A corporation may own a particular asset in determinate proportions for segregated accounts, for its general account or as a trustee when acting as such within its legal powers.
The corporation may by an identifiable act transfer assets for fair consideration among the segregated accounts, the general account and any trust accounts of the corporation.
Expenses, loans, and services.
The general account of the corporation, or any segregated account, may for a fair consideration provide loans or guarantees in connection with, perform services for, or reinsure other accounts, subject to rules promulgated by the commissioner. Generally accepted accounting principles and realistic actuarial tables may be considered to ascertain what is a fair consideration. Notwithstanding s. 645.68
, the commissioner may assign a general or segregated account obligation to a segregated account an order of distribution higher in priority than provided for under s. 645.68 (5)
Special provisions for separate accounts for variable contracts. 611.25(1)(1)
Separate accounts under this section form a special category of segregated accounts and may be designated by any appropriate name the corporation wishes to use.
With the approval of the commissioner, any corporation may establish one or more separate accounts and allocate to them any amounts paid or remitted to or held by the corporation under designated contracts or classes of contracts which amounts are to be applied to provide benefits payable partly or wholly in variable dollar amounts. Such amounts may also be applied to provide benefits in fixed and guaranteed dollar amounts and other incidental benefits.
(3) Special rights and procedures.
To the extent necessary to comply with the federal investment company act of 1940, as now or later amended, or any rules issued thereunder, the corporation may adopt special procedures for the conduct of the business and affairs of a separate account, and may, for persons having beneficial interests therein, provide special voting and other rights, including special rights and procedures relating to investment policy, investment advisory services, selection of certified public accountants, and selection of a committee, the members of which need not be otherwise affiliated with the corporation, to manage the business and affairs of the account.
(4) Applicable general provisions.
Separate accounts under this section are subject to s. 611.24 (3)
History: 1971 c. 260
An insurance corporation may form or acquire subsidiaries to do any lawful insurance business. There is no limit on the amount of investment in such subsidiaries except that the commissioner may by order or rule establish a limit and, for purposes of ss. 623.11
, the total value of the outstanding shares of such a subsidiary shall be deemed to equal the amount of surplus possessed by the subsidiary in excess of its security surplus, as determined by the commissioner under s. 623.12
(2) Investment subsidiaries.
An insurance corporation may form or acquire subsidiaries to hold or manage any assets that it might hold or manage directly. There is no limit on investment in such subsidiaries except that imposed by s. 620.23 (3)
An insurance corporation may form or acquire subsidiaries to perform functions or provide services that are ancillary to its insurance operations. It may have up to 10% of its assets invested in such subsidiaries, unless the commissioner by order or rule provides otherwise.
Subsidiaries are ancillary subsidiaries if they are engaged principally in one or more of the following:
Investing, reinvesting or trading in securities, or acting as a securities broker, dealer or marketing representative, for its own account or for the account of any affiliate.
Managing of investment companies registered under the federal investment company act of 1940, as amended, including related sales and services.
Acting as administrative agent for a government instrumentality performing an insurance, public assistance or related function.