Each mutual shall keep correct and complete books and records of account and shall also keep minutes of the proceedings of its policyholders, board of directors and committees having any authority of the board of directors. Each mutual shall keep at its principal office or at the office of its secretary a record giving the names and addresses of policyholders entitled to vote, or records showing where such information can be obtained.
Except for the records of the names and addresses of policyholders entitled to vote, all relevant books and records of a mutual may be inspected by any policyholder or the policyholder's agent or attorney for any proper purpose at any reasonable time. Inspection of the records of the names and addresses of policyholders of mutuals entitled to vote shall be permitted only for the purpose of communicating with other policyholders with regard to the nomination and election of candidates for the board or other corporate matters which may be submitted to a vote of the policyholders. No person may, directly or indirectly, use any information so obtained for any other purpose.
In any pending action or proceeding, or upon petition, a court of record in this state may, upon notice fixed by the court, hearing and a showing of proper cause, and upon suitable terms, order any books and records of account, minutes and records of policyholders of a mutual and any other pertinent documents in the mutual's possession, or transcripts from or duly authenticated copies thereof, to be brought within this state and kept at such place and for such time and for such purposes as may be designated in the order. A mutual failing to comply with an order under this subdivision is subject to involuntary dissolution under this chapter and all of its directors and officers may be punished for contempt of court for disobedience of the order.
Form of books, records or minutes.
Any books, records or minutes may be in written form or in any other form capable of being converted into written form within a reasonable time.
Records of policyholders entitled to vote.
Any provision of this chapter or of any articles or bylaws of a mutual, which requires the keeping of records concerning the names and addresses of policyholders entitled to vote shall be deemed to be complied with by the keeping of a record of the names of policyholders and the names and addresses of insureds or persons paying premiums. Any such provision which requires the mailing or sending of notices, reports, proposals, ballots or other materials to policyholders shall be deemed to be complied with if mailing thereof is made to the insured or the person paying premiums on the policy for delivery to the policyholder.
Legislative Council Note to (2) (a), 1975: This amendment accommodates the needs of small corporations while continuing to satisfy the purposes for having large boards, as explained in the note to s. 611.51 (2) (a) in chapter 260, laws of 1971
. [Bill 643-S]
Election and removal of directors and officers of stock corporations. 611.52(2)
At each annual meeting of shareholders, the shareholders shall elect directors to hold office until the next succeeding annual election except as provided in sub. (3)
or under s. 180.0806
. Each director shall hold office for the term for which he or she is elected and until his or her successor is elected and qualified if qualification is required. Section 180.0804
applies to a stock corporation.
Selection and removal of directors and officers of mutuals. 611.53(1)(1)
Public selection of directors.
The articles of a mutual may provide that any number of the directors shall be public directors chosen under a plan proposed by the corporation and approved by the commissioner. The plan shall be designed to assure true public representation on the board. The persons to be nominated as directors shall be persons whose insurance business or general experience qualifies them to serve responsibly and impartially.
(2) Election of directors.
Directors not to be chosen under sub. (1)
shall be elected by the policyholders.
(3) Resignation, vacancies and removal of directors.
Subject to subs. (1)
, ss. 181.0807
apply to a mutual. A director may be removed from office for cause by an affirmative vote of a majority of the full board at a meeting of the board called for that purpose.
History: 1971 c. 260
; 1997 a. 79
Supervision of management changes. 611.54(1)(a)(a)
The name of any person selected as a director or principal officer of a corporation, together with such pertinent biographical and other data as the commissioner requires by rule, shall be reported to the commissioner immediately after the selection.
For 5 years after the initial issuance of a certificate of authority to a corporation, the commissioner may within 30 days after receipt of a report under par. (a)
disapprove any person selected who fails to satisfy the commissioner that the person is trustworthy and has the competence, experience and freedom from conflict of interest necessary to discharge his or her responsibilities.
(2) Report of removal.
Whenever a director or principal officer of a corporation is removed under s. 180.0843 (2)
, 181.0843 (2)
or 611.53 (3)
, the removal shall be reported to the commissioner immediately together with a statement of the reasons for the removal.
(3) Removal by commissioner.
If the commissioner finds, after a hearing, that a director or officer has a conflict of interest, is incompetent, untrustworthy or has willfully violated chs. 600
, a rule promulgated under s. 601.41 (3)
or an order issued under s. 601.41 (4)
, and that the conflict of interest, incompetence or the violation endangers the interests of insureds or of the public, the commissioner may order that the director or officer be removed.
See also s. Ins 6.52
, Wis. adm. code.
Continuity of management in emergencies. 611.55(1)(1)
The legislature declares it to be desirable for the general welfare and in particular for the welfare of insurance beneficiaries, policyholders, claimants and others that the business of domestic insurance corporations be continued even in a national emergency. The specific purpose of this section is to facilitate the continued operation of such corporations if a national emergency is caused by an attack on the United States or by a nuclear, atomic or other disaster which makes it impossible or impracticable for a corporation to conduct its business in strict accord with applicable provisions of law, its articles, bylaws or its charter.
(2) Emergency bylaws.
The board of any corporation may at any time adopt emergency bylaws, subject to repeal or change by action of those having power to adopt regular bylaws, which shall be operative during such a national emergency and which may, notwithstanding any different provisions of the regular bylaws, or of the applicable statutes or of the corporation's articles or charter, make any provision that may be reasonably necessary for operation during the emergency.
(3) Emergency authorizations.
If the board of a corporation has not adopted emergency bylaws, the following provisions shall become effective upon the occurrence of a national emergency:
Three directors shall constitute a quorum for the transaction of business at all meetings of the board.
Any vacancy on the board may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director.
If there are no surviving directors, but at least 3 officers of the corporation survive, the 3 officers with the longest term of service shall be the directors and shall possess all of the powers of the previous board and such powers as are granted herein or by subsequently enacted legislation. By majority vote such emergency board may elect other directors. If there are not at least 3 surviving officers, the commissioner shall appoint 3 persons as directors who shall possess all of the powers of the previous board and such powers as are granted herein or by subsequently enacted legislation, and these persons by majority vote may elect other directors.
(4) Succession list.
At any time the board of a corporation may, by resolution, provide that in the event of such a national emergency and in the event of the death or incapacity of specified officers of the corporation, such officers shall be succeeded by the persons named or described in a succession list adopted by the board. The list may be on the basis of named persons or position titles, shall establish the order of priority and may prescribe the conditions under which the powers of the office shall be exercised.
(5) Home office.
At any time the board of a corporation may, by resolution, provide that in the event of such a national emergency the home office or principal place of business shall be at a location named or described in the resolution. The resolution may provide for alternate locations and establish an order of preference.
History: 1971 c. 260
Committees of directors. 611.56(1)
If the articles or bylaws of a corporation so provide, the board by resolution adopted by a majority of the full board may designate one or more committees, each consisting of at least 3 directors serving at the pleasure of the board. The board may designate one or more directors as alternate members of any committee to substitute for any absent member at any meeting of the committee. Any committee under this section may include one or more nonvoting members who are not directors. The designation of a committee and delegation of authority to it shall not relieve the board or any director of any responsibility imposed by law.
(2) Delegation; major committees.
When the board is not in session, a committee satisfying all of the requirements for the composition of a board under s. 611.51 (2)
may exercise any of the powers of the board in the management of the business and affairs of the corporation, including action under ss. 611.60
, to the extent authorized in the resolution or in the articles or bylaws; except that any such committee may include 7 or more directors if the corporation has 9 or more directors.
(3) Delegation; ordinary committees.
When the board is not in session, a committee not satisfying the requirements of sub. (2)
may exercise the powers of the board in the management of the business and affairs of the corporation to the extent authorized in the resolution or in the articles or bylaws, except action in respect to:
Compensation or indemnification of any person who is a director, principal officer or one of the 3 most highly paid employees, and any benefits or payments requiring shareholder or policyholder approval;
Approval of any contract required to be approved by the board under s. 611.60
, or of any other transaction in which a director has a material interest adverse to the corporation;
Any other decision requiring shareholder or policyholder approval;
Amendment or repeal of any action previously taken by the full board which by its terms is not subject to amendment or repeal by a committee;
Dividends or other distributions to shareholders or policyholders, other than in the routine implementation of policy determinations of the full board;
Filling of vacancies on the board or any committee created under sub. (1)
except that the articles or bylaws may provide for temporary appointments to fill vacancies on the board or any committee, the appointments to last no longer than the end of the next board meeting.
(4) Subsequent review.
The full board or a major committee of the board authorized to do so under sub. (2)
shall specifically review any transaction in which an officer has a material financial interest adverse to the corporation, at the next meeting following action by any ordinary committee.
(5) Quorum and voting. Section 180.0824
applies to a committee of the board of a stock corporation, except references to a committee "created under s. 180.0825
" shall be read as a committee "created under this section". Sections 181.0821
apply to a committee of the board of a mutual, except that references to "board" shall be read as "committee", "majority" in s. 181.0824 (1)
shall mean a majority of the members of the board appointed to serve on the committee, and "majority" in s. 181.0824 (2)
shall mean a majority of the members of the board appointed to serve on the committee who are present at the meeting.
Interlocking directorates and other relationships.
No person may simultaneously be a director or officer in one insurance corporation and a director, officer, employee or agent for another insurer if the effect is to lessen competition substantially or if the 2 insurers have materially adverse interests.
History: 1971 c. 260
; 1973 c. 128
See also s. Ins 6.52
, Wis. adm. code.
Transactions in which directors and others are interested. 611.60(1)(1)
Any material transaction between an insurance corporation and one or more of its directors or officers, or between an insurance corporation and any other person in which one or more of its directors or officers or any person controlling the corporation has a material interest, is voidable by the corporation unless:
The transaction at the time it is entered into is reasonable and fair to the interests of the corporation; and
The transaction has, with full knowledge of its terms and of the interests involved, been approved in advance by the board or by the shareholders; and
The transaction has been reported to the commissioner immediately after such approval.
(2) Quorum and voting.
Directors whose interest or status make the transaction subject to this section may be counted in determining a quorum for a board meeting approving a transaction under sub. (1) (b)
, but may not vote. Approval requires an affirmative vote of a majority of those present.
(3) Restricted transactions.
The commissioner may by rule require that for any classes of transactions subject to sub. (1)
which by their nature tend to be unreasonable or unfair to the interests of the corporation the report under sub. (1) (c)
shall be submitted to the commissioner in advance of the proposed effective date. Such a transaction shall not be carried out even though approved under sub. (1) (b)
, until the commissioner approves the transaction, or does not disapprove it for failure to comply with sub. (1) (a)
within 30 days after receiving the report under sub. (1) (c)
(4) Excepted transactions.
This section does not apply to transactions subject to s. 611.61
, nor to transactions made between an insurance corporation and its wholly owned subsidiary, nor to policies of insurance, other than reinsurance, issued in the normal course of business. Nothing in this section deprives any person of any rights accruing under a policy of insurance written at usual terms, other than reinsurance. The commissioner may by rule exempt other classes of transactions from the reporting requirement of sub. (1) (c)
, to the extent that the purposes of this section can be achieved without the report.
History: 1971 c. 260
; 1979 c. 102
s. 236 (21)
Transactions of insurers with affiliates. 611.61(1)(1)
No transaction may be entered into between an insurer authorized to do business in this state and any affiliate unless:
The transaction at the time it is entered into is reasonable and fair to the interests of the insurer;
The books, accounts and records of each party to the transaction are kept in a manner that clearly and accurately discloses the nature and details of the transaction and in accordance with generally accepted accounting principles permits ascertainment of charges relating to the transaction; and
If the transaction is a reinsurance transaction, it is reported to the commissioner immediately if the insurer is a domestic corporation.
Transactions entered into by domestic corporations in violation of sub. (1)
are voidable by the corporation.
History: 1971 c. 260
; 1979 c. 102
Directors' and officers' liability and indemnification. 611.63
Executive compensation. 611.63(2)
(2) Approval of board action by shareholders.
Any benefits or payments to any director or officer on account of services rendered to a stock corporation more than 90 days before the agreement or decision to give the benefit or make the payment, and any new pension plan, profit-sharing plan, stock option plan or any amendment to an existing plan which so far as it pertains to any director or officer substantially increases the financial burden on the corporation shall be approved by a vote of the shareholders.
(3) Notice to commissioner.
Any action taken by the board of a mutual insurance corporation on any of the subjects specified in sub. (1)
shall be reported to the commissioner within 30 days.
(4) Annual report to commissioner.
The amount of all direct and indirect remuneration for services, including retirement and other deferred compensation benefits and stock options, paid or accrued each year for the benefit of each director and each officer and employee whose remuneration exceeds an amount established by the commissioner, and for all directors and officers as a group shall be included in the annual report made to the commissioner.
(5) Prohibited criteria.
No arrangement for compensation or other employment benefits for any director, officer or employee with decision-making power may be made if it would:
Measure the compensation or other benefits in whole or in part by any criteria that would create a financial inducement for him or her to act contrary to the best interests of the corporation; or
Have a tendency to make the corporation depend for continuance or soundness of operation upon continuation in his or her position of any director, officer or employee.
(6) Effect of rehabilitation and liquidation proceedings.
If an order of rehabilitation or liquidation is issued under s. 645.32
, the contractual obligations of the insurer for unperformed services of any director, principal officer or person in fact performing similar functions or having similar powers is thereupon terminated.
Exclusive agency contracts. 611.66(1)
Except under sub. (2)
, no corporation may enter into any contract whereby any person is granted or obtains directly or indirectly the exclusive right or privilege of soliciting, producing or receiving a fee or commission on all or substantially all of the insurance business of the corporation or on all or substantially all of the insurance business of the corporation in this state.