LRB-1379/4
PJK:skg:jlb
1995 - 1996 LEGISLATURE
February 7, 1996 - Introduced by Senators Schultz and Rude, cosponsored by
Representatives Johnsrud and Baldus. Referred to Committee on Insurance.
SB533,1,8
1An Act to renumber 623.06 (1);
to renumber and amend 623.06 (5) and 646.31
2(2) (a);
to amend 601.31 (1) (p), 601.72 (1) (intro.), 601.72 (2), 601.72 (3), 601.73
3(1) (intro.), 601.73 (2) (c), 623.06 (6), 645.08 (2) and 646.51 (6);
to repeal and
4recreate 601.72 and 601.73 (1) (intro.); and
to create 601.715, 623.06 (1c),
5623.06 (1m), 623.06 (5) (b), 646.01 (1) (a) 2. i. and 646.31 (2) (f) of the statutes;
6relating to: accreditation for certain insurers, immunity for acts related to reg
7ulation of insurer solvency, claims under the insurance security fund, service
8of process on insurers and granting rule-making authority.
Analysis by the Legislative Reference Bureau
Current law requires the commissioner of insurance (commissioner) to value
annually the reserves held in support of the outstanding life insurance policies and
annuity and pure endowment contracts of every life insurance company doing busi
ness in this state to determine an insurance company's financial soundness. This bill
requires every life insurance company doing business in this state to submit annual
ly to the commissioner an actuary's opinion as to whether the company's reserves are
computed accurately and are in compliance with requirements under law. With some
exceptions specified by the commissioner by rule, each opinion submitted must also
contain an opinion as to whether the company's reserves are adequate to cover the
company's anticipated obligations under its policies and contracts. The commission
er may by rule provide for a transition period for an insurance company to establish
higher reserves if the actuary determines that the company's reserves are not ade
quate. In support of the opinion regarding the adequacy of the reserves, the actuary
must prepare a memorandum, which must be submitted to the commissioner if the
commissioner so requests. The bill provides the actuary with immunity from liability
for any act or omission with respect to an opinion, and also sets out requirements re
garding the confidentiality of any memorandum or other material submitted to the
commissioner in connection with an opinion.
Current law also provides for the creation of the insurance security fund and
its administration by a board of directors that includes the attorney general, the
state treasurer and the commissioner. The fund is composed primarily of assess
ments paid by insurers. The purpose of the fund is to pay specified classes of claims
against an insurer that is in liquidation. The bill creates another class of claims that
may be paid from the fund: a claim under a life or disability insurance policy or annu
ity contract that is made by a resident or nonresident beneficiary, assignee or payee
of a policyholder or certificate holder who is a resident of this state or who, if a nonres
ident, would have had a claim under the policy or annuity contract that would have
been payable from the fund.
Current law also provides for immunity from civil suit for the state, commis
sioner, special deputy commissioner, rehabilitator or liquidator, their employes or
agents, and the insurance security fund and its agents, employes, directors and con
tributor insurers for acts or omissions in the performance of their powers and duties
under the portion of the statutes that regulates the rehabilitation and liquidation of
insurers. The bill adds immunity for the same entities and persons for acts or omis
sions in the performance of their powers and duties relating to regulation of capital
or solvency of insurers.
Under current law, every insurer is required to maintain in this state a regis
tered agent for service of process. The registered agent must be an individual who
is a resident of this state, a domestic insurer or a nondomestic insurer authorized to
do business in this state. If an insurer fails to maintain an agent or if the agent can
not be found, substituted service may be made on the commissioner or, if the legal
proceeding is brought by the state, on the secretary of state. The commissioner or
secretary of state must send a copy of the process by certified mail to the person
served at the person's last-known principal place of business, residence or post-of
fice address. The fee for service on the commissioner is $10.
This bill requires every insurer authorized to do business in this state (autho
rized insurer) to maintain a registered agent for service of process. The registered
agent must be a natural person who resides in this state, a domestic corporation, non
stock corporation or limited liability company incorporated or organized in this state
with a business office in this state or a foreign corporation or limited liability compa
ny authorized to transact business in this state with a business office in this state.
The bill specifies how an authorized insurer may change its registered agent, how
a registered agent may change its registered agent address and how a registered
agent may resign. The bill provides that substituted service may be made on the com
missioner, by the same procedure as under current law, if an authorized insurer has
no registered agent or if the registered agent cannot with reasonable diligence be
served. If substituted service is made on the commissioner, an affidavit must be at
tached to the process served attesting that the authorized insurer has no registered
agent or that the registered agent could not with reasonable diligence be served. The
bill also provides that the commissioner is by law constituted attorney to receive ser
vice (substituted service) of summons, notices, orders, pleadings and all other legal
process for all authorized insurers, surplus lines insurers, unauthorized insurers,
risk purchasing groups and nonresident intermediaries and specifies the action or
inaction on the part of each of those entities which serves to authorize substituted
service on the commissioner on behalf of the entity.
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:
SB533,3,43
601.31
(1) (p) For substituted service of process on the commissioner under s.
4601.72
(2), $10.
SB533, s. 2
5Section
2. 601.715 of the statutes is created to read:
SB533,3,10
6601.715 Registered agent for service of process. (1) Every authorized in
7surer shall continuously maintain in this state a registered agent for service of pro
8cess, notice or demand on the insurer. The authorized insurer shall file the name and
9address of the registered agent with the commissioner. The registered agent may be
10any of the following:
SB533,3,1111
(a) A natural person who resides in this state.
SB533,3,1312
(b) A domestic corporation, nonstock corporation or limited liability company
13incorporated or organized in this state with a business office in this state.
SB533,3,1514
(c) A foreign corporation or limited liability company authorized to transact
15business in this state with a business office in this state.
SB533,3,18
16(2) (a) An authorized insurer may change its registered agent by delivering to
17the commissioner for filing a statement of registered agent change that is signed by
18an officer of the insurer and that includes all of the following information:
SB533,4,1
11. The name and home office address of the authorized insurer.
SB533,4,22
2. The name of the registered agent, as changed.
SB533,4,33
3. The complete address of the registered agent, as changed.
SB533,4,44
4. Any other information that the commissioner may require.
SB533,4,75
(b) An authorized insurer may change its registered agent no more than one
6time per year. Any change of registered agent is effective on January 1 of the year
7following the delivery of the statement under par. (a).
SB533,4,9
8(3) A registered agent of an authorized insurer may change its registered agent
9address by doing all of the following:
SB533,4,1110
(a) Notifying in writing the authorized insurer for which the registered agent
11is acting.
SB533,4,1312
(b) Delivering to the commissioner for filing a statement that includes all of the
13following:
SB533,4,1514
1. The name and home office address of the authorized insurer for which the
15registered agent is acting.
SB533,4,1616
2. The complete new registered agent address.
SB533,4,1717
3. An attached copy of the notice under par. (a).
SB533,4,20
18(4) (a) A registered agent of an authorized insurer may resign by signing and
19delivering to the commissioner for filing a statement of resignation that includes all
20of the following information:
SB533,4,2221
1. The name and home office address of the authorized insurer for which the
22registered agent is acting.
SB533,4,2323
2. The name of the registered agent.
SB533,4,2424
3. A statement that the registered agent resigns.
SB533,5,2
1(b) After filing the statement, the commissioner shall mail a copy to the autho
2rized insurer under par. (a) 1.
SB533,5,33
(c) The resignation is effective on the earlier of the following:
SB533,5,54
1. Sixty days after the commissioner receives the statement of resignation for
5filing.
SB533,5,76
2. The date on which the appointment of a successor registered agent is effec
7tive.
SB533,5,14
8(5) If an authorized insurer has no registered agent for service of process in this
9state or if the registered agent cannot with reasonable diligence be served, substi
10tuted service may be made on the commissioner under ss. 601.72 and 601.73. If sub
11stituted service is made on the commissioner, an affidavit attesting that the autho
12rized insurer has no registered agent or that the registered agent could not with
13reasonable diligence be served shall be attached to the process, notice or demand that
14is served.
SB533,5,17
15(6) Except as provided in sub. (5), this section does not limit or affect the right
16to serve summons, notice, orders, pleadings, demands or other process upon an au
17thorized insurer in any other manner provided by law.
SB533,6,2
20601.72 Service of process through state officer. (1) General. Under pro
21cedures specified in s. 601.73, the commissioner is by law constituted attorney, except
22in cases in which the proceeding is to be brought by the state against an insurer or
23intermediary other than a risk retention group or risk purchasing group, in which
24event the secretary of state is by law constituted attorney, to receive service of sum
1mons, notices, orders, pleadings and all other legal process relating to any court or
2administrative agency in this state for all of the following:
SB533,6,63
(a)
Authorized insurers. All insurers authorized to do business in this state,
4while authorized to do business in this state, and thereafter in any proceeding aris
5ing from or related to any transaction having any connection with this state, provided
6the requirements under s. 601.715 (5) are satisfied.
SB533,6,97
(b)
Surplus lines insurers. All insurers as to any proceeding arising out of any
8contract that is permitted by s. 618.41, or out of any certificate, cover note or other
9confirmation of such insurance.
SB533,6,1210
(c)
Unauthorized insurers. All insurers or other persons doing an unauthorized
11insurance business in this state, including but not limited to risk purchasing groups,
12as to any proceeding arising out of the unauthorized transaction.
SB533,6,1613
(d)
Risk purchasing groups and nonresident intermediaries. All risk purchas
14ing groups or nonresident intermediaries as to any proceeding arising out of insur
15ance activities within this state or out of insurance activities related to policies on
16risks within this state.
SB533,6,22
17(2) Appointment of attorney. Except as provided in sub. (2m), every licensed
18insurer by applying for and receiving a certificate of authority, every surplus lines
19insurer by entering into a contract subject to the surplus lines law, and every unau
20thorized insurer by doing an insurance business in this state, is deemed to have irre
21vocably appointed the commissioner and secretary of state as the insurer's attorneys
22in accordance with sub. (1).
SB533,7,5
23(2m) Risk retention groups and risk purchasing groups. A risk retention
24group or risk purchasing group may not do an insurance business or engage in any
25insurance activity in this state until it registers with the commissioner and desig
1nates the commissioner as its agent for the purposes described in sub. (1). The com
2missioner may prescribe the form of registration under this subsection. If a risk
3retention group or risk purchasing group fails to designate the commissioner as re
4quired by this subsection, the commissioner is appointed agent for the risk retention
5group or risk purchasing group as provided in sub. (2).
SB533,7,8
6(3) Others affected. The commissioner and secretary of state shall also be at
7torneys for the executors, administrators or personal representatives, receivers,
8trustees or other successors in interest of the persons specified in sub. (1).
SB533,7,10
9(4) Fees. Litigants serving process on the commissioner under this section
10shall pay the fees specified in s. 601.31 (1) (p).
SB533,7,13
11(5) Ordinary means of service. The right to substituted service under this sec
12tion does not limit the right to serve summons, notice, orders, pleadings, demands
13or other process upon any person in any manner provided by law.
SB533, s. 4
14Section
4. 601.72 (1) (intro.) of the statutes, as affected by 1995 Wisconsin Act
15.... (this act), is amended to read:
SB533,7,2216
601.72
(1) General. (intro.) Under procedures specified in s. 601.73, the com
17missioner is by law constituted attorney, except in cases in which the proceeding is
18to be brought by the state against an insurer or intermediary other than a risk reten
19tion group or risk purchasing group, in which event the
secretary of state department
20of financial institutions is by law constituted attorney, to receive service of summons,
21notices, orders, pleadings and all other legal process relating to any court or adminis
22trative agency in this state for all of the following:
SB533, s. 5
23Section
5. 601.72 (2) of the statutes, as affected by 1995 Wisconsin Act .... (this
24act), is amended to read:
SB533,8,6
1601.72
(2) Appointment of attorney. Except as provided in sub. (2m), every
2licensed insurer by applying for and receiving a certificate of authority, every surplus
3lines insurer by entering into a contract subject to the surplus lines law, and every
4unauthorized insurer by doing an insurance business in this state, is deemed to have
5irrevocably appointed the commissioner and
secretary of state department of finan
6cial institutions as the insurer's attorneys in accordance with sub. (1).
SB533, s. 6
7Section
6. 601.72 (3) of the statutes, as affected by 1995 Wisconsin Act .... (this
8act), is amended to read:
SB533,8,129
601.72
(3) Others affected. The commissioner and
secretary of state depart
10ment of financial institutions shall also be attorneys for the executors, administra
11tors or personal representatives, receivers, trustees or other successors in interest
12of the persons specified in sub. (1).
SB533,8,1615
601.73
(1) Requirements for effective service. (intro.) Service upon the com
16missioner or secretary of state under s. 601.72
(2) is service on the principal, if:
SB533, s. 8
17Section
8. 601.73 (1) (intro.) of the statutes, as affected by 1995 Wisconsin Acts
1827, section 7012b, and .... (this act), is repealed and recreated to read:
SB533,8,2119
601.73
(1) Requirements for effective service. (intro.) Service upon the com
20missioner or department of financial institutions under s. 601.72 is service on the
21principal, if:
SB533,9,224
601.73
(2) (c)
Default judgment. No plaintiff or complainant is entitled to a
25judgment by default in any proceeding in which process is served under this section
1and s. 601.72
(2) until the expiration of 20 days from the date of mailing of the process
2under par. (b).
SB533, s. 10
3Section
10. 623.06 (1) of the statutes is renumbered 623.06 (1f).
SB533, s. 11
4Section
11. 623.06 (1c) of the statutes is created to read:
SB533,9,75
623.06
(1c) In this section, "qualified actuary" means a member in good stand
6ing of the American academy of actuaries who meets any other requirements that the
7commissioner may by rule specify.
SB533, s. 12
8Section
12. 623.06 (1m) of the statutes is created to read:
SB533,9,149
623.06
(1m) (a) 1. For each year ending on or after December 31, 1996, every
10life insurance company doing business in this state shall submit to the commissioner,
11with its annual statement due by March 1 of the following year, an opinion by a quali
12fied actuary as to whether the reserves and related actuarial items held in support
13of the policies and contracts specified by the commissioner by rule satisfy all of the
14following: