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646.31(2)(a)2. 2. Except for a claim of a beneficiary, assignee or payee under a life or disability insurance policy or annuity contract, the claim of an insured, including a certificate holder, under a policy or annuity who at the time of the insured event or of the liquidation order was a resident of this state.
646.31(2)(b) (b) Certain nonresidents.
646.31(2)(b)1.1. Except with regard to claims under contracts that are held by residents of a state that does not provide substantially equivalent coverage with regard to contracts of residents of this state, the claim is made under a life or disability insurance policy or annuity contract subject to this section and issued by a domestic insurer, whether or not the claimant is a resident of this state.
646.31(2)(b)2. 2. The claim is made under a life or disability insurance policy or annuity contract subject to this section and issued by a domestic insurer if all of the following conditions are met:
646.31(2)(b)2.a. a. The claimant is a resident of another state that provides coverage similar to the coverage provided under this chapter but does not provide coverage for the claimant.
646.31(2)(b)2.b. b. The insurer never held a license or certificate of authority in the state in which the claimant resides.
646.31(2)(b)3. 3. The claim is made before January 1, 1990, under a life or disability insurance policy or annuity contract subject to this section and issued by a domestic insurer if all of the following conditions are met:
646.31(2)(b)3.a. a. The claimant was a resident of this state when the policy or contract was issued.
646.31(2)(b)3.b. b. The claimant is a resident of a state which does not provide coverage similar to the coverage provided under this chapter.
646.31(2)(c) (c) Owners of property interests. The claim of a person having an insurable interest in or related to property which was situated in this state at the time of the insured event.
646.31(2)(d) (d) Third party claimants. A claim under a liability or workers' compensation insurance policy, if:
646.31(2)(d)1. 1. Either the insured or the 3rd party claimant was a resident of this state at the time of the insured event;
646.31(2)(d)2. 2. The claim is for bodily or other personal injuries suffered in this state or by a person who suffered the injuries while a resident of this state; or
646.31(2)(d)3. 3. The claim is for damage to property situated in this state at the time the damage occurred.
646.31(2)(e) (e) Assignees. The claim of a direct or indirect resident assignee, other than an insurer, of a person who except for the assignment could have claimed under par. (a), (b), (c) or (d).
646.31(2)(f) (f) Beneficiaries, assignees and payees. Except for a claim of a nonresident certificate holder under a group policy or contract, a claim made under a life or disability insurance policy or annuity contract by a resident or nonresident beneficiary, assignee or payee of a person who fulfills all of the following criteria:
646.31(2)(f)1. 1. The person is a policyholder of, or a certificate holder under, the life or disability insurance policy or annuity contract.
646.31(2)(f)2. 2. The person is a resident of this state or could have made a claim under par. (b) 2.
646.31(3) (3)Deductible.
646.31(3)(a)(a) In this subsection, "health insurance policy" does not include a policy providing income continuation coverage or benefits for loss of time.
646.31(3)(am) (am) Except as provided in pars. (b) and (c), payment under this chapter is limited to the amount by which the claim exceeds $200. Claims may not be aggregated by assignment or otherwise for application of this deductible.
646.31(3)(b) (b) With regard to contracts subject to s. 646.35 (2) or (3) other than health insurance policies, in lieu of the deductible under par. (am), the board may impose a deductible not to exceed the lesser of 10% or $200 on any claim or other benefit payment if the board deems the imposition of this deductible more equitable or practical than that under par. (am).
646.31(3)(c) (c) A claim or other benefit payment under this chapter that is made under a health insurance policy may not be subject to the deductible under par. (am) or (b).
646.31(4) (4)Maximum claim.
646.31(4)(a)(a) Except in regard to worker's compensation insurance and except as provided in par. (b), the obligation of the fund on a single risk, loss or life may not exceed $300,000.
646.31(4)(b) (b) The fund is not obligated to pay a claimant an amount in excess of the loss obligation of the insurer in liquidation under the policy or coverage from which the claim arises.
646.31(5) (5)Punitive damages. No punitive damages may be paid out of the fund.
646.31(6) (6)Collection from collateral sources.
646.31(6)(a)(a) The portion of a loss claim for which indemnification is provided by other benefits or advantages, which may not be included in the class of claims defined by s. 645.68 (3), may not be claimed from the fund under this chapter.
646.31(6)(b) (b) The board may waive the application of par. (a) to claims under contracts subject to s. 646.35 (2) or (3), to the extent that the board determines that application of par. (a) would be impracticable.
646.31(6)(c) (c) Any person having an eligible claim which also constitutes a claim or legal right of recovery under any governmental insurance or guaranty program shall first exhaust all rights under that program, and any amount payable on an eligible claim under this chapter shall be reduced by the amount of recovery under that program.
646.31(7) (7)Setoffs and counterclaims. Section 645.56 applies to the settlement of loss claims. The board shall give the liquidator a reasonable opportunity to inform the board of possible setoffs and counterclaims before paying loss claims.
646.31(8) (8)Notice to claimants. The board shall provide notice under s. 645.47 (2) to those potential loss claimants to whom the fund is liable under the section, if the liquidator has not done so.
646.31(9) (9)Collection from other funds. A claim recoverable from more than one security fund shall be paid in the following order:
646.31(9)(a) (a) By any security fund with an obligation to pay all loss claims of the insurer;
646.31(9)(b) (b) If it is a first party claim for damage to property with a permanent location, by the fund of the location of the property;
646.31(9)(c) (c) If it is a workers' compensation claim, by the fund of the residence of the claimant;
646.31(9)(d) (d) In any other case, by the fund of the residence of the insured; and
646.31(9)(e) (e) Any other funds liable to pay.
646.31(9m) (9m)Recovery reduction. Any recovery under this chapter shall be reduced by the amount of recovery from any other security fund.
646.31(10) (10)Temporary moratoriums. Before being obligated to make payments under this chapter to holders of life insurance or annuity contracts the fund may impose, with court approval, temporary moratoriums of not more than 90 days on payments of cash values and policy loans in addition to any deferrals of cash or policy loan value by contractual provision. A temporary moratorium may be renewed for successive periods of not more than 90 days with court approval.
646.31(11) (11)Subrogation claims. The fund is not required to pay any amount due from the insurer to any reinsurer, insurer, insurance pool or underwriting association as subrogation recoveries or otherwise, except as provided in sub. (2) (a). A reinsurer, insurer, insurance pool or underwriting association that has paid a claim and thereby has become subrogated to the amount of that claim may assert that claim against the liquidator of the insurer in liquidation but not against the insured of the insurer in liquidation.
646.31(12) (12)Net worth of insured. Except for claims under s. 646.35, payment of a first-party claim under this chapter to an insured whose net worth, as defined in s. 646.325 (1), exceeds $10,000,000 is limited to the amount by which the aggregate of the insured's claims that satisfy subs. (1) to (7), (9) and (9m) plus the amount, if any, recovered from the insured under s. 646.325 exceeds 10% of the insured's net worth.
646.31 History History: 1979 c. 109; 1983 a. 120 ss. 6 to 11, 19; 1985 a. 216; 1987 a. 325; 1989 a. 23, 31; 1995 a. 396.
646.31 Annotation An offset under sub. (6) (a) must include amounts available to the claimant and not just amounts settled for. An offset of the policy limits of an applicable policy rather than the amount settled for was correct. Belongia v. Wisconsin Insurance Security Fund, 195 W (2d) 835, 537 NW (2d) 51 (Ct. App. 1995).
646.32 646.32 Appeal and review.
646.32(1)(1)Appeal. A claimant whose claim is reduced or declared ineligible shall promptly be given notice of the determination and of the right to object under this section. The claimant may appeal to the board within 30 days after the mailing of the notice.
646.32(2) (2)Review. Decisions of the board under sub. (1) are subject to judicial review.
646.32 History History: 1979 c. 109.
646.325 646.325 Recovery of amounts paid to 3rd parties.
646.325(1)(1)Definition. In this section, "net worth" means the amount of an insured's total assets less the insured's total liabilities at the end of the insured's fiscal year immediately preceding the date the liquidation order was entered, as shown on the insured's audited financial statement, or, if the insured is a natural person, the insured's total assets less the insured's total liabilities on December 31 immediately preceding the date the liquidation order was entered.
646.325(2) (2)Recovery from certain insureds and affiliates. Except as provided in sub. (3), the fund may recover from a person the amount of any claim paid on behalf of that person to a 3rd party, if all of the following conditions are satisfied:
646.325(2)(a) (a) The person on whose behalf the claim was paid is any of the following:
646.325(2)(a)1. 1. An insured whose net worth exceeds $10,000,000.
646.325(2)(a)2. 2. An affiliate of the insurer in liquidation.
646.325(2)(b) (b) Payment of the claim satisfied all or part of the person's liability obligations to 3rd parties.
646.325(3) (3)Limitation. The total amount recovered from an insured described in sub. (2) (a) 1. plus the amount of the insured's claims that satisfy s. 646.31 (1) to (7), (9) and (9m) but are not eligible for payment under s. 646.31 (12) may not exceed 10% of the insured's net worth.
646.325 History History: 1987 a. 325.
646.33 646.33 Subrogation and cooperation.
646.33(1) (1)Subrogation. Upon payment to any loss claimant the fund is subrogated to the claimant's full right of recovery against the insurer, and to the same extent the insurer would have been subrogated, against any liquidator and any 3rd person. On recovery under this section, the fund may retain both the amount it has paid to the claimant and the amount it has expended to obtain the recovery and shall pay any balance to the claimant.
646.33(2) (2)Cooperation. The claimant shall cooperate with the board in pursuing the fund's rights under sub. (1), including executing any necessary documents. If cooperation is withheld unreasonably, the fund may recover from the claimant any amount it has paid the claimant.
646.33(3) (3)Claims against liquidator. The board shall report periodically and whenever a reasonable request is made to any liquidator against whom subrogation rights exist under sub. (1) the claims paid and rejected together with estimates of unsettled claims made or anticipated against the fund.
646.33 History History: 1979 c. 109.
646.35 646.35 Continuation of coverage.
646.35(1) (1)Scope. This section applies to the following contracts when subject to this chapter:
646.35(1)(a) (a) Annuities.
646.35(1)(b) (b) Life insurance.
646.35(1)(c) (c) Disability insurance.
646.35(2) (2)Domestic insurer in liquidation. If a domestic insurer is in liquidation, the board shall, subject to the approval of the commissioner:
646.35(2)(a) (a) Guarantee, assume or reinsure or cause to be guaranteed, assumed or reinsured all policies of the insurer within the scope of this section except contracts that are held by residents of a state that does not provide substantially equivalent coverage with regard to contracts of residents of this state other than policies and contracts under s. 646.31 (2) (b) 3.;
646.35(2)(b) (b) Assure performance of the contractual obligations of the insurer on such policies; and
646.35(2)(c) (c) Provide the necessary money or other means necessary to discharge the duties under pars. (a) and (b).
646.35(3) (3)Nondomestic insurer in liquidation. If a nondomestic insurer is in liquidation, the board shall, subject to the approval of the commissioner and on a determination by the commissioner that the insurer's domiciliary jurisdiction or state of entry does not provide by statute for protection to residents of this state substantially similar to that provided by this section:
646.35(3)(a) (a) Guarantee, assume or reinsure or cause to be guaranteed, assumed or reinsured the policies of residents within the scope of this section;
646.35(3)(b) (b) Assure performance of the contractual obligations of the insurer on such policies; and
646.35(3)(c) (c) Provide the necessary money or other means necessary to discharge the duties under pars. (a) and (b).
646.35(4) (4)Claims against liquidator. The fund has a claim against the liquidator for reasonable payments made to discharge its duties under this section. If the board and the liquidator disagree regarding the reasonableness of such payments, either may apply to the court to determine the question. Such payments shall have the same priority as the class of claims under s. 645.68 (3).
646.35(5) (5)Rate increases. The board may increase any rates or premiums on policies during continuation of coverage under sub. (2) (b) or (3) (b) to the extent the policies permit the insurer to increase the rates or premiums. If the board determines that the rates or premiums on policies which do not permit an increase or the rates or premiums as increased to the extent permitted by the policies are inadequate under s. 625.11 (3), the board may offer the policyholders the option of terminating the coverage or continuing the coverage at adequate rates or premiums as determined by the board.
646.35(6) (6)Limitations. In performing its duties under this section:
646.35(6)(a) (a) In the case of an annuity contract, the board may limit its performance to payment of the then current value of the loss claim under s. 645.68 (3) as of the date of the order of liquidation, with interest to the date of payment, in lieu of the requirements of sub. (2) or (3).
646.35(6)(b) (b) In the case of a disability insurance policy which is neither guaranteed renewable nor noncancelable, the board is not obligated to continue the policy in force beyond the time required under s. 645.43 or the date established in the liquidation order of another state, but may continue the coverage under any disability insurance policy for up to 180 days after the date of the liquidation order. The commissioner may adopt rules defining "guaranteed renewable" and "noncancelable" for the purposes of this paragraph.
646.35(6)(bm) (bm) For coverages continued pursuant to par. (b), the board may substitute a comprehensive health insurance policy approved by the commissioner for a health maintenance organization policy that is subject to sub. (2) or (3), and increase rates or premiums for the substituted coverage as provided in sub. (5).
646.35(6)(c) (c) In the case of a life insurance or annuity contract, the board is not obligated to perform the responsibilities set forth in sub. (2) or (3) with respect to either of the following:
646.35(6)(c)1. 1. Any benefit payment liability, arising on or after the date of entry of the order of liquidation, to the extent that the payment is based upon a rate of interest that exceeds the larger of the following:
646.35(6)(c)1.a. a. The minimum guaranteed rate specified in the contract.
646.35(6)(c)1.b. b. The rate of interest determined by subtracting 3 percentage points from the monthly corporate bond yield average, as published by Moody's investors service or its successor and as adjusted on a monthly basis.
646.35(6)(c)2. 2. Any benefit payment liability, arising before the date of entry of the order of liquidation, to the extent that the payment is based upon a rate of interest that exceeds the larger of the following:
646.35(6)(c)2.a. a. The minimum guaranteed rate specified in the contract.
646.35(6)(c)2.b. b. The rate of interest determined by subtracting 2 percentage points from the monthly corporate bond yield average, as published by Moody's investors service or its successor, when averaged for the 4-year period ending on the date the fund becomes obligated with respect to the contract or averaged for such lesser period if the contract was issued less than 4 years before that date.
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