AB681, s. 95 24Section 95. 646.31 (6) (b) of the statutes is amended to read:
AB681,33,3
1646.31 (6) (b) The board fund may waive the application of par. (a) to claims
2under contracts subject to s. 646.35 (2) or (3), to the extent that the board fund
3determines that application of par. (a) would be impracticable.
AB681, s. 96 4Section 96. 646.31 (7) of the statutes is amended to read:
AB681,33,85 646.31 (7) Setoffs and counterclaims. Section 645.56 applies to the
6settlement of loss claims. The board fund shall give the liquidator a reasonable
7opportunity to inform the board fund of possible setoffs and counterclaims before
8paying loss claims.
AB681, s. 97 9Section 97. 646.31 (8) of the statutes is amended to read:
AB681,33,1210 646.31 (8) Notice to claimants. The board fund shall provide notice under s.
11645.47 (2) to those potential loss claimants to whom the fund is liable under the
12section, if the liquidator has not done so.
AB681, s. 98 13Section 98. 646.31 (9) (a) of the statutes is amended to read:
AB681,33,1514 646.31 (9) (a) By any security fund with an obligation to pay all loss claims of
15the insurer;.
AB681, s. 99 16Section 99. 646.31 (9) (b) of the statutes is amended to read:
AB681,33,1817 646.31 (9) (b) If it is a first party claim for damage to property with a permanent
18location, by the fund of the location of the property; .
AB681, s. 100 19Section 100. 646.31 (9) (c) of the statutes is amended to read:
AB681,33,2120 646.31 (9) (c) If it is a workers' compensation claim, by the fund of the residence
21of the claimant;.
AB681, s. 101 22Section 101. 646.31 (9) (cm) of the statutes is created to read:
AB681,33,2423 646.31 (9) (cm) If it is a liability claim, by the fund of the residence of the
24policyholder.
AB681, s. 102 25Section 102. 646.31 (9) (d) of the statutes is amended to read:
AB681,34,1
1646.31 (9) (d) In any other case, by the fund of the residence of the insured; and.
AB681, s. 103 2Section 103. 646.31 (10) of the statutes is renumbered 646.31 (10) (intro.) and
3amended to read:
AB681,34,64 646.31 (10) Temporary moratoriums. (intro.) Before being obligated to make
5payments under this chapter to holders of life insurance or annuity contracts the
6fund may impose, with court approval, temporary any of the following:
AB681,34,20 7(a) Temporary moratoriums of not more than 90 days on payments of cash
8values and policy loans in addition to any deferrals of cash or policy loan value by
9contractual provision. A temporary moratorium may be renewed for successive
10periods of not more than 90 days with court approval
or liens on payments of cash
11values and policy loans, or on any other right to withdraw funds held in conjunction
12with those policies or contracts, in addition to any contractual provisions for deferral
13of cash or policy loan value. If the court imposes a temporary moratorium or a
14moratorium charge on the payment of cash values or policy loans out of the assets
15of the insolvent insurer, or on any other right to withdraw, out of those assets, funds
16held in conjunction with those policies or contracts, the fund may defer the payment
17of cash values and policy loans and other rights to withdraw funds for the period of
18the moratorium or moratorium charge imposed by the court, except for any claims
19covered by the fund to be paid in accordance with a hardship procedure established
20by the liquidator and approved by the court
.
AB681, s. 104 21Section 104. 646.31 (10) (b) of the statutes is created to read:
AB681,35,222 646.31 (10) (b) Permanent policy or contract liens in connection with a
23guarantee, assumption, or reinsurance agreement, if the board finds that the
24amounts that may be assessed under this chapter are insufficient to ensure full and
25prompt performance of the fund's duties under this chapter, or that economic or

1financial conditions, as they affect insurers, are such that imposing such permanent
2policy or contract liens is in the public interest.
AB681, s. 105 3Section 105. 646.31 (11) of the statutes is amended to read:
AB681,35,114 646.31 (11) Subrogation claims. The fund is not required to pay any amount
5due from the insurer to any reinsurer, insurer, insurance pool or underwriting
6association as subrogation, contribution, or indemnification recoveries or otherwise,
7except as provided in sub. (2) (a). A reinsurer, insurer, insurance pool or
8underwriting association that has paid a claim and thereby has become subrogated
9or otherwise entitled to the amount of that claim may assert that claim against the
10liquidator of the insurer in liquidation but not against the insured of the insurer in
11liquidation.
AB681, s. 106 12Section 106. 646.31 (13) of the statutes is renumbered 646.31 (13) (intro.) and
13amended to read:
AB681,35,1514 646.31 (13) Residency. (intro.) For purposes of determining residency in this
15section, the:
AB681,35,18 16(a) The residency of a claimant, insured, or policyholder that is not a natural
17person is the state in which the claimant's, insured's, or policyholder's principal place
18of business is located.
AB681, s. 107 19Section 107. 646.31 (13) (b) of the statutes is created to read:
AB681,35,2320 646.31 (13) (b) In the case of a life or disability insurance policy or an annuity
21contract, residency means residency at the time of the liquidation order. In the case
22of any other kind of insurance covered by this chapter, residency means residency at
23the time of the insured event.
AB681, s. 108 24Section 108. 646.31 (13) (c) of the statutes is created to read:
AB681,35,2525 646.31 (13) (c) A person's residency may be in only one state.
AB681, s. 109
1Section 109. 646.31 (13) (d) of the statutes is created to read:
AB681,36,52 646.31 (13) (d) If a person who is a citizen of the United States is a resident of
3a foreign country, or of a possession, territory, or protectorate of the United States,
4that does not have an organization similar to the fund, the person's residency is the
5domicile of the insurer that issued the policy or contract.
AB681, s. 110 6Section 110. 646.32 (1) of the statutes is amended to read:
AB681,36,117 646.32 (1) Appeal. A claimant whose claim is reduced or declared ineligible
8shall promptly be given notice of the determination and of the right to object under
9this section. The claimant may appeal to the board within 30 days after the mailing
10of the notice. The claimant may not pursue the claim in court except as provided in
11sub. (2).
AB681, s. 111 12Section 111. 646.325 (1) of the statutes is amended to read:
AB681,36,2113 646.325 (1) Definition. In this section, "net worth" means the amount of an
14insured's total assets less the insured's total liabilities at the end of the insured's
15fiscal year immediately preceding the date the liquidation order was entered, as
16shown on the insured's audited financial statement, or, if and includes the
17consolidated net worth of all of the corporate affiliates, subsidiaries, operating
18divisions, holding companies, and parent entities that are shown as insureds or
19additional insureds on the policy issued by the insurer. If
the insured is a natural
20person, "net worth" means the insured's total assets less the insured's total liabilities
21on December 31 immediately preceding the date the liquidation order was entered.
AB681, s. 112 22Section 112. 646.325 (2) (intro.) of the statutes is amended to read:
AB681,37,223 646.325 (2) Recovery from certain insureds and affiliates. (intro.) Except
24as provided in sub. (3), the fund may recover from a person the costs and expenses
25incurred in defending a claim against the person by a 3rd party and the
amount of

1any claim paid on behalf of that the person to a 3rd party, if all of the following
2conditions are satisfied:
AB681, s. 113 3Section 113. 646.325 (2) (a) (intro.) of the statutes is amended to read:
AB681,37,54 646.325 (2) (a) (intro.) The person on whose behalf the claim was defended or
5paid is any of the following:
AB681, s. 114 6Section 114. 646.325 (2) (b) of the statutes is amended to read:
AB681,37,97 646.325 (2) (b) Payment Adjudication of the claim resulted in no liability
8obligation on the person to pay the claim of the 3rd party or payment
of the claim
9satisfied all or part of the person's liability obligations to 3rd parties.
AB681, s. 115 10Section 115. 646.33 (1) of the statutes is renumbered 646.33 (1) (a) and
11amended to read:
AB681,37,2012 646.33 (1) (a) Upon payment to any loss claimant the fund is subrogated to the
13claimant's full right of recovery against the insurer, and, to the same extent the
14insurer would have been subrogated, against any liquidator and any 3rd person. A
15person receiving benefits under this chapter thereby assigns to the fund the person's
16rights under, and any causes of action against any person for losses arising under,
17resulting from, or otherwise relating to, the covered policy or contract to the extent
18of the benefits received, regardless of whether the benefits are payments of or on
19account of contractual obligations, continuation of coverage, or the provision of
20substitute or alternative coverages.
AB681,37,23 21(2m) Recovery. (a) On recovery under this section, the fund may retain both
22the amount it has paid to the claimant and the amount it has expended to obtain the
23recovery and shall pay any balance to the claimant.
AB681, s. 116 24Section 116. 646.33 (1) (b), (c) and (d) of the statutes are created to read:
AB681,38,3
1646.33 (1) (b) The subrogation rights of the fund under this subsection have the
2same priority against the assets of the insolvent insurer as the claimant's rights with
3respect to the insurer.
AB681,38,114 (c) In addition to the rights specified in pars. (a) and (b), the fund has all of the
5common law rights of subrogation and any other equitable or legal remedy that
6would have been available to the insolvent insurer or the claimant with respect to
7the covered policy or contract including, in the case of a structured settlement
8annuity, any rights of the owner, beneficiary, or payee of the annuity, to the extent
9of the benefits received under this chapter, against a person originally or by
10succession responsible for the losses that arise from the personal injury and that
11relate to the annuity or its payment.
AB681,38,1612 (d) If any provision of this subsection is invalid or ineffective for any reason
13with respect to any person or claim, the amount payable by the fund with respect to
14the related covered obligations shall be reduced by any amount realized by any other
15person with respect to the person or claim that is attributable to the covered policy
16or contract.
AB681, s. 117 17Section 117. 646.33 (2) of the statutes is amended to read:
AB681,38,2418 646.33 (2) Cooperation. The claimant shall cooperate with the board fund in
19pursuing the fund's rights under sub. (1), including executing any necessary
20documents. If cooperation is withheld unreasonably, the fund may recover from the
21claimant any amount it has paid the claimant. The fund may require a claimant to
22execute a written assignment to it of the claimant's rights and causes of action
23relating to the covered policy or contract as a condition precedent to the receipt of any
24right or benefits under this chapter.
AB681, s. 118 25Section 118. 646.33 (2m) (b) of the statutes is created to read:
AB681,39,4
1646.33 (2m) (b) If a claimant to whom the fund has provided benefits under this
2chapter recovers amounts with respect to which the fund has rights under this
3section, the claimant shall pay to the fund the portion of the recovery that is
4attributable to the covered policy or contract.
AB681, s. 119 5Section 119. 646.33 (3) of the statutes is amended to read:
AB681,39,96 646.33 (3) Claims against liquidator. The board fund shall report periodically
7and whenever a reasonable request is made to any liquidator against whom
8subrogation rights exist under sub. (1) the claims paid and rejected together with
9estimates of unsettled claims made or anticipated against the fund.
AB681, s. 120 10Section 120. 646.35 (2) of the statutes is repealed.
AB681, s. 121 11Section 121. 646.35 (3) (title) of the statutes is amended to read:
AB681,39,1212 646.35 (3) (title) Nondomestic insurer Insurer in liquidation.
AB681, s. 122 13Section 122. 646.35 (3) (intro.) (except 646.35 (3) (title)) of the statutes is
14renumbered 646.35 (3) (am) (intro.) and amended to read:
AB681,39,2015 646.35 (3) (am) (intro.) If a nondomestic an insurer that is subject to this
16chapter
is in liquidation, the board fund shall, subject to the approval of the
17commissioner and on a determination by the commissioner that the insurer's
18domiciliary jurisdiction or state of entry does not provide by statute for protection to
19residents of this state substantially similar to that provided by this section
s. 646.31
20(2), do either of the following
:
AB681, s. 123 21Section 123. 646.35 (3) (a) of the statutes is renumbered 646.35 (3) (am) 1. and
22amended to read:
AB681,39,2523 646.35 (3) (am) 1. Guarantee, assume, or reinsure, or cause to be guaranteed,
24assumed, or reinsured, the policies of residents the insolvent insurer within the
25scope of this section;.
AB681, s. 124
1Section 124. 646.35 (3) (b) of the statutes is renumbered 646.35 (3) (am) 2. and
2amended to read:
AB681,40,43 646.35 (3) (am) 2. Assure performance of the contractual obligations of the
4insurer on such policies; and.
AB681, s. 125 5Section 125. 646.35 (3) (c) of the statutes is renumbered 646.35 (3) (bm) and
6amended to read:
AB681,40,117 646.35 (3) (bm) Provide the necessary money Whether the fund's duties under
8par. (am) are discharged by the fund under par. (am) 1. or 2. is at the fund's discretion.
9The fund shall provide moneys, pledges, loans, notes, guarantees,
or other means
10reasonably necessary to discharge the duties under pars. (a) and (b) par. (am) 1. or
112
.
AB681, s. 126 12Section 126. 646.35 (4) of the statutes is renumbered 646.35 (4) (a) and
13amended to read:
AB681,40,1814 646.35 (4) (a) The fund has a claim against the liquidator for reasonable
15payments made to discharge its duties under this section. If the board fund and the
16liquidator disagree regarding the reasonableness of such payments, either may
17apply to the court to determine the question. Such payments shall have the same
18priority as the class of claims under s. 645.68 (3).
AB681, s. 127 19Section 127. 646.35 (4) (b) of the statutes is created to read:
AB681,41,320 646.35 (4) (b) As a creditor of the insolvent insurer, the fund shall be entitled
21to receive disbursements of assets out of marshaled assets, consistent with s. 645.72
22and any substantially similar laws of other states, as a credit against obligations
23under this chapter. If, within 120 days after a final determination of an insurer's
24insolvency by the receivership court, the liquidator has not applied to the court for
25approval of a proposal for disbursement of assets out of marshaled assets to

1insurance guaranty associations having obligations because of the insolvency, the
2fund may apply to the receivership court, in accordance with the law of the insolvent
3insurer's domicile, for approval of its own proposal for disbursement of the assets.
AB681, s. 128 4Section 128. 646.35 (5) of the statutes is amended to read:
AB681,41,125 646.35 (5) Rate increases. The board fund may increase any rates or premiums
6on policies during continuation of coverage under sub. (2) (b) or (3) (b) (am) 2. to the
7extent the policies permit the insurer to increase the rates or premiums. If the board
8fund determines that the rates or premiums on policies which that do not permit an
9increase or the rates or premiums as increased to the extent permitted by the policies
10are inadequate under s. 625.11 (3), the board fund may offer the policyholders the
11option of terminating the coverage or continuing the coverage at adequate rates or
12premiums as determined by the board fund.
AB681, s. 129 13Section 129. 646.35 (6) (a) of the statutes is amended to read:
AB681,41,1714 646.35 (6) (a) In the case of an annuity contract, the board fund may limit its
15performance to payment of the then current value of the loss claim under s. 645.68
16(3) as of the date of the order of liquidation, with interest to the date of payment, in
17lieu of the requirements of sub. (2) or (3).
AB681, s. 130 18Section 130. 646.35 (6) (b) of the statutes is amended to read:
AB681,41,2519 646.35 (6) (b) In the case of a disability insurance policy which that is neither
20guaranteed renewable nor noncancelable, the board fund is not obligated to continue
21the policy in force beyond the time required under s. 645.43 or the date established
22in the liquidation order of another state, but may continue the coverage under any
23disability insurance policy for up to 180 days after the date of the liquidation order.
24The commissioner may adopt rules defining "guaranteed renewable" and
25"noncancelable" for the purposes of this paragraph.
AB681, s. 131
1Section 131. 646.35 (6) (bm) of the statutes is amended to read:
AB681,42,62 646.35 (6) (bm) For coverages continued pursuant to par. (b), the board fund
3may substitute a comprehensive health insurance policy approved by the
4commissioner for a health maintenance organization policy that is subject to sub. (2)
5or
(3), and increase rates or premiums for the substituted coverage as provided in
6sub. (5).
AB681, s. 132 7Section 132. 646.35 (6) (c) (intro.) of the statutes is amended to read:
AB681,42,108 646.35 (6) (c) (intro.) In the case of a life insurance or annuity contract, the
9board fund is not obligated to perform the responsibilities set forth in sub. (2) or (3)
10with respect to either of the following:
AB681, s. 133 11Section 133. 646.35 (6) (c) 1. (intro.) of the statutes is amended to read:
AB681,42,1712 646.35 (6) (c) 1. (intro.) Any benefit payment liability, arising on or after the
13date of entry of the order of liquidation, to the extent that the payment is based upon
14a rate of interest that
rate of interest on which it is based or the interest rate,
15crediting rate, or similar factor determined by use of an index or other external
16reference stated in the policy or contract and employed in calculating returns or
17changes in value
exceeds the larger smaller of the following:
AB681, s. 134 18Section 134. 646.35 (6) (c) 1. b. of the statutes is amended to read:
AB681,42,2219 646.35 (6) (c) 1. b. The rate of interest, which may not be less than zero,
20determined by subtracting 3 percentage points from the monthly corporate bond
21yield average, as most recently published by Moody's investors service or its
22successor and as adjusted on a monthly basis.
AB681, s. 135 23Section 135. 646.35 (6) (c) 2. (intro.) of the statutes is amended to read:
AB681,43,3
1646.35 (6) (c) 2. (intro.) Any benefit payment liability, arising before the date
2of entry of the order of liquidation, to the extent that the payment is based upon a
3rate of interest that
exceeds the larger smaller of the following:
AB681, s. 136 4Section 136. 646.35 (6) (c) 2. b. of the statutes is amended to read:
AB681,43,105 646.35 (6) (c) 2. b. The rate of interest, which may not be less than zero,
6determined by subtracting 2 percentage points from the monthly corporate bond
7yield average, as published by Moody's investors service or its successor, when
8averaged for over the 4-year period ending on the date the fund becomes obligated
9with respect to the contract
of entry of the order of liquidation or averaged for over
10such lesser period if the contract was issued less than 4 years before that date.
AB681, s. 137 11Section 137. 646.35 (7) of the statutes is created to read:
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