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:
AB681,43,1512 646.35 (7) Exclusion for coverage under another fund. (a) Notwithstanding
13s. 646.31 (9), the fund shall not provide coverage under this section to any person
14who, directly or indirectly, has coverage under any other state's security fund
15statutes.
AB681,43,1916 (b) In determining whether par. (a) applies in a situation in which a person
17could potentially be covered by security funds of more than one state, par. (a) shall
18be construed in conjunction with other states' laws in such a manner as to result in
19coverage for the person by only one security fund.
AB681, s. 138 20Section 138. 646.35 (8) of the statutes is created to read:
AB681,43,2221 646.35 (8) Reinsurance. (a) In this subsection, "coverage date" means the date
22on which the fund becomes responsible for the obligations of an insolvent insurer.
AB681,44,523 (b) At any time within one year after the coverage date, the fund may elect to
24succeed to the insolvent insurer's rights and obligations that accrue on or after the
25coverage date and that relate to contracts covered, in whole or in part, by the fund

1under one or more indemnity reinsurance agreements entered into by the insolvent
2insurer as a ceding insurer and selected by the fund. The election shall be effected
3by a notice to the liquidator and to any affected reinsurer. The fund may not exercise
4an election under this paragraph with respect to a reinsurance agreement that the
5liquidator has expressly disaffirmed.
AB681,44,76 (c) With respect to each indemnity reinsurance agreement for which the fund
7makes an election under par. (b):
AB681,44,138 1. The fund shall be responsible for all unpaid premiums under the agreement,
9for periods both before and after the coverage date, and for the performance of all
10other obligations to be performed under the agreement after the coverage date, that
11relate in each case to contracts covered, in whole or in part, by the fund. The fund
12may charge contracts covered in part by the fund, through reasonable allocation
13methods, for the costs of reinsurance in excess of the obligations of the fund.
AB681,44,2114 2. The fund is entitled to any amounts payable by the reinsurer under the
15agreement with respect to losses or events that occur in periods after the coverage
16date and that relate to contracts or contractual obligations covered, in whole or in
17part, by the fund. Upon receipt of any such amounts, the fund must pay to the
18beneficiary under the policy or contract on account of which the amounts were paid,
19the amount by which the benefits paid by the fund on account of the policy or contract
20less the retention of the insolvent insurer applicable to the loss or event is exceeded
21by the amount received by the fund.
AB681,45,422 3. Within 30 days after the election, the fund and the indemnity reinsurer must
23calculate the net balance due to or from the fund under the agreement as of the date
24of the election, giving full credit to all items paid by the insolvent insurer, the
25insurer's liquidator, and the indemnity reinsurer between the coverage date and the

1date of the election. The fund or the indemnity reinsurer shall pay the net balance
2due to the other within 5 days after the calculation is completed. The liquidator shall
3remit to the fund as promptly as practicable any amounts received by the liquidator
4that are due the fund under subd. 2.
AB681,45,105 4. If, within 60 days of the election, the fund pays all premiums due for periods
6both before and after the coverage date that relate to contracts covered, in whole or
7in part, by the fund, the reinsurer may not terminate the agreement insofar as it
8relates to contracts covered, in whole or in part, by the fund and may not set off
9against amounts due the fund any unpaid premium due for periods before the
10coverage date.
AB681,45,1611 (d) If the fund transfers its obligations to another insurer and the fund and
12other insurer agree, unless the the fund has previously expressly determined in
13writing that it will not exercise an election under par. (b), the other insurer succeeds
14to the rights and obligations of the fund under pars. (b) and (c), regardless of whether
15the fund has exercised an election under par. (b). If the other insurer succeeds to the
16fund's rights and obligations under pars. (b) and (c):
AB681,45,1917 1. The indemnity reinsurance agreements automatically terminate for new
18reinsurance, unless the indemnity reinsurer and the other insurer agree to the
19contrary.
AB681,45,2220 2. On and after the date on which an indemnity reinsurance agreement is
21transferred to the other insurer, the fund is no longer obligated to pay beneficiaries
22the amounts specified in par. (c) 2. with respect to that agreement.
AB681,46,423 (e) This subsection supersedes s. 645.58 (1), any applicable rules of the
24commissioner, and the provisions of any affected reinsurance agreement that
25provide for or require payment of reinsurance proceeds to the liquidator of the

1insolvent insurer on account of losses or events that occur after the coverage date.
2The liquidator remains entitled to any amounts payable by the reinsurer under the
3reinsurance agreement with respect to losses or events that occur before the coverage
4date, subject to any applicable setoff provisions.
AB681,46,55 (f) Nothing in this subsection, except as expressly provided in this subsection:
AB681,46,76 1. Alters or modifies the terms or conditions of the indemnity reinsurance
7agreements of the insolvent insurer.
AB681,46,98 2. Abrogates or limits any rights of any reinsurer to rescind a reinsurance
9agreement.
AB681,46,1210 3. Gives a policy owner or beneficiary an independent cause of action against
11an indemnity reinsurer that is not otherwise set forth in the indemnity reinsurance
12agreement.
AB681, s. 139 13Section 139. 646.35 (9) of the statutes is created to read:
AB681,46,1914 646.35 (9) Coverage obligations. Notwithstanding sub. (3), in performing its
15obligations to provide coverage under this section, the fund is not required to
16guarantee, assume, reinsure, or perform, or cause to be guaranteed, assumed,
17reinsured, or performed, the contractual obligations of an insolvent insurer under a
18covered policy or contract that do not materially affect the economic values or
19economic benefits of the covered policy or contract.
AB681, s. 140 20Section 140. 646.35 (10) of the statutes is created to read:
AB681,47,221 646.35 (10) Board determinations. The board shall have discretion to
22determine the means by which the fund may economically and efficiently provide
23benefits under this section. If the board has arranged or offered to provide benefits
24to a person under a plan or arrangement that fulfills the fund's obligations under this

1section, the person is not entitled to any benefits from the fund in addition to or other
2than those provided under the plan or arrangement.
AB681, s. 141 3Section 141. 646.51 (1) of the statutes is renumbered 646.51 (1m) and
4amended to read:
AB681,47,85 646.51 (1m) Duty to assess. As soon as practicable after a liquidation order
6has been issued, the board shall estimate separately for each of the accounts of s.
7646.11 (2), the amounts necessary to make the payments provided by this chapter
8and shall order authorize assessments separately for each account.
AB681, s. 142 9Section 142. 646.51 (1c) of the statutes is created to read:
AB681,47,1010 646.51 (1c) Definitions. In this section:
AB681,47,1411 (a) "Authorize" means, with respect to assessments, to approve, by the adoption
12of a resolution by the board, that an assessment from insurers in a specified amount
13be called immediately or in the future. An assessment is authorized when the
14resolution is adopted by the board.
AB681,47,1815 (b) "Call" means, with respect to assessments, to require payment, by the
16mailing of a notice to insurers by the fund, of an authorized assessment within the
17time set forth in the notice. An assessment is called when notice is mailed to insurers
18by the fund.
AB681, s. 143 19Section 143. 646.51 (2) of the statutes is repealed.
AB681, s. 144 20Section 144. 646.51 (3) (a) (title) of the statutes is renumbered 646.51 (3) (am)
21(title).
AB681, s. 145 22Section 145. 646.51 (3) (a) 1. of the statutes is renumbered 646.51 (1c) (c) and
23amended to read:
AB681,48,1024 646.51 (1c) (c) In this section, "premiums" "Premiums" means gross premiums
25and other considerations received for direct insurance and annuities, including

1considerations for a plan established under ss. 185.981 to 185.985, less return
2premiums and other considerations, dividends, and experience credits paid or
3credited to policyholders on the direct such business. The term "premiums" does not
4include any amounts received for any contracts or for the portions of any contracts
5for which coverage is excluded under s. 646.01 (1) (b)
premiums or other
6considerations received for policies or contracts, or for portions of policies or
7contracts, for which coverage is not provided under this chapter, except that the
8amount of assessable premiums or other considerations shall not be reduced on
9account of limitations with respect to a single risk, loss, or life under s. 646.31 (4) or
10on account of interest limitations under s. 646.35 (6) (c)
.
AB681, s. 146 11Section 146. 646.51 (3) (a) 2. of the statutes is renumbered 646.51 (3) (am)
12(intro.) and amended to read:
AB681,48,1413 646.51 (3) (am) (intro.) Except as provided in pars. (b) and par. (c), assessments
14shall be calculated as follows:
AB681,48,18 151. For assessments authorized by the board before the effective date of this
16subdivision .... [revisor inserts date], as
a percentage of premiums premium written
17in this state by each insurer in the classes protected by the account, accounts for the
18year preceding the year of entry of the order of liquidation.
AB681, s. 147 19Section 147. 646.51 (3) (am) 2. of the statutes is created to read:
AB681,48,2320 646.51 (3) (am) 2. For assessments authorized by the board on or after the
21effective date of this subdivision .... [revisor inserts date], as a percentage of premium
22written in this state by each insurer in the classes protected by the accounts for the
23year preceding the year in which the assessment is authorized by the board.
AB681, s. 148 24Section 148. 646.51 (3) (b) of the statutes is repealed.
AB681, s. 149 25Section 149. 646.51 (3) (c) of the statutes is amended to read:
AB681,49,5
1646.51 (3) (c) Administrative assessments. The board may make authorize
2assessments on a prorated or nonprorated basis to meet administrative costs and
3other expenses whether or not related to the liquidation or rehabilitation of a
4particular insurer. Nonprorated assessments may not exceed $200 per insurer in
5any year.
AB681, s. 150 6Section 150. 646.51 (4) of the statutes is renumbered 646.51 (4) (c) and
7amended to read:
AB681,49,198 646.51 (4) (c) The maximum assessment under this section in any calendar
9year is 2% of the assessable premiums under sub. (3). If the maximum assessment
10does not enable the fund to meet its obligations, an additional assessment shall be
11made in each succeeding year until the amounts available enable the fund to meet
12its obligations. No
Assessments to meet the obligations of the fund with respect to
13an insurer in liquidation may not be authorized or called unless the board makes a
14finding that it is necessary for implementing the purposes of this chapter.
15Recognizing that exact determinations may not always be possible, the board shall
16endeavor to classify and calculate assessments with a reasonable degree of accuracy.
17No authorized
assessment may be levied called if the assets held in the appropriate
18account of the fund are sufficient to cover all estimated payments for liquidations in
19progress.
AB681, s. 151 20Section 151. 646.51 (4) (a), (b) and (d) of the statutes are created to read:
AB681,50,221 646.51 (4) (a) Subject to pars. (b) and (d), the total of all assessments for an
22amount authorized by the board under this section with respect to an insurer may
23not, in one calendar year, exceed 2% of the insurer's average annual premiums
24received in this state, during the 3 calendar years preceding the year of entry of the

1order of liquidation, on the types of policies and contracts that are covered by the
2account.
AB681,50,73 (b) If the maximum assessment under par. (a), together with the other assets
4of the fund in an account, does not provide in one year in the account an amount that
5is sufficient for the fund to meet its obligations, the board shall assess additional
6amounts in each succeeding year until the amounts available enable the fund to meet
7its obligations.
AB681,50,118 (d) If 2 or more assessments are authorized in one calendar year with respect
9to insurers placed in liquidation in different calendar years, the average annual
10premiums for purposes of the limitation in par. (a) shall be equal and limited to the
11higher of the 3-year annual premium average for the applicable account.
AB681, s. 152 12Section 152. 646.51 (5) of the statutes is amended to read:
AB681,50,1713 646.51 (5) Collection. After the rate of assessment has been fixed, the board
14fund shall send to each insurer a statement of the amount it is to pay. The board fund
15shall designate whether the assessments shall be made payable in one sum or in
16installments. Assessments shall be collected by the same procedures as premium
17taxes or license fees under ch. 76.
AB681, s. 153 18Section 153. 646.51 (6) of the statutes is amended to read:
AB681,50,2219 646.51 (6) Appeal and review. Within 30 days after the board fund sends the
20statement under sub. (5), an insurer, after paying the assessment under protest, may
21appeal the assessment to the board or a committee thereof. The decision of the board
22on the appeal is subject to judicial review.
AB681, s. 154 23Section 154. 646.51 (7) (a) of the statutes is amended to read:
AB681,51,3
1646.51 (7) (a) An insurer's premium rates are not excessive because they
2contain an amount reasonably calculated to recoup assessments made called under
3this chapter.
AB681, s. 155 4Section 155. 646.51 (8) of the statutes is amended to read:
AB681,51,115 646.51 (8) Abatement and deferral. The board may abate or defer the
6assessment of an insurer in whole or part if payment of the assessment would
7endanger the ability of the insurer to fulfill its contractual obligations. The amount
8by which an assessment is abated or deferred may be assessed under this section
9against other insurers. When the conditions that prompted the board to defer
10assessment of an insurer no longer exist, the insurer shall pay all assessments that
11were deferred in accordance with a repayment plan approved by the board.
AB681, s. 156 12Section 156. 646.51 (9) (b) 1. of the statutes is amended to read:
AB681,51,1413 646.51 (9) (b) 1. Assessments made authorized or called before the insurer's
14license or certificate of authority terminated or expired.
AB681, s. 157 15Section 157. 646.51 (9) (b) 2. of the statutes is amended to read:
AB681,51,1916 646.51 (9) (b) 2. Assessments made authorized or called after the insurer's
17license or certificate of authority terminated or expired that relate to a liquidation
18order entered before the insurer's license or certificate of authority terminated or
19expired.
AB681, s. 158 20Section 158. 646.60 (1) (a) of the statutes is amended to read:
AB681,51,2321 646.60 (1) (a) Settlements by the fund. The liquidator is bound by
22determinations and settlements of covered loss claims, and by payments of claims,
23made by the board fund under this chapter.
AB681, s. 159 24Section 159. 646.61 (2) of the statutes is amended to read:
AB681,52,2
1646.61 (2) To meet the needs of the fund the board fund may temporarily
2transfer assets from one account to another.
AB681, s. 160 3Section 160. 646.73 of the statutes is repealed.
AB681, s. 161 4Section 161. Nonstatutory provisions.
AB681,52,95 (1) Annuity minimum nonforfeiture amount. Notwithstanding Section 162 (3 )
6of this act, an insurer may elect to comply with section 632.435 (1) (intro.), (a), and
7(b), (4), and (5) of the statutes, as affected by this act, on a contract form-by-contract
8form basis, for annuity contracts newly issued on any date after the effective date of
9this subsection.
AB681, s. 162 10Section 162 . Initial applicability.
AB681,53,311 (1) Insurance security fund. The treatment of sections 609.98 (1) and (4) (a)
12and (b), 645.58 (1) (intro.), 646.01 (1) (a) 2. k. and L. and (b) 1., 9. (intro.), a., b., c.,
13and d., 11., 11m., 15., 16., 17., and 18., 646.03 (1m), (2n), (2p), (4), and (5), 646.12 (2)
14(d) and (f) 2. and 3. and (4), 646.13 (title), (1) (intro.) and (b), (2) (intro.), (b), (c), (d),
15and (g), (3) (intro.), (a), (b), and (c) (intro.) and 2., and (4), 646.15 (title) and (1) (a)
16(intro.), 1., 2., and 4., 646.16, 646.21 (2), 646.31 (1) (d) 10. and 11., (2) (a) 1. and 2.,
17(b) 1., 2. (intro.), a., and b., and 3., (f) (title) and 2., and (g), (3), (5), (6) (a) and (b), (7),
18(8), (9) (a), (b), (c), (cm), and (d), and (11), 646.32 (1), 646.325 (1) and (2) (intro.), (a)
19(intro.), and (b), 646.33 (2), (2m) (b), and (3), 646.35 (2), (3) (title), (intro.) (except
20646.35 (3) (title)), (a), (b), and (c), (5), (6) (a), (b), (bm), and (c) (intro.), 1. (intro.) and
21b., and 2. (intro.) and b., (7), (8), (9), and (10), 646.51 (1), (1c), (2), (3) (a) (title), 1., and
222., (am) 2., (b), and (c), (5), (6), (7) (a), (8), and (9) (b) 1. and 2., 646.60 (1) (a), 646.61
23(2), and 646.73 of the statutes, the renumbering and amendment of sections 646.11
24(1), 646.31 (10) and (13), 646.33 (1), 646.35 (4), and 646.51 (4) of the statutes, and the
25creation of sections 646.11 (1) (d) and (e), 646.31 (10) (b) and (13) (b), (c), and (d),

1646.33 (1) (b), (c), and (d), 646.35 (4) (b), and 646.51 (4) (a), (b), and (d) of the statutes
2first apply to liquidation proceedings in which a liquidation order is issued on the
3effective date of this subsection.
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