AB681: Bill Text

AB681, s. 40 Section 40. 646.01 (1) (b) 9. b. of the statutes is repealed.

AB681, s. 41 Section 41. 646.01 (1) (b) 9. c. of the statutes is repealed.

AB681, s. 42 Section 42. 646.01 (1) (b) 9. d. of the statutes is repealed.

AB681, s. 43 Section 43. 646.01 (1) (b) 11. of the statutes is repealed and recreated to read:

AB681,21,19 646.01 (1) (b) 11. Any warranty or service contract.

AB681, s. 44 Section 44. 646.01 (1) (b) 11m. of the statutes is created to read:

AB681,21,24 646.01 (1) (b) 11m. Any contractual liability policy that is issued to a warrantor, warranty plan, warranty plan administrator, or service contract provider and that provides coverage of any liability or performance arising out of or in connection with a warranty or service contract.

AB681, s. 45 Section 45. 646.01 (1) (b) 15. of the statutes is created to read:

AB681,22,1 646.01 (1) (b) 15. An unallocated annuity contract.

AB681, s. 46 Section 46. 646.01 (1) (b) 16. of the statutes is created to read:

AB681,22,6 646.01 (1) (b) 16. A contractual agreement that obligates an insurer to provide a book value accounting guarantee for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee, neither of which is an affiliate of the insurer.

AB681, s. 47 Section 47. 646.01 (1) (b) 17. of the statutes is created to read:

AB681,22,18 646.01 (1) (b) 17. Any liability under a policy or contract to the extent that it provides for interest or other changes in value that are to be determined by the use of an index or other external reference stated in the policy or contract and to the extent that the interest or other changes in value have not been credited to the policy or contract as of the date of the entry of the order of liquidation and are subject to forfeiture. If a policy's or contract's interest or other changes in value are credited less frequently than annually, for purposes of determining the values that have been credited and that are not subject to forfeiture, the interest or change in value determined by using the procedures specified in the policy or contract will be credited as if the contractual date of crediting interest or other changes in value was the date of entry of the order of liquidation and will not be subject to forfeiture.

AB681, s. 48 Section 48. 646.01 (1) (b) 18. of the statutes is created to read:

AB681,23,2 646.01 (1) (b) 18. The deductible, self-funded, or self-insured portion of a claim under a liability or worker's compensation insurance policy, regardless of the timing or method provided in the policy, endorsement, or any other agreement for payment of the deductible, self-funded, or self-insured amount by the insured. This subdivision does not apply to a worker's compensation insurance policy if the insured under the policy is a debtor under 11 USC 701, et seq., as of the deadline set by the liquidator for filing claims against the insolvent insurer.

AB681, s. 49 Section 49. 646.03 (1m) of the statutes is created to read:

AB681,23,5 646.03 (1m) "Direct insurance" does not include a policy or contract of reinsurance, except for the following:

AB681,23,7 (a) Reinsurance for which the reinsurer has issued assumption certificates under the reinsurance policy or contract.

AB681,23,8 (b) Reinsurance ceded by an assessable town mutual company.

AB681, s. 50 Section 50. 646.03 (2n) of the statutes is created to read:

AB681,23,12 646.03 (2n) "Impaired insurer" means an insurer subject to this chapter that is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

AB681, s. 51 Section 51. 646.03 (2p) of the statutes is created to read:

AB681,23,16 646.03 (2p) "Insolvent insurer" means an insurer subject to this chapter that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

AB681, s. 52 Section 52. 646.03 (4) of the statutes is created to read:

AB681,23,24 646.03 (4) With respect to a life or disability insurance policy or an annuity contract, "owner" or "policyholder" means the person who is identified as the legal owner under the terms of the policy or contract or who is otherwise vested with legal title to the policy or contract through a valid assignment completed in accordance with the terms of the policy or contract and properly recorded as the owner on the books of the insurer. "Owner" or "policyholder" does not include a person with only a beneficial interest in a policy or contract.

AB681, s. 53 Section 53. 646.03 (5) of the statutes is created to read:

AB681,24,4 646.03 (5) "Unallocated annuity contract" means an annuity contract or group annuity certificate that is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under the contract or certificate.

AB681, s. 54 Section 54. 646.11 (1) of the statutes is renumbered 646.11 (1) (intro.) and amended to read:

AB681,24,10 646.11 (1) (intro.) Organization. There is created a fund an organization to be known as the "insurance security fund".." All insurers subject to this chapter are contributors to the fund as a result of their authority to transact business in this state. The fund shall consist of all of the following:

AB681,24,11 (a) All payments made by insurers under s. 646.51 , of the.

AB681,24,12 (b) The earnings resulting from investments under s. 646.21 (2) and of the.

AB681,24,14 (c) The amounts recovered under s. 645.72 (2) or a substantially similar law in the state of domicile of the insolvent insurer.

AB681, s. 55 Section 55. 646.11 (1) (d) of the statutes is created to read:

AB681,24,17 646.11 (1) (d) Amounts reimbursed to the fund through its subrogation and assignment rights.

AB681, s. 56 Section 56. 646.11 (1) (e) of the statutes is created to read:

AB681,24,19 646.11 (1) (e) Any other moneys received by the fund from time to time.

AB681, s. 57 Section 57. 646.12 (2) (d) of the statutes is amended to read:

AB681,25,3 646.12 (2) (d) Employ or retain the personnel necessary to carry out its the fund's duties and set compensation for the personnel, sue or be sued, make contracts and borrow money necessary to carry out its duties in the most efficient way, including money with which to pay claims under s. 646.31 or to continue coverage under s. 646.35. The board may offer as security for such loans its claims against the liquidator or its power to levy assessments under this chapter. Personnel employed under this paragraph are not employees of the state and are not subject to s. 20.922 or ch. 230.

AB681, s. 58 Section 58. 646.12 (2) (f) 2. of the statutes is amended to read:

AB681,25,8 646.12 (2) (f) 2. Keep confidential the records under subd. 1. pertaining to specific liquidation proceedings involving an insurer until the termination of the liquidation proceedings or until sooner ordered to make the records public by a court of competent jurisdiction.

AB681, s. 59 Section 59. 646.12 (2) (f) 3. of the statutes is amended to read:

AB681,25,12 646.12 (2) (f) 3. Keep confidential the records under subd. 1. pertaining to specific rehabilitation proceedings involving an insurer unless ordered to make the records public by a court of competent jurisdiction.

AB681, s. 60 Section 60. 646.12 (4) of the statutes is amended to read:

AB681,25,17 646.12 (4) Other powers. The board fund may join an organization consisting of one or more entities of other states performing comparable functions, in order to assist the board fund in carrying out its powers and duties under this chapter and otherwise further the purposes of this chapter.

AB681, s. 61 Section 61. 646.13 (title) of the statutes is amended to read:

AB681,25,20 646.13 (title) Special duties and powers of the board fund related to loss claims.

AB681, s. 62 Section 62. 646.13 (1) (intro.) of the statutes is amended to read:

AB681,25,22 646.13 (1) Duties. (intro.) The board fund shall:

AB681, s. 63 Section 63. 646.13 (1) (b) of the statutes is amended to read:

AB681,26,3 646.13 (1) (b) Stand in the position of the insurer in the investigation, compromise, settlement, denial, and payment of claims under s. 646.31 and the defense of 3rd party claims against insureds, subject to the limitations of s. 645.43. The board fund shall consult and cooperate with the liquidator in carrying out these duties.

AB681, s. 64 Section 64. 646.13 (2) (intro.) of the statutes is amended to read:

AB681,26,5 646.13 (2) Powers. (intro.) The board fund may:

AB681, s. 65 Section 65. 646.13 (2) (b) of the statutes is amended to read:

AB681,26,9 646.13 (2) (b) Exercise with respect to loss claims the powers that the liquidator has with respect to other claims under ch. 645 or a substantially similar law in the state of domicile of the insolvent insurer.

AB681, s. 66 Section 66. 646.13 (2) (c) of the statutes is amended to read:

AB681,26,13 646.13 (2) (c) With respect to any action against an insurer which is in liquidation, exercise the powers of the liquidator under s. 645.49 (1) or a substantially similar law in the state of domicile of the insolvent insurer.

AB681, s. 67 Section 67. 646.13 (2) (d) of the statutes is amended to read:

AB681,26,24 646.13 (2) (d) Have standing to appear in any liquidation proceedings in this state involving an insurer in liquidation, and have authority to appear or intervene before a court or agency of any other state having jurisdiction over an impaired or insolvent insurer, in accordance with the laws of that state, with respect to which the fund is or may become obligated or that has jurisdiction over any person or property against which the fund may have subrogation or other rights. Standing shall extend to all matters germane to the powers and duties of the fund, including proposals for reinsuring, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations.

AB681, s. 68 Section 68. 646.13 (2) (g) of the statutes is created to read:

AB681,27,4 646.13 (2) (g) Sue and be sued, make contracts, and borrow money necessary to carry out its duties, including money with which to pay claims under s. 646.31 or to continue coverage under s. 646.35. The fund may offer as security for such loans its claims against the liquidator or its power to levy assessments under this chapter.

AB681, s. 69 Section 69. 646.13 (3) (intro.) of the statutes is amended to read:

AB681,27,7 646.13 (3) No duty or liability. (intro.) The board fund has no duty or liability with respect to any claim filed as follows:

AB681, s. 70 Section 70. 646.13 (3) (a) of the statutes is amended to read:

AB681,27,13 646.13 (3) (a) With the liquidator under s. 645.61 after the original date for filing specified by the liquidator under s. 645.47 (2), unless the liquidator determines that the claim is considered to have been timely filed under s. 645.61 (2) and the claim participates fully in every distribution to the same extent as other timely filed claims in the same class.

AB681, s. 71 Section 71. 646.13 (3) (b) of the statutes is amended to read:

AB681,27,19 646.13 (3) (b) With a liquidator or court under the laws of any other state after the original date for filing specified by the liquidator or court, unless the liquidator or court determines that the claim is considered to have been timely filed under a law substantially similar to s. 645.61 (2) and the claim participates fully in every distribution to the same extent as other timely filed claims in the same class.

AB681, s. 72 Section 72. 646.13 (3) (c) (intro.) of the statutes is amended to read:

AB681,27,25 646.13 (3) (c) (intro.) Except for claims under life insurance policies, annuities and, or noncancelable or guaranteed renewable disability insurance policies, and except for claims determined to be excused late filings as provided in pars. (a) and (b), if the original date for filing is extended by the liquidator or court, with a liquidator or court after the earlier of the following:

AB681, s. 73 Section 73. 646.13 (3) (c) 2. of the statutes is amended to read:

AB681,28,3 646.13 (3) (c) 2. The final extended date for filing specified by the liquidator or court.

AB681, s. 74 Section 74. 646.13 (4) of the statutes is amended to read:

AB681,28,9 646.13 (4) When duty to defend terminates. Any obligation of the board fund to defend an insured ceases upon the board's fund's payment, by settlement releasing the insured or on a judgment, of an amount equal to the lesser of the board's fund's covered claim obligation limit or the applicable policy limit, subject to any express policy terms regarding tender of limits.

AB681, s. 75 Section 75. 646.15 (title) of the statutes is amended to read:

AB681,28,11 646.15 (title) Proceedings involving nondomestic insurers.

AB681, s. 76 Section 76. 646.15 (1) (a) (intro.) of the statutes is amended to read:

AB681,28,16 646.15 (1) (a) (intro.) If a nondomestic an insurer is in liquidation, the board fund may apply to the circuit court for Dane County for, and the court may grant, restraining orders, temporary and permanent injunctions, and other orders considered necessary and proper to prevent any of the following:

AB681, s. 77 Section 77. 646.15 (1) (a) 1. of the statutes is amended to read:

AB681,28,19 646.15 (1) (a) 1. Interference with the board fund or with its administrative proceedings.

AB681, s. 78 Section 78. 646.15 (1) (a) 2. of the statutes is amended to read:

AB681,28,23 646.15 (1) (a) 2. The institution or further prosecution of any action or proceeding involving the insurer or in which the board fund is obligated to defend a party.

AB681, s. 79 Section 79. 646.15 (1) (a) 4. of the statutes is amended to read:

AB681,29,3 646.15 (1) (a) 4. Any other threatened or contemplated action that might prejudice the rights of policyholders or the administration of the liquidation or board fund proceedings.

AB681, s. 80 Section 80. 646.16 of the statutes is created to read:

AB681,29,15 646.16 Payment of deposits made for benefit of creditors. (1) The commissioner shall promptly pay to the fund any deposit held in this state that was paid, as required by law or the commissioner, by the insolvent insurer for the benefit of creditors, including policyholders, and not turned over to the domiciliary liquidator upon the entry of a final order of liquidation of an insurer domiciled in this state or in a reciprocal state, as defined in s. 645.03 (1) (i). Of the amount paid to the fund under this subsection, the fund may retain the percentage determined by dividing the aggregate amount of policyholders' claims that are related to the insolvency and for which the fund has provided benefits under this chapter by the aggregate amount of all policyholders' claims in this state that are related to the insolvency. The fund shall remit the balance to the domiciliary liquidator.

AB681,29,19 (2) Any amount retained by the fund under sub. (1) shall be treated as a distribution of estate assets under s. 645.72 or a similar provision of the state of domicile of the insolvent insurer. Deposits subject to this section shall not be treated as deposits as security, escrow, or other security under s. 645.03 (1) (j).

AB681, s. 81 Section 81. 646.21 (2) of the statutes is amended to read:

AB681,30,3 646.21 (2) Investment of assets. The board may request that assets of the fund not needed currently be invested by the investment board under s. 25.17. If so requested, the investment board shall invest those assets in investments with maturities and liquidity appropriate to the probable needs of the fund for money to perform its duties. All income attributable to the investments shall be credited to the fund, and both income and principal shall be transferred to the board of the fund on request of the board. Assets held by the board of the fund shall be invested in a similar manner.

AB681, s. 82 Section 82. 646.31 (1) (d) 10. and 11. of the statutes are created to read:

AB681,30,6 646.31 (1) (d) 10. Based on an obligation that does not arise under the express written terms of the policy or contract, including any of the following: