SB320,35,1514 646.31 (13) Residency. (intro.) For purposes of determining residency in this
15section, the:
SB320,35,18 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.
SB320, s. 107 19Section 107. 646.31 (13) (b) of the statutes is created to read:
SB320,35,2320 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.
SB320, s. 108 24Section 108. 646.31 (13) (c) of the statutes is created to read:
SB320,35,2525 646.31 (13) (c) A person's residency may be in only one state.
SB320, s. 109
1Section 109. 646.31 (13) (d) of the statutes is created to read:
SB320,36,52 646.31 (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.
SB320, s. 110 6Section 110. 646.32 (1) of the statutes is amended to read:
SB320,36,117 646.32 (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).
SB320, s. 111 12Section 111. 646.325 (1) of the statutes is amended to read:
SB320,36,2113 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.
SB320, s. 112 22Section 112. 646.325 (2) (intro.) of the statutes is amended to read:
SB320,37,223 646.325 (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:
SB320, s. 113 3Section 113. 646.325 (2) (a) (intro.) of the statutes is amended to read:
SB320,37,54 646.325 (2) (a) (intro.) The person on whose behalf the claim was defended or
5paid is any of the following:
SB320, s. 114 6Section 114. 646.325 (2) (b) of the statutes is amended to read:
SB320,37,97 646.325 (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.
SB320, s. 115 10Section 115. 646.33 (1) of the statutes is renumbered 646.33 (1) (a) and
11amended to read:
SB320,37,2012 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.
SB320,37,23 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.
SB320, s. 116 24Section 116. 646.33 (1) (b), (c) and (d) of the statutes are created to read:
SB320,38,3
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.
SB320,38,114 (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.
SB320,38,1612 (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.
SB320, s. 117 17Section 117. 646.33 (2) of the statutes is amended to read:
SB320,38,2418 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.
SB320, s. 118 25Section 118. 646.33 (2m) (b) of the statutes is created to read:
SB320,39,4
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.
SB320, s. 119 5Section 119. 646.33 (3) of the statutes is amended to read:
SB320,39,96 646.33 (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.
SB320, s. 120 10Section 120. 646.35 (2) of the statutes is repealed.
SB320, s. 121 11Section 121. 646.35 (3) (title) of the statutes is amended to read:
SB320,39,1212 646.35 (3) (title) Nondomestic insurer Insurer in liquidation.
SB320, 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:
SB320,39,2015 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
:
SB320, s. 123 21Section 123. 646.35 (3) (a) of the statutes is renumbered 646.35 (3) (am) 1. and
22amended to read:
SB320,39,2523 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;.
SB320, s. 124
1Section 124. 646.35 (3) (b) of the statutes is renumbered 646.35 (3) (am) 2. and
2amended to read:
SB320,40,43 646.35 (3) (am) 2. Assure performance of the contractual obligations of the
4insurer on such policies; and.
SB320, s. 125 5Section 125. 646.35 (3) (c) of the statutes is renumbered 646.35 (3) (bm) and
6amended to read:
SB320,40,117 646.35 (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
.
SB320, s. 126 12Section 126. 646.35 (4) of the statutes is renumbered 646.35 (4) (a) and
13amended to read:
SB320,40,1814 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).
SB320, s. 127 19Section 127. 646.35 (4) (b) of the statutes is created to read:
SB320,41,320 646.35 (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.
SB320, s. 128 4Section 128. 646.35 (5) of the statutes is amended to read:
SB320,41,125 646.35 (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.
SB320, s. 129 13Section 129. 646.35 (6) (a) of the statutes is amended to read:
SB320,41,1714 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).
SB320, s. 130 18Section 130. 646.35 (6) (b) of the statutes is amended to read:
SB320,41,2519 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.
SB320, s. 131
1Section 131. 646.35 (6) (bm) of the statutes is amended to read:
SB320,42,62 646.35 (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).
SB320, s. 132 7Section 132. 646.35 (6) (c) (intro.) of the statutes is amended to read:
SB320,42,108 646.35 (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:
SB320, s. 133 11Section 133. 646.35 (6) (c) 1. (intro.) of the statutes is amended to read:
SB320,42,1712 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:
SB320, s. 134 18Section 134. 646.35 (6) (c) 1. b. of the statutes is amended to read:
SB320,42,2219 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.
SB320, s. 135 23Section 135. 646.35 (6) (c) 2. (intro.) of the statutes is amended to read:
SB320,43,3
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:
SB320, s. 136 4Section 136. 646.35 (6) (c) 2. b. of the statutes is amended to read:
SB320,43,105 646.35 (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.
SB320, s. 137 11Section 137. 646.35 (7) of the statutes is created to read:
SB320,43,1512 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.
SB320,43,1916 (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.
SB320, s. 138 20Section 138. 646.35 (8) of the statutes is created to read:
SB320,43,2221 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.
SB320,44,523 (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.
SB320,44,76 (c) With respect to each indemnity reinsurance agreement for which the fund
7makes an election under par. (b):
SB320,44,138 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.
SB320,44,2114 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.
SB320,45,422 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.
SB320,45,105 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.
SB320,45,1611 (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):
SB320,45,1917 1. The indemnity reinsurance agreements automatically terminate for new
18reinsurance, unless the indemnity reinsurer and the other insurer agree to the
19contrary.
SB320,45,2220 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.
SB320,46,423 (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.
SB320,46,55 (f) Nothing in this subsection, except as expressly provided in this subsection:
SB320,46,76 1. Alters or modifies the terms or conditions of the indemnity reinsurance
7agreements of the insolvent insurer.
SB320,46,98 2. Abrogates or limits any rights of any reinsurer to rescind a reinsurance
9agreement.
SB320,46,1210 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.
SB320, s. 139 13Section 139. 646.35 (9) of the statutes is created to read:
SB320,46,1914 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.
SB320, s. 140 20Section 140. 646.35 (10) of the statutes is created to read:
SB320,47,221 646.35 (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.
SB320, s. 141 3Section 141. 646.51 (1) of the statutes is renumbered 646.51 (1m) and
4amended to read:
SB320,47,85 646.51 (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.
Loading...
Loading...