SB320: Bill Text

SB320,44,13 1. The fund shall be responsible for all unpaid premiums under the agreement, for periods both before and after the coverage date, and for the performance of all other obligations to be performed under the agreement after the coverage date, that relate in each case to contracts covered, in whole or in part, by the fund. The fund may charge contracts covered in part by the fund, through reasonable allocation methods, for the costs of reinsurance in excess of the obligations of the fund.

SB320,44,21 2. The fund is entitled to any amounts payable by the reinsurer under the agreement with respect to losses or events that occur in periods after the coverage date and that relate to contracts or contractual obligations covered, in whole or in part, by the fund. Upon receipt of any such amounts, the fund must pay to the beneficiary under the policy or contract on account of which the amounts were paid, the amount by which the benefits paid by the fund on account of the policy or contract less the retention of the insolvent insurer applicable to the loss or event is exceeded by the amount received by the fund.

SB320,45,4 3. Within 30 days after the election, the fund and the indemnity reinsurer must calculate the net balance due to or from the fund under the agreement as of the date of the election, giving full credit to all items paid by the insolvent insurer, the insurer's liquidator, and the indemnity reinsurer between the coverage date and the date of the election. The fund or the indemnity reinsurer shall pay the net balance due to the other within 5 days after the calculation is completed. The liquidator shall remit to the fund as promptly as practicable any amounts received by the liquidator that are due the fund under subd. 2.

SB320,45,10 4. If, within 60 days of the election, the fund pays all premiums due for periods both before and after the coverage date that relate to contracts covered, in whole or in part, by the fund, the reinsurer may not terminate the agreement insofar as it relates to contracts covered, in whole or in part, by the fund and may not set off against amounts due the fund any unpaid premium due for periods before the coverage date.

SB320,45,16 (d) If the fund transfers its obligations to another insurer and the fund and other insurer agree, unless the the fund has previously expressly determined in writing that it will not exercise an election under par. (b), the other insurer succeeds to the rights and obligations of the fund under pars. (b) and (c), regardless of whether the fund has exercised an election under par. (b). If the other insurer succeeds to the fund's rights and obligations under pars. (b) and (c):

SB320,45,19 1. The indemnity reinsurance agreements automatically terminate for new reinsurance, unless the indemnity reinsurer and the other insurer agree to the contrary.

SB320,45,22 2. On and after the date on which an indemnity reinsurance agreement is transferred to the other insurer, the fund is no longer obligated to pay beneficiaries the amounts specified in par. (c) 2. with respect to that agreement.

SB320,46,4 (e) This subsection supersedes s. 645.58 (1), any applicable rules of the commissioner, and the provisions of any affected reinsurance agreement that provide for or require payment of reinsurance proceeds to the liquidator of the insolvent insurer on account of losses or events that occur after the coverage date. The liquidator remains entitled to any amounts payable by the reinsurer under the reinsurance agreement with respect to losses or events that occur before the coverage date, subject to any applicable setoff provisions.

SB320,46,5 (f) Nothing in this subsection, except as expressly provided in this subsection:

SB320,46,7 1. Alters or modifies the terms or conditions of the indemnity reinsurance agreements of the insolvent insurer.

SB320,46,9 2. Abrogates or limits any rights of any reinsurer to rescind a reinsurance agreement.

SB320,46,12 3. Gives a policy owner or beneficiary an independent cause of action against an indemnity reinsurer that is not otherwise set forth in the indemnity reinsurance agreement.

SB320, s. 139 Section 139. 646.35 (9) of the statutes is created to read:

SB320,46,19 646.35 (9) Coverage obligations. Notwithstanding sub. (3), in performing its obligations to provide coverage under this section, the fund is not required to guarantee, assume, reinsure, or perform, or cause to be guaranteed, assumed, reinsured, or performed, the contractual obligations of an insolvent insurer under a covered policy or contract that do not materially affect the economic values or economic benefits of the covered policy or contract.

SB320, s. 140 Section 140. 646.35 (10) of the statutes is created to read:

SB320,47,2 646.35 (10) Board determinations. The board shall have discretion to determine the means by which the fund may economically and efficiently provide benefits under this section. If the board has arranged or offered to provide benefits to a person under a plan or arrangement that fulfills the fund's obligations under this section, the person is not entitled to any benefits from the fund in addition to or other than those provided under the plan or arrangement.

SB320, s. 141 Section 141. 646.51 (1) of the statutes is renumbered 646.51 (1m) and amended to read:

SB320,47,8 646.51 (1m) Duty to assess. As soon as practicable after a liquidation order has been issued, the board shall estimate separately for each of the accounts of s. 646.11 (2), the amounts necessary to make the payments provided by this chapter and shall order authorize assessments separately for each account.

SB320, s. 142 Section 142. 646.51 (1c) of the statutes is created to read:

SB320,47,10 646.51 (1c) Definitions. In this section:

SB320,47,14 (a) "Authorize" means, with respect to assessments, to approve, by the adoption of a resolution by the board, that an assessment from insurers in a specified amount be called immediately or in the future. An assessment is authorized when the resolution is adopted by the board.

SB320,47,18 (b) "Call" means, with respect to assessments, to require payment, by the mailing of a notice to insurers by the fund, of an authorized assessment within the time set forth in the notice. An assessment is called when notice is mailed to insurers by the fund.

SB320, s. 143 Section 143. 646.51 (2) of the statutes is repealed.

SB320, s. 144 Section 144. 646.51 (3) (a) (title) of the statutes is renumbered 646.51 (3) (am) (title).

SB320, s. 145 Section 145. 646.51 (3) (a) 1. of the statutes is renumbered 646.51 (1c) (c) and amended to read:

SB320,48,10 646.51 (1c) (c) In this section, "premiums" "Premiums" means gross premiums and other considerations received for direct insurance and annuities, including considerations for a plan established under ss. 185.981 to 185.985, less return premiums and other considerations, dividends, and experience credits paid or credited to policyholders on the direct such business. The term "premiums" does not include any amounts received for any contracts or for the portions of any contracts for which coverage is excluded under s. 646.01 (1) (b) premiums or other considerations received for policies or contracts, or for portions of policies or contracts, for which coverage is not provided under this chapter, except that the amount of assessable premiums or other considerations shall not be reduced on account of limitations with respect to a single risk, loss, or life under s. 646.31 (4) or on account of interest limitations under s. 646.35 (6) (c).

SB320, s. 146 Section 146. 646.51 (3) (a) 2. of the statutes is renumbered 646.51 (3) (am) (intro.) and amended to read:

SB320,48,14 646.51 (3) (am) (intro.) Except as provided in pars. (b) and par. (c), assessments shall be calculated as follows:

SB320,48,18 1. For assessments authorized by the board before the effective date of this subdivision .... [revisor inserts date], as a percentage of premiums premium written in this state by each insurer in the classes protected by the account, accounts for the year preceding the year of entry of the order of liquidation.

SB320, s. 147 Section 147. 646.51 (3) (am) 2. of the statutes is created to read:

SB320,48,23 646.51 (3) (am) 2. For assessments authorized by the board on or after the effective date of this subdivision .... [revisor inserts date], as a percentage of premium written in this state by each insurer in the classes protected by the accounts for the year preceding the year in which the assessment is authorized by the board.

SB320, s. 148 Section 148. 646.51 (3) (b) of the statutes is repealed.

SB320, s. 149 Section 149. 646.51 (3) (c) of the statutes is amended to read:

SB320,49,5 646.51 (3) (c) Administrative assessments. The board may make authorize assessments on a prorated or nonprorated basis to meet administrative costs and other expenses whether or not related to the liquidation or rehabilitation of a particular insurer. Nonprorated assessments may not exceed $200 per insurer in any year.

SB320, s. 150 Section 150. 646.51 (4) of the statutes is renumbered 646.51 (4) (c) and amended to read:

SB320,49,19 646.51 (4) (c) The maximum assessment under this section in any calendar year is 2% of the assessable premiums under sub. (3). If the maximum assessment does not enable the fund to meet its obligations, an additional assessment shall be made in each succeeding year until the amounts available enable the fund to meet its obligations. No Assessments to meet the obligations of the fund with respect to an insurer in liquidation may not be authorized or called unless the board makes a finding that it is necessary for implementing the purposes of this chapter. Recognizing that exact determinations may not always be possible, the board shall endeavor to classify and calculate assessments with a reasonable degree of accuracy. No authorized assessment may be levied called if the assets held in the appropriate account of the fund are sufficient to cover all estimated payments for liquidations in progress.

SB320, s. 151 Section 151. 646.51 (4) (a), (b) and (d) of the statutes are created to read:

SB320,50,2 646.51 (4) (a) Subject to pars. (b) and (d), the total of all assessments for an amount authorized by the board under this section with respect to an insurer may not, in one calendar year, exceed 2% of the insurer's average annual premiums received in this state, during the 3 calendar years preceding the year of entry of the order of liquidation, on the types of policies and contracts that are covered by the account.

SB320,50,7 (b) If the maximum assessment under par. (a), together with the other assets of the fund in an account, does not provide in one year in the account an amount that is sufficient for the fund to meet its obligations, the board shall assess additional amounts in each succeeding year until the amounts available enable the fund to meet its obligations.

SB320,50,11 (d) If 2 or more assessments are authorized in one calendar year with respect to insurers placed in liquidation in different calendar years, the average annual premiums for purposes of the limitation in par. (a) shall be equal and limited to the higher of the 3-year annual premium average for the applicable account.

SB320, s. 152 Section 152. 646.51 (5) of the statutes is amended to read:

SB320,50,17 646.51 (5) Collection. After the rate of assessment has been fixed, the board fund shall send to each insurer a statement of the amount it is to pay. The board fund shall designate whether the assessments shall be made payable in one sum or in installments. Assessments shall be collected by the same procedures as premium taxes or license fees under ch. 76.

SB320, s. 153 Section 153. 646.51 (6) of the statutes is amended to read:

SB320,50,22 646.51 (6) Appeal and review. Within 30 days after the board fund sends the statement under sub. (5), an insurer, after paying the assessment under protest, may appeal the assessment to the board or a committee thereof. The decision of the board on the appeal is subject to judicial review.

SB320, s. 154 Section 154. 646.51 (7) (a) of the statutes is amended to read:

SB320,51,3 646.51 (7) (a) An insurer's premium rates are not excessive because they contain an amount reasonably calculated to recoup assessments made called under this chapter.

SB320, s. 155 Section 155. 646.51 (8) of the statutes is amended to read:

SB320,51,11 646.51 (8) Abatement and deferral. The board may abate or defer the assessment of an insurer in whole or part if payment of the assessment would endanger the ability of the insurer to fulfill its contractual obligations. The amount by which an assessment is abated or deferred may be assessed under this section against other insurers. When the conditions that prompted the board to defer assessment of an insurer no longer exist, the insurer shall pay all assessments that were deferred in accordance with a repayment plan approved by the board.

SB320, s. 156 Section 156. 646.51 (9) (b) 1. of the statutes is amended to read:

SB320,51,14 646.51 (9) (b) 1. Assessments made authorized or called before the insurer's license or certificate of authority terminated or expired.

SB320, s. 157 Section 157. 646.51 (9) (b) 2. of the statutes is amended to read:

SB320,51,19 646.51 (9) (b) 2. Assessments made authorized or called after the insurer's license or certificate of authority terminated or expired that relate to a liquidation order entered before the insurer's license or certificate of authority terminated or expired.

SB320, s. 158 Section 158. 646.60 (1) (a) of the statutes is amended to read:

SB320,51,23 646.60 (1) (a) Settlements by the fund. The liquidator is bound by determinations and settlements of covered loss claims, and by payments of claims, made by the board fund under this chapter.

SB320, s. 159 Section 159. 646.61 (2) of the statutes is amended to read:

SB320,52,2 646.61 (2) To meet the needs of the fund the board fund may temporarily transfer assets from one account to another.

SB320, s. 160 Section 160. 646.73 of the statutes is repealed.

SB320, s. 161 Section 161. Nonstatutory provisions.

SB320,52,9 (1) Annuity minimum nonforfeiture amount. Notwithstanding Section 162 (3 ) of this act, an insurer may elect to comply with section 632.435 (1) (intro.), (a), and (b), (4), and (5) of the statutes, as affected by this act, on a contract form-by-contract form basis, for annuity contracts newly issued on any date after the effective date of this subsection.

SB320, s. 162 Section 162 . Initial applicability.

SB320,53,3 (1) Insurance security fund. The treatment of sections 609.98 (1) and (4) (a) and (b), 645.58 (1) (intro.), 646.01 (1) (a) 2. k. and L. and (b) 1., 9. (intro.), a., b., c., and d., 11., 11m., 15., 16., 17., and 18., 646.03 (1m), (2n), (2p), (4), and (5), 646.12 (2) (d) and (f) 2. and 3. and (4), 646.13 (title), (1) (intro.) and (b), (2) (intro.), (b), (c), (d), and (g), (3) (intro.), (a), (b), and (c) (intro.) and 2., and (4), 646.15 (title) and (1) (a) (intro.), 1., 2., and 4., 646.16, 646.21 (2), 646.31 (1) (d) 10. and 11., (2) (a) 1. and 2., (b) 1., 2. (intro.), a., and b., and 3., (f) (title) and 2., and (g), (3), (5), (6) (a) and (b), (7), (8), (9) (a), (b), (c), (cm), and (d), and (11), 646.32 (1), 646.325 (1) and (2) (intro.), (a) (intro.), and (b), 646.33 (2), (2m) (b), and (3), 646.35 (2), (3) (title), (intro.) (except 646.35 (3) (title)), (a), (b), and (c), (5), (6) (a), (b), (bm), and (c) (intro.), 1. (intro.) and b., and 2. (intro.) and b., (7), (8), (9), and (10), 646.51 (1), (1c), (2), (3) (a) (title), 1., and 2., (am) 2., (b), and (c), (5), (6), (7) (a), (8), and (9) (b) 1. and 2., 646.60 (1) (a), 646.61 (2), and 646.73 of the statutes, the renumbering and amendment of sections 646.11 (1), 646.31 (10) and (13), 646.33 (1), 646.35 (4), and 646.51 (4) of the statutes, and the creation of sections 646.11 (1) (d) and (e), 646.31 (10) (b) and (13) (b), (c), and (d), 646.33 (1) (b), (c), and (d), 646.35 (4) (b), and 646.51 (4) (a), (b), and (d) of the statutes first apply to liquidation proceedings in which a liquidation order is issued on the effective date of this subsection.

SB320,53,6 (2) Suitability of annuity recommendations. The treatment of section 628.347 of the statutes first applies to recommendations for the purchase or exchange of annuities that are made on the effective date of this subsection.

SB320,53,9 (3) Annuity minimum nonforfeiture amount. The treatment of section 632.435 (1) (intro.), (a), and (b), (4), (5), and (12) of the statutes first applies to annuity contracts issued on the 2nd anniversary of the day after publication.

SB320, s. 163 Section 163. Effective dates. This act takes effect on the day after publication, except as follows:

SB320,53,14 (1) Suitability of annuity recommendations. The treatment of section 628.347 of the statutes and Section 162 (2) of this act take effect on the first day of the 7th month beginning after publication.

SB320,53,15 (End)