LRB-2366/1
PK/TD/AM:kjf&klm
2015 - 2016 LEGISLATURE
October 19, 2015 - Introduced by Representative Petersen, cosponsored by
Senator Lasee. Referred to Committee on Insurance.
AB420,2,6 1An Act to repeal 601.422, 601.425, 601.428, 612.14 (1) to (12), 612.31 (5), 612.31
2(6), 612.32 (4), 612.53 (1) (title), 612.53 (2), 612.71, 623.06 (1c), 628.81, 635.13
3(title), 635.13 (2) and 646.51 (3) (am) 1.; to renumber 612.53 (1) and 635.13 (1);
4to renumber and amend 612.14 (intro.), 620.04 (1), 623.06 (1f), 623.06 (8) and
5632.43 (6m) (a) 3.; to consolidate, renumber and amend 646.51 (3) (am)
6(intro.) and 2.; to amend 600.01 (1) (b) 10. b., 605.21 (2), 611.07 (4), 611.56 (5),
7612.02 (2) (a), 612.13 (3), 612.13 (4), 612.31 (4) (m), 612.32 (1), 612.32 (2) (a),
8612.33 (1), 612.33 (2) (b), 623.06 (2) (intro.), 628.07, 628.10 (2) (a), 628.10 (2)
9(am), 628.347 (1) (a), 628.347 (4) (c), 628.347 (4m) (b) 3. c., 631.95 (3) (a), 632.43
10(6m) (e) 3. f., 632.43 (6m) (e) 3. g., 632.62 (2), 632.62 (3), 632.62 (4) (a), 632.62
11(4) (b), 632.89 (3c) (b), 646.51 (3) (b), 646.51 (4) (a), 646.51 (9) (a), 646.51 (9) (b),
12655.27 (3) (b) 1., 655.27 (3) (b) 2., 655.27 (3) (b) 2m., 655.27 (3) (bg) 1., 655.27
13(3) (bg) 2., 655.27 (3) (br) (intro.), 655.27 (3) (d), 655.27 (3) (e) and 655.61 (1); to
14repeal and recreate
623.06 (1) (f); and to create 227.01 (13) (pm), 601.465

1(1m) (c) 8., 601.465 (1m) (c) 9., 601.465 (3) (d), 620.04 (1) (b), 623.06 (1), 623.06
2(1f) (b), 623.06 (1m) (intro.), 623.06 (1r), 623.06 (8m), 623.06 (9), 623.06 (10),
3623.06 (11), 623.06 (12), 623.06 (13) (b), 632.43 (6m) (a) 3. b., 632.43 (6m) (a) 4m.,
4645.675, 646.51 (3) (ar), 646.51 (10), 655.27 (3) (bt) and 655.61 (3) of the
5statutes; relating to: various miscellaneous changes to the insurance statutes
6and granting rule-making authority.
Analysis by the Legislative Reference Bureau
This bill makes a number of miscellaneous changes to the insurance statutes,
including the following:
1. Under current law, the reserves that life insurance policies, annuities, and
pure endowment contracts must maintain are calculated according to a formula set
out in the statutes. Under the bill, policies and contracts must use a principle-based
valuation for reserves on and after the operative date of the valuation manual. The
"valuation manual" is defined in the bill as the manual of valuation instructions
adopted by the National Association of Insurance Commissioners (NAIC). The
"operative date of the valuation manual" is defined in the bill as the January 1 of the
first calendar year beginning after the first July 1 as of which three things have
occurred: 1) the valuation manual has been adopted by the NAIC by an affirmative
vote of the greater of at least 42 members or three-fourths of the members voting;
2) the standard valuation law has been enacted by states representing more than 75
percent of the direct premiums written as reported in the 2008 annual statements
for certain types of insurance; and 3) the standard valuation law has been enacted
by at least 42 of 55 specified jurisdictions. "Principle-based valuation" is defined in
the bill as a reserve valuation that uses one or more methods, or one or more
assumptions, determined by the insurer and that is required to comply with detailed
specifications and processes outlined in the bill. The bill also describes the
documents, materials, and other information related to the requirements for
principle-based valuation that are designated as confidential and specifies the
confidentiality requirements that apply with respect to those documents, materials,
and other information.
2. Under current law, health care providers that are subject to the health care
liability provisions of the statutes pay assessments for the injured patients and
families compensation fund, which pays any portion of a medical malpractice claim
that exceeds the policy limits of the health care liability insurance carried by those
health care providers. The assessments are set by the commissioner of insurance
(commissioner) by rule, after approval by a supervisory board of governors (board).
Also under current law, health care providers that are subject to the health care
liability provisions of the statutes pay assessments for the mediation fund, which
pays the costs of the system for mediating medical malpractice claims against health

care providers subject to the health care liability provisions. The assessments are
set by the board by rule.
Under the bill, the assessments paid by health care providers for the injured
patients and families compensation fund continue to be set by the commissioner after
approval by the board within the same parameters as under current law, but the
assessments do not have to be set by rule; the assessments paid by health care
providers for the mediation fund continue to be set by the board, but the assessments
do not have to be set by rule; and, upon the request of the commissioner, the Joint
Committee on Finance may modify the assessments.
3. Current law authorizes the commissioner to waive an examination
requirement for a nonresident applicant for an intermediary's license if the
jurisdiction of the applicant's residence has applicant requirements that are
substantially as rigorous as those in this state. The bill requires the commissioner
to waive an examination requirement for a nonresident applicant if the applicant's
home state has issued the applicant an intermediary's license for which the
qualifications are equivalent to those in this state and the license is in good standing.
4. The bill expands the ways in which the commissioner may notify an
intermediary or navigator of the dates by which certain actions must be taken before
the intermediary's or navigator's license is revoked for nonpayment of fees or failure
to comply with education or training requirements by requiring notification
generally. Current law requires the commissioner to send the notice by first class
mail to the address on file.
5. The bill removes requirements for insurers to file a number of reports with
the Office of the Commissioner of Insurance (OCI), including a report with
information about the percentages and kinds of commissions and fixed salaries paid
to agents and brokers in this state, an annual report related to premiums and claims
for commercial liability insurance, an annual report related to premiums and claims
for product liability insurance, and an annual report related to the number of
rescissions initiated or completed with respect to individual health insurance
policies.
6. Current law requires a small employer insurer to maintain detailed records
relating to its rating and renewal underwriting methods and practices and to make
them available to the commissioner, as well as filing an annual actuarial opinion,
based on an examination of those records, certifying that the insurer's methods and
practices are in compliance with state law and based on generally accepted and
sound actuarial principles. The bill removes the requirement for the annual
actuarial opinion.
7. The bill designates information to or from the International Association of
Insurance Supervisors and its employees or agents as information that OCI may
refuse to disclose.
8. The bill shortens the period for paying premiums for coverage under the local
government property insurance fund from 60 days to 30 days after the effective date
of coverage.

9. The bill authorizes an insurance stock corporation to take action that is
required or permitted to be taken at a meeting by the written consent of board
members instead of at a meeting.
10. The bill gives the board of directors of an insurer doing a participating life
insurance business, in which life insurance policy holders participate in company
profits by receiving dividends, more discretion to determine its surplus and the
dividend to be distributed to its participating policy holders.
11. The bill subjects insurers that surrender their license or certificate of
authority to assessments authorized by the board of directors of the insurance
security fund and adjusts the formula for calculating assessments levied against an
insurer. Under current law, the board of directors of the insurance security fund
authorize assessments of insurers that have been ordered liquidated. Assessments
authorized prior to April 30, 2004, are calculated as a percentage of premiums
written in Wisconsin during the year preceding the year of entry of the order of
liquidation. Assessments authorized after April 30, 2004, are calculated as a
percentage of premiums written in Wisconsin during the year preceding the year in
which the assessment is authorized. Under the bill, assessments are calculated as
a percentage of premiums written in Wisconsin in the year preceding the year in
which the board authorizes the assessment. Current law also specifies that
assessments with respect to insurers providing annuities contracts and life and
health insurance policies are calculated as the average annual premiums received
in Wisconsin over the three years preceding the year of entry of the order of
liquidation. Under the bill, for insurers providing health insurance policies,
assessments authorized prior to the passage of the bill use the same formula;
assessments authorized after passage of the bill are calculated as a percentage of the
premiums written in Wisconsin by the insurer for the year preceding the year in
which the board authorized the assessment.
12. The bill exempts care management organizations that administer the
family care benefit and that offer only mental health or alcohol and other drug abuse
treatment services from the application of the insurance statutes. Current law
exempts care management organizations that administer family care from the
application of the insurance statutes unless the care management organization also
offers hospital, physician, or other acute care services.
13. The bill makes various changes to the laws governing town mutuals,
including allowing an entire board to serve as the adjustment committee to adjust
or supervise the adjustment of losses if no adjustment committee is appointed;
allowing a town mutual to insure real property and contents in an immediately
adjoining county owned by a member who has real property and contents insured by
that town mutual, and allowing a town mutual to provide coverage for livestock and
farm products while temporarily located outside the town mutual's territory.
14. The bill specifies certain rights that are preserved under a qualified
financial contract with an insurer that is subject to a rehabilitation or liquidation
proceeding. The bill specifies rights and obligations with respect to a party to a
netting agreement or a qualified financial contract with an insurer that is subject to

a rehabilitation or liquidation, including requirements on the receiver in the
proceeding.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB420,1 1Section 1. 227.01 (13) (pm) of the statutes is created to read:
AB420,5,42 227.01 (13) (pm) Relates to setting fees under s. 655.27 (3) for the injured
3patients and families compensation fund or setting fees under s. 655.61 for the
4mediation fund.
AB420,2 5Section 2. 600.01 (1) (b) 10. b. of the statutes is amended to read:
AB420,5,96 600.01 (1) (b) 10. b. The exemption under subd. 10. a. does not apply if the
7services offered by the care management organization include hospital, physician or
8other acute health care services other than mental health and alcohol and other drug
9abuse treatment services
.
AB420,3 10Section 3. 601.422 of the statutes is repealed.
AB420,4 11Section 4. 601.425 of the statutes is repealed.
AB420,5 12Section 5. 601.428 of the statutes is repealed.
AB420,6 13Section 6. 601.465 (1m) (c) 8. of the statutes is created to read:
AB420,5,1414 601.465 (1m) (c) 8. The International Association of Insurance Supervisors.
AB420,7 15Section 7. 601.465 (1m) (c) 9. of the statutes is created to read:
AB420,5,1716 601.465 (1m) (c) 9. An agent or employee of the International Association of
17Insurance Supervisors.
AB420,8 18Section 8. 601.465 (3) (d) of the statutes is created to read:
AB420,5,2119 601.465 (3) (d) Any information defined as confidential information under s.
20623.06 (12) (am), which is subject only to the confidentiality provisions in s. 623.06
21(12).
AB420,9
1Section 9. 605.21 (2) of the statutes is amended to read:
AB420,6,112 605.21 (2) Premium payment. Upon receipt of certification of premium due, the
3premium shall be paid into the state treasury for the benefit of the property fund,
4within 60 30 days after the date of certification or the effective date of the policy,
5whichever is the later. Premiums for property insured effective at a later date shall
6be paid within 60 30 days after the effective date of each addition. The amount of a
7premium in default shall be a special charge against the local governing unit, and
8be included in the next certification of state taxes and charged and collected as other
9special charges are collected, with interest from the due date at a rate set by the
10commissioner by rule or, in the absence of a rule, at twice the most common prime
11rate charged by major banks in this state.
AB420,10 12Section 10. 611.07 (4) of the statutes is amended to read:
AB420,6,1913 611.07 (4) Waiver of notice and informal action by shareholders,
14policyholders or directors.
Sections 180.0704, 180.0706, 180.0821 , and 180.0823
15apply to stock corporations and ss. 181.0704, 181.0706, 181.0821, and 181.0823
16apply to mutuals. Section 180.0821 also applies to a committee of the board of a stock
17corporation and s.
181.0821 also applies to a committee of the board of a mutual,
18except that, in both cases, references to "board" shall be read as "committee" and
19"directors" shall mean members of the board appointed to serve on the committee
.
AB420,11 20Section 11. 611.56 (5) of the statutes is amended to read:
AB420,7,521 611.56 (5) Quorum Meetings, quorum, and voting. Section Sections 180.0820,
22180.0821, and
180.0824 applies apply to a committee of the board of a stock
23corporation, except that references in s. 180.0824 to a committee "created under s.
24180.0825" shall be read as a committee "created under this section". Sections
25181.0820, 181.0821, and 181.0824 apply to a committee of the board of a mutual,

1except that references to "board" shall be read as "committee", "majority" in s.
2181.0824 (1) shall mean a majority of the members of the board appointed to serve
3on the committee, and "majority" in s. 181.0824 (2) shall mean a majority of the
4members of the board appointed to serve on the committee who are present at the
5meeting.
AB420,12 6Section 12. 612.02 (2) (a) of the statutes is amended to read:
AB420,7,87 612.02 (2) (a) The name of the corporation which shall contain the words "Town
8Mutual"
;
AB420,13 9Section 13. 612.13 (3) of the statutes is amended to read:
AB420,7,1210 612.13 (3) Duties. The board shall manage direct the business and affairs of
11the corporation and shall not delegate its power or responsibility to any person except
12as specifically provided otherwise in this chapter.
AB420,14 13Section 14. 612.13 (4) of the statutes is amended to read:
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