LRB-3789/1
AJM:amn
2015 - 2016 LEGISLATURE
December 7, 2015 - Introduced by Senators Lasee, Marklein, Stroebel and Olsen,
cosponsored by Representatives Nygren, Ballweg, Czaja, Gannon,
Thiesfeldt and Novak. Referred to Committee on Insurance, Housing, and
Trade.
SB437,1,3 1An Act to create 605.22 of the statutes; relating to: rate regulations,
2assessment levies, and dividends for the local government property insurance
3fund.
Analysis by the Legislative Reference Bureau
Under this bill, the local government property insurance fund (fund) is subject
to rate regulations currently applied to private insurers, must levy assessments
against participating local governmental units to maintain the fund assets when the
assets fall to a certain threshold ratio with respect to premiums, and must pay
dividends when the fund assets reach a certain threshold ratio with respect to
premiums. Under current law, a local governmental unit, including any city, county,
town, village, school, or library board, may pass a resolution to insure its property,
and property that it does not own but for which it is contractually liable if the
property is damaged or destroyed, in the fund. The fund is managed by the
commissioner of insurance and provides protection for the property insured in the
fund against fire and extended coverage perils.
The bill requires that the rate standards used to regulate private insurance, to
the extent that rates are not excessive, inadequate, or unfairly discriminatory, shall
apply to the rates set by the fund. The rates must be set by actuarial determination
to maintain the ratio of the net premiums of the fund to the surplus of the fund at
no less than 200 percent. If the ratio of net premiums to surplus rises above 225
percent, then the fund must levy an assessment against all of the local governmental
units participating in the fund, in proportion to each local governmental unit's share

of premiums written by the fund. The bill also provides that if a local governmental
unit fails to pay its assessment within 60 days of the due date of the assessment, the
local governmental unit's coverage under the fund shall be terminated. As with
unpaid premiums, the fund can collect unpaid assessments and charge such unpaid
assessments against the local government unit, with interest, as a special charge.
The bill also requires the fund to pay dividends to participating local
governmental units when the fund has at least $3,000,000 in surplus and the ratio
of net premiums to surplus is less than 45 percent. The bill directs the fund to pay
dividends to participating local governmental units in proportion to each unit's share
of premiums paid.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB437,1 1Section 1. 605.22 of the statutes is created to read:
SB437,2,5 2605.22 Property fund rates and assets. (1) Rate determination. The
3property fund's annual premium rates shall be actuarially determined to be
4sufficient to maintain a ratio of net premiums written to surplus of no less than 200
5percent. The rate standards under s. 625.11 shall apply to property fund rates.
SB437,3,8 6(2) Assessments. The property fund shall levy an assessment on local
7governmental units participating in the fund whenever the ratio of net premiums
8written to surplus is greater than 225 percent. Assessments shall be levied on all
9insured local governmental units participating in the fund in the fiscal year ending
10immediately prior to the date of the notice of assessment. Assessments shall be
11levied at the same rate according to each insured local governmental unit's
12proportional share of direct premiums written in the fund's fiscal year that ended
13immediately prior to the date of the notice of assessment. The date on which the
14assessment is due shall be specified in the notice of assessment and may not be less
15than 60 days after the date of the notice of assessment. The property fund shall

1collect unpaid assessments in the manner provided for collection of unpaid
2premiums under s. 605.21 (2). If an insured local governmental unit does not pay an
3assessment within 60 days after the assessment is due, the fund shall terminate
4coverage for that local governmental unit. If a local governmental unit cancels its
5coverage and a refund of premiums is due to the local governmental unit, the refund
6due shall be reduced by the amount of any unpaid assessment. A local governmental
7unit that fails to pay an assessment when due may not participate in the property
8fund until the past due assessment is paid.
SB437,3,18 9(3) Dividends. The property fund shall pay a dividend to its insured local
10governmental units whenever the ratio of net premiums written to surplus is less
11than 45 percent, provided that, following the payment of the dividend, the ratio of
12net premiums written to surplus does not exceed 100 percent and the amount of
13surplus is not less than $3,000,000. Dividends shall be paid to all insured local
14governmental units participating in the property fund in the fiscal year that ended
15immediately prior to the date of the notice of the dividend. Dividends shall be paid
16at the same rate according to each insured local government unit's proportional
17share of premiums written in the fund's fiscal year that ended immediately prior to
18the date of the notice of the dividend.
SB437,2 19Section 2. Effective date.
SB437,3,2020 (1) This act takes effect on July 1, 2018.
SB437,3,2121 (End)
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