Notice is hereby given that pursuant to the authority granted under s.
601.41 (3), Stats., and the procedures set forth in under s.
227.18, Stats., OCI will hold a public hearing to consider the adoption of the attached proposed rulemaking order affecting section
Ins 51.01, Wis. Adm. Code, relating to risk based capital requirements and affecting small business.
Hearing Information
Date: September 5, 2013
Time: 10:30 a.m., or as soon thereafter as the matter
may be reached
Location: Office of the Commissioner of Insurance
Room 227
125 South Webster St., 2nd Floor
Madison, WI
Written comments can be mailed to:
Sarah E. Norberg
Legal Unit — OCI Rule Comment for Rule Ins 51.01
Office of the Commissioner of Insurance
PO Box 7873
Madison, WI 53707-7873
Written comments can be hand delivered to:
Sarah E. Norberg
Legal Unit — OCI Rule Comment for Rule Ins 51.01
Office of the Commissioner of Insurance
125 South Webster St — 2nd Floor
Madison, WI 53703-3474
Comments can be emailed to:
Sarah E. Norberg
The deadline for submitting comments is 4:00 p.m. on September 19, 2013.
Summary of Proposed Rule and Fiscal Estimate
For a summary of the rule, see the analysis contained in the attached proposed rulemaking order. There will be no state or local government fiscal effect. The full text of the proposed changes, a summary of the changes, and the fiscal estimate are attached to this Notice of Hearing.
Initial Regulatory Flexibility Analysis
Notice is hereby further given that pursuant to s.
227.114, Stats., the proposed rule may have an effect on small businesses. The initial regulatory flexibility analysis is as follows:
a. Types of small businesses affected:
Domestic life and health insurers that complete a life annual statement and domestic fraternal insurers.
b. Description of reporting and bookkeeping procedures required:
None beyond those currently required.
c. Description of professional skills required:
None beyond those currently required.
OCI Small Business Regulatory Coordinator
The OCI small business coordinator is Louie Corneillus and may be reached at phone number (608) 264-8113 or at email address
louie.corneillus@wisconsin.gov.
Contact Person
A copy of the full text of the proposed rule changes, analysis, and fiscal estimate may be obtained from the OCI internet Web site at
http://oci.wi.gov/ocirules.htm or by contacting Inger Williams, Public Information and Communications, OCI, at:
inger.williams@wisconsin.gov, (608) 264-8110, 125 South Webster Street — 2
nd Floor, Madison, WI or PO Box 7873, Madison, WI 53707-7873.
PROPOSED ORDER AMENDING A RULE
Office of the Commissioner of Insurance
Relating to: risk based capital requirements and affecting small business.
The statement of scope of this rule, SS
069-12, was approved by the Governor on September 13, 2012, published in
Register No. 681, on September 30, 2012, and approved by the Commissioner on October 15, 2012.
Analysis Prepared by the Office of the Commissioner of Insurance (OCI)
1. Statutes interpreted
2. Statutory authority
3. Explanation of OCI's authority to promulgate the proposed rule under these statutes
Pursuant to s.
623.11 (1), Wis. Stats., “The commissioner shall, when necessary, determine the amount of compulsory surplus that an insurer is required to have in order not to be financially hazardous under s.
645.41 (4), Wis. Stats., as an amount that will provide reasonable security against contingencies affecting the insurer's financial position that are not fully covered by reserves or reinsurance."
Pursuant to s.
623.11 (2), Wis. Stats., “The commissioner may . . . establish by rule minimum ratios for the compulsory surplus in relation to any relevant variables, including the following: (a) amounts at risk; (b) premiums written or premiums earned; (c) liabilities; (d) equity investments of all or certain kinds in combination with any of the variables under pars. (a) to (c)."
The company action level provision under the regulation provides an early warning that an insurer might be approaching a financially hazardous condition. The proposed change to the regulation would modify a single variable, as authorized by s.
623.11 (2), Wis. Stats., potentially resulting in an earlier warning that a company is approaching financially hazardous condition.
4. Related statutes or rules
Section
623.11, Wis. Stats. and s.
Ins 51.01, Wis. Admin. Code, both address risk based capital requirements. The proposed rule merely updates the minimum ratio for insurers.
5. The plain language analysis and summary of the proposed rule
The existing regulation establishes risk based capital requirements for an insurer based on the risks inherent in the insurer's operations by requiring it to perform a calculation of its authorized control level risk based capital. Under the current regulation, a company action level event, which requires the company to take certain remedial steps, is triggered if:
(a) An insurer's capital is between 1.5 and 2.0 times the authorized control level risk based capital, or
(b) The insurer's capital is at or below 2.5 times the authorized control level risk based capital and the insurer has a negative trend test result, calculated pursuant to the risk based capital instructions.
The proposed rule would change the “2.5" to “3.0"; i.e., a company action level event would occur if the insurer's capital is at or below 3.0 times the authorized control level risk based capital and the insurer has a negative trend test result.
The proposed rule will update this regulation to be consistent with the NAIC model regulation and will also bring Wisconsin's requirements for life insurers into alignment with the requirements for health insurers and property and casualty insurers.
The proposed rule will apply to domestic life and health insurers that complete a life annual statement, and domestic fraternal insurers. The impact is expected to be minimal.
6. Summary of and preliminary comparison with any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule
The Office is unaware of any existing or proposed federal regulations that are intended to address the activities to be regulated by the proposed rule change.
7. Comparison of similar rules in adjacent states as found by OCI
Illinois: 215 ILCS 5/35A-15 (a) (1) (B) (2013) contains provisions comparable to Wisconsin's existing rule.
Iowa: IAC s. 521E.3 1. a. (2) (2013) contains provisions comparable to Wisconsin's existing rule.
Minnesota: Minn. Stat. s. 60A.60 Subd. 11 (1) (2013) contains provisions less stringent that Wisconsin's existing rule.
8. A summary of the factual data and analytical methodologies that OCI used in support of the proposed rule and how any related findings support the regulatory approach chosen for the proposed rule
The Office is proposing this rule change to make the regulation consistent with the NAIC model regulation for the purposes of maintaining accreditation. The amendment will also bring Wisconsin's requirements for life insurers into alignment with the requirements for health insurers and property and casualty insurers. Little, if any, Wisconsin insurers will be affected by this rule change.
9. Any analysis and supporting documentation that OCI used in support of OCI's determination of the rule's effect on small businesses under s. 227.114
Based upon revenue and ownership structure, there may be an effect on small businesses but any effect would be minimal as very few, if any, insurers meet the definition of a small business and non-insurance small businesses are protected by this proposed rule change as the amendment provides an earlier warning that a life insurer might be approaching a financially hazardous condition.
10. See the attached Private Sector Fiscal Analysis.
11. A description of the Effect on Small Business
There may be an effect on small businesses but any effect would be minimal as very few, if any, insurers meet the definition of a small business and non-insurance small businesses are protected by this proposed rule change as the amendment provides a an earlier warning that a life insurer might be approaching a financially hazardous condition.
12. Agency contact person
A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the Web site at:
http://oci.wi.gov/ocirules.htm
or by contacting Inger Williams, OCI Services Section, at:
Phone: (608) 264-8110
Address: 125 South Webster St — 2nd Floor, Madison WI 53703-3474
Mail: P.O. Box 7873, Madison, WI 53707-7873
13. Place where comments are to be submitted and deadline for submission
The deadline for submitting comments is 4:00 p.m. on the 14th day after the date for the hearing stated in the Notice of Hearing.
Mailing address:
Sarah E. Norberg
Legal Unit — OCI Rule Comment for Rule Ins 51.01
Office of the Commissioner of Insurance
PO Box 7873
Madison WI 53707-7873
Street address:
Sarah E. Norberg
Legal Unit — OCI Rule Comment for Rule Ins 51.01
