632.435 (1) (b) If a contract provides for a lump sum settlement at maturity or at any other time, upon surrender of the contract at or prior to the commencement of any annuity payments, the company will shall pay in lieu of any paid-up annuity benefit a cash surrender benefit of such amount as is specified in subs. (5), (6), (8), and (10). The company shall may reserve the right to defer the payment of such cash surrender benefit, for a period
of not exceeding 6 months after demand therefor with surrender of the contract, if the company receives written approval from the commissioner upon the company's written request, which shall address the deferral's necessity and equitability to all policyholders.
261,30
Section
30. 632.435 (4) of the statutes is repealed and recreated to read:
632.435 (4) (a) In this subsection, "net considerations" means, for a given contract year, an amount equal to 87.5 percent of the gross considerations credited to the contract during that contract year.
(b) The minimum nonforfeiture amount at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time, at one or more rates of interest as indicated in pars. (c) to (e), of the net considerations paid prior to such time, decreased by the sum of all of the following:
1. Any prior withdrawals from or partial surrenders of the contract accumulated at one or more rates of interest as indicated in pars. (c) to (e).
2. An annual contract charge of $50, accumulated at one or more rates of interest as indicated in pars. (c) to (e).
3. Any premium tax paid by the company for the contract, accumulated at one or more rates of interest as indicated in pars. (c) to (e).
4. The amount of any indebtedness to the company on the contract, including interest due and accrued.
(c) The interest rate used to determine minimum nonforfeiture amounts shall be an annual rate of interest that is the lower of 3 percent and the higher of either of the following:
1. The 5-year constant maturity treasury rate reported by the federal reserve board as of a date, or average over a period, specified in the contract no longer than 15 months prior to the contract issue date or redetermination date under par. (d), less 125 basis points or, if the contract provides substantive participation in an equity indexed benefit during the period or term, the contract may increase the reduction by up to an additional 100 basis points to reflect the value of the equity index benefit, and rounded to the nearest one-twentieth of 1 percent.
2. One percent.
(d) The interest rate determined under par. (c) shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis, and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the 5-year constant maturity treasury rate to be used at each redetermination date. The method for determining the interest rate under par. (c) shall be specified in the contract if the interest rate will be reset.
(e) The present value at the contract issue date, and at each redetermination date, of the additional reduction under par. (c) 1. for substantive participation in an equity index benefit may not exceed the market value of the benefit. The commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. The commissioner may disallow or limit the additional reduction if the commissioner determines that the demonstration is unacceptable.
(f) The commissioner may promulgate rules for the implementation of par. (e) and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts for which the commissioner determines adjustments are justified.
261,31
Section
31. 632.435 (5) of the statutes is amended to read:
632.435 (5) Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. Such present value shall be computed using the mortality table, if any, and the interest rate or rates specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract.
261,32
Section
32. 632.435 (12) of the statutes is repealed.
645.58 (1) Liability. (intro.) Except as provided in this subsection and in s. 646.35 (8) (e), the amount recoverable by the liquidator from a reinsurer shall not be reduced as a result of delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement. Payment made directly to an insured or other creditor shall not diminish the reinsurer's obligation to the insurer's estate except when any of the following applies:
261,35
Section
35. 646.01 (1) (a) 2. k. of the statutes is created to read:
646.01 (1) (a) 2. k. Risk-sharing plans under chs. 149 and 619.
261,36
Section
36. 646.01 (1) (a) 2. L. of the statutes is created to read:
646.01 (1) (a) 2. L. The patients compensation fund under s. 655.27.
261,37
Section
37. 646.01 (1) (b) 1. of the statutes is repealed and recreated to read:
646.01 (1) (b) 1. Any portion of a life insurance policy or annuity contract that is not guaranteed by the insurer or under which the risk is borne by the policy or policyholder.
261,38
Section
38. 646.01 (1) (b) 9. (intro.) of the statutes is renumbered 646.01 (1) (b) 9. and amended to read:
646.01 (1) (b) 9. Any self-funded, self-insured, or partially or wholly uninsured plan of an employer or other person to provide life insurance, annuity, or disability benefits to its employees or members to the extent that the plan is self-funded, self-insured, or uninsured
, including benefits payable by an employer or other person under any of the following:.
261,39
Section
39. 646.01 (1) (b) 9. a. of the statutes is repealed.
261,40
Section
40. 646.01 (1) (b) 9. b. of the statutes is repealed.
261,41
Section
41. 646.01 (1) (b) 9. c. of the statutes is repealed.
261,42
Section
42. 646.01 (1) (b) 9. d. of the statutes is repealed.
261,43
Section
43. 646.01 (1) (b) 11. of the statutes is repealed and recreated to read:
646.01 (1) (b) 11. Any warranty or service contract.
261,44
Section
44. 646.01 (1) (b) 11m. of the statutes is created to read:
646.01 (1) (b) 11m. Any contractual liability policy that is issued to a warrantor, warranty plan, warranty plan administrator, or service contract provider and that provides coverage of any liability or performance arising out of or in connection with a warranty or service contract.
261,45
Section
45. 646.01 (1) (b) 15. of the statutes is created to read:
646.01 (1) (b) 15. An unallocated annuity contract.
261,46
Section
46. 646.01 (1) (b) 16. of the statutes is created to read:
646.01 (1) (b) 16. A contractual agreement that obligates an insurer to provide a book value accounting guarantee for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee, neither of which is an affiliate of the insurer.
261,47
Section
47. 646.01 (1) (b) 17. of the statutes is created to read:
646.01 (1) (b) 17. Any liability under a policy or contract to the extent that it provides for interest or other changes in value that are to be determined by the use of an index or other external reference stated in the policy or contract and to the extent that the interest or other changes in value have not been credited to the policy or contract as of the date of the entry of the order of liquidation and are subject to forfeiture. If a policy's or contract's interest or other changes in value are credited less frequently than annually, for purposes of determining the values that have been credited and that are not subject to forfeiture, the interest or change in value determined by using the procedures specified in the policy or contract will be credited as if the contractual date of crediting interest or other changes in value was the date of entry of the order of liquidation and will not be subject to forfeiture.
261,48
Section
48. 646.01 (1) (b) 18. of the statutes is created to read:
646.01
(1) (b) 18. The deductible, self-funded, or self-insured portion of a claim under a liability or worker's compensation insurance policy, regardless of the timing or method provided in the policy, endorsement, or any other agreement for payment of the deductible, self-funded, or self-insured amount by the insured. This subdivision does not apply to a worker's compensation insurance policy if the insured under the policy is a debtor under
11 USC 701, et seq., as of the deadline set by the liquidator for filing claims against the insolvent insurer.
261,49
Section
49. 646.03 (1m) of the statutes is created to read:
646.03 (1m) "Direct insurance" does not include a policy or contract of reinsurance, except for the following:
(a) Reinsurance for which the reinsurer has issued assumption certificates under the reinsurance policy or contract.
(b) Reinsurance ceded by an assessable town mutual company.
261,50
Section
50. 646.03 (2n) of the statutes is created to read:
646.03 (2n) "Impaired insurer" means an insurer subject to this chapter that is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.
261,51
Section
51. 646.03 (2p) of the statutes is created to read:
646.03 (2p) "Insolvent insurer" means an insurer subject to this chapter that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.
261,52
Section
52. 646.03 (4) of the statutes is created to read:
646.03 (4) With respect to a life or disability insurance policy or an annuity contract, "owner" or "policyholder" means the person who is identified as the legal owner under the terms of the policy or contract or who is otherwise vested with legal title to the policy or contract through a valid assignment completed in accordance with the terms of the policy or contract and properly recorded as the owner on the books of the insurer. "Owner" or "policyholder" does not include a person with only a beneficial interest in a policy or contract.
261,53
Section
53. 646.03 (5) of the statutes is created to read:
646.03 (5) "Unallocated annuity contract" means an annuity contract or group annuity certificate that is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under the contract or certificate.
261,54
Section
54. 646.11 (1) of the statutes is renumbered 646.11 (1) (intro.) and amended to read:
646.11 (1) (intro.) Organization. There is created a fund an organization to be known as the "insurance security fund".." All insurers subject to this chapter are contributors to the fund as a result of their authority to transact business in this state. The fund shall consist of all of the following:
(a) All payments made by insurers under s. 646.51
, of the.
(b) The earnings resulting from investments under s. 646.21 (2) and of the.
(c) The amounts recovered under s. 645.72 (2) or a substantially similar law in the state of domicile of the insolvent insurer.
261,55
Section
55. 646.11 (1) (d) of the statutes is created to read:
646.11 (1) (d) Amounts reimbursed to the fund through its subrogation and assignment rights.
261,56
Section
56. 646.11 (1) (e) of the statutes is created to read:
646.11 (1) (e) Any other moneys received by the fund from time to time.
261,57
Section
57. 646.12 (2) (d) of the statutes is amended to read:
646.12 (2) (d) Employ or retain the personnel necessary to carry out its the fund's duties and set compensation for the personnel, sue or be sued, make contracts and borrow money necessary to carry out its duties in the most efficient way, including money with which to pay claims under s. 646.31 or to continue coverage under s. 646.35. The board may offer as security for such loans its claims against the liquidator or its power to levy assessments under this chapter. Personnel employed under this paragraph are not employees of the state and are not subject to s. 20.922 or ch. 230.
261,58
Section
58. 646.12 (2) (f) 2. of the statutes is amended to read:
646.12 (2) (f) 2. Keep confidential the records under subd. 1. pertaining to specific liquidation proceedings involving an insurer until the termination of the liquidation proceedings or until sooner ordered to make the records public by a court of competent jurisdiction.
261,59
Section
59. 646.12 (2) (f) 3. of the statutes is amended to read:
646.12 (2) (f) 3. Keep confidential the records under subd. 1. pertaining to specific rehabilitation proceedings involving an insurer unless ordered to make the records public by a court of competent jurisdiction.
261,60
Section
60. 646.12 (4) of the statutes is amended to read:
646.12 (4) Other powers. The board fund may join an organization consisting of one or more entities of other states performing comparable functions, in order to assist the board fund in carrying out its powers and duties under this chapter and otherwise further the purposes of this chapter.
261,61
Section
61. 646.13 (title) of the statutes is amended to read:
646.13 (title) Special duties and powers of the board fund related to loss claims.
261,62
Section
62. 646.13 (1) (intro.) of the statutes is amended to read:
646.13 (1) Duties. (intro.) The
board fund shall:
261,63
Section
63. 646.13 (1) (b) of the statutes is amended to read:
646.13 (1) (b) Stand in the position of the insurer in the investigation, compromise, settlement, denial, and payment of claims under s. 646.31 and the defense of 3rd party claims against insureds, subject to the limitations of s. 645.43. The board fund shall consult and cooperate with the liquidator in carrying out these duties.
261,64
Section
64. 646.13 (2) (intro.) of the statutes is amended to read:
646.13 (2) Powers. (intro.) The
board fund may:
261,65
Section
65. 646.13 (2) (b) of the statutes is amended to read:
646.13 (2) (b) Exercise with respect to loss claims the powers that the liquidator has with respect to other claims under ch. 645 or a substantially similar law in the state of domicile of the insolvent insurer.
261,66
Section
66. 646.13 (2) (c) of the statutes is amended to read:
646.13 (2) (c) With respect to any action against an insurer which is in liquidation, exercise the powers of the liquidator under s. 645.49 (1) or a substantially similar law in the state of domicile of the insolvent insurer.
261,67
Section
67. 646.13 (2) (d) of the statutes is amended to read:
646.13 (2) (d) Have standing to appear in any liquidation proceedings in this state involving an insurer in liquidation, and have authority to appear or intervene before a court or agency of any other state having jurisdiction over an impaired or insolvent insurer, in accordance with the laws of that state, with respect to which the fund is or may become obligated or that has jurisdiction over any person or property against which the fund may have subrogation or other rights. Standing shall extend to all matters germane to the powers and duties of the fund, including proposals for reinsuring, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations.
261,68
Section
68. 646.13 (2) (g) of the statutes is created to read:
646.13 (2) (g) Sue and be sued, make contracts, and borrow money necessary to carry out its duties, including money with which to pay claims under s. 646.31 or to continue coverage under s. 646.35. The fund may offer as security for such loans its claims against the liquidator or its power to levy assessments under this chapter.
