2003 Wisconsin Act 261

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.

261,69 Section 69. 646.13 (3) (intro.) of the statutes is amended to read:

646.13 (3) No duty or liability. (intro.) The board fund has no duty or liability with respect to any claim filed as follows:

261,70 Section 70. 646.13 (3) (a) of the statutes is amended to read:

646.13 (3) (a) With the liquidator under s. 645.61 after the original date for filing specified by the liquidator under s. 645.47 (2), unless the liquidator determines that the claim is considered to have been timely filed under s. 645.61 (2) and the claim participates fully in every distribution to the same extent as other timely filed claims in the same class.

261,71 Section 71. 646.13 (3) (b) of the statutes is amended to read:

646.13 (3) (b) With a liquidator or court under the laws of any other state after the original date for filing specified by the liquidator or court, unless the liquidator or court determines that the claim is considered to have been timely filed under a law substantially similar to s. 645.61 (2) and the claim participates fully in every distribution to the same extent as other timely filed claims in the same class.

261,72 Section 72. 646.13 (3) (c) (intro.) of the statutes is amended to read:

646.13 (3) (c) (intro.) Except for claims under life insurance policies, annuities and, or noncancelable or guaranteed renewable disability insurance policies, and except for claims determined to be excused late filings as provided in pars. (a) and (b), if the original date for filing is extended by the liquidator or court, with a liquidator or court after the earlier of the following:

261,73 Section 73. 646.13 (3) (c) 2. of the statutes is amended to read:

646.13 (3) (c) 2. The final extended date for filing specified by the liquidator or court.

261,74 Section 74. 646.13 (4) of the statutes is amended to read:

646.13 (4) When duty to defend terminates. Any obligation of the board fund to defend an insured ceases upon the board's fund's payment, by settlement releasing the insured or on a judgment, of an amount equal to the lesser of the board's fund's covered claim obligation limit or the applicable policy limit, subject to any express policy terms regarding tender of limits.

261,75 Section 75. 646.15 (title) of the statutes is amended to read:

646.15 (title) Proceedings involving nondomestic insurers.

261,76 Section 76. 646.15 (1) (a) (intro.) of the statutes is amended to read:

646.15 (1) (a) (intro.) If a nondomestic an insurer is in liquidation, the board fund may apply to the circuit court for Dane County for, and the court may grant, restraining orders, temporary and permanent injunctions, and other orders considered necessary and proper to prevent any of the following:

261,77 Section 77. 646.15 (1) (a) 1. of the statutes is amended to read:

646.15 (1) (a) 1. Interference with the board fund or with its administrative proceedings.

261,78 Section 78. 646.15 (1) (a) 2. of the statutes is amended to read:

646.15 (1) (a) 2. The institution or further prosecution of any action or proceeding involving the insurer or in which the board fund is obligated to defend a party.

261,79 Section 79. 646.15 (1) (a) 4. of the statutes is amended to read:

646.15 (1) (a) 4. Any other threatened or contemplated action that might prejudice the rights of policyholders or the administration of the liquidation or board fund proceedings.

261,80 Section 80. 646.16 of the statutes is created to read:

646.16 Payment of deposits made for benefit of creditors. (1) The commissioner shall promptly pay to the fund any deposit held in this state that was paid, as required by law or the commissioner, by the insolvent insurer for the benefit of creditors, including policyholders, and not turned over to the domiciliary liquidator upon the entry of a final order of liquidation of an insurer domiciled in this state or in a reciprocal state, as defined in s. 645.03 (1) (i). Of the amount paid to the fund under this subsection, the fund may retain the percentage determined by dividing the aggregate amount of policyholders' claims that are related to the insolvency and for which the fund has provided benefits under this chapter by the aggregate amount of all policyholders' claims in this state that are related to the insolvency. The fund shall remit the balance to the domiciliary liquidator.

(2) Any amount retained by the fund under sub. (1) shall be treated as a distribution of estate assets under s. 645.72 or a similar provision of the state of domicile of the insolvent insurer. Deposits subject to this section shall not be treated as deposits as security, escrow, or other security under s. 645.03 (1) (j).

261,81 Section 81. 646.21 (2) of the statutes is amended to read:

646.21 (2) Investment of assets. The board may request that assets of the fund not needed currently be invested by the investment board under s. 25.17. If so requested, the investment board shall invest those assets in investments with maturities and liquidity appropriate to the probable needs of the fund for money to perform its duties. All income attributable to the investments shall be credited to the fund, and both income and principal shall be transferred to the board of the fund on request of the board. Assets held by the board of the fund shall be invested in a similar manner.

261,82 Section 82. 646.31 (1) (d) 10. and 11. of the statutes are created to read:

646.31 (1) (d) 10. Based on an obligation that does not arise under the express written terms of the policy or contract, including any of the following:

a. A claim based on marketing materials.

b. A claim based on misrepresentations regarding policy benefits.

c. An extra-contractual claim, including a claim for punitive or exemplary damages.

d. A claim for statutorily imposed multiple damages.

e. A claim for penalties or consequential or incidental damages.

f. A claim for bad faith damages.

11. In the case of a life or disability insurance policy or an annuity contract, based on side letters, riders, or other documents that do not meet or comply with applicable policy form filing or approval requirements.

261,83 Section 83. 646.31 (2) (a) 1. of the statutes is amended to read:

646.31 (2) (a) 1. The claim of a policyholder, including a ceding assessable domestic insurer which that is organized under ch. 612 and a domestic insurer which that is a bona fide policyholder of the insurer in liquidation, who at the time of the insured event or of the liquidation order was is a resident of this state under sub. (13).

261,84 Section 84. 646.31 (2) (a) 2. of the statutes is amended to read:

646.31 (2) (a) 2. Except for a claim of a beneficiary, assignee, or payee under a life or disability insurance policy or annuity contract, the claim of an insured, including a certificate holder, under a policy or annuity contract who at the time of the insured event or of the liquidation order was is a resident of this state under sub. (13).

261,85 Section 85. 646.31 (2) (b) 1. of the statutes is repealed.

261,86 Section 86. 646.31 (2) (b) 2. (intro.) and a. of the statutes are consolidated, renumbered 646.31 (2) (b) and amended to read:

646.31 (2) (b) Certain nonresidents. The claim is made under a life or disability insurance policy or annuity contract subject to this section and issued by a domestic insurer if all of the following conditions are met: a. The and the claimant is a resident of another state that provides coverage similar to the coverage provided under this chapter but does not provide coverage for the claimant because the insurer was not licensed in that state at the time specified as a requirement for coverage under that state's guaranty association law.

261,87 Section 87. 646.31 (2) (b) 2. b. of the statutes is repealed.

261,88 Section 88. 646.31 (2) (b) 3. of the statutes is repealed.

261,89 Section 89. 646.31 (2) (f) (title) of the statutes is amended to read:

646.31 (2) (f) (title) Beneficiaries, assignees, and payees; life or disability policy or annuity contract .

261,90 Section 90. 646.31 (2) (f) 2. of the statutes is amended to read:

646.31 (2) (f) 2. The person is a resident of this state or could have made a claim under par. (b) 2.

261,91 Section 91. 646.31 (2) (g) of the statutes is created to read:

646.31 (2) (g) Payees; structured settlement annuity. 1. Notwithstanding par. (f), the claim of a payee, or of a beneficiary of a deceased payee, under a structured settlement annuity if the payee, or deceased payee's beneficiary, is a resident of this state, regardless of where the policyholder of the structured settlement annuity resides.

2. Notwithstanding pars. (b) and (f), the claim of a payee, or of a beneficiary of a deceased payee, under a structured settlement annuity if the payee, or deceased payee's beneficiary, is not a resident of this state, if neither the payee, or deceased payee's beneficiary, nor the policyholder of the structured settlement annuity is eligible for coverage by an organization that is comparable to the fund in the state of which the payee, or deceased payee's beneficiary, or the policyholder is a resident, and if either of the following applies:

a. The policyholder is a resident of this state.

b. The policyholder is not a resident of this state, but the insurer that issued the structured settlement annuity is domiciled in this state, and the state in which the policyholder resides has an organization that is comparable to the fund.

261,92 Section 92. 646.31 (3) of the statutes is repealed.

261,93 Section 93. 646.31 (5) of the statutes is repealed.

261,94 Section 94. 646.31 (6) (a) of the statutes is amended to read:

646.31 (6) (a) The portion of a an otherwise eligible loss claim for which indemnification is provided by other benefits or advantages, which may not be included in the classes of claims specified in s. 645.68 (intro.), may not be claimed from the fund under this chapter or from the insured or policyholder. The claimant must exhaust such collateral sources before pursuing payment from the fund. This paragraph does not apply to the claim of an insured or payee under a structured settlement annuity.

261,95 Section 95. 646.31 (6) (b) of the statutes is amended to read:

646.31 (6) (b) The board fund may waive the application of par. (a) to claims under contracts subject to s. 646.35 (2) or (3), to the extent that the board fund determines that application of par. (a) would be impracticable.

261,96 Section 96. 646.31 (7) of the statutes is amended to read:

646.31 (7) Setoffs and counterclaims. Section 645.56 applies to the settlement of loss claims. The board fund shall give the liquidator a reasonable opportunity to inform the board fund of possible setoffs and counterclaims before paying loss claims.

261,97 Section 97. 646.31 (8) of the statutes is amended to read:

646.31 (8) Notice to claimants. The board fund shall provide notice under s. 645.47 (2) to those potential loss claimants to whom the fund is liable under the section, if the liquidator has not done so.

261,98 Section 98. 646.31 (9) (a) of the statutes is amended to read:

646.31 (9) (a) By any security fund with an obligation to pay all loss claims of the insurer;.

261,99 Section 99. 646.31 (9) (b) of the statutes is amended to read:

646.31 (9) (b) If it is a first party claim for damage to property with a permanent location, by the fund of the location of the property;.

261,100 Section 100. 646.31 (9) (c) of the statutes is amended to read:

646.31 (9) (c) If it is a workers' compensation claim, by the fund of the residence of the claimant;.

261,101 Section 101. 646.31 (9) (cm) of the statutes is created to read:

646.31 (9) (cm) If it is a liability claim, by the fund of the residence of the policyholder.

261,102 Section 102. 646.31 (9) (d) of the statutes is amended to read:

646.31 (9) (d) In any other case, by the fund of the residence of the insured; and.

261,103 Section 103. 646.31 (10) of the statutes is renumbered 646.31 (10) (intro.) and amended to read:

646.31 (10) Temporary moratoriums. (intro.) Before being obligated to make payments under this chapter to holders of life insurance or annuity contracts the fund may impose, with court approval, temporary any of the following:

(a) Temporary moratoriums of not more than 90 days on payments of cash values and policy loans in addition to any deferrals of cash or policy loan value by contractual provision. A temporary moratorium may be renewed for successive periods of not more than 90 days with court approval or liens on payments of cash values and policy loans, or on any other right to withdraw funds held in conjunction with those policies or contracts, in addition to any contractual provisions for deferral of cash or policy loan value. If the court imposes a temporary moratorium or a moratorium charge on the payment of cash values or policy loans out of the assets of the insolvent insurer, or on any other right to withdraw, out of those assets, funds held in conjunction with those policies or contracts, the fund may defer the payment of cash values and policy loans and other rights to withdraw funds for the period of the moratorium or moratorium charge imposed by the court, except for any claims covered by the fund to be paid in accordance with a hardship procedure established by the liquidator and approved by the court.

261,104 Section 104. 646.31 (10) (b) of the statutes is created to read:

646.31 (10) (b) Permanent policy or contract liens in connection with a guarantee, assumption, or reinsurance agreement, if the board finds that the amounts that may be assessed under this chapter are insufficient to ensure full and prompt performance of the fund's duties under this chapter, or that economic or financial conditions, as they affect insurers, are such that imposing such permanent policy or contract liens is in the public interest.

261,105 Section 105. 646.31 (11) of the statutes is amended to read:

646.31 (11) Subrogation claims. The fund is not required to pay any amount due from the insurer to any reinsurer, insurer, insurance pool or underwriting association as subrogation, contribution, or indemnification recoveries or otherwise, except as provided in sub. (2) (a). A reinsurer, insurer, insurance pool or underwriting association that has paid a claim and thereby has become subrogated or otherwise entitled to the amount of that claim may assert that claim against the liquidator of the insurer in liquidation but not against the insured of the insurer in liquidation.

261,106 Section 106. 646.31 (13) of the statutes is renumbered 646.31 (13) (intro.) and amended to read:

646.31 (13) Residency. (intro.) For purposes of determining residency in this section, the:

(a) The residency of a claimant, insured, or policyholder that is not a natural person is the state in which the claimant's, insured's, or policyholder's principal place of business is located.

261,107 Section 107. 646.31 (13) (b) of the statutes is created to read:

646.31 (13) (b) In the case of a life or disability insurance policy or an annuity contract, residency means residency at the time of the liquidation order. In the case of any other kind of insurance covered by this chapter, residency means residency at the time of the insured event.

261,108 Section 108. 646.31 (13) (c) of the statutes is created to read: