SB320,11,2018 (b) "Recommendation" means advice provided by an insurance intermediary,
19or an insurer if no intermediary is involved, to an individual senior consumer that
20results in the purchase or exchange of an annuity in accordance with that advice.
SB320,11,2521 (c) "Senior consumer" means a person who is 65 years of age or older. The term
22includes any joint owner of an annuity who is less than 65 years of age if at least one
23joint owner is 65 years of age or older, and any prospective joint purchaser of an
24annuity who is less than 65 years of age if at least one prospective joint purchaser
25is 65 years of age or older.
SB320,12,8
1(2) Duties of insurers and insurance intermediaries with regard to
2recommendations.
(a) Except as provided in par. (c), an insurance intermediary, or
3insurer if no intermediary is involved, may not recommend to a senior consumer the
4purchase or exchange of an annuity if the recommendation results in an insurance
5transaction or series of insurance transactions unless the intermediary or insurer
6has reasonable grounds to believe that the recommendation is suitable for the senior
7consumer on the basis of facts disclosed by the senior consumer as to his or her
8investments, other insurance products, and financial situation and needs.
SB320,12,119 (b) Before making a recommendation described in par. (a), an insurance
10intermediary, or insurer if no intermediary is involved, shall make reasonable efforts
11to obtain information concerning all of the following:
SB320,12,1212 1. The senior consumer's financial status.
SB320,12,1313 2. The senior consumer's tax status.
SB320,12,1414 3. The senior consumer's investment objectives.
SB320,12,1615 4. Any other information that is reasonably appropriate for determining the
16suitability of a recommendation to the senior consumer.
SB320,12,1917 (c) An insurance intermediary, or insurer if no intermediary is involved, has no
18obligation under par. (a) to a senior consumer related to a recommendation if the
19senior consumer does any of the following:
SB320,12,2120 1. Refuses to provide relevant information requested by the insurer or
21insurance intermediary.
SB320,12,2222 2. Fails to provide complete or accurate information.
SB320,12,2423 3. Decides to enter into an insurance transaction that is not based on a
24recommendation of the insurer or insurance intermediary.
SB320,13,4
1(d) Any recommendation of an insurer or insurance intermediary that, under
2par. (c), is not subject to the obligation under par. (a) shall be reasonable under all
3circumstances actually known to the insurer or insurance intermediary at the time
4the recommendation is made.
SB320,13,9 5(3) Insurer's supervisory responsibility. (a) An insurer either shall ensure
6that a system to supervise recommendations that is reasonably designed to achieve
7compliance with this section is established and maintained by complying with pars.
8(c) to (e), or shall establish and maintain such a system, which shall include at least
9all of the following:
SB320,13,1010 1. Maintaining written procedures.
SB320,13,1211 2. Conducting periodic reviews of its records that are reasonably designed to
12assist in detecting and preventing violations of this section.
SB320,13,1713 (b) A general agent or independent agency either shall adopt a system
14established by an insurer to supervise recommendations of its insurance
15intermediaries that is reasonably designed to achieve compliance with this section,
16or shall establish and maintain such a system, which shall include at least all of the
17following:
SB320,13,1818 1. Maintaining written procedures.
SB320,13,2019 2. Conducting periodic reviews of records that are reasonably designed to assist
20in detecting and preventing violations of this section.
SB320,13,2421 (c) An insurer may contract with a 3rd party, which may be a general agent or
22independent agency, to establish and maintain a system of supervision as required
23under par. (a) with respect to insurance intermediaries under contract with or
24employed by the 3rd party.
SB320,14,5
1(d) An insurer shall make reasonable inquiry to ensure that any 3rd party with
2which the insurer contracts under par. (c) is performing the functions required under
3par. (a) and shall take such action as is reasonable under the circumstances to enforce
4the contractual obligation to perform the functions. An insurer may comply with its
5obligation to make reasonable inquiry in all of the following ways:
SB320,14,96 1. The insurer annually obtains from a senior manager of the 3rd party who
7has responsibility for the delegated functions a representation that the 3rd party is
8performing the required functions and that the senior manager has a reasonable
9basis for making the representation.
SB320,14,1310 2. The insurer, based on reasonable selection criteria, periodically selects 3rd
11parties contracting under par. (c) for reviews to determine whether the 3rd parties
12are performing the required functions. The insurer shall perform those procedures
13to conduct the reviews that are reasonable under the circumstances.
SB320,14,1714 (e) An insurer that contracts with a 3rd party under par. (c) and that complies
15with the supervisory requirement under par. (d) satisfies its responsibilities under
16par. (a) as to insurance intermediaries under contract with or employed by the 3rd
17party.
SB320,14,1918 (f) An insurer is not required under par. (a), and a general agent or independent
19agency is not required under par. (b), to do any of the following:
SB320,14,2120 1. Review, or provide for the review of, all insurance intermediary solicited
21transactions.
SB320,14,2422 2. Include in its system of supervision an insurance intermediary's
23recommendations made to senior consumers of products other than annuities offered
24by the insurer, general agent, or independent agency.
SB320,15,4
1(g) A general agent or independent agency contracting with an insurer under
2par. (c) shall promptly, upon request by the insurer under par. (d), provide a
3representation as described in par. (d) 1. or give a clear statement that it is unable
4to meet the representation criteria.
SB320,15,65 (h) No person may provide a representation under par. (d) 1. unless the person
6satisfies all of the following:
SB320,15,87 1. The person is a senior manager with responsibility for the delegated
8functions.
SB320,15,99 2. The person has a reasonable basis for making the representation.
SB320,15,14 10(4) National Association of Securities Dealers Conduct Rules. Compliance
11with the National Association of Securities Dealers Conduct Rules pertaining to
12suitability satisfies the requirements under sub. (2) for the recommendation of
13variable annuities. Nothing in this subsection, however, limits the commissioner's
14ability to enforce this section.
SB320,15,15 15(5) Remedial measures. The commissioner may do any of the following:
SB320,15,1816 (a) Order an insurer to take reasonably appropriate corrective action for any
17senior consumer harmed by a violation of this section by the insurer or the insurer's
18insurance intermediary.
SB320,15,2119 (b) Order an insurance intermediary to take reasonably appropriate corrective
20action for any senior consumer harmed by a violation of this section by the insurance
21intermediary.
SB320,15,2522 (c) Order a general agent or independent agency that employs or contracts with
23an insurance intermediary to sell, or solicit the sale of, annuities to senior consumers
24to take reasonably appropriate corrective action for any senior consumer harmed by
25a violation of this section by the insurance intermediary.
SB320,16,3
1(6) Penalties; mitigation. (a) Any person who violates this section is subject
2to the penalties provided under s. 601.64, suspension or revocation of a license or
3certificate of authority, and an order under s. 601.41 (4).
SB320,16,74 (b) A penalty under par. (a) for a violation of sub. (2) (a), (b), or (d), including
5a forfeiture, may be reduced or eliminated to the extent provided by rule of the
6commissioner if corrective action is taken for the senior consumer promptly after the
7violation is discovered.
SB320,16,108 (c) The commissioner may promulgate rules related to the reduction or
9elimination of penalties for violations of this section on the basis of prompt action
10taken to correct any harm caused to senior consumers by the violations.
SB320,16,18 11(7) Record keeping. An insurer and an insurance intermediary, including a
12general agent and an independent agency, shall maintain, or be able to make
13available to the commissioner, records of the information collected from a senior
14consumer and other information used in making a recommendation that was the
15basis for an insurance transaction for 6 years after the insurance transaction is
16completed by the insurer, except as otherwise permitted by the commissioner by rule.
17An insurer may, but is not required to, maintain records on behalf of an insurance
18intermediary, including a general agent and an independent agency.
SB320,16,19 19(8) Exemptions. This section does not apply to any of the following:
SB320,16,2120 (a) Direct response solicitations in which no recommendation is made based on
21information collected from the senior consumer.
SB320,16,2222 (b) Recommendations related to contracts used to fund any of the following:
SB320,16,2423 1. An employee pension or welfare benefit plan that is covered by the federal
24Employee Retirement and Income Security Act.
SB320,17,2
12. A plan described in section 401 (a) or (k), 403 (b), or 408 (k) or (p) of the
2Internal Revenue Code, if the plan is established or maintained by an employer.
SB320,17,633. A government or church plan as defined in section 414 of the Internal
4Revenue Code, a government or church welfare benefit plan, or a deferred
5compensation plan of a state or local government or tax exempt organization under
6section 457 of the Internal Revenue Code.
SB320,17,87 4. A nonqualified deferred compensation arrangement established or
8maintained by an employer or plan sponsor.
SB320,17,109 5. A settlement or assumption of liability associated with personal injury
10litigation or any dispute or claim resolution process.
SB320,17,1111 6. A formal prepaid funeral or burial contract.
SB320, s. 27 12Section 27. 632.435 (1) (intro.) of the statutes is amended to read:
SB320,17,1713 632.435 (1) (intro.) In the case of contracts issued on or after the operative date
14of this section as defined in sub. (12), no
No contract of annuity shall be delivered or
15issued for delivery in this state unless it contains in substance the following
16provisions or corresponding provisions which in the opinion of the commissioner are
17at least as favorable to the contract holder:
SB320, s. 28 18Section 28. 632.435 (1) (a) of the statutes is amended to read:
SB320,17,2219 632.435 (1) (a) Upon cessation of payment of considerations under a contract,
20or upon the written request of the contract owner,
the company will shall grant a
21paid-up annuity on a plan stipulated in the contract of such value as is specified in
22subs. (5) to (8) and (10).
SB320, s. 29 23Section 29. 632.435 (1) (b) of the statutes is amended to read:
SB320,18,724 632.435 (1) (b) If a contract provides for a lump sum settlement at maturity or
25at any other time, upon surrender of the contract at or prior to the commencement

1of any annuity payments, the company will shall pay in lieu of any paid-up annuity
2benefit a cash surrender benefit of such amount as is specified in subs. (5), (6), (8),
3and (10). The company shall may reserve the right to defer the payment of such cash
4surrender benefit, for a period of not exceeding 6 months after demand therefor with
5surrender of the contract, if the company receives written approval from the
6commissioner upon the company's written request, which shall address the deferral's
7necessity and equitability to all policyholders
.
SB320, s. 30 8Section 30. 632.435 (4) of the statutes is repealed and recreated to read:
SB320,18,119 632.435 (4) (a) In this subsection, "net considerations" means, for a given
10contract year, an amount equal to 87.5 percent of the gross considerations credited
11to the contract during that contract year.
SB320,18,1512 (b) The minimum nonforfeiture amount at or prior to the commencement of any
13annuity payments shall be equal to an accumulation up to such time, at one or more
14rates of interest as indicated in pars. (c) to (e), of the net considerations paid prior
15to such time, decreased by the sum of all of the following:
SB320,18,1716 1. Any prior withdrawals from or partial surrenders of the contract
17accumulated at one or more rates of interest as indicated in pars. (c) to (e).
SB320,18,1918 2. An annual contract charge of $50, accumulated at one or more rates of
19interest as indicated in pars. (c) to (e).
SB320,18,2120 3. Any premium tax paid by the company for the contract, accumulated at one
21or more rates of interest as indicated in pars. (c) to (e).
SB320,18,2322 4. The amount of any indebtedness to the company on the contract, including
23interest due and accrued.
SB320,19,3
1(c) The interest rate used to determine minimum nonforfeiture amounts shall
2be an annual rate of interest that is the lower of 3 percent and the higher of either
3of the following:
SB320,19,104 1. The 5-year constant maturity treasury rate reported by the federal reserve
5board as of a date, or average over a period, specified in the contract no longer than
615 months prior to the contract issue date or redetermination date under par. (d), less
7125 basis points or, if the contract provides substantive participation in an equity
8indexed benefit during the period or term, the contract may increase the reduction
9by up to an additional 100 basis points to reflect the value of the equity index benefit,
10and rounded to the nearest one-twentieth of 1 percent.
SB320,19,1111 2. One percent.
SB320,19,1812 (d) The interest rate determined under par. (c) shall apply for an initial period
13and may be redetermined for additional periods. The redetermination date, basis,
14and period, if any, shall be stated in the contract. The basis is the date or average
15over a specified period that produces the value of the 5-year constant maturity
16treasury rate to be used at each redetermination date. The method for determining
17the interest rate under par. (c) shall be specified in the contract if the interest rate
18will be reset.
SB320,19,2519 (e) The present value at the contract issue date, and at each redetermination
20date, of the additional reduction under par. (c) 1. for substantive participation in an
21equity index benefit may not exceed the market value of the benefit. The
22commissioner may require a demonstration that the present value of the additional
23reduction does not exceed the market value of the benefit. The commissioner may
24disallow or limit the additional reduction if the commissioner determines that the
25demonstration is unacceptable.
SB320,20,5
1(f) The commissioner may promulgate rules for the implementation of par. (e)
2and to provide for further adjustments to the calculation of minimum nonforfeiture
3amounts for contracts that provide substantive participation in an equity index
4benefit and for other contracts for which the commissioner determines adjustments
5are justified.
SB320, s. 31 6Section 31. 632.435 (5) of the statutes is amended to read:
SB320,20,127 632.435 (5) Any paid-up annuity benefit available under a contract shall be
8such that its present value on the date annuity payments are to commence is at least
9equal to the minimum nonforfeiture amount on that date. Such present value shall
10be computed using the mortality table, if any, and the interest rate or rates specified
11in the contract for determining the minimum paid-up annuity benefits guaranteed
12in the contract.
SB320, s. 32 13Section 32. 632.435 (12) of the statutes is repealed.
SB320, s. 33 14Section 33. Chapter 641 of the statutes, as affected by 2001 Wisconsin Act 109,
15is repealed.
SB320, s. 34 16Section 34. 645.58 (1) (intro.) of the statutes, as affected by 2003 Wisconsin
17Act 44
, is amended to read:
SB320,20,2318 645.58 (1) Liability. (intro.) Except as provided in this subsection and in s.
19646.35 (8) (e)
, the amount recoverable by the liquidator from a reinsurer shall not be
20reduced as a result of delinquency proceedings, regardless of any provision in the
21reinsurance contract or other agreement. Payment made directly to an insured or
22other creditor shall not diminish the reinsurer's obligation to the insurer's estate
23except when any of the following applies:
SB320, s. 35 24Section 35. 646.01 (1) (a) 2. k. of the statutes is created to read:
SB320,20,2525 646.01 (1) (a) 2. k. Risk-sharing plans under chs. 149 and 619.
SB320, s. 36
1Section 36. 646.01 (1) (a) 2. L. of the statutes is created to read:
SB320,21,22 646.01 (1) (a) 2. L. The patients compensation fund under s. 655.27.
SB320, s. 37 3Section 37. 646.01 (1) (b) 1. of the statutes is repealed and recreated to read:
SB320,21,64 646.01 (1) (b) 1. Any portion of a life insurance policy or annuity contract that
5is not guaranteed by the insurer or under which the risk is borne by the policy or
6policyholder.
SB320, s. 38 7Section 38. 646.01 (1) (b) 9. (intro.) of the statutes is renumbered 646.01 (1)
8(b) 9. and amended to read:
SB320,21,139 646.01 (1) (b) 9. Any self-funded, self-insured, or partially or wholly uninsured
10plan of an employer or other person to provide life insurance, annuity , or disability
11benefits to its employees or members to the extent that the plan is self-funded,
12self-insured,
or uninsured, including benefits payable by an employer or other
13person under any of the following:
.
SB320, s. 39 14Section 39. 646.01 (1) (b) 9. a. of the statutes is repealed.
SB320, s. 40 15Section 40. 646.01 (1) (b) 9. b. of the statutes is repealed.
SB320, s. 41 16Section 41. 646.01 (1) (b) 9. c. of the statutes is repealed.
SB320, s. 42 17Section 42. 646.01 (1) (b) 9. d. of the statutes is repealed.
SB320, s. 43 18Section 43. 646.01 (1) (b) 11. of the statutes is repealed and recreated to read:
SB320,21,1919 646.01 (1) (b) 11. Any warranty or service contract.
SB320, s. 44 20Section 44. 646.01 (1) (b) 11m. of the statutes is created to read:
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