AB420,21,1914 1. Quantifies the benefits, guarantees, and funding associated with the
15contracts and their risks at a level of conservatism that reflects conditions that
16include unfavorable events that have a reasonable probability of occurring during
17the lifetime of the contracts. For policies or contracts with significant tail risk, the
18principle-based valuation should reflect conditions appropriately adverse to
19quantify the tail risk.
AB420,21,2420 2. Incorporates assumptions, risk analysis methods and financial models, and
21management techniques that are consistent with, but not necessarily identical with,
22those used within the company's overall risk assessment process, while recognizing
23potential differences in financial reporting structures and any prescribed
24assumptions or methods.
AB420,21,2525 3. Incorporates assumptions that are derived in one of the following ways:
AB420,22,1
1a. The assumption is prescribed in the valuation manual.
AB420,22,62 b. For an assumption that is not prescribed in the valuation manual, the
3assumption is established using the company's available experience to the extent it
4is relevant and statistically credible. To the extent that company data is not
5available, relevant, or statistically credible, the assumption is established using
6other relevant, statistically credible experience.
AB420,22,97 4. Provides margins for uncertainty, including adverse deviation and
8estimation error, such that the greater the uncertainty, the larger the margin and
9resulting reserve.
AB420,22,1210 (b) A company using a principle-based valuation for one or more policies or
11contracts subject to this section as specified in the valuation manual shall do all of
12the following:
AB420,22,1413 1. Establish procedures for corporate governance and oversight of the actuarial
14valuation function consistent with those described in the valuation manual.
AB420,22,2115 2. Provide to the commissioner and the board of directors an annual
16certification of the effectiveness of the internal controls with respect to the
17principle-based valuation. The internal controls shall be designed to ensure that all
18material risks inherent in the liabilities and associated assets subject to the
19valuation are included in the valuation and that valuations are made in accordance
20with the valuation manual. The certification shall be based on the controls in place
21as of the end of the preceding calendar year.
AB420,22,2322 3. Develop, and file with the commissioner upon request, a principle-based
23valuation report that complies with standards prescribed in the valuation manual.
AB420,22,2524 (c) A principle-based valuation may include a prescribed formulaic reserve
25component.
AB420,43
1Section 43. 623.06 (11) of the statutes is created to read:
AB420,23,52 623.06 (11) Beginning on the operative date of the valuation manual, a
3company shall submit mortality, morbidity, policyholder behavior, or expense
4experience and other data for all policies and contracts in force as prescribed in the
5valuation manual.
AB420,44 6Section 44. 623.06 (12) of the statutes is created to read:
AB420,23,77 623.06 (12) (a) In this subsection:
AB420,23,98 1. "Experience data" means any documents, materials, data, or other
9information submitted by a company under sub. (11).
AB420,23,1410 2. "Experience materials" means any documents, materials, data, or other
11information, including all working papers and copies of working papers, created or
12produced in connection with experience data, in each case that include any
13potentially company-identifying or personally identifiable information, that is
14provided to or obtained by the commissioner, together with any experience data.
AB420,23,1615 (am) For purposes of pars. (b) and (c), all of the following are confidential
16information:
AB420,23,2017 1. A memorandum in support of an opinion submitted under sub. (1m) or (1r)
18and any other documents, materials, or other information, including all working
19papers and copies of working papers, created, produced, or obtained by or disclosed
20to the commissioner or any other person in connection with the memorandum.
AB420,24,421 2. All documents, materials, and other information, including all working
22papers and copies of working papers, created, produced, or obtained by or disclosed
23to the commissioner or any other person in the course of an examination made under
24sub. (9) (f), except that if an examination report or other material prepared in
25connection with an examination made under ss. 601.43 and 601.44 is not held as

1private and confidential information under s. 601.465 (1m) (b), an examination
2report or other material prepared in connection with an examination made under
3sub. (9) (f) is not confidential information to the same extent as if the examination
4report or other material had been prepared under ss. 601.43 and 601.44.
AB420,24,115 3. Any reports, documents, materials, or other information developed by a
6company in support of, or in connection with, an annual certification by the company
7under sub. (10) (b) 2. evaluating the effectiveness of the company's internal controls
8with respect to a principle-based valuation and any other documents, materials, or
9other information, including all working papers and copies of working papers,
10created, produced, or obtained by or disclosed to the commissioner or any other
11person in connection with the reports, documents, materials, and other information.
AB420,24,1512 4. Any principle-based valuation report developed under sub. (10) (b) 3. and
13any other documents, materials, or other information, including all working papers
14and copies of working papers, created, produced, or obtained by or disclosed to the
15commissioner or any other person in connection with the report.
AB420,24,1916 5. Experience data, experience materials, and any other documents, materials,
17data, or other information, including all working papers and copies of working
18papers, created, produced, or obtained by or disclosed to the commissioner or any
19other person in connection with experience materials.
AB420,24,2520 (b) 1. Information described as confidential under par. (am) is confidential and
21privileged; is not subject to receipt, inspection, or copying under s. 19.35 (1); is not
22subject to subpoena; and is not subject to discovery or admissible in evidence in any
23private civil action. The commissioner is authorized to use the confidential
24information in the furtherance of any regulatory or legal action brought against the
25company as a part of the commissioner's official duties.
AB420,25,3
12. Neither the commissioner nor any person who received confidential
2information while acting under the authority of the commissioner may testify in any
3private civil action concerning any confidential information.
AB420,25,114 3. a. In furtherance of the performance of the commissioner's regulatory duties,
5the commissioner may share confidential information with other state, federal, and
6international regulatory agencies; the National Association of Insurance
7Commissioners and its affiliates and subsidiaries; the Actuarial Board for
8Counseling and Discipline or its successor, in the case of confidential information
9under par. (am) 1. and 4. only, upon request stating that the confidential information
10is required for the purposes of professional disciplinary proceedings; and state,
11federal, and international law enforcement agencies.
AB420,25,1512 b. Confidential information may be shared under subd. 3. a. only if the recipient
13agrees, and has the legal authority to agree, to maintain the confidentiality and
14privileged status of such documents, materials, data, and other information in the
15same manner and to the same extent as required for the commissioner.
AB420,25,2416 c. The commissioner may receive documents, materials, or other information,
17including otherwise confidential and privileged documents, materials, data, or
18information from the National Association of Insurance Commissioners and its
19affiliates and subsidiaries, from regulatory or law enforcement agencies of other
20foreign or domestic jurisdictions, and from the Actuarial Board for Counseling and
21Discipline or its successor, and shall maintain as confidential or privileged any
22document, material, or other information received with notice or the understanding
23that it is confidential or privileged under the laws of the jurisdiction that is the source
24of the document, material, or information.
AB420,26,2
1d.   The commissioner may enter into agreements governing sharing and use of
2information consistent with this subsection.
AB420,26,73 e. No waiver of any applicable privilege or claim of confidentiality in the
4confidential information shall occur as a result of disclosure of such information or
5documents to the commissioner under this subsection or as a result of the
6commissioner sharing such information or documents as authorized in this
7subsection.
AB420,26,108 f. A privilege established under the law of any state or jurisdiction that is
9substantially similar to the privilege established under this subsection shall be
10available and enforced in any proceeding in, and in any court of, this state.
AB420,26,1211 (c) Notwithstanding par. (b), any confidential information specified in par. (am)
121. and 4. is subject to all of the following:
AB420,26,1713 1. The confidential information may be subject to subpoena for the purpose of
14defending an action seeking damages from the appointed actuary submitting the
15related memorandum in support of an opinion submitted under sub. (1m) or (1r) or
16the principle-based valuation report developed under sub. (10) (b) 3. by reason of an
17action required by this section or rules promulgated under this section.
AB420,26,1918 2. The confidential information may otherwise be released by the commissioner
19with the written consent of the company.
AB420,26,2520 3. If any portion of a memorandum in support of an opinion submitted under
21sub. (1m) or (1r) or any portion of the principle-based valuation report developed
22under sub. (10) (b) 3. is cited by the company in its marketing, is publicly volunteered
23to or before a government agency other than a state insurance department, or is
24released by the company to the news media, all portions of such memorandum or
25report shall no longer be confidential.
AB420,45
1Section 45. 623.06 (13) (b) of the statutes is created to read:
AB420,27,32 623.06 (13) (b) Subsections (1), (1f) (b), (1r), and (8m) to (12) shall become
3effective on the effective date of this paragraph .... [LRB inserts date].
AB420,46 4Section 46. 628.07 of the statutes is amended to read:
AB420,27,12 5628.07 Licensing of nonresidents. The commissioner may shall waive the
6any examination requirement of an examination for a nonresident applicant under
7s. 628.04 if the jurisdiction of the applicant's residence has imposed upon the
8applicant requirements substantially as rigorous as those of this state and has
9enforced them with comparable rigor
home state or state of residence has issued the
10applicant a license for which the qualifications are equivalent to the qualifications
11for a license issued by this state and if that license is in good standing at the time of
12application
.
AB420,47 13Section 47. 628.10 (2) (a) of the statutes is amended to read:
AB420,27,2514 628.10 (2) (a) For failure to comply with continuing education or annual
15training requirements.
The license of any intermediary or individual navigator who
16fails to produce evidence of compliance with continuing education standards set by
17the commissioner or with annual training requirements is revoked, effective on the
18date on which the evidence of compliance is due. At least 60 days before that date,
19the commissioner shall send by 1st class mail to the intermediary's or navigator's
20address that is on file with the commissioner notice
notify the intermediary or
21navigator
of the date by which the evidence of compliance is due and that the
22intermediary's or navigator's license will be revoked if the evidence is not received
23by that date. An intermediary or navigator whose license is revoked under this
24paragraph may have his or her license reinstated, or may be relicensed, as provided
25in sub. (5).
AB420,48
1Section 48. 628.10 (2) (am) of the statutes is amended to read:
AB420,28,102 628.10 (2) (am) Nonpayment of fees. The license of an intermediary or
3individual navigator who fails to pay a fee when due is revoked, effective on the date
4on which the fee is due. At least 60 days before that date, the commissioner shall send
5by 1st class mail to the intermediary's or navigator's address that is on file with the
6commissioner notice
notify the intermediary or navigator of the date by which the
7fee is due and that the intermediary's or navigator's license will be revoked if timely
8payment is not made. An intermediary who is a natural person, or an individual
9navigator, whose license is revoked under this paragraph may have his or her license
10reinstated, or may be relicensed, as provided in sub. (5).
AB420,49 11Section 49. 628.347 (1) (a) of the statutes is amended to read:
AB420,28,1412 628.347 (1) (a) "Annuity" means a fixed or variable an annuity that is an
13insurance product that is individually solicited, whether the product is classified as
14an individual or group annuity.
AB420,50 15Section 50. 628.347 (4) (c) of the statutes is amended to read:
AB420,28,1816 628.347 (4) (c) This subsection applies to FINRA broker-dealer sales of
17variable annuities and fixed annuities if the suitability and supervision are similar
18to those applied to variable annuity sales.
AB420,51 19Section 51. 628.347 (4m) (b) 3. c. of the statutes is amended to read:
AB420,28,2120 628.347 (4m) (b) 3. c. How fixed, variable, and indexed product-specific
21annuity contract provisions features affect consumers.
AB420,52 22Section 52. 628.81 of the statutes is repealed.
AB420,53 23Section 53. 631.95 (3) (a) of the statutes is amended to read:
AB420,29,424 631.95 (3) (a) Disability insurance. In establishing premiums for an individual
25or group disability insurance policy or a certificate of group disability insurance, an

1insurer may inquire about a person's existing medical condition and, based on the
2opinion of a qualified actuary, as defined in s. 623.06 (1c) (1) (h), use information
3related to a person's existing medical condition, regardless of whether that condition
4is or may have been caused by abuse or domestic abuse.
AB420,54 5Section 54. 632.43 (6m) (a) 3. of the statutes is renumbered 632.43 (6m) (a)
63. (intro.) and amended to read:
AB420,29,87 632.43 (6m) (a) 3. (intro.) "Nonforfeiture interest rate" means 125% either of
8the following:
AB420,29,11 9a. For all policies other than those described in subd. 3. b., 125 percent of the
10applicable calendar year valuation interest rate under s. 623.06 rounded to the
11nearest 0.25% 0.25 percent, but in no case less than 4 percent.
AB420,55 12Section 55. 632.43 (6m) (a) 3. b. of the statutes is created to read:
AB420,29,1413 632.43 (6m) (a) 3. b. For policies issued on or after the operative date of the
14valuation manual, the rate per annum provided in the valuation manual.
AB420,56 15Section 56. 632.43 (6m) (a) 4m. of the statutes is created to read:
AB420,29,1716 632.43 (6m) (a) 4m. "Operative date of the valuation manual" has the meaning
17given in s. 623.06 (1) (f).
AB420,57 18Section 57. 632.43 (6m) (e) 3. f. of the statutes is amended to read:
AB420,30,1019 632.43 (6m) (e) 3. f. Any For policies issued before the operative date of the
20valuation manual, any
ordinary mortality tables adopted after 1980 by the National
21Association of Insurance Commissioners, that are approved by rule adopted by the
22commissioner for use in determining the minimum nonforfeiture standard, may be
23substituted for the commissioners 1980 standard ordinary mortality table with or
24without 10-year select mortality factors or for the commissioners 1980 extended
25term insurance table. For policies issued on or after the operative date of the

1valuation manual, the valuation manual provides the commissioners standard
2mortality table for use in determining the minimum nonforfeiture standard that
3may be substituted for the commissioners 1980 standard ordinary mortality table
4with or without 10-year select mortality factors or for the commissioners 1980
5extended term insurance table. If the commissioner approves, by rule, any ordinary
6mortality table adopted by the National Association of Insurance Commissioners for
7use in determining the minimum nonforfeiture standard for policies issued on or
8after the operative date of the valuation manual, then that minimum nonforfeiture
9standard supersedes the minimum nonforfeiture standard provided by the valuation
10manual.
AB420,58 11Section 58. 632.43 (6m) (e) 3. g. of the statutes is amended to read:
AB420,31,212 632.43 (6m) (e) 3. g. Any For policies issued before the operative date of the
13valuation manual, any
industrial mortality tables adopted after 1980 by the
14National Association of Insurance Commissioners, that are approved by rule
15adopted by the commissioner for use in determining the minimum nonforfeiture
16standard, may be substituted for the commissioners 1961 standard industrial
17mortality table or the commissioners 1961 industrial extended term insurance table.
18For policies issued on or after the operative date of the valuation manual, the
19valuation manual provides the commissioners standard mortality table for use in
20determining the minimum nonforfeiture standard that may be substituted for the
21commissioners 1961 standard industrial mortality table or for the commissioners
221961 industrial extended term insurance table. If the commissioner approves, by
23rule, any industrial mortality table adopted by the National Association of Insurance
24Commissioners for use in determining the minimum nonforfeiture standard for
25policies issued on or after the operative date of the valuation manual, then that

1minimum nonforfeiture standard supersedes the minimum nonforfeiture standard
2provided by the valuation manual.
AB420,59 3Section 59. 632.62 (2) of the statutes is amended to read:
AB420,31,84 632.62 (2) Participation. Every participating policy shall by its terms give its
5holder full right to participate annually in the part of the surplus accumulations from
6the participating business of the insurer that are to be distributed
make its holder
7eligible to share annually in the part of the surplus to be distributed as provided in
8sub. (4) (b)
.
AB420,60 9Section 60. 632.62 (3) of the statutes is amended to read:
AB420,31,1310 632.62 (3) Accounting. Every insurer issuing both participating and
11nonparticipating policies shall separately account for the 2 classes of business and
12no part of the amounts accumulated or credited surplus allocated to the participating
13class may be voluntarily transferred to the nonparticipating class.
AB420,61 14Section 61. 632.62 (4) (a) of the statutes is amended to read:
AB420,31,1715 632.62 (4) (a) Deferred dividends. No life insurance policy or certificate may
16be issued in which the accounting, apportionment and distribution of surplus
17dividends, if any, is deferred for a period longer than one year.
AB420,62 18Section 62. 632.62 (4) (b) of the statutes is amended to read:
AB420,32,1219 632.62 (4) (b) Payment. Every insurer doing a participating business shall
20annually ascertain the surplus over required reserves and other liabilities. After
21setting aside such contingency reserves amounts as may be lawful and considered
22necessary and be lawful, such reasonable nondistributable surplus as is needed to
23permit orderly growth,
by the insurer's board of directors for providing for the growth
24of the company and for protecting the ability to meet ongoing and future claims and
25other obligations and needs under both normal and stressed environments, and after


1making provision for the payment of reasonable dividends upon capital stock as
2determined by the insurer's board of directors
and such sums as are required by prior
3contracts to be held on account of deferred dividend policies, the remaining surplus
4shall be equitably apportioned and returned as a dividend to the participating
5policyholders or certificate holders entitled to share therein
an insurer shall
6distribute as dividends the remaining surplus, if any, attributable to participating
7life insurance and annuity policies in such amounts, including zero, and in such
8allocations among the participating life insurance and annuity policies as its board
9of directors determines to be reasonably proportioned to its calculation of the life
10insurance and annuity policies' contribution to the distributable surplus
. A dividend
11may be conditioned on the payment of the succeeding year's premium only on the
12first and second anniversaries of the policy.
AB420,63 13Section 63. 632.89 (3c) (b) of the statutes is amended to read:
AB420,32,2214 632.89 (3c) (b) A cost increase specified under par. (a) may not be determined
15until the employer's group health benefit plan or self-insured health plan has
16complied with the requirements under sub. (3) for at least the first 6 months of the
17plan year for which the increase is to be determined. The cost increase shall be
18determined, and certified, by a qualified actuary, as defined in s. 623.06 (1c) (1) (h).
19A copy of the actuary's determination, and all underlying documentation that the
20actuary relied on in making the determination, shall be filed with and, in accordance
21with rules promulgated by the commissioner, retained by the insurer issuing the
22group health benefit plan or by the self-insured health plan.
AB420,64 23Section 64. 635.13 (title) of the statutes is repealed.
AB420,65 24Section 65. 635.13 (1) of the statutes is renumbered 635.13.
AB420,66 25Section 66. 635.13 (2) of the statutes is repealed.
AB420,67
1Section 67. 645.675 of the statutes is created to read:
AB420,33,2 2645.675 Qualified financial contracts. (1) In this section:
AB420,33,73 (a) "Actual direct compensatory damages" includes normal and reasonable
4costs of cover or other reasonable measures of damages used in the derivatives,
5securities, or other markets for the contract and agreement claims. "Actual direct
6compensatory damages" does not include punitive or exemplary damages, damages
7for lost profit or lost opportunity, or damages for pain and suffering.
AB420,33,108 (b) "Business day" means any day other than a Saturday, a Sunday, or a day
9on which the New York Stock Exchange, or the Federal Reserve Bank of New York
10is closed.
AB420,33,1111 (c) "Commodity contract" means any of the following:
AB420,33,1512 1. A contract for the purchase or sale of a commodity for future delivery on, or
13subject to the rules of, a board of trade or contract market under the federal
14Commodity Exchange Act, 7 USC 1, et seq., or a board of trade outside the United
15States.
AB420,33,1816 2. An agreement that is subject to regulation under the federal Commodity
17Exchange Act, 7 USC 23, and that is commonly known to the commodities trade as
18a margin account, margin contract, leverage account, or leverage contract.
AB420,33,2119 3. An agreement or transaction that is subject to regulation under the federal
20Commodity Exchange Act, 7 USC 6c, and that is commonly known to the
21commodities trade as a commodity option.
AB420,33,2222 4. Any combination of agreements or transactions specified in subds. 1. to 3.
AB420,33,2423 5. Any option to enter into an agreement or transaction specified in subds. 1.
24to 3.
AB420,34,11
1(d) "Contractual right" includes any right established in a rule or bylaw, or in
2a resolution, of the governing board of a derivatives clearing organization or board
3of trade as defined in the federal Commodity Exchange Act, 7 USC 1, et seq.; a
4multilateral clearing organization, as defined in the federal Deposit Insurance
5Corporation Improvement Act of 1991, 12 USC 4402; a national securities exchange,
6a national securities association, a securities clearing agency, or a control market
7designated under the federal Commodity Exchange Act, 7 USC 1, et seq.; or a
8derivatives transaction execution facility registered under the federal Commodity
9Exchange Act, 7 USC 1, et seq., or any right, regardless whether it is in writing,
10arising under statutory or common law, or under the uniform commercial code, or by
11reason of normal business practice.
AB420,34,1312 (e) "Counterparty" means a person who enters into a qualified financial
13contract with an insurer.
AB420,34,1614 (f) "Credit insurance" means insurance against loss arising from failure of
15debtors to meet financial obligations to creditors, except mortgage guaranty
16insurance.
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