SB763: Bill Text

LRB-5366/1

AJM&TJD:ahe

2017 - 2018 LEGISLATURE

2017 Senate BILL 763

February 1, 2018 - Introduced by Senator Craig, cosponsored by Representative Duchow. Referred to Committee on Insurance, Financial Services, Constitution and Federalism.

SB763,1,6 An Act to repeal 601.427; to amend 626.31 (1) (b); and to create 601.465 (1m) (d), 601.465 (2m) (e) to (i), 601.465 (3) (e), 610.80 and 645.31 (16) of the statutes; relating to: disclosures to the commissioner of insurance and other changes to the insurance laws, extending the time limit for emergency rule procedures, providing an exemption from emergency rule-making procedures, and granting rule-making authority.

Analysis by the Legislative Reference Bureau

This bill eliminates the medical malpractice insurance report, adds certain biographical information to the information that the commissioner of insurance may refuse to disclose to others, adds provisions that apply to the privilege relating to confidential information provided to the commissioner, changes the membership of the rating committee of the Wisconsin worker's compensation rating bureau, creates a corporate governance annual disclosure requirement, and adds corporate deficiencies to the list of grounds for which an insurer may be rehabilitated.

Corporate governance annual disclosure

The bill requires an insurer or an insurance holding company system of which an insurer is a member to annually submit to the commissioner a corporate governance annual disclosure containing information specified in the bill. If the insurer is a member of an insurance holding company system the system shall submit the disclosure to the insurance commissioner of the lead state, and the state shall provide a copy to Wisconsin's commissioner upon the commissioner's request. The bill allows the commissioner to request additional information from the insurer or insurance holding company system to understand the corporate governance policies and implementation of those policies. The bill specifies how, when, and with whom documents, materials, and other information disclosed to the commissioner in conjunction with a corporate governance annual disclosure may be released, shared, or disclosed, including providing that the documents, materials, and other information is considered proprietary and contains trade secrets and is confidential and privileged. The commissioner may petition a court for an order directing rehabilitation of an insurer on one of the grounds specified in current law, and the bill adds to those grounds corporate governance deficiencies in which continued operation of the insurer may be hazardous to policyholders, creditors, or the public.

Nondisclosure of information

Currently the Office of the Commissioner of Insurance may refuse to disclose and may prevent others from disclosing certain information obtained by the commissioner including testimony, reports, records, and information obtained in the court of an inquiry made by the commissioner or an examination conducted by the commissioner. Under the bill, OCI may also refuse to disclose biographical information of directors or principal officers of a corporation reported, as required by current law, by a domestic stock or mutual insurance corporation.

Current law specifies the nature of the privilege surrounding the confidential information obtained by the commissioner such as specifying that the privilege may not be constructively waived and may be waived only by affirmative written and specific consent of the commissioner. Under the bill, privileged information is not subject to inspection or copying under open records law and is not subject to subpoena or discovery or admissible as evidence in a private civil action. The commissioner may not be compelled to testify concerning privileged information in a private civil action, and no person, while acting under the authority of the commissioner, is allowed to testify concerning privileged action in a private civil action. The bill also specifies that the privilege is not waived as a result of the commissioner sharing the information as authorized under current law. Confidentiality of corporate governance annual disclosures and related information is excluded from the general nondisclosure provisions and subject only to the specific confidentiality provisions created for such disclosures and information in the bill.

Medical malpractice report

Current law requires insurers who are authorized to write medical malpractice insurance to file an annual medical malpractice insurance report with the commissioner. This bill eliminates the medical malpractice report filing requirement.

Rating bureau

Currently, the rating committee of the Wisconsin Compensation Rating Bureau that establishes rating plans for worker's compensation insurance consists of ten members: two members representing employer interests, four members chosen by stock insurers, and four chosen by mutual insurers. The bill changes the total of members to an even number no fewer than 8 and no more than 12. Two members of the committee will still represent employer interests and be appointed by the governor. Of the remaining members, the bill designates that half are chosen by stock insurers and half are chosen by mutual insurers.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB763,1 Section 1. 601.427 of the statutes is repealed.

SB763,2 Section 2. 601.465 (1m) (d) of the statutes is created to read:

SB763,3,4 601.465 (1m) (d) Biographical data reported under s. 611.54 (1) relating to directors or principal officers of a corporation.

SB763,3 Section 3. 601.465 (2m) (e) to (i) of the statutes are created to read:

SB763,3,7 601.465 (2m) (e) Privileged information is not subject to inspection or copying under s. 19.35 (1).

SB763,3,9 (f) Privileged information is not subject to subpoena or discovery and is not admissible as evidence in any private civil action.

SB763,3,11 (g) The commissioner may not be compelled to testify concerning privileged information in any private civil action.

SB763,3,13 (h) No person, while acting under the authority of the commissioner, may testify concerning privileged information in any private civil action.

SB763,3,15 (i) The privilege is not waived as a result of the commissioner sharing information as authorized under sub. (1m).

SB763,4 Section 4. 601.465 (3) (e) of the statutes is created to read:

SB763,4,3 601.465 (3) (e) All information protected under s. 610.80 (4), including the corporated governance annual disclosures and related information, which are subject only to the confidentiality provisions in s. 610.80 (4).

SB763,5 Section 5. 610.80 of the statutes is created to read:

SB763,4,6 610.80 Corporate governance annual disclosure. (1) Definitions. In this section:

SB763,4,7 (a) “Insurance holding company system” has the meaning given in s. 622.03 (2).

SB763,4,8 (b) “Insurer” has the meaning given in s. 622.03 (3).

SB763,4,9 (c) “Lead state” has the meaning given in s. 622.03 (4).

SB763,4,17 (2) Disclosure requirement. (a) An insurer or insurance holding company system of which an insurer is a member shall, annually no later than June 1, submit to the commissioner a corporate governance annual disclosure that contains the information described in sub. (3). If the insurer is a member of an insurance holding company system, the insurance holding company system shall submit the disclosure to the commissioner of the lead state in accordance with the laws of the lead state. Upon the commissioner's request, the insurer shall provide a copy of the disclosure when this state is not the lead state.

SB763,4,22 (b) The commissioner may request additional information from an insurer or insurance holding company system that the commissioner determines is necessary for the commissioner to understand an insurer's or insurer member of an insurance holding company system's corporate governance policies and the reporting or information system or controls implementing the policies.

SB763,5,3 (c) With respect to an insurer member of an insurance holding company system, if the commissioner wishes to review the disclosure under par. (a) or make a request for additional information about the disclosure under par. (a), the commissioner shall request the disclosure or additional information through the lead state before seeking the information from the insurer member of the insurance holding company system.

SB763,5,10 (d) The insurer or insurance holding company system has discretion over responses to inquiries regarding the disclosure under this section, provided that the disclosure is consistent with rules established by the commissioner regarding the disclosure and contains the material information necessary to permit the commissioner to gain an understanding of the insurer's or insurer member of an insurance holding company system's corporate governance structure, policies, and practices.

SB763,5,16 (e) Insurers providing information substantially similar to the information required by this section in other documents provided to the commissioner, including proxy statements or other state or federal filings provided to the commissioner, are not required to also provide that information in the corporate governance annual disclosure but are required to reference in the corporate governance annual disclosure the document in which the information is included.

SB763,5,18 (3) Contents of disclosure. The disclosure under sub. (2) (a) shall include all of the following:

SB763,5,24 (a) The signature of the chief executive officer or corporate secretary of the insurer or insurance holding company system attesting that, to the best of that individual's knowledge, the insurer has implemented the corporate governance practices described in the disclosure and that a copy of the disclosure was provided to the insurer's board of directors or an appropriate committee of the insurer's board of directors.

SB763,6,11 (b) An explanation of the level of corporate governance at which the disclosure provides its reporting, the criteria used to determine the level of reporting, and, if applicable, any change in the level of reporting from the previous disclosure. The insurer or insurance holding company system may provide information regarding corporate governance at the ultimate controlling parent, intermediate holding company, or individual legal entity level, depending upon how the insurer or insurance holding company system has structured its corporate governance. In determining at which level of reporting an insurer or insurance holding company system will make its disclosure, the insurer or insurance holding company system shall consider at which level the insurer or insurance holding company system does each of the following:

SB763,6,12 1. Determines risk appetite.

SB763,6,13 2. Collectively oversees earnings, capital, liquidity, operations, and reputation.

SB763,6,15 3. Coordinates and exercises supervision over earnings, capital, liquidity, operations, and reputation.

SB763,6,16 4. Places liability for failure to perform corporate governance duties.

SB763,6,20 (4) Confidentiality. (a) All of the following apply to documents, materials, and other information in the possession or control of the commissioner that are obtained by, created by, or disclosed to the commissioner or any other person under this section: