2021 - 2022 LEGISLATURE
September 24, 2021 - Introduced by Senator Felzkowski, cosponsored by
Representative Petersen. Referred to Committee on Insurance, Licensing
and Forestry.
SB588,1,11 1An Act to repeal 601.954 (2) (f) 1., 635.05 (7), 635.12 and 646.51 (3) (ar) 1.; to
2renumber
632.66; to consolidate, renumber and amend 601.954 (2) (f)
3(intro.) and 2. and 646.51 (3) (ar) (intro.) and 2.; to amend 601.64 (3) (c), 611.40
4(1), 611.42 (1), 611.42 (1e) (b) (intro.), 632.62 (1) (b) 1., 632.62 (1) (b) 2., 645.68
5(3), 646.13 (2) (g), 646.325 (2) (intro.), 646.325 (2) (a) (intro.), 655.27 (3) (b) 2.,
6655.27 (3) (bt) and 655.275 (2); and to create 551.102 (28) (bm), 601.465 (3) (g),
7601.465 (3) (h), 601.48 (1m), 611.42 (1b), 611.42 (1g), 611.426, 617.13, 625.03
8(1m) (f), 632.62 (1) (b) 4., 632.66 (2), 646.01 (1) (b) 21., 646.01 (1) (b) 22. and
9646.325 (2) (a) 3. of the statutes; relating to: various changes to insurance
10laws, including issuance of funding agreements, granting rule-making
11authority, and providing a penalty.
Analysis by the Legislative Reference Bureau
This bill modifies various insurance statutes that are generally administered
by the Office of the Commissioner of Insurance.
The bill requires that OCI maintain accreditation with the National
Association of Insurance Commissioners and allows OCI to adopt minimum

education and certification requirements for job classifications that monitor the
financial solvency of insurers to meet NAIC accreditation and best practice
standards.
The bill modifies the penalty for violations of insurance statutes and rules.
Under current law, a person who violates an insurance statute or rule, intentionally
aids a person in such a violation, or knowingly permits such a violation by a person
over whom he or she has authority is subject to a penalty of not more than $1,000.
The bill increases this penalty to not more than $5,000 if the violation specifically
involves a consumer who is an adult at risk or at least 60 years of age.
The bill modifies the policyholder meeting requirements that apply to mutual
insurance corporations (mutuals) to allow mutuals to hold meetings by means of
remote communication and to allow policyholders to participate by means of remote
communication. In order to allow remote participation, a mutual must implement
reasonable measures regarding participation and participant verification and must
maintain a record of voting and other actions by remote participants. The bill also
requires that the meeting notice describe the means of remote communication to be
used. The bill also allows remote participation in shareholders' meetings for stock
insurance corporations.
Under the bill, a domestic insurer with a certificate of authority to transact the
business of life insurance and annuities may issue a “funding agreement,” which the
bill defines as an annuity without life contingencies that is an agreement for an
insurer to accept and accumulate funds and to make one or more payments at future
dates in fixed or variable amounts that are not based on mortality or morbidity
contingencies. In order to issue a funding agreement, the insurer's board of directors
must approve a funding agreement plan, the insurer must comply with form filing
requirements, and OCI must determine that the issuance is not adverse to the
interest of the insurer's policyholders, although no determination is required if the
insurer has more than $200 billion in admitted assets. Additionally, the bill provides
that no amounts may be guaranteed or credited under a funding agreement except
upon reasonable assumptions as to investment income and expenses and on a basis
equitable to all holders of a given class. The bill specifies that the issuance or delivery
of a funding agreement in Wisconsin constitutes doing an insurance business in the
state and that an insurer may directly offer funding agreements. The bill provides
that amounts payable under funding agreements are treated as loss claims, funding
agreements are not subject to rate regulation requirements, and materials provided
to OCI related to funding agreements are confidential. The bill also specifies that
funding agreements are not securities for purposes of state securities law and that
OCI has sole authority to regulate their issuance and sale.
The bill directs OCI to promulgate rules requiring certain insurers, as
determined under the rules, to report their group capital calculations and liquidity
stress tests.
As enacted in 2021 Wisconsin Act 73, insurers and other entities holding a
credential from OCI are required in the insurance laws to provide notification of a
cybersecurity breach. Entities, including insurers, that are subject to federal laws
protecting against disclosure of nonpublic personal information and fraudulent

access to financial information and health plans, health care clearinghouses, and
certain health care providers that must comply with the privacy requirements of the
federal Health Insurance Portability and Accountability Act are exempt from this
notification requirement. The bill eliminates the exemption from notification of a
cybersecurity breach for the entities and insurers that are subject to federal laws
protecting against disclosure of nonpublic personal information and fraudulent
access to financial information.
The bill repeals the requirement that small employer insurers annually publish
their premium rates.
The bill specifies that the requirements regarding the insurance security fund
do not apply to funding agreements or the federal employee health benefit plan. The
bill also specifies that the insurance security fund may make contracts for the
administration and payment of claims for which the insured is responsible and that
the fund may recover costs and expenses incurred in administering a claim.
The bill also modifies statutes relating to the injured patients and families
compensation fund. The bill specifies that the payment classifications provided by
OCI under current law must be by reference to the applicable Insurance Services
Office, Inc., codes and extends the provision in current law providing for passive
review by the Joint Committee on Finance of the fund's proposed fees to also include
the payment classifications. The bill also provides that the fund's peer review
council, which is currently five persons, may be either five or seven persons.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB588,1 1Section 1 . 551.102 (28) (bm) of the statutes is created to read:
SB588,3,32 551.102 (28) (bm) Does not include a funding agreement authorized under s.
3632.66.
SB588,2 4Section 2. 601.465 (3) (g) of the statutes is created to read:
SB588,3,65 601.465 (3) (g) Any information designated as confidential under s. 632.66 (2)
6(g), which is subject to the confidentiality provisions in s. 632.66 (2) (g).
SB588,3 7Section 3. 601.465 (3) (h) of the statutes is created to read:
SB588,3,118 601.465 (3) (h) Group capital calculation and liquidity stress test filings and
9any related information provided by an insurer under rules promulgated under s.
10617.13 (1), which are not subject to subch. II of ch. 19 and are subject only to the
11confidentiality provisions of s. 617.13 (2).
SB588,4
1Section 4. 601.48 (1m) of the statutes is created to read:
SB588,4,32 601.48 (1m) Accreditation. (a) The office shall maintain accreditation with
3the National Association of Insurance Commissioners.
SB588,4,114 (b) Notwithstanding s. 230.14, the commissioner may adopt minimum
5education and certification requirements for job classification levels that monitor the
6financial solvency of insurers as necessary to meet accreditation and best practice
7standards established by the National Association of Insurance Commissioners.
8Any minimum education and certification requirement adopted under this
9paragraph shall apply only to employees placed into the classification level after the
10requirement is adopted and may not apply to employees who were in that
11classification level prior to the adoption of the requirement.
SB588,5 12Section 5 . 601.64 (3) (c) of the statutes is amended to read:
SB588,4,2413 601.64 (3) (c) Forfeiture for violation of statute or rule. Whoever violates an
14insurance statute or rule or s. 149.13, 2011 stats., intentionally aids a person in
15violating an insurance statute or rule or s. 149.13, 2011 stats., or knowingly permits
16a person over whom he or she has authority to violate an insurance statute or rule
17or s. 149.13, 2011 stats., shall forfeit to the state not more than $1,000 for each
18violation, except that whoever violates an insurance statute or rule, intentionally
19aids a person in violating an insurance statute or rule, or knowingly permits a person
20over whom he or she has authority to violate an insurance statute or rule shall, if the
21violation specifically involves a consumer who is an adult at risk, as defined in s.
2255.01 (1e), or an individual who is at least 60 years of age, forfeit to the state not more
23than $5,000 for each violation
. If the statute or rule imposes a duty to make a report
24to the commissioner, each week of delay in complying with the duty is a new violation.
SB588,6
1Section 6. 601.954 (2) (f) (intro.) and 2. of the statutes, as created by 2021
2Wisconsin Act 73
, are consolidated, renumbered 601.954 (2) (f) and amended to read:
SB588,5,53 601.954 (2) (f) Exceptions for certain entities. This subsection does not apply
4to any of the following: 2. An entity that is described in 45 CFR 164.104 (a), if the
5entity complies with the requirements of 45 CFR part 164.
SB588,7 6Section 7. 601.954 (2) (f) 1. of the statutes is repealed.
SB588,8 7Section 8. 611.40 (1) of the statutes is amended to read:
SB588,5,128 611.40 (1) Meetings, notices, quorums and voting. Sections 180.0701 to
9180.0703, 180.0705, 180.0709, 180.0721 to 180.0727 and 180.1708 (3) apply to stock
10corporations. Each director of a stock corporation shall be elected by a plurality of
11the votes cast by the shares entitled to vote in the election at a meeting at which a
12quorum is present.
SB588,9 13Section 9 . 611.42 (1) of the statutes is amended to read:
SB588,5,1614 611.42 (1) General. Subject to this section and s. 611.53, ss. 181.0701 (1), (2),
15and (4) to (6)
, 181.0702 (1) to (3) and (5), 181.0705 (1) to (4), 181.0722 (1) to (3),
16181.0723, and 181.0727 apply to mutuals.
SB588,10 17Section 10. 611.42 (1b) of the statutes is created to read:
SB588,5,2118 611.42 (1b) Place of meetings. (a) A mutual may hold an annual, regular, or
19special meeting of policyholders in or outside this state at the place stated in or fixed
20in accordance with the bylaws. If no place is stated in or fixed in accordance with the
21bylaws, the mutual shall hold the annual meeting at its principal office.
SB588,5,2522 (b) Notwithstanding par. (a), a mutual's bylaws may authorize the board of
23directors, in its sole discretion, to determine that an annual, regular, or special
24meeting of policyholders may be held solely by means of remote communication as
25authorized under s. 611.426.
SB588,11
1Section 11. 611.42 (1e) (b) (intro.) of the statutes is amended to read:
SB588,6,62 611.42 (1e) (b) (intro.) The court may fix the time and place of the meeting or
3determine that the meeting shall be held solely by means of remote communication
4as provided under s. 611.426
. The court shall require that the meeting be called and
5conducted in accordance with the mutual's articles of incorporation and bylaws, in
6so far as possible, except that the court may do all of the following:
SB588,12 7Section 12. 611.42 (1g) of the statutes is created to read:
SB588,6,108 611.42 (1g) Notice of meetings. (a) When required. A mutual shall give notice
9of meetings of policyholders as provided in its bylaws or, if the bylaws are silent, in
10a manner that is fair and reasonable.
SB588,6,1411 (b) In general. A notice that conforms to the requirements of par. (c) is fair and
12reasonable. Except for matters referred to in par. (c) 2., other means of giving notice
13may also be fair and reasonable when all of the circumstances are considered.
14Section 181.0141 applies to notices provided under this subsection.
SB588,6,1615 (c) Notice safe harbor. Notice is fair and reasonable if all of the following
16conditions exist:
SB588,6,2217 1. The mutual notifies its policyholders of the date, time, and, if applicable,
18place of each annual, regular, and special meeting of policyholders not more than 60
19days and not less than 10 days, or, if notice is mailed by any type other than first class
20or registered mail, 30 days, before the meeting date. If the board of directors has
21authorized participation by means of remote communication under s. 611.426, the
22notice shall describe the means of remote communication to be used.
SB588,6,2523 2. Notice of an annual or regular meeting includes a description of any matter
24or matters that must be approved by the policyholders under s. 181.0723 (2),
25181.0831, 181.0873 (4), 181.1003, 181.1021, 181.1105, 181.1202, or 181.1401.
SB588,7,2
13. Notice of a special meeting includes a description of the matter or matters
2for which the meeting is called.
SB588,7,103 (d) Adjourned meetings. Unless the bylaws require otherwise, if an annual,
4regular, or special meeting of policyholders is adjourned to a different date, time, or
5place or will be held by a new means of remote communication, notice need not be
6given of the new date, time, place, or means of remote communication if the new date,
7time, place, or means of remote communication is announced at the meeting before
8adjournment. If a new record date for the adjourned meeting is or must be fixed
9under s. 181.0707, notice of the adjourned meeting must be given under this
10subsection to the policyholders of record as of the new record date.
SB588,13 11Section 13. 611.426 of the statutes is created to read:
SB588,7,16 12611.426 Remote participation in policyholder meetings. (1) If
13authorized by the board of directors in its sole discretion, and subject to sub. (2) and
14any guidelines and procedures adopted by the board of directors, policyholders and
15proxies of policyholders not physically present at a meeting of policyholders may
16participate in the meeting by means of remote communication.
SB588,7,21 17(2) If policyholders and proxies of policyholders participate in a meeting of
18policyholders by means of remote communication, the participating policyholders
19and proxies of policyholders shall be considered to be present in person and
20permitted to vote at the meeting, whether the meeting is held at a designated place
21or solely by means of remote communication, if all of the following apply:
SB588,7,2422 (a) The mutual has implemented reasonable measures to verify that each
23person considered to be present and permitted to vote at the meeting by means of
24remote communication is a policyholder or proxy of a policyholder.
SB588,8,4
1(b) The mutual has implemented reasonable measures to provide policyholders
2and proxies of policyholders a reasonable opportunity to participate in the meeting
3and to vote on matters submitted to the policyholders, including an opportunity to
4read or hear the proceedings of the meeting concurrently with the proceedings.
SB588,8,75 (c) The mutual maintains a record of voting and other actions by any
6policyholder or proxy of a policyholder that votes or takes another action at the
7meeting by means of remote communication.
SB588,14 8Section 14. 617.13 of the statutes is created to read:
SB588,8,13 9617.13 Rules requiring group capital calculations and liquidity stress
10tests. (1)
The commissioner shall promulgate rules requiring certain insurers, as
11determined under the rules, to report their group capital calculations and liquidity
12stress tests, including the form of the reports and the manner and process for filing
13the reports.
SB588,8,21 14(2) Sections 19.31 to 19.37 do not apply to the filings made under sub. (1) or to
15any information submitted to the commissioner in connection with the filings. The
16filings made under sub. (1) are not subject to subpoena or discovery and may not be
17admissible in evidence in any private civil action. The commissioner shall only share
18a filing made under sub. (1), and any information requested in connection with the
19filing, with the insurance regulatory authorities of states having statutes or
20regulations substantially similar to this section and who have agreed in writing not
21to disclose the information.
SB588,15 22Section 15. 625.03 (1m) (f) of the statutes is created to read:
SB588,8,2323 625.03 (1m) (f) Funding agreements authorized under s. 632.66.
SB588,16 24Section 16 . 632.62 (1) (b) 1. of the statutes is amended to read:
SB588,9,2
1632.62 (1) (b) 1. Paid-up, temporary, pure endowment insurance and annuity
2settlements provided in exchange for lapsed, surrendered or matured policies;.
SB588,17 3Section 17 . 632.62 (1) (b) 2. of the statutes is amended to read:
SB588,9,54 632.62 (1) (b) 2. Annuities beginning within one year of the making of the
5contract; and.
SB588,18 6Section 18. 632.62 (1) (b) 4. of the statutes is created to read:
SB588,9,77 632.62 (1) (b) 4. Funding agreements authorized under s. 632.66.
SB588,19 8Section 19 . 632.66 of the statutes is renumbered 632.66 (1).
SB588,20 9Section 20. 632.66 (2) of the statutes is created to read:
SB588,9,1410 632.66 (2) (a) In this subsection, “funding agreement” means an annuity
11without life contingencies that is an agreement for an insurer to accept and
12accumulate funds and to make one or more payments at future dates in fixed or
13variable amounts, or both, that are not based on mortality or morbidity
14contingencies.
SB588,9,1715 (b) A domestic insurer that holds a valid certificate of authority to transact the
16business of life insurance and annuities in this state may issue a funding agreement
17if all of the following conditions are met:
SB588,9,1918 1. The domestic insurer's board of directors, or an authorized committee of the
19board, approves the domestic insurer's plan relating to funding agreements.
SB588,9,2420 2. The commissioner determines that the issuance of funding agreements by
21the domestic insurer is not adverse to the interests of the policyholders of the
22domestic insurer, except that no determination from the commissioner is required
23if the domestic insurer has more than $200 billion in admitted assets. In making a
24determination under this subdivision, the commissioner shall consider the domestic

1insurer's specific policy objective and strategies, investment and risk management
2guidelines, and aggregate maximum limits on the funding agreement business.
SB588,10,53 3. No amounts may be guaranteed or credited under the funding agreement
4except upon reasonable assumptions as to investment income and expenses and on
5a basis equitable to all holders of a given class of the funding agreement.
SB588,10,76 4. The domestic insurer complies with the form filing requirements under s.
7631.20 with respect to the funding agreement.
SB588,10,98 (c) The issuance or delivery of a funding agreement by an insurer in this state
9shall constitute doing an insurance business herein.
SB588,10,1210 (d) A domestic insurer may offer funding agreements directly through the
11domestic insurer and is not required to use licensed intermediaries when marketing
12funding agreements.
SB588,10,1513 (e) Amounts paid to the domestic insurer, and proceeds applied under optional
14modes of settlement, under funding agreements may be allocated to one or more
15separate accounts pursuant to s. 611.24.
SB588,10,1816 (f) Notwithstanding ch. 551, the commissioner has sole authority to regulate
17the issuance and sale of funding agreements, including the persons selling funding
18agreements on behalf of insurers.
SB588,10,2219 (g) Notwithstanding s. 601.465 (1m) and subch. II of ch. 19, any materials
20submitted to the commissioner pursuant to an approval under par. (b) 2. or pursuant
21to a request from the commissioner related to a funding agreement shall be held
22confidential pursuant to s. 601.465 (1n).
SB588,10,2423 (h) The commissioner may promulgate rules as necessary for the
24implementation of this subsection.
SB588,21 25Section 21 . 635.05 (7) of the statutes is repealed.
SB588,22
1Section 22. 635.12 of the statutes is repealed.
SB588,23 2Section 23 . 645.68 (3) of the statutes is amended to read:
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