Scope Statements
Insurance
This statement of scope was approved by the Governor on November 18, 2013.
Rule No.
Relating to
Injured Patients and Families Compensation Fund Annual Fund and Mediation Panel Fees, for the fiscal year beginning July 1, 2014.
Rule Type
Emergency and Permanent.
1. Description of the Objective of the Rule
The office of the commissioner of insurance's objective is to establish the annual fees that participating health care providers must pay to fund the injured patients and families compensation fund (“fund") as required by Wis. Stat. s.
655.57 (3), and set the mediation panel fees for the fiscal year beginning July 1, 2014, as required by Wis. Stat. s.
655.61.
2. Description of Existing Policies Relevant to the Rule and of New Policies Proposed to be Included in the Rule and an Analysis of Policy Alternatives; the History, Background and Justification for the Proposed Rule
The policies as set forth in the statutes require the office of the commissioner of insurance to promulgate a rule to establish the amount of fees to be paid into the fund annually as approved by the board of governors of the fund (“board"). The fees included in the proposed rule will address both the annual assessments for the coverage provided to the participating health care providers, and the mediation fund fees which are collected by the fund and paid to the director of state courts for the operations of the medical mediation panels.
3. Statutory Authority for the Rule (Including the Statutory Citation and Language)
The fund was established by and is operated as provided in Wis. Stat. ch.
655. The commissioner of insurance, with approval by the board, is required to annually set the fees for the fund and the medical mediation panel by administrative rule. Wis. Stat. s.
655.004, states that the director of state courts and the commissioner may promulgate such rules under Wis. Stat. ch.
227, as are necessary to enable them to perform their responsibilities under this chapter. Pursuant to Wis. Stat. s.
655.27 (3) (b), the commissioner, after approval by the board, shall by rule set the mediation panel fees, and Wis. Stat. s.
655.61, requires that the board, by rule to set fees that are charged to health care providers that are sufficient to provide the necessary revenue to fund the medical mediation panels. Finally, Wis. Stat. s.
601.41 (3), provides that the commissioner shall have rule-making authority under Wis. Stat. s.
227.11 (2).
4. Estimate of the Amount of Time that State Employees will Spend to Develop the Rule and of Other Resources Necessary To Develop the Rule
120 hours of time including the time of state employees and members of the board.
5. Description of all Entities that this Rule may have an Economic Impact on
All health care providers that are participants in the fund, as set forth in Wis. Stat.
s.
655.002 (1), are required to pay annual assessments for payment of claims that arise in each given year consistent with the provisions of Wis. Stat.
ch.
655. For the fiscal year beginning July 1, 2014 it is anticipated that the board will approve fund fees at the December 18, 2013, board meeting and mediation panel fees at the March 2014 board meeting.
6. Summary and preliminary comparison of any existing or proposed federal regulation that is intended to address the activities to be regulated by the rule
There is no existing or proposed federal regulation addressing any medical malpractice fund like the Wisconsin fund.
7. Statement of Scope for Permanent and Emergency Rule
The fund issues invoices for the following fiscal year in June of each year. In order for the invoices to correctly reflect the decreased assessment that was approved by the board, a rule must be promulgated and take effect prior to June 15, 2014. Due to the length of time that may be required to promulgate the rule, the scope is being submitted for both the permanent rule and an emergency rule to ensure that procedures are in place to promulgate the rule on an emergency basis to ensure that the invoices can be issued reflecting the decreased assessments approved by the board while the permanent rule can proceed without negative impact on the fund.
Contact Person
Julie E. Walsh, Senior Attorney, 608-264-8101.
Insurance
This statement of scope was approved by the Governor on November 15, 2013.
Rule No.
Relating to
Holding company reporting requirements for insurers and affecting small businesses.
Rule Type
Permanent.
1. Detailed Description of the Objective of the Rule
The objective of the rule change is to modify the reporting requirements for licensed insurers that are a part of an insurance holding company system. Wisconsin's current rule generally follows the National Association of Insurance Commissioners' (NAIC) Insurance Holding Company System Regulatory Model Act (Model Act) and Insurance Holding Company System Model Regulation (Model Regulation). The NAIC recently made changes to its Model Act and Model Regulation to modernize the regulation by better addressing transactions involving complex insurance holding company organizations and insurers licensed in multiple jurisdictions. Wisconsin must adopt certain of those changes in substantively the same form as the NAIC Model Act and Model Regulation if the Wisconsin Office of the Commissioner of Insurance (OCI) is to remain a state insurance regulatory agency that is accredited by the NAIC. It is a goal of the OCI and a benefit to domestic insurers for OCI to maintain its accreditation because as an NAIC accredited state, domestic insurers are only subject to certain filing requirements with OCI and financial examination by OCI. Without accreditation, domestic insurers could be subject to financial examination and filing requirements for all jurisdictions in which they operate. This could include examination from all 50 state jurisdictions for some insurers. Without accreditation, the cost of doing business for Wisconsin's domestic insurance industry would increase because their regulation by other states would increase. In order to maintain accreditation, OCI must adopt certain standard regulations developed by the NAIC. In addition, the changes are similar to those adopted or that will be adopted in other states and work to promote uniformity for insurance holding company systems operating across multiple states.
2. Description of Existing Policies Relevant to the Rule And of New Policies Proposed to be Included in the Rule and an Analysis of Policy Alternatives; the History, Background, and Justification for the Proposed Rule
The existing ch.
Ins 40, Wis. Admin Code, sets forth the reporting standards for (a) the acquisition of control or merger with a domestic insurer, (b) the annual registration of holding company information, and (c) the standards for reporting transactions within an insurance holding company system. The additions and changes to the rule include changes to the type and amount of information that is reported by the domestic insurance industry to the OCI under each of the reports required by ch.
Ins 40, Wis. Admin. Code, including information that is not now reported but that would give the OCI information on the significant risks potentially faced by members of the domestic insurance industry and give the OCI the tools that it needs to monitor significant risks. The rule changes contemplated generally follow the changes made to the NAIC Model Rule and Model Act that are required for accreditation.
The changes also include minor additions and edits to the existing rule that help clarify the types of transactions that are subject to the holding company reporting requirements and the form of those reporting requirements.
The existing s.
Ins 16.01, Wis. Admin. Code, provides a framework for the regular annual billing of domestic insurers, except for town mutuals and cooperative associations, to fund the costs of administering examinations. It also provides that domestic insurers located outside of Wisconsin may be billed an additional amount to cover the higher travel costs associated with their examinations. The proposed rule change would provide that an insurer that is the subject of a supervisory college may be billed for additional costs in a similar manner.
3. Detailed Statutory Authority for the Rule (Including the Statutory Citation and Language)
The statutory authority for these rules are ss.
227.11 (2) (a) and
601.41 (3), Wis. Stats., which provide for the commissioner's rule making authority in general, and specifically, ss.
617.11 (1),
617.21 (1) (d),
(2) (a),
(b),
601.48 (1),
(2) and
601.45 (1), Wis. Stats. Section
617.11 (1), Wis. Stats., provides that an insurer shall report “information concerning the insurer and its affiliates that the commissioner requires by rule" and “the commissioner may promulgate rules prescribing the timing of reports under this subsection, including, but not limited to, requiring periodic reporting and the form and procedure for filing reports." Section
617.21 (1) (d), Wis. Stats., provides that regarding transactions with affiliates, the transaction must comply “with any other standard that the commissioner prescribes by rule." Section
617.21 (2) (a), Wis. Stats., provides that “the commissioner may promulgate rules requiring a domestic insurer, a person attempting to acquire or having control of a domestic insurer and affiliates of a domestic insurer to report a transaction or a group or series of transactions" that are material and involve a domestic insurer or an affiliate. Section
617.21 (2) (b), Wis. Stats., provides that transactions with affiliates may not be entered into unless the transaction is reported “to the commissioner in the form and by the date before the effective date of the transaction that are prescribed by the commissioner by rule." Section
601.48 states that the commissioner may participate in the activities and affairs of “organizations so far as it will, in the judgment of the commissioner, enhance the purposes of chs.
600 to
655" and the commissioner “may exchange information and data and consult with other persons in order to improve and carry out insurance regulation." Section
601.45 (1), Wis. Stats., provides that the reasonable costs of examination “shall be paid by examinees . . . either on the basis of a system of billing for actual salaries and expenses of examiners and other apportionable expenses, including office overhead, or by a system of regular annual billings to cover the costs relating to a group of companies, or a combination of such systems, as the commissioner may by rule prescribe."
4. Estimates of the Amount of Time that State Employees will Spend to Develop the Rule and of Other Resources Necessary to Develop The Rule
400 hours and no other resources are necessary to develop the rule.
5. Description of all Entities that may be Impacted by the Rule
The proposed rule changes will affect Wisconsin-licensed insurers that are members of a holding company system and affiliates of those insurers. It would also affect persons attempting to acquire control of Wisconsin-licensed insurers.
6. Summary and Preliminary Comparison of any Existing or Proposed Federal Regulation that is Intended to Address the Activities to be Regulated by the Rule
The Office is unaware of any proposed or existing federal laws or regulations that are intended to address the activities to be regulated by the proposed rule change.
7. Anticipated Economic Impact of Implementing the Rule (Note if the Rule is Likely to Have a Significant Economic Impact on Small Businesses)
____ yes
__x__ no
local/statewide economic impact (choose one)
__x__ minimal or none (< or = $50,000)
_____ moderate ($50,000--$20,000,000)
_____ significant (>$20,000,000)
For many insurers, there will be little or no effect. For insurers that are part of a holding company system, an annual Enterprise Risk Report would be required of the ultimate controlling person. Also, persons attempting to acquire control of an insurer would have to file a pre-acquisition report. These additional filing requirements are expected to have a minimal economic impact. For insurers that are the subject of a supervisory college, the annual assessment can be expected to increase slightly.
