646.01(1)(b)3.
3. Surety bonds, fidelity bonds and any other bonding obligations.
646.01(1)(b)5.
5. Mortgage guaranty, financial guaranty and other forms of insurance offering protection against investment risks.
646.01(1)(b)8.
8. Product liability or completed operations liability insurance, and comprehensive general liability including either of these coverages, provided to a risk purchasing group or a member of a risk purchasing group.
646.01(1)(b)9.
9. Any self-funded or partially or wholly uninsured plan of an employer or other person to provide life insurance, annuity or disability benefits to its employees or members to the extent that the plan is self-funded or uninsured, including benefits payable by an employer or other person under any of the following:
646.01(1)(b)10.
10. Any liability for dividends or experience rating credits payable after the date of entry of the order of liquidation under an insurance or annuity contract, and any fees or allowances due any person, including the policyholder, in connection with service to or administration of the contract.
646.01(1)(b)13.
13. Any transaction or combination of transactions between a person, including affiliates of such person, and an insurer, including affiliates of such insurer, which involves the transfer of investment or credit risk unaccompanied by transfer of insurance risk.
646.01(1)(b)14.
14. A policy issued by an insurer to the department of health and family services under
s. 49.45 (2) (b) 2. to provide prepaid health care to medical assistance recipients.
646.01(2)
(2) Purposes. The purposes of this chapter are:
646.01(2)(a)
(a) To maintain public confidence in the promises of insurers by providing a mechanism for protecting insureds from excessive delay and loss in the event of liquidation of insurers and by assessing the cost of such protection among insurers; and
646.01(2)(b)
(b) To provide where appropriate for the continuation of protection under policies and supplemental contracts of life insurance, disability insurance and annuities.
646.01 Annotation
The purpose of this chapter is to protect insureds against losses caused by insolvent insurers. Insureds of insolvent insurers are protected against subrogation claims to the extent of their policy limits. Fireman's Fund v. Pitco Frialator,
145 Wis. 2d 526,
427 N.W.2d 417 (Ct. App. 1988).
646.03
646.03
Definitions. In this chapter, unless the context indicates otherwise:
646.03(1)
(1) "Board" means the board of directors of the insurance security fund created by
s. 646.12.
646.03(2)
(2) "Fund" means the insurance security fund created by
s. 646.11.
646.03(3)
(3) "Liquidator" includes receiver or conservator.
646.11
646.11
Organization and administration of fund. 646.11(1)(1)
Organization. There is created a fund to be known as the "insurance security fund". All insurers subject to this chapter are contributors to the fund as a result of their authority to transact business in this state. The fund shall consist of all payments made by insurers under
s. 646.51, of the earnings resulting from investments under
s. 646.21 (2) and of the amounts recovered under
s. 645.72 (2).
646.11(2)
(2) Accounts. The fund shall be composed of 6 segregated accounts, one for life insurance, one for annuities, one for disability insurance other than policies issued or coverage provided by a health maintenance organization insurer, one for health maintenance organization insurers, one for all other kinds of insurance subject to this chapter and an administrative account.
646.11(3)
(3) Expenses of fund. Necessary expenses of administration of the fund incurred in connection with actual liquidations or with continuation of contracts under
s. 646.35 shall be charged to the appropriate account of the fund. All other expenses shall be charged to the administrative account.
646.11(4)
(4) Liability. No contributor to the fund or person acting on its behalf is personally liable for any obligations of the fund. The rights of creditors are solely against the assets of the fund.
646.11(5)
(5) Immunity. No cause of action of any nature may arise against and no liability may be imposed upon the fund or its agents, employees, directors or contributor insurers, or the commissioner or the commissioner's agents, employees or representatives, for any act or omission by any of them in the performance of their powers and duties under this chapter.
646.12
646.12
Administration of the fund. 646.12(1)(a)(a)
Members. The fund shall be administered by a board of directors which shall consist of not fewer than 7 nor more than 14 members. The attorney general, the state treasurer and the commissioner are members with full voting rights. Other members shall be chosen from representatives of insurers subject to this chapter under procedures specified by the commissioner by rule, provided that one member is a representative of a service insurance corporation. The rule may provide that, instead of natural persons, specific insurers or associations of insurers may be selected as members of the board and may act through any duly authorized representative.
646.12(1)(b)
(b)
Chairperson. The person to chair the board shall be elected by the members of the board under a rule promulgated by the commissioner.
646.12(2)
(2) General powers and duties. The board shall:
646.12(2)(a)
(a) Subject to the commissioner's power to promulgate rules under
sub. (1), adopt rules for the administration of this chapter, including delegation of any part of its powers and its own procedures.
646.12(2)(b)
(b) Create standing or special committees as needed. A minority of the members of any committee may be persons not members of the board.
646.12(2)(c)
(c) Delegate to the committees any of its powers and duties under this chapter, subject to review and reconsideration by the board.
646.12(2)(d)
(d) Employ or retain the personnel necessary to carry out its duties and set compensation for the personnel, sue or be sued, make contracts and borrow money necessary to carry out its duties in the most efficient way, including money with which to pay claims under
s. 646.31 or to continue coverage under
s. 646.35. The board may offer as security for such loans its claims against the liquidator or its power to levy assessments under this chapter. Personnel employed under this paragraph are not employees of the state and are not subject to
s. 20.922 or
ch. 230.
646.12(2)(e)
(e) Advise and make recommendations to the commissioner on any matter related to the possible insolvency of an insurer covered by this chapter, and respond to any reasonable questions presented by the commissioner. Information, recommendations and advice under this subsection are privileged and confidential and are not open to public inspection under
s. 19.35 (1).
646.12(2)(f)1.1. Keep records of all meetings of the fund and of its subcommittees that involve discussions of the activities of the fund in carrying out its powers and duties under this chapter.
646.12(2)(f)2.
2. Keep confidential the records under
subd. 1. pertaining to specific liquidation proceedings involving an insurer until the termination of the liquidation proceedings or until sooner ordered to make the records public by a court.
646.12(2)(f)3.
3. Keep confidential the records under
subd. 1. pertaining to specific rehabilitation proceedings involving an insurer unless ordered to make the records public by a court.
646.12(2)(g)
(g) Negotiate and contract with any liquidator to achieve the purposes of this chapter.
646.12(2)(h)
(h) Perform other acts necessary to achieve the purposes of this chapter.
646.12(3)
(3) Compensation. Members of the board and other committee members shall receive no compensation for services but may receive reimbursement for all reasonable and necessary expenses incurred in the performance of their respective duties as directors or as committee members.
646.12(4)
(4) Other powers. The board may join an organization consisting of one or more entities of other states performing comparable functions, in order to assist the board in carrying out its powers and duties under this chapter and otherwise further the purposes of this chapter.
646.12 Cross-reference
Cross Reference: See also ch.
Ins 11, Wis. adm. code.
646.13
646.13
Special duties and powers of the board related to loss claims. 646.13(1)(a)
(a) Establish procedures and acceptable forms of proof for eligible claims, which shall correspond as closely as practicable with the corresponding rules under
ch. 645.
646.13(1)(b)
(b) Stand in the position of the insurer in the investigation, compromise, settlement, denial and payment of claims under
s. 646.31 and the defense of 3rd party claims against insureds, subject to the limitations of
s. 645.43. The board shall consult and cooperate with the liquidator in carrying out these duties.
646.13(2)(a)
(a) Review settlements, releases and judgments to which the insurer or its insureds were parties to determine the extent to which they may be properly contested.
646.13(2)(b)
(b) Exercise with respect to loss claims the powers that the liquidator has with respect to other claims under
ch. 645.
646.13(2)(c)
(c) With respect to any action against an insurer which is in liquidation, exercise the powers of the liquidator under
s. 645.49 (1).
646.13(2)(d)
(d) Have standing to appear in any liquidation proceedings in this state involving an insurer in liquidation.
646.13(2)(e)
(e) Pursue salvage and subrogation with respect to paid covered claim obligations and retain any amounts recovered.
646.13(2)(f)
(f) Appoint and direct legal counsel for the defense of covered claims under insurance policies.
646.13(3)
(3) No duty or liability. The board has no duty or liability with respect to any claim filed as follows:
646.13(3)(a)
(a) With the liquidator under
s. 645.61 after the date for filing specified by the liquidator under
s. 645.47 (2), unless the liquidator determines that the claim is considered to have been timely filed under
s. 645.61 (2) and the claim participates fully in every distribution to the same extent as other timely filed claims in the same class.
646.13(3)(b)
(b) With a liquidator or court under the laws of any other state after the date for filing specified by the liquidator or court, unless the liquidator or court determines that the claim is considered to have been timely filed under a law substantially similar to
s. 645.61 (2) and the claim participates fully in every distribution to the same extent as other timely filed claims in the same class.
646.13(3)(c)
(c) Except for claims under life insurance policies, annuities and noncancelable or guaranteed renewable disability insurance policies and except for claims determined to be excused late filings as provided in
pars. (a) and
(b), with a liquidator or court after the earlier of the following:
646.13(3)(c)1.
1. Eighteen months after the order of liquidation is entered.
646.13(3)(c)2.
2. The final date for filing specified by the liquidator or court.
646.13(4)
(4) When duty to defend terminates. Any obligation of the board to defend an insured ceases upon the board's payment, by settlement releasing the insured or on a judgment, of an amount equal to the lesser of the board's covered claim obligation limit or the applicable policy limit, subject to any express policy terms regarding tender of limits.
646.15
646.15
Proceedings involving nondomestic insurers. 646.15(1)(a)(a) If a nondomestic insurer is in liquidation, the board may apply to the circuit court for Dane County for, and the court may grant, restraining orders, temporary and permanent injunctions, and other orders considered necessary and proper to prevent any of the following:
646.15(1)(a)1.
1. Interference with the board or with its administrative proceedings.
646.15(1)(a)2.
2. The institution or further prosecution of any action or proceeding involving the insurer or in which the board is obligated to defend a party.
646.15(1)(a)3.
3. The obtaining of a preference, judgment, garnishment or lien against the insurer or its assets.
646.15(1)(a)4.
4. Any other threatened or contemplated action that might prejudice the rights of policyholders or the administration of the liquidation or board proceedings.
646.15(1)(b)
(b) Upon granting an application under
par. (a), the court may retain jurisdiction of any further proceeding or relief, as the court considers necessary and proper, involving the insurer.
646.15(2)
(2) Exclusive proceedings. A court of this state does not have jurisdiction to entertain, hear or determine a proceeding or to grant relief if the proceeding or relief involves or is related to a nondomestic insurer which is in liquidation unless the court is so authorized under this chapter or
ch. 645.
646.15 History
History: 1987 a. 325;
1999 a. 30.
646.21
646.21
Custody and investment of assets. 646.21(1)
(1)
Custody. Except as provided in
sub. (2), the board controls the assets of the fund. The board shall select regulated financial institutions in this state which receive deposits in which to establish and maintain accounts for assets needed on a current basis. If practicable, the accounts shall earn interest.
646.21(2)
(2) Investment of assets. The board may request that assets of the fund not needed currently be invested by the investment board under
s. 25.17. If so requested, the investment board shall invest those assets in investments with maturities and liquidity appropriate to the probable needs of the fund for money to perform its duties. All income attributable to the investments shall be credited to the fund, and both income and principal shall be transferred to the board of the fund on request of the board. Assets held by the board of the fund shall be invested in a similar manner.
646.21 History
History: 1979 c. 109;
1983 a. 120.
