612.31
612.31
Authorized business. 612.31(1)(a)(a)
General. Subject to other provisions of this section, a town mutual may insure a member against loss or damage from any cause to any property in which the member has an interest.
612.31(1)(b)1.1. Insurance authorized under
par. (a) may include insurance against loss of use of or loss of income from property including interruption of business activity caused by loss or damage to the property.
612.31(1)(b)2.
2. Insurance authorized under
par. (a) may include replacement cost coverage.
612.31(2)
(2) Limitations on property insurance. 612.31(2)(a)1.1. No town mutual may insure a member against loss to growing crops by windstorm or hail.
612.31(2)(a)2.
2. No town mutual may insure a member against loss to property by windstorm or hail unless approval of the members is obtained under
s. 612.12.
612.31(2)(a)3.
3. A town mutual insuring a member against loss to property by windstorm or hail must obtain reinsurance under
s. 612.33 (2) (a).
612.31(2)(b)
(b)
Burglary and plate glass. A town mutual may insure a member against loss of property by burglary or theft or against the breakage of glass whether in a specified location or in transit but may do so only as a coverage supplemental to fire and extended coverage insurance on the property.
612.31(2)(c)
(c)
Limitations by rule. The commissioner may by rule exclude any insurance authorized under
sub. (1) or
(3) if he or she finds that it cannot be successfully transacted by town mutuals without endangering the interests of insureds or the public.
612.31(3)
(3) Nonproperty insurance. Subject to the voting requirement of
s. 612.12 (1) (d) and the reinsurance requirement of
s. 612.33 (2), a town mutual may include any of the following as supplementary coverage to property insurance written under
sub. (1):
612.31(3)(a)
(a)
Liability insurance. Insurance against loss or damage for which the insured is liable caused by the sickness, personal injury or death of any other person or by loss or damage to the property of the other person.
612.31(3)(b)
(b)
Errors and omissions. Insurance against loss, expense and liability resulting from errors, omissions or neglect in the performance of any official, vocational or professional service, except loss or damage covered by
par. (a).
612.31(3)(c)
(c)
Medical payments and other supplemental insurance. Insurance against loss, damage and expense, including loss of time, arising out of bodily injury to, or sickness, disease or death of the insured or another person, caused by accident, for which the insurer assumes an obligation to pay irrespective of the member's legal liability therefor.
612.31(4)
(4) Excluded business. Town mutuals may not transact the following insurance business:
612.31(4)(f)
(f) Elevator liability or steam boiler liability insurance;
612.31(4)(h)
(h) Inland marine insurance except as a supplementary coverage to property in a fixed location insured under
sub. (1);
612.31(4)(n)
(n) Loss, damage or liability caused by nuclear reaction or nuclear radiation or radioactive contamination, whether directly or indirectly resulting from an insured peril under the policy.
612.31(5)
(5) Writing of proportional insurance. Two or more town mutuals may together write an insurance policy with each town mutual severally assuming a proportional share of the total coverage, if except for territorial limitations each participating town mutual has the power to write risks of the kind covered in the policy. One of the town mutuals that satisfies the territorial rules of
s. 612.32 shall be designated by the policy as the originating insurer responsible for collecting the premiums and adjusting the losses on behalf of all participants. The policyholder shall be liable to assessments in each insurer but shall have voting rights only in the originating insurer. Each policy shall contain a provision advising the policyholder that there are other participating insurers and of his or her right to obtain their names, addresses and extent of their participation. Proportional insurance under this subsection is not reinsurance under
sub. (4) (m) or
s. 612.33 (1).
612.31(6)
(6) Assuming reinsurance. One town mutual may assume reinsurance from another if:
612.31(6)(a)
(a) The commissioner approves the assuming reinsurer as one qualified to assume reinsurance;
612.31(6)(b)
(b) The commissioner approves the reinsurance contract in advance;
612.31(6)(c)
(c) The portion of the insurance contract assumed is, apart from territorial limitations, within the insuring authority of the reinsurer as determined by this chapter and any rules promulgated hereunder; and
612.31(6)(d)
(d) The ceding town mutual does not have voting rights in the reinsurer but pays the same advance premiums and is subject to assessment by the reinsurer on the same basis as members.
612.31(7)
(7) Special requirements. The commissioner may, as a condition for transacting specified types of business, establish by rule special requirements concerning minimum surplus, the minimum number of members or insured risks, the operating territory, required reinsurance, and approval by a specified percentage of the members, so far as such requirements are necessary to protect the interests of insureds and the public.
612.32
612.32
Territory. No town mutual may insure any risks located outside the territory authorized in its articles, except:
612.32(1)
(1) Real property outside territory. Town mutuals may insure real property and contents in villages and cities partially located in the specified territory, real property and contents owned by a member immediately adjoining and contiguous to land owned by the same member which is within the specified territory, and real property and contents used exclusively by the member and his or her family for recreational purposes.
612.32(2)(a)(a)
Farm property. A town mutual may provide coverage for livestock, farm products, farm machinery and farm vehicles while temporarily located, for a period not exceeding 6 months, outside its territory, subject to limitations in the policy or in the articles or bylaws with respect to the distance from the territory to which the property may be removed without suspension of the coverage.
612.32(2)(b)
(b)
Household property. A town mutual may provide coverage for household goods and effects and other personal property while temporarily removed from the location stated in the policy, whether within or outside the town mutual's territory.
612.32(3)
(3) Nonproperty coverage. A town mutual may write nonproperty insurance under
s. 612.31 (3) without regard to its territorial limits provided the coverage is included in a policy providing principally coverage under
s. 612.31 (1) on property within its territory.
612.32(4)
(4) Proportional insurance and reinsurance. Nothing in this section prevents a town mutual from participation in proportional insurance or reinsurance under
s. 612.31 (5) or
(6).
612.33(1)(1)
Permitted and prohibited reinsurance. A town mutual may cede reinsurance only under
s. 612.31 (6), or to an insurer authorized to do business in this state under
s. 612.71 or
ch. 611 or
618, or under arrangements which are approved in advance by the commissioner and which are subject to the controls the commissioner prescribes.
612.33(2)(a)(a)
Windstorm and hail insurance. If a town mutual provides coverage against windstorm or hail, or other perils involving a similar potential for catastrophic losses, which are designated by the commissioner by rule, it shall obtain reinsurance for each such risk or else stop-loss reinsurance with an insurer authorized to do such business in this state, to an extent or in an amount specified by the commissioner by rule. The commissioner may prescribe detailed requirements for such reinsurance by rule or by order.
612.33(2)(b)
(b)
Nonproperty insurance. To the extent that a town mutual provides insurance under
s. 612.31 (3), it shall obtain reinsurance of at least a 90% proportional share of each risk with an insurer authorized to do such business in this state. The commissioner may permit a town mutual to retain a larger percentage if he or she finds that the interests of the members will not be endangered thereby, or may require it to reinsure a larger percentage if he or she finds that the interests of the members make it advisable. The commissioner may by rule require other reinsurance.
612.33(2)(c)
(c)
Information for policyholder. Each policy providing coverage reinsured under
par. (a) or
(b) where the reinsurance is specifically applicable to the policy shall contain a clause advising the policyholder of the existence of the reinsurance and of his or her right to obtain the name and address of the reinsurer and the terms of the reinsurance.
612.33(2)(d)
(d)
Contents of reinsurance contract. Each required reinsurance contract that is specifically applicable to particular direct policies shall contain the following provisions:
612.33(2)(d)1.
1. That any claimant who could recover from the town mutual may, if the town mutual would be unable to fully satisfy its financial obligations to the claimant, recover from the town mutual, the reinsurer, or both, and that the claimant may recover from the reinsurer in the same way that he or she could recover from the town mutual but only in the amount for which the reinsurer is liable according to the terms of the reinsurance contract; and
612.33(2)(d)2.
2. That there shall be no diminution in the amount recoverable from the reinsurer under
subd. 1. as a result of any delinquency proceedings pertaining to the town mutual, nor as a result of a breach of the reinsurance contract by the town mutual.
612.33(2)(e)
(e)
Approval of reinsurance contract. Every reinsurance contract required under this subsection shall be on a form approved by the commissioner under
s. 612.51. The commissioner shall approve the form unless he or she finds that it would be contrary to the law or to the interests of insureds or the public.
612.34(1)(1)
Regulation of assessments. Town mutuals need not file information under
ch. 625 about special assessments unless ordered to do so by rule or order of the commissioner.
612.34(2)
(2) Classifications. No classification plan for the purpose of determining premiums or assessment shares may be used unless it has been approved by the commissioner. The commissioner shall approve the plan unless he or she finds that it would be contrary to the law, including the standards of
s. 625.11, or contrary to the interests of insureds or of the public.
612.34(3)
(3) Mandatory advance premiums. Notwithstanding members' liability for subsequent assessments under
s. 612.54, town mutuals shall charge advance premiums expected to be adequate for any insurance for which they must obtain reinsurance under
s. 612.33 (2) (b).
612.34 History
History: 1973 c. 22;
1979 c. 102 s.
236 (5).
612.35
612.35
Borrowing and repayment. A town mutual may borrow money to pay losses or expenses, but before obtaining a loan which would bring its indebtedness, including debit balances from reinsurance arrangements under
s. 612.33 (1) above 50% of its assets including assessments levied and collectible which are not overdue, it shall report the amount and purpose of the loan and all outstanding loans and debit balances to the commissioner. The commissioner may thereupon order the town mutual to levy an assessment to repay its indebtedness, establish a surplus, or both, within a reasonable time not less than 60 days after notice.
612.35 History
History: 1973 c. 22.
612.36(1)(1)
General. Except as provided in
sub. (2), town mutuals are subject to
ch. 620 but shall be restricted as provided in
s. 620.03 (1) unless individually exempted by the commissioner under
s. 620.03 (2). In applying the restrictions of
ch. 620 all assets of town mutuals shall be treated as if they were required to satisfy the compulsory surplus requirement, except to the extent that the commissioner by rule determines otherwise.
612.36(2)
(2) Real estate. Section 620.23 (1) (c) does not apply to town mutuals. Except under
s. 620.21 (2), no town mutual may own real estate that in the aggregate exceeds, in value measured at cost, one mill on the dollar of the insurance in force.
612.36 History
History: 1973 c. 22;
1977 c. 339.
612.36 Annotation
Legislative Council Note, 1977: Sub. (2) continues in effect that portion of s. 201.24 (2) that applies to town mutuals. [Bill 258-S]
612.51(1)(1)
Approval required. No town mutual may use any policy form, including a rider, endorsement or special clause, nor any application form, unless it has been approved by the commissioner. The commissioner shall approve the form unless he or she finds:
612.51(1)(a)
(a) That it is inequitable, unfairly discriminatory, misleading, deceptive, obscure or encourages misrepresentation, including cases where the form:
612.51(1)(a)1.
1. Is misleading because its benefits are too restricted to achieve the purposes for which the policy is sold;
612.51(1)(a)2.
2. Contains provisions whose natural consequence is to obscure or lessen competition;
612.51(1)(a)4.
4. Is misleading, deceptive or obscure because of such physical aspects as format, typography, style, color, material or organization.
612.51(1)(b)
(b) That it provides benefits or contains other provisions that would endanger the solidity of the insurer;
612.51(1)(c)
(c) That in the case of the policy, though not of riders and endorsements, it fails to provide the exact name of the insurer and the full address of its home office; or
612.51(1)(d)
(d) That it violates a statute or a rule promulgated by the commissioner, or is otherwise contrary to law.
612.51(2)
(2) Rules. The commissioner may by rule prescribe forms to be used for policies, applications or for particular clauses.
612.51(3)
(3) Articles and bylaws. The articles and bylaws shall be attached to or clearly incorporated by reference in every policy issued by a town mutual. They may be incorporated by reference only if each new member is supplied a copy of them and each policy specifies how additional copies may be obtained.
612.51(4)
(4) Limited coverage. Recovery as to any or all items of personal property insured under a policy may be limited to a percentage of the value at the time of the loss, by a clearly expressed statement to that effect in that policy.
612.52
612.52
Undertaking to pay premiums and assessments. An applicant for insurance shall sign an undertaking agreeing to pay the advance premiums for any insurance on the applicant's behalf and any assessment which may be levied in accordance with the terms of the policy, the articles, the bylaws, the statutes, and the reasonable expenses of collecting the assessment and any reasonable penalties for nonpayment. The undertaking may provide that for such collection the applicant shall waive any exemptions otherwise applicable to the property covered by the policy.
612.53
612.53
Loss adjustment. 612.53(1)(1)
Rules. The commissioner may promulgate rules for loss adjustment procedures.
