646.01(1)(b)18.
18. The deductible, self-funded, or self-insured portion of a claim under a liability or worker's compensation insurance policy, regardless of the timing or method provided in the policy, endorsement, or any other agreement for payment of the deductible, self-funded, or self-insured amount by the insured. This subdivision does not apply to a worker's compensation insurance policy if the insured under the policy is a debtor under
11 USC 701, et seq., as of the deadline set by the liquidator for filing claims against the insolvent insurer.
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(1m)
(1m) "Direct insurance" does not include a policy or contract of reinsurance, except for the following:
646.03(1m)(a)
(a) Reinsurance for which the reinsurer has issued assumption certificates under the reinsurance policy or contract.
646.03(1m)(b)
(b) Reinsurance ceded by an assessable town mutual company.
646.03(2)
(2) "Fund" means the insurance security fund created by
s. 646.11.
646.03(2n)
(2n) "Impaired insurer" means an insurer subject to this chapter that is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.
646.03(2p)
(2p) "Insolvent insurer" means an insurer subject to this chapter that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.
646.03(3)
(3) "Liquidator" includes receiver or conservator.
646.03(4)
(4) With respect to a life or disability insurance policy or an annuity contract, "owner" or "policyholder" means the person who is identified as the legal owner under the terms of the policy or contract or who is otherwise vested with legal title to the policy or contract through a valid assignment completed in accordance with the terms of the policy or contract and properly recorded as the owner on the books of the insurer. "Owner" or "policyholder" does not include a person with only a beneficial interest in a policy or contract.
646.03(5)
(5) "Unallocated annuity contract" means an annuity contract or group annuity certificate that is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under the contract or certificate.
646.11
646.11
Organization and administration of fund. 646.11(1)(1)
Organization. There is created an organization 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 of the following:
646.11(1)(c)
(c) The amounts recovered under
s. 645.72 (2) or a substantially similar law in the state of domicile of the insolvent insurer.
646.11(1)(d)
(d) Amounts reimbursed to the fund through its subrogation and assignment rights.
646.11(1)(e)
(e) Any other moneys received by the fund from time to time.
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 the fund's duties and set compensation for the personnel. 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 of competent jurisdiction.
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 of competent jurisdiction.
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 fund may join an organization consisting of one or more entities of other states performing comparable functions, in order to assist the fund 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 fund 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 fund 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 or a substantially similar law in the state of domicile of the insolvent insurer.
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) or a substantially similar law in the state of domicile of the insolvent insurer.
646.13(2)(d)
(d) Have standing to appear in any liquidation proceedings in this state involving an insurer in liquidation, and have authority to appear or intervene before a court or agency of any other state having jurisdiction over an impaired or insolvent insurer, in accordance with the laws of that state, with respect to which the fund is or may become obligated or that has jurisdiction over any person or property against which the fund may have subrogation or other rights. Standing shall extend to all matters germane to the powers and duties of the fund, including proposals for reinsuring, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations.
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(2)(g)
(g) Sue and be sued, make contracts, and borrow money necessary to carry out its duties, including money with which to pay claims under
s. 646.31 or to continue coverage under
s. 646.35. The fund may offer as security for such loans its claims against the liquidator or its power to levy assessments under this chapter.
646.13(3)
(3) No duty or liability. The fund 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 original 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 original 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, or noncancelable or guaranteed renewable disability insurance policies, and except for claims determined to be excused late filings as provided in
pars. (a) and
(b), if the original date for filing is extended by the liquidator or court, 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 extended date for filing specified by the liquidator or court.
646.13(4)
(4) When duty to defend terminates. Any obligation of the fund to defend an insured ceases upon the fund's payment, by settlement releasing the insured or on a judgment, of an amount equal to the lesser of the fund'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 insurers. 646.15(1)(a)(a) If an insurer is in liquidation, the fund 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 fund 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 fund 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 fund 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.
646.16
646.16
Payment of deposits made for benefit of creditors. 646.16(1)(1) The commissioner shall promptly pay to the fund any deposit held in this state that was paid, as required by law or the commissioner, by the insolvent insurer for the benefit of creditors, including policyholders, and not turned over to the domiciliary liquidator upon the entry of a final order of liquidation of an insurer domiciled in this state or in a reciprocal state, as defined in
s. 645.03 (1) (i). Of the amount paid to the fund under this subsection, the fund may retain the percentage determined by dividing the aggregate amount of policyholders' claims that are related to the insolvency and for which the fund has provided benefits under this chapter by the aggregate amount of all policyholders' claims in this state that are related to the insolvency. The fund shall remit the balance to the domiciliary liquidator.
646.16(2)
(2) Any amount retained by the fund under
sub. (1) shall be treated as a distribution of estate assets under
s. 645.72 or a similar provision of the state of domicile of the insolvent insurer. Deposits subject to this section shall not be treated as deposits as security, escrow, or other security under
s. 645.03 (1) (j).
646.16 History
History: 2003 a. 261.
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 fund on request of the board. Assets held by the fund shall be invested in a similar manner.
