646.35(6)(c)2.
2. Any benefit payment liability, arising before the date of entry of the order of liquidation, to the extent that the payment exceeds the rate of interest, which may not be less than zero, determined by subtracting 2 percentage points from the monthly corporate bond yield average, as published by Moody's investors service or its successor, when averaged over the 4-year period ending on the date of entry of the order of liquidation or averaged over such lesser period if the contract was issued less than 4 years before that date.
646.35(7)
(7) Exclusion for coverage under another fund. 646.35(7)(a)(a) Notwithstanding
s. 646.31 (9), the fund shall not provide coverage under this section to any person who, directly or indirectly, has coverage under any other state's security fund statutes.
646.35(7)(b)
(b) In determining whether
par. (a) applies in a situation in which a person could potentially be covered by security funds of more than one state,
par. (a) shall be construed in conjunction with other states' laws in such a manner as to result in coverage for the person by only one security fund.
646.35(8)(a)(a) In this subsection, "coverage date" means the date on which the fund becomes responsible for the obligations of an insolvent insurer.
646.35(8)(b)
(b) At any time within one year after the coverage date, the fund may elect to succeed to the insolvent insurer's rights and obligations that accrue on or after the coverage date and that relate to contracts covered, in whole or in part, by the fund under one or more indemnity reinsurance agreements entered into by the insolvent insurer as a ceding insurer and selected by the fund. The election shall be effected by a notice to the liquidator and to any affected reinsurer. The fund may not exercise an election under this paragraph with respect to a reinsurance agreement that the liquidator has expressly disaffirmed.
646.35(8)(c)
(c) With respect to each indemnity reinsurance agreement for which the fund makes an election under
par. (b):
646.35(8)(c)1.
1. The fund shall be responsible for all unpaid premiums under the agreement, for periods both before and after the coverage date, and for the performance of all other obligations to be performed under the agreement after the coverage date, that relate in each case to contracts covered, in whole or in part, by the fund. The fund may charge contracts covered in part by the fund, through reasonable allocation methods, for the costs of reinsurance in excess of the obligations of the fund.
646.35(8)(c)2.
2. The fund is entitled to any amounts payable by the reinsurer under the agreement with respect to losses or events that occur in periods after the coverage date and that relate to contracts or contractual obligations covered, in whole or in part, by the fund. Upon receipt of any such amounts, the fund must pay to the beneficiary under the policy or contract on account of which the amounts were paid, the amount by which the benefits paid by the fund on account of the policy or contract less the retention of the insolvent insurer applicable to the loss or event is exceeded by the amount received by the fund.
646.35(8)(c)3.
3. Within 30 days after the election, the fund and the indemnity reinsurer must calculate the net balance due to or from the fund under the agreement as of the date of the election, giving full credit to all items paid by the insolvent insurer, the insurer's liquidator, and the indemnity reinsurer between the coverage date and the date of the election. The fund or the indemnity reinsurer shall pay the net balance due to the other within 5 days after the calculation is completed. The liquidator shall remit to the fund as promptly as practicable any amounts received by the liquidator that are due the fund under
subd. 2.
646.35(8)(c)4.
4. If, within 60 days of the election, the fund pays all premiums due for periods both before and after the coverage date that relate to contracts covered, in whole or in part, by the fund, the reinsurer may not terminate the agreement insofar as it relates to contracts covered, in whole or in part, by the fund and may not set off against amounts due the fund any unpaid premium due for periods before the coverage date.
646.35(8)(d)
(d) If the fund transfers its obligations to another insurer and the fund and other insurer agree, unless the fund has previously expressly determined in writing that it will not exercise an election under
par. (b), the other insurer succeeds to the rights and obligations of the fund under
pars. (b) and
(c), regardless of whether the fund has exercised an election under
par. (b). If the other insurer succeeds to the fund's rights and obligations under
pars. (b) and
(c):
646.35(8)(d)1.
1. The indemnity reinsurance agreements automatically terminate for new reinsurance, unless the indemnity reinsurer and the other insurer agree to the contrary.
646.35(8)(d)2.
2. On and after the date on which an indemnity reinsurance agreement is transferred to the other insurer, the fund is no longer obligated to pay beneficiaries the amounts specified in
par. (c) 2. with respect to that agreement.
646.35(8)(e)
(e) This subsection supersedes
s. 645.58 (1), any applicable rules of the commissioner, and the provisions of any affected reinsurance agreement that provide for or require payment of reinsurance proceeds to the liquidator of the insolvent insurer on account of losses or events that occur after the coverage date. The liquidator remains entitled to any amounts payable by the reinsurer under the reinsurance agreement with respect to losses or events that occur before the coverage date, subject to any applicable setoff provisions.
646.35(8)(f)
(f) Nothing in this subsection, except as expressly provided in this subsection:
646.35(8)(f)1.
1. Alters or modifies the terms or conditions of the indemnity reinsurance agreements of the insolvent insurer.
646.35(8)(f)2.
2. Abrogates or limits any rights of any reinsurer to rescind a reinsurance agreement.
646.35(8)(f)3.
3. Gives a policy owner or beneficiary an independent cause of action against an indemnity reinsurer that is not otherwise set forth in the indemnity reinsurance agreement.
646.35(9)
(9) Coverage obligations. Notwithstanding
sub. (3), in performing its obligations to provide coverage under this section, the fund is not required to guarantee, assume, reinsure, or perform, or cause to be guaranteed, assumed, reinsured, or performed, the contractual obligations of an insolvent insurer under a covered policy or contract that do not materially affect the economic values or economic benefits of the covered policy or contract.
646.35(10)
(10) Board determinations. The board shall have discretion to determine the means by which the fund may economically and efficiently provide benefits under this section. If the board has arranged or offered to provide benefits to a person under a plan or arrangement that fulfills the fund's obligations under this section, the person is not entitled to any benefits from the fund in addition to or other than those provided under the plan or arrangement.
646.41
646.41
Tax exemption. The fund is exempt from payment of all fees and taxes levied by this state or any of its subdivisions or instrumentalities, except for fees and taxes levied by virtue of employment under
s. 646.12 (2) (d).
646.41 History
History: 1979 c. 109.
646.51(1c)(a)
(a) "Authorize" means, with respect to assessments, to approve, by the adoption of a resolution by the board, that an assessment from insurers in a specified amount be called immediately or in the future. An assessment is authorized when the resolution is adopted by the board.
646.51(1c)(b)
(b) "Call" means, with respect to assessments, to require payment, by the mailing of a notice to insurers by the fund, of an authorized assessment within the time set forth in the notice. An assessment is called when notice is mailed to insurers by the fund.
646.51(1c)(c)
(c) "Premiums" means gross premiums and other considerations received for direct insurance and annuities, including considerations for a plan established under
ss. 185.981 to
185.985, less return premiums and other considerations, dividends, and experience credits paid or credited to policyholders on such business. The term "premiums" does not include premiums or other considerations received for policies or contracts, or for portions of policies or contracts, for which coverage is not provided under this chapter, except that the amount of assessable premiums or other considerations shall not be reduced on account of limitations with respect to a single risk, loss, or life under
s. 646.31 (4) or on account of interest limitations under
s. 646.35 (6) (c).
646.51(1m)
(1m) Duty to assess. As soon as practicable after a liquidation order has been issued, the board shall estimate separately for each of the accounts of
s. 646.11 (2), the amounts necessary to make the payments provided by this chapter and shall authorize assessments separately for each account.
646.51(3)(am)(am)
General. Except as provided in
pars. (b) and
(c), assessments shall be calculated as follows:
646.51(3)(am)1.
1. For assessments authorized by the board before April 30, 2004, as a percentage of premium written in this state by each insurer in the classes protected by the accounts for the year preceding the year of entry of the order of liquidation.
646.51(3)(am)2.
2. For assessments authorized by the board on or after April 30, 2004, as a percentage of premium written in this state by each insurer in the classes protected by the accounts for the year preceding the year in which the assessment is authorized by the board.
646.51(3)(b)
(b)
Life and health. Except as provided in
par. (c), with respect to annuity contracts or life or disability insurance policies, including policies issued by health maintenance organizations, assessments shall be calculated as a percentage of average annual premium received in this state by each insurer in the classes protected by the accounts for the 3 most recent years preceding the year of the entry of the order of liquidation.
646.51(3)(c)
(c)
Administrative assessments. The board may authorize assessments on a prorated or nonprorated basis to meet administrative costs and other expenses whether or not related to the liquidation or rehabilitation of a particular insurer. Nonprorated assessments may not exceed $200 per insurer in any year.
646.51(4)(a)(a) Subject to
pars. (b) and
(d), the total of all assessments for an amount authorized by the board under this section with respect to an insurer may not, in one calendar year, exceed 2 percent of the insurer's assessable premiums under
sub. (3) (am) or
(b) on the types of policies and contracts that are covered by the account.
646.51(4)(b)
(b) If the maximum assessment under
par. (a), together with the other assets of the fund in an account, does not provide in one year in the account an amount that is sufficient for the fund to meet its obligations, the board shall assess additional amounts in each succeeding year until the amounts available enable the fund to meet its obligations.
646.51(4)(c)
(c) Assessments to meet the obligations of the fund with respect to an insurer in liquidation may not be authorized or called unless the board makes a finding that it is necessary for implementing the purposes of this chapter. Recognizing that exact determinations may not always be possible, the board shall endeavor to classify and calculate assessments with a reasonable degree of accuracy. No authorized assessment may be called if the assets held in the appropriate account of the fund are sufficient to cover all estimated payments for liquidations in progress.
646.51(4)(d)
(d) If 2 or more assessments are authorized in one calendar year with respect to insurers placed in liquidation in different calendar years, the average annual premiums for purposes of the limitation in
par. (a) shall be equal and limited to the higher of the 3-year annual premium average for the applicable account.
646.51(5)
(5) Collection. After the rate of assessment has been fixed, the fund shall send to each insurer a statement of the amount it is to pay. The fund shall designate whether the assessments shall be made payable in one sum or in installments. Assessments shall be collected by the same procedures as premium taxes or license fees under
ch. 76.
646.51(6)
(6) Appeal and review. Within 30 days after the fund sends the statement under
sub. (5), an insurer, after paying the assessment under protest, may appeal the assessment to the board or a committee thereof. The decision of the board on the appeal is subject to judicial review.
646.51(7)(a)(a) An insurer's premium rates are not excessive because they contain an amount reasonably calculated to recoup assessments called under this chapter.
646.51(7)(b)
(b) If the premium rates on a class of business are fixed, so that it is not possible for an insurer to recoup its assessments by increasing premium rates on the class of business, the insurer may offset 20% of the amount of the Wisconsin portion of the assessment against its tax liabilities to this state, other than real property taxes, in each of the 5 calendar years following the year in which the assessment was paid.
646.51(7)(c)
(c) If an insurer ceases doing business in this state, all assessments not yet offset may be offset against its tax liabilities to this state for the year it ceases doing business. If the offset exceeds the tax liabilities, no refund will be made and there will be no carry-forward of the deficit to later years.
646.51(7)(d)
(d) Any amount available for credit against future tax liabilities under this subsection may be regarded as an asset of the insurer under rules promulgated by the commissioner.
646.51(8)
(8) Abatement and deferral. The board may abate or defer the assessment of an insurer in whole or part if payment of the assessment would endanger the ability of the insurer to fulfill its contractual obligations. The amount by which an assessment is abated or deferred may be assessed under this section against other insurers. When the conditions that prompted the board to defer assessment of an insurer no longer exist, the insurer shall pay all assessments that were deferred in accordance with a repayment plan approved by the board.
646.51(9)
(9) Obligation to contribute ceases. 646.51(9)(a)(a) Except as provided in
par. (b), if an insurer's license or certificate of authority to do business in this state terminates or expires, the insurer's obligation to pay assessments under this section ceases beginning on the day after the insurer's license or certificate of authority terminates or expires.
646.51(9)(b)
(b) An insurer whose license or certificate of authority to do business in this state terminates or expires remains liable after the termination or expiration to pay all of the following:
646.51(9)(b)1.
1. Assessments authorized or called before the insurer's license or certificate of authority terminated or expired.
646.51(9)(b)2.
2. Assessments authorized or called after the insurer's license or certificate of authority terminated or expired that relate to a liquidation order entered before the insurer's license or certificate of authority terminated or expired.
646.51 Annotation
Sub. (7) is applicable to franchise taxes, income taxes, and fire department dues. Only Wisconsin assessments are used for offsets against Wisconsin taxes. Section 76.66 applies. If assessments are reimbursed, tax credits should be recaptured.
72 Atty. Gen. 17.
646.60
646.60
Claims by security funds. 646.60(1)(a)(a) Settlements by the fund. The liquidator is bound by determinations and settlements of covered loss claims, and by payments of claims, made by the fund under this chapter.
646.60(1)(b)
(b)
Settlements by comparable funds. The liquidator is bound by determinations and settlements of covered loss claims, and by payments of claims, made by funds or organizations of other states that are comparable to the fund under this chapter if all of the following apply:
646.60(1)(b)1.
1. The laws of the other states give equivalent recognition to the determinations and settlements of loss claims, and to payments of claims, made by the fund.
646.60(1)(b)2.
2. If the same claim is reported as paid by 2 or more funds, payment shall be to the fund with a prior obligation under
s. 646.31 (9).
646.60(2)
(2) Priorities. The subrogation claims of funds under
sub. (1) for settlements of claims, including expenses in settling them, have the priority the claims would have under
s. 645.68.
646.61
646.61
Disposal and transfer of assets. 646.61(1)
(1) After termination of all liquidations under any account of
s. 646.11 (2), remaining assets in that account shall be redistributed among those who paid assessments under rules promulgated to ensure treatment that is as equitable to the contributing insurers as is practicable. Partial distributions may be made to insurers who were assessed after all claims against the fund arising from such liquidations have been paid.
646.61(2)
(2) To meet the needs of the fund the fund may temporarily transfer assets from one account to another.
