Ins 40.04(2)(d) (d) All management agreements, exclusive agency agreements, service contracts, tax allocation agreements, or cost-sharing arrangements which involve a domestic insurer and either an affiliate or a person attempting to acquire control of the domestic insurer. All agreements under this paragraph entered into after the effective date of this rule shall, at a minimum and as applicable, contain all of the following:

Ins 40.04(2)(d)1. 1. Identify the person providing services and the nature of such services.

Ins 40.04(2)(d)2. 2. Set forth the methods to allocate costs.

Ins 40.04(2)(d)3. 3. Require timely settlement, not less frequently than on a quarterly basis, and compliance with the requirements in the Accounting Practices and Procedures Manual.

Ins 40.04(2)(d)4. 4. Prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement. This subdivision does not prohibit loans or capital transactions that involve a domestic insurer and an affiliate that are otherwise permitted by statute or rule.

Ins 40.04(2)(d)5. 5. State that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance.

Ins 40.04(2)(d)6. 6. Define books and records of the insurer to include all books and records developed or maintained under or related to the agreement.

Ins 40.04(2)(d)7. 7. Specify that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer.

Ins 40.04(2)(d)8. 8. State that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer.

Ins 40.04(2)(d)9. 9. Include standards for termination of the agreement with and without cause.

Ins 40.04(2)(d)10. 10. Include provisions for indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services.

Ins 40.04(2)(d)11. 11. Specify that, if the insurer is placed in delinquency proceedings or seized by the commissioner under ch. 645., Stats.:

Ins 40.04(2)(d)11.a. a. All of the rights of the insurer under the agreement extend to the receiver or commissioner.

Ins 40.04(2)(d)11.b. b. All books and records will immediately be made available to the receiver or the commissioner, and shall be turned over to the receiver or commissioner immediately upon the receiver or the commissioner’s request.

Ins 40.04(2)(d)12. 12. Specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership pursuant to ch. 645, Stats.

Ins 40.04(2)(d)13. 13. Specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a delinquency proceeding or seizure by the commissioner under chapter 645, Stats., and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services.

Ins 40.04(2)(e) (e) A transaction not in the ordinary course of business which involves a domestic insurer and either an affiliate of, or a person attempting to acquire control of, a domestic insurer and which involves or exposes to risk an amount equal to or exceeding the lesser of 2% of the domestic insurer’s admitted assets or 10% of policyholder surplus as of the 31st day of December of the immediately preceding calendar year; and

Ins 40.04(2)(f) (f) Any material transactions which the commissioner requires to be reported by order.

Ins 40.04(3) (3) Illegal transactions not authorized. This section does not authorize or permit any transaction which would be otherwise contrary to law.

Ins 40.04(4) (4) Group or series of related transactions. For the purpose of applying sub. (2), a group or series of related transactions shall be treated as if they are a single transaction.

Ins 40.04(5) (5) Subterfuge prohibited. A domestic insurer, person attempting to acquire control of a domestic insurer, person having control of a domestic insurer or affiliate of a domestic insurer may not enter into transactions which are part of a group or series of transactions if the purpose of those separate transactions is to attempt to avoid a threshold amount under this chapter.

Ins 40.04(6) (6) Disapproval. Transactions subject to reporting under sub. (2) may be disapproved by the commissioner under s. 617.21 (3), Stats. No person may enter into or assent to a transaction that is disapproved by the commissioner or which is subject to reporting under sub. (2) but not reported.

Ins 40.04(7) (7) Insurer may report on behalf of affiliate or person attempting to acquire control. A domestic insurer may file a report under sub. (2) on behalf of its affiliate or of the person attempting to acquire control of the insurer. Lack of knowledge that an insurer has not reported on behalf of the affiliate or person or that the report is incomplete or inaccurate is not a defense for the affiliate or person attempting to acquire control of the insurer.

Ins 40.04 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 14-071: r. and recr. Register August 2015 No. 716, eff. 9-1-15; s. 35.17 correction in (2) Register August 2015 No. 716.

Ins 40.05 Ins 40.05 Privileged information. The information required to be filed with the commissioner under to ss. Ins 40.02, 40.025, 40.07, and 40.08, is required pursuant to s. 601.42, Stats., and is subject to s. 601.465, Stats.

Ins 40.05 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 14-071: am. Register August 2015 No. 716, eff. 9-1-15; CR 19-013: am. Register April 2020 No. 772, eff. 5-1-20.

Ins 40.07 Ins 40.07 Designation of the group-wide supervisor of internationally active insurance groups.

Ins 40.07(1) (1) 

Ins 40.07(1)(a) (a) The commissioner is authorized to act as the group-wide supervisor for any internationally active insurance group in accordance with this section. The commissioner may acknowledge that another regulatory official is a more appropriate group-wide supervisor when the internationally active insurance group meets any of the following requirements: