ORDER OF THE OFFICE OF THE COMMISSIONER OF INSURANCE AMENDING, CREATING AND REPEALING A RULE
Office of the Commissioner of Insurance
The Commissioner of Insurance proposes an order to amend INS 51.01 (21), INS 51.80 (3) (a) 1., INS 51.80 (3) (a) 2., INS (3) (a) 3., and INS 51.80 (6); and to create INS 51.80 (3) (a) 3e., INS 51.80 (3) (a) 3m., INS 51.80 (3) (a) 3s., and INS 51.80 (6m), relating to capital requirements for insurers.
The statement of scope for this rule SS: 160-20 was approved by the Governor on December 11, 2020, published in Register No.780A3, on December 21, 2020, and approved by the Commissioner on January 13, 2021. The proposed rule was approved by the Governor on January 5, 2023, to submit to the Legislature, and submitted to the Legislature on January 10, 2023. The rule passed through Senate and Assembly committees and the Joint Committee for Review of Administrative Rules on April 6, 2023 (Senate) and April 12, 2023 (Assembly) with no action taken.
ANALYSIS PREPARED BY THE OFFICE OF THE COMMISSIONER OF INSURANCE (OCI)
2. Statutory authority:
3. Explanation of OCI’s authority to promulgate the proposed rule under these statutes:
The Commissioner has the general authority to promulgate rules necessary to administer and enforce Wis. Stats. chs. 600 to 655, and as provided in Wis. Stat. § 601.41 (3) (a), has “rule-making authority” under Wis. Stat. § 227.11 (2). Wis. Stat. § 623.11 (2) requires the Commissioner to establish by rule the minimum ratios for the compulsory surplus in relation to any relevant variables, including amounts at risk, premiums written or earned, liabilities, and equity investments. 4. Related statutes or rules:
Wis. Adm. Code Ins ch. 51, Wisconsin Statutes Section 623.11. 5. The plain language analysis and summary of the proposed rule:
The proposed rule will modify the compulsory surplus requirement for insurers offering Medicare stand-alone drug coverage, variable business, and medical malpractice insurance to be reflective of the risk and amount of compulsory surplus required to be maintained. Additionally, the proposed rule will add provisions regarding premiums for health insurers for purposes of Wis. Admin. Code § Ins 51.80 and will correct a citation cross reference in Wis. Admin. Code § Ins 51.01. 6. Summary of, and preliminary comparison with, any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule:
NA
7. Comparison of similar rules in adjacent states as found by OCI:
Illinois: 215 ILL. COMP. STAT. 5/35A-1 to 5/35A-70 (“risk-based capital law”)
Iowa: IOWA CODE §§ 521E.1 to 521E.12 (“risk-based capital requirements for insurers”)
Michigan: BULLETIN 2013-21-INS (regarding risk-based capital levels for insurers)
Minnesota: MINN. STAT. §§ 60A.60 to 60A.696 (“regulation of risk-based capital”)
8. A summary of the factual data and analytical methodologies that OCI used in support of the proposed rule and how any related findings support the regulatory approach chosen for the proposed rule:
OCI has issued orders to insurers who offer stand-alone Medicare, variable life and medical malpractice polices in which the agency provided more refined approaches to compulsory surplus requirements in line with the proposed changes in this rule. The intent of the rule is to adopt the factors that OCI has currently been modifying through specific company orders as industry-wide standards for simplicity and uniformity.
9. Any analysis and supporting documentation that OCI used in support of OCI’s determination of the rule’s effect on small businesses under s. 227.114: The proposed rule would modify surplus requirements for stand-alone Medicare, variable business, and medical malpractice insurance products. OCI is not aware of any insurers that issue these type of products that would be considered a small business.
10. A description of the Effect on Small Business:
This rule will have little or no effect on small businesses.
11. Agency contact person:
A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the web site at: https://oci.wi.gov/Pages/Regulation/RulesCurrentlyPending.aspx or by contacting Karyn Culver at: Phone: (608) 267-9586
Address: 125 South Webster St – 2nd Floor, Madison WI 53703-3474
Mail: PO Box 7873, Madison, WI 53707-7873
12. Place where comments are to be submitted and deadline for submission:
Persons wishing to testify or provide oral or written comments regarding the proposed administrative rule may appear during the hearing. Additionally, the rule may be reviewed and comments made at https://docs.legis.wisconsin.gov/code or sent to the following: The deadline for submitting comments is 4:00 p.m. on December 2, 2022.
Written comments can be mailed or hand-delivered to:
Legal Unit – OCI Rule Comment for Rule Ins 51
Office of the Commissioner of Insurance
125 South Webster St – 2nd Floor
Madison WI 53703-3474
The proposed rule changes are:
SECTION 1. Ins 51.01 (21) is amended to read:
“Risk based capital plan” means a comprehensive financial plan containing the elements specified in s. Ins 50.15 (1)51.15 (1).
