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To renumber and amend Ins 40.13;
To amend Ins 40.01, 40.05, 40.11, 40.12, 40.14, 40.15, 40.19, and Forms A, B, C, and D of the appendix to Ins 40;
To repeal and recreate Ins 40.02, 40.03, 40.04, 40.13, and Form E of the appendix to Ins 40;
To create Ins 16.01(4) (d), 40.01(4m), 40.025, 40.20, and Forms F and AA of the appendix to Ins 40, Wis. Adm. Code,
Relating to holding company reporting requirements for insurers and affecting small business.
  1.   Statutes interpreted:
ss. 600.01, 601.45, 601.48(1),(20, 617.11(1), 617.12(2), 617.21(1)(d), (2)(a),(b), 617.215, and 601.48(1),(2).
  2.   Statutory authority:
  3.   Explanation of OCI’s authority to promulgate the proposed rule under these statutes:
The statutory authority for these rules are ss. 227.11 (2) (a) and 601.41 (3), Wis. Stat., which provide for the commissioner’s rule making authority in general, and specifically, ss. 617.11 (1), 617.12 (2), 617.21 (1) (d), (2) (a) (b), 617.215 (3), 601.48 (1) (2) and 601.45 (1), Wis. Stats. Section 617.11 (1), Wis. Stat., provides that an insurer shall report “information concerning the insurer and its affiliates that the commissioner requires by rule” and “the commissioner may promulgate rules prescribing the timing of reports under this subsection, including, but not limited to, requiring periodic reporting and the form and procedure for filing reports. Section 617.12 (2), Wis. Stat., requires that commissioner to promulgate rules regarding the filing of an enterprise risk report. Section 617.21 (1) (d), Wis. Stat., provides that regarding transactions with affiliates, the transaction must comply “with any other standard that the commissioner prescribes by rule.” Section 617.21 (2) (a), Wis. Stat., provides that “the commissioner may promulgate rules requiring a domestic insurer, a person attempting to acquire or having control of a domestic insurer and affiliates of a domestic insurer to report a transaction or a group or series of transactions” that are material and involve a domestic insurer or an affiliate. Section 617.21 (2) (b), Wis. Stat., provides that transactions with affiliates may not be entered into unless the transaction is reported “to the commissioner in the form and by the date before the effective date of the transaction that are prescribed by the commissioner by rule.” Section 601.48, Wis. Stat., states that the commissioner may participate in the activities and affairs of “organizations so far as it will, in the judgment of the commissioner, enhance the purposes of chs. 600 to 655” and the commissioner “may exchange information and data and consult with other persons in order to improve and carry out insurance regulation.” Section 601.45 (1), Wis. Stat., provides that the reasonable costs of examination “shall be paid by examinees . . . either on the basis of a system of billing for actual salaries and expenses of examiners and other apportionable expenses, including office overhead, or by a system of regular annual billings to cover the costs relating to a group of companies, or a combination of such systems, as the commissioner may by rule prescribe.” Section 617.215 (3), Wis. Stat., states that insurers that are the subject of a supervisory college “shall pay the reasonable expenses related to the commissioner's participation in supervisory colleges, including reasonable travel expenses. The commissioner may impose a regular assessment on insurers to cover the expenses.
  4.   Related statutes or rules:
  5.   The plain language analysis and summary of the proposed rule:
    The objective of the proposed rule is to modify the reporting requirements for licensed insurers that are a part of an insurance holding company system. Wisconsin’s current rule generally follows the National Association of Insurance Commissioners (“NAIC”) Insurance Holding Company System Regulatory Model Act (Model Act) and Insurance Holding Company System Model Regulation (Model Regulation). The NAIC recently made changes to its Model Act and Model Regulation to modernize the regulation by better addressing transactions involving complex insurance holding company organizations and insurers licensed in multiple jurisdictions. Wisconsin must adopt certain of those changes in substantively the same form as the NAIC Model Act and Model Regulation if the Wisconsin Office of the Commissioner of Insurance (OCI) is to remain a state insurance regulatory agency that is accredited by the NAIC. It is a goal of the OCI and a benefit to domestic insurers for OCI to maintain its accreditation because as an NAIC accredited state, domestic insurers are only subject to certain filing requirements with OCI and financial examination by OCI. Without accreditation, domestic insurers could be subject to financial examination and filing requirements for all jurisdictions in which they operate. This could include examination from all 51 U.S. jurisdictions for some insurers. Without accreditation, the cost of doing business for Wisconsin’s domestic insurance industry would increase because their regulation by other states would increase. In order to maintain accreditation, OCI must adopt certain standard regulations developed by the NAIC. In addition, the changes are similar to those adopted or that will be adopted in other states and work to promote uniformity for insurance holding company systems operating across multiple states.
    The proposed changes to the rule include the development of a preacquisition notice to be filed in acquisitions involving insurers. The rule also requires the annual filing of a confidential enterprise risk report by insurers who are part of a holding company group. The enterprise risk report identifies the material risks within the insurance holding company system that could pose enterprise risk to the insurer. The proposed rule also includes small modifications and clarifications to current reporting requirements. Finally, the rule implements assessments to insurers who are subject to a supervisory college.
  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:
    There are no federal regulations which address these activities.
  7.   Comparison of similar rules in adjacent states as found by OCI:
    Adjacent states have substantially similar provision which may be found at the citations listed below.
Illinois: 215 Ill Comp. Stat. §§ 5/131.1-131.30
Iowa: Iowa Code ch. 521A
Michigan: Mich. Comp. Laws §§ 500.1301-1379
Minnesota: Minn. Stat. ch. 60D
  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 based this rule on the model law and regulations that were adopted by the NAIC and that have been enacted or are in the process of being enacted by all 51 jurisdictions in the United States and Puerto Rico.
  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:
    See the attached Private Sector Fiscal Analysis.
  10.   A description of the Effect on Small Business:
This rule will have little or no effect on small businesses. The enterprise risk report filing must only be made by companies who register as a holding company. The vast majority of companies who have a holding company system would not qualify as a small business. Small insurers, such as town mutual insurers, who also have a captive insurance agency do register as holding companies and would have to file the enterprise risk report. However, because the substance of the enterprise risk reports scales with the complexity of the organization, the effect on small insurers should be minimal and will not require additional resources to comply.
  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:
or by contacting Inger Williams, OCI Services Section, at:
Phone:   (608) 264-8110
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:
The deadline for submitting comments is 4:00 p.m. on the 14th day after the date for the hearing stated in the Notice of Hearing.
Mailing address:
Richard B. Wicka
Legal Unit - OCI Rule Comment for Rule Ins
Office of the Commissioner of Insurance
PO Box 7873
Madison WI 53707-7873
Street address:
Links to Admin. Code and Statutes in this Register are to current versions, which may not be the version that was referred to in the original published document.