Chapter 612

612.02(6)(b) (b) Is satisfied that the proposed directors and officers are trustworthy and individually competent for the tasks assigned them and that collectively they have the competence and experience to administer the affairs of the proposed town mutual;

612.02(6)(c) (c) Is satisfied that the total amount initially at risk and its distribution permit a sound insurance operation; and

612.02(6)(d) (d) Is satisfied that the business plan is consistent with the interests of the members and of the public.

612.02(7) (7) Contents of certificate. The certificate of authority shall specify the territories and types of insurance authorized and the surplus required under sub. (5).

612.02(8) (8) Effect of certificate. Upon issuance of the certificate of authority, the town mutual shall have legal existence.

612.02 History History: 1973 c. 22; 1979 c. 102 ss. 114, 236 (5), (7); 1985 a. 189; 2015 a. 90; 2015 a. 197 s. 51.

612.03 612.03 General powers and effect of unauthorized corporate acts. Sections 181.0302 (intro.), (1) to (8), (11) to (13), (18) and (19) and 181.0304 apply to town mutuals, except that references to “attorney general” shall be read as “commissioner”. Section 181.0302 (7) is subject to s. 612.35.

612.03 History History: 1973 c. 22; 1979 c. 110; 1983 a. 192; 1987 a. 13; 1997 a. 79.

612.04 612.04 Amendments of articles, bylaws and business plan.

612.04(1) (1) Right to amend articles and make and amend bylaws. Sections 181.0207 and 181.1001 apply to town mutuals. A town mutual may make and amend bylaws as provided by the articles or, in the absence of any such provision, in the same manner as the articles may be made or amended.

612.04(2) (2) Approval required. No change in the articles or bylaws or in the business plan is effective until approved by the commissioner, nor may a town mutual depart from its business plan except with the commissioner’s approval. No change may be made inconsistent with s. 612.02 (2). Section 181.1008 applies to town mutuals.

612.04(3) (3) Grounds for disapproval. The commissioner shall approve the change unless he or she finds, after a hearing, that it would be:

612.04(3)(a) (a) Contrary to law; or

612.04(3)(b) (b) Inconsistent with the interests of the members or of the public.

612.04 History History: 1973 c. 22; 1977 c. 203; 1979 c. 102 ss. 115, 236 (5); 1997 a. 79.

612.10 612.10 Membership.

612.10(1) (1) Creation and duration of membership. Each policyholder is a member of the town mutual and has all the rights and duties of a member during the time his or her policy is in effect. The articles or bylaws may establish rules determining which of multiple policyholders on the same policy shall exercise voting rights or how such multiple policyholders may divide voting rights among them.

612.10(2) (2) Mortgagee not a member. A person having rights merely by reason of a mortgagee clause included in or attached to a policy does not thereby become a member.

612.10 History History: 1973 c. 22; 1979 c. 102 s. 236 (13).

612.11 612.11 Meetings of members.

612.11(1) (1) Place of meetings. All meetings of members shall be held within the territorial limits of the town mutual, except under s. 612.21 (4).

612.11(2) (2) Notice of meeting.

612.11(2)(a) (a) Annual meeting. Notice of the time and place of the annual meeting shall be given to each member by printing it conspicuously on each policy or in any other reasonable manner that the commissioner approves. A change in time or place may be made by the board of directors by giving notice at least 10 days prior to the original date and 30 days prior to the new date.

612.11(2)(b) (b) Special meetings. Notice of special meetings shall be given to members at least 30 days prior to the date of the meeting, and shall state the proposed business to be brought before the meeting.

612.11(3) (3) Commissioner’s right to attend. The commissioner may attend any meeting of members.

612.11 History History: 1973 c. 22; 1997 a. 79.

612.12 612.12 Voting rights of members.

612.12(1) (1) Matters subject to vote. Members of town mutuals shall have the right to vote on the following matters:

612.12(1)(a) (a) Election of directors;

612.12(1)(b) (b) Amendment of articles;

612.12(1)(c) (c) Merger, transfer of business under s. 612.24, conversion and voluntary dissolution;

612.12(1)(d) (d) Any decision by the town mutual to transact insurance for which reinsurance is required under s. 612.33 (2), unless such insurance is totally reinsured; and

612.12(1)(e) (e) Other matters specified in the articles or bylaws.

612.12(2) (2) Special notices and majorities. No resolution on any of the matters specified in sub. (1) (c) or (d) is effective unless notice of the matter has been given as required for a special meeting under s. 612.11 (2) (b); nor unless it is approved by at least 25 members and by two-thirds of the members voting on the resolution.

612.12(3) (3) Nominating procedures. The articles or bylaws may provide for nominating committees, and for their procedures. Nominations from the floor may not be excluded.

612.12(4) (4) Voting procedures.

612.12(4)(a) (a) Allocation of votes. Except under s. 612.10 (1), each member is entitled to one vote. No person may have more than one vote regardless of the number of policies issued to that person.

612.12(4)(b) (b) Proxies. No member may vote by proxy.

612.12(4)(c) (c) Mail voting. The articles or bylaws may provide that votes may be cast by mail, and may prescribe the voting procedure. If voting by mail is authorized, a ballot shall be sent to each member at least 30 days before the meeting at which the decision is to be made, setting out the exact question to be voted upon. A vote signed by a member and delivered before the meeting in accordance with the prescribed voting procedure is equivalent to a vote at the meeting. No question on which there is voting by mail may be amended in any way at the meeting.

612.12 History History: 1973 c. 22; 1991 a. 316; 1997 a. 79.

612.13 612.13 Directors and officers.

612.13(1) (1) Number and classification. Town mutuals shall have at least 5 directors divided into 3 classes as nearly equal in size as possible.

612.13(1m) (1m) Inside directors.

612.13(1m)(a) (a) Beginning 2 years after April 30, 2004, all of the following apply:

612.13(1m)(a)1. 1. If a town mutual has fewer than 9 directors, no more than one director may be an employee or representative of the town mutual.

612.13(1m)(a)2. 2. Employees and representatives of a town mutual may not constitute a majority of its board.

612.13(1m)(b) (b) Notwithstanding par. (a), the commissioner may allow a town mutual an extension of up to one year to come into compliance with the requirements under par. (a).

612.13(2) (2) Election. At each annual meeting one class of directors shall be elected by and from among the members for a term of 3 years.

612.13(3) (3) Duties. The board shall direct the business and affairs of the corporation and shall not delegate its power or responsibility to any person except as specifically provided otherwise in this chapter.

612.13(4) (4) Adjustment committee. The directors may annually appoint from their own number an adjustment committee of at least 3 persons, to adjust or supervise the adjustment of losses under s. 612.53. If no adjustment committee is appointed, the entire board shall act as the adjustment committee to adjust or supervise the adjustment of losses under s. 612.53.

612.13(5) (5) Directors’ liability and indemnification. Directors who willfully neglect or refuse for 30 days to perform their duties under s. 612.54 shall be jointly and severally liable to any person sustaining loss by their nonfeasance. Section 611.62 applies to town mutuals.

612.13(6) (6) Removal.

612.13(6)(a) (a) Directors. A director may be removed from office for cause by an affirmative vote of a majority of the full board at a meeting of the board called for that purpose. The vote of two-thirds of the members of the town mutual present at a meeting called for the purpose may remove a director from office with or without cause.

612.13(6)(b) (b) Officers. Sections 181.0843 and 181.0844 apply to town mutuals.

612.13 History History: 1973 c. 22; 1997 a. 79; 2003 a. 261; 2015 a. 90.

612.14 612.14 Reports. An officer or person designated by an officer of the company shall present to the annual meeting written reports showing the condition of the town mutual on the previous December 31 and its activity during the preceding calendar year, including any information required to be presented by the articles or bylaws or by the commissioner. The officer or person designated by an officer shall include in the reports a sufficient level of information to reasonably inform members about the financial condition of the town mutual.

612.14 History History: 1973 c. 22; 2015 a. 90.

612.15 612.15 Supervision of management changes.

612.15(1) (1) Elections.

612.15(1)(a) (a) Report. The name and residence of each person selected as a director or officer of a town mutual, and such pertinent biographical data and financial information as the commissioner may reasonably require by rule, shall be reported to the commissioner immediately after the selection.

612.15(1)(b) (b) Disapproval. The commissioner, after a hearing called within 30 days after receipt of a report under par. (a), may disapprove any person selected who for any reason is unqualified to serve, who is not trustworthy or who lacks the competence and experience necessary to discharge his or her responsibilities.

612.15(2) (2) Report of removal. Whenever the board or a member’s meeting removes a director or officer under s. 612.13 (6) or otherwise before the expiration of his or her term, the board shall promptly report to the commissioner the removal and a statement of the reasons therefor.

612.15(3) (3) Removal by commissioner. If the commissioner finds, after a hearing, that a director or officer is for any reason unqualified to serve, is incompetent or untrustworthy, or has willfully violated chs. 600 to 646, a rule promulgated under s. 601.41 (3) or an order issued under s. 601.41 (4), and that thereby the interests of members or of the public are endangered, the commissioner shall by order remove the director or officer.

612.15(4) (4) Changes of place of office. If the articles designate the residence or business address of a specified corporate officer as the place of the principal office of the town mutual, any change of such address shall be reported promptly to the commissioner.

612.15 History History: 1973 c. 22; 1979 c. 89; 1979 c. 102 s. 236 (13); 1991 a. 316.

612.16 612.16 Exclusive agency and management contracts. Sections 611.66 and 611.67 apply to town mutuals.

612.16 History History: 1973 c. 22.

612.18 612.18 Transactions with affiliates and in which directors and others are interested. Sections 611.60 and 611.61 apply to town mutuals.

612.18 History History: 1973 c. 22; 1979 c. 102.

612.21 612.21 Merger of town mutuals.

612.21(1) (1) Conditions for merger. Two or more town mutuals authorized to operate in all or part of the same or in contiguous territories not exceeding 16 counties altogether may merge into one of the constituent town mutuals, or into a new town mutual, under the procedure provided in this section.

612.21(2) (2) Plan of merger. The board of each participating town mutual shall adopt the same plan of merger by resolution stating:

612.21(2)(a) (a) The reasons for and the purposes of the proposed action;

612.21(2)(b) (b) The proposed terms, conditions and procedures for and estimated expenses of implementing the merger;

612.21(2)(c) (c) The proposed name of the surviving or new town mutual and the location of its principal office; and

612.21(2)(d) (d) The proposed articles and bylaws for the surviving or new town mutual.

612.21(3) (3) Approval by commissioner. Each of the participating town mutuals shall file with the commissioner for approval a copy of the resolution and any explanatory statement proposed to be issued to the members, together with so much of the information under s. 612.02 (4) for the surviving or new town mutual as the commissioner reasonably requires. The commissioner shall approve the plan unless he or she finds, after a hearing, that it would be contrary to the law, or that the surviving or new town mutual would not satisfy the requirements for a certificate of authority under s. 612.02 (6), or that the plan would be contrary to the interests of insureds or of the public.

612.21(4) (4) Approval by members. After being approved by the commissioner under sub. (3), the plan shall be submitted for approval to the members of each participating town mutual in a special joint meeting to be held within the territorial limits of one of the participating town mutuals. The members of each town mutual shall vote separately.

612.21(6) (6) Reports to commissioner. Each participating town mutual shall file with the commissioner a copy of the resolution adopted under sub. (4), stating the number of members entitled to vote, the number of members voting and the number of votes cast in favor of the plan, stating separately in each case the mail votes and the votes cast in person.

612.21(7) (7) Certificate of authority. If the requirements of the law are met, the commissioner shall issue a certificate of authority to the surviving town mutual. Thereupon the nonsurviving town mutuals shall cease their legal existence. The surviving town mutual shall have all the assets and be liable for all of the obligations of each of the participating town mutuals.

612.21 History History: 1973 c. 22; 1979 c. 102; 1985 a. 189; 1991 a. 316; 1997 a. 79.

612.22 612.22 Merger of town mutuals and mutual insurance corporations.

612.22(1) (1) Conditions for merger. One or more town mutuals may merge with a single domestic mutual under ch. 611. If the domestic mutual is nonassessable, the surviving corporation shall be a mutual under ch. 611. If the domestic mutual is assessable, the surviving corporation may be either a mutual under ch. 611 or a town mutual under this chapter.

612.22(2) (2) Plan of merger. The board of each participating corporation shall adopt the same plan of merger under s. 181.1102 (1), by resolution containing all of the items described in s. 181.1102 (1) (a) to (f), and s. 181.1102 shall apply.

612.22(3) (3) Approval by commissioner.

612.22(3)(a) (a) Each of the participating corporations shall file with the commissioner for approval a copy of the resolution and any explanatory material proposed to be issued to the members who have the right to vote on the merger under sub. (4), together with so much of the information under s. 611.13 (2) or 612.02 (4), whichever is appropriate, for the surviving or new corporation as the commissioner reasonably requires. The commissioner shall approve the plan unless he or she finds, after a hearing, that it would be contrary to the law, or that the surviving or new corporation would not satisfy the requirements for a certificate of authority under s. 611.20 or 612.02 (6), whichever is appropriate, or that the plan would be contrary to the interest of insureds or of the public.

612.22(3)(b) (b) If the surviving corporation will be a town mutual, the plan filed with the commissioner under par. (a) shall include a time schedule for bringing the surviving corporation into compliance with this chapter. The commissioner may approve a reasonable time schedule that does not exceed 3 years.

612.22(4) (4) Approval by members of the mutuals. After being approved by the commissioner under sub. (3), the plan shall be submitted for approval to the members of the participating town mutual or mutuals and to the members of the participating domestic mutual if the domestic mutual is assessable. The members of each participating mutual who have the right to vote on the merger shall vote separately.

612.22(6) (6) Reports to commissioner. Each participating mutual, the members of which have the right to vote under sub. (4), shall file with the commissioner a copy of the resolution adopted under sub. (4), stating the number of members entitled to vote, the number of members voting, and the number of votes cast in favor of the plan, stating separately in each case the mail votes and the votes cast in person.