Chapter 612

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.

612.22(7) (7) Certificate of authority. If the requirements of the law are met, the commissioner shall issue a certificate of authority to the surviving mutual. Thereupon the nonsurviving corporations shall cease their legal existence. The surviving mutual shall have all the assets and be liable for all of the obligations of each of the participating corporations.

612.22 History History: 1973 c. 22; 1979 c. 102; 1991 a. 316; 1997 a. 79; 2003 a. 261; 2009 a. 342; 2021 a. 258.

612.23 612.23 Conversion of town mutuals into mutual insurance corporations. One or more town mutuals may be converted into a single mutual insurance corporation under ch. 611, as follows:

612.23(1) (1) Conversion plan. The board of each participating town mutual shall adopt the same plan of conversion by resolution stating:

612.23(1)(a) (a) The reasons for and the purposes of the proposed action;

612.23(1)(b) (b) The proposed terms, conditions and procedures for and estimated expenses of implementing the conversion;

612.23(1)(c) (c) The proposed name of the corporation; and

612.23(1)(d) (d) The proposed articles and bylaws.

612.23(2) (2) Approval by commissioner. The town mutuals shall file with the commissioner for approval the plan together with so much of the information under s. 611.13 (2) as the commissioner reasonably requires. The commissioner shall approve the plan unless the commissioner finds, after a hearing, that it would be contrary to the law, that the new mutual would not satisfy the requirements for a certificate of authority under s. 611.20 or that the plan would be contrary to the interests of insureds or of the public.

612.23(3) (3) Approval by members. After being approved by the commissioner, the plan shall be submitted to the members of each town mutual for their approval.

612.23(4) (4) Election of directors. A plan of conversion shall contain a provision for prompt election of directors if the plan goes into effect. If the plan is approved by the members of each town mutual, directors shall be elected promptly.

612.23(5) (5) Reports to commissioner. Each town mutual shall file with the commissioner a copy of the resolution adopted under sub. (3), 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. Any election of directors under sub. (4) shall also be reported to the commissioner.

612.23(6) (6) Certificate of authority. If the requirements of the law are met, the commissioner shall issue a certificate of authority to the new mutual. Thereupon the nonsurviving town mutuals shall cease their legal existence, the corporate existence of any new mutual shall begin, and the directors elected under sub. (4) shall take office. The new mutual shall have all the assets and be liable for all of the obligations of each of the participating town mutuals. The commissioner may grant a period not exceeding one year for adjustment to the requirements of ch. 611, specifying the extent to which particular provisions of ch. 611 shall not apply.

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

612.24 612.24 Transfer of business.

612.24(1) (1) Approval by members. No action by which a town mutual proposes to transfer to another person or to reinsure any part of its insurance business, other than in the normal and usual course of business, or to sell, lease, exchange, mortgage, pledge or otherwise dispose of all or substantially all of its assets, is effective unless approved by the members.