Chapter 612

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.

612.24(2) (2) Report to commissioner. The town mutual shall file with the commissioner a copy of any resolution under sub. (1) not less than 30 days in advance of the date of the action proposed to be taken under the resolution, with a statement of the number of members entitled to vote, the number of members voting and the number voting to approve the transfer, stating separately mail votes and votes cast in person. The commissioner may defer the effective date for an additional period not exceeding 30 days by written notice to the town mutual before the expiration of the initial 30-day period.

612.24(3) (3) Disapproval. The commissioner may, within the 30-day period or its extension, prohibit the proposed action if it is contrary to law or to the interests of insureds or the public or if it will make possible the circumvention of any of the requirements of chs. 600 to 646. The commissioner shall prohibit a transfer of all or substantially all of the business unless it is accompanied by a plan for voluntary dissolution under s. 612.25.

612.24 History History: 1973 c. 22; 1977 c. 203 s. 103; 1979 c. 89.

612.25 612.25 Voluntary dissolution of town mutuals. A town mutual may be dissolved in the following way:

612.25(1) (1) Plan for dissolution. The board shall adopt a plan for dissolution stating:

612.25(1)(a) (a) The reasons for the proposed action;

612.25(1)(b) (b) The proposed terms, conditions and procedures for and estimated expenses of implementing the dissolution; and

612.25(1)(c) (c) The financial condition of the town mutual, in such detail as the commissioner reasonably requires.

612.25(2) (2) Submission to commissioner. The town mutual shall file with the commissioner the plan and any explanatory statement proposed to be issued to the members. The commissioner may require that any additional information reasonably necessary to enable the members to make a decision be added to the proposed explanatory statement.

612.25(3) (3) Approval by members and commissioner. The plan shall thereupon be submitted to the members. If the members adopt the plan, the corporation shall file with the commissioner for approval a copy of the resolution of the members, 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 the mail votes and the votes cast in person. The commissioner shall approve the plan unless he or she finds, after a hearing, that the town mutual is insolvent or may become insolvent in the process of dissolution unless it makes an assessment. If an assessment would be required, the commissioner shall institute proceedings under s. 645.41 (10).

612.25(4) (4) Implementation of plan. When the plan has been completely implemented, that fact shall be reported to the commissioner and the commissioner shall certify that the town mutual no longer has a legal existence.

612.25(5) (5) Conversion to ch. 645 liquidation. If it appears at any time that the approved dissolution plan cannot be implemented according to its terms, or that there are grounds for involuntary liquidation, the commissioner may petition under s. 645.41 for liquidation of the town mutual.

612.25 History History: 1973 c. 22; 1979 c. 102 ss. 120, 236 (6).

612.31 612.31 Authorized business.

612.31(1) (1) Property insurance.

612.31(1)(a) (a) General. Subject to other provisions of this section, a town mutual may insure a member against loss or damage from any cause to any property in which the member has an interest.

612.31(1)(b) (b) Extensions.

612.31(1)(b)1. 1. Insurance authorized under par. (a) may include insurance against loss of use of or loss of income from property including interruption of business activity caused by loss or damage to the property.

612.31(1)(b)2. 2. Insurance authorized under par. (a) may include replacement cost coverage.

612.31(2) (2) Limitations on property insurance.

612.31(2)(a) (a) Windstorm and hail insurance.

612.31(2)(a)1. 1. No town mutual may insure a member against loss to growing crops by windstorm or hail.

612.31(2)(a)2. 2. No town mutual may insure a member against loss to property by windstorm or hail unless approval of the members is obtained under s. 612.12.

612.31(2)(a)3. 3. A town mutual insuring a member against loss to property by windstorm or hail must obtain reinsurance under s. 612.33 (2) (a).

612.31(2)(b) (b) Burglary and plate glass. A town mutual may insure a member against loss of property by burglary or theft or against the breakage of glass whether in a specified location or in transit but may do so only as a coverage supplemental to fire and extended coverage insurance on the property.

612.31(2)(c) (c) Limitations by rule. The commissioner may by rule exclude any insurance authorized under sub. (1) or (3) if he or she finds that it cannot be successfully transacted by town mutuals without endangering the interests of insureds or the public.