Chapter 616

SCHOOL BENEFIT PLANS

Subch. I of ch. 616 Note NOTE: Chapter 261, laws of 1979, which created this subchapter, contains explanatory notes.

616.03 616.03 Designation of a mutual insurer as a school benefit insurer. A mutual insurer engaged in no activities other than those specified in s. 616.06 may apply to the commissioner for designation as a school benefit insurer. If the commissioner finds that the insurer is engaged in no other activities, the commissioner shall declare it to be a school benefit insurer. As long as the insurer’s activities are thus restricted and it uses the term “school benefit” or its equivalent in its name, it is deemed to be operating under this subchapter, within the meaning of s. 601.31 (2) and shall have the tax exemptions under s. 616.10.

616.03 History History: 1979 c. 261; 1981 c. 314 s. 146.

616.06 616.06 Continuation of existing school benefit plans. A plan directed by schools or school authorities in this state, which was organized under s. 185.991, 1977 stats., prior to May 11, 1980 and is operating on a nonprofit basis without capital stock, may continue to operate under this subchapter, if its purpose is exclusively to provide benefits for accidental injury to or accidental death of pupils attending the school.

616.06 History History: 1979 c. 261.

616.07 616.07 Certificate of authority.

616.07(1) (1) Issuance. Within 90 days after May 11, 1980, each plan authorized under s. 616.06 shall apply to the commissioner for a certificate of authority to continue the business it was doing on that date. The commissioner shall issue the certificate unless the commissioner finds after a hearing that the plan is in substantial or willful noncompliance with the law. No charge may be made for the initial issuance of the certificate under this subsection.

616.07(2) (2) Termination. A certificate issued under sub. (1) remains in force until it is revoked after a hearing for a substantial violation of chs. 600 to 646.

616.07 History History: 1979 c. 261; 1981 c. 314.

616.08 616.08 Organization of new insurers.

616.08(1) (1) General. Except as provided in sub. (2), new insurers may be organized exclusively for the purposes stated in s. 616.06 pursuant to the procedures for mutual insurers specified in ch. 611.

616.08(2) (2) Exceptions.

616.08(2)(a) (a) Sections 611.24 to 611.26 do not apply to insurers organized under this section.

616.08(2)(b) (b) After issuance of the certificate of authority, incorporators of an insurer under this section who have advanced money or incurred obligations for the reasonable and authorized expenses of organization may be reimbursed in cash from the proceeds of subscriptions for bonds and contribution notes, on itemized receipts audited by the commissioner. The total reimbursement may not exceed 5 percent of the amount received for the bonds and notes.

616.08(2)(c) (c) Upon request by the incorporators, the commissioner may modify any requirements in the organizational process specified in ch. 611 if the commissioner considers the modification justified by the simplicity of the proposed operation or by the circumstances surrounding the organizational process.

616.08 History History: 1979 c. 261.

616.09 616.09 Applicability of other statutes.

616.09(1) (1) Existing organizations under s. 616.06.

616.09(1)(a) (a)

616.09(1)(a)1. 1. Except as provided in subd. 2., plans authorized under s. 616.06 are not subject to chs. 600 to 646.

616.09(1)(a)2. 2. Plans authorized under s. 616.06 are subject to s. 610.21, 1977 stats., s. 610.55, 1977 stats., s. 610.57, 1977 stats., and ss. 628.34 to 628.39, 1977 stats., to chs. 600, 601, 620, 625, 627 and 645, to ss. 632.72, 632.755, 632.861, and 632.87, and to this subchapter except s. 616.08.

616.09(1)(b) (b) Plans authorized under s. 616.06 are subject to rules issued under s. 620.03 (3) which are applicable to life insurers.

616.09(1)(c) (c)

616.09(1)(c)1. 1. Plans authorized under s. 616.06 are subject to ch. 185 or 193, as applicable, except that ss. 185.03 (5) and (6), 185.05 (1) (c), 185.55, 185.61, 185.62, 185.63, 185.64, 185.71 to 185.76, 185.81, 193.215 (2) (a) 2., 193.225, 193.301 (9), 193.801, 193.805, 193.905 to 193.971, and those provisions applicable to cooperatives or unincorporated cooperative associations with stock do not apply.

616.09(1)(c)2. 2. In all actions commenced after May 11, 1980, in those provisions of ch. 185 which apply under subd. 1. to plans authorized under s. 616.06, “department” shall be deemed to read “department of financial institutions and commissioner”, except in s. 185.48, where “department” shall be deemed to read “commissioner”.

616.09(1)(d) (d) Each plan authorized under s. 616.06 shall:

616.09(1)(d)1. 1. File with the commissioner for approval its rules and regulations and schedules of the benefits contemplated, together with the forms of agreement entered into with students, parents, guardians or others;

616.09(1)(d)2. 2. File with the commissioner its constitution and bylaws; and

616.09(1)(d)3. 3. Maintain sufficient reserves to discharge its obligations and for any prepayment of dues or fees collected.

616.09(2) (2) Corporations organized under s. 616.08.

616.09(2)(a) (a) Except as provided in par. (b), corporations organized under s. 616.08 are subject to all applicable provisions of chs. 600 to 646.

616.09(2)(b) (b) Corporations organized under s. 616.08 may elect to be subject to one or more of the following sections in place of corresponding provisions of ch. 611: s. 185.11, 185.12, 185.13, 185.14, 185.15, 185.38 or 185.45.

616.09 History History: 1979 c. 261; 1981 c. 205; 1981 c. 314 s. 144; 1987 a. 307, 403; 1991 a. 70; 1995 a. 27; 2005 a. 441; 2007 a. 96; 2021 a. 9; 2021 a. 240 s. 30.

616.10 616.10 Exemption from taxation. Every mutual designated a school benefit insurer under s. 616.03, every plan authorized under s. 616.06, and every corporation organized under s. 616.08 is declared to be a charitable and benevolent corporation, and its property, real, personal and mixed, and its income and property transferred to it, are exempt from taxation as provided in ss. 70.11, 71.26 (1) (a) and 71.45 (1) (a).

616.10 History History: 1979 c. 261; 1987 a. 27 s. 3202 (47) (a); 1987 a. 312 s. 17; 2007 a. 20.

616.14 616.14 Limitations applicable to plans under s. 616.06.

616.14(1) (1) Governing body. The governing body of a plan shall be the same as the governing body of the sponsoring organization, but must have at least 3 members. If the governing body of the sponsoring organization consists of fewer than 3 members, the governing body of the sponsoring organization shall appoint to the governing body of the plan the number of persons necessary to comply with this subsection. Appointments under this subsection shall be made under rules adopted by the governing body of the sponsoring organization.

616.14(2) (2) Size. No plan under s. 616.03, 616.06 or 616.08 may operate unless the plan covers a number of students large enough to give stability to its loss experience.

616.14 History History: 1979 c. 261.

616.18 616.18 Restrictions on transactions.

616.18(1) (1) Voidable transactions. Any material transaction between a plan or corporation authorized under this subchapter and one or more of its management or members of its governing board, or with any person in a position to influence the vote of any member of its governing board or the decision of any of its management or with any person having power to control the plan or corporation is voidable by the plan or corporation unless:

616.18(1)(a) (a) The transaction at the time it is entered into is reasonable and fair to the interests of the plan or corporation and its members;

616.18(1)(b) (b) The transaction has, with full knowledge of its terms and of the interests involved, been approved in advance by the governing board or by the members; and

616.18(1)(c) (c) The transaction has been reported to the commissioner immediately after approval under par. (b).

616.18(2) (2) Excepted transactions.

616.18(2)(a) (a) This section does not apply to policies of insurance issued by the plan or corporation in the normal course of its business.

616.18(2)(b) (b) The commissioner may by rule exempt other classes of transactions from the reporting requirement of sub. (1) (c), if the purposes of this section can be achieved without the report.

616.18 History History: 1979 c. 261.

616.20 616.20 Conversion of plans under s. 616.06 to mutuals under ch. 611 or service insurance corporations under ch. 613.

616.20(1) (1) Authorization. Under a proposal proposed by the officers of a plan operating under s. 616.06 and approved by the commissioner and by a majority of the members voting, the plan may be converted to a mutual under ch. 611 or a service insurance corporation under ch. 613.

616.20(2) (2) Notice and voting rights. Voting on the conversion is required only if the bylaws provide for it. Voting shall be as provided in the bylaws. If voting is required, but there is no notice provision in the bylaws, the officers shall give notice of the plan to convert under sub. (1) to all members entitled to vote on the conversion at least 30 days before the plan is submitted to the members for a vote. Whether or not voting is required, any member who feels aggrieved by the conversion plan may communicate objections to the commissioner who shall give them consideration before approving the plan. If voting is required by the bylaws, the commissioner may not approve the plan until at least 60 days after notice has been given to all members and 30 days after the voting on the plan. In all cases the commissioner may approve the plan only if the conversion plan protects the legitimate interests of the members.

616.20(3) (3) Membership and ownership of assets. Members of the plan shall be the members of the mutual or service insurance corporation created by conversion under this section. Assets of the plan shall become assets of the new corporation, and all existing contracts shall become the contracts of the new corporation.

616.20(4) (4) Liability of officers. If the commissioner approves a conversion under this section, no officer is liable to any member for losses suffered solely as a result of the conversion.

616.20(5) (5) Fees. A new corporation formed under this section is not subject to the fees under s. 601.31 (1) or (2).

616.20 History History: 1979 c. 261.

subch. III of ch. 616 SUBCHAPTER III

PROPERTY SERVICE CONTRACTS

616.50 616.50 Definitions. In this subchapter:

616.50(1) (1) “Administration” includes any of the following activities performed on behalf of a provider:

616.50(1)(a) (a) Approving or disapproving claims, paying claims, or controlling the claims adjustment process.

616.50(1)(b) (b) Arranging for or controlling the purchase of insurance associated with the offering of service contracts.

616.50(1)(c) (c) Maintaining records or submitting filings required under this subchapter on behalf of a provider.

616.50(1)(d) (d) Collecting provider fees from service contract sellers and remitting the provider fees to the provider.

616.50(2) (2) “Administrator” means a person appointed by a provider under s. 616.54 (1) to be responsible for any or all of the administration of service contracts and compliance with this subchapter.

616.50(3) (3) “Commissioner” means the commissioner of insurance.

616.50(4) (4) “Consumer” means an individual who buys other than for purposes of resale any tangible personal property that is distributed in commerce and that is normally used for personal, family, or household purposes and not for business or research purposes.

616.50(5) (5) “Maintenance agreement” means a contract of a specified duration that provides for scheduled maintenance only and does not include repair or replacement.

616.50(6) (6) “Motor vehicle manufacturer” means a person that does or satisfies any of the following:

616.50(6)(a) (a) Manufactures or produces motor vehicles and sells motor vehicles under its own name or label.

616.50(6)(b) (b) Is a subsidiary of the person that manufactures or produces motor vehicles.

616.50(6)(c) (c) Is a corporation that owns 100 percent of the person that manufactures or produces motor vehicles.

616.50(6)(d) (d) Manufactures or produces motor vehicles and sells motor vehicles under the trade name or label of another person that manufactures or produces motor vehicles.

616.50(6)(e) (e) Does not manufacture or produce motor vehicles but, pursuant to a written contract, licenses the use of its trade name or label to another person that manufactures or produces motor vehicles and that sells motor vehicles under the licensor’s trade name or label.

616.50(7) (7) “Nonoriginal manufacturer’s parts” means replacement parts for property that are not made for or by the original manufacturer of the property.

616.50(8) (8) “Provider” means a person that is contractually obligated to a service contract holder under the terms of a service contract.

616.50(9) (9) “Provider fee” means the consideration paid for a service contract.

616.50(10) (10) “Reimbursement insurance policy” means any of the following:

616.50(10)(a) (a) A policy of insurance issued to a provider under the terms of the insured service contracts issued or sold by the provider that, in the event of the provider’s or administrator’s nonperformance, will pay or perform on behalf of the provider or administrator all covered contractual obligations or services under the terms of the insured service contracts issued or sold by the provider.

616.50(10)(b) (b) A policy of insurance issued to a provider that provides the coverage specified in par. (a) and additional coverage that does not conflict with par. (a).

616.50(11) (11) “Service contract” means a contract or agreement for a separately stated consideration for a specific duration to perform the repair, replacement, or maintenance of property, or to provide indemnification for the repair, replacement, or maintenance of property, for the operational or structural failure of property, due to a defect in materials or workmanship, accidental damage from handling, or normal wear and tear, with or without additional provisions for incidental payment of indemnity under limited circumstances, including towing, rental, and emergency road service and road hazard protection. “Service contract” includes a contract or agreement that provides for any of the following:

616.50(11)(a) (a) The repair, replacement, or maintenance of property or indemnification for the repair, replacement, or maintenance of property for damage resulting from a power surge or interruption.

616.50(11)(b) (b) The repair or replacement or indemnification for the repair or replacement of a motor vehicle for the operational or structural failure of one or more parts or systems of the motor vehicle brought about by the failure of an additive product to perform as represented.

616.50(11)(c) (c) The repair or replacement of tires or wheels on a motor vehicle damaged as a result of coming into contact with road hazards including potholes, rocks, wood debris, metal parts, glass, plastic, curbs, or composite scraps.

616.50(11)(d) (d) The removal of dents, dings, or creases on a motor vehicle that can be repaired using the process of paintless dent removal without affecting the existing paint finish and without replacing vehicle body panels, sanding, bonding, or painting.

616.50(11)(e) (e) The repair or replacement of motor vehicle windshield chips or cracks.

616.50(11)(f) (f) The repair of damage to the interior components of a motor vehicle caused by wear and tear, but does not include the replacement of any part or component of a motor vehicle’s interior.

616.50(11)(g) (g) The repair or replacement of a motor vehicle key or key fob in the event that the key or key fob becomes inoperable or is lost or stolen.

616.50(11)(h) (h) The repair, replacement, or maintenance of a motor vehicle, or indemnification for the repair, replacement, or maintenance, for excess wear to the motor vehicle that results in excess wear and use charges at the end of a lease that are assessed by a lessor under a motor vehicle lease agreement, if the value of any benefits under the contract or agreement does not exceed the purchase price of the motor vehicle.