Chapter 645

645.72   Distribution of assets.

645.73   Unclaimed and withheld funds.

645.74   Termination of proceedings.

645.75   Reopening liquidation.

645.76   Disposition of records during and after termination of liquidation.

645.77   External audit of receiver’s books.

SUBCHAPTER IV

INTERSTATE RELATIONS

645.81   Conservation of property of foreign or alien insurers found in this state.

645.82   Liquidation of property of foreign or alien insurers found in this state.

645.83   Foreign domiciliary receivers in other states.

645.84   Ancillary formal proceedings.

645.85   Ancillary summary proceedings.

645.86   Claims of nonresidents against insurers domiciled in this state.

645.87   Claims of residents against insurers domiciled in reciprocal states.

645.88   Attachment, garnishment and levy of execution.

645.89   Interstate priorities.

645.90   Subordination of claims for noncooperation.

Ch. 645 Cross-reference Cross-reference: See definitions in ss. 600.03 and 628.02.

subch. I of ch. 645 SUBCHAPTER I

GENERAL PROVISIONS

645.01 645.01 Short title, construction and purpose.

645.01(1) (1) Short title. This chapter may be cited as the “Insurers Rehabilitation and Liquidation Act”.

645.01(2) (2) Construction: no limitation of powers. This chapter shall not be interpreted to limit the powers granted the commissioner by other provisions of the law.

645.01(3) (3) Liberal construction. This chapter shall be liberally construed to effect the purpose stated in sub. (4).

645.01(4) (4) Purpose. The purpose of this chapter is the protection of the interests of insureds, creditors, and the public generally, with minimum interference with the normal prerogatives of proprietors, through:

645.01(4)(a) (a) Early detection of any potentially dangerous condition in an insurer, and prompt application of appropriate corrective measures, neither unduly harsh nor subject to the kind of publicity that would needlessly damage or destroy the insurer;

645.01(4)(b) (b) Improved methods for rehabilitating insurers, by enlisting the advice and management expertise of the insurance industry;

645.01(4)(c) (c) Enhanced efficiency and economy of liquidation, through clarification and specification of the law, to minimize legal uncertainty and litigation;

645.01(4)(d) (d) Equitable apportionment of any unavoidable loss;

645.01(4)(e) (e) Lessening the problems of interstate rehabilitation and liquidation by facilitating cooperation between states in the liquidation process, and by extension of the scope of personal jurisdiction over debtors of the insurer outside this state; and

645.01(4)(f) (f) Regulation of the insurance business by the impact of the law relating to delinquency procedures and substantive rules on the entire insurance business.

645.01 History History: 1979 c. 89, 102, 177.

645.01 Annotation Although the circuit court had subject matter jurisdiction, because New Jersey has adopted insurance rehabilitation legislation similar to ch. 645 that seeks to satisfy the same policy objectives as ch. 645, the principal of comity required the court to yield to the rehabilitation court in New Jersey and dismiss the claim of a Wisconsin resident against the insurer. Isermann v. MBL Life Assurance Corp. 231 Wis. 2d 136, 605 N.W.2d 210 (Ct. App. 1999), 98-2846.

645.02 645.02 Persons covered. The proceedings authorized by this chapter may be applied to all of the following:

645.02(1) (1) All insurers who are doing, or have done, an insurance business in this state, and against whom claims arising from that business may exist now or in the future.

645.02(2) (2) All insurers who purport to do an insurance business in this state.

645.02(3) (3) All insurers who have insureds resident in this state.

645.02(4) (4) All other persons organized or in the process of organizing with the intent to do an insurance business in this state.

645.02(5) (5) All service insurance corporations under ch. 613 and all fraternals as defined in s. 614.01.

645.02(6) (6) All licensees under ch. 616.

645.02(7) (7) All health maintenance organizations, limited service health organizations and preferred provider plans organized under ss. 185.981 to 185.985.

645.02 History History: 1975 c. 223, 373, 374; 1979 c. 93, 261, 355; 1985 a. 29; 2013 a. 271.

645.03 645.03 Definitions.

645.03(1) (1) General definitions. For the purposes of this chapter:

645.03(1)(a) (a) “Ancillary state” means any state other than a domiciliary state.

645.03(1)(b) (b) “Delinquency proceeding” means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer, and any summary proceeding under ss. 645.21 to 645.24.

645.03(1)(c) (c) “Domiciliary state” means the state in which an insurer is incorporated or organized or, in the case of an alien insurer, the state in which the insurer has, at the commencement of delinquency proceedings, the largest amount of its assets held in trust and on deposit for the benefit of policyholders and creditors in the United States.

645.03(1)(d) (d) “Fair consideration” is given for property or an obligation:

645.03(1)(d)1. 1. When in exchange for such property or obligation, as a fair equivalent therefor, and in good faith, property is conveyed or services are rendered or obligation is incurred or an antecedent debt is satisfied; or

645.03(1)(d)2. 2. When such property or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared to the value of the property or obligation obtained.

645.03(1)(e) (e) “General assets” means all property, real, personal or otherwise, not specifically mortgaged, pledged, deposited or otherwise encumbered for the security or benefit of specified persons or limited classes of persons, and as to specifically encumbered property the term includes all such property or its proceeds in excess of the amount necessary to discharge the sums secured thereby. Assets held in trust and on deposit for the security or benefit of all policyholders or all policyholders and creditors, in more than a single state, shall be treated as general assets.

645.03(1)(f) (f) “Insurer” means any person who is doing, has done, purports to do or is licensed to do an insurance business and is or has been subject to the authority of, or to liquidation, rehabilitation, reorganization or conservation by, a commissioner. For purposes of this chapter, all other persons included under s. 645.02 shall be deemed to be insurers.

645.03(1)(g) (g) “Preferred claim” means any claim with respect to which the law accords priority of payment from the general assets of the insurer.

645.03(1)(h) (h) “Receiver” means receiver, liquidator, rehabilitator or conservator, as the context requires.

645.03(1)(i) (i) “Reciprocal state” means any state other than this state in which in substance and effect ss. 645.42 (1), 645.83 (1) and (3), 645.84 and 645.86 to 645.89 are in force, and in which provisions are in force requiring that the commissioner be the receiver of a delinquent insurer, and in which some provision exists for the avoidance of fraudulent conveyances and preferential transfers.

645.03(1)(j) (j) “Secured claim” means any claim secured by mortgage, trust deed, pledge, deposit as security, escrow or otherwise, but not including special deposit claims or claims against general assets. The term also includes claims which have become liens upon specific assets by reason of judicial process, except where they have been invalidated.

645.03(1)(k) (k) “Special deposit claim” means any claim secured by a deposit made pursuant to law for the security or benefit of one or more limited classes of persons, but not including any claim secured by general assets.

645.03(1)(L) (L) “Transfer” includes the sale and every other method, direct or indirect, of disposing of or of parting with property or with an interest therein or with the possession thereof or of fixing a lien upon property or upon an interest therein, absolutely or conditionally, voluntarily or involuntarily, by or without judicial proceedings. The retention of a security title to property delivered to a debtor shall be deemed a transfer suffered by the debtor.

645.03(2) (2) Definitions applicable to proceedings involving surety insurance. If the subject of a rehabilitation or liquidation proceeding under this chapter is an insurer engaged in a surety business:

645.03(2)(a) (a) “Beneficiary” as used in this chapter includes an obligee of a bond.

645.03(2)(b) (b) “Insured” as used in this chapter includes both the principal and obligee of a bond.

645.03(2)(c) (c) “Policy” as used in this chapter includes a bond issued by a surety.

645.03(2)(d) (d) “Policyholder” as used in this chapter includes a principal on a bond.

645.03 History History: 1971 c. 260; 1979 c. 93; 1983 a. 189.

645.035 645.035 Bankruptcy petition is prohibited.

645.035(1) (1) In this section, “bankruptcy proceeding” means any proceeding under 11 USC 101 to 1330.

645.035(2) (2) No insurer may commence a bankruptcy proceeding in which the insurer is a debtor.

645.035(3) (3) No person, including an insurer, may commence a bankruptcy proceeding against an insurer.

645.035(4) (4) No board of directors, director or officer of an insurer may authorize the commencement of a bankruptcy proceeding in which the insurer is a debtor or the commencement of a bankruptcy proceeding against an insurer. Any act, resolution, filing or other matter that purports to authorize the commencement of a bankruptcy proceeding in which the insurer is a debtor or against an insurer is void and without effect.

645.035(5) (5) This section applies to all insurers, including but not limited to an insurer doing business as a health maintenance organization, as defined in s. 609.01 (2).

645.035 History History: 1989 a. 23.

645.04 645.04 Jurisdiction and venue.

645.04(1) (1) Actions by commissioner. Except as provided in sub. (2) and s. 645.45 (1), no delinquency proceeding may be commenced under this chapter by anyone other than the commissioner of this state and no court has jurisdiction to entertain, hear or determine any proceeding commenced by any other person.

645.04(2) (2) Actions by judgment creditors.

645.04(2)(a) (a) The judgment creditors of 3 or more unrelated judgments may commence proceedings under the conditions and in the manner prescribed in this subsection, by serving notice upon the commissioner and the insurer of intention to file a petition for liquidation under s. 645.41 or 645.82. Each of the judgments must:

645.04(2)(a)1. 1. Have been rendered against the insurer by a court in this state having jurisdiction over the subject matter and the insurer;

645.04(2)(a)2. 2. Have been entered more than 60 days before the service of notice;

645.04(2)(a)3. 3. Not have been paid in full;

645.04(2)(a)4. 4. Not be the subject of a valid contract between the insurer and any judgment creditor for payment of the judgment, unless the contract has been breached by the insurer; and

645.04(2)(a)5. 5. Not be a judgment on which an appeal or review is pending.

645.04(2)(b) (b) If any one of the judgments in favor of a petitioning creditor remains unpaid for 30 days after service of the notice, and the commissioner has not then filed a petition for liquidation, the creditor may file in the name of the commissioner a verified petition for liquidation of the insurer under s. 645.41 or 645.82 alleging the conditions stated in this subsection. The commissioner shall be served and joined in the action.

645.04(3) (3) Exclusiveness of proceedings; arbitration clauses. No court of this state has jurisdiction to entertain, hear or determine any complaint praying for the dissolution, liquidation, rehabilitation, sequestration, conservation or receivership of any insurer, or praying for an injunction or restraining order or other relief preliminary to, incidental to or relating to such proceedings other than in accordance with this chapter. An arbitration provision of any contract with an insurer that is subject to a delinquency proceeding under subch. III is not enforceable unless the receiver elects to accept arbitration. Only the court that has jurisdiction of the delinquency proceeding may entertain, hear or determine any matter that otherwise would be subject to an arbitration provision.

645.04(4) (4) Change of venue. Venue for proceedings arising under this chapter shall be laid initially as specified in this chapter. All other actions and proceedings initiated by the receiver may be commenced and tried where the delinquency proceedings are then pending, or where venue would be laid by ss. 801.50 to 801.62 or other applicable law. All other actions and proceedings against the receiver shall be commenced and tried in the county where the delinquency proceedings are pending. At any time upon motion of any party, venue may be changed by order of the court or the presiding judge thereof to any other circuit court in this state, as the convenience of the parties and witnesses and the ends of justice may require. This subsection relates only to venue and is not jurisdictional.

645.04(5) (5) Personal jurisdiction, grounds for. In addition to other grounds for jurisdiction provided by the law of this state, a court of this state having jurisdiction of the subject matter has jurisdiction over a person served pursuant to s. 801.11 in an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this state:

645.04(5)(a) (a) If the person served is obligated to the insurer in any way as an incident to any agency or brokerage arrangement that may exist or has existed between the insurer and the agent or broker, in any action on or incident to the obligation;

645.04(5)(b) (b) If the person served is a reinsurer who has at any time written a policy of reinsurance for an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, or is an agent or broker of or for the reinsurer, in any action on or incident to the reinsurance contract; or

645.04(5)(c) (c) If the person served is or has been an officer, manager, trustee, organizer, promoter or person in a position of comparable authority or influence in an insurer against which a rehabilitation or liquidation order is in effect when the action is commenced, in any action resulting from the relationship with the insurer.