Chapter Ins 13
TOWN MUTUAL INSURANCE
Ins 13.01 Other rules applicable to town mutual insurers. Ins 13.02 Definitions, usages, synonyms and abbreviations. Ins 13.03 Organization of town mutuals. Ins 13.04 Undertaking to pay premiums and assessments and contract forms. Ins 13.05 Accounting records, accounting controls and reports. Ins 13.06 Surplus requirements. Ins 13.08 Valuation of liabilities. Ins 13.01Ins 13.01 Other rules applicable to town mutual insurers. The following chapter and sections of the Wisconsin Administrative Code are applicable to town mutual insurers: Ins 13.01(7)(7) Section Ins 6.76 GROUNDS FOR DISAPPROVAL OF AND AUTHORIZED CLAUSES FOR FIRE, INLAND MARINE AND OTHER PROPERTY INSURANCE FORMS. Ins 13.01 HistoryHistory: Cr. Register, August, 1974, No. 224, eff. 9-1-74, emerg. r. (1) (b) eff. 6-22-76; r. (1) (b), Register, September, 1976, No. 249, eff. 12-1-76; r. and recr., Register, April, 1982, No. 316, eff. 5-1-82. Ins 13.02Ins 13.02 Definitions, usages, synonyms and abbreviations. Ins 13.02(1)(1) “Admitted assets” as used in this chapter includes the total of ledger assets, plus the total of nonledger assets, less the total assets not admitted as determined in the annual report filed with the office of the commissioner of insurance. Ins 13.02(2)(2) “Gross income” as used in this chapter includes premiums written and assessments collected on direct business and from reinsurance assumed, policy and membership fees, interest and dividend income from investments, gains on investments, rental income from real estate investments and miscellaneous income. Ins 13.02 HistoryHistory: Cr. Register, August, 1974, No. 224, eff. 9-1-74. Ins 13.03Ins 13.03 Organization of town mutuals. Ins 13.03(1)(1) Purpose. This rule is promulgated to implement, interpret and set forth procedural requirements necessary to carry out the purpose and provisions of s. 612.02, Stats. Ins 13.03(2)(2) Scope. This rule shall apply to all town mutual insurers organized or operating under ch. 612, Stats. Ins 13.03(3)(3) Model articles. Town mutual insurers may adopt articles of incorporation with provisions as follows: ARTICLES OF INCORPORATION
Article I. The name of this corporation is _________ Insurance Company, and the principal office for the transaction of business is located at___________, county of _____________, (or: at the residence or the business office of the ________________ (a specified officer of the company)) state of Wisconsin.
Article II. (1) The business of the corporation is:
(a) Fire and extended coverage insurance, including (excluding) windstorm and hail;
(b) Other property insurance customarily provided with fire insurance, to the extent authorized by statute or rule;
(c) Non-property insurance customarily provided with fire and extended coverage insurance to the extent authorized by statute or rule.
(2) The corporation may insure any property located within the territory specified in the articles, but not elsewhere except as authorized by statute.
(3) The corporation may do business in all of the towns, villages and cities within the county (ies) _______________ of (not more than 8 unless specifically authorized by the commissioner or unless the articles result from a merger in which case the maximum is 16), but not elsewhere except as authorized by statute.
Article III. The corporation shall be managed by a board of directors consisting of________________ (not less than 5) members divided into 3 classes. One class shall be elected at each annual meeting for a term of 3 years. The directors shall have such rights, powers and duties as are prescribed by statute, these articles, or the bylaws. Vacancies in the board may be filled by the directors for the interim to the next annual meeting. At that time, a director shall be chosen for the unexpired term. Directors 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.
Article IV. The officers of the corporation shall consist of a president, vice president, secretary and treasurer. These officers shall be chosen by the board of directors from among its members immediately after the annual meeting of the corporation and they shall hold office for one year or until their successors are duly elected and qualified, or until removed by the board, which may remove them without cause subject to any contract rights to compensation.
Article V. The annual meeting of the corporation for the election of directors and such other business as may properly come before the meeting shall be held in ______________ Wisconsin, on the ___________________ in ______________ of each year at _______o’clock___M., or at such other time and place within the corporation’s territorial limits as may be determined by the board provided they shall give notice thereof by mail to all members at least 10 days prior to the date set by this article for the meeting and at least 30 days prior to the new date of the meeting. Special meetings of the corporation may be called by the board, (and shall be called by the president or secretary upon the written petition of 25 members) provided at least 30 days’ notice thereof, reciting the proposed business to be taken up, shall be given by mail to each member. At all meetings of the corporation, 10 members shall constitute a quorum and each member shall have one vote. No member shall vote by proxy.
Article VI. These articles may be amended at any annual or duly called and noticed special meeting by a resolution adopted by two-thirds of the votes cast on the question, subject to approval by the commissioner under s. 612.04 (2). Dissolution of the corporation may be effected by a resolution under ss. 612.12 (2) and 612.25. Article VII. The members of the board, by a majority of the votes cast on the question, may make and amend bylaws not inconsistent with the statutes, these articles or with the provisions or conditions of any existing policy. Any bylaw made or amended by the board shall be subject to repeal or amendment by the members by a majority of the votes cast on the question at an annual or special meeting.
Article VIII. Any assessment shall be levied in accordance with s. 612.54 (1) through (3). Notice of any assessment shall be subject to s. 612.54 (4). Consequences of default and failure to pay an assessment shall be as specified in s. 612.54 (5). Ins 13.03 HistoryHistory: Cr. Register, August, 1974, No. 224, eff. 9-1-74; am. (3), Register, June, 2001, No. 546, eff. 1-1-02. Ins 13.04Ins 13.04 Undertaking to pay premiums and assessments and contract forms. Ins 13.04(1)(1) Purposes. This rule is promulgated to implement, and set forth procedural requirements necessary to carry out the purpose and provisions of ss. 612.51, 612.52 and 612.54, Stats. Ins 13.04(2)(2) Scope. This rule shall apply to all corporations organized or operating under ch. 612, Stats. Ins 13.04(3)(3) Undertaking to pay premiums and assessments. The undertaking to pay premiums and assessments to be signed by all prospective members shall be in form and substance substantially as follows, and may be a part of the application: UNDERTAKING TO PAY PREMIUMS AND
ASSESSMENTS
I, _______________of______________, in consideration of insurance on my buildings and personal property, insured to myself, my heirs and assigns by the_______________ Insurance Company, bind myself, and to the extent of their interest in the property my heirs and assigns, to pay to the company the premiums for such insurance and, within the period of time stated in the notice of assessment, my share of all legal assessments, if any, levied by the company, together with all legal costs and charges incurred in legal proceedings to collect any assessment levied upon me and statutory penalties for nonpayment, according to the statutes and the terms and conditions in the policy and any renewals thereof or of the insurance thereunder. My property covered by the insurance, both personal and real, shall be liable for that share, waiving all exemptions.
Dated this_______ day of_____________, 20___
Witness
Agent
___________________
___________________
Applicants
Ins 13.04(4)(4) Town mutual policy forms. Town mutual policy forms shall conform to ss. Ins 6.07 and 6.76, and shall include provisions substantially as follows relating to articles of incorporation and bylaws and notice of annual meeting: ARTICLES OF INCORPORATION AND BYLAWS
It is hereby mutually understood and agreed by and between this company and the insured, that this policy is made and accepted with reference to the Articles of Incorporation and Bylaws, which are hereby declared to be part of this contract. This provision applies whether or not the Articles of Incorporation and Bylaws are included in this policy.
NOTICE
The insured is notified that by virtue of this Policy he or she is a member of the________________Insurance Company, of _______________, County, Wisconsin, and that the annual meetings of said company are held in_____________, County, Wisconsin, on the (date) in (month) of each year at _____o’clock___M.
Ins 13.04(5)(5) Permissible variations. Provisions of a town mutual policy may be so arranged in the policy as to provide for convenience in its preparation and issuance. Blank spaces may be changed or altered, spaces may be provided for the listing of rates and premiums for coverages insured under the policy or by riders or by endorsements attached to or printed thereon, and spaces may be utilized for reference to forms and for listing the amount of insurance, provisions as to coinsurance, provisions as to mortgage clause, descriptions and locations of the insured property and other matters advisable and necessary to indicate a delineation of the insurance effective under the contract, and other data as may be included for duplication of daily reports for office records. Ins 13.04(6)(6) Forms and endorsements. Riders, forms and endorsements may be attached to the town mutual policy to include perils in addition to fire and lightning and for other necessary purposes. Except when in contradiction with ch. 612, Stats., the contracts, endorsements, and other forms of town mutuals should be similar to like forms of insurers subject to chs. 631 and 632, Stats. Ins 13.04(7)(7) Mortgagee clause. If a loss under a policy issued by a town mutual insurer is payable to a mortgagee who is not an insured, the mortgagee clause may provide: Ins 13.04(7)(b)(b) That the mortgagee is not liable for any premium or assessment, regardless of whether coverage has been extended after payment of a premium or assessment by the mortgagee. Ins 13.04 HistoryHistory: Cr. Register, August, 1974, No. 224, eff. 9-1-74; emerg. am. (4) (a) and (c), eff. 6-22-76; am. (4) (a) and (c), Register, September, 1976, No. 249, eff. 10-1-76; am. (3), r. and recr. (4) and (5), cr. (6), Register, April, 1982, No. 316, eff. 5-1-82; cr. (7), Register, May, 1986, No. 365, eff. 6-1-86. Ins 13.05Ins 13.05 Accounting records, accounting controls and reports. Ins 13.05(1)(1) Purpose. This rule is intended to implement and interpret s. 601.41, Stats., for the purpose of setting minimum standards and techniques for accounting and reporting of data relating to company financial transactions and other operations. Ins 13.05(2)(2) Scope. This rule shall apply to all town mutual insurers organized or operating under ch. 612, Stats. Ins 13.05(3)(3) Accounting records. The following journals, ledgers and subsidiary records or similar records from which the data indicated may be obtained shall be maintained: Ins 13.05(3)(a)(a) Policy Register: A register or other records which shall contain the policy number, policyholder’s name, effective date of policy, term of policy, risk in force, amount of risk in force reinsured, premium amount, policy fee, reinsurance premium, and provision for miscellaneous data. Ins 13.05(3)(b)(b) Cash Receipts Journal: A journal which shall contain the date, payor, amount received, identification, and reference to the general ledger account and amount affected. All cash received by the company shall be recorded in the journal. Ins 13.05(3)(c)(c) Cash Disbursements Journal: A journal which shall contain the date, payee, check number, amount of check, and a reference to the general ledger account and amount affected. All cash disbursed by the company shall be recorded in the journal. Ins 13.05(3)(d)(d) General Journal: A journal for recording entries for all transactions affecting ledger items, which are not recorded in the cash receipts journal or cash disbursements journal. The general journal shall contain the date of the transaction, an explanation, the ledger account affected, and the amount of the transaction. Ins 13.05(3)(e)(e) General Ledger: A ledger which shall have an account for each asset and liability, surplus, income and expense items of the company. Each account shall contain an account title and/or number, a date for each transaction, a description, debit amounts, credit amounts and an account balance. Ins 13.05(3)(f)(f) Loss Claim Register: A register for recording all claims filed with the company. It shall list all claims in claim number order and contain the claimant’s and policyholder’s name, policy number, date of loss, date that loss was reported to the company, cause of the loss, estimated amount of the loss, and the date the claim was settled and the amount of loss payments, if any. Claims closed without payment should be so noted. Ins 13.05(4)(4) Accounting controls. The following minimum controls of records and data handling should be maintained: Ins 13.05(4)(a)(a) Cash Receipts: All cash receipts shall be recorded on a cash receipts journal. The cash receipts and cash funds of the company shall at all times be kept separate and distinct from any personal, agency or other funds. All cash received shall be deposited in the bank intact, in the company’s name. A duplicate deposit ticket shall be retained in the company’s office for each deposit. All checks in payment of premiums or received by the company for other purposes shall be endorsed for deposit immediately upon receipt. All cash receipts shall be deposited at least weekly. All cash deposits shall be prepared and made, whenever possible, by some individual other than the one who records the receipts or reconciles the bank accounts. Ins 13.05(4)(b)(b) Cash Disbursements: All disbursements except those made from the petty cash fund shall be made by check. All checks issued by the company shall be recorded in chronological and numerical order in a cash disbursements journal. Each disbursement shall be supported and explained in the records of the company. All checks used for disbursements shall be pre-numbered and properly accounted for. All checks shall be mailed or delivered immediately after being signed. All disbursements over a specified amount shall be approved by more than one officer, director or employee of the company. Whenever possible, a person other than the person maintaining the company’s cash disbursement journal or reconciling the bank accounts shall sign the checks. Ins 13.05(4)(c)(c) Petty Cash Fund: A petty cash fund may be maintained for the payment of small bills or for making change. Each disbursement shall be supported by a signed voucher or receipted invoice. At any time the total of the cash, checks and paid vouchers in the fund shall exactly equal the total of the fund as originally set up. The petty cash fund shall be reimbursed at regular intervals and always on the last business day of each year. Ins 13.05(4)(d)(d) Reconciliation of Bank Accounts: Bank statements shall be obtained from each of the banks in which the company maintains checking accounts at the end of each calendar month. The balance appearing on the bank statement shall be reconciled with the cash balance appearing on the company’s records at the end of each month. Whenever possible, bank reconciliations should be made or reviewed by an individual other than the individuals preparing and making bank deposits, recording income and disbursements, and individuals signing company checks. Ins 13.05(4)(e)(e) Loss Claims: All claims reported to the company shall be assigned a claim number when reported. Claims in excess of a specified amount shall be approved by more than one officer, director or employee of the company. All claims shall be adequately documented so that amounts for settlement and coverage can be verified. The claim file shall contain the reason for denial if the claim is denied. Ins 13.05(4)(f)(f) General Internal Controls: Non-negotiable evidences of company investments such as registered bonds, certificates of deposits, notes, etc., shall be maintained to ensure their safekeeping with adequate safety controls. Negotiable evidences of company investments shall be maintained in a safety deposit box in a bank, or under a safekeeping agreement with a bank or banking and trust company pursuant to s. 610.23, Stats. Access to a company safety deposit box containing negotiable securities shall require the presence and signature of at least 2 officers, directors or employees of the company. Company accounting records shall be maintained in such detail that verification can be made to source documents supporting each transaction. Ins 13.05(5)(5) Financial statements. Financial statements shall be prepared by the secretary and treasurer of the company showing the financial condition of the company as of December 31, of each year or whenever requested by the commissioner. The report shall be prepared as prescribed by the commissioner. Ins 13.05(6)(6) Fidelity bond requirements. All insurers subject to this rule shall procure and maintain in force a fidelity bond or honesty insurance as a guaranty against financial loss caused by employee dishonesty. The bond shall cover all fraudulent or dishonest acts, including larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction or willful application, committed by employees acting alone or in collusion. The bond shall cover all officers, directors and employees having direct access to the company’s assets and with responsibility for the handling and processing of income of the company and disbursements of the company. A blanket bond covering all officers, directors and employees satisfies this requirement. The minimum amount of the bond shall be determined on the basis of total admitted assets, plus gross income of the company as set forth in the following schedule: Ins 13.05 HistoryHistory: Cr. Register, August, 1974, No. 224, eff. 9-1-74; reprinted to correct error, Register, March, 1980, No. 291; am. (3)(e), Register, April, 1982, No. 316, eff. 5-1-82; am. (3) (a) to (f), (4) and (6), Register, July, 1991, No. 427, eff. 8-1-91; am. (6), Register, June, 2001, No. 546, eff. 1-1-02.
