Chapter Ins 50

Ins 50.50(3) (3) The commissioner may determine the nature and scope of an examination. An examination may, but need not, cover all aspects of the insurer’s assets, condition, affairs and operations, and may involve or be supplemented by review of audit procedures performed by accountants. Examinations may include, but are not limited to, the following types of examinations:

Ins 50.50(3)(a) (a) Compliance examinations which are a general review of the insurer’s corporate affairs and insurance operations to determine compliance with chs. 600 to 646, Stats. A compliance examination may consist of review of an accountant’s work papers or be supplemented by such a review.

Ins 50.50(3)(b) (b) Targeted examinations are limited to a review of specified areas. Areas that may be targeted may include, but are not limited to, life reserve valuations, claims analyses, organizational and capital changes, loss reserves or market conduct.

Ins 50.50(3)(c) (c) Comprehensive examinations which are complete examinations of the condition and affairs of the insurer.

Ins 50.50(4) (4) After the commissioner issues an adopted examination report, the insurer examined shall promptly file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders.

Ins 50.50(5) (5) The office of the commissioner of insurance, under s. 601.465, Stats., may refuse to disclose and prevent any person from disclosing, in response to a request for production, deposition, subpoena, or otherwise, information obtained from the national association of insurance commissioners or another insurance department under pledge of confidentiality or for the purpose of conducting an investigation or examination or obtained, produced or created in the course of an inquiry under s. 601.42, Stats., or examination under s. 601.43, Stats. This privilege applies to information obtained, produced or created before or after the effective date of s. 601.465, Stats., and regardless of whether an inquiry, investigation or examination has been concluded, except it does not apply to a document which is an adopted examination report. An adopted examination report is available for public inspection as required under s. 601.44 (6), Stats. The office or the commissioner may disclose the content of an examination report, preliminary examination report or results, or any matter relating a report or the results of an examination to further legal or regulatory action, or to the insurance department of any other state or country or to law enforcement officials of this or any other state or agency of the federal government, so long as the department, agency or office agrees in writing to hold it confidential. 

Ins 50.50 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 50.55 Ins 50.55 Examination of foreign and alien insurers.

Ins 50.55(1) (1) The commissioner may accept, under s. Ins 50.50, an examination report on a licensed foreign or alien insurer which is prepared by the insurance department for the insurer’s state of domicile until December 31, 1993. After December 31, 1993, an examination report from the insurance department of the insurer’s state of domicile may only be accepted if:

Ins 50.55(1)(a) (a) The insurance department is at the time of the examination accredited under the National Association of Insurance Commissioners’ Financial Regulation Standards and Accreditation Program; or

Ins 50.55(1)(b) (b) The examination is performed under the supervision of an accredited insurance department or with the participation of one or more examiners who are employed by an accredited state insurance department and who, after a review of the examination work papers and report, state under oath that the examination was performed in a manner consistent with the standards and procedures required by their insurance department.

Ins 50.55(2) (2) A foreign or alien insurer shall file written notice with the commissioner if it has not received an examination call for an examination which will be acceptable under this section for the determination of the financial condition of the insurer within 4 years after the date for which the last examination of the insurer examined the financial condition of the insurer.

Ins 50.55 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

subch. IV of ch. Ins 50 Subchapter IV — Actuarial Opinion

Ins 50.60 Ins 50.60 Definitions. In this chapter, “qualified actuary” means a member in good standing of the American academy of actuaries unless disqualified by a standard or determination of the commissioner.

Ins 50.60 History History: Cr. Register, December, 1995, No. 480, eff. 1-1-96.

Ins 50.65 Ins 50.65 Actuarial opinion required.

Ins 50.65(1) (1) For each year ending on or after December 31, 1996, every life insurance company doing business in this state shall submit to the commissioner, with its annual statement due by March 1 of the following year, an opinion by a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner satisfy all of the following:

Ins 50.65(1)(a) (a) They are computed appropriately.

Ins 50.65(1)(b) (b) They are based on assumptions that satisfy contract provisions.

Ins 50.65(1)(c) (c) They are consistent with prior reported amounts.

Ins 50.65(1)(d) (d) They comply with the applicable laws of this state.

Ins 50.65(2) (2) The opinion under sub. (1) shall be in the form and contain the information required by the commissioner.

Ins 50.65(3) (3) 

Ins 50.65(3)(a) (a) Every life insurance company shall include with the opinion required under sub. (1) the opinion of the qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company’s obligations under the policies and contracts, including but not limited to, the benefits under and expenses associated with the policies and contracts. The commissioner may allow a transition period for an insurance company to establish any higher reserves that the qualified actuary determines are necessary to make adequate provision for the company’s obligations under the policies and contracts. This subchapter and subch. V may be enforced under s. 601.41 or 601.64, ch. 645, Stats., or any other enforcement provision of chs. 601 to 645, Stats.

Ins 50.65(3)(b) (b) An insurance company that is required to submit an opinion under par. (a) shall have prepared by the qualified actuary who renders the opinion and memorandum in support of the opinion under par. (a). The memorandum shall be in the form, and provide the information, required by the form specified by the commissioner. The insurance company shall provide the memorandum to the commissioner, at the commissioner’s request, for the commissioner’s examination. After examination, the commissioner may return the memorandum to the insurance company.

Ins 50.65(3)(c) (c) If an insurance company fails to provide a supporting memorandum to the commissioner upon request within the period specified, or if the commissioner determines that the supporting memorandum provided by an insurance company is otherwise unacceptable, the commissioner may retain a qualified actuary at the expense of the insurance company to review the opinion required under par. (a) and the basis for the opinion and to prepare supporting memorandum as the commissioner requires.

Ins 50.65(4) (4) The following provisions apply to an opinion required under sub. (1) or (2):

Ins 50.65(4)(a) (a) The opinion shall apply to all business in force, including individual and group health insurance plans, in form and substance acceptable to the commissioner.

Ins 50.65(4)(b) (b) The opinion shall be based on standards adopted from time to time by the actuarial standards board established by the American academy of actuaries and on such additional standards as the commissioner may prescribe.

Ins 50.65(4)(c) (c) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.

Ins 50.65(5) (5) An insurer which violates this chapter or an insurer or actuary which submits an opinion or memorandum which includes a misrepresentation is subject to the penalties specified under ch. 601, Stats.

Ins 50.65(6) (6) 

Ins 50.65(6)(a) (a) Any memorandum in support of, and any other material provided by an insurance company to the commissioner in connection with, an opinion required under this section is subject [to] s. 601.465, Stats.

Ins 50.65(6)(b) (b) The commissioner may release any such memorandum or other material with the written consent of the insurance company, or to the American academy of actuaries upon its request if the memorandum or other material is required for professional disciplinary proceedings and if the request sets forth procedures that are satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material.

Ins 50.65 History History: Cr. Register, December, 1995, No. 480, eff. 1-1-96; CR 04-071: am. (3) (a) Register December 2004 No. 588, eff. 12-31-05.

Ins 50.67 Ins 50.67 Reserves.

Ins 50.67(1) (1) An insurance company’s aggregate reserves for all policies, contracts and benefits may not be less than the aggregate reserves determined by a qualified actuary in an opinion under this chapter to be necessary to make adequate provision for the company’s obligations under the policies and contracts.

Ins 50.67(2) (2) For the purpose of s. 623.06 (6), Stats., holding any additional reserves that a qualified actuary, in an opinion under this chapter determined to be necessary to make adequate provision for the company’s obligations under the policies and contracts shall not be considered the adoption of a higher standard of valuation.

Ins 50.67 History History: Cr. Register, December, 1995, No. 480, eff. 1-1-96.

Ins 50.68 Ins 50.68 Reliance on actuary opinion. An actuarial opinion which is issued by a qualified actuary and required under this subchapter and subch. V is solely for the benefit of the insurer which is the subject of the opinion, the commissioner and the office. It is not for the benefit of any other person and is therefore not to be relied upon by any other person unless reliance is induced by fraud or willful misconduct.

Ins 50.68 History History: Cr. Register, December, 1995, No. 480, eff. 1-1-96.

subch. V of ch. Ins 50 Subchapter V — Actuarial Opinion and Memorandum Regulation

Ins 50.70 Ins 50.70 Purpose. The purpose of this rule is to prescribe:

Ins 50.70(1) (1) Guidelines and standards for statements of actuarial opinion which are to be submitted in accordance with subch. IV and ch. 623, Stats., and for memoranda in support of such an opinion.

Ins 50.70(2) (2) Rules applicable to the appointment of an appointed actuary.

Ins 50.70(3) (3) Guidance as to the meaning of “adequacy of reserves.”

Ins 50.70 History History: Cr. Register, December, 1995, No. 480, eff. 1-1-96; CR 04-071: r. (2), renum. (3) to be (2), cr. (3) Register December 2004 No. 588, eff. 12-31-05.

Ins 50.71 Ins 50.71 Authority. This rule is issued pursuant to the authority vested in the commissioner under ss. 601.42, 601.43, 601.465, Stats., and ch. 623, Stats.

Ins 50.71 History History: Cr. Register, December, 1995, No. 480, eff. 1-1-96; CR 04-071: am. Register December 2004 No. 588, eff. 12-31-05.

Ins 50.72 Ins 50.72 Scope. This subchapter shall apply to all life insurance companies and fraternal benefit societies doing business in this state and to all life insurance companies and fraternal benefit societies which are authorized to reinsure life insurance, annuities or accident and health insurance business in this state. This subchapter shall be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with relevant actuarial standards of practice. However, the commissioner may specify specific methods of actuarial analysis and actuarial assumptions when, in the commissioner’s judgment, these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items. This subchapter shall be applicable to all annual statements filed with the office of the commissioner of insurance. A statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with s. Ins 50.78, and a memorandum in support thereof in accordance with s. Ins 50.79, is required each year.

Ins 50.72 History History: Cr. Register, December, 1995, No. 480, eff. 1-1-96; CR 04-071: renum. (1) to be Ins 50.72 and am., r. (2) Register December 2004 No. 588, eff. 12-31-05.

Ins 50.73 Ins 50.73 Definitions. In this subchapter:

Ins 50.73(1) (1) “Actuarial opinion” means the opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with s. Ins 50.78 and with applicable actuarial standards of practice.

Ins 50.73(2) (2) “Actuarial standards board” is the board established by the american academy of actuaries to develop and promulgate standards of actuarial practice.

Ins 50.73(3) (3) “Annual statement” means that statement required by s. Ins 50.20 to be filed by the company annually.

Ins 50.73(4) (4) “Appointed actuary” means any individual who is appointed or retained in accordance with the requirements set forth in s. Ins 50.75 (3) to provide the actuarial opinion and supporting memorandum as required by subch. IV and ch. 623, Stats.

Ins 50.73(5) (5) “Asset adequacy analysis” means an analysis that meets the standards and other requirements referred to in s. Ins 50.75 (4). It may take many forms, including, but not limited to, cash flow testing, sensitivity testing or applications of risk theory.

Ins 50.73(6) (6) “AVR” means asset valuation reserve.

Ins 50.73(7) (7) “Commissioner” means the commissioner of insurance of this state.

Ins 50.73(8) (8) “Company” means a life insurance company, fraternal benefit society or reinsurer subject to the provisions of [this] subchapter.

Ins 50.73(9) (9) “Qualified Actuary” means any individual who meets the requirements set forth in s. Ins 50.75 (2).

Ins 50.73 History History: Cr. Register, December, 1995, No. 480, eff. 1-1-96; CR 04-071: cr. (intro.) and (6), am. (1), renum. (6) and (7) to be (7) and (8), r. (8) Register December 2004 No. 588, eff. 12-31-05.

Ins 50.75 Ins 50.75 General requirements.

Ins 50.75(1) (1) Submission of statement of actuarial opinion.

Ins 50.75(1)(a) (a) There is to be included on or attached to Page 1 of the annual statement for each year beginning with 1996 the statement of an appointed actuary, entitled “Statement of Actuarial Opinion,” setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with s. Ins 50.78.

Ins 50.75(1)(b) (b) Upon written request by the company, the commissioner may grant an extension of the date for submission of the statement of actuarial opinion.

Ins 50.75(2) (2) Qualified actuary. A qualified actuary is an individual who:

Ins 50.75(2)(a) (a) Is a member in good standing of the American academy of actuaries;

Ins 50.75(2)(b) (b) Is qualified to sign statements of actuarial opinion for life and health insurance company annual statements in accordance with the American academy of actuaries qualification standards for actuaries signing such statements;

Ins 50.75(2)(c) (c) Is familiar with the valuation requirements applicable to life and health insurance companies; and

Ins 50.75(2)(d) (d) Has not been found by the commissioner (or if so found has subsequently been reinstated as a qualified actuary), following appropriate notice and hearing to have:

Ins 50.75(2)(d)1. 1. Violated any provision of, or any obligation imposed by, an insurance law or other law in the course of his or her dealings as a qualified actuary;

Ins 50.75(2)(d)2. 2. Been found guilty of fraudulent or dishonest practices;

Ins 50.75(2)(d)3. 3. Demonstrated his or her incompetency, lack of cooperation, or untrustworthiness to act as a qualified actuary;

Ins 50.75(2)(d)4. 4. Submitted to the commissioner during the past 5 years, pursuant to this subchapter, an actuarial opinion or memorandum that the commissioner rejected because it did not meet the provisions of this subchapter including standards set by the actuarial standards board; or

Ins 50.75(2)(d)5. 5. Resigned or been removed as an actuary within the past 5 years as a result of acts or omissions indicated in any adverse report on examination or as a result of failure to adhere to generally acceptable actuarial standards; and

Ins 50.75(2)(e) (e) Has not failed to notify the commissioner of any action taken by any commissioner of any other state similar to that under par. (d).

Ins 50.75(3) (3) Appointed actuary. An “appointed actuary” is a qualified actuary who is appointed or retained to prepare the statement of actuarial opinion required by this subchapter either directly by or by the authority of the board of directors through an executive officer of the company other than the qualified actuary. The company shall give the commissioner timely written notice of the name, title (and, in the case of a consulting actuary, the name of the firm) and manner of appointment or retention of each person appointed or retained by the company as an appointed actuary and shall state in such notice that the person meets the requirements set forth in sub. (2). Once notice is furnished, no further notice is required with respect to this person, provided that the company shall give the commissioner timely written notice in the event the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements set forth in sub. (2). If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall so state and give the reasons for replacement.

Ins 50.75(4) (4) Standards for asset adequacy analysis. The asset adequacy analysis required by this subchapter:

Ins 50.75(4)(a) (a) Shall conform to the standards of practice as promulgated from time to time by the actuarial standards board and on any additional standards under this subchapter, which standards are to form the basis of the statement of actuarial opinion in accordance with s. Ins 50.78; and

Ins 50.75(4)(b) (b) Shall be based on methods of analysis as are deemed appropriate for such purposes by the actuarial standards board.

Ins 50.75(5) (5) Liabilities to be covered.

Ins 50.75(5)(a) (a) Under authority of ch. 623, Stats., and subch. IV, the statement of actuarial opinion shall apply to all in force business on the statement date regardless of when or where issued. This includes items reported in the annual statement exhibits pertaining to contract reserves for life insurance, annuities, accident and health insurance, and deposit type contracts; liabilities for unpaid claims; and equivalent items in the separate account statement or statements.

Ins 50.75(5)(b) (b) If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods set forth in s. 623.06 (3), (3m), (4m) and (7), Stats., and s. Ins 3.17, the company shall establish such additional reserve.

Ins 50.75(5)(c) (c) Additional reserves established under par. (b) and deemed not necessary in subsequent years may be released. Any amounts released must be disclosed in the actuarial opinion for the applicable year. The release of such reserves would not be deemed an adoption of a lower standard of valuation.

Ins 50.75 History History: Cr. Register, December, 1995, No. 480, eff. 1-1-96; CR 04-071: am. (1) (a), (3) and (5) (a), r. (1) (b), (c) and (5) (c), renum. (1) (d) and (5) (d) to be (1) (b) and (5) (c) and am. (5) (c) Register December 2004 No. 588, eff. 12-31-05.

Ins 50.76 Ins 50.76 Required opinions. In accordance with subch. IV and ch. 623, Stats., every company doing business in this state shall annually submit the opinion of an appointed actuary as provided for by this subchapter.

Ins 50.76 History History: Cr. Register, December, 1995, No. 480, eff. 1-1-96; CR 04-071: r. and recr. Register December 2004 No. 588, eff. 12-31-05.