Chapter Ins 51

Ins 51.20(1) (1) If a regulatory action level event occurs with respect to an insurer the commissioner shall:

Ins 51.20(1)(a) (a) Require the insurer to prepare and submit a risk based capital plan or, if applicable, a revised risk based capital plan;

Ins 51.20(1)(b) (b) Perform such examination or analysis as the commissioner deems necessary of the assets, liabilities and operations of the insurer including a review of its risk based capital plan or revised risk based capital plan; and

Ins 51.20(1)(c) (c) Subsequent to the examination or analysis, issue an order specifying such corrective actions as the commissioner shall determine are required.

Ins 51.20(2) (2) In determining corrective actions, the commissioner may take into account such factors as are deemed relevant with respect to the insurer based upon the commissioner’s examination or analysis of the assets, liabilities and operations of the insurer, including, but not limited to, the results of any sensitivity tests undertaken pursuant to the risk based capital instructions. The insurer shall submit a risk based capital plan or revised risk based capital plan:

Ins 51.20(2)(a) (a) Within 45 days after the occurrence of the regulatory action level event;

Ins 51.20(2)(b) (b) If the insurer challenges an adjusted risk based capital report under s. Ins 50.50 and the challenge is not frivolous in the judgment of the commissioner, within 45 days after the notification to the insurer that the commissioner has, after a hearing, rejected the insurer’s challenge; or

Ins 51.20(2)(c) (c) If the insurer challenges a revised risk based capital plan pursuant to s. Ins 51.50 and the challenge is not frivolous in the judgment of the commissioner, within 45 days after the notification to the insurer that the commissioner has, after a hearing, rejected the insurer’s challenge.

Ins 51.20(3) (3) The commissioner may retain actuaries and investment experts and other consultants as may be necessary in the judgment of the commissioner to review the insurer’s risk based capital plan or revised risk based capital plan, examine or analyze the assets, liabilities and operations of the insurer and formulate a corrective order with respect to the insurer. The fees, costs and expenses relating to consultants shall be borne by the affected insurer or such other party as directed by the commissioner.

Ins 51.20 History History: Cr. Register, December, 1996, No. 492, eff. 1-1-97.

Ins 51.30 Ins 51.30 Authorized control level event. If an authorized control level event occurs with respect to an insurer, the commissioner shall:

Ins 51.30(1) (1) Take such actions as are required under s. Ins 51.20 regarding an insurer with respect to which a regulatory action level event has occurred; or

Ins 51.30(2) (2) If the commissioner deems it to be in the best interests of the policyholders and creditors of the insurer and of the public, take such actions as are necessary to cause the insurer to be placed under regulatory control under ch. 645, Stats. If the commissioner takes such actions, the authorized control level event shall be deemed sufficient grounds for the commissioner to take action under ch. 645, Stats., and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in ch. 645, Stats.

Ins 51.30 History History: Cr. Register, December, 1996, No. 492, eff. 1-1-97.

Ins 51.40 Ins 51.40 Mandatory control level. If there is a mandatory control level event:

Ins 51.40(1) (1) With respect to a life or health insurer, the commissioner shall take such actions as are necessary to place the insurer under regulatory control under ch. 645, Stats. The mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under ch. 645, Stats., and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in ch. 645, Stats. Notwithstanding any of the foregoing, the commissioner may forego action for up to ninety days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the 90 day period.

Ins 51.40(2) (2) With respect to a property and casualty insurer, the commissioner shall take such actions as are necessary to place the insurer under regulatory control under ch. 645, Stats., or, in the case of an insurer which is writing no business and which is running-off its existing business, may allow the insurer to continue its run-off under the supervision of the commissioner. In either event, the mandatory control level event shall be deemed sufficient grounds for the commissioner to take action under ch. 645, Stats., and the commissioner shall have the rights, powers and duties with respect to the insurer as are set forth in ch. 645, Stats. Notwithstanding any of the foregoing, the commissioner may forego action for up to 90 days after the mandatory control level event if the commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the 90 day period.

Ins 51.40 History History: Cr. Register, December, 1996, No. 492, eff. 1-1-97.

Ins 51.50 Ins 51.50 Hearings.

Ins 51.50(1) (1) An insurer shall have the right to a hearing, on a record, at which the insurer may challenge any determination or action by the commissioner under this subchapter upon any of the following:

Ins 51.50(1)(a) (a) Notification to an insurer by the commissioner of an adjusted risk based capital report.

Ins 51.50(1)(b) (b) Notification to an insurer by the commissioner of all of the following:

Ins 51.50(1)(b)1. 1. The insurer’s risk based capital plan or revised risk based capital plan is unsatisfactory.

Ins 51.50(1)(b)2. 2. Such notification constitutes a regulatory action level event with respect to such insurer.

Ins 51.50(1)(c) (c) Notification to any insurer by the commissioner that the insurer has failed to adhere to its risk based capital plan or revised risk based capital plan and that such failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event with respect to the insurer in accordance with its risk based capital plan or revised risk based capital plan.

Ins 51.50(1)(d) (d) Notification to an insurer by the commissioner of a corrective order with respect to the insurer under this subchapter.

Ins 51.50(2) (2) The procedures established under ss. 601.62, 601.63, and 645.21, Stats., apply to an order, determination or hearing under this chapter.

Ins 51.50(3) (3) This section does not apply to an action by the commissioner based on ch. 645, Stats., subch. II or any other provision of the statutes or rules other than this subchapter. An insurer’s right to a hearing, if any, is solely governed by those provisions and not this section.

Ins 51.50 History History: Cr. Register, December, 1996, No. 492, eff. 1-1-97.

Ins 51.55 Ins 51.55 Confidentiality; prohibition on announcements, prohibition on use in ratemaking.

Ins 51.55(1) (1) Except as permitted under sub. (2) the commissioner shall keep all of the following information confidential and it may not be subject to subpoena:

Ins 51.55(1)(a) (a) Risk based capital reports, to the extent the information is not required to be set forth in a publicly available annual statement schedule.

Ins 51.55(1)(b) (b) Risk based capital plans, including the results or report of any examination or analysis of an insurer performed under this chapter.

Ins 51.55(1)(c) (c) Any corrective order issued by the commissioner pursuant to examination or analysis, with respect to any domestic insurer or foreign insurer, which is issued under s. 645.21, Stats.

Ins 51.55(2) (2) The information described under sub. (1) is information that is obtained by the commissioner under ss. 601.465 and 645.24, Stats., and shall be retained as confidential under those statutes. This information is not subject to subpoena. The commissioner may disclose the information only for the purpose of enforcement actions taken by the commissioner under chs. 600 to 655, Stats.

Ins 51.55(3) (3) 

Ins 51.55(3)(a) (a) Except as otherwise required under the provisions of this chapter, no insurer, agent, broker or other person engaged in any manner in the insurance business may make, publish, disseminate, circulate or place before the public, or cause, directly or indirectly to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing an assertion, representation or statement with regard to the risk based capital levels of any insurer, or of any component derived in the calculation of risk based capital levels. Any such representation is misleading.

Ins 51.55(3)(b) (b) If any materially false statement with respect to the comparison regarding an insurer’s total adjusted capital to its risk based capital levels or an inappropriate comparison of any other amount to an insurer’s risk based capital levels is published in any written publication and the insurer is able to demonstrate to the commissioner with substantial proof the falsity of such statement, or the inappropriateness, as the case may be, then the insurer may publish an announcement in a written publication if the sole purpose of the announcement is to rebut the materially false statement.

Ins 51.55(4) (4) The commissioner shall principally use risk based capital instructions, risk based capital reports, adjusted risk based capital reports, risk based capital plans and revised risk based capital plans as one method for monitoring the solvency of insurers and to assist in determining the need for corrective action with respect to insurers. The commissioner may not use these instructions, reports or plans for ratemaking nor as evidence in any rate proceeding nor used by the commissioner to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance which an insurer or any affiliate is authorized to write. The commissioner finds that the comparison of an insurer’s total adjusted capital to any of its risk based capital levels is a regulatory tool which may indicate the need for possible corrective action with respect to the insurer, and is not intended as a means to rank insurers generally.

Ins 51.55 History History: Cr. Register, December, 1996, No. 492, eff. 1-1-97.

Ins 51.60 Ins 51.60 Supplemental provisions; exemptions.

Ins 51.60(1) (1) The provisions of this subchapter are supplemental to any other provisions of the laws or rules of this state, and do not preclude or limit any other powers or duties of the commissioner under these laws or rules or procedures for applying those laws, including, but not limited to, chs. 620, 623, and 645, Stats., and subch. II. An insurer which is in violation of subch. II is in financially hazardous condition and may be subject to any of the proceedings provided under ch. 645, Stats., regardless of whether the insurer is in compliance with this subchapter or a proceeding is requested or pending under this subchapter and regardless of the insurer’s risk based capital level. Nothing in this subchapter prevents the commissioner from taking, or limits the authority of the commissioner to take, action under any of those provisions when action is not permitted or required under this subchapter.

Ins 51.60(2) (2) The commissioner may exempt from the application of this subchapter any domestic property and casualty insurer which complies with all of the following:

Ins 51.60(2)(a) (a) The insurer writes direct business only in this state.

Ins 51.60(2)(b) (b) The insurer writes direct annual premiums of $10,000,000 or less.

Ins 51.60(2)(c) (c) The insurer assumes no reinsurance in excess of five percent of direct premium written.

Ins 51.60(3) (3) The commissioner may exempt from the application of this subchapter:

Ins 51.60(3)(a) (a) Any domestic health maintenance organization insurer writing $2,000,000 or less direct annual premium that writes only direct business in this state and assumes no reinsurance in excess of 5% of direct premium.

Ins 51.60(3)(b) (b) Any domestic insurer writing only limited service health organization business covering less than 2,000 lives that writes only direct business in this state and assumes no reinsurance in excess of 5% of direct premium written.

Ins 51.60(3)(c) (c) Any domestic fraternal insurer writing $2,000,000 or less in direct annual premium and that assumes no reinsurance in excess of 5% of direct premium.

Ins 51.60 History History: Cr. Register, December, 1996, No. 492, eff. 1-1-97; cr. (3), Register, May, 1999, No. 521, eff. 6-1-99; CR 10-077: cr. (3) (c) Register December 2010 No. 660, eff. 1-1-11.

Ins 51.65 Ins 51.65 Foreign insurers.

Ins 51.65(1) (1) Any foreign insurer shall, upon the written request of the commissioner, submit to the commissioner a risk based capital report as of the end of the calendar year just ended by the later of the following:

Ins 51.65(1)(a) (a) The date a risk based capital report would be required to be filed by a domestic insurer under this chapter.

Ins 51.65(1)(b) (b) Fifteen days after the request is received by the foreign insurer.

Ins 51.65(2) (2) Any foreign insurer shall, at the written request of the commissioner, promptly submit to the commissioner a copy of any risk based capital plan that is filed with the insurance commissioner of any other state.

Ins 51.65(3) (3) If a company action level event, regulatory action level event or authorized control level event with respect to any foreign insurer as determined under the risk based capital statute or rule applicable in the state of domicile of the insurer or, if no risk based capital statute is in force in that state, under the provisions of this subchapter, if the insurance commissioner of the state of domicile of the foreign insurer fails to require the foreign insurer to file a risk based capital plan in the manner specified under that state’s risk based capital statute or, if no risk based capital statute is in force in that state, under s. Ins 51.15, the commissioner may require the foreign insurer to file a risk based capital plan with the commissioner. In such event, the failure of the foreign insurer to file a risk based capital plan with the commissioner shall be grounds to order the insurer to cease and desist from writing new insurance business in this state.

Ins 51.65(4) (4) If a mandatory control level event with respect to any foreign insurer occurs, if no domiciliary receiver has been appointed with respect to the foreign insurer under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign insurer, the commissioner may make application to the circuit court permitted under the ch. 645, Stats. with respect to the liquidation of property of foreign insurers found in this state, and the occurrence of the mandatory control level event shall be considered adequate grounds for the application.

Ins 51.65 History History: Cr. Register, December, 1996, No. 492, eff. 1-1-97.

subch. II of ch. Ins 51 Subchapter II — Permanent Capital, Compulsory Surplus and Security Surplus

Ins 51.75 Ins 51.75 Applicability. This subchapter applies to insurers on, before and after January 1, 1997 except s. Ins 51.80 applies to service insurance corporations organized under ch. 613, Stats., only after December 31, 1996, and first requires filing of reports or plans by a service insurance corporation for year end calendar year 1996 or for after that date.

Ins 51.75 History History: Cr. Register, December, 1996, No. 492, eff. 1-1-97.

Ins 51.80 Ins 51.80 Capital, compulsory and security surplus.

Ins 51.80(1) (1) Purpose. This section implements and interprets ss. 600.03 (45), 618.21 (1) (a), 623.11 and 623.12, Stats., for the purpose of establishing the amount of capital and compulsory surplus an insurer is required to maintain to provide reasonable security against contingencies affecting its financial position that are not fully covered by reserves or by reinsurance, and the amount of security surplus that an insurer should maintain in order to provide an ample margin of safety and clearly assure a sound operation.

Ins 51.80(2) (2) Scope. This section applies to all lines of insurance except title insurance and mortgage guarantee insurance as defined in s. Ins 6.75 (2) (h) and (i), and to each insurer subject to ss. 623.11 and 645.41, Stats., except insurers licensed under chs. 612 or 616, Stats., insurers subject to s. Ins 9.04 and life insurers domiciled in foreign countries.

Ins 51.80(3) (3) Compulsory surplus. Except for the adjustments to the circumstances of individual insurers provided in s. 623.11 (1) (b), Stats., and sub. (6), the amount of compulsory surplus of an insurer shall be the greater of:

Ins 51.80(3)(a) (a) The sum of:

Ins 51.80(3)(a)1. 1. 15% of premiums for individual life and disability insurance, not including variable life insurance;

Ins 51.80(3)(a)2. 2. 10% of premiums for group life and disability insurance, not including variable life insurance;

Ins 51.80(3)(a)3. 3. The greater of 2% of reserves or 7 1⁄2% of premiums for annuities and deposit administration funds, not including variable annuity business;

Ins 51.80(3)(a)3e. 3e. 2% of premiums for variable life and variable annuity business;

Ins 51.80(3)(a)3m. 3m. 30% of premiums for medical professional liability insurance;

Ins 51.80(3)(a)3s. 3s. 7% of premiums for Medicare stand-alone drug coverage insurance;

Ins 51.80(3)(a)4. 4. 20% of premiums for all other covered lines of insurance; or

Ins 51.80(3)(b) (b) $2 million for an insurer first authorized to do business in Wisconsin on or after January 1, 1982, or the amount required by statute or administrative order before that date for other insurers.

Ins 51.80(4) (4) Security surplus. The security surplus of an insurer shall be the compulsory surplus plus:

Ins 51.80(4)(a) (a) 40% of compulsory surplus for insurers restricted under s. 620.04, Stats.

Ins 51.80(4)(b) (b) 40% of compulsory surplus for other insurers with premiums of $10 million or less reduced by 1% of compulsory surplus for each $33 million of additional premiums in excess of $10 million, but not less than 10% of compulsory surplus.

Ins 51.80(5) (5) Separate determination. Compulsory surplus and security surplus are computed separately and are not added together for purposes of determining compliance with this rule.

Ins 51.80(6) (6) Premiums. For purposes of subs. (3) and (4), for all insurers except insurers that file on the national association of insurance commissioners health annual statement blank, premiums are gross premiums and other considerations received for insurance and annuities in the 12-month period ending on or not more than 60 days before the date as of which the calculation is made with the following deductions and exclusions:

Ins 51.80(6)(a) (a) Exclude annual and initial reinsurance premiums for contracts of modified coinsurance and premium deposits.

Ins 51.80(6)(b) (b) Deduct return premiums; premiums ceded to authorized reinsurers other than premiums of contracts of modified coinsurance; and retrospective premium refunds and dividends paid or credited to policyholders.

Ins 51.80(6m) (6m) Heath insurance premiums. For purposes of subs. (3) and (4), for insurers that file on the national association of insurance commissioners health annual statement blank, premiums are earned premiums and other considerations for insurance in the 12-month period ending on or not more than 60 days before the date as of which the calculation is made with the deductions and exclusions allowed in sub. (6) (a) and (b).

Ins 51.80(7) (7) Individual circumstances. In the event of special circumstances of an individual insurer, the commissioner may by order:

Ins 51.80(7)(a) (a) Adjust the factors in this section to calculate the compulsory or security surplus as a higher or lower amount than the amount determined under sub. (3) or (4);

Ins 51.80(7)(b) (b) Establish additional factors in relation to any relevant variables in determining the amount of compulsory surplus required for such insurer; and

Ins 51.80(7)(c) (c) Require minimum capital in an amount of less than $2 million.

Ins 51.80(8) (8) Combining insurers. The commissioner may require the combination of 2 or more insurers for application of this section or may permit such combination upon request by such insurers.

Ins 51.80(9) (9) Reporting. Every insurer to which this section applies shall compute its compulsory surplus and security surplus, as of the preceding December 31, and include a copy of such computation as a part of its annual statement filed with the commissioner under s. 601.42, Stats., and s. Ins 7.02.