SB588,1,11 1An Act to repeal 601.954 (2) (f) 1., 635.05 (7), 635.12 and 646.51 (3) (ar) 1.; to
2renumber 632.66; to consolidate, renumber and amend 601.954 (2) (f)
3(intro.) and 2. and 646.51 (3) (ar) (intro.) and 2.; to amend 601.64 (3) (c), 611.40
4(1), 611.42 (1), 611.42 (1e) (b) (intro.), 632.62 (1) (b) 1., 632.62 (1) (b) 2., 645.68
5(3), 646.13 (2) (g), 646.325 (2) (intro.), 646.325 (2) (a) (intro.), 655.27 (3) (b) 2.,
6655.27 (3) (bt) and 655.275 (2); and to create 551.102 (28) (bm), 601.465 (3) (g),
7601.465 (3) (h), 601.48 (1m), 611.42 (1b), 611.42 (1g), 611.426, 617.13, 625.03
8(1m) (f), 632.62 (1) (b) 4., 632.66 (2), 646.01 (1) (b) 21., 646.01 (1) (b) 22. and
9646.325 (2) (a) 3. of the statutes; relating to: various changes to insurance
10laws, including issuance of funding agreements, granting rule-making
11authority, and providing a penalty.

This bill modifies various insurance statutes that are generally administered
by the Office of the Commissioner of Insurance.

The bill requires that OCI maintain accreditation with the National
Association of Insurance Commissioners and allows OCI to adopt minimum

education and certification requirements for job classifications that monitor the
financial solvency of insurers to meet NAIC accreditation and best practice
standards.

The bill modifies the penalty for violations of insurance statutes and rules.
Under current law, a person who violates an insurance statute or rule, intentionally
aids a person in such a violation, or knowingly permits such a violation by a person
over whom he or she has authority is subject to a penalty of not more than $1,000.
The bill increases this penalty to not more than $5,000 if the violation specifically
involves a consumer who is an adult at risk or at least 60 years of age.

The bill modifies the policyholder meeting requirements that apply to mutual
insurance corporations (mutuals) to allow mutuals to hold meetings by means of
remote communication and to allow policyholders to participate by means of remote
communication. In order to allow remote participation, a mutual must implement
reasonable measures regarding participation and participant verification and must
maintain a record of voting and other actions by remote participants. The bill also
requires that the meeting notice describe the means of remote communication to be
used. The bill also allows remote participation in shareholders' meetings for stock
insurance corporations.

Under the bill, a domestic insurer with a certificate of authority to transact the
business of life insurance and annuities may issue a “funding agreement,” which the
bill defines as an annuity without life contingencies that is an agreement for an
insurer to accept and accumulate funds and to make one or more payments at future
dates in fixed or variable amounts that are not based on mortality or morbidity
contingencies. In order to issue a funding agreement, the insurer's board of directors
must approve a funding agreement plan, the insurer must comply with form filing
requirements, and OCI must determine that the issuance is not adverse to the
interest of the insurer's policyholders, although no determination is required if the
insurer has more than $200 billion in admitted assets. Additionally, the bill provides
that no amounts may be guaranteed or credited under a funding agreement except
upon reasonable assumptions as to investment income and expenses and on a basis
equitable to all holders of a given class. The bill specifies that the issuance or delivery
of a funding agreement in Wisconsin constitutes doing an insurance business in the
state and that an insurer may directly offer funding agreements. The bill provides
that amounts payable under funding agreements are treated as loss claims, funding
agreements are not subject to rate regulation requirements, and materials provided
to OCI related to funding agreements are confidential. The bill also specifies that
funding agreements are not securities for purposes of state securities law and that
OCI has sole authority to regulate their issuance and sale.

The bill directs OCI to promulgate rules requiring certain insurers, as
determined under the rules, to report their group capital calculations and liquidity
stress tests.

As enacted in 2021 Wisconsin Act 73, insurers and other entities holding a
credential from OCI are required in the insurance laws to provide notification of a
cybersecurity breach. Entities, including insurers, that are subject to federal laws
protecting against disclosure of nonpublic personal information and fraudulent

access to financial information and health plans, health care clearinghouses, and
certain health care providers that must comply with the privacy requirements of the
federal Health Insurance Portability and Accountability Act are exempt from this
notification requirement. The bill eliminates the exemption from notification of a
cybersecurity breach for the entities and insurers that are subject to federal laws
protecting against disclosure of nonpublic personal information and fraudulent
access to financial information.

The bill repeals the requirement that small employer insurers annually publish
their premium rates.

The bill specifies that the requirements regarding the insurance security fund
do not apply to funding agreements or the federal employee health benefit plan. The
bill also specifies that the insurance security fund may make contracts for the
administration and payment of claims for which the insured is responsible and that
the fund may recover costs and expenses incurred in administering a claim.

The bill also modifies statutes relating to the injured patients and families
compensation fund. The bill specifies that the payment classifications provided by
OCI under current law must be by reference to the applicable Insurance Services
Office, Inc., codes and extends the provision in current law providing for passive
review by the Joint Committee on Finance of the fund's proposed fees to also include
the payment classifications. The bill also provides that the fund's peer review
council, which is currently five persons, may be either five or seven persons.