SB482,1,4 1An Act to repeal 618.416 (1) (c); to amend 600.03 (23), 610.80 (8), 614.19 (3) (b),
2616.54 (8), 655.27 (3) (b) 2. and 655.275 (2); and to create 601.465 (1m) (c) 10.,
3614.78 and 614.79 of the statutes; relating to: various changes to insurance
4laws.

This bill makes various changes to insurance laws, including correcting certain
grammatical errors.

Under the bill, the commissioner of insurance may issue an order that declares
a domestic fraternal that has undergone a certain financial event specified in the bill
to be in a hazardous condition. The commissioner may then order the fraternal to
remedy the event, and the order may include authorization to negotiate to transfer
all of its members, insurance certificates, and other assets and liabilities to another
fraternal or insurer. The transfer is considered to be a novation of the insurance
certificates effective on the date of transfer. The fraternal must ensure the transfer
is concluded within the time specified by the commissioner and subject to approval
by the commissioner. Though other law may require notice to or approval by the
fraternal's members or supreme governing body, a transfer agreement under the bill
is considered to be fully approved by the fraternal upon a majority vote of the
fraternal's board of directors. If the fraternal seeks to transfer to an organization
that does not have authority to transact insurance business in Wisconsin, the

commissioner may grant a limited certificate of authority for the organization to
service the existing insurance certificates and fulfill obligations to certificate holders
following the transfer.

The bill adds the following to current law grounds for rehabilitation or
liquidation of an insurer: failure by a domestic fraternal to comply with a
commissioner's order related to the financial event and failure by a domestic
fraternal to remedy the hazardous condition within the time specified by the
commissioner. The bill, however, specifies that unless the commissioner reasonably
believes that rehabilitation of the fraternal has a high probability of returning the
fraternal to long-term viability or will facilitate transfer to another fraternal or
insurer, rehabilitation of the fraternal is presumed to be futile and to serve no useful
purpose. After a petition for liquidation of a fraternal is filed, the fraternal may not
assess payment of shares of a deficiency, unless the commissioner determines the
assessment is for the purpose of satisfying obligations to creditors. Liquidation of
domestic fraternals must be conducted consistent with the purposes of the current
law purpose of enhancing efficiency and economy of liquidation, through clarification
and specification of the law, to minimize legal uncertainty and litigation in a manner
designed to conserve assets, limit liquidation expenses, and avoid any assessment
of shares of a deficiency.

A liquidator of a fraternal under the bill must attempt to transfer insurance
policies or certificates by assignment, assumption, or another means to another
qualified fraternal, or if no qualified fraternal will accept the transfer, to an insurer
authorized to sell life insurance in Wisconsin. Upon transfer to an insurer, each
member of the transferring fraternal and owner of an insurance policy or certificate
being transferred is considered to agree that any terms of the policy or certificate that
provide for the fraternal's solvency or that subject the policy or certificate to the
fraternal's policies are null and void and to agree to any other changes in terms that
are determined by the liquidator to be necessary to effectuate the transfer.

Under current law, a fraternal organization that issues insurance policies and
that has an impaired financial position may apportion the deficiency among
members of the fraternal. This bill specifies that the assessment of the share of the
deficiency may not take effect sooner than 90 days after the date the commissioner
of insurer is notified of the assessment, unless the commissioner specifies an earlier
date. The bill also allows the commissioner to disapprove the assessment if the
commissioner finds that the assessment does not conform with the law or is contrary
to the interest of the fraternal's members.

Under current law, the injured patients and families compensation fund pays
excess medical malpractice claims and other amounts. Certain health care providers
who are covered by the compensation fund must pay an annual assessment to the
compensation fund in an amount calculated under formulas in current law. When
calculating the fees assessed to physicians, current law requires the commissioner
to provide for not more than four payment classifications, based upon the amount of
surgery performed and the risk of diagnostic and therapeutic services provided or

procedures performed. The bill changes the number of payment classifications to no
fewer than four classifications.

Currently, the Injured Patients and Families Compensation Fund Peer Review
Council reviews claims made and determines any future changes to fees assessed
against the health care provider. The board of governors of the plan of health care
liability coverage for health care providers appoints members to the peer review
council and designates the chairperson and other officers of the council. The bill
dictates that the chairperson of the peer review council must be a physician. Current
law requires the peer review council to consist of five persons, not more than three
of whom are physicians who are actively engaged in the practice of medicine in
Wisconsin. The bill specifies that those physicians must be licensed and in good
standing to practice medicine instead of actively practicing. Current law requires
the chairperson of the peer review council to serve as an ex officio nonvoting member
of the Medical Examining Board. The bill allows the chairperson to designate
another peer review council member to be the ex officio member of the Medical
Examining Board and specifies that the chairperson or peer review council member
may attend meetings of the Medical Examining Board as appropriate.

This bill delays the date on which the first governance annual disclosure is due
to the first June 1 that occurs after the date the final rules implementing the
disclosure requirements are promulgated. 2017 Wisconsin Act 313 requires an
insurer or an insurance holding company system of which an insurer is a member
to annually submit to the commissioner a corporate governance annual disclosure
containing certain information.

Under current law, the Office of the Commissioner of Insurance may refuse to
disclose and may prevent disclosure of testimony, reports, records, communications,
and information that are obtained from various entities under a pledge of
confidentiality or for the purpose of assisting or participating in the entity's
monitoring activities or in conducting an inquiry, investigation, or examination.
This bill adds to the list of entities whose information may not be disclosed a fund
or other entity in another state, or an association acting on behalf of the fund or other
entity, that is organized for the same purpose as the security fund created under
Wisconsin law.

This bill eliminates the requirement that, for an intermediary to place surplus
lines insurance with an unauthorized insurer domiciled in the United States, the
unauthorized insurer must provide to the commissioner, no more than six months
after the close of the period reported on, a certified copy of its current annual
statement that is filed and approved by the regulatory authority in the unauthorized
insurer's domicile and certified by an accounting or auditing firm licensed in the
jurisdiction of the unauthorized insurer's domicile. The bill maintains the
requirements for placement of surplus lines insurance that the unauthorized insurer
that is domiciled in the United States is authorized to write the type of insurance to

be placed with the insurer in its place of domicile and has capital and surplus in an
amount specified under current law.

This bill changes the deadline for submission of financial statements by
providers of property service contracts that use a deposit or irrevocable letter of
credit from the end of the fifth month following the end of the provider's fiscal year
to March 31 of each year.