Every officer, manager, employee, shareholder, member, subscriber, attorney or any other person acting on behalf of the insurer who knowingly participates in giving any preference when he or she has reasonable cause to believe the insurer to be or about to become insolvent at the time of the preference shall be personally liable to the liquidator for the amount of the preference. It is permissible to infer that there is reasonable cause to so believe if the transfer was made within 4 months before the date of filing of the successful petition for liquidation.
Every person receiving any property from the insurer or the benefit thereof as a preference voidable under sub. (1) (b)
is personally liable therefor and is bound to account to the liquidator.
Nothing in this subsection prejudices any other claim by the liquidator against any person.
Claims of holders of void or voidable rights. 645.55(1)(1)
Disallowance for failure to surrender property.
No claims of a creditor who has received or acquired a preference, lien, conveyance, transfer, assignment or encumbrance, voidable under this chapter, may be allowed unless the creditor surrenders the preference, lien, conveyance, transfer, assignment or encumbrance. If the avoidance is effected by a proceeding in which a final judgment has been entered, the claim shall not be allowed unless the money is paid or the property is delivered to the liquidator within 30 days from the date of the entering of the final judgment, except that the court having jurisdiction over the liquidation may allow further time if there is an appeal or other continuation of the proceeding.
Time for filing.
A claim allowable under sub. (1)
by reason of the avoidance, whether voluntary or involuntary, of a preference, lien, conveyance, transfer, assignment or encumbrance may be filed as an excused late filing under s. 645.61
if filed within 30 days from the date of the avoidance or within the further time allowed by the court under sub. (1)
History: 1979 c. 93
Setoffs and counterclaims. 645.56(1)(1)
Setoffs allowed in general.
Mutual debts or mutual credits between the insurer and another person in connection with any action or proceeding under this chapter shall be set off and the balance only shall be allowed or paid, except as provided in sub. (2)
No setoff or counterclaim may be allowed in favor of any person where:
The obligation of the insurer to the person would not at the date of the filing of a petition for liquidation entitle the person to share as a claimant in the assets of the insurer;
The obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff;
The obligation of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or
The obligation of the person is to pay premiums, whether earned or unearned, to the insurer.
History: 1979 c. 93
Report to court.
As soon as practicable but not more than 2 years from the date of an order of liquidation under s. 645.42
of an insurer issuing assessable policies, including an insurer organized under ch. 612
, the liquidator shall make a report to the court setting forth:
The reasonable value of the assets of the insurer;
The insurer's probable total liabilities; and
The probable aggregate amount of the assessment necessary to pay all claims of creditors and expenses in full, including expenses of administration and costs of collecting the assessment.
Upon the basis of the report provided in sub. (1)
, including any supplements and amendments thereto, the court may levy ex parte one or more assessments against all members of the insurer who are subject to assessment.
Subject to any applicable legal limits on assessability, the aggregate assessment shall be for the amount that the sum of the probable liabilities, the expenses of administration and the estimated cost of collection of the assessment exceeds the value of existing assets, with due regard being given to assessments that cannot be collected economically.
Order to show cause.
After levy of assessment under sub. (2)
, the court shall issue an order directing each member who has not paid the assessment pursuant to the order to show cause why the liquidator shall not have a judgment therefor. If a member of the insurer also appears to be indebted to the insurer apart from the assessment, the court, upon application of the liquidator, may also direct the member to show cause why the member should not pay the other indebtedness. Liability for such indebtedness shall be determined in the same manner and at the same time as the liability to pay the assessment.
The liquidator shall give notice of the order to show cause by publication if so directed by the court and by first class mail to each member liable thereunder mailed at least 20 days before the return day of the order to show cause to the member's last-known address as it appears on the records of the insurer.
If a member does not appear and serve duly verified objections upon the liquidator upon the return day of the order to show cause under sub. (3)
, the court shall make an order adjudging the member liable to the liquidator for the amount of the assessment against the member and other indebtedness, under sub. (3)
, together with costs.
If on such return day, the member appears and serves duly verified objections upon the liquidator, the court may hear and determine the matter or may appoint a referee to hear it and make such order as the facts warrant. Any order made by a referee under this paragraph shall have the same force and effect as if it were a judgment of the court, subject to review by the court upon application within 30 days.
The liquidator may enforce any order or collect any judgment under sub. (5)
by any lawful means.
Reinsurer's liability; arbitration clauses. 645.58(1)(1)
Except as provided in this subsection and in s. 646.35 (8) (e)
, the amount recoverable by the liquidator from a reinsurer shall not be reduced as a result of delinquency proceedings, regardless of any provision in the reinsurance contract or other agreement. Payment made directly to an insured or other creditor shall not diminish the reinsurer's obligation to the insurer's estate except when any of the following applies:
The reinsurance contract or other agreement specifically provides for another payee of the reinsurance in the event of delinquency proceedings, payment is made to the other payee, and the payment operates to extinguish the liability of the ceding insurer to the extent of the payment made by the reinsurer.
The reinsurer has assumed policy obligations of the ceding insurer as direct obligations of the reinsurer, payment is made to the payees under the policies, and the assumption operates to extinguish the liability of the ceding insurer to the extent assumed.
After December 31, 1989, a domestic insurer may not enter into a reinsurance contract that contains an arbitration provision permitting its reinsurer to require arbitration of an action on or related to the contract when the domestic insurer is subject to a delinquency proceeding under this subchapter.
History: 1989 a. 23
; 2003 a. 44
Uncollected, unearned premiums.
An agent or broker who is a resident of this state is not liable to the liquidator of a domestic or foreign insurer for the amount of any uncollected, unearned premium.
History: 1987 a. 325
Applicability of claims settlement provisions to loss claims.
Sections 645.46 (18)
, 645.61 (2)
, 645.63 (1)
, 645.64 (3)
and 645.87 (2)
do not apply to those loss claims that are subject to ch. 646
or to corresponding laws of other states that conform to s. 646.60 (1)
. In addition, ss. 645.61 (1)
, 645.62 (1)
, 645.63 (2)
, 645.64 (1)
, 645.83 (3)
and 645.87 (1)
do not apply to those loss claims under contracts subject to s. 646.35
or to corresponding laws of other states that conform to ss. 646.35
and 646.60 (1)
History: 1979 c. 109
; 1985 a. 216
Filing of claims. 645.61(1)(1)
Deadline for filing.
Proof of all claims must be filed with the liquidator in the form required by s. 645.62
on or before the last day for filing specified in the notice required under s. 645.47
, except that proof of claims under s. 645.68 (9)
need not be filed at all, and proof of claims for unearned premiums and claims for cash surrender values or other investment values in life insurance and annuities need not be filed unless the liquidator expressly so requires.
Excused late filings.
For a good cause shown, the liquidator shall recommend and the court shall permit a claimant making a late filing to share in dividends, whether past or future, as if the claim were not late, to the extent that any such payment will not prejudice the orderly administration of the liquidation. Good cause includes but is not limited to the following:
That existence of a claim was not known to the claimant and which the claimant filed within 30 days after learning of it;
That a claim for unearned premiums or for cash surrender values or other investment values in life insurance or annuities which was not required to be filed was omitted from the liquidator's recommendations to the court under s. 645.71
, and that it was filed within 30 days after the claimant learned of the omission;
That a transfer to a creditor was avoided under ss. 645.52
or was voluntarily surrendered under s. 645.55
, and that the filing satisfies the conditions of s. 645.55
That valuation under s. 645.67
of security held by a secured creditor shows a deficiency, which is filed within 30 days after the valuation; and
That a claim was contingent and became absolute, and was filed within 30 days after it became absolute.
Unexcused late filings.
The liquidator may consider any claim filed late which is not covered by sub. (2)
, and permit it to receive dividends, other than the first dividend, which are subsequently declared on any claims of the same or lower priority if the payment does not prejudice the orderly administration of the liquidation. The late-filing claimant shall receive, at each distribution, the same percentage of the amount allowed on the late claim as is then being paid to other claimants of the same priority plus the same percentage of the amount allowed on the late claim as is then being paid to claimants of any lower priority. This shall continue until the late claim has been paid in full.
Filing of claims by funds.
Claims by funds under s. 646.33
and corresponding provisions of funds of other jurisdictions that satisfy s. 646.60 (1) (b)
shall be filed periodically by the funds pursuant to rules promulgated by the commissioner.
History: 1971 c. 260
; 1979 c. 93
Unless otherwise prescribed by the liquidator, a proof of claim shall consist of a verified statement that includes all of the following that are applicable:
The particulars of the claim, including the consideration given for it.
The identity and amount of the security on the claim.
That the sum claimed is justly owing and that there is no setoff, counterclaim or defense to the claim.
Any right of priority of payment or other specific right asserted by the claimant.
A copy of any written instrument which is the foundation of the claim.
In the case of any 3rd-party claim based on a liability policy issued by the insurer, a conditional release of the insured pursuant to s. 645.64 (1)
The name and address of the claimant and the attorney, if any, who represents the claimant.
No claim need be considered or allowed if it does not contain all the information under par. (a)
which may be applicable. The liquidator may require that a prescribed form be used and may require that other information and documents be included.
At any time the liquidator may request the claimant to present information or evidence supplementary to that required under sub. (1)
, and may take testimony under oath, require production of affidavits or depositions or otherwise obtain additional information or evidence.
Conclusiveness of judgments.
No judgment or order against an insured or the insurer entered after the filing of a successful petition for liquidation and no judgment or order against an insured or the insurer entered at any time by default or by collusion need be considered as evidence of liability or of the amount of damages. No judgment or order against an insured or the insurer entered within 4 months before the filing of the petition need be considered as evidence of liability or of the amount of damages.
Claims contingent on judgments.
The claim of a 3rd party which is contingent only on the party's first obtaining a judgment against the insured shall be considered and allowed as if there were no such contingency.
Claims under terminated policies.
Any claim that would have become absolute if there had been no termination of coverage under s. 645.43
, and which was not covered by insurance acquired to replace the terminated coverage, shall be allowed as if the coverage had remained in effect, unless at least 10 days before the insured event occurred either the claimant had actual notice of the termination or notice was mailed to the claimant as prescribed by s. 645.47 (1)
or 645.48 (1)
. If allowed the claim shall share in distributions under s. 645.68 (8)
Other contingent claims.
A claim may be allowed even if contingent, if it is filed in accordance with s. 645.61 (2)
. It may be allowed and may participate in all dividends declared after it is filed, to the extent that it does not prejudice the orderly administration of the liquidation.
Claims that are due except for the passage of time shall be treated as absolute claims are treated, except that where justice requires the court may order them discounted at the legal rate of interest.
Claims under security fund.
The board of the insurance security fund shall file a claim with the liquidator for all claims to which the fund has been subrogated under s. 646.33 (1)
Claims under employment contracts with directors and others.
Claims made under employment contracts by directors, principal officers or persons in fact performing similar functions or having similar powers are limited to payment for services rendered prior to the issuance of any order of rehabilitation or liquidation under s. 645.32
Sub. (1) governs technically contingent claims of 3rd parties, sub. (2) governs truly contingent claims, and sub. (3) governs other contingent claims, including technically contingent claims of those who are not 3rd parties. Bell Captain North v. Anderson, 112 Wis. 2d 396
, 332 N.W.2d 860
(Ct. App. 1983).
Special provisions for 3rd-party claims. 645.64(1)(1)
Third party's claim.
Whenever any 3rd party asserts a cause of action against an insured of an insurer in liquidation, the 3rd party may file a claim with the liquidator. The filing of the claim shall release the insured's liability to the 3rd party on that cause of action in the amount of the applicable policy limit, but the liquidator shall also insert in any form used for the filing of 3rd-party claims appropriate language to constitute such a release. The release shall be void if the insurance coverage is avoided by the liquidator.
Whether or not the 3rd party files a claim, the insured may file a claim on his or her own behalf in the liquidation. If the insured fails to file a claim by the date for filing claims specified in the order of liquidation or within 60 days after mailing of the notice required by s. 645.47 (1) (b)
, whichever is later, the insured is an unexcused late filer.
The liquidator shall make recommendations to the court under s. 645.71
for the allowance of an insured's claim under sub. (2)
after consideration of the probable outcome of any pending action against the insured on which the claim is based, the probable damages recoverable in the action and the probable costs and expenses of defense. After allowance by the court, the liquidator shall withhold any dividends payable on the claim, pending the outcome of litigation and negotiation with the insured. Whenever it seems appropriate, the liquidator shall reconsider the claim on the basis of additional information and amend the recommendations to the court. The insured shall be afforded the same notice and opportunity to be heard on all changes in the recommendation as in its initial determination. The court may amend its allowance as it thinks appropriate.
As claims against the insured are settled or barred, the insured shall be paid from the amount withheld the same percentage dividend as was paid on other claims of like priority, based on the lesser of the following:
The amount actually recovered from the insured by action or paid by agreement plus the reasonable costs and expenses of defense.
After all claims are settled or barred, any sum remaining from the amount withheld shall revert to the undistributed assets of the insurer. Delay in final payment under this subsection shall not be a reason for unreasonable delay of final distribution and discharge of the liquidator.
If several claims founded upon one policy are filed, whether by 3rd parties or as claims by the insured under this section, and the aggregate allowed amount of the claims to which the same limit of liability in the policy is applicable exceeds that limit, each claim as allowed shall be reduced in the same proportion so that the total equals the policy limit. Claims by the insured shall be evaluated as in sub. (3)
. If any insured's claim is subsequently reduced under sub. (3)
, the amount thus freed shall be apportioned ratably among the claims that have been reduced under this subsection.
Third parties and insureds are not required to file their claims with the liquidator. Riley v. Heil, 624 F. Supp. 695