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.
(2) 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.
(3) 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.
(4) 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.
(2) Supplementary information.
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.
(3) 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.
(2) 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)
(3) 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.
(4) Immature claims.
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.
(5) 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)
(6) 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.
(2) Insured's claim.
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.
(4) Multiple claims.
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
Disputed claims. 645.65(1)(1)
Notice of rejection and request for hearing.
When a claim is denied in whole or in part by the liquidator, written notice of the determination and of the right to object shall be given promptly to the claimant and the claimant's attorney by first class mail at the address shown in the proof of claim. Within 60 days from the mailing of the notice, the claimant may file objections with the court. If objections are not filed within that period, the claimant may not further object to the determination.
(2) Notice of hearing.
Whenever objections are filed with the court, the liquidator shall ask the court for a hearing as soon as practicable and give notice of the hearing by first class mail to the claimant or the claimant's attorney and to any other persons directly affected, not less than 10 nor more than 20 days before the date of the hearing. The matter may be heard by the court or by a court-appointed referee.
History: 1979 c. 93
; 1991 a. 316
Claims of surety.
Whenever a creditor whose claim against an insurer is secured in whole or in part by the undertaking of another person fails to prove and file that claim, the other person may do so in the creditor's name, and is subrogated to the rights of the creditor, whether the claim has been filed by the creditor or by the other person in the creditor's name, to the extent that the other person discharges the undertaking. In the absence of an agreement with the creditor to the contrary, the other person shall not be entitled to any dividend until the amount paid to the creditor on the undertaking plus the dividends paid on the claim from the insurer's estate to the creditor equals the amount of the entire claim of the creditor. Any excess received by the creditor shall be held in trust for such other person.
History: 1979 c. 93
Secured creditors' claims. 645.67(1)(1)
The value of any security held by a secured creditor shall be determined in one of the following ways, as the court directs:
By converting the same into money according to the terms of the agreement pursuant to which the security was delivered to such creditor;
By agreement, arbitration, compromise or litigation between the creditor and the liquidator.
The determination shall be under the supervision and control of the court. The amount so determined shall be credited upon the secured claim, and any deficiency shall be treated as an unsecured claim. If the claimant surrenders his or her security to the liquidator, the entire claim shall be allowed as if unsecured.
History: 1979 c. 102
s. 236 (13)
Qualified financial contracts. 645.675(1)(a)
“Actual direct compensatory damages" includes normal and reasonable costs of cover or other reasonable measures of damages used in the derivatives, securities, or other markets for the contract and agreement claims. “Actual direct compensatory damages" does not include punitive or exemplary damages, damages for lost profit or lost opportunity, or damages for pain and suffering.
“Business day" means any day other than a Saturday, a Sunday, or a day on which the New York Stock Exchange, or the Federal Reserve Bank of New York is closed.
“Commodity contract" means any of the following:
A contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a board of trade or contract market under the federal Commodity Exchange Act, 7 USC 1
, et seq., or a board of trade outside the United States.
An agreement that is subject to regulation under the federal Commodity Exchange Act, 7 USC 23
, and that is commonly known to the commodities trade as a margin account, margin contract, leverage account, or leverage contract.
An agreement or transaction that is subject to regulation under the federal Commodity Exchange Act, 7 USC 6c
, and that is commonly known to the commodities trade as a commodity option.
Any option to enter into an agreement or transaction specified in subds. 1.
“Contractual right" includes any right established in a rule or bylaw, or in a resolution, of the governing board of a derivatives clearing organization or board of trade as defined in the federal Commodity Exchange Act, 7 USC 1
, et seq.; a multilateral clearing organization, as defined in the federal Deposit Insurance Corporation Improvement Act of 1991, 12 USC 4402
; a national securities exchange, a national securities association, a securities clearing agency, or a control market designated under the federal Commodity Exchange Act, 7 USC 1
, et seq.; or a derivatives transaction execution facility registered under the federal Commodity Exchange Act, 7 USC 1
, et seq., or any right, regardless whether it is in writing, arising under statutory or common law, or under the uniform commercial code, or by reason of normal business practice.
“Counterparty" means a person who enters into a qualified financial contract with an insurer.
“Credit insurance" means insurance against loss arising from failure of debtors to meet financial obligations to creditors, except mortgage guaranty insurance.
“Credit life insurance" means insurance on the lives of borrowers or purchasers of goods in connection with specific loans or credit transactions when all or a portion of the insurance is payable to the creditor to reduce or extinguish the debt.
“Disability insurance" means insurance covering injury or death of persons caused by accident or insurance covering the health of persons.
“Financial guaranty insurance" means a surety bond, insurance policy, indemnity contract, or any similar guarantee issued by an insurer under which a loss is payable upon proof of occurrence of financial loss to an insured claimant. “Financial guaranty insurance" does not include credit insurance, credit life insurance, disability insurance, mortgage guaranty insurance, or long-term care insurance.
“First-method provision" means a contract provision in which the nondefaulting party is not required to pay if a net or settlement amount is owed to the defaulting party.
“Mortgage guaranty insurance" means insurance against loss arising from any of the following:
Debtors to meet financial obligations to creditors under evidences of indebtedness that are secured by any of the following: