Various changes to insurance laws, including issuance of funding agreements, granting rule-making authority, and providing a penalty

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.