Chapter 645, INSURERS REHABILITATION AND LIQUIDATION

645.01 Short title, construction and purpose. (1) SHORT TITLE. This chapter may be cited as the “Insurers Rehabilitation and Liquidation Act”. (2) CONSTRUCTION: NO LIMITATION OF POWERS. This chapter shall not be interpreted to limit the powers granted the commissioner by other pr…

645.02 Persons covered. The proceedings authorized by this chapter may be applied to all of the following: (1) All insurers who are doing, or have done, an insurance business in this state, and against whom claims arising from that business may exist now or in the future. (2) All…

645.03 Definitions. (1) GENERAL DEFINITIONS. For the purposes of this chapter: (a) “Ancillary state” means any state other than a domiciliary state. (b) “Delinquency proceeding” means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reor…

645.035 Bankruptcy petition is prohibited. (1) In this section, “bankruptcy proceeding” means any proceeding under 11 USC 101 to 1330. (2) No insurer may commence a bankruptcy proceeding in which the insurer is a debtor. (3) No person, including an insurer, may commence a bankrup…

645.04 Jurisdiction and venue. (1) ACTIONS BY COMMISSIONER. Except as provided in sub. (2) and s. 645.45 (1), no delinquency proceeding may be commenced under this chapter by anyone other than the commissioner of this state and no court has jurisdiction to entertain, hear or dete…

645.05 Injunctions and orders. (1) INJUNCTIONS IN THIS STATE. Any receiver appointed in a proceeding under this chapter may at any time apply for and any court of general jurisdiction in this state may grant, under the relevant sections of ch. 813, such restraining orders, tempor…

645.06 Costs and expenses of litigation. In any proceeding or action brought by the commissioner or a receiver under this chapter, the court may award such costs and other expenses of litigation to the commissioner or receiver as justice requires, without regard to the limitation…

645.07 Cooperation of officers and employees. (1) DUTY TO COOPERATE. Any officer, manager, trustee or general agent of any insurer, any attorney representing an insurer on any matter, and any other person with executive authority over or in charge of any segment of the insurer’s …

645.08 Bonds; immunity. (1) BONDS. In any proceeding under this chapter the commissioner and the commissioner’s deputies are responsible on their official bonds for the faithful performance of their duties. If the court deems it desirable for the protection of the assets, it may …

645.09 Commissioner’s reports. (1) GENERAL REPORT OF PROCEEDINGS. The commissioner may include in his or her annual report: (a) Formal proceedings. The names of the insurers proceeded against under ss. 645.31, 645.41, 645.45, 645.81, 645.82 and 645.84, and such other facts as ind…

645.10 Continuation of delinquency proceedings. Every proceeding commenced before August 5, 1967 is deemed to have commenced under this chapter for the purpose of conducting the proceeding thereafter, except that in the discretion of the commissioner the proceeding may be continu…

645.11 Effect of amendments of this chapter. Every proceeding commenced under this chapter before December 9, 1979, is subject to the amendments of this chapter by chapter 93, laws of 1979, except as to rights which have fully vested before December 9, 1979. History: 1979 c. 93, …

645.21 Commissioner’s summary orders. 645.21(1)(1) Summary order after hearing. Whenever the commissioner has reasonable cause to believe, and determines, after a hearing held as prescribed in s. 601.62, that any insurer has committed or engaged in, or is committing or engaging i…

645.22 Court’s seizure order. (1) ISSUANCE. Upon the filing by the commissioner in any circuit court in this state of a verified petition alleging any ground that would justify a court order for a formal delinquency proceeding against an insurer under this chapter and that the in…

645.23 Commissioner’s seizure order. (1) ISSUANCE. If it appears to the commissioner that the interests of creditors, policyholders or the public will be endangered by the delay incident to asking for a court seizure order, then on any ground that would justify a court seizure or…

645.24 Conduct of hearings in summary proceedings. (1) CONFIDENTIALITY OF COMMISSIONER’S HEARINGS. The commissioner shall hold all hearings in summary proceedings privately unless the insurer requests a public hearing, in which case the hearing shall be public. (2) CONFIDENTIALIT…

645.31 Grounds for rehabilitation. The commissioner may apply by verified petition to the circuit court for Dane County or for the county in which the principal office of the insurer is located for an order directing rehabilitation of a domestic insurer or an alien insurer domici…

645.32 Rehabilitation orders. (1) APPOINTMENT OF REHABILITATOR. An order to rehabilitate the business of a domestic insurer, or an alien insurer domiciled in this state, shall appoint the commissioner and his or her successors in office rehabilitator and shall direct the rehabili…

645.33 Powers and duties of the rehabilitator. (1) SPECIAL DEPUTY COMMISSIONER. The rehabilitator may appoint a special deputy commissioner to rehabilitate the insurer. The special deputy commissioner shall have all of the powers of the rehabilitator granted under this section. S…

645.34 Actions by and against rehabilitator. 645.34(1)(1) Stays in pending litigation. On request of the rehabilitator, any court in this state before which any action or proceeding by or against an insurer is pending when a rehabilitation order against the insurer is entered sha…

645.35 Termination of rehabilitation. (1) TRANSFORMATION TO LIQUIDATION. Whenever the rehabilitator believes that further attempts to rehabilitate an insurer would substantially increase the risk of loss to creditors, policyholders, or the public, or would be futile, the rehabili…

645.41 Grounds for liquidation. The commissioner may apply by verified petition to the circuit court for Dane County or for the county in which the principal office of the insurer is located for an order directing him or her to liquidate a domestic insurer or an alien insurer dom…

645.42 Liquidation orders. (1) ORDER TO LIQUIDATE. An order to liquidate the business of a domestic insurer shall appoint the commissioner and his or her successors in office liquidator and shall direct the liquidator to take possession of the assets of the insurer and to adminis…

645.43 Continuance of coverage. (1) All insurance policies issued by the insurer shall continue in force: (a) For a period of 15 days from the date of entry of the liquidation order; (b) Until the normal expiration of the policy coverage; (c) Until the insured has replaced the in…

645.44 Dissolution of insurer. The commissioner may petition for an order dissolving the corporate existence of a domestic insurer or the U.S. branch of an alien insurer domiciled in this state at the time of the application for a liquidation order. If the court issues a liquidat…

645.45 Federal receivership. (1) PETITION FOR FEDERAL RECEIVER. Whenever in the commissioner’s opinion, liquidation of a domestic insurer or an alien insurer domiciled in this state would be facilitated by a federal receivership, and when any ground exists upon which the commissi…

645.46 Powers of liquidator. The liquidator shall report to the court monthly, or at other intervals specified by the court, on the progress of the liquidation in whatever detail the court orders. Subject to the court’s control, the liquidator may: (1) Appoint a special deputy to…

645.47 Notice to creditors and others. (1) NOTICE REQUIRED. (a) General requirements. The liquidator shall give notice of the liquidation order as soon as possible by first class mail and either by telegram or telephone to the insurance commissioner of each jurisdiction in which …

645.48 Duties of agents. (1) WRITTEN NOTICE. Every person who receives notice in the form prescribed in s. 645.47 that an insurer which the person represents as an independent agent is the subject of a liquidation order shall as soon as practicable give notice of the liquidation …

645.49 Actions by and against liquidator. 645.49(1)(1) Termination of actions against insurer by order appointing liquidator. Upon issuance of any order appointing the commissioner liquidator of a domestic insurer or of an alien insurer domiciled in this state, all actions and al…

645.51 Collection and list of assets. Cross-reference: See definitions in ss. 600.03 and 628.02. SUBCHAPTER I GENERAL PROVISIONS

645.52 Fraudulent transfers prior to petition. (1) DEFINITION AND EFFECT. Every transfer made or suffered and every obligation incurred by an insurer within one year prior to the filing of a successful petition for rehabilitation or liquidation under this chapter is fraudulent as…

645.53 Fraudulent transfers after petition. 645.53(1)(1) Effect of petition: real property. After a petition for rehabilitation or liquidation, a transfer of any of the real property of the insurer made to a person acting in good faith shall be valid against the receiver if made …

645.54 Voidable preferences and liens. (1) PREFERENCES. (a) Preference defined. A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year before the…

645.55 Claims of holders of void or voidable rights. (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 th…

645.56 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 a…

645.57 Assessments. (1) 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 co…

645.58 Reinsurer’s liability; arbitration clauses. (1) LIABILITY. 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 …

645.59 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.

645.60 Applicability of claims settlement provisions to loss claims. Sections 645.46 (18), 645.61 (2) and (3), 645.63 (1), (3), (4) and (6), 645.64 (3), 645.65, 645.71, 645.86 and 645.87 (2) do not apply to those loss claims that are subject to ch. 646 or to corresponding laws of…

645.61 Filing of claims. (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) to (11)…

645.62 Proof of claim. 645.62(1)(1) Contents of proof of claim. 645.62(1)(a)(a) 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: 645.62(1)(a)1.1. The particulars of the cl…

645.63 Special claims. (1) 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. A…

645.64 Special provisions for 3rd-party claims. (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 liabi…

645.65 Disputed claims. (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…

645.66 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, …

645.67 Secured creditors’ claims. (1) The value of any security held by a secured creditor shall be determined in one of the following ways, as the court directs: (a) By converting the same into money according to the terms of the agreement pursuant to which the security was deli…

645.675 Qualified financial contracts. (1) In this section: (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. …

645.68 Order of distribution. The order of distribution of claims from the insurer’s estate shall be as stated in this section. The first $50 of the amount allowed on each claim in the classes under subs. (3) to (6), except for claims of the federal government under subs. (3) and…

645.69 Claims for certain health care costs. Unless a lower class is applicable, a claim is included among the claims that are subject to the classification under s. 645.68 (5) if the claim is any of the following: (1) A claim against a health maintenance organization insurer or …