611.19 Initial capital and surplus requirements.

(1) Minimum capital and permanent surplus. The commissioner may by rule establish the minimum capital for a stock corporation or the minimum permanent surplus for a nonassessable mutual organized under this chapter. In the absence of such a rule, the minimum capital or minimum permanent surplus shall be $2,000,000 or such greater amount as the commissioner specifies by order.

(2) Initial expendable surplus. A corporation organized under this chapter shall have an initial expendable surplus, after payment of all organizational expenses, of at least 50 percent of the minimum capital or minimum permanent surplus specified under sub. (1), or such other percentage as the commissioner specifies by order.

(4) Assessable mutuals.

(a) Reduced permanent surplus. An assessable mutual organized under this chapter need not have a permanent surplus if the assessment liability of its policyholders is unlimited. If assessments are limited to a specified amount or a specified multiple of annual advance premiums, the minimum permanent surplus shall be the amount that would be required under sub. (1) if the corporation were not assessable, reduced by an amount that reasonably reflects the value of the policyholders' assessment liability in satisfying the financial needs of the corporation.

(b) Initial expendable surplus. An assessable mutual organized under this chapter shall have an initial expendable surplus of at least $100,000, after payment of all organizational expenses.

(c) Initial applications; general. Except under pars. (d) and (e), no certificate of authority shall be issued to an assessable mutual until it has at least 400 bona fide applications for insurance from not less than 400 separate applicants on separate risks located in this state in each of the classes of business upon which assessments may be separately levied. A full year's premium shall be paid with each application and the aggregate premium shall be at least $50,000 for each such class. If at any time while the corporation is an assessable mutual, the business plan is amended to include an additional class of business on which assessments may be separately levied, identical requirements shall be applicable to each additional class.

(d) Same; worker's compensation. Five employers or more may join in the formation of an assessable mutual to write only worker's compensation insurance if, instead of the requirements of par. (c), policies are simultaneously put into effect that cover at least 1,500 employees, counting no more than 300 for any employer. A full year's premium shall be paid by each employer, aggregating at least $100,000.

(e) Initial surplus in lieu of initial applications. In place of initial applications and premium payments for any class of business, the corporation may provide the minimum permanent surplus and initial expendable surplus that the commissioner would require for a nonassessable mutual organizing to do that class of business under like conditions. The class of business shall nevertheless be assessable until conversion under s. 611.77 (1).

(5) Mutuals with open contracts. A mutual organized under this chapter need not have a permanent surplus if it issues only contracts the benefits of which may be reduced by action of the board if assets are not sufficient to provide the protection specified in the contracts. The terms and format of any such open contract provision must be approved by the commissioner before the mutual is given a certificate of incorporation.

(6) Providers' contracts. Any corporation under this chapter which promises in its policies to supply services in lieu of or in addition to indemnity, on a basis giving the insurer no option whether it will supply services or pay indemnity, shall maintain such contracts with providers that it can be reasonably expected that services will be provided as promised in its contracts.

(7) Reduction of minimum surplus. The commissioner may by order reduce the minimum amounts of surplus required under subs. (1) and (2) if in the commissioner's opinion the extent and nature of providers' contracts under sub. (6), financial guarantees and other support by financially sound private or public corporations, a pressing social need in a particular community for the formation of a mutual insurance corporation to provide needed insurance coverage, or other special circumstances, justify the proposed reduction in the required surplus. A person who will directly compete with the proposed insurer is aggrieved within the meaning of s. 601.62 (3) (a).

(8) Health maintenance organization insurer. This section does not apply to a health maintenance organization insurer that is subject to s. 609.96.

History: 1971 c. 260; 1975 c. 147 s. 54; 1979 c. 261; 1985 a. 335; 1989 a. 23, 303.