614.78 Maintenance of solvency.
(1) Order declaring hazardous condition. When a domestic fraternal has an authorized control level event, as defined by the commissioner by rule, under circumstances the commissioner determines will not be promptly remedied, the commissioner, in addition to taking any other action required or allowed by law, may issue an order declaring the domestic fraternal to be in a hazardous condition and may order the fraternal to remedy the authorized control level event. This order may include authorization to the fraternal to negotiate an agreement to transfer, subject to sub. (2), all members, certificates, and other assets and liabilities of the fraternal to another fraternal or other insurer through merger, consolidation, assumption, or other means.
(2) Specifications regarding transfer.
(a) Any transfer under sub. (1) shall constitute a novation of the transferring fraternal's certificates that is effective on the date of transfer. The fraternal shall ensure the transfer is concluded within the time agreed to by the commissioner and subject to approval by the commissioner. The transfer agreement under this paragraph is considered to be fully approved by the domestic fraternal upon a majority vote of the fraternal's board of directors, notwithstanding s. 614.73 and any other law or regulation that requires notice to or approval by the fraternal's members or supreme governing body. Any law of a fraternal requiring notice to or approval by the fraternal's members or supreme governing body shall be suspended by this section. The transferring fraternal shall provide notice to its members of the transfer by mail or in the manner provided by s. 614.41 (1) no later than 30 days after the transfer is approved by the commissioner.
(b) If the fraternal seeks to make a transfer under sub. (1) to an organization that does not have a certificate of authority in this state, the commissioner may grant the organization a limited certificate of authority to service the existing certificates and fulfill all obligations owed to certificate holders following the transfer but not to otherwise transact insurance business in this state.
(c) By order of the commissioner and notwithstanding any law or rules to the contrary and any laws of the fraternal, the board of directors of the fraternal may suspend or modify the qualifications for membership in the fraternal as necessary to facilitate a transfer under sub. (1).
(d) Upon the effective date of a transfer to an organization that is not a fraternal and in consideration for the transfer, each member of the fraternal is considered to agree that any terms of a certificate subjecting the certificate to the laws of the fraternal or providing for the maintenance of the fraternal's solvency, except to the extent of any outstanding lien not released by the terms of the transfer, shall be null and void and the assuming organization shall endorse the certificate accordingly.
History: 2019 a. 66; s. 35.17 correction in (2) (a).