Notice is hereby further given that pursuant to s. 227.114, Stats., the proposed rule may have an effect on small businesses. The initial regulatory flexibility analysis is as follows:

The OCI small business coordinator is Louie Corneillus and may be reached at phone number (608) 264-8113 or at email address louie.corneillus@wisconsin.gov.

A copy of the full text of the proposed rule changes, analysis, and fiscal estimate may be obtained from the OCI internet Web site at http://oci.wi.gov/ocirules.htm or by contacting Inger Williams, Public Information and Communications, OCI, at: inger.williams@wisconsin.gov, (608) 264-8110, 125 South Webster Street — 2nd Floor, Madison, WI or PO Box 7873, Madison, WI 53707-7873.

Rule No. 145-: To amend s. Ins 51.01 (4) (a) 2., Wis. Admin. Code.

Relating to: risk based capital requirements and affecting small business.

The statement of scope of this rule, SS 069-12, was approved by the Governor on September 13, 2012, published in Register No. 681, on September 30, 2012, and approved by the Commissioner on October 15, 2012.

ss. 623.11 (1) and (2), Wis. Stats.

ss. 227.11 (2) (a), 623.11 (1) and (2), Wis. Stats.

Pursuant to s. 623.11 (1), Wis. Stats., “The commissioner shall, when necessary, determine the amount of compulsory surplus that an insurer is required to have in order not to be financially hazardous under s. 645.41 (4), Wis. Stats., as an amount that will provide reasonable security against contingencies affecting the insurer's financial position that are not fully covered by reserves or reinsurance."

Pursuant to s. 623.11 (2), Wis. Stats., “The commissioner may . . . establish by rule minimum ratios for the compulsory surplus in relation to any relevant variables, including the following: (a) amounts at risk; (b) premiums written or premiums earned; (c) liabilities; (d) equity investments of all or certain kinds in combination with any of the variables under pars. (a) to (c)."

The company action level provision under the regulation provides an early warning that an insurer might be approaching a financially hazardous condition. The proposed change to the regulation would modify a single variable, as authorized by s. 623.11 (2), Wis. Stats., potentially resulting in an earlier warning that a company is approaching financially hazardous condition.

Section 623.11, Wis. Stats. and s. Ins 51.01, Wis. Admin. Code, both address risk based capital requirements. The proposed rule merely updates the minimum ratio for insurers.

The existing regulation establishes risk based capital requirements for an insurer based on the risks inherent in the insurer's operations by requiring it to perform a calculation of its authorized control level risk based capital. Under the current regulation, a company action level event, which requires the company to take certain remedial steps, is triggered if:

(a) An insurer's capital is between 1.5 and 2.0 times the authorized control level risk based capital, or

(b) The insurer's capital is at or below 2.5 times the authorized control level risk based capital and the insurer has a negative trend test result, calculated pursuant to the risk based capital instructions.

The proposed rule would change the “2.5" to “3.0"; i.e., a company action level event would occur if the insurer's capital is at or below 3.0 times the authorized control level risk based capital and the insurer has a negative trend test result.

The proposed rule will update this regulation to be consistent with the NAIC model regulation and will also bring Wisconsin's requirements for life insurers into alignment with the requirements for health insurers and property and casualty insurers.

The proposed rule will apply to domestic life and health insurers that complete a life annual statement, and domestic fraternal insurers. The impact is expected to be minimal.

The Office is unaware of any existing or proposed federal regulations that are intended to address the activities to be regulated by the proposed rule change.

Illinois: 215 ILCS 5/35A-15 (a) (1) (B) (2013) contains provisions comparable to Wisconsin's existing rule.

Iowa: IAC s. 521E.3 1. a. (2) (2013) contains provisions comparable to Wisconsin's existing rule.

Michigan: MCLS s. 50.1204a (2013) adopts the NAIC Model Law by reference.

Minnesota: Minn. Stat. s. 60A.60 Subd. 11 (1) (2013) contains provisions less stringent that Wisconsin's existing rule.

The Office is proposing this rule change to make the regulation consistent with the NAIC model regulation for the purposes of maintaining accreditation. The amendment will also bring Wisconsin's requirements for life insurers into alignment with the requirements for health insurers and property and casualty insurers. Little, if any, Wisconsin insurers will be affected by this rule change.

Based upon revenue and ownership structure, there may be an effect on small businesses but any effect would be minimal as very few, if any, insurers meet the definition of a small business and non-insurance small businesses are protected by this proposed rule change as the amendment provides an earlier warning that a life insurer might be approaching a financially hazardous condition.

There may be an effect on small businesses but any effect would be minimal as very few, if any, insurers meet the definition of a small business and non-insurance small businesses are protected by this proposed rule change as the amendment provides a an earlier warning that a life insurer might be approaching a financially hazardous condition.

A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the Web site at: http://oci.wi.gov/ocirules.htm

or by contacting Inger Williams, OCI Services Section, at:

The deadline for submitting comments is 4:00 p.m. on the 14th day after the date for the hearing stated in the Notice of Hearing.

Street address:

Email address:

Web site: http://oci.wi.gov/ocirules.htm

Ins 51.01 (4) (a) 2. If a life or health insurer that completes the life annual statement for the reporting year, the insurer has total adjusted capital which is greater than or equal to its company action level risk based capital but less than the product of its authorized control level risk based capital and 2.53.0 and has a negative trend.

This rule change will have no significant effect on the private sector regulated by OCI.

STATE OF WISCONSIN DEPARTMENT OF ADMINISTRATION DOA-2049 (C04/2011)					Division of Executive Budget and Finance 101 East Wilson Street, 10th Floor P.O. Box 7864 Madison, WI 53707-7864 FAX: (608) 267-0372
ADMINISTRATIVE RULES — FISCAL ESTIMATE
1.   Fiscal Estimate Version
X Original ⍽ Updated ⍽ Corrected
2.   Administrative Rule Chapter Title and Number   Ins 51.01 (4) (a) 2.
3.   Subject   Risk based capital requirements and affecting small business.
4.   State Fiscal Effect:
X No Fiscal Effect ⍽ Indeterminate	⍽ Increase Existing Revenues ⍽ Decrease Existing Revenues					⍽ Increase Costs ⍽ Yes X No   May be possible to absorb       within agency's budget. ⍽ Decrease Costs
5.   Fund Sources Affected: ⍽ GPR   ⍽ FED   ⍽ PRO   ⍽ PRS   ⍽ SEG   ⍽ SEG-S						6.   Affected Ch. 20, Stats. Appropriations: None
7.   Local Government Fiscal Effect:
X No Fiscal Effect ⍽ Indeterminate	⍽ Increase Revenues ⍽ Decrease Revenues			⍽ Increase Costs ⍽ Decrease Costs
8.   Local Government Units Affected: ⍽ Towns⍽ Villages⍽ Cities ⍽ Counties ⍽ School Districts ⍽ WTCS Districts ⍽ Others: None
9.   Private Sector Fiscal Effect (small businesses only):

X No Fiscal Effect ⍽ Indeterminate	⍽ Increase Revenues ⍽ Decrease Revenues ⍽ Yes ⍽ No May have significant     economic impact on a     substantial number of     small businesses		⍽ Increase Costs ⍽ Yes X No     May have significant       economic impact on a       substantial number of       small businesses ⍽ Decrease Costs
10.   Types of Small Businesses Affected:
Domestic health or life insurers or domestic fraternal insurers that meet the definition of a small business.
11.   Fiscal Analysis Summary
12.   Long-Range Fiscal Implications
None
13.   Name - Prepared by Sarah E. Norberg		Telephone Number (608) 266-0082		Date 07/02/2013
14.   Name – Analyst Reviewer		Telephone Number		Date
Signature—Secretary or Designee		Telephone Number		Date

STATE OF WISCONSIN DEPARTMENT OF ADMINISTRATION DOA-2049 (R03/2012)	Division of Executive Budget and Finance 101 East Wilson Street, 10th Floor P.O. Box 7864 Madison, WI 53707-7864 FAX: (608) 267-0372
ADMINISTRATIVE RULES Fiscal Estimate & Economic Impact Analysis

1. Type of Estimate and Analysis
X Original   ⍽ Updated   ⍽ Corrected
2. Administrative Rule Chapter, Title and Number
Agency 145 Ch. Ins 51.01 (4) (a) 2.
3. Subject
Risk Based Capital Requirements and affecting small business amendment beginning January 1, 2014.
4. Fund Sources Affected			5. Chapter 20, Stats. Appropriations Affected
⍽ GPR   ⍽ FED   X PRO   ⍽ PRS   ⍽SEG   ⍽ SEG-S			None
6. Fiscal Effect of Implementing the Rule
X No Fiscal Effect ⍽ Indeterminate	⍽ Increase Existing Revenues ⍽ Decrease Existing Revenues		⍽ Increase Costs ⍽ Could Absorb Within Agency's Budget ⍽ Decrease Cost
7. The Rule Will Impact the Following (Check All That Apply)
⍽ State's Economy ⍽ Local Government Units		X Specific Businesses/Sectors ⍽ Public Utility Rate Payers X Small Businesses (if checked, complete Attachment A)
8. Would Implementation and Compliance Costs Be Greater Than $20 million? ⍽ Yes   X No
9. Policy Problem Addressed by the Rule
The proposed rule potentially results in an earlier warning that a company is approaching a financially hazardous condition. The proposed rule updates an existing regulation to be consistent with the NAIC model regulation and will also bring Wisconsin's requirements for life insurers into alignment with the requirements for health insurers and property and casualty insurers.
10. Summary of the businesses, business sectors, associations representing business, local governmental units, and individuals that may be affected by the proposed rule that were contacted for comments.
OCI solicited comments generally through publication requesting comments from the public utilizing the OCI website. Additionally OCI solicited comments from the following businesses, associations representing businesses, local governmental units and individuals: Northwestern Mutual Trilogy Johnson Insurance Thrivent Network Health United HealthCare Group Health Cooperative of Eau Claire Group Health Cooperative of South Central Wisconsin HIRSP Arrowhead Strategies Capital Group of Wisconsin Wisconsin Health Plans Wisconsin Medical Society WPS Insurance Dean Health Plan Unity Health Plan TASC Physicians Plus Insurance Corporation Wisconsin Hospital Association Gundersen Lutheran Wisconsin Dental Association Security Health Plan NAIFA Wisconsin Assurant Health Wisconsin Counties Group Health Trust Blue Cross Blue Shield of Wisconsin Ministry Health Care Humana Aurora Health Care Mayo Health Care WEA Trust Health Partners Mercy Health System WellPoint Arise Health Plan
11. Identify the local governmental units that participated in the development of this EIA.
None beyond solicitation for comments.
12. Summary of Rule's Economic and Fiscal Impact on Specific Businesses, Business Sectors, Public Utility Rate Payers, Local Governmental Units and the State's Economy as a Whole (Include Implementation and Compliance Costs Expected to be Incurred)
The proposed rule will affect domestic life and health insurers who complete a life annual statement, and domestic fraternal insurers. The impact is expected to be minimal. Non-insurance small businesses are protected by this proposed rule change as the amendment provides an earlier warning that a life insurer might be approaching a financially hazardous condition. There may be an effect on small businesses but any effect would be minimal as very few, if any, insurers meet the definition of a small business.
13. Benefits of Implementing the Rule and Alternative(s) to Implementing the Rule
The proposed rule potentially results in an earlier warning that a company is approaching a financially hazardous condition. The proposed rule updates an existing regulation to be consistent with the NAIC model regulation and will also bring Wisconsin's requirements for life insurers into alignment with the requirements for health insurers and property and casualty insurers. This change makes the application of standards uniform across lines of insurance minimizing disparate treatment of insurers.
14. Long Range Implications of Implementing the Rule
The long-range implications of the rule as proposed are: 1) earlier warning that a company is approaching a financially hazardous condition, 2) consistency in risk based capital requirements for life, health and property and casualty insurers, and 3) consistency with the NAIC model regulation for the purposes of maintaining accreditation for domestic insurers conducting business in other states.
15. Compare With Approaches Being Used by Federal Government
OCI is unaware of any existing or proposed federal regulations that are intended to address the activities to be regulated by the proposed rule change.
16. Compare With Approaches Being Used by Neighboring States (Illinois, Iowa, Michigan and Minnesota)
Illinois and Iowa have laws comparable to Wisconsin's existing rule (215 ILCS 5/35A-15 (a) (1) (B) (2013) and IAC s. 521E.3 1. a. (2) (2013)). Michigan adopts the NAIC Model Law by reference (MCLS s. 50.1204a (2013)). Effective December 31, 2013, Minnesota will have a requirement comparable to Wisconsin's proposed rule (Minn. Stat. s. 60A.62 Subd. 1 (1) (ii) (2013)).
17. Contact Name				18. Contact Phone Number
Louie Cornelius				608-264-8113

NOTICE IS HEREBY GIVEN that pursuant to authority vested in the Department of Safety and Professional Services in ss. 145.13 and 227.11 (2), Stats., and interpreting s. 145.02 (2), Stats., the Department of Safety and Professional Services will hold a public hearing at the time and place indicated below to consider an order to renumber and amend s. SPS 381.01 (141) as s. SPS 381.01 (141) (a) to (c); amend ss. SPS 381.20 Table 381.20-11 (partial) line 6., 384.20 (2) (b) (Note), 384.40 (4) (intro.), and 384.40 (8) (a) and (d); and create ss. SPS 381.01 (141) (c) (Note), 381.20 Table 381.20-11 (partial) line 7., relating to U.S. EPA lead reduction rule, Safe Drinking Water Act amendments of 2011.