(1) Every domestic
insurer shall, on or prior to each March 1, prepare and submit a report of its
risk based capital levels as of the end of the calendar year just ended, in a
form and containing such information as is required by the risk based capital
instructions. For the purpose of this section filing of a risk based capital
report with the NAIC constitutes filing with the commissioner. A domestic
insurer shall file its risk based capital report with all of the following:
(a) The NAIC in accordance with the risk
based capital instructions.
(b) The
insurance commissioner in any state in which the insurer is authorized to do
business, if the insurance commissioner has notified the insurer of its request
in writing, in which case the insurer shall file its risk based capital report
not later than the later of:
1. Fifteen days
from the receipt of notice to file its risk based capital report with that
state.
2. March 1.
(1g) The risk based
capital of health maintenance organization insurers and of insurers writing
only limited service health organization business shall be determined in
accordance with the formula set forth in the risk based capital instructions.
The formula shall take into account, and may adjust for the covariance between
each of the following:
(a) Asset
risk.
(b) Credit risk.
(c) Underwriting risk.
(d) All other business risks and such other
relevant risks as are set forth in the risk based capital instructions.
(1r) The risks
identified under sub. (1g) shall be provided for as determined in each case by
applying the factors in the manner set forth in the risk based capital
instructions.
(2) A life or health
insurer's risk based capital shall be determined in accordance with the formula
set forth in the risk based capital instructions. The formula shall take into
account, and may adjust for the covariance between each of the following:
(a) The risk with respect to the insurer's
assets.
(b) The risk of adverse
insurance experience with respect to the insurer's liabilities and
obligations.
(c) The interest rate
risk with respect to the insurer's business.
(d) All other business risks and such other
relevant risks as are set forth in the risk based capital
instructions.
(3) The
risks identified under sub. (2) shall be provided for as determined in each
case by applying the factors in the manner set forth in the risk based capital
instructions.
(4) A property and
casualty insurer's risk based capital shall be determined in accordance with
the formula set forth in the risk based capital instructions. The formula shall
take into account, and may adjust for the covariance between each of the
following:
(a) Asset risk.
(b) Credit risk.
(c) Underwriting risk.
(d) All other business risks and such other
relevant risks as are set forth in the risk based capital
instructions.
(5) The
risks identified under sub. (4) shall be provided for as determined in each
case by applying the factors in the manner set forth in the risk based capital
instructions.
Note: An excess of capital over the amount produced by the
risk based capital requirements in this subchapter and the formulas, schedules
and instructions referenced in this subchapter is desirable in the business of
insurance. Accordingly, insurers should seek to maintain capital above the risk
based capital levels required by this subchapter. Additional capital is used
and useful in the insurance business and helps to secure an insurer against
various risks inherent in, or affecting, the business of insurance and not
accounted for or only partially measured by the risk-based capital requirements
contained in this chapter.
(6) If a domestic insurer files a risk based
capital report which in the judgment of the commissioner is inaccurate, then
the commissioner shall adjust the risk based capital report to correct the
inaccuracy and shall notify the insurer of the adjustment. The notice shall
contain a statement of the reason for the adjustment.
Notes
Wis. Admin. Code Office of the Commissioner of Insurance § Ins 51.05
Cr. Register, December,
1996, No. 492, eff. 1-1-97; cr. (1g) and (1r), Register, May, 1999, No. 521,
eff. 6-1-99.
