To:         Members of the Bureau

FROM:  Donna Knepper

RE:        Rule V. – Premium Basis

Manual Rule Page R-19

The Bureau has been asked to recirculate the following information released in General Circular Letter 305 dated July 8, 1983:

Rule V., as found on Page R-10 19 in the manual, provides that the basis of premium in Wisconsin is total remuneration. In subparagraph V. B. 2. of the rule, it also defines what is included in the term "remuneration". One of the inclusions is:

"e. f. Payment by an employer of amounts otherwise required by law to be paid by employees to statutory insurance or pension plans, such as the Federal Social Security Act;"

It appears that some insurers are not including such remuneration when developing final premium for certain risks. More specifically, some insurers providing coverage to school boards (or municipalities) are not "picking up" contributions made by the employer on behalf of employee – teachers into the State Teachers Retirement Fund.

The Teachers Retirement Plan is statutory. It requires the employee – teacher to pay 5% of his or her salary into the Plan, with the employer paying in a matching contribution. We understand that the school boards (or municipalities) are paying the employee’s 5% in addition to the normal employer’s share. This is clearly remuneration under manual Rule V.B.2.e. f. and must be used in premium calculation. Any insurer not "picking up" this contribution is acting in violation of the filings made on its behalf by this Bureau.

This is clearly contrary to the insurance laws and could subject the insurer to forfeiture or other disciplinary action by the Insurance Commissioner.

Please see that the information contained in this circular is disseminated to the Underwriting, Auditing and Marketing Departments within your company who are responsible for Wisconsin business. Also, please make sure your field force, including your agents, are aware of this manual rule.

We appreciate your cooperation."