HF 2300

as introduced - 93rd Legislature (2023 - 2024) Posted on 05/11/2023 09:45pm

A bill for an act
relating to insurance; providing for certain premium discounts and rate reductions;
establishing a strengthen Minnesota homes program; establishing an account;
authorizing administrative rulemaking; proposing coding for new law in Minnesota
Statutes, chapter 65A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [65A.60] PREMIUM DISCOUNT OR INSURANCE RATE REDUCTION;
CONSTRUCTION AND CERTIFICATION.
new text end

new text begin (a) For purposes of sections 65A.60 to 65A.63:
new text end

new text begin (1) "commissioner" means the commissioner of commerce;
new text end

new text begin (2) "insurable property" means a residential property certified as meeting the Fortified
For Safe Living Standards (FFSLS), as may be adopted from time to time by the Institute
for Business and Home Safety (IBHS) or a successor entity, or the Fortified Commercial
Standard (FCS), as may be adopted from time to time by IBHS; and
new text end

new text begin (3) "insurer" has the meaning given in section 65A.27, subdivision 5.
new text end

new text begin (b) An insurer must provide a premium discount or insurance rate reduction in an amount
and manner as established in paragraph (h) for an insurable property. An insurer may offer
additional adjustments in deductibles, other credit rate differentials, or a combination thereof,
collectively referred to as adjustments. An adjustment must be made available under the
terms specified under this section to an owner who builds or locates a new insurable property
in Minnesota in order to resist loss due to catastrophic windstorm events.
new text end

new text begin (c) An insurable property must be certified as conforming to FFSLS or FCS criteria only
after inspection and certification by an IBHS-certified inspector.
new text end

new text begin (d) An owner of insurable property claiming an adjustment must maintain the IBHS
certification documentation, which is considered proof of compliance with the FFSLS or
FCS requirements.
new text end

new text begin (e) The records required by this section are subject to audit by the commissioner or the
commissioner's representative.
new text end

new text begin (f) Evidence of IBHS certification must be presented to the insurer or potential insurer
of a property owner before the adjustment becomes effective for the insurable property.
new text end

new text begin (g) The records that must be maintained under paragraph (d) must be presented to the
insurer or potential insurer of a property owner before the adjustment becomes effective
for the insurable property.
new text end

new text begin (h) An insurer required to submit rates and rating plans to the commissioner must submit
an actuarially justified rating plan for a person who builds an insurable property to comply
with this section. In addition to the requirements of this section, an insurer may voluntarily
offer a more generous mitigation adjustment that the insurer deems appropriate. An insurer
is prohibited from offering a mitigation adjustment that does not meet the minimum
requirements of this section.
new text end

new text begin (i) The commissioner may adopt rules as necessary to implement this section.
new text end

Sec. 2.

new text begin [65A.61] PREMIUM DISCOUNT OR INSURANCE RATE REDUCTION;
FORTIFIED EXISTING HOMES.
new text end

new text begin (a) An insurer must provide a premium discount or insurance rate reduction in an amount
and manner as established in paragraph (e) for an insurable property. An insurer may offer
additional adjustments in deductibles, other credit rate differentials, or a combination thereof,
collectively referred to as adjustments. An adjustment must be available under the terms
specified in this section to any owner who retrofits an insurable property located in Minnesota
in order to resist loss due to catastrophic windstorm events.
new text end

new text begin (b) To obtain the adjustment provided in this section, an insurable property must be
retrofitted to the requirements in the Fortified Home: Highwind and Hail Standards (FHWH),
as may be adopted from time to time by the IBHS or a successor entity.
new text end

new text begin (c) An insurable property must be certified as conforming to Fortified Commercial
Standard or Fortified Home requirements only after an IBHS-certified inspector inspects
and certifies the insurable property.
new text end

new text begin (d) An owner of insurable property claiming an adjustment under this section must
maintain the IBHS certification documentation, which is considered proof of compliance
with the FCS or Fortified Home requirements described under paragraphs (b) and (c). The
certification must be presented to the insurer or potential insurer of a property owner before
the adjustment becomes effective for the insurable property.
new text end

new text begin (e) An insurer required to submit rates and rating plans to the commissioner must submit
an actuarially justified rating plan for a person who retrofits an insurable property to comply
with the sets of alternatives provided in paragraph (b). The adjustment only applies to
policies that provide wind coverage and may apply to that portion of the premium for wind
coverage or to the total premium if the insurer does not separate the premium for wind
coverage in the insurer's rate filing. The adjustment applies exclusively to the premium
designated for the improved insurable property. In addition to the requirements of this
section, an insurer may voluntarily offer any other mitigation adjustment that the insurer
deems appropriate.
new text end

new text begin (f) The commissioner may adopt rules as necessary to implement this section.
new text end

Sec. 3.

new text begin [65A.62] ENDORSEMENT OFFER TO UPGRADE HOME TO FORTIFIED
STANDARD.
new text end

new text begin (a) An insurer writing homeowners insurance must offer a fortified roof endorsement
to upgrade a nonfortified home that is otherwise eligible for a fortified standard to a fortified
standard identified under section 65A.61 when the insured home incurs damage covered
by the policy that requires the roof to be replaced. The endorsement must upgrade the
nonfortified home consistent with the fortified requirements for the geographic area in which
the nonfortified home is located.
new text end

new text begin (b) The endorsement offer must be made at the time (1) a new policy on a nonfortified
home is written, and (2) upon first renewal of an existing policy on a nonfortified home.
new text end

new text begin (c) For policies offered, issued, or renewed after January 1, 2026, an insurer must file
the insurer's endorsement form and accompanying rates for approval by the department.
new text end

new text begin (d) The commissioner may adopt rules as necessary to implement this section.
new text end

Sec. 4.

new text begin [65A.63] STRENGTHEN MINNESOTA HOMES PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Short title. new text end

new text begin This section may be cited as the "Strengthen Minnesota
Homes Act."
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the terms in this subdivision have
the meanings given.
new text end

new text begin (b) "Commissioner" means the commissioner of commerce.
new text end

new text begin (c) "Insurable property" has the meaning given in section 65A.60, paragraph (a).
new text end

new text begin (d) "Program" means the Strengthen Minnesota Homes program established under this
section.
new text end

new text begin Subd. 3. new text end

new text begin Program established; purpose, permitted activities. new text end

new text begin The Strengthen Minnesota
Homes program is established within the department. The purpose of the program is to
provide grants to retrofit insurable property to resist loss due to common perils, including
but not limited to tornadoes or other catastrophic windstorm events.
new text end

new text begin Subd. 4. new text end

new text begin Strengthen Minnesota homes account; appropriation. new text end

new text begin (a) A strengthen
Minnesota homes account is created as a separate account in the special revenue fund of
the state treasury. The account consists of money provided by law and any other money
donated, allotted, transferred, or otherwise provided to the account. Earnings, including
interest, dividends, and any other earnings arising from assets of the account, must be
credited to the account. Money remaining in the account at the end of a fiscal year does not
cancel to the general fund and remains in the account until expended. The commissioner
must manage the account.
new text end

new text begin (b) Money in the account is appropriated to the commissioner to pay for (1) grants issued
under the program, and (2) the reasonable costs incurred by the commissioner to administer
the program.
new text end

new text begin Subd. 5. new text end

new text begin Use of grants. new text end

new text begin (a) A grant under this section must be used to retrofit an insurable
property, as provided under section 65A.61, paragraph (b).
new text end

new text begin (b) Grant money provided under this section must not be used for maintenance or repairs,
but may be used in conjunction with repairs or reconstruction necessitated by damage from
wind or hail.
new text end

new text begin (c) A project funded by a grant under this section must be completed within three months
of the date the grant is approved. Failure to complete the project in a timely manner may
result in forfeiture of the grant.
new text end

new text begin Subd. 6. new text end

new text begin Applicant eligibility. new text end

new text begin (a) The commissioner must develop (1) administrative
procedures to implement this section, and (2) criteria used to determine whether an applicant
is eligible for a grant under this section.
new text end

new text begin (b) The criteria may include but are not limited to:
new text end

new text begin (1) proof that the applicant has an existing insurance policy that provides wind insurance
on the home; and
new text end

new text begin (2) the applicant's eligibility for and participation in other financial assistance programs
the commissioner administers, including but not limited to the weatherization assistance
program under section 216C.264 and the low-income energy assistance program, as defined
in section 256J.08, subdivision 52.
new text end

new text begin Subd. 7. new text end

new text begin Contractor eligibility; conflicts of interest. new text end

new text begin (a) To be eligible to work as a
contractor on a projected funded by a grant under this section, the contractor must meet all
of the following program requirements and must maintain a current copy of all certificates,
licenses, and proof of insurance coverage with the program office. The eligible contractor
must:
new text end

new text begin (1) hold a valid residential building contractor and residential remodeler license issued
by the commissioner of labor and industry;
new text end

new text begin (2) not be subject to disciplinary action by the commissioner of labor and industry;
new text end

new text begin (3) hold any other valid state or jurisdictional business license or work permits required
by law;
new text end

new text begin (4) possess an in-force general liability policy with $1,000,000 in liability coverage;
new text end

new text begin (5) possess an in-force workers compensation policy with $1,000,000 in coverage;
new text end

new text begin (6) possess a certificate of compliance from the commissioner of revenue;
new text end

new text begin (7) successfully complete Fortified Roof for High Wind and Hail and Hurricane training
provided by the IBHS or IBHS's successor and provide a certificate of successful completion
of the training. The training may be offered as separate courses;
new text end

new text begin (8) agree to the terms and successfully register as a vendor with the commissioner of
management and budget and receive direct deposit of payment for mitigation work performed
under the program;
new text end

new text begin (9) maintain Internet access and keep a valid email address on file with the program and
remain active in the commissioner of management and budget's vendor and supplier portal
while working on the program;
new text end

new text begin (10) maintain an active email address for the communication with the program;
new text end

new text begin (11) successfully complete the program training; and
new text end

new text begin (12) agree to follow program procedures and rules established under this section and by
the commissioner.
new text end

new text begin (b) An eligible contractor must not have a financial interest, other than payment on
behalf of the homeowner, in any project for which the eligible contractor performs work
toward a fortified designation under the program. An eligible contractor is prohibited from
acting as the evaluator for a fortified designation on any project funded by the program. An
eligible contractor must report to the commissioner regarding any potential conflict of
interest before work commences on any job funded by the program.
new text end

new text begin Subd. 8. new text end

new text begin Evaluator eligibility; conflicts of interest. new text end

new text begin (a) To be eligible to work on the
program as an evaluator, the evaluator must meet all program eligibility requirements and
must submit to the commissioner and maintain a copy of all current certificates and licenses.
The evaluator must:
new text end

new text begin (1) be in good standing with IBHS and maintain an active certification as a fortified
home evaluator for hurricane and high wind and hail or a successor certification;
new text end

new text begin (2) possess a Minnesota business license and be registered with the secretary of state;
and
new text end

new text begin (3) successfully complete the program training.
new text end

new text begin (b) Evaluators must not have a financial interest in any project that the evaluator inspects
for designation purposes for the program. An evaluator must not be an eligible contractor
or supplier of any material, product, or system installed in any home that the evaluator
inspects for designation purposes for the program. An evaluator must not be a sales agent
for any home being designated for the program. An evaluator must inform the commissioner
of any potential conflict of interest impacting the evaluator's participation in the program.
new text end

new text begin Subd. 9. new text end

new text begin Grant approval; allocation. new text end

new text begin (a) The commissioner must review all applications
for completeness and must perform appropriate audits to verify (1) the accuracy of the
information on the application, and (2) that the applicant meets all eligibility rules. All
verified applicants must be placed in the order the application was received. Grants must
be awarded on a first-come, first-served basis, subject to availability of money for the
program.
new text end

new text begin (b) When a grant is approved, an approval letter must be sent to the applicant.
new text end

new text begin (c) An eligible contractor is prohibited from beginning work until a grant is approved.
new text end

new text begin (d) In order to assure equitable distribution of grants in proportion to the income
demographics in counties where the program is made available, grant applications must be
accepted on a first-come, first-served basis. The commissioner may establish pilot projects
as needed to establish a sustainable program distribution system in any geographic area
within Minnesota.
new text end

new text begin Subd. 10. new text end

new text begin Grant award process; release of grant money. new text end

new text begin (a) After a grant application
is approved, the eligible contractor selected by the homeowner may begin the mitigation
work.
new text end

new text begin (b) Once the mitigation work is completed, the eligible contractor must submit a copy
of the signed contract to the commissioner, along with an invoice seeking payment and an
affidavit stating the fortified standards were met by the work.
new text end

new text begin (c) The IBHS evaluator must conduct all required evaluations, including a required
interim inspection during construction and the final inspection, and must confirm that the
work was completed according to the mitigation specifications.
new text end

new text begin (d) Grant money must be released on behalf of an approved applicant only after a fortified
designation certificate has been issued for the home. The program or another designated
entity must, on behalf of the homeowner, directly pay the eligible contractor that performed
the mitigation work. The program or the program's designated entity must pay the eligible
contractor the costs covered by the grant. The homeowner must pay the eligible contractor
for the remaining cost after receiving an IBHS fortified certificate.
new text end

new text begin (e) The program must confirm that the homeowner's insurer provides the appropriate
premium credit.
new text end

new text begin (f) The program must conduct random reinspections to detect any fraud and must submit
any irregularities to the attorney general.
new text end

new text begin Subd. 11. new text end

new text begin Limitations. new text end

new text begin (a) This section does not create an entitlement for property
owners or obligate the state of Minnesota to pay for residential property in Minnesota to be
inspected or retrofitted. The program under this section is subject to legislative appropriations,
the receipt of federal grants or money, or the receipt of other sources of grants or money.
The department may obtain grants or other money from the federal government or other
funding sources to support and enhance program activities.
new text end

new text begin (b) All mitigation under this section is contingent upon securing all required local permits
and applicable inspections to comply with local building codes and the Fortified for Existing
Homes Program. A mitigation project receiving a grant under this section is subject to
random reinspection at a later date.
new text end

new text begin Subd. 12. new text end

new text begin Rulemaking; other rules. new text end

new text begin The commissioner may adopt administrative rules
and eligibility requirements necessary to administer the program established under this
section and pursuant to instructions or requirements associated with grants or other money
received by the program.
new text end