HF 78

as introduced - 87th Legislature (2011 - 2012) Posted on 01/13/2011 10:10am

A bill for an act
relating to insurance; requiring surcharge disclosure for homeowner's insurance;
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.285] SURCHARGE DISCLOSURE.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the terms defined in
this section have the meanings given them.
new text end

new text begin (a) "Computed premium" means the rate in effect before the application of a
surcharge.
new text end

new text begin (b) "Chargeable claim" means a claim that is taken into consideration in applying a
surcharge.
new text end

new text begin (c) "Policy" means a policy providing homeowner's insurance.
new text end

new text begin (d) "Surcharge" means an increase in premium for a policy, including the removal of
a claim-free discount, based upon a claim.
new text end

new text begin (e) "Surcharge disclosure statement" means a written statement disclosing the
surcharge plan of an insurer, the effective date of the surcharge plan, the name of the
insurer, and other information the commissioner requires to be disclosed to assist insureds
in comparing surcharge plans among insurers.
new text end

new text begin (f) "Surcharge plan" means the conditions under which an insurer applies a surcharge
including but not limited to: (1) the maximum dollar amount that an insurer pays due to a
claim without applying a surcharge; (2) claims that are not chargeable; (3) the length of
time that a claim is chargeable; and (4) surcharge rates for the first and each successive
claim.
new text end

new text begin (g) "Surcharge rate" means the amount of a surcharge expressed as a percentage of
the computed premium rate or as a dollar amount surcharge, if a percentage surcharge is
not used.
new text end

new text begin Subd. 2. new text end

new text begin Disclosure to applicants. new text end

new text begin Before accepting the initial premium payment,
an insurer or its agent shall provide a surcharge disclosure statement to a person who
applies for a policy that is effective on or after January 1, 2012. If the insurer provides
the surcharge disclosure statement on the insurer's Web site, the insurer or agent may
notify the applicant orally or in writing of its availability for review on the insurer's Web
site before accepting the initial payment, in lieu of providing a disclosure statement to
the applicant in writing, if the insurer so notifies the applicant of the availability of a
written version of this statement upon the applicant's request. The insurer shall provide
the surcharge disclosure statement in writing if requested by the applicant. An oral notice
is presumed delivered if the agent or insurer makes a contemporaneous notation in the
applicant's record of the notice having been delivered or if the insurer or agent retains an
audio recording of the notification provided to the applicant.
new text end

new text begin Subd. 3. new text end

new text begin Disclosure to policyholders. new text end

new text begin An insurer or its agent shall mail or deliver
a surcharge disclosure statement or written notice of the statement's availability on the
insurer's Web site to the named insured either before or with the first notice to renew a
policy on or after January 1, 2012. If a surcharge disclosure statement or written Web site
notice has been provided pursuant to subdivision 2, no surcharge disclosure statement is
required to be mailed or delivered to the same named insured pursuant to this subdivision.
new text end

new text begin Subd. 4. new text end

new text begin Notification of change. new text end

new text begin No insurer may change its surcharge plan unless
a surcharge disclosure statement or written Web site notice is mailed or delivered to the
named insured before the change is made. A surcharge disclosure statement disclosing
a change applicable on the renewal of a policy may be mailed with an offer to renew
the policy. Surcharges cannot be applied to claims that occurred before a change in a
surcharge plan except to the extent provided under the prior plan.
new text end

new text begin Subd. 5. new text end

new text begin Penalty. new text end

new text begin Failure to comply with this section constitutes a violation of
section 70A.04 and the violator is subject to the penalties prescribed in section 70A.21.
new text end

new text begin Subd. 6. new text end

new text begin Commissioner may adopt rules. new text end

new text begin The commissioner may adopt rules
reasonably necessary to carry out and make effective this section.
new text end