Minnesota Administrative Rules

CHAPTER 2700, INSURANCE POLICIES, PRACTICES

DEPARTMENT OF COMMERCE

2700.0200

[Repealed, L 2013 c 130 s 4]

Published Electronically:

August 1, 2013

2700.0300 COMMENCEMENT OF LITIGATION CLAUSE.

No policy, rider, or endorsement form shall be accepted for filing by this department from any casualty insurance company that contains a provision limiting the time within which legal proceedings may be instituted against the insurer by the insured to a period less than two years.

Statutory Authority:

MS s 60A.03; 62A.04; 65A.01

Published Electronically:

September 14, 2007

2700.0400 STATUTORY DEPOSITS WITH COMMISSIONER.

Registered securities will not be accepted for deposit unless registered in the following manner: "Commissioner of commerce of the state of Minnesota for the benefit of all policyholders of the depositor."

Mortgage deposits shall be accompanied by an assignment thereof to the commissioner of commerce.

In all cases where mortgages are deposited, credit toward the deposit may not exceed the value of the lands secured without regard to improvements. Independent appraisals setting out the value of the land shall be filed to enable the department to determine the allowable value of the mortgages deposited.

Statutory Authority:

MS s 60A.10

History:

L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Published Electronically:

September 14, 2007

2700.0500 EQUAL TREATMENT OF MINNESOTA POLICYHOLDERS.

For the purpose of eliminating discrimination against Minnesota policyholders:

A.

all domestic companies issuing nonassessable policies in any other state, territory, or jurisdiction shall establish a guaranty fund as provided by law and issue a nonassessable contract in Minnesota, or withdraw immediately from other states, territories, or jurisdictions in which the issuance of an assessable policy is not permitted;

B.

all foreign companies that issue nonassessable contracts in any other state, territory, or jurisdiction shall also issue nonassessable contracts in the state of Minnesota, provided the companies can comply with Minnesota laws relating to issuance of policies without a contingent liability. If compliance is not possible, then the company shall withdraw from the state of Minnesota and refrain from issuing any policies in this state, or withdraw from and surrender its license in any state, territory, or jurisdiction in which the company is issuing nonassessable contracts.

Statutory Authority:

MS s 60A.03; 66A.21

Published Electronically:

September 14, 2007

2700.0600 ACTUARIES.

Subpart 1.

Scope.

This part shall apply to annual statements filed with the commissioner of commerce in accordance with Minnesota Statutes, section 60A.13, and all other reports and documents relating to the business of insurance filed with the commissioner or issued to the public.

Subp. 2.

Purpose.

The purpose of this part is to establish standards for use of the terms "actuary" and "actuarial." It is not the purpose of this part to require any insurer or other person to employ an actuary except as may be required by statute or another rule.

Subp. 3.

Qualified actuary defined.

For the purpose of this part, a qualified actuary is a member of the American Academy of Actuaries, or an individual who has demonstrated to the satisfaction of the commissioner of commerce that the actuary has the educational background necessary for the practice of actuarial science, and that the actuary has not less than seven years of actuarial experience.

Subp. 4.

Signing as actuary.

No annual statement, report, or document relating to the business of insurance shall be filed with the commissioner of commerce or issued to the public if it is signed by a person who represents in such instrument to be an actuary, and said person is not a qualified actuary as defined in subpart 3.

Subp. 5.

Use of "actuary" and "actuarial."

Whenever the term "actuary" or "actuarial" is used in any representation relating to the business of insurance made to the commissioner of commerce or to the public, it shall be understood to mean a qualified actuary or having the attributes of a qualified actuary.

Subp. 6.

Penalty.

A violation of any of the provisions of this part shall be deemed a violation of Minnesota Statutes, section 72A.19, and punishable in accordance with Minnesota Statutes, section 72A.25.

Statutory Authority:

MS s 60A.28

History:

L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92; 17 SR 1279

Published Electronically:

September 14, 2007

2700.0700

[Renumbered 2795.2000]

Published Electronically:

September 14, 2007

LEGIBLE TYPEFACE STYLES

2700.1100 AUTHORITY.

The rules hereinafter set forth are promulgated pursuant to Minnesota Statutes 1977, section 72C.07.

Statutory Authority:

MS s 72C.07

Published Electronically:

September 14, 2007

2700.1200 PURPOSE.

The purpose of parts 2700.1100 to 2700.1300 is to provide insurance policies that are printed in typeface styles that are easily readable to the average person.

Statutory Authority:

MS s 72C.07

Published Electronically:

September 14, 2007

2700.1300 LEGIBLE TYPEFACE.

Subpart 1.

Scope.

These rules shall be considered applicable in all insurance policies and contracts required to be filed under Minnesota Statutes, section 72C.11.

Subp. 2.

Legibility.

All insurers upon filing shall specify the type face styles used in each policy. The commissioner will consider the following typeface styles as being legible: Aldine; Bakerville; Bodoni; Bodoni Book; Century; Century Schoolbook; Chelmsford; Copperplate; Clarendon; Fairfield; Futura; Garamond; Gothic; Helios; Helvetica; Journal; Korinna; Modern Roman; Megaron; Melior; Metro; News Gothic; Optima; Press Roman; Pyramid; Schoolbook; Sparton; Theme; Times Roman; Trade Gothic; Univers; and Universe.

This list is not intended to be exhaustive, but is intended solely as an indication of the legibility of a typeface style that is required. Any typeface selected that meets the same standard of legibility will be approved. Extreme type styles such as Old English or heavy block are not acceptable.

Italics, boldface, and contrasting styles may be used to emphasize important or technical terms and for captions. When two or more typeface styles are used, they shall be visually compatible.

Statutory Authority:

MS s 72C.07

Published Electronically:

September 14, 2007

2700.2100

[Repealed, 10 SR 1179]

Published Electronically:

September 14, 2007

2700.2200

[Repealed, 10 SR 1179]

Published Electronically:

September 14, 2007

2700.2300

[Repealed, 10 SR 1179]

Published Electronically:

September 14, 2007

2700.2400

[Repealed, 10 SR 2260; L 1987 c 337 s 131]

Published Electronically:

September 14, 2007

2700.2410

[Repealed, 10 SR 2260; L 1987 c 337 s 131]

Published Electronically:

September 14, 2007

2700.2420

[Repealed, 10 SR 2260; L 1987 c 337 s 131]

Published Electronically:

September 14, 2007

2700.2430

[Repealed, 10 SR 2260; L 1987 c 337 s 131]

Published Electronically:

September 14, 2007

2700.2440

[Repealed, 10 SR 2260; L 1987 c 337 s 131]

Published Electronically:

September 14, 2007

2700.2450

[Repealed, 10 SR 2260]

Published Electronically:

September 14, 2007

COMMERCIAL INSURANCE FILING EXEMPTIONS

2700.2460 DEFINITION OF COMMERCIAL POLICIES.

"Commercial policies" means all policy forms regulated by Minnesota Statutes, section 70A.06, that by general practice are used for business entities. The term does not include policy forms providing private passenger vehicle insurance or homeowners' insurance, personal liability coverage, personal property or personal article floater coverage, credit property coverage, crop hail insurance, title insurance, or professional liability insurance covering individuals. The term does not include policy forms insuring individually owned motorcycles, motorized bicycles, recreational equipment, mobile homes, house trailers, snowmobiles, watercraft, aircraft not used in air commerce, or owner occupied residential dwellings containing fewer than five family dwelling units.

Statutory Authority:

MS s 45.023; 70A.02

History:

19 SR 1581

Published Electronically:

September 14, 2007

2700.2470 EXEMPTION FROM CERTAIN FILING REQUIREMENTS.

Subpart 1.

Commercial policy forms.

If the commercial policy forms of an insurer comply with the requirements in Minnesota Statutes, the insurer shall be exempt from the filing and approval requirements in Minnesota Statutes, section 70A.06, subdivision 2, for those policies.

Subp. 2.

Commercial policy rates.

If the rates of an insurer for commercial policy forms comply with the requirements in Minnesota Statutes, the insurer shall be exempt from the filing requirements in Minnesota Statutes, section 70A.06, subdivision 1, for those rates. This subpart does not apply to guide "a" rates or excess rates, also known as "consent to rate."

Subp. 3.

Other rates.

Insurers shall be exempt from the filing requirements in Minnesota Statutes, section 70A.06, for guide "a" rates and excess rates used for commercial policies of insurance if the rates comply with the requirements in Minnesota Statutes and the insurer maintains a file containing the information required by Minnesota Statutes, section 70A.06, subdivision 1, for the policy for at least one year after the policy has terminated.

Subp. 4.

Rate service organizations.

The exemption provided in this section does not apply to rate service organizations, as defined in Minnesota Statutes, section 70A.03.

Statutory Authority:

MS s 45.023; 70A.02

History:

19 SR 1581

Published Electronically:

September 14, 2007

2700.2480 FILING OF EXEMPT INFORMATION.

An insurer shall within 30 days of request provide the commissioner of commerce with any of the information for which part 2700.2470 provides exemption from filing.

Statutory Authority:

MS s 45.023; 70A.02

History:

19 SR 1581

Published Electronically:

September 14, 2007

UNFAIR TRADE PRACTICES

2700.3100 DEFINITIONS.

Subpart 1.

Charter policy.

"Charter policy" is that form of life insurance policy, usually issued by a newly organized company, which is sold on the basis that its availability will be limited to a specific predetermined number of units of a fixed dollar amount, and which generally provides that the policyholder shall participate in the earnings resulting from either the participating policies or the nonparticipating policies sold by the company, or perhaps both. The prospective purchaser is led to believe that he or she will receive a special advantage in any future distribution of earnings, profits, dividends, or abatement of premium not available to those persons holding other types of policies issued by the company.

Subp. 2.

Guaranteed annual endowment.

A "guaranteed annual endowment" is that form of life insurance policy containing a series of pure guaranteed annual endowments evidenced by coupons, passbooks, or similar devices generally identified with investment or banking operations.

Subp. 3.

Lending institutions.

For the purpose of part 2700.3200, subpart 10, the term "lending institutions" shall include:

A.

persons, firms, associations, or corporations engaged in the business of loaning moneys for the purchase of property and for any other purpose that involves real or personal property as security; and

B.

persons, firms, associations, or corporations who act as agents for the organizations defined in item A.

Subp. 4.

Person.

For the purpose of part 2700.3200, subparts 2, 3, and 6, "person" shall have the same meaning as in Minnesota Statutes, section 72A.18, subdivision 2.

Subp. 5.

Premium financing plan.

"Premium financing plan" is any plan or program arranged by a licensed life insurance agent in connection with the purchase of an individual life insurance policy, annuity, or endowment contract issued for delivery within this state, pursuant to which one or more premiums on such policy are to be paid in full or in part through credit, except the extension of credit for not more than 90 days to an individual who is at least 21 years of age.

Subp. 6.

Profit-sharing policy.

A "profit-sharing policy" is that form of life insurance policy that contains provisions representing or tending to create the understanding that the policyholder will be eligible to participate, with a special advantage not available to the persons holding other types of policies issued by the same company, in any future distribution of general corporate profits, as distinguished from a refund of the excess premiums paid by that policyholder.

Subp. 7.

Risk.

For the purpose of part 2700.3200, subpart 10, "risk" means the potential loss covered by a policy of insurance.

Statutory Authority:

MS s 72A.19

History:

17 SR 1279

Published Electronically:

September 14, 2007

2700.3200 UNFAIR AND DECEPTIVE PRACTICES.

Subpart 1.

Definition.

Acts or practices in subparts 2 to 10 are hereby specifically defined as "unfair and deceptive acts or practices in the business of insurance."

Subp. 2.

Automatic enrollment.

It is unfair and deceptive:

A.

for a person to render a billing statement to or otherwise attempt to collect premiums from a resident of Minnesota, for any insurance coverage that is in addition to or greater than that already in force, until and unless the resident has expressly given affirmative consent, oral or written, to such insurance coverage. This applies to any person whether or not the person has had, or presently has, any insurance in force for the resident from whom an attempt is made to collect premiums. This item shall not apply to:

(1)

credit life and credit accident and health insurance as defined by Minnesota Statutes, section 62B.02, subdivisions 2 and 3;

(2)

insurance coverage written under a master policy or individual policies issued to employees of a common employer or to members of an association pursuant to an agreement with such employer or association; or

(3)

coverage that may either be required by law or is expressly permitted by law to be placed into effect without the prior affirmative consent of the insured;

B.

for a person to render a billing statement to or otherwise attempt to collect premiums from a resident of Minnesota for any credit life insurance or credit accident and health insurance (as those terms are defined by Minnesota Statutes, section 62B.02, subdivisions 2 and 3 as amended) until and unless the debtor (as that term is defined in Minnesota Statutes, section 62B.02, subdivision 5, as amended) has expressly given affirmative consent, oral or written, to such insurance coverage. Once a debtor becomes protected either by credit life or credit accident and health insurance, or both, the premium to be paid by that debtor shall not be altered until and unless the debtor, subsequent to becoming protected by that insurance, has given prior written approval to continuing to be insured at the altered premium, unless the extent of the coverage remains unchanged. A reduction in coverage without a reduction in the premium rate will be deemed an altered premium.

Subp. 3.

Premium financing.

It is unfair and deceptive for a premium financing plan to be used unless the purchaser is furnished with a copy of a clear statement of the relevant details of the credit transaction on or before the later of the date on which said premium financing plan is to become operative; or the date the policy is delivered, unless such statement is dated and contains the following:

A.

the name and address of the agent and the company proposing to issue the life insurance policy, annuity, or endowment contract and the type of said policy or contract;

B.

the annual premium (or total or periodic premiums per year) for said policy or contract;

C.

the amount of said premiums to be financed for each year of premium financing plan;

D.

the amount of charges other than principal and interest, each such charge to be labeled and stated separately;

E.

the amounts and due dates of payments;

F.

the name and address of the person or firm to which such payments are to be made; and

G.

the signatures of the purchaser and of the insurance agent or other representative of the insurer.

The provisions of this subpart do not apply to any financing of the premium for decreasing or level credit life insurance or credit accident and health insurance.

Subp. 4.

Policy name or title.

It is unfair and deceptive for any insurance company, insurance agent, or company representative to deliver within this state, or issue for delivery within this state, any individual policy of life insurance without the use of the words "life insurance" on its name or title or the use of other language clearly indicating that the policy is a policy of life insurance, annuity, or an endowment contract.

Subp. 5.

Certain terms.

It is unfair and deceptive to use the terms "investment," "investment plan," "expansion plan," "profit," "profit-sharing," and other similar terms in connection with life insurance policies, annuities, or endowment contracts in a context or under such circumstances or conditions as to have a capacity or tendency to mislead a purchaser or prospective purchaser of such policy or contract to believe that the purchaser or prospective purchaser will receive, or that it is possible that he or she will receive, something other than a life insurance policy, an annuity, or an endowment contract or some benefits not provided in the policy or contract or some benefit not available to other persons of the same class and equal expectation of life.

Subp. 6.

Sales practices.

It is unfair and deceptive for any person within this state to:

A.

make any statement or reference relating to the growth of the life insurance industry or to the tax status of life insurance companies in connection with any solicitation for life insurance, annuities, or endowment contracts in a context that could reasonably be understood to interest a prospect in the purchase of shares of stock in an insurance company rather than in the purchase of a life insurance policy, an annuity, or an endowment contract;

B.

make any statement that reasonably gives rise to the inference that an insured or a prospective insured will enjoy a status common to a stockholder in the insurance company or will acquire a stock ownership interest in the insurance company;

C.

make any reference to or statement concerning an insurance company's "investment department," "insured investment department," or similar terminology in such a manner as to imply that the life insurance policy, annuity, or endowment contract was sold or issued by the investment department of the life insurance company;

D.

make any statement or reference that would reasonably tend to imply that by purchasing a life insurance policy, annuity, or endowment contract the purchaser or prospective purchaser will become a member of a limited group of persons who may receive special advantages from the company or favored treatment in the payment of dividends, unless such benefits are specifically provided in the policy or contract (this item has no relation or applicability to policies or contracts under which insured persons of one class of risk may receive dividends at a higher rate than persons of another class of risk);

E.

state or imply that only a limited number of persons, or a limited class of persons, will be eligible to buy a particular kind of life insurance policy, annuity, or endowment contract, unless such limitation can be verified by the underwriting practices of the insurance company;

F.

state or imply that policyholders or contract holders who are said to act as centers of influence for an insurance company will share, because of so acting, in the company's surplus earnings in some manner not available to other policyholders or contract holders who are otherwise in the same class;

G.

describe or refer to premium payments in language that states that the payment is a "deposit" unless:

(1)

the payment establishes a debtor-creditor relationship between the life insurance company and the policyholder or contract holder and a showing is made as to when and how the deposit may be withdrawn;

(2)

the term is used in conjunction with the word "premium" in such a manner as to indicate clearly the true character of the payment; or

(3)

the term is used in conjunction with a deposit administration plan;

H.

provide any illustrations or projection of future dividends on any policy or contract unless:

(1)

the illustration or projection is based upon the experience currently used by the insurance company for dividends or upon a scale adopted by the company, which is based upon the experience currently used by the company; and

(2)

the illustration or projection clearly indicates that the dividends shown are not guaranteed;

I.

use the words "dividends," "cash dividends," "surplus," or similar phrases in such a manner as to state or imply that the payment of dividends is guaranteed or certain to occur;

J.

state or imply that a purchaser of a life insurance policy, an annuity other than a contract on a variable basis, or an endowment contract will share in a stated percentage or portion of the earnings of the insurance company (nothing in this item is intended to prohibit a representation that a holder of a participating policy or contract will participate in the share of the divisible surplus, if any, apportioned to the policy or contract by the insurance company);

K.

make any statement or imply that projected dividends under a participating policy or contract will be or can be sufficient at any time to assure the receipt of benefits, such as a paid up policy or contract, without the further payment of premiums, unless the statement is accompanied by an adequate explanation as to what benefits or coverage would be provided or discontinued at such time, and the conditions under which this would occur;

L.

state that the insured is guaranteed certain benefits if the policy or contract is allowed to lapse without making an explanation of the nonforfeiture benefits;

M.

describe or advertise a life insurance policy, an annuity, an endowment contract or premium payments therefor, except contracts on a variable basis, in terms of "units of participation," unless accompanied by other language clearly indicating the reference to a policy or contract or to premium payments, as the case may be;

N.

include in sales kits and prepared sales presentations proposed answers to be used in response to a prospect's questions as to whether a life insurance policy, an annuity, or an endowment contract is being sold, which are designed to avoid a clear and unequivocal statement that life insurance, an annuity, or endowment contract is the subject matter of the solicitation;

O.

display in any manner to a prospective policyholder any material that includes illustrations, using dollar amounts, in connection with the proposed sale of a life insurance policy, an annuity, or endowment contract, unless the material clearly identifies the source of the dollar amounts and the subject to which such amount pertains;

P.

make any general statement that insurance companies make a profit as a result of policy lapses or surrenders;

Q.

make unfair or misleading comparisons to the past experience of other life insurance companies as a means of projecting possible experience of the soliciting company;

R.

represent pure annual endowment benefits as earnings on premiums invested, or represent that a pure annual endowment benefit in a policy is other than a guaranteed benefit for which a premium is being paid by the policyholder;

S.

state that a policy or contract contains features which are not found in other life insurance policies, annuities, or endowment contracts, unless that be true;

T.

represent an option to purchase life insurance in the future in such a manner that the policyholder might reasonably infer that instead of merely acquiring an option, the policyholder is purchasing present benefits that would result in a payment to the beneficiary in the event of the death of the policyholder;

U.

make reference to a policy of life insurance, an annuity, or an endowment contract in such a manner as to materially misrepresent the true nature of the policy or contract; or

V.

as a competitive or twisting device, inform any policyholder or prospective policyholder that any insurance company was required to change a policy or contract form or related material to comply with the provisions of this rule.

Subp. 7.

Guaranteed annual endowments.

It is unfair and misleading to issue a guaranteed annual endowment policy or any other policy that is essentially a coupon policy.

Subp. 8.

Charter policies.

It is unfair and misleading to issue any form of a charter policy, whether heretofore approved or not.

Subp. 9.

Profit-sharing policies.

It is unfair and misleading to issue any form of a profit-sharing policy, annuity, or endowment contract whether heretofore approved or not. Provided, however, nothing in this subpart is intended to apply to contracts on a variable basis to the extent that they are permitted under the laws of this state.

Subp. 10.

Disapproval of insurer or policy.

It is unfair and misleading for a lending institution to disapprove an insurer or policy of insurance, insuring or covering property, real or personal, which serves as security for loan, or the purpose of which is the object of the institution's financing loan, where such disapproval:

A.

has the effect of encouraging the insured to carry insurance with an insurer of the institution's choice;

B.

is based on standards unrelated to insurer's ability to assume the risk or authorization to write the risk; or

C.

is based on a rating requirement disproportionate to the size of the risk.

Subp. 11.

Discrimination because of blindness or partial blindness.

It is unfair and deceptive to discriminate between individuals of the same class by refusing to insure, or refusing to continue to insure, or limiting the amount, extent, or kind of coverage available to an individual, or charging an individual a different rate for the same coverage, solely because of blindness or partial blindness.

With respect to all other conditions, including the underlying cause of the blindness or partial blindness, persons who are blind or partially blind are subject to the same standards of sound actuarial principles or actual or reasonably anticipated experience as are sighted persons.

Refusal to insure includes denial by an insurer of disability insurance coverage on the grounds that the policy defines "disability" as being presumed in the event that the insured loses his or her eyesight.

However, an insurer may exclude from coverage disabilities, consisting solely of blindness or partial blindness when the condition existed at the time the policy was issued.

Statutory Authority:

MS s 45.023; 72A.19

History:

10 SR 1499; 17 SR 1279

Published Electronically:

September 14, 2007

2700.3300 PENALTIES.

A violation of any of the provisions of parts 2700.3100 to 2700.3400 by whatever means, including but not being limited to the use of certain policies or contracts or presentations, whether involving language or illustrations disseminated by means of sales kits, jackets or covers, letters, personal confrontations, visual aids, or other media, shall be deemed to be a violation of the insurance laws of this state, and shall subject any person, firm, or corporation so violating any provision of parts 2700.3100 to 2700.3400 to the penalty provided by Minnesota Statutes, section 72A.09, as amended, in addition to any other penalty provided by law.

Statutory Authority:

MS s 72A.19

Published Electronically:

September 14, 2007

2700.3400 POLICIES AND CONTRACTS IN EFFECT MARCH 1969.

Parts 2700.3100 to 2700.3400 do not affect the validity of any life insurance policy, annuity, or endowment contract in force on the effective date hereof. However, the previous approval by this division of any form of policy or contract prohibited by these rules is hereby withdrawn effective March 1, 1969, and no such policy or contract shall be sold after that date.

Statutory Authority:

MS s 72A.19

Published Electronically:

September 14, 2007