1.1                          A bill for an act 
  1.2             relating to insurance; regulating risk-based capital 
  1.3             for insurers; enacting the model act of the National 
  1.4             Association of Insurance Commissioners; amending 
  1.5             Minnesota Statutes 1994, section 13.71, by adding a 
  1.6             subdivision; proposing coding for new law in Minnesota 
  1.7             Statutes, chapter 60A. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1994, section 13.71, is 
  1.10  amended by adding a subdivision to read: 
  1.11     Subd. 18.  [RISK-BASED CAPITAL DATA.] Risk-based capital 
  1.12  reports and related reports, data, and orders maintained by the 
  1.13  commissioner of commerce are classified under section 60A.67. 
  1.14     Sec. 2.  [60A.60] [DEFINITIONS.] 
  1.15     Subdivision 1.  [SCOPE.] For the purposes of sections 
  1.16  60A.60 to 60A.696, the terms defined in this section have the 
  1.17  meanings given them. 
  1.18     Subd. 2.  [ADJUSTED RISK-BASED CAPITAL REPORT.] "Adjusted 
  1.19  risk-based capital report" means a risk-based capital report 
  1.20  that has been adjusted by the commissioner according to section 
  1.21  60A.61, subdivision 5. 
  1.22     Subd. 3.  [CORRECTIVE ORDER.] "Corrective order" means an 
  1.23  order issued by the commissioner specifying corrective actions 
  1.24  that the commissioner has determined are required. 
  1.25     Subd. 4.  [DOMESTIC INSURER.] "Domestic insurer" means an 
  1.26  insurance company incorporated or organized in this state. 
  2.1      Subd. 5.  [FOREIGN INSURER.] "Foreign insurer" means an 
  2.2   insurance company that is admitted to do business in this state 
  2.3   under section 60A.19 but is not incorporated or organized in 
  2.4   this state. 
  2.5      Subd. 6.  [NAIC.] "NAIC" means the National Association of 
  2.6   Insurance Commissioners. 
  2.7      Subd. 7.  [LIFE AND/OR HEALTH INSURER.] "Life and/or health 
  2.8   insurer" means an insurance company authorized to transact 
  2.9   business under section 60A.06, subdivision 1, clause (4), or a 
  2.10  property and casualty insurer transacting business only under 
  2.11  section 60A.06, subdivision 1, clause (5)(a). 
  2.12     Subd. 8.  [PROPERTY AND CASUALTY INSURER.] "Property and 
  2.13  casualty insurer" means an insurance company authorized to 
  2.14  transact business under section 60A.06, subdivision 1, clauses 
  2.15  (1), (2), (3), (5), (6), (8), (9), (10), (11), (12), (13), (14), 
  2.16  and (15), but does not include monoline mortgage guaranty 
  2.17  insurers, and financial guaranty insurers. 
  2.18     Subd. 9.  [NEGATIVE TREND.] "Negative trend" means, with 
  2.19  respect to a life and/or health insurer, negative trend over a 
  2.20  period of time, as determined according to the "trend test 
  2.21  calculation" included in the risk-based capital instructions. 
  2.22     Subd. 10.  [RISK-BASED CAPITAL INSTRUCTIONS.] "Risk-based 
  2.23  instructions" means the risk-based capital report including 
  2.24  risk-based capital instructions adopted by the NAIC, as those 
  2.25  risk-based instructions may be amended by the NAIC from time to 
  2.26  time according to the procedures adopted by the NAIC. 
  2.27     Subd. 11.  [RISK-BASED CAPITAL LEVEL.] "Risk-based capital 
  2.28  level" means an insurer's company action level risk-based 
  2.29  capital, regulatory action level risk-based capital, authorized 
  2.30  control level risk-based capital, or mandatory control level 
  2.31  risk-based capital where: 
  2.32     (1) "company action level risk-based capital" means, with 
  2.33  respect to an insurer, the product of 2.0 and its authorized 
  2.34  control level risk-based capital; 
  2.35     (2) "regulatory action level risk-based capital" means the 
  2.36  product of 1.5 and its authorized control level risk-based 
  3.1   capital; 
  3.2      (3) "authorized control level risk-based capital" means the 
  3.3   number determined under the risk-based capital formula according 
  3.4   to the risk-based capital instructions; 
  3.5      (4) "mandatory control level risk-based capital" means the 
  3.6   product of .70 and the authorized control level risk-based 
  3.7   capital. 
  3.8      Subd. 12.  [RISK-BASED CAPITAL PLAN.] "Risk-based capital 
  3.9   plan" means a comprehensive financial plan containing the 
  3.10  elements specified in section 60A.62, subdivision 2.  If the 
  3.11  commissioner rejects the risk-based capital plan, and it is 
  3.12  revised by the insurer, with or without the commissioner's 
  3.13  recommendation, the plan must be called the "revised risk-based 
  3.14  capital plan." 
  3.15     Subd. 13.  [RISK-BASED CAPITAL REPORT.] "Risk-based capital 
  3.16  report" means the report required in section 60A.61. 
  3.17     Subd. 14.  [TOTAL ADJUSTED CAPITAL.] "Total adjusted 
  3.18  capital" means the sum of: 
  3.19     (1) an insurer's statutory capital and surplus as 
  3.20  determined in accordance with statutory accounting applicable to 
  3.21  the annual statement required to be filed under section 60A.13; 
  3.22  and 
  3.23     (2) other items, if any, as the risk-based capital 
  3.24  instructions may provide. 
  3.25     Sec. 3.  [60A.61] [RISK-BASED CAPITAL REPORTS.] 
  3.26     Subdivision 1.  [GENERAL REQUIREMENTS.] Every domestic 
  3.27  insurer shall, on or before each March 1, prepare and submit to 
  3.28  the commissioner a report of its risk-based capital levels as of 
  3.29  the end of the calendar year just ended, in a form and 
  3.30  containing the information required by the risk-based capital 
  3.31  instructions.  In addition, every domestic insurer shall file 
  3.32  its risk-based capital report: 
  3.33     (1) with the NAIC according to the risk-based capital 
  3.34  instructions; and 
  3.35     (2) with the insurance commissioner in a state in which the 
  3.36  insurer is authorized to do business, if the insurance 
  4.1   commissioner has notified the insurer of its request in writing, 
  4.2   in which case the insurer shall file its risk-based capital 
  4.3   report not later than the later of: 
  4.4      (i) 15 days from the receipt of notice to file its 
  4.5   risk-based capital report with that state; or 
  4.6      (ii) March 1. 
  4.7      Subd. 2.  [LIFE AND/OR HEALTH INSURERS.] A life and/or 
  4.8   health insurer's risk-based capital must be determined according 
  4.9   to the formula set forth in the risk-based capital 
  4.10  instructions.  The formula must take into account, and may 
  4.11  adjust for the covariance between: 
  4.12     (1) the risk with respect to the insurer's assets; 
  4.13     (2) the risk of adverse insurance experience with respect 
  4.14  to the insurer's liabilities and obligations; 
  4.15     (3) the interest rate risk with respect to the insurer's 
  4.16  business; and 
  4.17     (4) all other business risks and other relevant risks set 
  4.18  forth in the risk-based capital instructions; 
  4.19  determined in each case by applying the factors in the manner 
  4.20  set forth in the risk-based capital instructions. 
  4.21     Subd. 3.  [PROPERTY AND CASUALTY INSURERS.] A property and 
  4.22  casualty insurer's risk-based capital must be determined 
  4.23  according to the formula set forth in the risk-based capital 
  4.24  instructions.  The formula must take into account, and may 
  4.25  adjust for the covariance between: 
  4.26     (1) asset risk; 
  4.27     (2) credit risk; 
  4.28     (3) underwriting risk; and 
  4.29     (4) all other business risks and other relevant risks set 
  4.30  forth in the risk-based capital instructions; 
  4.31  determined in each case by applying the factors in the manner 
  4.32  set forth in the risk-based capital instructions. 
  4.33     Subd. 4.  [MAINTAINING ADDITIONAL CAPITAL.] An excess of 
  4.34  capital over the amount produced by the risk-based capital 
  4.35  requirements contained in sections 60A.60 to 60A.696 and the 
  4.36  formulas, schedules, and instructions referenced in sections 
  5.1   60A.60 to 60A.696 is desirable in the business of insurance.  
  5.2   Accordingly, insurers should seek to maintain capital above the 
  5.3   risk-based capital levels required by sections 60A.60 to 60A.696.
  5.4   Additional capital is used and useful in the insurance business 
  5.5   and helps to secure an insurer against various risks inherent 
  5.6   in, or affecting, the business of insurance and not accounted 
  5.7   for or only partially measured by the risk-based capital 
  5.8   requirements contained in sections 60A.60 to 60A.696. 
  5.9      Subd. 5.  [ADJUSTED RISK-BASED CAPITAL REPORT.] If a 
  5.10  domestic insurer files a risk-based capital report that in the 
  5.11  judgment of the commissioner is inaccurate, then the 
  5.12  commissioner shall adjust the risk-based capital report to 
  5.13  correct the inaccuracy and shall notify the insurer of the 
  5.14  adjustment.  The notice must contain a statement of the reason 
  5.15  for the adjustment.  A risk-based capital report as so adjusted 
  5.16  is referred to as an "adjusted risk-based capital report." 
  5.17     Sec. 4.  [60A.62] [COMPANY ACTION LEVEL EVENT.] 
  5.18     Subdivision 1.  [DEFINITION.] "Company action level event" 
  5.19  means any of the following events: 
  5.20     (1) the filing of a risk-based capital report by an insurer 
  5.21  which indicates that: 
  5.22     (i) the insurer's total adjusted capital is greater than or 
  5.23  equal to its regulatory action level risk-based capital but less 
  5.24  than its company action level risk-based capital; or 
  5.25     (ii) if a life and/or health insurer, the insurer has total 
  5.26  adjusted capital that is greater than or equal to its company 
  5.27  action level risk-based capital but less than the product of its 
  5.28  authorized control level risk-based capital and 2.5 and has a 
  5.29  negative trend; 
  5.30     (2) the notification by the commissioner to the insurer of 
  5.31  an adjusted risk-based capital report that indicates an event in 
  5.32  clause (1), provided the insurer does not challenge the adjusted 
  5.33  risk-based report under section 60A.66; or 
  5.34     (3) if, pursuant to section 60A.66, an insurer challenges 
  5.35  an adjusted risk-based capital report that indicates the event 
  5.36  in clause (1), the notification by the commissioner to the 
  6.1   insurer that the commissioner has, after a hearing, rejected the 
  6.2   insurer's challenge. 
  6.3      Subd. 2.  [PLAN.] In the event of a company action level 
  6.4   event, the insurer shall prepare and submit to the commissioner 
  6.5   a risk-based capital plan that: 
  6.6      (1) identifies the conditions that contribute to the 
  6.7   company action level event; 
  6.8      (2) contains proposals of corrective actions that the 
  6.9   insurer intends to take and would be expected to result in the 
  6.10  elimination of the company action level event; 
  6.11     (3) provides projections of the insurer's financial results 
  6.12  in the current year and at least the four succeeding years, both 
  6.13  in the absence of proposed corrective actions and giving effect 
  6.14  to the proposed corrective actions, including projected 
  6.15  statutory balance sheets, income statements, and cash flow 
  6.16  statements.  The projections for both new and renewal business 
  6.17  might include separate projections for each major line of 
  6.18  business and separately identify each significant income, 
  6.19  expense, and benefit component; 
  6.20     (4) identifies the key assumptions impacting the insurer's 
  6.21  projections and the sensitivity of the projections to the 
  6.22  assumptions; and 
  6.23     (5) identifies the quality of, and problems associated 
  6.24  with, the insurer's business, including, but not limited to, its 
  6.25  assets, anticipated business growth and associated surplus 
  6.26  strain, extraordinary exposure to risk, mix of business, and use 
  6.27  of reinsurance, if any, in each case. 
  6.28     Subd. 3.  [SUBMISSION.] The risk-based capital plan must be 
  6.29  submitted: 
  6.30     (1) within 45 days of the company action level event; or 
  6.31     (2) if the insurer challenges an adjusted risk-based 
  6.32  capital report pursuant to section 60A.66, within 45 days after 
  6.33  notification to the insurer that the commissioner has, after a 
  6.34  hearing, rejected the insurer's challenge. 
  6.35     Subd. 4.  [NOTIFICATION BY COMMISSIONER.] Within 60 days 
  6.36  after the submission by an insurer of a risk-based capital plan 
  7.1   to the commissioner, the commissioner shall notify the insurer 
  7.2   whether the risk-based capital plan must be implemented or is, 
  7.3   in the judgment of the commissioner, unsatisfactory.  If the 
  7.4   commissioner determines the risk-based capital plan is 
  7.5   unsatisfactory, the notification to the insurer must set forth 
  7.6   the reasons for the determination, and may set forth proposed 
  7.7   revisions that will render the risk-based capital plan 
  7.8   satisfactory, in the judgment of the commissioner.  Upon 
  7.9   notification from the commissioner, the insurer shall prepare a 
  7.10  revised risk-based capital plan, that may incorporate by 
  7.11  reference any revisions proposed by the commissioner, and shall 
  7.12  submit the revised risk-based capital plan to the commissioner: 
  7.13     (1) within 45 days after the notification from the 
  7.14  commissioner; or 
  7.15     (2) if the insurer challenges the notification from the 
  7.16  commissioner under section 60A.66, within 45 days after a 
  7.17  notification to the insurer that the commissioner has, after a 
  7.18  hearing, rejected the insurer's challenge. 
  7.19     Subd. 5.  [UNSATISFACTORY PLAN.] In the event of a 
  7.20  notification by the commissioner to an insurer that the 
  7.21  insurer's risk-based capital plan or revised risk-based capital 
  7.22  plan is unsatisfactory, the commissioner may at the 
  7.23  commissioner's discretion, subject to the insurer's right to a 
  7.24  hearing under section 60A.66, specify in the notification that 
  7.25  the notification constitutes a regulatory action level event. 
  7.26     Subd. 6.  [FILINGS TO OTHER STATES.] Every domestic insurer 
  7.27  that files a risk-based capital plan or revised risk-based 
  7.28  capital plan with the commissioner shall file a copy of the 
  7.29  risk-based capital plan or revised risk-based capital plan with 
  7.30  the insurance commissioner in any state in which the insurer is 
  7.31  authorized to do business if: 
  7.32     (1) the state has a risk-based capital provision 
  7.33  substantially similar to section 60A.67, subdivision 1; and 
  7.34     (2) the insurance commissioner of that state has notified 
  7.35  the insurer of its request for the filing in writing, in which 
  7.36  case the insurer shall file a copy of the risk-based capital 
  8.1   plan or revised risk-based capital plan in that state no later 
  8.2   than the later of: 
  8.3      (i) 15 days after the receipt of notice to file a copy of 
  8.4   its risk-based capital plan or revised risk-based plan with the 
  8.5   state; or 
  8.6      (ii) the date on which the risk-based capital plan or 
  8.7   revised risk-based capital plan is filed under section 60A.62, 
  8.8   subdivisions 3 and 4. 
  8.9      Sec. 5.  [60A.63] [REGULATORY ACTION LEVEL EVENT.] 
  8.10     Subdivision 1.  [DEFINITION.] "Regulatory action level 
  8.11  event" means, with respect to an insurer, any of the following 
  8.12  events: 
  8.13     (1) the filing of a risk-based capital report by the 
  8.14  insurer that indicates that the insurer's total adjusted capital 
  8.15  is greater than or equal to its authorized control level 
  8.16  risk-based capital but less than its regulatory action level 
  8.17  risk-based capital; 
  8.18     (2) the notification by the commissioner to an insurer of 
  8.19  an adjusted risk-based capital report that indicates the event 
  8.20  in clause (1), provided the insurer does not challenge the 
  8.21  adjusted risk-based capital report under section 60A.66; 
  8.22     (3) if, pursuant to section 60A.66, the insurer challenges 
  8.23  an adjusted risk-based capital report that indicates the event 
  8.24  in clause (1), the notification by the commissioner to the 
  8.25  insurer that the commissioner has, after a hearing, rejected the 
  8.26  insurer's challenge; 
  8.27     (4) the failure of the insurer to file a risk-based capital 
  8.28  report by March 1, unless the insurer has provided an 
  8.29  explanation for the failure that is satisfactory to the 
  8.30  commissioner and has cured the failure within ten days after 
  8.31  March 1; 
  8.32     (5) the failure of the insurer to submit a risk-based 
  8.33  capital plan to the commissioner within the time period set 
  8.34  forth in section 60A.62, subdivision 3; 
  8.35     (6) notification by the commissioner to the insurer that: 
  8.36     (i) the risk-based capital plan or revised risk-based 
  9.1   capital plan submitted by the insurer is, in the judgment of the 
  9.2   commissioner, unsatisfactory; and 
  9.3      (ii) the notification constitutes a regulatory action level 
  9.4   event with respect to the insurer, provided the insurer has not 
  9.5   challenged the determination under section 60A.66; 
  9.6      (7) if, pursuant to section 60A.66, the insurer challenges 
  9.7   a determination by the commissioner under clause (6), the 
  9.8   notification by the commissioner to the insurer that the 
  9.9   commissioner has, after a hearing, rejected the challenge; 
  9.10     (8) notification by the commissioner to the insurer that 
  9.11  the insurer has failed to adhere to its risk-based capital plan 
  9.12  or revised risk-based capital plan, but only if the failure has 
  9.13  a substantial adverse effect on the ability of the insurer to 
  9.14  eliminate the company action level event according to its 
  9.15  risk-based capital plan or revised risk-based capital plan and 
  9.16  the commissioner has so stated in the notification, provided the 
  9.17  insurer has not challenged the determination under section 
  9.18  60A.66; or 
  9.19     (9) if, pursuant to section 60A.66, the insurer challenges 
  9.20  a determination by the commissioner under clause (8), the 
  9.21  notification by the commissioner to the insurer that the 
  9.22  commissioner has, after a hearing, rejected the challenge. 
  9.23     Subd. 2.  [COMMISSIONER'S DUTIES.] In the event of a 
  9.24  regulatory action level event, the commissioner shall: 
  9.25     (1) require the insurer to prepare and submit a risk-based 
  9.26  capital plan, or, if applicable, a revised risk-based capital 
  9.27  plan; 
  9.28     (2) examine or analyze as the commissioner considers 
  9.29  necessary the assets, liabilities, and operations of the insurer 
  9.30  including reviewing its risk-based capital plan or revised 
  9.31  risk-based capital plan; and 
  9.32     (3) subsequent to the examination or analysis, issue a 
  9.33  corrective order specifying the corrective actions the 
  9.34  commissioner determines are required. 
  9.35     Subd. 3.  [CORRECTIVE ACTION.] In determining corrective 
  9.36  actions, the commissioner may take into account factors 
 10.1   considered relevant with respect to the insurer based upon the 
 10.2   commissioner's examination or analysis of the assets, 
 10.3   liabilities and operations of the insurer, including, but not 
 10.4   limited to, the results of any sensitivity tests undertaken 
 10.5   pursuant to the risk-based capital instructions.  The risk-based 
 10.6   capital plan or revised risk-based capital plan must be 
 10.7   submitted: 
 10.8      (1) within 45 days after the occurrence of the regulatory 
 10.9   action level event; 
 10.10     (2) if the insurer challenges an adjusted risk-based 
 10.11  capital report pursuant to section 60A.66 and the challenge is 
 10.12  not frivolous in the judgment of the commissioner, within 45 
 10.13  days after the notification to the insurer that the commissioner 
 10.14  has, after a hearing, rejected the insurer's challenge; or 
 10.15     (3) if the insurer challenges a revised risk-based capital 
 10.16  plan pursuant to section 60A.66 and the challenge is not 
 10.17  frivolous in the judgment of the commissioner, within 45 days 
 10.18  after the notification to the insurer that the commissioner has, 
 10.19  after a hearing, rejected the insurer's challenge. 
 10.20     Subd. 4.  [EXAMINATION AND REVIEW.] The commissioner may 
 10.21  retain actuaries and investment experts and other consultants as 
 10.22  may be necessary in the judgment of the commissioner to review 
 10.23  the insurer's risk-based capital plan or revised risk-based 
 10.24  capital plan, examine or analyze the assets, liabilities, and 
 10.25  operations of the insurer and formulate the corrective order 
 10.26  with respect to the insurer.  The fees, costs, and expenses 
 10.27  relating to consultants shall be borne by the affected insurer 
 10.28  or other party as directed by the commissioner. 
 10.29     Sec. 6.  [60A.64] [AUTHORIZED CONTROL LEVEL EVENT.] 
 10.30     Subdivision 1.  [DEFINITION.] "Authorized control level 
 10.31  event" means any of the following events: 
 10.32     (1) the filing of a risk-based capital report by the 
 10.33  insurer that indicates that the insurer's total adjusted capital 
 10.34  is greater than or equal to its mandatory control level 
 10.35  risk-based capital but less than its authorized control level 
 10.36  risk-based capital; 
 11.1      (2) the notification by the commissioner to the insurer of 
 11.2   an adjusted risk-based capital report that indicates the event 
 11.3   in clause (1), provided the insurer does not challenge the 
 11.4   adjusted risk-based capital report under section 60A.66; 
 11.5      (3) if, pursuant to section 60A.66, the insurer challenges 
 11.6   an adjusted risk-based capital report that indicates the event 
 11.7   in clause (1), notification by the commissioner to the insurer 
 11.8   that the commissioner has, after a hearing, rejected the 
 11.9   insurer's challenge; 
 11.10     (4) the failure of the insurer to respond, in a manner 
 11.11  satisfactory to the commissioner, to a corrective order, 
 11.12  provided the insurer has not challenged the corrective order 
 11.13  under section 60A.66; or 
 11.14     (5) if the insurer has challenged a corrective order under 
 11.15  section 60A.66 and the commissioner has, after a hearing, 
 11.16  rejected the challenge or modified the corrective order, the 
 11.17  failure of the insurer to respond, in a manner satisfactory to 
 11.18  the commissioner, to the corrective order subsequent to 
 11.19  rejection or modification by the commissioner. 
 11.20     Subd. 2.  [COMMISSIONER'S DUTIES.] In the event of an 
 11.21  authorized control level event with respect to an insurer, the 
 11.22  commissioner shall: 
 11.23     (1) take the actions required under section 60A.63 
 11.24  regarding an insurer with respect to which a regulatory action 
 11.25  level event has occurred; or 
 11.26     (2) if the commissioner considers it to be in the best 
 11.27  interests of the policyholders and creditors of the insurer and 
 11.28  of the public, take the actions necessary to cause the insurer 
 11.29  to be placed under regulatory control under chapter 60B.  In the 
 11.30  event the commissioner takes these actions, the authorized 
 11.31  control level event is considered sufficient grounds for the 
 11.32  commissioner to take action under chapter 60B, and the 
 11.33  commissioner has the rights, powers, and duties with respect to 
 11.34  the insurer set forth in chapter 60B.  In the event the 
 11.35  commissioner takes actions under this clause pursuant to an 
 11.36  adjusted risk-based capital report, the insurer is entitled to 
 12.1   the protections afforded to insurers under section 60B.11 
 12.2   pertaining to summary proceedings. 
 12.3      Sec. 7.  [60A.65] [MANDATORY CONTROL LEVEL EVENT.] 
 12.4      Subdivision 1.  [DEFINITION.] "Mandatory control level 
 12.5   event" means any of the following events: 
 12.6      (1) the filing of a risk-based capital report that 
 12.7   indicates that the insurer's total adjusted capital is less than 
 12.8   its mandatory control level risk-based capital; 
 12.9      (2) notification by the commissioner to the insurer of an 
 12.10  adjusted risk-based capital report that indicates the event in 
 12.11  clause (1), provided the insurer does not challenge the adjusted 
 12.12  risk-based capital report under section 60A.66; or 
 12.13     (3) if, pursuant to section 60A.66, the insurer challenges 
 12.14  an adjusted risk-based capital report that indicates the event 
 12.15  in clause (1), notification by the commissioner to the insurer 
 12.16  that the commissioner has, after a hearing, rejected the 
 12.17  insurer's challenge. 
 12.18     Subd. 2.  [COMMISSIONER'S DUTIES.] In the event of a 
 12.19  mandatory control level event: 
 12.20     (1) with respect to a life and/or health insurer, the 
 12.21  commissioner shall take the actions necessary to place the 
 12.22  insurer under regulatory control under chapter 60B.  In that 
 12.23  event, the mandatory control level event is considered 
 12.24  sufficient grounds for the commissioner to take action under 
 12.25  chapter 60B, and the commissioner has the rights, powers, and 
 12.26  duties with respect to the insurer set forth in chapter 60B.  If 
 12.27  the commissioner takes actions pursuant to an adjusted 
 12.28  risk-based capital report, the insurer is entitled to the 
 12.29  protections of section 60B.11 pertaining to summary 
 12.30  proceedings.  However, the commissioner may forego action for up 
 12.31  to 90 days after the mandatory control level event if the 
 12.32  commissioner finds there is a reasonable expectation that the 
 12.33  mandatory control level event may be eliminated within the 
 12.34  90-day period; and 
 12.35     (2) with respect to a property and casualty insurer, the 
 12.36  commissioner shall take the actions necessary to place the 
 13.1   insurer under regulatory control under chapter 60B, or, in the 
 13.2   case of an insurer that is writing no business and that is 
 13.3   running off its existing business, may allow the insurer to 
 13.4   continue its run-off under the supervision of the commissioner.  
 13.5   In either event, the mandatory control level event is sufficient 
 13.6   grounds for the commissioner to take action under chapter 60B, 
 13.7   and the commissioner has the rights, powers, and duties with 
 13.8   respect to the insurer set forth in chapter 60B.  If the 
 13.9   commissioner takes actions pursuant to an adjusted risk-based 
 13.10  capital report, the insurer is entitled to the protections of 
 13.11  section 60B.11 pertaining to summary proceedings.  However, the 
 13.12  commissioner may forego action for up to 90 days after the 
 13.13  mandatory control level event if the commissioner finds there is 
 13.14  a reasonable expectation that the mandatory control level event 
 13.15  may be eliminated within the 90-day period. 
 13.16     Sec. 8.  [60A.66] [HEARINGS.] 
 13.17     Upon: 
 13.18     (1) notification to an insurer by the commissioner of an 
 13.19  adjusted risk-based report; 
 13.20     (2) notification to an insurer by the commissioner that: 
 13.21     (i) the insurer's risk-based capital plan or revised 
 13.22  risk-based capital plan is unsatisfactory; and 
 13.23     (ii) the notification constitutes a regulatory action level 
 13.24  event with respect to the insurer; 
 13.25     (3) notification to an insurer by the commissioner that the 
 13.26  insurer has failed to adhere to its risk-based capital plan or 
 13.27  revised risk-based capital plan and that the failure has 
 13.28  substantial adverse effect on the ability of the insurer to 
 13.29  eliminate the company action level event with respect to the 
 13.30  insurer according to its risk-based capital plan or revised 
 13.31  risk-based capital plan; or 
 13.32     (4) notification to an insurer by the commissioner of a 
 13.33  corrective order with respect to the insurer, 
 13.34  the insurer has the right to a confidential hearing conducted in 
 13.35  accordance with chapter 14, on a record, at which the insurer 
 13.36  may challenge any determination or action by the commissioner.  
 14.1   The insurer shall notify the commissioner of its request for a 
 14.2   hearing within five days after the notification by the 
 14.3   commissioner under clause (1), (2), (3), or (4).  Upon receipt 
 14.4   of the insurer's request for a hearing, the commissioner shall 
 14.5   set a date for the hearing no less than ten nor more than 30 
 14.6   days after the date of the insurer's request. 
 14.7      Sec. 9.  [60A.67] [CONFIDENTIALITY.] 
 14.8      Subdivision 1.  [GENERALLY.] All risk-based capital 
 14.9   reports, to the extent the information in them is not required 
 14.10  to be set forth in a publicly available annual statement 
 14.11  schedule, and risk-based capital plans, including the results or 
 14.12  report of an examination or analysis of an insurer performed 
 14.13  pursuant to sections 60A.60 to 60A.696, and any corrective order 
 14.14  issued by the commissioner pursuant to an examination or 
 14.15  analysis, with respect to a domestic insurer or foreign insurer 
 14.16  that are filed with the commissioner constitute information that 
 14.17  might be damaging to the insurer if made available to its 
 14.18  competitors, and shall be maintained by the commissioner as 
 14.19  nonpublic data as defined in section 13.02, subdivision 9.  This 
 14.20  information is not subject to subpoena, other than by the 
 14.21  commissioner and then only for the purpose of enforcement 
 14.22  actions taken by the commissioner pursuant to sections 60A.60 to 
 14.23  60A.696 or other provision of the insurance laws of this state. 
 14.24     Subd. 2.  [PROHIBITION ON ANNOUNCEMENTS.] The comparison of 
 14.25  an insurer's total adjusted capital to any of its risk-based 
 14.26  capital levels is a regulatory tool that may indicate the need 
 14.27  for possible corrective action with respect to the insurer and 
 14.28  is not intended as a means to rank insurers generally.  Except 
 14.29  as otherwise required under sections 60A.60 to 60A.696, the 
 14.30  making, publishing, dissemination, circulating, or placing 
 14.31  before the public, or causing, directly or indirectly to be 
 14.32  made, published, disseminated, circulated, or placed before the 
 14.33  public, in a newspaper, magazine, or other publication, or in 
 14.34  the form of a notice, circular, pamphlet, letter, or poster, or 
 14.35  over any radio or television station, or in any other way, an 
 14.36  advertisement, announcement, or statement containing an 
 15.1   assertion, representation, or statement with regard to the 
 15.2   risk-based capital levels of an insurer, or of any component 
 15.3   derived in the calculation, by an insurer, agent, broker, or 
 15.4   other person engaged in any manner in the insurance business 
 15.5   would be misleading and is prohibited.  However, if a materially 
 15.6   false statement with respect to the comparison regarding an 
 15.7   insurer's total adjusted capital to its risk-based capital 
 15.8   levels, or any of them, or an inappropriate comparison of any 
 15.9   other amount to the insurer's risk-based capital levels is 
 15.10  published in a written publication and the insurer is able to 
 15.11  demonstrate to the commissioner with substantial proof the 
 15.12  falsity of the statement, or the inappropriateness, as the case 
 15.13  may be, then the insurer may publish an announcement in a 
 15.14  written publication if the sole purpose of the announcement is 
 15.15  to rebut the materially false statement. 
 15.16     Subd. 3.  [PROHIBITION ON USE IN RATEMAKING.] The 
 15.17  risk-based capital instructions, risk-based capital reports, 
 15.18  adjusted risk-based capital reports, risk-based capital plans, 
 15.19  and revised risk-based capital plans are intended solely for use 
 15.20  by the commissioner in monitoring the solvency of insurers and 
 15.21  the need for possible corrective action with respect to insurers.
 15.22  This information shall not be used by the commissioner for 
 15.23  ratemaking nor considered or introduced as evidence in a rate 
 15.24  proceeding nor used by the commissioner to calculate or derive 
 15.25  any elements of an appropriate premium level or rate of return 
 15.26  for a line of insurance that an insurer or an affiliate is 
 15.27  authorized to write. 
 15.28     Sec. 10.  [60A.68] [SUPPLEMENTAL PROVISIONS; RULES; 
 15.29  EXEMPTION.] 
 15.30     (a) Sections 60A.60 to 60A.696 are supplemental to other 
 15.31  laws of this state and do not preclude or limit other powers or 
 15.32  duties of the commissioner under those laws, including, but not 
 15.33  limited to, chapters 60B and 60G. 
 15.34     (b) The commissioner may exempt from the application of 
 15.35  sections 60A.60 to 60A.696 a domestic property and casualty 
 15.36  insurer that: 
 16.1      (1) writes direct business only in this state; 
 16.2      (2) writes direct annual premiums of $2,000,000 or less; 
 16.3   and 
 16.4      (3) assumes no reinsurance in excess of five percent of 
 16.5   direct premium written. 
 16.6      Sec. 11.  [60A.69] [FOREIGN INSURERS.] 
 16.7      Subdivision 1.  [REPORTING REQUIREMENTS.] A foreign insurer 
 16.8   shall, upon the written request of the commissioner, submit to 
 16.9   the commissioner a risk-based capital report as of the end of 
 16.10  the calendar year just ended not later than the later of: 
 16.11     (1) the date a risk-based capital report would be required 
 16.12  to be filed by a domestic insurer under sections 60A.60 to 
 16.13  60A.696; or 
 16.14     (2) fifteen days after the request is received by the 
 16.15  foreign insurer. 
 16.16     A foreign insurer shall, at the written request of the 
 16.17  commissioner, promptly submit to the commissioner copies of all 
 16.18  risk-based capital plans that are filed by the insurer with the 
 16.19  insurance commissioners of other states. 
 16.20     Subd. 2.  [A RISK-BASED CAPITAL PLAN REQUIREMENT.] In the 
 16.21  event of a company action level event, regulatory action level 
 16.22  event, or authorized control level event with respect to a 
 16.23  foreign insurer as determined under the risk-based capital 
 16.24  statute applicable in the state of domicile of the insurer, or, 
 16.25  if no risk-based capital statute is in force in that state, 
 16.26  under sections 60A.60 to 60A.696, if the insurance commissioner 
 16.27  of the state of domicile of the foreign insurer fails to require 
 16.28  the foreign insurer to file a risk-based capital plan in the 
 16.29  manner specified under that state's risk-based capital statute, 
 16.30  or, if no risk-based capital statute is in force in that state, 
 16.31  under section 60A.62, the commissioner may require the foreign 
 16.32  insurer to file a risk-based capital plan with the 
 16.33  commissioner.  In this event, the failure of the foreign insurer 
 16.34  to file a risk-based capital plan with the commissioner shall be 
 16.35  grounds to order the insurer to cease and desist from writing 
 16.36  new insurance business in this state.  This section does not 
 17.1   limit the commissioner's authority to require a foreign insurer 
 17.2   to file a copy of the risk-based capital plan submitted to the 
 17.3   commissioner in the state of domicile. 
 17.4      Subd. 3.  [LIQUIDATION OF PROPERTY.] In the event of a 
 17.5   mandatory control level event with respect to a foreign insurer, 
 17.6   if no domiciliary receiver has been appointed with respect to 
 17.7   the foreign insurer under the rehabilitation and liquidation 
 17.8   statute applicable in the state of domicile of the foreign 
 17.9   insurer, the commissioner may make application to the district 
 17.10  court permitted under chapter 60B with respect to the 
 17.11  liquidation of property of foreign insurers found in this state, 
 17.12  and the occurrence of the mandatory control level event is 
 17.13  adequate grounds for the application. 
 17.14     Sec. 12.  [60A.695] [IMMUNITY.] 
 17.15     There is no liability on the part of, and no cause of 
 17.16  action arises against, the commissioner or the commerce 
 17.17  department or its employees or agents for an action taken by 
 17.18  them in the performance of their powers and duties under 
 17.19  sections 60A.60 to 60A.696. 
 17.20     Sec. 13.  [60A.696] [NOTICES.] 
 17.21     All notices by the commissioner to an insurer that may 
 17.22  result in regulatory action under sections 60A.60 to 60A.696 are 
 17.23  effective upon dispatch if transmitted by registered or 
 17.24  certified mail, or in the case of other transmission is 
 17.25  effective upon the insurer's receipt of the notice. 
 17.26     Sec. 14.  [EFFECTIVE DATE.] 
 17.27     This act is effective for annual statements filed after 
 17.28  January 1, 1996.