1.1                          A bill for an act 
  1.2             relating to insurance; regulating coverages; modifying 
  1.3             agent cancellations or terminations; providing certain 
  1.4             filing requirements for domestic insurers; regulating 
  1.5             disclosures and policy and contract provisions; 
  1.6             providing for the operation and administration of the 
  1.7             medical malpractice joint underwriting association and 
  1.8             the Minnesota joint underwriting association; 
  1.9             regulating policy cancellations or terminations and 
  1.10            claims practices; regulating information handling 
  1.11            practices; establishing solvency requirements; making 
  1.12            technical changes; amending Minnesota Statutes 1994, 
  1.13            sections 60A.07, subdivision 8; 60A.08, subdivision 
  1.14            14; 60A.09, subdivision 4a; 60A.11, subdivision 21; 
  1.15            60A.171, subdivision 7, and by adding a subdivision; 
  1.16            60A.36, subdivision 1; 60C.09, subdivision 2; 60C.11, 
  1.17            by adding a subdivision; 61A.02, subdivision 2, and by 
  1.18            adding a subdivision; 61A.072, subdivision 4; 61A.32; 
  1.19            61B.20, subdivision 15; 61B.28, subdivision 7; 62A.02, 
  1.20            by adding a subdivision; 62A.31, subdivisions 1p, 1r, 
  1.21            1s, and 3; 62A.315; 62A.318; 62A.36, subdivision 1; 
  1.22            62A.39; 62A.44, subdivision 2; 62A.60; 62F.03, 
  1.23            subdivision 6; 62F.04, subdivision 1a; 62I.02, 
  1.24            subdivisions 2, 5, and by adding a subdivision; 
  1.25            62I.07; 62L.02, subdivision 15; 62L.09, subdivision 3; 
  1.26            65A.01, subdivision 3; 65A.295; 65B.14, by adding a 
  1.27            subdivision; 65B.15, subdivision 1; 70A.07; and 
  1.28            72A.20, subdivisions 17, 23, 26, 30, and by adding a 
  1.29            subdivision; Minnesota Statutes 1995 Supplement, 
  1.30            sections 60A.07, subdivision 10; 60A.67, subdivision 
  1.31            2; 60K.03, subdivision 7; 61A.09, subdivision 1; 
  1.32            62A.042; 62A.135, subdivision 1; 62A.31,subdivision 
  1.33            1h; 62C.14, subdivision 14; 62E.05, subdivision 1; 
  1.34            62F.02, subdivision 2; 62L.12, subdivision 2; and 
  1.35            65B.47, subdivision 1a; proposing coding for new law 
  1.36            in Minnesota Statutes, chapters 60A; 61A; 62A; and 
  1.37            72A; repealing Minnesota Statutes 1994, sections 
  1.38            60A.13, subdivision 8; 60A.40; 60B.27; 62I.20; 65A.25; 
  1.39            and 72A.205; Laws 1995, chapter 140, section 1. 
  1.40  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.41                             ARTICLE 1 
  1.42     Section 1.  Minnesota Statutes 1994, section 60A.08, 
  2.1   subdivision 14, is amended to read: 
  2.2      Subd. 14.  [AGREEMENT TO RESCIND POLICY OR RELEASE BAD 
  2.3   FAITH CLAIM.] (a) If the insurer has knowledge of any claims 
  2.4   against the insured that would remain unsatisfied due to the 
  2.5   financial condition of the insured, the insurer and the insured 
  2.6   may not agree to: 
  2.7      (1) rescind the policy; or 
  2.8      (2) directly or indirectly transfer to, or release to, the 
  2.9   insurer the insured's claim or potential claim against the 
  2.10  insurer based upon the insurer's refusal to settle a claim 
  2.11  against the insured.  
  2.12     (b) Before entering into an agreement to rescind a policy 
  2.13  described in paragraph (a), an insurer must make a good faith 
  2.14  effort to ascertain:  (1) the existence and identity of all 
  2.15  claims against the policy; and (2) the financial condition of 
  2.16  the insured. 
  2.17     (c) The insured must provide reasonable financial 
  2.18  information upon request of the insurer. 
  2.19     (d) An agreement made in violation of this section is void 
  2.20  and unenforceable. 
  2.21     Sec. 2.  Minnesota Statutes 1994, section 60A.09, 
  2.22  subdivision 4a, is amended to read: 
  2.23     Subd. 4a.  [ASSUMPTION TRANSACTIONS REGULATED.] No life 
  2.24  company, whether domestic, foreign, or alien, shall perform an 
  2.25  assumption transaction, including an assumption reinsurance 
  2.26  agreement, with respect to a policy issued to a Minnesota 
  2.27  resident, unless: 
  2.28     (1) the assumption agreement has been filed with the 
  2.29  commissioner; 
  2.30     (2) the assumption agreement specifically provides that the 
  2.31  original insurer remains liable to the insured in the event the 
  2.32  assuming insurer is unable to fulfill its obligations or the 
  2.33  original insurer acknowledges in writing to the commissioner 
  2.34  that it remains liable to the insured in the event the assuming 
  2.35  insurer is unable to fulfill its obligations; 
  2.36     (3) the proposed certificate of assumption to be provided 
  3.1   to the policyholder has been filed with the commissioner for 
  3.2   review and approval as provided in section 61A.02; and 
  3.3      (4) the proposed certificate of assumption contains, in 
  3.4   bold face type, the following language: 
  3.5      "Policyholder:  Please be advised that you retain all 
  3.6   rights with respect to your policy against your original insurer 
  3.7   in the event the assuming insurer is unable to fulfill its 
  3.8   obligations.  In such event, your original insurer remains 
  3.9   liable to you notwithstanding the terms of its assumption 
  3.10  agreement." 
  3.11     With respect to residents of Minnesota, the notice to 
  3.12  policyholders shall also include a statement as to the effect on 
  3.13  guaranty fund coverage, if any, that will result from the 
  3.14  transfer. 
  3.15     Clauses (2) and (4) above do not apply if the policyholder 
  3.16  consents in a signed writing to a release of the original 
  3.17  insurer from liability and to a waiver of the protections 
  3.18  provided in clauses (2) and (4) after being informed in writing 
  3.19  by the insurer of the circumstances relating to and the effect 
  3.20  of the assumption, provided that the consent form signed by the 
  3.21  policyholder has been filed with and approved by the 
  3.22  commissioner. 
  3.23     If a company is deemed by the commissioner to be in a 
  3.24  hazardous condition or is under a court ordered supervision, 
  3.25  rehabilitation, liquidation, conservation or receivership, and 
  3.26  the transfer of policies is in the best interest of the 
  3.27  policyholders, as determined by the commissioner, a transfer may 
  3.28  be effected notwithstanding the provisions in this subdivision 
  3.29  by using a different form of consent by policyholders.  This may 
  3.30  include a form of implied consent and adequate notification to 
  3.31  the policyholder of the circumstances requiring the transfer as 
  3.32  approved by the commissioner.  This paragraph does not apply 
  3.33  when a policy is transferred to the Minnesota life and health 
  3.34  guaranty association or to the Minnesota insurance guaranty 
  3.35  association. 
  3.36     Sec. 3.  Minnesota Statutes 1994, section 60A.171, 
  4.1   subdivision 7, is amended to read: 
  4.2      Subd. 7.  The provisions of this section do not apply to 
  4.3   the termination of an agent's contract for insolvency, 
  4.4   abandonment, gross and willful misconduct, or failure to pay 
  4.5   over to the company money due to the company after receipt by 
  4.6   the agent of a written demand therefor, or after revocation of 
  4.7   the agent's license by the commissioner of commerce; nor to the 
  4.8   termination of agents who write insurance business exclusively 
  4.9   for one company or agents in the direct employ of the 
  4.10  company.  This section does not apply to the termination of an 
  4.11  agent's contract if the agent is directly employed by the 
  4.12  company or if the agent writes 80 percent or more of the agent's 
  4.13  gross annual insurance business for one company or any or all of 
  4.14  its subsidiaries. 
  4.15     Sec. 4.  Minnesota Statutes 1994, section 60A.171, is 
  4.16  amended by adding a subdivision to read: 
  4.17     Subd. 12.  For purposes of this section, a cancellation or 
  4.18  termination of an agent's contract is considered to have 
  4.19  occurred if the company cancels a line of insurance business or 
  4.20  a volume of insurance business that equals or exceeds 75 percent 
  4.21  of the insurance business placed by that agent with the company. 
  4.22     Sec. 5.  [60A.179] [LIFE OR HEALTH INSURANCE POLICY QUOTAS 
  4.23  FOR EXCLUSIVE AGENTS.] 
  4.24     Subdivision 1.  [APPLICATION.] This section applies to 
  4.25  licensed insurance agents as defined by section 60A.176. 
  4.26     Subd. 2.  [PROHIBITED PRACTICE.] No insurer shall require 
  4.27  an agent who has been licensed as an agent three years or more 
  4.28  to sell a specified number of life or health insurance policies 
  4.29  or a specified dollar amount of life and health insurance in 
  4.30  relation to the sale of other insurance products.  No insurer 
  4.31  may terminate an agent's contract or reduce or restrict an 
  4.32  agent's underwriting authority on property and casualty 
  4.33  insurance policies based upon the sale of life or health 
  4.34  insurance. 
  4.35     Sec. 6.  Minnesota Statutes 1994, section 60A.36, 
  4.36  subdivision 1, is amended to read: 
  5.1      Subdivision 1.  [REASON FOR CANCELLATION.] No insurer may 
  5.2   cancel a policy of commercial liability and/or property 
  5.3   insurance during the term of the policy, except for one or more 
  5.4   of the following reasons:  
  5.5      (1) nonpayment of premium; 
  5.6      (2) misrepresentation or fraud made by or with the 
  5.7   knowledge of the insured in obtaining the policy or in pursuing 
  5.8   a claim under the policy; 
  5.9      (3) actions by the insured that have substantially 
  5.10  increased or substantially changed the risk insured; 
  5.11     (4) refusal of the insured to eliminate known conditions 
  5.12  that increase the potential for loss after notification by the 
  5.13  insurer that the condition must be removed; 
  5.14     (5) substantial change in the risk assumed, except to the 
  5.15  extent that the insurer should reasonably have foreseen the 
  5.16  change or contemplated the risk in writing the contract; 
  5.17     (6) loss of reinsurance by the insurer which provided 
  5.18  coverage to the insurer for a significant amount of the 
  5.19  underlying risk insured.  A notice of cancellation under this 
  5.20  clause shall advise the policyholder that the policyholder has 
  5.21  ten days from the date of receipt of the notice to appeal the 
  5.22  cancellation to the commissioner of commerce and that the 
  5.23  commissioner will render a decision as to whether the 
  5.24  cancellation is justified because of the loss of reinsurance 
  5.25  within five 30 business days after receipt of the appeal; 
  5.26     (7) a determination by the commissioner that the 
  5.27  continuation of the policy could place the insurer in violation 
  5.28  of the insurance laws of this state; or 
  5.29     (8) nonpayment of dues to an association or organization, 
  5.30  other than an insurance association or organization, where 
  5.31  payment of dues is a prerequisite to obtaining or continuing the 
  5.32  insurance.  This provision for cancellation for failure to pay 
  5.33  dues does not apply to persons who are retired at 62 years of 
  5.34  age or older or who are disabled according to social security 
  5.35  standards.  
  5.36     Sec. 7.  Minnesota Statutes 1995 Supplement, section 
  6.1   60K.03, subdivision 7, is amended to read: 
  6.2      Subd. 7.  [EXCEPTIONS.] The following are exempt from the 
  6.3   general licensing requirements prescribed by this section:  
  6.4      (1) agents of township mutuals who are exempted pursuant to 
  6.5   section 60K.04; 
  6.6      (2) fraternal benefit society representatives exempted 
  6.7   pursuant to section 60K.05; 
  6.8      (3) any regular salaried officer or employee of a licensed 
  6.9   insurer, without license or other qualification, may act on 
  6.10  behalf of that licensed insurer in the negotiation of insurance 
  6.11  for that insurer, provided that a licensed agent must 
  6.12  participate in the sale of the insurance; 
  6.13     (4) employers and their officers or employees, and the 
  6.14  trustees or employees of any trust plan, to the extent that the 
  6.15  employers, officers, employees, or trustees are engaged in the 
  6.16  administration or operation of any program of employee benefits 
  6.17  for the employees of the employers or employees of their 
  6.18  subsidiaries or affiliates involving the use of insurance issued 
  6.19  by a licensed insurance company; provided that the activities of 
  6.20  the officers, employees and trustees are incidental to clerical 
  6.21  or administrative duties and their compensation does not vary 
  6.22  with the volume of insurance or applications for insurance; 
  6.23     (5) employees of a creditor who enroll debtors for credit 
  6.24  life, credit accident and health, or credit involuntary 
  6.25  unemployment insurance; provided the employees receive no 
  6.26  commission or fee for it; 
  6.27     (6) clerical or administrative employees of an insurance 
  6.28  agent who take insurance applications or receive premiums in the 
  6.29  office of their employer, if the activities are incidental to 
  6.30  clerical or administrative duties and the employee's 
  6.31  compensation does not vary with the volume of the applications 
  6.32  or premiums; 
  6.33     (7) rental vehicle companies and their employees in 
  6.34  connection with the offer of rental vehicle personal accident 
  6.35  insurance under section 72A.125; and 
  6.36     (8) employees of a retailer who enroll purchasers for 
  7.1   credit insurance associated with a retail purchase; provided the 
  7.2   employees receive no commission, fee, bonus, or other form of 
  7.3   compensation for it; and 
  7.4      (9) representatives of prepaid legal service plans in 
  7.5   connection with the sale and marketing of these plans. 
  7.6      Sec. 8.  Minnesota Statutes 1994, section 61A.02, 
  7.7   subdivision 2, is amended to read: 
  7.8      Subd. 2.  [APPROVAL REQUIRED.] No policy or certificate of 
  7.9   life insurance or annuity contract, issued to an individual, 
  7.10  group, or multiple employer trust, nor any rider of any kind or 
  7.11  description which is made a part thereof shall be issued or 
  7.12  delivered in this state, or be issued by a life insurance 
  7.13  company organized under the laws of this state, until the form 
  7.14  of the same has been approved by the commissioner.  In making a 
  7.15  determination under this section, the commissioner may require 
  7.16  the insurer to provide rates and advertising materials related 
  7.17  to policies or contracts, certificates, or similar evidence of 
  7.18  coverage issued or delivered in this state.  
  7.19     This section applies Subdivisions 1 to 5 apply to a policy, 
  7.20  certificate of insurance, or similar evidence of coverage issued 
  7.21  to a Minnesota resident or issued to provide coverage to a 
  7.22  Minnesota resident.  This section does Subdivisions 1 to 5 do 
  7.23  not apply to a certificate of insurance or similar evidence of 
  7.24  coverage that meets the conditions of section 61A.093, 
  7.25  subdivision 2. 
  7.26     Sec. 9.  Minnesota Statutes 1994, section 61A.02, is 
  7.27  amended by adding a subdivision to read: 
  7.28     Subd. 6.  [FILING BY DOMESTIC INSURERS FOR PURPOSES OF 
  7.29  COMPLYING WITH ANOTHER STATE'S FILING REQUIREMENTS.] A domestic 
  7.30  insurer may file with the commissioner for informational 
  7.31  purposes only a policy, certificate of insurance, or annuity 
  7.32  contract that is not intended to be offered or sold within this 
  7.33  state.  This subdivision only applies to the filing in Minnesota 
  7.34  of a policy, certificate of insurance, or annuity contract 
  7.35  issued to an insured, certificate holder, or annuitant located 
  7.36  outside of this state when the filing is for the express purpose 
  8.1   of complying with the law of the state in which the insured, 
  8.2   certificate holder, or annuitant resides.  In no event may a 
  8.3   policy, certificate of insurance, or annuity contract filed 
  8.4   under this subdivision for out-of-state use be issued or 
  8.5   delivered in Minnesota unless and until the policy, certificate 
  8.6   of insurance, or annuity contract is approved under subdivision 
  8.7   2. 
  8.8      Sec. 10.  Minnesota Statutes 1994, section 61A.072, 
  8.9   subdivision 4, is amended to read: 
  8.10     Subd. 4.  [LONG-TERM CARE EXPENSES.] If the right to 
  8.11  receive accelerated benefits is contingent upon the insured 
  8.12  receiving long-term care services, the contract or supplemental 
  8.13  contract shall include the following provisions:  
  8.14     (1) the minimum accelerated benefit shall be $1,200 per 
  8.15  month if the insured is receiving nursing facility services and 
  8.16  $750 per month if the insured is receiving home services with a 
  8.17  minimum lifetime benefit limit of $50,000; 
  8.18     (2) coverage is effective immediately and benefits shall 
  8.19  commence with the receipt of services as defined in section 
  8.20  62A.46, subdivision 3, 4, or 5, but may include a waiting period 
  8.21  of not more than 90 days, provided that no more than one waiting 
  8.22  period may be required per benefit period as defined in section 
  8.23  62A.46, subdivision 11; 
  8.24     (3) premium shall be waived during any period in which 
  8.25  benefits are being paid to the insured during confinement to a 
  8.26  nursing home facility; 
  8.27     (4) coverage may not be canceled or renewal refused except 
  8.28  on the grounds of nonpayment of premium; 
  8.29     (5) coverage must include preexisting conditions during the 
  8.30  first six months of coverage if the insured was not diagnosed or 
  8.31  treated for the particular condition during the 90 days 
  8.32  immediately preceding the effective date of coverage; 
  8.33     (6) the contract or supplemental contract shall contain the 
  8.34  following disclosure:  
  8.35     "THE ACCELERATED LIFE INSURANCE BENEFITS PROVIDED UNDER 
  8.36  THIS CONTRACT MAY NOT COVER ALL NURSING HOME, HOME CARE, OR 
  9.1   ADULT DAY CARE EXPENSES.  BENEFITS ARE NOT PAYABLE UPON RECEIPT 
  9.2   OF RESIDENTIAL CARE.  READ YOUR POLICY CAREFULLY TO DETERMINE 
  9.3   YOUR BENEFIT AMOUNT."; 
  9.4      (7) coverage must include mental or nervous disorders which 
  9.5   have a demonstrable organic cause such as Alzheimer's and 
  9.6   related dementias; 
  9.7      (8) (7) no prior hospitalization requirement shall be 
  9.8   allowed unless a similar requirement is allowed by section 
  9.9   62A.48, subdivision 1; and 
  9.10     (9) (8) the contract shall include a cancellation provision 
  9.11  that meets the requirements of section 62A.50, subdivision 2. 
  9.12     Sec. 11.  Minnesota Statutes 1995 Supplement, section 
  9.13  61A.09, subdivision 1, is amended to read: 
  9.14     Subdivision 1.  No group life insurance policy or group 
  9.15  annuity shall be issued for delivery in this state until the 
  9.16  form thereof and the form of any certificates issued thereunder 
  9.17  have been filed in accordance with and subject to the provisions 
  9.18  of section 61A.02.  Each person insured under such a group life 
  9.19  insurance policy (excepting policies which insure the lives of 
  9.20  debtors of a creditor or vendor to secure payment of 
  9.21  indebtedness) shall be furnished a certificate of insurance 
  9.22  issued by the insurer and containing the following: 
  9.23     (a) Name and location of the insurance company; 
  9.24     (b) A statement as to the insurance protection to which the 
  9.25  certificate holder is entitled, including any changes in such 
  9.26  protection depending on the age of the person whose life is 
  9.27  insured; 
  9.28     (c) Any and all provisions regarding the termination or 
  9.29  reduction of the certificate holder's insurance protection; 
  9.30     (d) A statement that the master group policy may be 
  9.31  examined at a reasonably accessible place; 
  9.32     (e) The maximum rate of contribution to be paid by the 
  9.33  certificate holder; 
  9.34     (f) Beneficiary and method required to change such 
  9.35  beneficiary; 
  9.36     (g) A statement that alternative methods for the payment of 
 10.1   group life policy proceeds of $15,000 or more must be offered to 
 10.2   beneficiaries in lieu of a lump sum distribution, at their 
 10.3   request.  Alternative payment methods which must be offered at 
 10.4   the request of the beneficiaries must include, but are not 
 10.5   limited to, a life income option, an income option for fixed 
 10.6   amounts or fixed time periods, and the option to select an 
 10.7   interest-bearing account with the company with the right to 
 10.8   select another option at a later date; 
 10.9      (h) In the case of a group term insurance policy if the 
 10.10  policy provides that insurance of the certificate holder will 
 10.11  terminate, in case of a policy issued to an employer, by reason 
 10.12  of termination of the certificate holder's employment, or in 
 10.13  case of a policy issued to an organization of which the 
 10.14  certificate holder is a member, by reason of termination of 
 10.15  membership, a provision to the effect that in case of 
 10.16  termination of employment or membership, or in case of 
 10.17  termination of the group policy, the certificate holder shall be 
 10.18  entitled to have issued by the insurer, without evidence of 
 10.19  insurability, upon application made to the insurer within 31 
 10.20  days after the termination, and upon payment of the premium 
 10.21  applicable to the class of risk to which that person belongs and 
 10.22  to the form and amount of the policy at that person's then 
 10.23  attained age, a policy of life insurance only, in any one of the 
 10.24  forms customarily issued by the insurer except term insurance, 
 10.25  in an amount equal to the amount of the life insurance 
 10.26  protection under such group insurance policy at the time of such 
 10.27  termination; and shall contain a further provision to the effect 
 10.28  that upon the death of the certificate holder during such 31-day 
 10.29  period and before any such individual policy has become 
 10.30  effective, the amount of insurance for which the certificate 
 10.31  holder was entitled to make application shall be payable as a 
 10.32  death benefit by the insurer.  
 10.33     This section applies to a policy, certificate of insurance, 
 10.34  or similar evidence of coverage issued to a Minnesota resident 
 10.35  or issued to provide coverage to a Minnesota resident.  This 
 10.36  section does not apply to a certificate of insurance or similar 
 11.1   evidence of coverage that meets the conditions of section 
 11.2   61A.093, subdivision 2. 
 11.3      Sec. 12.  [61A.53] [DEFINITIONS.] 
 11.4      Subdivision 1.  [APPLICABILITY.] For purposes of sections 
 11.5   61A.53 to 61A.60, the terms defined in this section have the 
 11.6   meanings given. 
 11.7      Subd. 2.  [REPLACEMENT.] "Replacement" means any 
 11.8   transaction in which new life insurance or a new annuity is to 
 11.9   be purchased, and it is known or should be known to the 
 11.10  proposing agent or broker or to the proposing insurer if there 
 11.11  is no agent, that by reason of the transaction, existing life 
 11.12  insurance or annuity has been or is to be: 
 11.13     (1) lapsed, forfeited, surrendered, or otherwise 
 11.14  terminated; 
 11.15     (2) converted to reduced paid-up insurance, continued as 
 11.16  extended term insurance, or otherwise reduced in value by the 
 11.17  use of nonforfeiture benefits or other policy values; 
 11.18     (3) amended so as to effect either a reduction in benefits 
 11.19  or in the term for which coverage would otherwise remain in 
 11.20  force or for which benefits would be paid; 
 11.21     (4) reissued with any reduction in cash value; or 
 11.22     (5) pledged as collateral or subjected to borrowing, 
 11.23  whether in a single loan or under a schedule of borrowing over a 
 11.24  period of time for amounts in the aggregate exceeding 25 percent 
 11.25  of the loan value set forth in the policy. 
 11.26     Subd. 3.  [CONSERVATION.] "Conservation" means any attempt 
 11.27  by the existing insurer or its agent or broker to dissuade a 
 11.28  policy owner or contract holder from the replacement of existing 
 11.29  life insurance or annuity.  Conservation does not include 
 11.30  routine administrative procedures such as late payment 
 11.31  reminders, late payment offers, or reinstatement offers. 
 11.32     Subd. 4.  [DIRECT-RESPONSE SALE.] "Direct-response sale" 
 11.33  means any sale of life insurance or annuity where the insurer 
 11.34  does not use an agent in the sale or delivery of the policy or 
 11.35  contract. 
 11.36     Subd. 5.  [EXISTING INSURER.] "Existing insurer" means the 
 12.1   insurance company whose policy or contract is or will be changed 
 12.2   or terminated in such a manner as described within the 
 12.3   definition of "replacement." 
 12.4      Subd. 6.  [EXISTING LIFE INSURANCE OR ANNUITY.] "Existing 
 12.5   life insurance or annuity" means any life insurance or annuity 
 12.6   in force, including life insurance under a binding or 
 12.7   conditional receipt or a life insurance policy or annuity 
 12.8   contract that is within an unconditional refund period. 
 12.9      Subd. 7.  [REPLACING INSURER.] "Replacing insurer" means 
 12.10  the insurance company that issues or proposes to issue a new 
 12.11  policy or contract which is a replacement of existing life 
 12.12  insurance or annuity. 
 12.13     Sec. 13.  [61A.54] [EXEMPTIONS.] 
 12.14     Unless otherwise specifically included, sections 61A.53 to 
 12.15  61A.60 do not apply to transactions involving: 
 12.16     (1) credit life insurance; 
 12.17     (2) group life insurance or group annuities; 
 12.18     (3) an application to the existing insurer that issued the 
 12.19  existing life insurance, where a contractual change or a 
 12.20  conversion privilege is being exercised; 
 12.21     (4) proposed life insurance that is to replace life 
 12.22  insurance under a binding or conditional receipt issued by the 
 12.23  same company; or 
 12.24     (5) transactions where the replacing insurer and the 
 12.25  existing insurer are the same, or are subsidiaries or affiliates 
 12.26  under common ownership or control; provided, however, that 
 12.27  agents or brokers proposing replacement shall comply with 
 12.28  section 61A.55, subdivision 1. 
 12.29     Sec. 14.  [61A.55] [DUTIES OF AGENTS AND BROKERS.] 
 12.30     Subdivision 1.  [SUBMISSION TO INSURER.] Each agent or 
 12.31  broker who initiates the application shall submit to the insurer 
 12.32  to which an application for life insurance or annuity is 
 12.33  presented, with or as part of each application: 
 12.34     (1) a statement signed by the applicant as to whether 
 12.35  replacement of existing life insurance or annuity is involved in 
 12.36  the transaction; and 
 13.1      (2) a signed statement as to whether the agent or broker 
 13.2   knows replacement is or may be involved in the transaction. 
 13.3      Subd. 2.  [REPLACEMENT INFORMATION.] Where a replacement is 
 13.4   involved, the agent or broker shall: 
 13.5      (1) present to the applicant, not later than at the time of 
 13.6   taking the application, a "notice regarding replacement" in the 
 13.7   form as described in section 61A.60, subdivision 1, or other 
 13.8   substantially similar form approved by the commissioner.  The 
 13.9   notice shall be fully completed and signed by both the applicant 
 13.10  and the agent or broker and left with the applicant.  The 
 13.11  completed notice must list all existing life insurance and 
 13.12  annuity to be replaced, properly identified by name of insurer, 
 13.13  the insured, and contract number.  If a contract number has not 
 13.14  been assigned by the existing insurer, alternative 
 13.15  identification, such as an application or receipt number, shall 
 13.16  be listed; 
 13.17     (2) leave with the applicant the original or a copy of any 
 13.18  written or printed communications used for presentation to the 
 13.19  applicant; and 
 13.20     (3) submit to the replacing insurer with the application a 
 13.21  copy of the fully completed and signed replacement notice 
 13.22  provided under this subdivision. 
 13.23     Subd. 3.  [MATERIALS USED TO DISSUADE REPLACEMENT.] Each 
 13.24  agent or broker who uses written or printed communications in a 
 13.25  conservation shall leave with the applicant the original or a 
 13.26  copy of the communications. 
 13.27     Sec. 15.  [61A.56] [DUTIES OF ALL INSURERS.] 
 13.28     Each insurer shall: 
 13.29     (1) inform its field representatives or other personnel 
 13.30  responsible for compliance with sections 61A.53 to 61A.60 of the 
 13.31  requirements of those sections; and 
 13.32     (2) require with or as a part of each completed application 
 13.33  for life insurance or annuity a statement signed by the 
 13.34  applicant as to whether the proposed insurance or annuity will 
 13.35  replace existing life insurance or annuity. 
 13.36     Sec. 16.  [61A.57] [DUTIES OF INSURERS THAT USE AGENTS OR 
 14.1   BROKERS.] 
 14.2      Each insurer that uses an agent or broker in a life 
 14.3   insurance or annuity sale shall: 
 14.4      (a) Require with or as part of each completed application 
 14.5   for life insurance or annuity, a statement signed by the agent 
 14.6   or broker as to whether the agent or broker knows replacement is 
 14.7   or may be involved in the transaction. 
 14.8      (b) Where a replacement is involved: 
 14.9      (1) require from the agent or broker with the application 
 14.10  for life insurance or annuity, a copy of the fully completed and 
 14.11  signed replacement notice provided the applicant under section 
 14.12  61A.55.  The existing life insurance or annuity must be 
 14.13  identified by name of insurer, insured, and contract number.  If 
 14.14  a number has not been assigned by the existing insurer, 
 14.15  alternative identification, such as an application or receipt 
 14.16  number, must be listed; and 
 14.17     (2) send to each existing insurer a written communication 
 14.18  advising of the replacement or proposed replacement and the 
 14.19  identification information obtained under this section.  This 
 14.20  written communication must be made within five working days of 
 14.21  the date that the application is received in the replacing 
 14.22  insurer's home or regional office, or the date the proposed 
 14.23  policy or contract is issued, whichever is sooner. 
 14.24     (c) The replacing insurer shall maintain evidence of the 
 14.25  "notice regarding replacement" and a replacement register, 
 14.26  cross-indexed, by replacing agent and existing insurer to be 
 14.27  replaced.  Evidence that all requirements were met shall be 
 14.28  maintained for at least six years. 
 14.29     (d) The replacing insurer shall provide in its policy or 
 14.30  contract, or in a separate written notice that is delivered with 
 14.31  the policy or contract, that the applicant has a right to an 
 14.32  unconditional refund of all premiums paid, which right may be 
 14.33  exercised within a period of 20 days beginning from the date of 
 14.34  delivery of the policy. 
 14.35     Sec. 17.  [61A.58] [DUTIES OF INSURERS WITH RESPECT TO 
 14.36  DIRECT RESPONSE SALES.] 
 15.1      (a) If in the solicitation of a direct response sale, the 
 15.2   insurer did not propose the replacement, and a replacement is 
 15.3   involved, the insurer shall send to the applicant with the 
 15.4   policy or contract a replacement notice as described in section 
 15.5   61A.60, subdivision 2, or other substantially similar form 
 15.6   approved by the commissioner.  
 15.7      (b) If the insurer proposed the replacement, it shall: 
 15.8      (1) provide to applicants or prospective applicants with or 
 15.9   as a part of the application a replacement notice as described 
 15.10  in section 61A.60, subdivision 2, or other substantially similar 
 15.11  form approved by the commissioner; 
 15.12     (2) request from the applicant with or as part of the 
 15.13  application, a list of all existing life insurance policies or 
 15.14  annuity contracts to be replaced and properly identified by name 
 15.15  of insurer and insured; and 
 15.16     (3) comply with the requirements of section 61A.57, 
 15.17  paragraph (b), clause (2), if the applicant furnishes the names 
 15.18  of the existing insurers, and the requirements of section 
 15.19  61A.57, paragraphs (c) and (d), except that it need not index 
 15.20  the replacement register by replacing agent. 
 15.21     Sec. 18.  [61A.59] [ENFORCEMENT; EFFECT OF COMPLIANCE.] 
 15.22     (a) An agent, broker, or insurer shall not recommend the 
 15.23  replacement or conservation of an existing policy or contract by 
 15.24  use of a substantially inaccurate presentation or comparison of 
 15.25  an existing policy's or contract's premiums and benefits or 
 15.26  dividends and values, if any.  An insurer, agent, 
 15.27  representative, officer, or employee of the insurer failing to 
 15.28  comply with the requirements of sections 61A.53 to 61A.60 is 
 15.29  subject to such penalties as may be appropriate under this 
 15.30  chapter.  
 15.31     (b) Patterns of action by policy holders or contract 
 15.32  holders who purchase replacing policies or contracts from the 
 15.33  same agent or broker, after indicating on applications that 
 15.34  replacement is not involved, are prima facie evidence of the 
 15.35  agent's or broker's knowledge that replacement was intended in 
 15.36  connection with the sale of those policies, and the patterns of 
 16.1   action are prima facie evidence of the agent's or broker's 
 16.2   intent to violate sections 61A.53 to 61A.60. 
 16.3      (c) Sections 61A.53 to 61A.60 do not prohibit the use of 
 16.4   additional material other than that which is required that does 
 16.5   not violate those sections or any other statute or rule. 
 16.6      (d) Compliance by an insurer, agent, or broker with 
 16.7   sections 61A.53 to 61A.60 does not limit any cause of action or 
 16.8   other remedies that the insured may otherwise have against an 
 16.9   insurer, agent, or broker.  In a proceeding in which the 
 16.10  insured's knowledge or understanding is an issue, compliance 
 16.11  with those sections may be admitted as evidence on that issue, 
 16.12  but shall not be conclusive. 
 16.13     Sec. 19.  [61A.60] [REQUIRED REPLACEMENT NOTICE AND FORM.] 
 16.14     Subdivision 1.  [NOTICE FORM; AGENT SALES.] The notice 
 16.15  required where sections 61A.53 to 61A.60 refer to this 
 16.16  subdivision is as follows: 
 16.17                         IMPORTANT NOTICE 
 16.18  
 16.19  DEFINITION:  REPLACEMENT is any transaction where, in connection
 16.20               with the purchase of New Insurance, you LAPSE, 
 16.21               SURRENDER, CONVERT to Paid-up Insurance, Place on 
 16.22               Extended Term, or BORROW all or part of the policy 
 16.23               loan values on an existing insurance policy or
 16.24               an annuity.  (See reverse side for DEFINITIONS.) 
 16.26  IF YOU       In connection with the purchase of this insurance, 
 16.27  INTEND TO    if you have REPLACED or intend to REPLACE your 
 16.28  REPLACE      present life insurance coverage, you should be 
 16.29  COVERAGE     certain that you understand all the relevant 
 16.30               factors involved.
 16.31               You should BE AWARE that you may be required to
 16.32               provide [EVIDENCE OF INSURABILITY] and 
 16.34               1)  If your HEALTH condition has CHANGED since 
 16.35               the application was taken on your present 
 16.36               policies, you may be required to pay ADDITIONAL 
 17.1                PREMIUMS under the NEW POLICY, or be DENIED 
 17.2                coverage. 
 17.4                2)  Your present occupation or activities [may not
 17.5                be covered or could require additional premiums.]
 17.7                3)  The INCONTESTABLE and SUICIDE CLAUSE will 
 17.8                begin anew in a new policy.  This could RESULT 
 17.9                in a [CLAIM under the new policy BEING DENIED] 
 17.10               that would otherwise have been paid.
 17.12               4)  Current law DOES NOT REQUIRE your present 
 17.13               insurer(s) to REFUND any premiums.
 17.15               5)  It is to your advantage to OBTAIN INFORMATION
 17.16               regarding your existing policies [from the 
 17.17               insurer or agent from whom you purchased the 
 17.18               policy.]
 17.20     
 17.21     (If you are purchasing an annuity, clauses 1, 2, and 3 
 17.22     above would not apply to the new annuity contract.) THE 
 17.23     INSURANCE I INTEND TO PURCHASE FROM 
 17.24     .......................................INSURANCE CO. MAY 
 17.25     REPLACE OR ALTER EXISTING LIFE INSURANCE POLICY(IES). The 
 17.26     following policy(ies) may be replaced as a result of this 
 17.27     transaction: [Insurer [Insured as it appears on the policy] 
 17.28     as it appears on the policy] 
 17.29  .............................................................
 17.30  .............................................................
 17.31  .............................................................
 17.32  .............................    .............................
 17.33        [Policy Number]                 [Insured Birthdate]
 17.34  .............................    .............................
 17.35  .............................    .............................
 17.36  .............................    .............................
 18.1   .............................    .............................
 18.2         The proposed policy
 18.3         ......................................   $......  
 18.4         type of policy-generic name              face amount
 18.6         ........................................................
 18.7         signature of applicant                   date
 18.9         ........................................................
 18.10        address of applicant        city              state
 18.12        I certify that this form was given to and completed by 
 18.14        ........................................................
 18.15                      (applicant-please print or type)
 18.17        prior to taking an application and that I am leaving a 
 18.18        signed copy for the applicant.
 18.20               ...................................................
 18.21               agent's signature                    date
 18.23               ...................................................
 18.24                                address
 18.26               ...................................................
 18.27                       city                       state
 18.28            [NOTE IMPORTANT STATEMENT ON REVERSE SIDE]
 18.29     Subd. 2.  [NOTICE FORM; DIRECT RESPONSE SALES.] The notice 
 18.30  required where sections 61A.53 to 61A.60 refer to this 
 18.31  subdivision is as follows: 
 18.32                         IMPORTANT NOTICE
 18.33                           REQUIRED BY
 18.34                     MINNESOTA INSURANCE LAW
 18.36  DEFINITION: REPLACEMENT is any transaction where, in connection 
 18.37              with the purchase of New Insurance or a New Annuity, 
 18.38              you LAPSE, SURRENDER, CONVERT to Paid-up Insurance, 
 18.39              Place on Extended Term, or BORROW all or part of 
 18.40              the policy loan values on an existing insurance 
 18.41              policy or an annuity.  (See reverse side for 
 18.42              DEFINITIONS.) 
 18.44  IF YOU      In connection with the purchase of this insurance 
 18.45  INTEND TO   or annuity, if you have REPLACED or intend to 
 18.46  REPLACE     REPLACE your present life insurance coverage or 
 18.47  COVERAGE    annuity(ies), you should be certain that you 
 18.48              understand all the relevant factors involved. 
 19.2                 You should BE AWARE that you may be required 
 19.3               to provide [Evidence of insurability] and 
 19.5               (1) If your HEALTH condition has CHANGED since 
 19.6                   the application was taken on your present 
 19.7                   policies, you may be required to pay 
 19.8                   ADDITIONAL PREMIUMS under the NEW POLICY, 
 19.9                   or be DENIED coverage. 
 19.10              (2) Your present occupation or activities [may 
 19.11                  not be covered or could require additional 
 19.12                  premiums.]
 19.13              (3) The INCONTESTABLE and SUICIDE CLAUSE will 
 19.14                  begin anew in a new policy.  This could 
 19.15                  RESULT in a [CLAIM under the new policy 
 19.16                  BEING DENIED] that would otherwise have 
 19.17                  been paid. 
 19.18              (4) Current law DOES NOT REQUIRE your present 
 19.19                  insurer(s) to REFUND any premiums. 
 19.20              (5) It may be to your advantage to OBTAIN 
 19.21                  INFORMATION regarding your existing 
 19.22                  policies [from the insurer or agent from
 19.23                  whom you purchased the policy.] 
 19.25                (If an annuity is being purchased, Items 1, 
 19.26              2, and 3 above would not apply to the new 
 19.27              contract.)
 19.29  CAUTION     If after studying the information made 
 19.30              available to you, you decide to replace your 
 19.31              existing life insurance or annuity with our 
 19.32              contract, you are urged not to take action to 
 19.33              terminate or alter your existing coverage until 
 19.34              after you have been issued the new policy, 
 19.35              examined it, and found it to be acceptable to 
 19.36              you.  If you should terminate or otherwise 
 20.1               materially alter your existing coverage and 
 20.2               fail to qualify for the life insurance for 
 20.3               which you have applied, you may find yourself 
 20.4               unable to purchase other life insurance or be 
 20.5               able to purchase it only at substantially 
 20.6               higher rates. 
 20.8   INSURER'S MAILING DATE:  .............................
 20.9      Subd. 3.  [DEFINITIONS.] The following definitions must 
 20.10  appear on the back of the notice forms provided in subdivisions 
 20.11  1 and 2: 
 20.12                           DEFINITIONS 
 20.13     PREMIUMS:  Premiums are the payments you make in exchange 
 20.14  for an insurance or annuity contract.  They are unlike deposits 
 20.15  in a savings or investment program, because if you drop the 
 20.16  policy, you might get back less than you paid in. 
 20.17     CASH SURRENDER VALUE:  This is the amount of money you can 
 20.18  get in cash if you surrender your life insurance policy or 
 20.19  annuity.  If there is a policy loan, the cash surrender value is 
 20.20  the difference between the cash value printed in the policy and 
 20.21  the loan value.  Not all policies have cash surrender values. 
 20.22     LAPSE:  A life insurance policy may lapse when you do not 
 20.23  pay the premiums within the grace period.  If you had a cash 
 20.24  surrender value, the insurer might change your policy to as much 
 20.25  extended term insurance or paid-up insurance as the cash 
 20.26  surrender value will buy.  Sometimes the policy lets the insurer 
 20.27  borrow from the cash surrender value to pay the premiums. 
 20.28     SURRENDER:  You surrender a life insurance policy when you 
 20.29  either let it lapse or tell the company you want to drop it.  
 20.30  Whenever a policy has a cash surrender value, you can get it in 
 20.31  cash if you return the policy to the company with a written 
 20.32  request.  Most insurers will also let you exchange the cash 
 20.33  value of the policy for paid-up or extended term insurance. 
 20.34     CONVERT TO PAID-UP INSURANCE:  This means you use your cash 
 20.35  surrender value to change your insurance to a paid-up policy 
 20.36  with the same insurer.  The death benefit generally will be 
 21.1   lower than under the old policy, but you will not have to pay 
 21.2   any more premiums. 
 21.3      PLACE ON EXTENDED TERM:  This means you use your cash 
 21.4   surrender value to change your insurance to term insurance with 
 21.5   the same insurer.  In this case, the net death benefit will be 
 21.6   the same as before.  However, you will only be covered for a 
 21.7   specified period of time stated in the policy. 
 21.8      BORROW POLICY LOAN VALUES:  If your life insurance policy 
 21.9   has a cash surrender value, you can almost always borrow all or 
 21.10  part of it from the insurer.  Interest will be charged according 
 21.11  to the terms of the policy, and if the loan with unpaid interest 
 21.12  ever exceeds the cash surrender value, your policy will be 
 21.13  surrendered.  If you die, the amount of the loan and any unpaid 
 21.14  interest due will be subtracted from the death benefits. 
 21.15     EVIDENCE OF INSURABILITY:  This means proof that you are an 
 21.16  acceptable risk.  You have to meet the insurer's standards 
 21.17  regarding age, health, occupation, etc., to be eligible for 
 21.18  coverage. 
 21.19     INCONTESTABLE CLAUSE:  This says that after two years, 
 21.20  depending on the policy or insurer, the life insurer will not 
 21.21  resist a claim because you made a false or incomplete statement 
 21.22  when you applied for the policy.  For the early years, though, 
 21.23  if there are wrong answers on the application and the insurer 
 21.24  finds out about them, the insurer can deny a claim as if the 
 21.25  policy had never existed. 
 21.26     SUICIDE CLAUSE:  This says that if you commit suicide after 
 21.27  being insured for less than two years, depending on the policy 
 21.28  and insurer, your beneficiaries will receive only a refund of 
 21.29  the premiums that were paid. 
 21.30     Subd. 4.  [PRINTING OF NOTICES.] The notices in 
 21.31  subdivisions 1 and 2 must be reproduced in their entirety on one 
 21.32  side of an 8-1/2 by 11 inch sheet of plain paper.  The 
 21.33  definitions contained in subdivision 3 must be printed on the 
 21.34  reverse side.  The insurer may print its legal name in the space 
 21.35  provided.  
 21.36     Sec. 20.  Minnesota Statutes 1994, section 61B.28, 
 22.1   subdivision 7, is amended to read: 
 22.2      Subd. 7.  [NOTICE CONCERNING LIMITATIONS AND EXCLUSIONS.] 
 22.3   (a) No person, including an insurer, agent, or affiliate of an 
 22.4   insurer or agent, shall offer for sale in this state a covered 
 22.5   life insurance, annuity, or health insurance policy or contract 
 22.6   without delivering at the time of application for that policy or 
 22.7   contract a notice in the form specified in subdivision 8, or in 
 22.8   a form approved by the commissioner under paragraph (b), 
 22.9   relating to coverage provided by the Minnesota life and health 
 22.10  insurance guaranty association.  The notice may be part of the 
 22.11  application.  A copy of the notice must be given to the 
 22.12  applicant.  The notice must be delivered to the applicant at the 
 22.13  time of application for the policy or contract, except that if 
 22.14  the application is not taken from the applicant in person, the 
 22.15  notice must be sent to the applicant within 72 hours after the 
 22.16  application is taken.  The person offering the policy or 
 22.17  contract shall document the fact that the notice was given at 
 22.18  the time of application or was sent within the specified time. 
 22.19  This does not require that the receipt of the notice be 
 22.20  acknowledged by the applicant. 
 22.21     (b) The association may prepare, and file with the 
 22.22  commissioner for approval, a form of notice as an alternative to 
 22.23  the form of notice specified in subdivision 8 describing the 
 22.24  general purposes and limitations of this chapter.  The form of 
 22.25  notice shall: 
 22.26     (1) state the name, address, and telephone number of the 
 22.27  Minnesota life and health insurance guaranty association; 
 22.28     (2) prominently warn the policy or contract holder that the 
 22.29  Minnesota life and health insurance guaranty association may not 
 22.30  cover the policy or, if coverage is available, it will be 
 22.31  subject to substantial limitations and exclusions and 
 22.32  conditioned on continued residence in the state; 
 22.33     (3) state that the insurer and its agents are prohibited by 
 22.34  law from using the existence of the Minnesota life and health 
 22.35  insurance guaranty association for the purpose of sales, 
 22.36  solicitation, or inducement to purchase any form of insurance; 
 23.1      (4) emphasize that the policy or contract holder should not 
 23.2   rely on coverage under the Minnesota life and health insurance 
 23.3   guaranty association when selecting an insurer; 
 23.4      (5) provide other information as directed by the 
 23.5   commissioner.  The commissioner may approve any form of notice 
 23.6   proposed by the association and, as to the approved form of 
 23.7   notice, the association may notify all member insurers by mail 
 23.8   that the form of notice is available as an alternative to the 
 23.9   notice specified in subdivision 8.  
 23.10     (c) A policy or contract not covered by the Minnesota Life 
 23.11  and Health Insurance Guaranty Association or the Minnesota 
 23.12  Insurance Guaranty Association must contain the following notice 
 23.13  in ten-point type, stamped in red ink or contrasting type on the 
 23.14  policy or contract and the application: 
 23.15     "THIS POLICY OR CONTRACT IS NOT PROTECTED BY THE MINNESOTA 
 23.16     LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION OR THE 
 23.17     MINNESOTA INSURANCE GUARANTY ASSOCIATION.  IN THE CASE OF 
 23.18     INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED.  ONLY THE 
 23.19     ASSETS OF THIS INSURER WILL BE AVAILABLE TO PAY YOUR CLAIM."
 23.20     This section does not apply to fraternal benefit societies 
 23.21  regulated under chapter 64B. 
 23.22     Sec. 21.  Minnesota Statutes 1994, section 62A.02, is 
 23.23  amended by adding a subdivision to read: 
 23.24     Subd. 7.  [FILING BY DOMESTIC INSURERS FOR PURPOSES OF 
 23.25  COMPLYING WITH ANOTHER STATE'S FILING REQUIREMENTS.] A domestic 
 23.26  insurer may file with the commissioner for informational 
 23.27  purposes only a policy or certificate of insurance that is not 
 23.28  intended to be offered or sold within this state.  This 
 23.29  subdivision only applies to the filing in Minnesota of a policy 
 23.30  or certificate of insurance issued to an insured or certificate 
 23.31  holder located outside of this state when the filing is for the 
 23.32  express purpose of complying with the law of the state in which 
 23.33  the insured or certificate holder resides.  In no event may a 
 23.34  policy or certificate of insurance filed under this subdivision 
 23.35  for out-of-state use be issued or delivered in Minnesota unless 
 23.36  and until the policy or certificate of insurance is approved 
 24.1   under subdivision 2. 
 24.2      Sec. 22.  Minnesota Statutes 1995 Supplement, section 
 24.3   62A.042, is amended to read: 
 24.4      62A.042 [FAMILY COVERAGE; COVERAGE OF NEWBORN INFANTS.] 
 24.5      Subdivision 1.  [INDIVIDUAL FAMILY POLICIES; RENEWALS.] (a) 
 24.6   No policy of individual accident and sickness insurance which 
 24.7   provides for insurance for more than one person under section 
 24.8   62A.03, subdivision 1, clause (3), and no individual health 
 24.9   maintenance contract which provides for coverage for more than 
 24.10  one person under chapter 62D, shall be renewed to insure or 
 24.11  cover any person in this state or be delivered or issued for 
 24.12  delivery to any person in this state unless the policy or 
 24.13  contract includes as insured or covered members of the family 
 24.14  any newborn infants, including dependent grandchildren who 
 24.15  reside with a covered grandparent, immediately from the moment 
 24.16  of birth and thereafter which insurance or contract shall 
 24.17  provide coverage for illness, injury, congenital malformation, 
 24.18  or premature birth.  For purposes of this paragraph, "newborn 
 24.19  infants" includes grandchildren who are financially dependent 
 24.20  upon a covered grandparent and who reside with that covered 
 24.21  grandparent continuously from birth.  No policy or contract 
 24.22  covered by this section may require notification to a health 
 24.23  carrier as a condition for this dependent coverage.  However, if 
 24.24  the policy or contract mandates an additional premium for each 
 24.25  dependent, the health carrier shall be entitled to all premiums 
 24.26  that would have been collected had the health carrier been aware 
 24.27  of the additional dependent.  The health carrier may withhold 
 24.28  payment of any health benefits for the new dependent until it 
 24.29  has been compensated with the applicable premium which would 
 24.30  have been owed if the health carrier had been informed of the 
 24.31  additional dependent immediately. 
 24.32     (b) The coverage under paragraph (a) includes benefits for 
 24.33  inpatient or outpatient expenses arising from medical and dental 
 24.34  treatment up to age 18, including orthodontic and oral surgery 
 24.35  treatment, involved in the management of birth defects known as 
 24.36  cleft lip and cleft palate.  If orthodontic services are 
 25.1   eligible for coverage under a dental insurance plan and another 
 25.2   policy or contract, the dental plan shall be primary and the 
 25.3   other policy or contract shall be secondary in regard to the 
 25.4   coverage required under paragraph (a).  Payment for dental or 
 25.5   orthodontic treatment not related to the management of the 
 25.6   congenital condition of cleft lip and cleft palate shall not be 
 25.7   covered under this provision.  
 25.8      Subd. 2.  [GROUP POLICIES; RENEWALS.] (a) No group accident 
 25.9   and sickness insurance policy and no group health maintenance 
 25.10  contract which provide for coverage of family members or other 
 25.11  dependents of an employee or other member of the covered group 
 25.12  shall be renewed to cover members of a group located in this 
 25.13  state or delivered or issued for delivery to any person in this 
 25.14  state unless the policy or contract includes as insured or 
 25.15  covered family members or dependents any newborn infants, 
 25.16  including dependent grandchildren who reside with a covered 
 25.17  grandparent, immediately from the moment of birth and thereafter 
 25.18  which insurance or contract shall provide coverage for illness, 
 25.19  injury, congenital malformation, or premature birth.  For 
 25.20  purposes of this paragraph, "newborn infants" includes 
 25.21  grandchildren who are financially dependent upon a covered 
 25.22  grandparent and who reside with that covered grandparent 
 25.23  continuously from birth.  No policy or contract covered by this 
 25.24  section may require notification to a health carrier as a 
 25.25  condition for this dependent coverage.  However, if the policy 
 25.26  or contract mandates an additional premium for each dependent, 
 25.27  the health carrier shall be entitled to all premiums that would 
 25.28  have been collected had the health carrier been aware of the 
 25.29  additional dependent.  The health carrier may reduce the health 
 25.30  benefits owed to the insured, certificate holder, member, or 
 25.31  subscriber by the amount of past due premiums applicable to the 
 25.32  additional dependent. 
 25.33     (b) The coverage under paragraph (a) includes benefits for 
 25.34  inpatient or outpatient expenses arising from medical and dental 
 25.35  treatment up to age 18, including orthodontic and oral surgery 
 25.36  treatment, involved in the management of birth defects known as 
 26.1   cleft lip and cleft palate.  If orthodontic services are 
 26.2   eligible for coverage under a dental insurance plan and another 
 26.3   policy or contract, the dental plan shall be primary and the 
 26.4   other policy or contract shall be secondary in regard to the 
 26.5   coverage required under paragraph (a).  Payment for dental or 
 26.6   orthodontic treatment not related to the management of the 
 26.7   congenital condition of cleft lip and cleft palate shall not be 
 26.8   covered under this provision. 
 26.9      Sec. 23.  [62A.3091] [NONDISCRIMINATE COVERAGE OF TESTS.] 
 26.10     Subdivision 1.  [SCOPE OF REQUIREMENT.] This section 
 26.11  applies to any of the following if issued or renewed to a 
 26.12  Minnesota resident or to cover a Minnesota resident: 
 26.13     (1) a health plan, as defined in section 62A.011; 
 26.14     (2) coverage described in section 62A.011, subdivision 3, 
 26.15  clauses (2), (3), or (6) to (12); and 
 26.16     (3) a policy, contract, or certificate issued by a 
 26.17  community integrated service network or an integrated service 
 26.18  network licensed under chapter 62N. 
 26.19     Subd. 2.  [REQUIREMENT.] Coverage described in subdivision 
 26.20  1 that covers laboratory tests, diagnostic tests, and X-rays 
 26.21  must provide the same coverage, without requiring additional 
 26.22  signatures, for all such tests ordered by an advanced practice 
 26.23  nurse operating pursuant to chapter 148.  Nothing in this 
 26.24  section shall be construed to interfere with any written 
 26.25  agreement between a physician and an advanced practice nurse. 
 26.26     Sec. 24.  [62A.3092] [EQUAL TREATMENT OF SURGICAL FIRST 
 26.27  ASSISTING SERVICES.] 
 26.28     Subdivision 1.  [SCOPE OF REQUIREMENT.] This section 
 26.29  applies to any of the following if issued or renewed to a 
 26.30  Minnesota resident or to cover a Minnesota resident: 
 26.31     (1) a health plan, as defined in section 62A.011; 
 26.32     (2) coverage described in section 62A.011, subdivision 3, 
 26.33  clauses (2), (3), or (6) to (12); and 
 26.34     (3) a policy, contract, or certificate issued by a 
 26.35  community integrated service network or an integrated service 
 26.36  network licensed under chapter 62N.  
 27.1      Subd. 2.  [REQUIREMENT.] Coverage described in subdivision 
 27.2   1 that provides for payment for surgical first assisting 
 27.3   benefits or services shall be construed as providing for payment 
 27.4   for a registered nurse who performs first assistant functions 
 27.5   and services that are within the scope of practice of a 
 27.6   registered nurse. 
 27.7      Sec. 25.  Minnesota Statutes 1995 Supplement, section 
 27.8   62A.135, subdivision 1, is amended to read: 
 27.9      Subdivision 1.  [DEFINITIONS.] For purposes of this 
 27.10  section, the following terms have the meanings given them: 
 27.11     (a) "fixed indemnity policy" is a policy form, other than 
 27.12  an accidental death and dismemberment policy, a disability 
 27.13  income policy, or a long-term care policy as defined in section 
 27.14  62A.46, subdivision 2, that pays a predetermined, specified, 
 27.15  fixed benefit for services provided.  Claim costs under these 
 27.16  forms are generally not subject to inflation, although they may 
 27.17  be subject to changes in the utilization of health care 
 27.18  services.  For policy forms providing both expense-incurred and 
 27.19  fixed benefits, the policy form is a fixed indemnity policy if 
 27.20  50 percent or more of the total claims are for predetermined, 
 27.21  specified, fixed benefits; 
 27.22     (b) "guaranteed renewable" means that, during the renewal 
 27.23  period (to a specified age) renewal cannot be declined nor 
 27.24  coverage changed by the insurer for any reason other than 
 27.25  nonpayment of premiums, fraud, or misrepresentation, but the 
 27.26  insurer can revise rates on a class basis upon approval by the 
 27.27  commissioner; 
 27.28     (c) "noncancelable" means that, during the renewal period 
 27.29  (to a specified age) renewal cannot be declined nor coverage 
 27.30  changed by the insurer for any reason other than nonpayment of 
 27.31  premiums, fraud, or misrepresentation and that rates cannot be 
 27.32  revised by the insurer.  This includes policies that are 
 27.33  guaranteed renewable to a specified age, such as 60 or 65, at 
 27.34  guaranteed rates; and 
 27.35     (d) "average annualized premium" means the average of the 
 27.36  estimated annualized premium per covered person based on the 
 28.1   anticipated distribution of business using all significant 
 28.2   criteria having a price difference, such as age, sex, amount, 
 28.3   dependent status, mode of payment, and rider frequency.  For 
 28.4   filing of rate revisions, the amount is the anticipated average 
 28.5   assuming the revised rates have fully taken effect. 
 28.6      Sec. 26.  Minnesota Statutes 1995 Supplement, section 
 28.7   62A.31, subdivision 1h, is amended to read: 
 28.8      Subd. 1h.  [LIMITATIONS ON DENIALS, CONDITIONS, AND PRICING 
 28.9   OF COVERAGE.] No issuer of Medicare supplement policies, 
 28.10  including policies that supplement Medicare issued by health 
 28.11  maintenance organizations or those policies governed by section 
 28.12  1833 or 1876 of the federal Social Security Act, United States 
 28.13  Code, title 42, section 1395, et seq., health carrier issuing 
 28.14  Medicare-related coverage in this state may impose preexisting 
 28.15  condition limitations or otherwise deny or condition the 
 28.16  issuance or effectiveness of any Medicare supplement insurance 
 28.17  policy form such coverage available for sale in this state, nor 
 28.18  may it discriminate in the pricing of such a policy coverage, 
 28.19  because of the health status, claims experience, receipt of 
 28.20  health care, medical condition, or age of an applicant where an 
 28.21  application for such insurance coverage is submitted prior to or 
 28.22  during the six-month period beginning with the first day of the 
 28.23  month in which an individual first enrolled for benefits under 
 28.24  Medicare Part B.  This paragraph subdivision applies to each 
 28.25  Medicare-related coverage offered by a health carrier regardless 
 28.26  of whether the individual has attained the age of 65 years.  If 
 28.27  an individual who is enrolled in Medicare Part B due to 
 28.28  disability status is involuntarily disenrolled due to loss of 
 28.29  disability status, the individual is eligible for the another 
 28.30  six-month enrollment period provided under this subdivision if 
 28.31  beginning the first day of the month in which the individual 
 28.32  later becomes eligible for and enrolls again in Medicare Part 
 28.33  B.  An individual who is or was previously enrolled in Medicare 
 28.34  Part B due to disability status is eligible for another 
 28.35  six-month enrollment period under this subdivision beginning the 
 28.36  first day of the month in which the individual has attained the 
 29.1   age of 65 years and either maintains enrollment in, or enrolls 
 29.2   again in, Medicare Part B. 
 29.3      Sec. 27.  Minnesota Statutes 1994, section 62A.31, 
 29.4   subdivision 1p, is amended to read: 
 29.5      Subd. 1p.  [RENEWAL OR CONTINUATION PROVISIONS.] Medicare 
 29.6   supplement policies and certificates shall include a renewal or 
 29.7   continuation provision.  The language or specifications of the 
 29.8   provision shall be consistent with the type of contract issued.  
 29.9   The provision shall be appropriately captioned and shall appear 
 29.10  on the first page of the policy or certificate, and shall 
 29.11  include any reservation by the issuer of the right to change 
 29.12  premiums.  Except for riders or endorsements by which the issuer 
 29.13  effectuates a request made in writing by the insured, exercises 
 29.14  a specifically reserved right under a Medicare supplement policy 
 29.15  or certificate, or is required to reduce or eliminate benefits 
 29.16  to avoid duplication of Medicare benefits, all riders or 
 29.17  endorsements added to a Medicare supplement policy or 
 29.18  certificate after the date of issue or at reinstatement or 
 29.19  renewal that reduce or eliminate benefits or coverage in the 
 29.20  policy or certificate shall require a signed acceptance by the 
 29.21  insured.  After the date of policy or certificate issue, a rider 
 29.22  or endorsement that increases benefits or coverage with a 
 29.23  concomitant increase in premium during the policy or certificate 
 29.24  term shall be agreed to in writing and signed by the insured, 
 29.25  unless the benefits are required by the minimum standards for 
 29.26  Medicare supplement policies or if the increased benefits or 
 29.27  coverage is required by law.  Where a separate additional 
 29.28  premium is charged for benefits provided in connection with 
 29.29  riders or endorsements, the premium charge shall be set forth in 
 29.30  the policy, declaration page, or certificate.  If a Medicare 
 29.31  supplement policy or certificate contains limitations with 
 29.32  respect to preexisting conditions, the limitations shall appear 
 29.33  as a separate paragraph of the policy or certificate and be 
 29.34  labeled as "preexisting condition limitations." 
 29.35     Issuers of accident and sickness policies or certificates 
 29.36  that provide hospital or medical expense coverage on an expense 
 30.1   incurred or indemnity basis, other than incidentally, to a 
 30.2   person eligible for Medicare by reason of age shall provide to 
 30.3   such applicants a Medicare Supplement Buyer's "Guide to Health 
 30.4   Insurance for People with Medicare" in the form developed by the 
 30.5   Health Care Financing Administration and in a type size no 
 30.6   smaller than 12-point type.  Delivery of the Buyer's guide must 
 30.7   be made whether or not such policies or certificates are 
 30.8   advertised, solicited, or issued as Medicare supplement policies 
 30.9   or certificates as defined in this section.  Except in the case 
 30.10  of direct response issuers, delivery of the Buyer's guide must 
 30.11  be made to the applicant at the time of application, and 
 30.12  acknowledgment of receipt of the Buyer's guide must be obtained 
 30.13  by the issuer.  Direct response issuers shall deliver the 
 30.14  Buyer's guide to the applicant upon request, but no later than 
 30.15  the time at which the policy is delivered. 
 30.16     Sec. 28.  Minnesota Statutes 1994, section 62A.31, 
 30.17  subdivision 1r, is amended to read: 
 30.18     Subd. 1r.  [COMMUNITY RATE.] Each health maintenance 
 30.19  organization, health service plan corporation, insurer, or 
 30.20  fraternal benefit society that sells coverage that supplements 
 30.21  Medicare-related coverage shall establish a separate community 
 30.22  rate for that coverage.  Beginning January 1, 1993, no coverage 
 30.23  that supplements Medicare or that is governed by section 1833 or 
 30.24  1876 of the federal Social Security Act, United States Code, 
 30.25  title 42, section 1395, et seq., may be offered, issued, sold, 
 30.26  or renewed to a Minnesota resident, except at the community rate 
 30.27  required by this subdivision.  The same community rate must 
 30.28  apply to newly issued coverage and to renewal coverage. 
 30.29     For coverage that supplements Medicare and for the Part A 
 30.30  rate calculation for plans governed by section 1833 of the 
 30.31  federal Social Security Act, United States Code, title 42, 
 30.32  section 1395, et seq., the community rate may take into account 
 30.33  only the following factors: 
 30.34     (1) actuarially valid differences in benefit designs or 
 30.35  provider networks; 
 30.36     (2) geographic variations in rates if preapproved by the 
 31.1   commissioner of commerce; and 
 31.2      (3) premium reductions in recognition of healthy lifestyle 
 31.3   behaviors, including but not limited to, refraining from the use 
 31.4   of tobacco.  Premium reductions must be actuarially valid and 
 31.5   must relate only to those healthy lifestyle behaviors that have 
 31.6   a proven positive impact on health.  Factors used by the health 
 31.7   carrier making this premium reduction must be filed with and 
 31.8   approved by the commissioner of commerce. 
 31.9      For insureds not residing in Anoka, Carver, Chisago, 
 31.10  Dakota, Hennepin, Ramsey, Scott, or Washington county, a health 
 31.11  plan may, at the option of the health carrier, phase in 
 31.12  compliance under the following timetable: 
 31.13     (i) a premium adjustment as of March 1, 1993, that consists 
 31.14  of one-half of the difference between the community rate that 
 31.15  would be applicable to the person as of March 1, 1993, and the 
 31.16  premium rate that would be applicable to the person as of March 
 31.17  1, 1993, under the rate schedule permitted on December 31, 1992. 
 31.18  A health plan may, at the option of the health carrier, 
 31.19  implement the entire premium difference described in this clause 
 31.20  for any person as of March 1, 1993, if the premium difference 
 31.21  would be 15 percent or less of the premium rate that would be 
 31.22  applicable to the person as of March 1, 1993, under the rate 
 31.23  schedule permitted on December 31, 1992, if the health plan does 
 31.24  so uniformly regardless of whether the premium difference causes 
 31.25  premiums to rise or to fall.  The premium difference described 
 31.26  in this clause is in addition to any premium adjustment 
 31.27  attributable to medical cost inflation or any other lawful 
 31.28  factor and is intended to describe only the premium difference 
 31.29  attributable to the transition to the community rate; and 
 31.30     (ii) with respect to any person whose premium adjustment 
 31.31  was constrained under clause (i), a premium adjustment as of 
 31.32  January 1, 1994, that consists of the remaining one-half of the 
 31.33  premium difference attributable to the transition to the 
 31.34  community rate, as described in clause (i). 
 31.35     A health plan that initially follows the phase-in timetable 
 31.36  may at any subsequent time comply on a more rapid timetable.  A 
 32.1   health plan that is in full compliance as of January 1, 1993, 
 32.2   may not use the phase-in timetable and must remain in full 
 32.3   compliance.  Health plans that follow the phase-in timetable 
 32.4   must charge the same premium rate for newly issued coverage that 
 32.5   they charge for renewal coverage.  A health plan whose premiums 
 32.6   are constrained by clause (i) may take the constraint into 
 32.7   account in establishing its community rate. 
 32.8      From January 1, 1993 to February 28, 1993, a health plan 
 32.9   may, at the health carrier's option, charge the community rate 
 32.10  under this paragraph or may instead charge premiums permitted as 
 32.11  of December 31, 1992. 
 32.12     Sec. 29.  Minnesota Statutes 1994, section 62A.31, 
 32.13  subdivision 1s, is amended to read: 
 32.14     Subd. 1s.  [PRESCRIPTION DRUG COVERAGE.] Beginning January 
 32.15  1, 1993, a health maintenance organization that issues 
 32.16  Medicare-related coverage that supplements Medicare or that 
 32.17  issues coverage governed by section 1833 or 1876 of the federal 
 32.18  Social Security Act, United States Code, title 42, section 1395 
 32.19  et seq., must offer, to each person to whom it offers any 
 32.20  contract described in this subdivision, at least one contract 
 32.21  that either: 
 32.22     (1) covers 80 percent of the reasonable and customary 
 32.23  charge for prescription drugs or the copayment equivalency; or 
 32.24     (2) offers the coverage described in clause (1) as an 
 32.25  optional rider that may be purchased separately from other 
 32.26  optional coverages.  
 32.27     Sec. 30.  Minnesota Statutes 1994, section 62A.31, 
 32.28  subdivision 3, is amended to read: 
 32.29     Subd. 3.  [DEFINITIONS.] (a) "Accident," "accidental 
 32.30  injury," or "accidental means" means to employ "result" language 
 32.31  and does not include words that establish an accidental means 
 32.32  test or use words such as "external," "violent," "visible 
 32.33  wounds," or similar words of description or characterization. 
 32.34     (1) The definition shall not be more restrictive than the 
 32.35  following:  "Injury or injuries for which benefits are provided 
 32.36  means accidental bodily injury sustained by the insured person 
 33.1   which is the direct result of an accident, independent of 
 33.2   disease or bodily infirmity or any other cause, and occurs while 
 33.3   insurance coverage is in force." 
 33.4      (2) The definition may provide that injuries shall not 
 33.5   include injuries for which benefits are provided or available 
 33.6   under a workers' compensation, employer's liability or similar 
 33.7   law, or motor vehicle no-fault plan, unless prohibited by law. 
 33.8      (b) "Applicant" means: 
 33.9      (1) in the case of an individual Medicare supplement policy 
 33.10  or certificate, the person who seeks to contract for insurance 
 33.11  benefits; and 
 33.12     (2) in the case of a group Medicare supplement policy or 
 33.13  certificate, the proposed certificate holder. 
 33.14     (c) "Benefit period" or "Medicare benefit period" shall not 
 33.15  be defined more restrictively than as defined in the Medicare 
 33.16  program. 
 33.17     (d) "Certificate" means a certificate delivered or issued 
 33.18  for delivery in this state or offered to a resident of this 
 33.19  state under a group Medicare supplement policy or certificate. 
 33.20     (e) "Certificate form" means the form on which the 
 33.21  certificate is delivered or issued for delivery by the issuer. 
 33.22     (f) "Convalescent nursing home," "extended care facility," 
 33.23  or "skilled nursing facility" shall not be defined more 
 33.24  restrictively than as defined in the Medicare program. 
 33.25     (g) "Health care expenses" means expenses of health 
 33.26  maintenance organizations associated with the delivery of health 
 33.27  care services which are analogous to incurred losses of 
 33.28  insurers.  The expenses shall not include: 
 33.29     (1) home office and overhead costs; 
 33.30     (2) advertising costs; 
 33.31     (3) commissions and other acquisition costs; 
 33.32     (4) taxes; 
 33.33     (5) capital costs; 
 33.34     (6) administrative costs; and 
 33.35     (7) claims processing costs. 
 33.36     (h) "Hospital" may be defined in relation to its status, 
 34.1   facilities, and available services or to reflect its 
 34.2   accreditation by the joint commission on accreditation of 
 34.3   hospitals, but not more restrictively than as defined in the 
 34.4   Medicare program. 
 34.5      (i) "Issuer" includes insurance companies, fraternal 
 34.6   benefit societies, health care service plans, health maintenance 
 34.7   organizations, and any other entity delivering or issuing for 
 34.8   delivery Medicare supplement policies or certificates in this 
 34.9   state or offering these policies or certificates to residents of 
 34.10  this state. 
 34.11     (j) "Medicare" shall be defined in the policy and 
 34.12  certificate.  Medicare may be defined as the Health Insurance 
 34.13  for the Aged Act, title XVIII of the Social Security Amendments 
 34.14  of 1965, as amended, or title I, part I, of Public Law Number 
 34.15  89-97, as enacted by the 89th Congress of the United States of 
 34.16  America and popularly known as the Health Insurance for the Aged 
 34.17  Act, as amended. 
 34.18     (k) "Medicare eligible expenses" means health care expenses 
 34.19  covered by Medicare, to the extent recognized as reasonable and 
 34.20  medically necessary by Medicare. 
 34.21     (l) "Medicare-related coverage" means a policy, contract, 
 34.22  or certificate issued as a supplement to Medicare, regulated 
 34.23  under sections 62A.31 to 62A.44, including Medicare select 
 34.24  coverage; policies, contracts, or certificates that supplement 
 34.25  Medicare issued by health maintenance organizations; or 
 34.26  policies, contracts, or certificates governed by section 1833 
 34.27  (known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA" 
 34.28  or "risk" contracts) of the federal Social Security Act, United 
 34.29  States Code, title 42, section 1395, et seq., as amended. 
 34.30     (m) "Medicare supplement policy or certificate" means a 
 34.31  group or individual policy of accident and sickness insurance or 
 34.32  a subscriber contract of hospital and medical service 
 34.33  associations or health maintenance organizations, other than a 
 34.34  policy or certificate issued under a contract under or those 
 34.35  policies or certificates covered by, section 1833 or 1876 of the 
 34.36  federal Social Security Act, United States Code, title 42, 
 35.1   section 1395, et seq., or an issued policy under a demonstration 
 35.2   project authorized specified under amendments to the federal 
 35.3   Social Security Act, which is advertised, marketed, or designed 
 35.4   primarily as a supplement to reimbursements under Medicare for 
 35.5   the hospital, medical, or surgical expenses of persons eligible 
 35.6   for Medicare. 
 35.7      (m) (n) "Physician" shall not be defined more restrictively 
 35.8   than as defined in the Medicare program or section 62A.04, 
 35.9   subdivision 1, or 62A.15, subdivision 3a. 
 35.10     (n) (o) "Policy form" means the form on which the policy is 
 35.11  delivered or issued for delivery by the issuer. 
 35.12     (o) (p) "Sickness" shall not be defined more restrictively 
 35.13  than the following: 
 35.14     "Sickness means illness or disease of an insured person 
 35.15     which first manifests itself after the effective date of 
 35.16     insurance and while the insurance is in force." 
 35.17     The definition may be further modified to exclude 
 35.18  sicknesses or diseases for which benefits are provided under a 
 35.19  workers' compensation, occupational disease, employer's 
 35.20  liability, or similar law. 
 35.21     Sec. 31.  Minnesota Statutes 1994, section 62A.315, is 
 35.22  amended to read: 
 35.23     62A.315 [EXTENDED BASIC MEDICARE SUPPLEMENT PLAN; 
 35.24  COVERAGE.] 
 35.25     The extended basic Medicare supplement plan must have a 
 35.26  level of coverage so that it will be certified as a qualified 
 35.27  plan pursuant to section 62E.07, and will provide: 
 35.28     (1) coverage for all of the Medicare part A inpatient 
 35.29  hospital deductible and coinsurance amounts, and 100 percent of 
 35.30  all Medicare part A eligible expenses for hospitalization not 
 35.31  covered by Medicare; 
 35.32     (2) coverage for the daily copayment amount of Medicare 
 35.33  part A eligible expenses for the calendar year incurred for 
 35.34  skilled nursing facility care; 
 35.35     (3) coverage for the copayment amount of Medicare eligible 
 35.36  expenses under Medicare part B regardless of hospital 
 36.1   confinement, and the Medicare part B deductible amount; 
 36.2      (4) 80 percent of the usual and customary hospital and 
 36.3   medical expenses and supplies described in section 62E.06, 
 36.4   subdivision 1, not to exceed any charge limitation established 
 36.5   by the Medicare program or state law, the usual and customary 
 36.6   hospital and medical expenses and supplies, described in section 
 36.7   62E.06, subdivision 1, while in a foreign country, and 
 36.8   prescription drug expenses, not covered by Medicare's eligible 
 36.9   expenses Medicare; 
 36.10     (5) coverage for the reasonable cost of the first three 
 36.11  pints of blood, or equivalent quantities of packed red blood 
 36.12  cells as defined under federal regulations under Medicare parts 
 36.13  A and B, unless replaced in accordance with federal regulations; 
 36.14     (6) 100 percent of the cost of immunizations and routine 
 36.15  screening procedures for cancer, including mammograms and pap 
 36.16  smears; 
 36.17     (7) preventive medical care benefit:  coverage for the 
 36.18  following preventive health services: 
 36.19     (i) an annual clinical preventive medical history and 
 36.20  physical examination that may include tests and services from 
 36.21  clause (ii) and patient education to address preventive health 
 36.22  care measures; 
 36.23     (ii) any one or a combination of the following preventive 
 36.24  screening tests or preventive services, the frequency of which 
 36.25  is considered medically appropriate: 
 36.26     (A) fecal occult blood test and/or digital rectal 
 36.27  examination; 
 36.28     (B) dipstick urinalysis for hematuria, bacteriuria, and 
 36.29  proteinuria; 
 36.30     (C) pure tone (air only) hearing screening test 
 36.31  administered or ordered by a physician; 
 36.32     (D) serum cholesterol screening every five years; 
 36.33     (E) thyroid function test; 
 36.34     (F) diabetes screening; 
 36.35     (iii) any other tests or preventive measures determined 
 36.36  appropriate by the attending physician.  
 37.1      Reimbursement shall be for the actual charges up to 100 
 37.2   percent of the Medicare-approved amount for each service as if 
 37.3   Medicare were to cover the service as identified in American 
 37.4   Medical Association current procedural terminology (AMA CPT) 
 37.5   codes to a maximum of $120 annually under this benefit.  This 
 37.6   benefit shall not include payment for any procedure covered by 
 37.7   Medicare; 
 37.8      (8) at-home recovery benefit:  coverage for services to 
 37.9   provide short-term at-home assistance with activities of daily 
 37.10  living for those recovering from an illness, injury, or surgery: 
 37.11     (i) for purposes of this benefit, the following definitions 
 37.12  shall apply: 
 37.13     (A) "activities of daily living" include, but are not 
 37.14  limited to, bathing, dressing, personal hygiene, transferring, 
 37.15  eating, ambulating, assistance with drugs that are normally 
 37.16  self-administered, and changing bandages or other dressings; 
 37.17     (B) "care provider" means a duly qualified or licensed home 
 37.18  health aide/homemaker, personal care aide, or nurse provided 
 37.19  through a licensed home health care agency or referred by a 
 37.20  licensed referral agency or licensed nurses registry; 
 37.21     (C) "home" means a place used by the insured as a place of 
 37.22  residence, provided that the place would qualify as a residence 
 37.23  for home health care services covered by Medicare.  A hospital 
 37.24  or skilled nursing facility shall not be considered the 
 37.25  insured's place of residence; 
 37.26     (D) "at-home recovery visit" means the period of a visit 
 37.27  required to provide at-home recovery care, without limit on the 
 37.28  duration of the visit, except each consecutive four hours in a 
 37.29  24-hour period of services provided by a care provider is one 
 37.30  visit; 
 37.31     (ii) coverage requirements and limitations: 
 37.32     (A) at-home recovery services provided must be primarily 
 37.33  services that assist in activities of daily living; 
 37.34     (B) the insured's attending physician must certify that the 
 37.35  specific type and frequency of at-home recovery services are 
 37.36  necessary because of a condition for which a home care plan of 
 38.1   treatment was approved by Medicare; 
 38.2      (C) coverage is limited to: 
 38.3      (I) no more than the number and type of at-home recovery 
 38.4   visits certified as medically necessary by the insured's 
 38.5   attending physician.  The total number of at-home recovery 
 38.6   visits shall not exceed the number of Medicare-approved home 
 38.7   health care visits under a Medicare-approved home care plan of 
 38.8   treatment; 
 38.9      (II) the actual charges for each visit up to a maximum 
 38.10  reimbursement of $40 per visit; 
 38.11     (III) $1,600 per calendar year; 
 38.12     (IV) seven visits in any one week; 
 38.13     (V) care furnished on a visiting basis in the insured's 
 38.14  home; 
 38.15     (VI) services provided by a care provider as defined in 
 38.16  this section; 
 38.17     (VII) at-home recovery visits while the insured is covered 
 38.18  under the policy or certificate and not otherwise excluded; 
 38.19     (VIII) at-home recovery visits received during the period 
 38.20  the insured is receiving Medicare-approved home care services or 
 38.21  no more than eight weeks after the service date of the last 
 38.22  Medicare-approved home health care visit; 
 38.23     (iii) coverage is excluded for: 
 38.24     (A) home care visits paid for by Medicare or other 
 38.25  government programs; and 
 38.26     (B) care provided by family members, unpaid volunteers, or 
 38.27  providers who are not care providers. 
 38.28     Sec. 32.  Minnesota Statutes 1994, section 62A.318, is 
 38.29  amended to read: 
 38.30     62A.318 [MEDICARE SELECT POLICIES AND CERTIFICATES.] 
 38.31     (a) This section applies to Medicare select policies and 
 38.32  certificates, as defined in this section, including those issued 
 38.33  by health maintenance organizations.  No policy or certificate 
 38.34  may be advertised as a Medicare select policy or certificate 
 38.35  unless it meets the requirements of this section. 
 38.36     (b) For the purposes of this section: 
 39.1      (1) "complaint" means any dissatisfaction expressed by an 
 39.2   individual concerning a Medicare select issuer or its network 
 39.3   providers; 
 39.4      (2) "grievance" means dissatisfaction expressed in writing 
 39.5   by an individual insured under a Medicare select policy or 
 39.6   certificate with the administration, claims practices, or 
 39.7   provision of services concerning a Medicare select issuer or its 
 39.8   network providers; 
 39.9      (3) "Medicare select issuer" means an issuer offering, or 
 39.10  seeking to offer, a Medicare select policy or certificate; 
 39.11     (4) "Medicare select policy" or "Medicare select 
 39.12  certificate" means a Medicare supplement policy or certificate 
 39.13  that contains restricted network provisions; 
 39.14     (5) "network provider" means a provider of health care, or 
 39.15  a group of providers of health care, that has entered into a 
 39.16  written agreement with the issuer to provide benefits insured 
 39.17  under a Medicare select policy or certificate; 
 39.18     (6) "restricted network provision" means a provision that 
 39.19  conditions the payment of benefits, in whole or in part, on the 
 39.20  use of network providers; and 
 39.21     (7) "service area" means the geographic area approved by 
 39.22  the commissioner within which an issuer is authorized to offer a 
 39.23  Medicare select policy or certificate. 
 39.24     (c) The commissioner may authorize an issuer to offer a 
 39.25  Medicare select policy or certificate pursuant to this section 
 39.26  and section 4358 of the Omnibus Budget Reconciliation Act (OBRA) 
 39.27  of 1990, Public Law Number 101-508, if the commissioner finds 
 39.28  that the issuer has satisfied all of the requirements of 
 39.29  Minnesota Statutes. 
 39.30     (d) A Medicare select issuer shall not issue a Medicare 
 39.31  select policy or certificate in this state until its plan of 
 39.32  operation has been approved by the commissioner. 
 39.33     (e) A Medicare select issuer shall file a proposed plan of 
 39.34  operation with the commissioner, in a format prescribed by the 
 39.35  commissioner.  The plan of operation shall contain at least the 
 39.36  following information: 
 40.1      (1) evidence that all covered services that are subject to 
 40.2   restricted network provisions are available and accessible 
 40.3   through network providers, including a demonstration that: 
 40.4      (i) the services can be provided by network providers with 
 40.5   reasonable promptness with respect to geographic location, hours 
 40.6   of operation, and after-hour care.  The hours of operation and 
 40.7   availability of after-hour care shall reflect usual practice in 
 40.8   the local area.  Geographic availability shall reflect the usual 
 40.9   travel times within the community; 
 40.10     (ii) the number of network providers in the service area is 
 40.11  sufficient, with respect to current and expected policyholders, 
 40.12  either: 
 40.13     (A) to deliver adequately all services that are subject to 
 40.14  a restricted network provision; or 
 40.15     (B) to make appropriate referrals; 
 40.16     (iii) there are written agreements with network providers 
 40.17  describing specific responsibilities; 
 40.18     (iv) emergency care is available 24 hours per day and seven 
 40.19  days per week; and 
 40.20     (v) in the case of covered services that are subject to a 
 40.21  restricted network provision and are provided on a prepaid 
 40.22  basis, there are written agreements with network providers 
 40.23  prohibiting the providers from billing or otherwise seeking 
 40.24  reimbursement from or recourse against an individual insured 
 40.25  under a Medicare select policy or certificate.  This section 
 40.26  does not apply to supplemental charges or coinsurance amounts as 
 40.27  stated in the Medicare select policy or certificate; 
 40.28     (2) a statement or map providing a clear description of the 
 40.29  service area; 
 40.30     (3) a description of the grievance procedure to be used; 
 40.31     (4) a description of the quality assurance program, 
 40.32  including: 
 40.33     (i) the formal organizational structure; 
 40.34     (ii) the written criteria for selection, retention, and 
 40.35  removal of network providers; and 
 40.36     (iii) the procedures for evaluating quality of care 
 41.1   provided by network providers, and the process to initiate 
 41.2   corrective action when warranted; 
 41.3      (5) a list and description, by specialty, of the network 
 41.4   providers; 
 41.5      (6) copies of the written information proposed to be used 
 41.6   by the issuer to comply with paragraph (i); and 
 41.7      (7) any other information requested by the commissioner. 
 41.8      (f) A Medicare select issuer shall file proposed changes to 
 41.9   the plan of operation, except for changes to the list of network 
 41.10  providers, with the commissioner before implementing the 
 41.11  changes.  The changes shall be considered approved by the 
 41.12  commissioner after 30 days unless specifically disapproved. 
 41.13     An updated list of network providers shall be filed with 
 41.14  the commissioner at least quarterly. 
 41.15     (g) A Medicare select policy or certificate shall not 
 41.16  restrict payment for covered services provided by nonnetwork 
 41.17  providers if: 
 41.18     (1) the services are for symptoms requiring emergency care 
 41.19  or are immediately required for an unforeseen illness, injury, 
 41.20  or condition; and 
 41.21     (2) it is not reasonable to obtain the services through a 
 41.22  network provider. 
 41.23     (h) A Medicare select policy or certificate shall provide 
 41.24  payment for full coverage under the policy or certificate for 
 41.25  covered services that are not available through network 
 41.26  providers. 
 41.27     (i) A Medicare select issuer shall make full and fair 
 41.28  disclosure in writing of the provisions, restrictions, and 
 41.29  limitations of the Medicare select policy or certificate to each 
 41.30  applicant.  This disclosure must include at least the following: 
 41.31     (1) an outline of coverage sufficient to permit the 
 41.32  applicant to compare the coverage and premiums of the Medicare 
 41.33  select policy or certificate with: 
 41.34     (i) other Medicare supplement policies or certificates 
 41.35  offered by the issuer; and 
 41.36     (ii) other Medicare select policies or certificates; 
 42.1      (2) a description, including address, phone number, and 
 42.2   hours of operation, of the network providers, including primary 
 42.3   care physicians, specialty physicians, hospitals, and other 
 42.4   providers; 
 42.5      (3) a description of the restricted network provisions, 
 42.6   including payments for coinsurance and deductibles when 
 42.7   providers other than network providers are used; 
 42.8      (4) a description of coverage for emergency and urgently 
 42.9   needed care and other out-of-service area coverage; 
 42.10     (5) a description of limitations on referrals to restricted 
 42.11  network providers and to other providers; 
 42.12     (6) a description of the policyholder's rights to purchase 
 42.13  any other Medicare supplement policy or certificate otherwise 
 42.14  offered by the issuer; and 
 42.15     (7) a description of the Medicare select issuer's quality 
 42.16  assurance program and grievance procedure. 
 42.17     (j) Before the sale of a Medicare select policy or 
 42.18  certificate, a Medicare select issuer shall obtain from the 
 42.19  applicant a signed and dated form stating that the applicant has 
 42.20  received the information provided pursuant to paragraph (i) and 
 42.21  that the applicant understands the restrictions of the Medicare 
 42.22  select policy or certificate. 
 42.23     (k) A Medicare select issuer shall have and use procedures 
 42.24  for hearing complaints and resolving written grievances from the 
 42.25  subscribers.  The procedures shall be aimed at mutual agreement 
 42.26  for settlement and may include arbitration procedures.  
 42.27     (1) The grievance procedure must be described in the policy 
 42.28  and certificates and in the outline of coverage. 
 42.29     (2) At the time the policy or certificate is issued, the 
 42.30  issuer shall provide detailed information to the policyholder 
 42.31  describing how a grievance may be registered with the issuer. 
 42.32     (3) Grievances must be considered in a timely manner and 
 42.33  must be transmitted to appropriate decision makers who have 
 42.34  authority to fully investigate the issue and take corrective 
 42.35  action. 
 42.36     (4) If a grievance is found to be valid, corrective action 
 43.1   must be taken promptly. 
 43.2      (5) All concerned parties must be notified about the 
 43.3   results of a grievance. 
 43.4      (6) The issuer shall report no later than March 31 of each 
 43.5   year to the commissioner regarding the grievance procedure.  The 
 43.6   report shall be in a format prescribed by the commissioner and 
 43.7   shall contain the number of grievances filed in the past year 
 43.8   and a summary of the subject, nature, and resolution of the 
 43.9   grievances. 
 43.10     (l) At the time of initial purchase, a Medicare select 
 43.11  issuer shall make available to each applicant for a Medicare 
 43.12  select policy or certificate the opportunity to purchase a 
 43.13  Medicare supplement policy or certificate otherwise offered by 
 43.14  the issuer. 
 43.15     (m)(1) At the request of an individual insured under a 
 43.16  Medicare select policy or certificate, a Medicare select issuer 
 43.17  shall make available to the individual insured the opportunity 
 43.18  to purchase a Medicare supplement policy or certificate offered 
 43.19  by the issuer that has comparable or lesser benefits and that 
 43.20  does not contain a restricted network provision.  The issuer 
 43.21  shall make the policies or certificates available without 
 43.22  requiring evidence of insurability after the Medicare supplement 
 43.23  policy or certificate has been in force for six months.  If the 
 43.24  issuer does not have available for sale a policy or certificate 
 43.25  without restrictive network provisions, the issuer shall provide 
 43.26  enrollment information for the Minnesota comprehensive health 
 43.27  association Medicare supplement plans. 
 43.28     (2) For the purposes of this paragraph, a Medicare 
 43.29  supplement policy or certificate will be considered to have 
 43.30  comparable or lesser benefits unless it contains one or more 
 43.31  significant benefits not included in the Medicare select policy 
 43.32  or certificate being replaced.  For the purposes of this 
 43.33  paragraph, a significant benefit means coverage for the Medicare 
 43.34  part A deductible, coverage for prescription drugs, coverage for 
 43.35  at-home recovery services, or coverage for part B excess charges.
 43.36     (n) Medicare select policies and certificates shall provide 
 44.1   for continuation of coverage if the secretary of health and 
 44.2   human services determines that Medicare select policies and 
 44.3   certificates issued pursuant to this section should be 
 44.4   discontinued due to either the failure of the Medicare select 
 44.5   program to be reauthorized under law or its substantial 
 44.6   amendment. 
 44.7      (1) Each Medicare select issuer shall make available to 
 44.8   each individual insured under a Medicare select policy or 
 44.9   certificate the opportunity to purchase a Medicare supplement 
 44.10  policy or certificate offered by the issuer that has comparable 
 44.11  or lesser benefits and that does not contain a restricted 
 44.12  network provision.  The issuer shall make the policies and 
 44.13  certificates available without requiring evidence of 
 44.14  insurability. 
 44.15     (2) For the purposes of this paragraph, a Medicare 
 44.16  supplement policy or certificate will be considered to have 
 44.17  comparable or lesser benefits unless it contains one or more 
 44.18  significant benefits not included in the Medicare select policy 
 44.19  or certificate being replaced.  For the purposes of this 
 44.20  paragraph, a significant benefit means coverage for the Medicare 
 44.21  part A deductible, coverage for prescription drugs, coverage for 
 44.22  at-home recovery services, or coverage for part B excess charges.
 44.23     (o) A Medicare select issuer shall comply with reasonable 
 44.24  requests for data made by state or federal agencies, including 
 44.25  the United States Department of Health and Human Services, for 
 44.26  the purpose of evaluating the Medicare select program. 
 44.27     (p) Medicare select policies and certificates under this 
 44.28  section shall be regulated and approved by the department of 
 44.29  commerce. 
 44.30     (q) Medicare select policies and certificates must be 
 44.31  either a basic plan or an extended basic plan. Before a Medicare 
 44.32  select policy or certificate is sold or issued in this state, 
 44.33  the applicant must be provided with an explanation of coverage 
 44.34  for both a Medicare select basic and a Medicare select extended 
 44.35  basic policy or certificate and must be provided with the 
 44.36  opportunity of purchasing either a Medicare select basic or a 
 45.1   Medicare select extended basic policy.  The basic plan may also 
 45.2   include any of the optional benefit riders authorized by section 
 45.3   62A.316.  Preventive care provided by Medicare select policies 
 45.4   or certificates must be provided as set forth in section 62A.315 
 45.5   or 62A.316, except that the benefits are as defined in chapter 
 45.6   62D. 
 45.7      (r) Medicare select policies and certificates are exempt 
 45.8   from the requirements of section 62A.31, subdivision 1, 
 45.9   paragraph (d).  This paragraph expires January 1, 1994. 
 45.10     Sec. 33.  Minnesota Statutes 1994, section 62A.36, 
 45.11  subdivision 1, is amended to read: 
 45.12     Subdivision 1.  [LOSS RATIO STANDARDS.] (a) For purposes of 
 45.13  this section, "Medicare supplement policy or certificate" has 
 45.14  the meaning given in section 62A.31, subdivision 3, but also 
 45.15  includes a policy, contract, or certificate issued under a 
 45.16  contract under section 1833 or 1876 of the federal Social 
 45.17  Security Act, United States Code, title 42, section 1395 et 
 45.18  seq.  A Medicare supplement policy form or certificate form 
 45.19  shall not be delivered or issued for delivery unless the policy 
 45.20  form or certificate form can be expected, as estimated for the 
 45.21  entire period for which rates are computed to provide coverage, 
 45.22  to return to policyholders and certificate holders in the form 
 45.23  of aggregate benefits, not including anticipated refunds or 
 45.24  credits, provided under the policy form or certificate form:  
 45.25     (1) at least 75 percent of the aggregate amount of premiums 
 45.26  earned in the case of group policies, and 
 45.27     (2) at least 65 percent of the aggregate amount of premiums 
 45.28  earned in the case of individual policies, calculated on the 
 45.29  basis of incurred claims experience or incurred health care 
 45.30  expenses where coverage is provided by a health maintenance 
 45.31  organization on a service rather than reimbursement basis and 
 45.32  earned premiums for the period and according to accepted 
 45.33  actuarial principles and practices.  An insurer shall 
 45.34  demonstrate that the third year loss ratio is greater than or 
 45.35  equal to the applicable percentage.  
 45.36     All filings of rates and rating schedules shall demonstrate 
 46.1   that expected claims in relation to premiums comply with the 
 46.2   requirements of this section when combined with actual 
 46.3   experience to date.  Filings of rate revisions shall also 
 46.4   demonstrate that the anticipated loss ratio over the entire 
 46.5   future period for which the revised rates are computed to 
 46.6   provide coverage can be expected to meet the appropriate loss 
 46.7   ratio standards, and aggregate loss ratio from inception of the 
 46.8   policy or certificate shall equal or exceed the appropriate loss 
 46.9   ratio standards.  
 46.10     An application form for a Medicare supplement policy or 
 46.11  certificate, as defined in this section, must prominently 
 46.12  disclose the anticipated loss ratio and explain what it means. 
 46.13     (b) An issuer shall collect and file with the commissioner 
 46.14  by May 31 of each year the data contained in the National 
 46.15  Association of Insurance Commissioners Medicare Supplement 
 46.16  Refund Calculating form, for each type of Medicare supplement 
 46.17  benefit plan.  
 46.18     If, on the basis of the experience as reported, the 
 46.19  benchmark ratio since inception (ratio 1) exceeds the adjusted 
 46.20  experience ratio since inception (ratio 3), then a refund or 
 46.21  credit calculation is required.  The refund calculation must be 
 46.22  done on a statewide basis for each type in a standard Medicare 
 46.23  supplement benefit plan.  For purposes of the refund or credit 
 46.24  calculation, experience on policies issued within the reporting 
 46.25  year shall be excluded.  
 46.26     A refund or credit shall be made only when the benchmark 
 46.27  loss ratio exceeds the adjusted experience loss ratio and the 
 46.28  amount to be refunded or credited exceeds a de minimis level.  
 46.29  The refund shall include interest from the end of the calendar 
 46.30  year to the date of the refund or credit at a rate specified by 
 46.31  the secretary of health and human services, but in no event 
 46.32  shall it be less than the average rate of interest for 13-week 
 46.33  treasury bills.  A refund or credit against premiums due shall 
 46.34  be made by September 30 following the experience year on which 
 46.35  the refund or credit is based.  
 46.36     (c) An issuer of Medicare supplement policies and 
 47.1   certificates in this state shall file annually its rates, rating 
 47.2   schedule, and supporting documentation including ratios of 
 47.3   incurred losses to earned premiums by policy or certificate 
 47.4   duration for approval by the commissioner according to the 
 47.5   filing requirements and procedures prescribed by the 
 47.6   commissioner.  The supporting documentation shall also 
 47.7   demonstrate in accordance with actuarial standards of practice 
 47.8   using reasonable assumptions that the appropriate loss ratio 
 47.9   standards can be expected to be met over the entire period for 
 47.10  which rates are computed.  The demonstration shall exclude 
 47.11  active life reserves.  An expected third-year loss ratio which 
 47.12  is greater than or equal to the applicable percentage shall be 
 47.13  demonstrated for policies or certificates in force less than 
 47.14  three years. 
 47.15     As soon as practicable, but before the effective date of 
 47.16  enhancements in Medicare benefits, every issuer of Medicare 
 47.17  supplement policies or certificates in this state shall file 
 47.18  with the commissioner, in accordance with the applicable filing 
 47.19  procedures of this state:  
 47.20     (1) a premium adjustment that is necessary to produce an 
 47.21  expected loss ratio under the policy or certificate that will 
 47.22  conform with minimum loss ratio standards for Medicare 
 47.23  supplement policies or certificates.  No premium adjustment that 
 47.24  would modify the loss ratio experience under the policy or 
 47.25  certificate other than the adjustments described herein shall be 
 47.26  made with respect to a policy or certificate at any time other 
 47.27  than on its renewal date or anniversary date; 
 47.28     (2) if an issuer fails to make premium adjustments 
 47.29  acceptable to the commissioner, the commissioner may order 
 47.30  premium adjustments, refunds, or premium credits considered 
 47.31  necessary to achieve the loss ratio required by this section; 
 47.32     (3) any appropriate riders, endorsements, or policy or 
 47.33  certificate forms needed to accomplish the Medicare supplement 
 47.34  insurance policy or certificate modifications necessary to 
 47.35  eliminate benefit duplications with Medicare.  The riders, 
 47.36  endorsements, or policy or certificate forms shall provide a 
 48.1   clear description of the Medicare supplement benefits provided 
 48.2   by the policy or certificate. 
 48.3      (d) The commissioner may conduct a public hearing to gather 
 48.4   information concerning a request by an issuer for an increase in 
 48.5   a rate for a policy form or certificate form if the experience 
 48.6   of the form for the previous reporting period is not in 
 48.7   compliance with the applicable loss ratio standard.  The 
 48.8   determination of compliance is made without consideration of a 
 48.9   refund or credit for the reporting period.  Public notice of the 
 48.10  hearing shall be furnished in a manner considered appropriate by 
 48.11  the commissioner. 
 48.12     (e) An issuer shall not use or change premium rates for a 
 48.13  Medicare supplement policy or certificate unless the rates, 
 48.14  rating schedule, and supporting documentation have been filed 
 48.15  with, and approved by, the commissioner according to the filing 
 48.16  requirements and procedures prescribed by the commissioner. 
 48.17     Sec. 34.  Minnesota Statutes 1994, section 62A.39, is 
 48.18  amended to read: 
 48.19     62A.39 [DISCLOSURE.] 
 48.20     No individual Medicare supplement plan shall be delivered 
 48.21  or issued in this state and no certificate shall be delivered 
 48.22  under a group Medicare supplement plan delivered or issued in 
 48.23  this state unless the plan is shown on the cover page and an 
 48.24  outline containing at least the following information in no less 
 48.25  than 12-point type is delivered to the applicant at the time the 
 48.26  application is made:  
 48.27     (a) A description of the principal benefits and coverage 
 48.28  provided in the policy; 
 48.29     (b) A statement of the exceptions, reductions, and 
 48.30  limitations contained in the policy including the following 
 48.31  language, as applicable, in bold print:  "THIS POLICY DOES NOT 
 48.32  COVER ALL MEDICAL EXPENSES BEYOND THOSE COVERED BY MEDICARE.  
 48.33  THIS POLICY DOES NOT COVER ALL SKILLED NURSING HOME CARE 
 48.34  EXPENSES AND DOES NOT COVER CUSTODIAL OR RESIDENTIAL NURSING 
 48.35  CARE.  READ YOUR POLICY CAREFULLY TO DETERMINE WHICH NURSING 
 48.36  HOME FACILITIES AND EXPENSES ARE COVERED BY YOUR POLICY."; 
 49.1      (c) A statement of the renewal provisions including any 
 49.2   reservations by the insurer of a right to change premiums.  The 
 49.3   premium and manner of payment shall be stated for all plans that 
 49.4   are offered to the prospective applicant.  All possible premiums 
 49.5   for the prospective applicant shall be illustrated; 
 49.6      (d)  [READ YOUR POLICY OR CERTIFICATE VERY CAREFULLY.] A 
 49.7   statement that the outline of coverage is a summary of the 
 49.8   policy issued or applied for and that the policy should be 
 49.9   consulted to determine governing contractual provisions.  
 49.10  Additionally, it does not give all the details of Medicare 
 49.11  coverage.  Contact your local Social Security office or consult 
 49.12  the Medicare handbook for more details; 
 49.13     (e) A statement of the policy's loss ratio as follows:  
 49.14  "This policy provides an anticipated loss ratio of (..%).  This 
 49.15  means that, on the average, policyholders may expect that 
 49.16  ($....) of every $100.00 in premium will be returned as benefits 
 49.17  to policyholders over the life of the contract."; 
 49.18     (f) When the outline of coverage is provided at the time of 
 49.19  application and the Medicare supplement policy or certificate is 
 49.20  issued on a basis that would require revision of the outline, a 
 49.21  substitute outline of coverage properly describing the policy or 
 49.22  certificate shall accompany the policy or certificate when it is 
 49.23  delivered and contain the following statement, in no less than 
 49.24  12-point type, immediately above the company name: 
 49.25  "NOTICE:  Read this outline of coverage carefully.  It is not 
 49.26  identical to the outline of coverage provided upon application, 
 49.27  and the coverage originally applied for has not been issued."; 
 49.28     (g)  [RIGHT TO RETURN POLICY OR CERTIFICATE.] "If you find 
 49.29  that you are not satisfied with your policy or certificate for 
 49.30  any reason, you may return it to (insert issuer's address).  If 
 49.31  you send the policy or certificate back to us within 30 days 
 49.32  after you receive it, we will treat the policy or certificate as 
 49.33  if it had never been issued and return all of your payments 
 49.34  within ten days."; 
 49.35     (h)  [POLICY OR CERTIFICATE REPLACEMENT.] "If you are 
 49.36  replacing another health insurance policy or certificate, do NOT 
 50.1   cancel it until you have actually received your new policy or 
 50.2   certificate and are sure you want to keep it."; 
 50.3      (i)  [NOTICE.] "This policy or certificate may not fully 
 50.4   cover all of your medical costs."  
 50.5      A.  (for agents:) 
 50.6      "Neither (insert company's name) nor its agents are 
 50.7   connected with Medicare." 
 50.8      B.  (for direct response:) 
 50.9      "(insert company's name) is not connected with Medicare." 
 50.10     (j) Notice regarding policies or certificates which are not 
 50.11  Medicare supplement policies.  
 50.12     Any accident and sickness insurance policy or certificate, 
 50.13  other than a Medicare supplement policy, or a policy or 
 50.14  certificate issued pursuant to a contract under the federal 
 50.15  Social Security Act, section 1833 or 1876 (United States Code, 
 50.16  title 42, section 1395, et seq.), disability income policy; 
 50.17  basic, catastrophic, or major medical expense policy; single 
 50.18  premium nonrenewable policy; or other policy, issued for 
 50.19  delivery in this state to persons eligible for Medicare shall 
 50.20  notify insureds under the policy that the policy is not a 
 50.21  Medicare supplement policy or certificate.  The notice shall 
 50.22  either be printed or attached to the first page of the outline 
 50.23  of coverage delivered to insureds under the policy, or if no 
 50.24  outline of coverage is delivered, to the first page of the 
 50.25  policy or certificate delivered to insureds.  The notice shall 
 50.26  be in no less than 12-point type and shall contain the following 
 50.27  language: 
 50.28     "THIS (POLICY OR CERTIFICATE) IS NOT A MEDICARE SUPPLEMENT 
 50.29     (POLICY OR CONTRACT).  If you are eligible for Medicare, 
 50.30     review the Medicare supplement buyer's "Guide to Health 
 50.31     Insurance for People with Medicare" available from the 
 50.32     company." 
 50.33     (k)  [COMPLETE ANSWERS ARE VERY IMPORTANT.] "When you fill 
 50.34  out the application for the new policy or certificate, be sure 
 50.35  to answer truthfully and completely all questions about your 
 50.36  medical and health history.  The company may cancel your policy 
 51.1   or certificate and refuse to pay any claims if you leave out or 
 51.2   falsify important medical information."  If the policy or 
 51.3   certificate is guaranteed issue, this paragraph need not appear. 
 51.4      "Review the application carefully before you sign it.  Be 
 51.5   certain that all information has been properly recorded."  
 51.6      Include for each plan, prominently identified in the cover 
 51.7   page, a chart showing the services, Medicare payments, plan 
 51.8   payments, and insured payments for each plan, using the same 
 51.9   language, in the same order, using uniform layout and format. 
 51.10     The outline of coverage provided to applicants pursuant to 
 51.11  this section consists of four parts:  a cover page, premium 
 51.12  information, disclosure pages, and charts displaying the 
 51.13  features of each benefit plan offered by the insurer. 
 51.14     Sec. 35.  Minnesota Statutes 1994, section 62A.44, 
 51.15  subdivision 2, is amended to read: 
 51.16     Subd. 2.  [QUESTIONS.] (a) Application forms shall include 
 51.17  the following questions designed to elicit information as to 
 51.18  whether, as of the date of the application, the applicant has 
 51.19  another Medicare supplement or other health insurance policy or 
 51.20  certificate in force or whether a Medicare supplement policy or 
 51.21  certificate is intended to replace any other accident and 
 51.22  sickness policy or certificate presently in force.  A 
 51.23  supplementary application or other form to be signed by the 
 51.24  applicant and agent containing the questions and statements may 
 51.25  be used. 
 51.26     "(1) You do not need more than one Medicare supplement 
 51.27     policy or certificate. 
 51.28     (2) If you are 65 or older, purchase this policy, you may 
 51.29     want to evaluate your existing health coverage and decide 
 51.30     if you need multiple coverages. 
 51.31     (3) You may be eligible for benefits under Medicaid and may 
 51.32     not need a Medicare supplement policy or certificate.  
 51.33     (3) (4) The benefits and premiums under your Medicare 
 51.34     supplement policy or certificate will can be suspended, if 
 51.35     requested, during your entitlement to benefits under 
 51.36     Medicaid for 24 months.  You must request this suspension 
 52.1      within 90 days of becoming eligible for Medicaid.  If you 
 52.2      are no longer entitled to Medicaid, your policy or 
 52.3      certificate will be reinstated if requested within 90 days 
 52.4      of losing Medicaid eligibility. 
 52.5      (5) Counseling services may be available in Minnesota to 
 52.6      provide advice concerning medical assistance through state 
 52.7      Medicaid, Qualified Medicare Beneficiaries (QMBs), and 
 52.8      Specified Low-Income Medicare Beneficiaries (SLMBs). 
 52.9      To the best of your knowledge: 
 52.10     (1) Do you have another Medicare supplement policy or 
 52.11     certificate in force, including health care service 
 52.12     contract or health maintenance organization contract?  
 52.13     (a) If so, with which company? 
 52.14     (b) If so, do you intend to replace your current Medicare 
 52.15  supplement policy with this policy or certificate? 
 52.16     (2) Do you have any other health insurance policies that 
 52.17     provide benefits that which this Medicare supplement policy 
 52.18     or certificate would duplicate?  
 52.19     (a) If you do so, please name the company and the. 
 52.20     (b) What kind of policy.?  
 52.21     (3) If the answer to question 1 or 2 is yes, do you intend 
 52.22     to replace these medical or health policies with this 
 52.23     policy or certificate? 
 52.24     (4) Are you covered by for medical assistance through the 
 52.25     state Medicaid program?  If so, which of the following 
 52.26     programs provides coverage for you?  
 52.27     a.  Specified Low-Income Medicare Beneficiary (SLMB), 
 52.28     b.  Qualified Medicare Beneficiary (QMB), or 
 52.29     c.  full Medicaid Beneficiary?" 
 52.30     (b) Agents shall list any other health insurance policies 
 52.31  they have sold to the applicant.  
 52.32     (1) List policies sold that are still in force.  
 52.33     (2) List policies sold in the past five years that are no 
 52.34  longer in force.  
 52.35     (c) In the case of a direct response issuer, a copy of the 
 52.36  application or supplemental form, signed by the applicant, and 
 53.1   acknowledged by the insurer, shall be returned to the applicant 
 53.2   by the insurer on delivery of the policy or certificate.  
 53.3      (d) Upon determining that a sale will involve replacement 
 53.4   of Medicare supplement coverage, any issuer, other than a direct 
 53.5   response issuer, or its agent, shall furnish the applicant, 
 53.6   before issuance or delivery of the Medicare supplement policy or 
 53.7   certificate, a notice regarding replacement of Medicare 
 53.8   supplement coverage.  One copy of the notice signed by the 
 53.9   applicant and the agent, except where the coverage is sold 
 53.10  without an agent, shall be provided to the applicant and an 
 53.11  additional signed copy shall be retained by the issuer.  A 
 53.12  direct response issuer shall deliver to the applicant at the 
 53.13  time of the issuance of the policy or certificate the notice 
 53.14  regarding replacement of Medicare supplement coverage. 
 53.15     (e) The notice required by paragraph (d) for an issuer 
 53.16  shall be provided in substantially the following form in no less 
 53.17  than 12-point type: 
 53.18             "NOTICE TO APPLICANT REGARDING REPLACEMENT 
 53.19                  OF MEDICARE SUPPLEMENT INSURANCE
 53.20               (Insurance company's name and address)
 53.21    SAVE THIS NOTICE!  IT MAY BE IMPORTANT TO YOU IN THE FUTURE.
 53.22     According to (your application) (information you have 
 53.23  furnished), you intend to terminate existing Medicare supplement 
 53.24  insurance and replace it with a policy or certificate to be 
 53.25  issued by (Company Name) Insurance Company.  Your new policy or 
 53.26  certificate will provide 30 days within which you may decide 
 53.27  without cost whether you desire to keep the policy or 
 53.28  certificate. 
 53.29     You should review this new coverage carefully.  Compare it 
 53.30  with all accident and sickness coverage you now have.  Terminate 
 53.31  your present policy only If, after due consideration, you find 
 53.32  that purchase of this Medicare supplement coverage is a wise 
 53.33  decision you should terminate your present Medicare supplement 
 53.34  policy.  You should evaluate the need for other accident and 
 53.35  sickness coverage you have that may duplicate this policy. 
 53.36     STATEMENT TO APPLICANT BY ISSUER, AGENT, (BROKER OR OTHER 
 54.1      REPRESENTATIVE):  I have reviewed your current medical or 
 54.2      health insurance coverage.  The replacement of insurance 
 54.3      involved in this transaction does not duplicate coverage, 
 54.4      To the best of my knowledge this Medicare supplement policy 
 54.5      will not duplicate your existing Medicare supplement policy 
 54.6      because you intend to terminate the existing Medicare 
 54.7      supplement policy.  The replacement policy or certificate 
 54.8      is being purchased for the following reason(s) (check one): 
 54.9      ______  Additional benefits 
 54.10     ______  No change in benefits, but lower premiums 
 54.11     ______  Fewer benefits and lower premiums 
 54.12     ______  Other (please specify)  
 54.13     ____________________________________________________________
 54.14     ____________________________________________________________
 54.15     ____________________________________________________________
 54.16     (1) Health conditions which you may presently have 
 54.17     (preexisting conditions) may not be immediately or fully 
 54.18     covered under the new policy or certificate.  This could 
 54.19     result in denial or delay of a claim for benefits under the 
 54.20     new policy or certificate, whereas a similar claim might 
 54.21     have been payable under your present policy or certificate. 
 54.22     (2) State law provides that your replacement policy or 
 54.23     certificate may not contain new preexisting conditions, 
 54.24     waiting periods, elimination periods, or probationary 
 54.25     periods.  The insurer will waive any time periods 
 54.26     applicable to preexisting conditions, waiting periods, 
 54.27     elimination periods, or probationary periods in the new 
 54.28     policy (or coverage) for similar benefits to the extent the 
 54.29     time was spent (depleted) under the original policy or 
 54.30     certificate. 
 54.31     (3) If you still wish to terminate your present policy or 
 54.32     certificate and replace it with new coverage, be certain to 
 54.33     truthfully and completely answer all questions on the 
 54.34     application concerning your medical and health history.  
 54.35     Failure to include all material medical information on an 
 54.36     application may provide a basis for the company to deny any 
 55.1      future claims and to refund your premium as though your 
 55.2      policy or certificate had never been in force.  After the 
 55.3      application has been completed and before you sign it, 
 55.4      review it carefully to be certain that all information has 
 55.5      been properly recorded.  (If the policy or certificate is 
 55.6      guaranteed issue, this paragraph need not appear.) 
 55.7      Do not cancel your present policy or certificate until you 
 55.8      have received your new policy or certificate and you are 
 55.9      sure that you want to keep it. 
 55.10     
 55.11     _____________________________________________________ 
 55.12     (Signature of Agent, Broker, or Other Representative)* 
 55.13     
 55.14     _____________________________________________________ 
 55.15     (Typed Name and Address of Issuer, Agent, or Broker) 
 55.16     
 55.17     _____________________ 
 55.18     (Date) 
 55.19     
 55.20     __________________________________ 
 55.21     (Applicant's Signature) 
 55.22     
 55.23     _____________________ 
 55.24     (Date) 
 55.25     
 55.26     *Signature not required for direct response sales." 
 55.27     
 55.28     (f) Paragraph (e), clauses (1) and (2), of the replacement 
 55.29  notice (applicable to preexisting conditions) may be deleted by 
 55.30  an issuer if the replacement does not involve application of a 
 55.31  new preexisting condition limitation. 
 55.32     Sec. 36.  Minnesota Statutes 1994, section 62A.60, is 
 55.33  amended to read: 
 55.34     62A.60 [RETROACTIVE DENIAL OF EXPENSES.] 
 55.35     In cases where the subscriber or insured is liable for 
 55.36  costs beyond applicable copayments or deductibles, no insurer 
 56.1   may retroactively deny payment to a person who is covered when 
 56.2   the services are provided for health care services that are 
 56.3   otherwise covered, if the insurer or its representative failed 
 56.4   to provide prior or concurrent review or authorization for the 
 56.5   expenses when required to do so under the policy, plan, or 
 56.6   certificate.  If prior or concurrent review or authorization was 
 56.7   provided by the insurer or its representative, and the 
 56.8   preexisting condition limitation provision, the general 
 56.9   exclusion provision and any other coinsurance, or other policy 
 56.10  requirements have been met, the insurer may not deny payment for 
 56.11  the authorized service or time period except in cases where 
 56.12  fraud or substantive misrepresentation occurred. 
 56.13     Sec. 37.  Minnesota Statutes 1995 Supplement, section 
 56.14  62C.14, subdivision 14, is amended to read: 
 56.15     Subd. 14.  No subscriber's individual contract or any group 
 56.16  contract which provides for coverage of family members or other 
 56.17  dependents of a subscriber or of an employee or other group 
 56.18  member of a group subscriber, shall be renewed, delivered, or 
 56.19  issued for delivery in this state unless such contract includes 
 56.20  as covered family members or dependents any newborn infants, 
 56.21  including dependent grandchildren, immediately from the moment 
 56.22  of birth and thereafter which insurance shall provide coverage 
 56.23  for illness, injury, congenital malformation or premature 
 56.24  birth.  For purposes of this paragraph, "newborn infants" 
 56.25  includes grandchildren who are financially dependent upon a 
 56.26  covered grandparent and who reside with that covered grandparent 
 56.27  continuously from birth.  No policy, contract, or agreement 
 56.28  covered by this section may require notification to a health 
 56.29  carrier as a condition for this dependent coverage.  However, if 
 56.30  the policy, contract, or agreement mandates an additional 
 56.31  premium for each dependent, the health carrier shall be entitled 
 56.32  to all premiums that would have been collected had the health 
 56.33  carrier been aware of the additional dependent.  The health 
 56.34  carrier may withhold payment of any health benefits for the new 
 56.35  dependent until it has been compensated with the applicable 
 56.36  premium which would have been owed if the health carrier had 
 57.1   been informed of the additional dependent immediately. 
 57.2      Sec. 38.  Minnesota Statutes 1995 Supplement, section 
 57.3   62E.05, subdivision 1, is amended to read: 
 57.4      Subdivision 1.  [CERTIFICATION.] Upon application by an 
 57.5   insurer, fraternal, or employer for certification of a plan of 
 57.6   health coverage as a qualified plan or a qualified medicare 
 57.7   supplement plan for the purposes of sections 62E.01 to 62E.16, 
 57.8   the commissioner shall make a determination within 90 days as to 
 57.9   whether the plan is qualified.  All plans of health coverage, 
 57.10  except Medicare supplement policies, shall be labeled as 
 57.11  "qualified" or "nonqualified" on the front of the policy or 
 57.12  evidence of insurance contract, or on the schedule page.  All 
 57.13  qualified plans shall indicate whether they are number one, two, 
 57.14  or three coverage plans. 
 57.15     Sec. 39.  Minnesota Statutes 1995 Supplement, section 
 57.16  62F.02, subdivision 2, is amended to read: 
 57.17     Subd. 2.  [DIRECTORS.] The association shall have a board 
 57.18  of directors composed of 11 persons chosen for a term of four 
 57.19  years as follows:  five persons elected by members of the 
 57.20  association at a meeting called by the commissioner; three 
 57.21  members who are health care providers appointed by the 
 57.22  commissioner prior to the election by the association; and three 
 57.23  public members, as defined in section 214.02, appointed by the 
 57.24  governor prior to the election by the association.  If the 
 57.25  commissioner determines that it is no longer cost-effective or 
 57.26  efficient to operate a separate board of directors to administer 
 57.27  the medical malpractice joint underwriting association, the 
 57.28  commissioner shall deactivate the board and assign all of the 
 57.29  board's authority and responsibilities under this chapter to the 
 57.30  Minnesota joint underwriting association board of directors 
 57.31  established under section 62I.02. 
 57.32     Sec. 40.  Minnesota Statutes 1994, section 62F.03, 
 57.33  subdivision 6, is amended to read: 
 57.34     Subd. 6.  "Net direct premiums" means gross direct premiums 
 57.35  written on personal injury liability insurance, including the 
 57.36  liability component of multiple peril package policies as 
 58.1   computed by the commissioner, less return premiums for the 
 58.2   unused or unabsorbed portions of premium deposits.  Net direct 
 58.3   premiums do not include policyholder dividends. 
 58.4      Sec. 41.  Minnesota Statutes 1994, section 62F.04, 
 58.5   subdivision 1a, is amended to read: 
 58.6      Subd. 1a.  [REAUTHORIZATION.] The authorization to issue 
 58.7   insurance is valid for a period of two years from the date it 
 58.8   was made.  The commissioner may reauthorize the issuance of 
 58.9   insurance for additional two-year periods under the terms of 
 58.10  subdivision 1 according to the procedures set forth in sections 
 58.11  62I.21 and 62I.22.  This subdivision is not a limitation on the 
 58.12  number of times the commissioner may reauthorize the issuance of 
 58.13  insurance. 
 58.14     Sec. 42.  Minnesota Statutes 1994, section 62I.02, 
 58.15  subdivision 2, is amended to read: 
 58.16     Subd. 2.  [DIRECTOR BOARD OF DIRECTORS.] The association 
 58.17  shall have a board of directors composed of 11 persons chosen as 
 58.18  follows:  five persons elected by members of the association at 
 58.19  a meeting called by the commissioner; three public members, as 
 58.20  defined in section 214.02, appointed by the commissioner; and 
 58.21  three members, appointed by the commissioner representing groups 
 58.22  to whom coverage has been extended by the association.  The 
 58.23  terms of the members shall be four years.  Terms may be 
 58.24  staggered so that no more than six members are appointed or 
 58.25  elected every two years.  Members may serve until their 
 58.26  successors are appointed or elected.  If at any time no coverage 
 58.27  is currently extended by the association, then either additional 
 58.28  public members may be appointed to fill these three positions 
 58.29  or, at the option of the commissioner, representatives from 
 58.30  groups who had previously been covered by the association may 
 58.31  serve as directors.  In the event that the commissioner assigns 
 58.32  the responsibility for administering chapter 62F to the 
 58.33  Minnesota joint underwriting association, the board of directors 
 58.34  must be increased by four additional members.  These four 
 58.35  additional members must be appointed by the commissioner.  One 
 58.36  of the additional members must be a licensed health care 
 59.1   provider, two of the additional members must be representatives 
 59.2   of medical malpractice insurers, and the fourth additional 
 59.3   member must be a public member. 
 59.4      Sec. 43.  Minnesota Statutes 1994, section 62I.02, 
 59.5   subdivision 5, is amended to read: 
 59.6      Subd. 5.  [ACCOUNTS.] (a) For the purposes of 
 59.7   administration and assessment, and except as otherwise 
 59.8   authorized under paragraph (b), the association shall be divided 
 59.9   into two separate accounts: 
 59.10     (1) the property and casualty insurance account; and 
 59.11     (2) the personal injury liability insurance account 
 59.12  account-liquor. 
 59.13     (b) If the association is authorized by the commissioner to 
 59.14  issue medical malpractice insurance, the association shall 
 59.15  establish a third account for purposes of administration and 
 59.16  assessment.  This account must be identified as the personal 
 59.17  injury liability insurance account-medical malpractice. 
 59.18     Sec. 44.  Minnesota Statutes 1994, section 62I.02, is 
 59.19  amended by adding a subdivision to read: 
 59.20     Subd. 6.  [MEDICAL MALPRACTICE.] If the association is 
 59.21  authorized by the commissioner to issue medical malpractice 
 59.22  insurance, it shall administer the medical malpractice insurance 
 59.23  program according to chapter 62F. 
 59.24     Sec. 45.  Minnesota Statutes 1994, section 62I.07, is 
 59.25  amended to read: 
 59.26     62I.07 [MEMBERSHIP ASSESSMENTS.] 
 59.27     Subdivision 1.  [GENERAL ASSESSMENT.] Each member of the 
 59.28  association that is authorized to write property and casualty 
 59.29  insurance in the state shall participate in its losses and 
 59.30  expenses in the proportion that the direct written premiums of 
 59.31  the member on the kinds of insurance in that account bears to 
 59.32  the total aggregate direct written premiums written in this 
 59.33  state by all members on the kinds of insurance in that account.  
 59.34  The members' participation in the association shall be 
 59.35  determined annually on the direct written premiums written 
 59.36  during the preceding calendar year as reported on the annual 
 60.1   statements and other reports filed by the member with the 
 60.2   commissioner.  Direct written premiums mean that amount at page 
 60.3   14, column (2), lines 5, 8, 9, 17, 21.2, 22, 23, 24, 25, 26, and 
 60.4   27 of the annual statement filed annually with the department of 
 60.5   commerce under section 60A.13. 
 60.6      Subd. 2.  [PERSONAL INJURY LIABILITY INSURANCE ASSESSMENT; 
 60.7   LIQUOR LIABILITY.] A member of the association shall participate 
 60.8   in its writings, expenses, servicing allowance, management fees, 
 60.9   and losses in the proportion that the net direct premiums of the 
 60.10  member, excluding that portion of premiums attributable to the 
 60.11  operation of the association, written during the preceding 
 60.12  calendar year on the kinds of insurance in that account bears to 
 60.13  the aggregate net direct premiums written in this state by all 
 60.14  members on the kinds of insurance in that account.  The member's 
 60.15  participation in the association shall be determined annually on 
 60.16  the basis of net direct premiums written during the preceding 
 60.17  calendar year, as reported in the annual statements and other 
 60.18  reports filed by the member with the commissioner.  Net direct 
 60.19  premiums mean gross direct premiums written on personal injury 
 60.20  liability insurance, including the liability component of 
 60.21  multiple peril package policies as computed by the commissioner, 
 60.22  less return premiums for the unused or unabsorbed portions of 
 60.23  premium deposits.  The net direct premiums are calculated using 
 60.24  lines 5.2 CMP, and 17-other liability from page 14, column (2) 
 60.25  of the annual statement filed annually with the department of 
 60.26  commerce pursuant to section 60A.13. 
 60.27     Subd. 3.  [PERSONAL INJURY LIABILITY INSURANCE ASSESSMENT; 
 60.28  MEDICAL MALPRACTICE.] If an assessment is needed for medical 
 60.29  malpractice, the assessment is made using the following lines 
 60.30  from page 14, column (2) of the annual statement filed annually 
 60.31  with the department of commerce pursuant to section 60A.13 using 
 60.32  the following lines:  5.2 commercial multiperil liability, 11 
 60.33  medical malpractice, 17-other liability, 19.1 PIP-private 
 60.34  passenger, 19.3 PIP-commercial. 
 60.35     Sec. 46.  Minnesota Statutes 1994, section 62L.02, 
 60.36  subdivision 15, is amended to read: 
 61.1      Subd. 15.  [HEALTH BENEFIT PLAN.] "Health benefit plan" 
 61.2   means a policy, contract, or certificate offered, sold, issued, 
 61.3   or renewed by a health carrier to a small employer for the 
 61.4   coverage of medical and hospital benefits.  Health benefit plan 
 61.5   includes a small employer plan.  Health benefit plan does not 
 61.6   include coverage that is: 
 61.7      (1) limited to disability or income protection coverage; 
 61.8      (2) automobile medical payment coverage; 
 61.9      (3) supplemental to liability insurance; 
 61.10     (4) designed solely to provide payments on a per diem, 
 61.11  fixed indemnity, or non-expense-incurred basis; 
 61.12     (5) credit accident and health insurance as defined in 
 61.13  section 62B.02; 
 61.14     (6) designed solely to provide dental or vision care; 
 61.15     (7) blanket accident and sickness insurance as defined in 
 61.16  section 62A.11; 
 61.17     (8) accident-only coverage; 
 61.18     (9) a long-term care policy as defined in section 62A.46; 
 61.19     (10) issued as a supplement to Medicare, as defined in 
 61.20  sections 62A.31 to 62A.44, or policies, contracts, or 
 61.21  certificates that supplement Medicare issued by health 
 61.22  maintenance organizations or those policies, contracts, or 
 61.23  certificates governed by section 1833 or 1876 of the federal 
 61.24  Social Security Act, United States Code, title 42, section 1395, 
 61.25  et seq., as amended; 
 61.26     (11) workers' compensation insurance; or 
 61.27     (12) issued solely as a companion to a health maintenance 
 61.28  contract as described in section 62D.12, subdivision 1a, so long 
 61.29  as the health maintenance contract meets the definition of a 
 61.30  health benefit plan. 
 61.31     For the purpose of this chapter, a health benefit plan 
 61.32  issued to eligible employees of a small employer who meets the 
 61.33  participation requirements of section 62L.03, subdivision 3, is 
 61.34  considered to have been issued to a small employer.  A health 
 61.35  benefit plan issued on behalf of a health carrier is considered 
 61.36  to be issued by the health carrier. 
 62.1      Sec. 47.  Minnesota Statutes 1994, section 62L.09, 
 62.2   subdivision 3, is amended to read: 
 62.3      Subd. 3.  [REENTRY PROHIBITION.] (a) Except as otherwise 
 62.4   provided in paragraph (b), a health carrier that ceases to do 
 62.5   business in the small employer market after July 1, 1993, is 
 62.6   prohibited from writing new business in the small employer 
 62.7   market in this state for a period of five years from the date of 
 62.8   notice to the commissioner.  This subdivision applies to any 
 62.9   health maintenance organization that ceases to do business in 
 62.10  the small employer market in one service area with respect to 
 62.11  that service area only.  Nothing in this subdivision prohibits 
 62.12  an affiliated health maintenance organization from continuing to 
 62.13  do business in the small employer market in that same service 
 62.14  area.  
 62.15     (b) The commissioner of commerce or the commissioner of 
 62.16  health may permit a health carrier that ceases to do business in 
 62.17  the small employer market in this state after July 1, 1993, to 
 62.18  immediately begin writing new business in the small employer 
 62.19  market if the commissioner considers it appropriate.  
 62.20     Sec. 48.  Minnesota Statutes 1995 Supplement, section 
 62.21  62L.12, subdivision 2, is amended to read: 
 62.22     Subd. 2.  [EXCEPTIONS.] (a) A health carrier may sell, 
 62.23  issue, or renew individual conversion policies to eligible 
 62.24  employees otherwise eligible for conversion coverage under 
 62.25  section 62D.104 as a result of leaving a health maintenance 
 62.26  organization's service area. 
 62.27     (b) A health carrier may sell, issue, or renew individual 
 62.28  conversion policies to eligible employees otherwise eligible for 
 62.29  conversion coverage as a result of the expiration of any 
 62.30  continuation of group coverage required under sections 62A.146, 
 62.31  62A.17, 62A.21, 62C.142, 62D.101, and 62D.105. 
 62.32     (c) A health carrier may sell, issue, or renew conversion 
 62.33  policies under section 62E.16 to eligible employees. 
 62.34     (d) A health carrier may sell, issue, or renew individual 
 62.35  continuation policies to eligible employees as required. 
 62.36     (e) A health carrier may sell, issue, or renew individual 
 63.1   health plans if the coverage is appropriate due to an unexpired 
 63.2   preexisting condition limitation or exclusion applicable to the 
 63.3   person under the employer's group health plan or due to the 
 63.4   person's need for health care services not covered under the 
 63.5   employer's group health plan. 
 63.6      (f) A health carrier may sell, issue, or renew an 
 63.7   individual health plan, if the individual has elected to buy the 
 63.8   individual health plan not as part of a general plan to 
 63.9   substitute individual health plans for a group health plan nor 
 63.10  as a result of any violation of subdivision 3 or 4. 
 63.11     (g) Nothing in this subdivision relieves a health carrier 
 63.12  of any obligation to provide continuation or conversion coverage 
 63.13  otherwise required under federal or state law. 
 63.14     (h) Nothing in this chapter restricts the offer, sale, 
 63.15  issuance, or renewal of coverage issued as a supplement to 
 63.16  Medicare under sections 62A.31 to 62A.44, or policies or 
 63.17  contracts that supplement Medicare issued by health maintenance 
 63.18  organizations, or those contracts governed by section 1833 or 
 63.19  1876 of the federal Social Security Act, United States Code, 
 63.20  title 42, section 1395 et. seq., as amended. 
 63.21     (i) Nothing in this chapter restricts the offer, sale, 
 63.22  issuance, or renewal of individual health plans necessary to 
 63.23  comply with a court order. 
 63.24     Sec. 49.  Minnesota Statutes 1994, section 65A.01, 
 63.25  subdivision 3, is amended to read: 
 63.26     Subd. 3.  [POLICY PROVISIONS.] On said policy following 
 63.27  such matter as provided in subdivisions 1 and 2, printed in the 
 63.28  English language in type of such size or sizes and arranged in 
 63.29  such manner, as is approved by the commissioner of commerce, the 
 63.30  following provisions and subject matter shall be stated in the 
 63.31  following words and in the following sequence, but with the 
 63.32  convenient placing, if desired, of such matter as will act as a 
 63.33  cover or back for such policy when folded, with the blanks below 
 63.34  indicated being left to be filled in at the time of the issuing 
 63.35  of the policy, to wit: 
 63.36     (Space for listing the amounts of insurance, rates and 
 64.1   premiums for the basic coverages provided under the standard 
 64.2   form of policy and for additional coverages or perils provided 
 64.3   under endorsements attached.  The description and location of 
 64.4   the property covered and the insurable value(s) of any 
 64.5   building(s) or structure(s) covered by the policy or its 
 64.6   attached endorsements; also in the above space may be stated 
 64.7   whether other insurance is limited and if limited the total 
 64.8   amount permitted.) 
 64.9      In consideration of the provisions and stipulations herein 
 64.10  or added hereto and of the premium above specified this company, 
 64.11  for a term of ..... from ..... (At 12:01 a.m. Standard Time) to 
 64.12  ..... (At 12:01 a.m. Standard Time) at location of property 
 64.13  involved, to an amount not exceeding the amount(s) above 
 64.14  specified does insure .....  and legal representatives 
 64.15  ........................................... 
 64.16     (In above space may be stated whether other insurance is 
 64.17  limited.) (And if limited the total amount permitted.) 
 64.18     Subject to form No.(s) ..... attached hereto. 
 64.19     This policy is made and accepted subject to the foregoing 
 64.20  provisions and stipulations and those hereinafter stated, which 
 64.21  are hereby made a part of this policy, together with such 
 64.22  provisions, stipulations and agreements as may be added hereto 
 64.23  as provided in this policy. 
 64.24     The insurance effected above is granted against all loss or 
 64.25  damage by fire originating from any cause, except as hereinafter 
 64.26  provided, also any damage by lightning and by removal from 
 64.27  premises endangered by the perils insured against in this 
 64.28  policy, to the property described hereinafter while located or 
 64.29  contained as described in this policy, or pro rata for five days 
 64.30  at each proper place to which any of the property shall 
 64.31  necessarily be removed for preservation from the perils insured 
 64.32  against in this policy, but not elsewhere.  The amount of said 
 64.33  loss or damage, except in case of total loss on buildings, to be 
 64.34  estimated according to the actual value of the insured property 
 64.35  at the time when such loss or damage happens. 
 64.36     If the insured property shall be exposed to loss or damage 
 65.1   from the perils insured against, the insured shall make all 
 65.2   reasonable exertions to save and protect same. 
 65.3      This entire policy shall be void if, whether before a loss, 
 65.4   the insured has willfully, or after a loss, the insured has 
 65.5   willfully and with intent to defraud, concealed or 
 65.6   misrepresented any material fact or circumstance concerning this 
 65.7   insurance or the subject thereof, or the interests of the 
 65.8   insured therein. 
 65.9      This policy shall not cover accounts, bills, currency, 
 65.10  deeds, evidences of debt, money or securities; nor, unless 
 65.11  specifically named hereon in writing, bullion, or manuscripts. 
 65.12     This company shall not be liable for loss by fire or other 
 65.13  perils insured against in this policy caused, directly or 
 65.14  indirectly by:  (a) enemy attack by armed forces, including 
 65.15  action taken by military, naval or air forces in resisting an 
 65.16  actual or immediately impending enemy attack; (b) invasion; (c) 
 65.17  insurrection; (d) rebellion; (e) revolution; (f) civil war; (g) 
 65.18  usurped power; (h) order of any civil authority except acts of 
 65.19  destruction at the time of and for the purpose of preventing the 
 65.20  spread of fire, providing that such fire did not originate from 
 65.21  any of the perils excluded by this policy. 
 65.22     Other insurance may be prohibited or the amount of 
 65.23  insurance may be limited by so providing in the policy or an 
 65.24  endorsement, rider or form attached thereto. 
 65.25     Unless otherwise provided in writing added hereto this 
 65.26  company shall not be liable for loss occurring: 
 65.27     (a) while the hazard is increased by any means within the 
 65.28  control or knowledge of the insured; or 
 65.29     (b) while the described premises, whether intended for 
 65.30  occupancy by owner or tenant, are vacant or unoccupied beyond a 
 65.31  period of 60 consecutive days; or 
 65.32     (c) as a result of explosion or riot, unless fire ensue, 
 65.33  and in that event for loss by fire only. 
 65.34     Any other peril to be insured against or subject of 
 65.35  insurance to be covered in this policy shall be by endorsement 
 65.36  in writing hereon or added hereto. 
 66.1      The extent of the application of insurance under this 
 66.2   policy and the contributions to be made by this company in case 
 66.3   of loss, and any other provision or agreement not inconsistent 
 66.4   with the provisions of this policy, may be provided for in 
 66.5   writing added hereto, but no provision may be waived except such 
 66.6   as by the terms of this policy is subject to change. 
 66.7      No permission affecting this insurance shall exist, or 
 66.8   waiver of any provision be valid, unless granted herein or 
 66.9   expressed in writing added hereto.  No provision, stipulation or 
 66.10  forfeiture shall be held to be waived by any requirements or 
 66.11  proceeding on the part of this company relating to appraisal or 
 66.12  to any examination provided for herein. 
 66.13     This policy shall be canceled at any time at the request of 
 66.14  the insured, in which case this company shall, upon demand and 
 66.15  surrender of this policy, refund the excess of paid premium 
 66.16  above the customary short rates for the expired time.  This 
 66.17  policy may be canceled at any time by this company by giving to 
 66.18  the insured a ten 30 days' written notice of cancellation with 
 66.19  or without tender of the excess of paid premium above the pro 
 66.20  rata premium for the expired time, which excess, if not 
 66.21  tendered, shall be refunded on demand.  Notice of cancellation 
 66.22  shall state that said excess premium (if not tendered) will be 
 66.23  refunded on demand. 
 66.24     If loss hereunder is made payable, in whole or in part, to 
 66.25  a designated mortgagee or contract for deed vendor not named 
 66.26  herein as insured, such interest in this policy may be canceled 
 66.27  by giving to such mortgagee or vendor a ten days' written notice 
 66.28  of cancellation. 
 66.29     Notwithstanding any other provisions of this policy, if 
 66.30  this policy shall be made payable to a mortgagee or contract for 
 66.31  deed vendor of the covered real estate, no act or default of any 
 66.32  person other than such mortgagee or vendor or the mortgagee's or 
 66.33  vendor's agent or those claiming under the mortgagee or vendor, 
 66.34  whether the same occurs before or during the term of this 
 66.35  policy, shall render this policy void as to such mortgagee or 
 66.36  vendor nor affect such mortgagee's or vendor's right to recover 
 67.1   in case of loss on such real estate; provided, that the 
 67.2   mortgagee or vendor shall on demand pay according to the 
 67.3   established scale of rates for any increase of risks not paid 
 67.4   for by the insured; and whenever this company shall be liable to 
 67.5   a mortgagee or vendor for any sum for loss under this policy for 
 67.6   which no liability exists as to the mortgagor, vendee, or owner, 
 67.7   and this company shall elect by itself, or with others, to pay 
 67.8   the mortgagee or vendor the full amount secured by such mortgage 
 67.9   or contract for deed, then the mortgagee or vendor shall assign 
 67.10  and transfer to the company the mortgagee's or vendor's 
 67.11  interest, upon such payment, in the said mortgage or contract 
 67.12  for deed together with the note and debts thereby secured. 
 67.13     This company shall not be liable for a greater proportion 
 67.14  of any loss than the amount hereby insured shall bear to the 
 67.15  whole insurance covering the property against the peril involved.
 67.16     In case of any loss under this policy the insured shall 
 67.17  give immediate written notice to this company of any loss, 
 67.18  protect the property from further damage, and a statement in 
 67.19  writing, signed and sworn to by the insured, shall within 60 
 67.20  days be rendered to the company, setting forth the value of the 
 67.21  property insured, except in case of total loss on buildings the 
 67.22  value of said buildings need not be stated, the interest of the 
 67.23  insured therein, all other insurance thereon, in detail, the 
 67.24  purposes for which and the persons by whom the building insured, 
 67.25  or containing the property insured, was used, and the time at 
 67.26  which and manner in which the fire originated, so far as known 
 67.27  to the insured. 
 67.28     The insured, as often as may be reasonably required, shall 
 67.29  exhibit to any person designated by this company all that 
 67.30  remains of any property herein described, and, after being 
 67.31  informed of the right to counsel and that any answers may be 
 67.32  used against the insured in later civil or criminal proceedings, 
 67.33  the insured shall, within a reasonable period after demand by 
 67.34  this company, submit to examinations under oath by any person 
 67.35  named by this company, and subscribe the oath.  The insured, as 
 67.36  often as may be reasonably required, shall produce for 
 68.1   examination all records and documents reasonably related to the 
 68.2   loss, or certified copies thereof if originals are lost, at a 
 68.3   reasonable time and place designated by this company or its 
 68.4   representatives, and shall permit extracts and copies thereof to 
 68.5   be made.  
 68.6      In case the insured and this company, except in case of 
 68.7   total loss on buildings, shall fail to agree as to the actual 
 68.8   cash value or the amount of loss, then, on the written demand of 
 68.9   either, each shall select a competent and disinterested 
 68.10  appraiser and notify the other of the appraiser selected within 
 68.11  20 days of such demand.  In case either fails to select an 
 68.12  appraiser within the time provided, then a presiding judge of 
 68.13  the district court of the county wherein the loss occurs may 
 68.14  appoint such appraiser for such party upon application of the 
 68.15  other party in writing by giving five days' notice thereof in 
 68.16  writing to the party failing to appoint.  The appraisers shall 
 68.17  first select a competent and disinterested umpire; and failing 
 68.18  for 15 days to agree upon such umpire, then a presiding judge of 
 68.19  the above mentioned court may appoint such an umpire upon 
 68.20  application of party in writing by giving five days' notice 
 68.21  thereof in writing to the other party.  The appraisers shall 
 68.22  then appraise the loss, stating separately actual value and loss 
 68.23  to each item; and, failing to agree, shall submit their 
 68.24  differences, only, to the umpire.  An award in writing, so 
 68.25  itemized, of any two when filed with this company shall 
 68.26  determine the amount of actual value and loss.  Each appraiser 
 68.27  shall be paid by the selecting party, or the party for whom 
 68.28  selected, and the expense of the appraisal and umpire shall be 
 68.29  paid by the parties equally. 
 68.30     It shall be optional with this company to take all of the 
 68.31  property at the agreed or appraised value, and also to repair, 
 68.32  rebuild or replace the property destroyed or damaged with other 
 68.33  of like kind and quality within a reasonable time, on giving 
 68.34  notice of its intention so to do within 30 days after the 
 68.35  receipt of the proof of loss herein required. 
 68.36     There can be no abandonment to this company of any property.
 69.1      The amount of loss for which this company may be liable 
 69.2   shall be payable 60 days after proof of loss, as herein 
 69.3   provided, is received by this company and ascertainment of the 
 69.4   loss is made either by agreement between the insured and this 
 69.5   company expressed in writing or by the filing with this company 
 69.6   of an award as herein provided.  It is moreover understood that 
 69.7   there can be no abandonment of the property insured to the 
 69.8   company, and that the company will not in any case be liable for 
 69.9   more than the sum insured, with interest thereon from the time 
 69.10  when the loss shall become payable, as above provided. 
 69.11     No suit or action on this policy for the recovery of any 
 69.12  claim shall be sustainable in any court of law or equity unless 
 69.13  all the requirements of this policy have been complied with, and 
 69.14  unless commenced within two years after inception of the loss. 
 69.15     This company is subrogated to, and may require from the 
 69.16  insured an assignment of all right of recovery against any party 
 69.17  for loss to the extent that payment therefor is made by this 
 69.18  company; and the insurer may prosecute therefor in the name of 
 69.19  the insured retaining such amount as the insurer has paid. 
 69.20     Assignment of this policy shall not be valid except with 
 69.21  the written consent of this company. 
 69.22     IN WITNESS WHEREOF, this company has executed and attested 
 69.23  these presents. 
 69.24   
 69.25   ........................         ........................
 69.26        (Signature)                     (Signature)         
 69.27   ........................         ........................
 69.28       (Name of office)                (Name of office)     
 69.29     Sec. 50.  Minnesota Statutes 1994, section 65A.295, is 
 69.30  amended to read: 
 69.31     65A.295 [HOMEOWNER'S INSURANCE COVERAGE.] 
 69.32     (a) Every insurer writing homeowner's insurance in this 
 69.33  state shall make available at least one form of homeowner's 
 69.34  policy for each level of peril coverage offered by the insurer 
 69.35  in which the insured has the option to specify the dollar amount 
 69.36  of coverage provided for structures other than the dwelling and 
 70.1   for personal property.  The premium must be reduced to reflect 
 70.2   the reduced risk of lesser coverage. 
 70.3      (b) A written notice must be provided to all applicants for 
 70.4   homeowner's insurance at the time of application informing them 
 70.5   of the options provided in paragraph (a). 
 70.6      (c) Coverage for structures other than the dwelling is the 
 70.7   coverage provided under "Coverage B, Other Structures" in the 
 70.8   standard homeowner's policy.  Coverage for personal property is 
 70.9   the coverage provided under "Coverage C, Personal Property" in 
 70.10  the standard homeowner's package policy. 
 70.11     (d) (c) "Level of peril" refers to basic, broad, and all 
 70.12  risk levels of coverage. 
 70.13     Sec. 51.  Minnesota Statutes 1994, section 65B.14, is 
 70.14  amended by adding a subdivision to read: 
 70.15     Subd. 5.  [VIOLATIONS.] "Violations" means all moving 
 70.16  traffic violations that are recorded by the department of public 
 70.17  safety on a household member's motor vehicle record, and 
 70.18  violations reported by a similar authority in another state or 
 70.19  moving traffic violations reported by the insured. 
 70.20     Sec. 52.  Minnesota Statutes 1994, section 65B.15, 
 70.21  subdivision 1, is amended to read: 
 70.22     Subdivision 1.  No cancellation or reduction in the limits 
 70.23  of liability of coverage during the policy period of any policy 
 70.24  shall be effective unless notice thereof is given and unless 
 70.25  based on one or more reasons stated in the policy which shall be 
 70.26  limited to the following: 
 70.27     1.  Nonpayment of premium; or 
 70.28     2.  The policy was obtained through a material 
 70.29  misrepresentation; or 
 70.30     3.  Any insured made a false or fraudulent claim or 
 70.31  knowingly aided or abetted another in the presentation of such a 
 70.32  claim; or 
 70.33     4.  The named insured failed to disclose fully motor 
 70.34  vehicle accidents and moving traffic violations of the named 
 70.35  insured for the preceding 36 months if called for in the written 
 70.36  application; or 
 71.1      5.  The named insured failed to disclose in the written 
 71.2   application any requested information necessary for the 
 71.3   acceptance or proper rating of the risk; or 
 71.4      6.  The named insured knowingly failed to give any required 
 71.5   written notice of loss or notice of lawsuit commenced against 
 71.6   the named insured, or, when requested, refused to cooperate in 
 71.7   the investigation of a claim or defense of a lawsuit; or 
 71.8      7.  The named insured or any other operator who either 
 71.9   resides in the same household, or customarily operates an 
 71.10  automobile insured under such policy, unless the other operator 
 71.11  is identified as a named insured in another policy as an insured:
 71.12     (a) has, within the 36 months prior to the notice of 
 71.13  cancellation, had that person's driver's license under 
 71.14  suspension or revocation because the person committed a moving 
 71.15  traffic violation or because the person refused to be tested 
 71.16  under section 169.121, subdivision 1, paragraph (a); or 
 71.17     (b) is or becomes subject to epilepsy or heart attacks, and 
 71.18  such individual does not produce a written opinion from a 
 71.19  physician testifying to that person's medical ability to operate 
 71.20  a motor vehicle safely, such opinion to be based upon a 
 71.21  reasonable medical probability; or 
 71.22     (c) has an accident record, conviction record (criminal or 
 71.23  traffic), physical condition or mental condition, any one or all 
 71.24  of which are such that the person's operation of an automobile 
 71.25  might endanger the public safety; or 
 71.26     (d) has been convicted, or forfeited bail, during the 24 
 71.27  months immediately preceding the notice of cancellation for 
 71.28  criminal negligence in the use or operation of an automobile, or 
 71.29  assault arising out of the operation of a motor vehicle, or 
 71.30  operating a motor vehicle while in an intoxicated condition or 
 71.31  while under the influence of drugs; or leaving the scene of an 
 71.32  accident without stopping to report; or making false statements 
 71.33  in an application for a driver's license, or theft or unlawful 
 71.34  taking of a motor vehicle; or 
 71.35     (e) has been convicted of, or forfeited bail for, one or 
 71.36  more violations within the 18 months immediately preceding the 
 72.1   notice of cancellation, of any law, ordinance, or rule which 
 72.2   justify a revocation of a driver's license.  
 72.3      8.  The insured automobile is: 
 72.4      (1) so mechanically defective that its operation might 
 72.5   endanger public safety; or 
 72.6      (2) used in carrying passengers for hire or compensation, 
 72.7   provided however that the use of an automobile for a car pool 
 72.8   shall not be considered use of an automobile for hire or 
 72.9   compensation; or 
 72.10     (3) used in the business of transportation of flammables or 
 72.11  explosives; or 
 72.12     (4) an authorized emergency vehicle; or 
 72.13     (5) subject to an inspection law and has not been inspected 
 72.14  or, if inspected, has failed to qualify within the period 
 72.15  specified under such inspection law; or 
 72.16     (6) substantially changed in type or condition during the 
 72.17  policy period, increasing the risk substantially, such as 
 72.18  conversion to a commercial type vehicle, a dragster, sports car 
 72.19  or so as to give clear evidence of a use other than the original 
 72.20  use. 
 72.21     Sec. 53.  Minnesota Statutes 1995 Supplement, section 
 72.22  65B.47, subdivision 1a, is amended to read: 
 72.23     Subd. 1a.  [EXEMPTIONS.] Subdivision 1 does not apply to:  
 72.24     (1) a commuter van; 
 72.25     (2) a vehicle being used to transport children as part of a 
 72.26  family or group family day care program; 
 72.27     (3) a vehicle being used to transport children to school or 
 72.28  to a school-sponsored activity; 
 72.29     (4) a bus while it is in operation within the state of 
 72.30  Minnesota as to any Minnesota resident who is an insured as 
 72.31  defined in section 65B.43, subdivision 5; or 
 72.32     (5) a passenger in a taxi; or 
 72.33     (6) a taxi driver. 
 72.34     Sec. 54.  Minnesota Statutes 1994, section 70A.07, is 
 72.35  amended to read: 
 72.36     70A.07 [RATES OPEN TO INSPECTION.] 
 73.1      All rates and supplementary rate information, furnished to 
 73.2   the commissioner under this chapter shall, as soon as the rates 
 73.3   are effective reviewed by the commissioner, be open to public 
 73.4   inspection at any reasonable time.  
 73.5      Sec. 55.  Minnesota Statutes 1994, section 72A.20, 
 73.6   subdivision 17, is amended to read: 
 73.7      Subd. 17.  [RETURN OF PREMIUMS.] (a) Refusing, upon 
 73.8   surrender of an individual policy of life insurance in the case 
 73.9   of the insured's death, or in the case of a surrender prior to 
 73.10  death, of an individual insurance policy not covered by the 
 73.11  standard nonforfeiture laws under section 61A.24, to refund to 
 73.12  the owner all unearned premiums paid on the policy covering the 
 73.13  insured as of the time of the insured's death or surrender if 
 73.14  the unearned premium is for a period of more than one month.  
 73.15     (b) Refusing, upon termination or cancellation of a policy 
 73.16  of automobile insurance under section 65B.14, subdivision 2, or 
 73.17  a policy of homeowner's insurance under section 65A.27, 
 73.18  subdivision 4, or a policy of accident and sickness insurance 
 73.19  under section 62A.01, or a policy of comprehensive health 
 73.20  insurance under chapter 62E, to refund to the insured all 
 73.21  unearned premiums paid on the policy covering the insured as of 
 73.22  the time of the termination or cancellation if the unearned 
 73.23  premium is for a period of more than one month.  The return of 
 73.24  unearned premium must be delivered to the insured within 30 days 
 73.25  following receipt by the insurer of the insured's request for 
 73.26  cancellation. 
 73.27     (c) This subdivision does not apply to policies of 
 73.28  insurance providing coverage only for motorcycles or other 
 73.29  seasonally rated or limited use vehicles where the rate is 
 73.30  reduced to reflect seasonal or limited use. 
 73.31     (d) For purposes of this section, a premium is unearned 
 73.32  during the period of time the insurer has not been exposed to 
 73.33  any risk of loss.  Except for premiums for motorcycle coverage 
 73.34  or other seasonally rated or limited use vehicles where the rate 
 73.35  is reduced to reflect seasonal or limited use, the unearned 
 73.36  premium is determined by multiplying the premium by the fraction 
 74.1   that results from dividing the period of time from the date of 
 74.2   termination to the date the next scheduled premium is due by the 
 74.3   period of time for which the premium was paid. 
 74.4      (e) The owner may cancel a policy referred to in this 
 74.5   section at any time during the policy period.  This provision 
 74.6   supersedes any inconsistent provision of law or any inconsistent 
 74.7   policy provision. 
 74.8      Sec. 56.  Minnesota Statutes 1994, section 72A.20, 
 74.9   subdivision 23, is amended to read: 
 74.10     Subd. 23.  [DISCRIMINATION IN AUTOMOBILE INSURANCE 
 74.11  POLICIES.] (a) No insurer that offers an automobile insurance 
 74.12  policy in this state shall: 
 74.13     (1) use the employment status of the applicant as an 
 74.14  underwriting standard or guideline; or 
 74.15     (2) deny coverage to a policyholder for the same reason. 
 74.16     (b) No insurer that offers an automobile insurance policy 
 74.17  in this state shall: 
 74.18     (1) use the applicant's status as a tenant, as the term is 
 74.19  defined in section 566.18, subdivision 2, as an underwriting 
 74.20  standard or guideline; or 
 74.21     (2) deny coverage to a policyholder for the same reason; or 
 74.22     (3) make any discrimination in offering or establishing 
 74.23  rates, premiums, dividends, or benefits of any kind, or by way 
 74.24  of rebate, for the same reason.  
 74.25     (c) No insurer that offers an automobile insurance policy 
 74.26  in this state shall: 
 74.27     (1) use the failure of the applicant to have an automobile 
 74.28  policy in force during any period of time before the application 
 74.29  is made as an underwriting standard or guideline; or 
 74.30     (2) deny coverage to a policyholder for the same reason. 
 74.31     This provision does not apply if the applicant was required 
 74.32  by law to maintain automobile insurance coverage and failed to 
 74.33  do so. 
 74.34     An insurer may require reasonable proof that the applicant 
 74.35  did not fail to maintain this coverage.  The insurer is not 
 74.36  required to accept the mere lack of a conviction or citation for 
 75.1   failure to maintain this coverage as proof of failure to 
 75.2   maintain coverage.  The insurer must provide the applicant with 
 75.3   information identifying the documentation that is required to 
 75.4   establish reasonable proof that the applicant failed to maintain 
 75.5   the coverage. 
 75.6      (d) No insurer that offers an automobile insurance policy 
 75.7   in this state shall use an applicant's prior claims for benefits 
 75.8   paid under section 65B.44 as an underwriting standard or 
 75.9   guideline if the applicant was 50 percent or less negligent in 
 75.10  the accident or accidents causing the claims. 
 75.11     Sec. 57.  Minnesota Statutes 1994, section 72A.20, 
 75.12  subdivision 26, is amended to read: 
 75.13     Subd. 26.  [LOSS EXPERIENCE.] An insurer shall without cost 
 75.14  to the insured provide an insured with the loss or claims 
 75.15  experience of that insured for the current policy period and for 
 75.16  the two policy periods preceding the current one for which the 
 75.17  insurer has provided coverage, within 30 days of a request for 
 75.18  the information by the policyholder.  Claims experience data 
 75.19  must be provided to the insured in accordance with state and 
 75.20  federal requirements regarding the confidentiality of medical 
 75.21  data.  The insurer shall not be responsible for providing 
 75.22  information without cost more often than once in a 12-month 
 75.23  period.  The insurer is not required to provide the information 
 75.24  if the policy covers the employee of more than one employer and 
 75.25  the information is not maintained separately for each employer 
 75.26  and not all employers request the data. 
 75.27     An insurer, health maintenance organization, or a 
 75.28  third-party administrator may not request more than three years 
 75.29  of loss or claims experience as a condition of submitting an 
 75.30  application or providing coverage. 
 75.31     This subdivision does not apply to individual life and 
 75.32  health insurance policies or personal automobile or homeowner's 
 75.33  insurance only applies to group life policies and group health 
 75.34  policies. 
 75.35     Sec. 58.  Minnesota Statutes 1994, section 72A.20, 
 75.36  subdivision 30, is amended to read: 
 76.1      Subd. 30.  [RECORDS RETENTION.] An insurer shall retain 
 76.2   copies of all underwriting documents, policy forms, and 
 76.3   applications for three years from the effective date of the 
 76.4   policy.  An insurer shall retain all claim files and 
 76.5   documentation related to a claim for three years from the date 
 76.6   the claim was paid or denied.  This subdivision does not relieve 
 76.7   the insurer of its obligation to produce these documents to the 
 76.8   department after the retention period has expired in connection 
 76.9   with an enforcement action or administrative proceeding against 
 76.10  the insurer from whom the documents are requested, if the 
 76.11  insurer has retained the documents.  Records required to be 
 76.12  retained by this section may be retained in paper, photograph, 
 76.13  microprocess, magnetic, mechanical, or electronic media, or by 
 76.14  any process which accurately reproduces or forms a durable 
 76.15  medium for the reproduction of a record. 
 76.16     Sec. 59.  Minnesota Statutes 1994, section 72A.20, is 
 76.17  amended by adding a subdivision to read: 
 76.18     Subd. 35.  [DETERMINATION OF HEALTH PLAN POLICY 
 76.19  LIMITS.] Any health plan that includes a specific policy limit 
 76.20  within its insurance policy, certificate, or subscriber 
 76.21  agreement shall calculate the policy limit by using the amount 
 76.22  actually paid on behalf of the insured, subscriber, or 
 76.23  dependents for services covered under the policy, subscriber 
 76.24  agreement, or certificate unless the amount paid is greater than 
 76.25  the billed charge. 
 76.26     Sec. 60.  [72A.207] [GRADED DEATH BENEFITS.] 
 76.27     For the purpose of this section, a graded death benefit is 
 76.28  a provision within a life insurance policy in which the death 
 76.29  benefit, in the early years of the policy, is less than the face 
 76.30  amount of the policy, but which increases with the passage of 
 76.31  time. 
 76.32     No policy of life insurance paying a graded death benefit 
 76.33  may be issued in this state unless the graded death benefit is 
 76.34  equal to at least four times the first year premium.  This 
 76.35  section does not prohibit the return of premiums or premiums 
 76.36  plus interest in connection with the voluntary or judicially 
 77.1   ordered rescission of the policy, or according to the terms of 
 77.2   the exclusions from coverage for suicide, aviation, or war risk. 
 77.3      Sec. 61.  [MEDICAL MALPRACTICE INSURANCE COVERAGE; 
 77.4   REAUTHORIZATION.] 
 77.5      Any authorization to issue insurance according to Minnesota 
 77.6   Statutes, section 62F.04, valid on the effective date of this 
 77.7   section remains valid for an additional two-year period at the 
 77.8   end of the initial two-year authorization.  The additional 
 77.9   authorization period granted by this section applies only to the 
 77.10  types of coverages authorized as of the effective date of this 
 77.11  section. 
 77.12     Sec. 62.  [COMMITTEE STUDY; DISCLOSURE OF FINANCIAL 
 77.13  INCENTIVES.] 
 77.14     The house committee on financial institutions and insurance 
 77.15  shall study how best to disclose to consumers any financial 
 77.16  arrangements between health plan companies and health care 
 77.17  providers that may provide financial incentives for providers to 
 77.18  restrict care provided to consumers. 
 77.19     Sec. 63.  [REPEALER.] 
 77.20     (a) Minnesota Statutes 1994, sections 60A.40; 60B.27; 
 77.21  62I.20; 65A.25; and 72A.205, are repealed. 
 77.22     (b) Laws 1995, chapter 140, section 1, is repealed. 
 77.23     Sec. 64.  [EFFECTIVE DATES.] 
 77.24     Sections 2 to 4, 8, 9, 11, 20, 21, 25 to 30, 33, 38 to 46, 
 77.25  54, 57, 59, and 60 are effective the day following final 
 77.26  enactment. 
 77.27     Section 48 is effective retroactive to July 1, 1995. 
 77.28     Sections 1 and 12 to 19 are effective January 1, 1997. 
 77.29                             ARTICLE 2 
 77.30     Section 1.  Minnesota Statutes 1994, section 60A.07, 
 77.31  subdivision 8, is amended to read: 
 77.32     Subd. 8.  [SPECIAL PROVISIONS AS TO MUTUAL COMPANIES.] (1) 
 77.33  [AMENDMENT OF ARTICLES OR CERTIFICATE OF INCORPORATION.] The 
 77.34  certificate of incorporation or articles of association of any 
 77.35  domestic insurance company without capital stock, now or 
 77.36  hereafter organized and existing under the laws of this state, 
 78.1   may be amended in respect to any matter which an original 
 78.2   certificate of incorporation or articles of association of a 
 78.3   corporation of the same kind might lawfully have contained by 
 78.4   the adoption of a resolution specifying the proposed amendment, 
 78.5   at a regular meeting of the members thereof or at a special 
 78.6   meeting called for that expressly stated purpose, by the 
 78.7   affirmative vote of a majority of the members present, in person 
 78.8   or by proxy, at the meeting, and by causing the resolution to be 
 78.9   embraced in a certificate duly executed by its president and 
 78.10  secretary or other presiding and recording officers, under its 
 78.11  corporate seal, and approved, filed, recorded, and published in 
 78.12  the manner prescribed by law for the execution, approval, 
 78.13  filing, recording, and publishing of a like original certificate 
 78.14  of incorporation or articles of association. 
 78.15     (2) [RENEWAL OF CORPORATE EXISTENCE.] Any domestic 
 78.16  insurance company or corporation having no capital stock, 
 78.17  heretofore or hereafter organized and existing under the laws of 
 78.18  this state, whose period of duration has expired or is about to 
 78.19  expire, may, on or before the date of the expiration, or within 
 78.20  six months after the date of expiration, renew its corporate 
 78.21  existence from the date of such expiration for any period 
 78.22  permitted by the laws of this state, by the adoption of a 
 78.23  resolution to that effect by the affirmative vote of 
 78.24  three-fourths of the members present, in person or by proxy, at 
 78.25  a regular meeting of the members, or at any special meeting 
 78.26  called for that expressly stated purpose, and by causing the 
 78.27  resolution to be embraced in a certificate duly executed by its 
 78.28  president and secretary or other presiding and recording 
 78.29  officers, under its corporate seal, and approved, filed, 
 78.30  recorded, and published in the manner prescribed by law for the 
 78.31  execution, approval, filing, recording, and publishing of an 
 78.32  original certificate of incorporation or articles of association.
 78.33     (3) [BYLAWS.] The bylaws of any domestic insurance 
 78.34  corporation without capital stock, in cases where the bylaws 
 78.35  must be adopted or approved by the members thereof, may be 
 78.36  adopted, altered, or amended at a regular meeting of the members 
 79.1   thereof, or at a special meeting called for that expressly 
 79.2   stated purpose, by the affirmative vote of a majority of the 
 79.3   members present, in person or by proxy, at the meeting. 
 79.4      (4) [CONVERSION OF A DOMESTIC MUTUAL INTO A STOCK INSURANCE 
 79.5   CORPORATION.] A domestic mutual corporation may be converted 
 79.6   into a stock insurance corporation as follows: 
 79.7      (a) [ACTION BY BOARD OF DIRECTORS.] The board of directors 
 79.8   shall adopt a plan of conversion. 
 79.9      (b) [PLAN OF CONVERSION.] (i) The plan of conversion shall 
 79.10  provide that, upon consummation of the conversion, each 
 79.11  policyholder at the date of the passage of the resolution by the 
 79.12  board of directors shall be entitled to such shares of stock of 
 79.13  the new company as the policyholder's equitable share of the 
 79.14  surplus of the company will purchase.  This equitable share 
 79.15  shall be determined by independent certified auditors or 
 79.16  consulting actuaries and shall be subject to approval by the 
 79.17  commissioner.  If a policyholder's equitable share of the 
 79.18  surplus of the company produces a fractional share, the 
 79.19  policyholder shall be given the option of either receiving the 
 79.20  value of the fractional share in cash or of purchasing the 
 79.21  fractional part of a share that will entitle the policyholder to 
 79.22  a full share. 
 79.23     (ii) No shares of the corporation being organized shall be 
 79.24  issued or subscribed for, formally or informally, directly or 
 79.25  indirectly during the conversion except as authorized under 
 79.26  subparagraph (i). 
 79.27     (iii) The corporation shall not pay compensation or 
 79.28  remuneration of any kind to any person in connection with the 
 79.29  proposed conversion, except at reasonable rates for printing 
 79.30  costs, and for legal and other professional fees for services 
 79.31  actually rendered. 
 79.32     (iv) The plan of conversion shall include a copy of the 
 79.33  proposed articles of incorporation which shall comply with the 
 79.34  requirements of chapter 300.  Except as otherwise specifically 
 79.35  provided, the corporation resulting from conversion under this 
 79.36  section shall be deemed to have been organized as of the date of 
 80.1   issuance of the initial certificate of authority to the mutual 
 80.2   corporation being converted. 
 80.3      (c) [APPROVAL BY POLICYHOLDERS.] Within 30 days after its 
 80.4   adoption by the board of directors, the plan of conversion shall 
 80.5   be submitted to the policyholders for approval by the 
 80.6   affirmative vote of a majority of the policyholders entitled to 
 80.7   vote, in the manner prescribed by subparagraph (1).  Every 
 80.8   policyholder as of the date of the adoption under subparagraph 
 80.9   (a) shall be entitled to one vote for each policy held.  Only 
 80.10  such policyholders shall be entitled to vote. 
 80.11     (d) [APPROVAL BY THE COMMISSIONER.] (i) Within 30 days 
 80.12  after its adoption by the policyholders, the plan of conversion 
 80.13  shall be submitted to the commissioner with an application for 
 80.14  approval. 
 80.15     (ii) The commissioner shall not approve if the value of 
 80.16  single shares is set at a figure that substantially burdens 
 80.17  policyholders who wish to purchase a fractional share under 
 80.18  subparagraph (b)(i). 
 80.19     (iii) If the commissioner finds that the plan of conversion 
 80.20  has been duly approved by the policyholders, that the conversion 
 80.21  would not violate any law and would not be contrary to the 
 80.22  interests of the policyholders, the commissioner shall approve 
 80.23  the plan of conversion and shall issue a new certificate of 
 80.24  authority to the corporation. 
 80.25     (e) [CONVERSION.] After filing an amendment of the articles 
 80.26  of incorporation as provided by chapter 300, the corporation 
 80.27  shall become a stock corporation and shall no longer be a mutual 
 80.28  corporation, and the board of directors shall execute the plan 
 80.29  of conversion. 
 80.30     (f) [SECURITIES REGULATION.] The filing with the 
 80.31  commissioner of commerce of a certified copy of the plan of 
 80.32  conversion as adopted by the policyholders and approved by the 
 80.33  commissioner shall constitute registration under chapter 80A, of 
 80.34  the securities authorized to be issued to policyholders 
 80.35  thereunder. 
 80.36     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
 81.1   60A.07, subdivision 10, is amended to read: 
 81.2      Subd. 10.  [SPECIAL PROVISIONS AS TO LIFE COMPANIES.] (1) 
 81.3   [PREREQUISITES OF LIFE COMPANIES.] No mutual life company shall 
 81.4   be qualified to issue any policy until applications for at least 
 81.5   $200,000 of insurance, upon lives of at least 200 separate 
 81.6   residents, have been actually and in good faith made, accepted, 
 81.7   and entered upon its books and at least one full annual premium 
 81.8   thereunder, based upon the authorized table of mortality, 
 81.9   received in cash or in absolutely payable and collectible 
 81.10  notes.  A duplicate receipt for each premium, conditioned for 
 81.11  the return thereof unless the policy be issued within one year 
 81.12  thereafter, shall be issued, and one copy delivered to the 
 81.13  applicant and the other filed with the commissioner, together 
 81.14  with the certificate of a solvent authorized bank in the state, 
 81.15  of the deposit therein of such cash and notes, aggregating the 
 81.16  amount aforesaid, specifying the maker, payee, date, maturity, 
 81.17  and amount of each.  Such cash and notes shall be held by it not 
 81.18  longer than one year, and at or before the expiration thereof to 
 81.19  be by it paid or delivered, upon the written order of the 
 81.20  commissioner, to such company or applicants, respectively. 
 81.21     (2)  [FOREIGN COMPANIES MAY BECOME DOMESTIC.] Any company 
 81.22  organized under the laws of any other state or country, which 
 81.23  might have been originally incorporated under the laws of this 
 81.24  state, and which has been admitted to do business therein for 
 81.25  either or both the purpose of life or accident insurance, upon 
 81.26  complying with all the requirements of law relative to the 
 81.27  execution, filing, recording and publishing of original 
 81.28  certificates and payment of incorporation fees by like domestic 
 81.29  corporations, therein designating its principal place of 
 81.30  business at a place in this state, may become a domestic 
 81.31  corporation, and be entitled to like certificates of its 
 81.32  corporate existence and license to transact business in this 
 81.33  state, and be subject in all respects to the authority and 
 81.34  jurisdiction thereof. 
 81.35     (3)  [TEMPORARY CAPITAL STOCK OF MUTUAL LIFE COMPANIES.] A 
 81.36  new mutual life insurance company which has complied with the 
 82.1   provisions of clause (1) or an existing mutual life insurance 
 82.2   company may establish, a temporary capital of, such amount not 
 82.3   less than $100,000, as may be approved by the commissioner.  
 82.4   Such temporary capital shall be invested by the company in the 
 82.5   same manner as is provided for the investment of its other 
 82.6   funds.  Out of the net surplus of the company the holders of the 
 82.7   temporary capital stock may receive a dividend which may be 
 82.8   cumulative.  This capital stock shall not be a liability of the 
 82.9   company but shall be retired within a reasonable time and 
 82.10  according to terms approved by the commissioner.  At the time 
 82.11  for the retirement of this capital stock, the holders shall be 
 82.12  entitled to receive from the company the par value thereof and 
 82.13  any dividends thereon due and unpaid, and thereupon the stock 
 82.14  shall be surrendered and canceled.  In the event of the 
 82.15  liquidation of the company, the holders of temporary capital 
 82.16  stock shall have the same preference in the assets of the 
 82.17  company as shareholders have in a stock insurance company.  
 82.18  Dividends on this stock are subject to section 60D.20, 
 82.19  subdivision 2. 
 82.20     Temporary capital stock may be issued with or without 
 82.21  voting rights.  If issued with voting rights, the holders shall, 
 82.22  at all meetings, be entitled to one vote for each $10 of 
 82.23  temporary capital stock held.  
 82.24     Sec. 3.  [60A.075] [MUTUAL COMPANY CONVERSION TO STOCK 
 82.25  COMPANY.] 
 82.26     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
 82.27  section, the terms in this subdivision have the meanings given 
 82.28  them. 
 82.29     (a) "Eligible member" means a policyholder whose policy is 
 82.30  in force as of the record date, which is the date that the 
 82.31  mutual company's board of directors adopts a plan of conversion 
 82.32  or some other date specified as the record date in the plan of 
 82.33  conversion and approved by the commissioner.  Unless otherwise 
 82.34  provided in the plan, a person insured under a group policy is 
 82.35  not an eligible member, unless on the record date: 
 82.36     (1) the person is insured or covered under a group life 
 83.1   policy or group annuity contract under which funds are 
 83.2   accumulated and allocated to the respective covered persons; 
 83.3      (2) the person has the right to direct the application of 
 83.4   the funds so allocated; 
 83.5      (3) the group policyholder makes no contribution to the 
 83.6   premiums or deposits for the policy or contract; and 
 83.7      (4) the converting mutual company has the names and 
 83.8   addresses of the persons covered under the group life policy or 
 83.9   group annuity contract. 
 83.10     (b) "Reorganized company" means a Minnesota domestic stock 
 83.11  insurance company that has converted from a Minnesota domestic 
 83.12  mutual insurance company according to this section. 
 83.13     (c) "Plan of conversion" or "plan" means a plan adopted by 
 83.14  a Minnesota domestic mutual insurance company's board of 
 83.15  directors under this section to convert the mutual company into 
 83.16  a Minnesota domestic stock insurance company. 
 83.17     (d) "Policy" means a policy or contract of insurance issued 
 83.18  by a converting mutual company, including an annuity contract. 
 83.19     (e) "Commissioner" means the commissioner of commerce. 
 83.20     (f) "Converting mutual company" means a Minnesota domestic 
 83.21  mutual insurance company seeking to convert to a Minnesota 
 83.22  domestic stock insurance company according to this section. 
 83.23     (g) "Effective date of a conversion" means the date 
 83.24  determined according to subdivision 6. 
 83.25     (h) "Membership interests" means all policyholders' rights 
 83.26  as members of the converting mutual company, including but not 
 83.27  limited to, rights to vote and to participate in any 
 83.28  distributions of surplus, whether or not incident to the 
 83.29  company's liquidation. 
 83.30     (i) "Equitable surplus" means the converting mutual 
 83.31  company's surplus as regards policyholders as of the effective 
 83.32  date of the conversion determined in a manner that is not unfair 
 83.33  or inequitable to policyholders. 
 83.34     (j) "Permitted issuer" means:  (1) a corporation organized 
 83.35  and owned by the converting mutual company or by any other 
 83.36  insurance company or insurance holding company for the purpose 
 84.1   of purchasing and holding all of the stock of the reorganized 
 84.2   company; (2) a stock insurance company owned by the converting 
 84.3   mutual company or by any other insurance company or insurance 
 84.4   holding company into which the converting mutual company will be 
 84.5   merged; or (3) any other corporation approved by the 
 84.6   commissioner. 
 84.7      Subd. 2.  [AUTHORIZATION.] A mutual insurance company may 
 84.8   become a stock insurance company according to a plan of 
 84.9   conversion established and approved in the manner provided by 
 84.10  this section. 
 84.11     Subd. 3.  [ADOPTION OF A PLAN OF CONVERSION BY THE BOARD OF 
 84.12  DIRECTORS.] (a) A converting mutual company shall, by the 
 84.13  affirmative vote of a majority of its board of directors, adopt 
 84.14  a plan of conversion consistent with the requirements of this 
 84.15  section. 
 84.16     (b) At any time before approval of a plan by the 
 84.17  commissioner, the converting mutual company, by the affirmative 
 84.18  vote of a majority of its board of directors, may amend or 
 84.19  withdraw the plan. 
 84.20     Subd. 4.  [APPROVAL OF THE PLAN OF CONVERSION BY THE 
 84.21  COMMISSIONER.] (a) [DOCUMENTS TO BE FILED.] After adoption of 
 84.22  the plan by the converting mutual company's board of directors, 
 84.23  but before the member's approval of the plan, the converting 
 84.24  mutual company shall file the following documents with the 
 84.25  commissioner for review and approval: 
 84.26     (1) the plan of conversion, including an independent 
 84.27  evaluation of the pro forma market value and of the equitable 
 84.28  surplus of the company and of the estimated value of any shares 
 84.29  to be issued and an independent actuarial opinion, if required; 
 84.30     (2) the form of notice of meeting for eligible members to 
 84.31  vote on the plan; 
 84.32     (3) the form of any proxies to be solicited from eligible 
 84.33  members; 
 84.34     (4) the proposed articles of incorporation and bylaws of 
 84.35  the converted stock company; 
 84.36     (5) information required under chapter 60D if the plan 
 85.1   results in a change of control of the converting mutual company; 
 85.2   and 
 85.3      (6) other information or documentation requested by the 
 85.4   commissioner or required by rule. 
 85.5      (b) [REQUIRED FINDINGS.] The commissioner shall approve or 
 85.6   conditionally approve the plan upon finding that: 
 85.7      (1) the provisions of this section have been fully met; and 
 85.8      (2) the plan will not be unfair or inequitable to 
 85.9   policyholders. 
 85.10     (c) [TIME.] The plan of conversion shall, by order, be 
 85.11  approved, conditionally approved, or disapproved by the 
 85.12  commissioner within the later of 30 days from the commissioner's 
 85.13  receipt of all required information from the converting mutual 
 85.14  company or 30 days after the conclusion of a public hearing held 
 85.15  according to paragraph (e).  An approval or conditional approval 
 85.16  of a plan expires if the reorganization is not completed within 
 85.17  180 days unless this time period is extended by the commissioner 
 85.18  for good cause shown. 
 85.19     (d) [CONSULTANTS.] The commissioner may retain, at the 
 85.20  converting mutual company's expense, qualified experts not 
 85.21  otherwise a part of the commissioner's staff to assist in 
 85.22  reviewing the plan and supplemental materials and valuations. 
 85.23     (e) [HEARING.] The commissioner may, but need not, conduct 
 85.24  a public hearing regarding the proposed plan of conversion.  The 
 85.25  hearing must begin no later than 30 days after submission to the 
 85.26  commissioner of a plan of conversion and all required 
 85.27  information.  The commissioner shall give the converting mutual 
 85.28  company at least 20 days' notice of the hearing.  At the 
 85.29  hearing, the converting mutual company, its policyholders, and 
 85.30  any other person whose interest may be affected by the proposed 
 85.31  conversion may present evidence, examine and cross-examine 
 85.32  witnesses, and offer oral and written arguments or comments 
 85.33  according to the procedure for contested cases under chapter 
 85.34  14.  The persons participating may conduct discovery proceedings 
 85.35  in the same manner as prescribed for the district courts of this 
 85.36  state.  All discovery proceedings must be concluded no later 
 86.1   than three days before the scheduled commencement date of the 
 86.2   public hearing. 
 86.3      Subd. 5.  [APPROVAL OF THE PLAN BY THE ELIGIBLE 
 86.4   MEMBERS.] (a) [NOTICE.] Following approval or conditional 
 86.5   approval of the plan by the commissioner, all eligible members 
 86.6   shall be given notice of a regular or special meeting of the 
 86.7   policyholders called for the purpose of considering the plan and 
 86.8   any corporate actions that are a part of, or are reasonably 
 86.9   attendant to, the accomplishment of the plan. 
 86.10     (b) [NOTICE REQUIRED.] A copy of the plan or a summary of 
 86.11  the plan must accompany the notice.  The notice must be mailed 
 86.12  to each eligible member's last known address, as shown on the 
 86.13  converting mutual company's records, within 45 days of the 
 86.14  commissioner's approval of the plan, unless the commissioner 
 86.15  directs an earlier date for mailing.  The meeting to vote upon 
 86.16  the plan must be set for a date no less than 45 days after the 
 86.17  date when the notice of the meeting is mailed by the converting 
 86.18  mutual company unless the commissioner directs an earlier date 
 86.19  for the meeting.  If the meeting to vote upon the plan is held 
 86.20  coincident with the converting mutual company's annual meeting 
 86.21  of policyholders, only one combined notice of meeting is 
 86.22  required. 
 86.23     (c) [FAILURE TO GIVE NOTICE.] If the converting mutual 
 86.24  company complies substantially and in good faith with the notice 
 86.25  requirements of this section, the converting mutual company's 
 86.26  failure to give any member or members any required notice does 
 86.27  not impair the validity of any action taken under this section. 
 86.28     (d) [VOTING.] (1) The plan must be adopted upon receiving 
 86.29  the affirmative vote of a majority of the votes cast by eligible 
 86.30  members. 
 86.31     (2) Eligible members may vote in person or by proxy.  The 
 86.32  form of any proxy must be filed with and approved by the 
 86.33  commissioner. 
 86.34     (3) The number of votes each eligible member may cast shall 
 86.35  be determined by the converting mutual company's bylaws.  If the 
 86.36  bylaws are silent, or if the commissioner determines that the 
 87.1   voting requirements under the bylaws would be unfair or would 
 87.2   prejudice the rights of the eligible members, each eligible 
 87.3   member may cast one vote. 
 87.4      Subd. 6.  [CONVERSION.] (a) [FILING.] Following approval by 
 87.5   the members, the converting mutual company shall file a copy of 
 87.6   the company's amended or restated articles of incorporation with 
 87.7   the commissioner, together with a certified copy of the minutes 
 87.8   of the meeting at which the plan was adopted and a certified 
 87.9   copy of the plan.  The commissioner shall review and, if 
 87.10  appropriate, approve the amended or restated articles.  After 
 87.11  approval by the commissioner, the converting mutual company 
 87.12  shall file the articles with the secretary of state as provided 
 87.13  by chapter 300. 
 87.14     (b) [EFFECTIVE DATE.] Effective on the date of filing an 
 87.15  amendment or restatement of the articles of incorporation with 
 87.16  the secretary of state as provided by chapter 300, or on a later 
 87.17  date if the plan so specifies, the converting mutual corporation 
 87.18  shall become a stock corporation and shall no longer be a mutual 
 87.19  corporation. 
 87.20     Subd. 7.  [PLAN NOT UNFAIR OR INEQUITABLE.] A plan of 
 87.21  conversion shall not be unfair or inequitable to policyholders.  
 87.22  A plan of conversion is not unfair or inequitable if it 
 87.23  satisfies the conditions of subdivision 7, 8, or 9.  The 
 87.24  commissioner may determine that any other plan proposed by a 
 87.25  converting mutual company is not unfair or inequitable to 
 87.26  policyholders. 
 87.27     Subd. 8.  [SHARE CONVERSION.] A plan of conversion under 
 87.28  this subdivision shall provide for exchange of policyholders' 
 87.29  membership interests in return for shares in the reorganized 
 87.30  company, according to paragraphs (a) to (c). 
 87.31     (a) The policyholders' membership interests shall be 
 87.32  exchanged, in a manner that takes into account the estimated 
 87.33  proportionate contribution of equitable surplus of each class of 
 87.34  participating policies and contracts, for all of the common 
 87.35  shares of the reorganized company or its parent company or a 
 87.36  permitted issuer, or for a combination of the common shares of 
 88.1   the reorganized company or its parent company or a permitted 
 88.2   issuer. 
 88.3      (b) Unless the anticipated issuance within a shorter period 
 88.4   is disclosed, the issuer of common shares shall not, within two 
 88.5   years after the effective date of reorganization, issue either 
 88.6   of the following: 
 88.7      (1) any of its common shares or any securities convertible 
 88.8   with or without consideration into the common shares or carrying 
 88.9   any warrant to subscribe to or purchase common shares; and 
 88.10     (2) any warrant, right, or option to subscribe to or 
 88.11  purchase the common shares or other securities described in 
 88.12  paragraph (a), except for the issue of common shares to or for 
 88.13  the benefit of policyholders according to the plan of conversion 
 88.14  and the issue of options for the purchase of common shares being 
 88.15  granted to officers, directors, or employees of the reorganized 
 88.16  company or its parent company, if any, according to this section.
 88.17     (c) Unless the common shares have a public market when 
 88.18  issued, the issuer shall use its best efforts to encourage and 
 88.19  assist in the establishment of a public market for the common 
 88.20  shares within two years of the effective date of the conversion 
 88.21  or a longer period as disclosed in the plan of conversion.  
 88.22  Within one year after any offering of stock other than the 
 88.23  initial distribution, but no later than six years after the 
 88.24  effective date of the conversion, the reorganized company shall 
 88.25  offer to make available to policyholders who received and 
 88.26  retained shares of common stock or securities described in 
 88.27  paragraph (b), clause (1), a procedure to dispose of those 
 88.28  shares of stock at market value without brokerage commissions or 
 88.29  similar fees. 
 88.30     Subd. 9.  [SURPLUS DISTRIBUTION.] A plan of conversion 
 88.31  under this subdivision shall provide for the exchange of the 
 88.32  policyholders' membership interests in return for the operation 
 88.33  of the converting mutual company's participating policies as a 
 88.34  closed block of business and for the distribution of the 
 88.35  company's equitable surplus to policyholders, and shall provide 
 88.36  for the issuance of new shares of the reorganized company or its 
 89.1   parent corporation, each according to paragraphs (a) to (i). 
 89.2      (a) The converting mutual company's participating business, 
 89.3   comprised of its participating policies and contracts in force 
 89.4   on the effective date of the conversion or other reasonable date 
 89.5   as provided in the plan, shall be operated by the reorganized 
 89.6   company as a closed block of participating business.  However, 
 89.7   at the option of the converting mutual company, group policies 
 89.8   and group contracts may be omitted from the closed block. 
 89.9      (b) Assets of the converting mutual company must be 
 89.10  allocated to the closed block of participating business in an 
 89.11  amount equal to the reserves and liabilities for the converting 
 89.12  mutual life insurer's participating policies and contracts in 
 89.13  force on the effective date of the conversion.  The plan must be 
 89.14  accompanied by an opinion of an independent qualified actuary 
 89.15  who meets the standards set forth in the insurance laws or 
 89.16  regulations for the submission of actuarial opinions as to the 
 89.17  adequacy of reserves or assets.  The opinion must relate to the 
 89.18  adequacy of the assets allocated to support the closed block of 
 89.19  business.  The actuarial opinion must be based on methods of 
 89.20  analysis considered appropriate for those purposes by the 
 89.21  Actuarial Standards Board. 
 89.22     (c) The reorganized company shall keep a separate 
 89.23  accounting for the closed block and shall make and include in 
 89.24  the annual statement to be filed with the commissioner each year 
 89.25  a separate statement showing the gains, losses, and expenses 
 89.26  properly attributable to the closed block. 
 89.27     (d) Notwithstanding the establishment of a closed block, 
 89.28  the entire assets of the reorganized company shall be available 
 89.29  for the payment of benefits to policyholders.  Payment must 
 89.30  first be made from the assets supporting the closed block until 
 89.31  exhausted, and then from the general assets of the reorganized 
 89.32  company. 
 89.33     (e) The converting mutual company's equitable surplus shall 
 89.34  be distributed to eligible participating policyholders in a form 
 89.35  or forms selected by the converting mutual company.  The form of 
 89.36  distribution may consist of cash, securities of the reorganized 
 90.1   company, securities of another institution, a certificate of 
 90.2   contribution, additional life insurance, annuity benefits, 
 90.3   increased dividends, reduced premiums, or other equitable 
 90.4   consideration or any combination of forms of consideration.  The 
 90.5   consideration, if any, given to a class or category of 
 90.6   policyholders may differ from the consideration given to another 
 90.7   class or category of policyholders.  A certificate of 
 90.8   contribution must be repayable in ten years, be equal to 100 
 90.9   percent of the value of the policyholders' membership interest, 
 90.10  and bear interest at the highest rate charged by the reorganized 
 90.11  company for policy loans on the effective date of the conversion.
 90.12     (f) The consideration must be allocated among the 
 90.13  policyholders in a manner that is fair and equitable to the 
 90.14  policyholders. 
 90.15     (g) The reorganized company or its parent corporation shall 
 90.16  issue and sell shares of one or more classes having a total 
 90.17  price equal to the estimated value in the market of the shares 
 90.18  on the initial offering date.  The estimated value must take 
 90.19  into account all of the following: 
 90.20     (1) the pro forma market value of the reorganized company; 
 90.21     (2) the consideration to be given to policyholders 
 90.22  according to paragraph (e); 
 90.23     (3) the proceeds of the sale of the shares; and 
 90.24     (4) any additional value attributable to the shares as a 
 90.25  result of a purchaser or a group of purchasers who acted in 
 90.26  concert to obtain shares in the initial offering, attaining, 
 90.27  through such purchase, control of the reorganized company or its 
 90.28  parent corporation. 
 90.29     (h) If a purchaser or a group of purchasers acting in 
 90.30  concert is to attain control in the initial offering, the mutual 
 90.31  company shall not, directly or indirectly, pay for any of the 
 90.32  costs or expenses of conversion of the mutual company, whether 
 90.33  or not the conversion is effected. 
 90.34     (i) Periodically, with the commissioner's approval, the 
 90.35  reorganized company may share in the profits of the closed block 
 90.36  of participating business for the benefit of stockholders if the 
 91.1   assets allocated to the closed block are in excess of those 
 91.2   necessary to support the closed block. 
 91.3      Subd. 10.  [SUBSCRIPTION RIGHTS.] A plan of conversion 
 91.4   under this subdivision shall provide for exchange of the 
 91.5   policyholders' membership interests in return for the operation 
 91.6   of the converting mutual company's participating policies as a 
 91.7   closed block of business, for the creation of a liquidation 
 91.8   account to protect the interests of policyholders, and for the 
 91.9   issuance of subscription rights to eligible policyholders, and 
 91.10  shall provide for the issuance of shares by the reorganized 
 91.11  company, each according to paragraphs (a) to (j). 
 91.12     (a) The converting mutual company's participating business, 
 91.13  comprised of its participating policies and contracts in force 
 91.14  on the effective date of the conversion, or such other 
 91.15  reasonable date specified in the plan, and excluding at the 
 91.16  converting mutual company's option any group policies or group 
 91.17  contracts, shall be operated by the reorganized company as a 
 91.18  closed block of participating business according to subdivision 
 91.19  8, paragraphs (a) to (c). 
 91.20     (b) The reorganized company or its parent corporation or a 
 91.21  permitted issuer shall issue and sell shares of one or more 
 91.22  classes having a total price equal to the estimated value of the 
 91.23  shares in the market on the initial offering date taking into 
 91.24  account the proceeds of the sale of shares and the consideration 
 91.25  given to policyholders. 
 91.26     (c) The policyholders shall receive nontransferable 
 91.27  preemptive subscription rights to purchase all of the common 
 91.28  shares of the issuer according to paragraph (b). 
 91.29     (d) The preemptive subscription rights to purchase the 
 91.30  common shares must be allocated among the participating 
 91.31  policyholders in whole shares in a manner provided in the plan 
 91.32  that takes into account the estimated contribution of each class 
 91.33  of participating policies and contracts to the total amount of 
 91.34  the policyholders' consideration.  The plan must provide a fair 
 91.35  and equitable means for the allocation of shares in the event of 
 91.36  an oversubscription.  The plan must further provide that any 
 92.1   shares of capital stock not subscribed by eligible members must 
 92.2   be sold in a public offering through an underwriter, unless the 
 92.3   number of shares unsubscribed is so small in number so as not to 
 92.4   warrant the expense of a public offering, in which case the plan 
 92.5   may provide for the purchase of the unsubscribed shares by 
 92.6   private placement or through any fair and equitable alternative 
 92.7   means approved by the commissioner. 
 92.8      (e) The number of the common shares that a person, together 
 92.9   with any affiliates or group of persons acting in concert, may 
 92.10  subscribe or purchase in the reorganization, must be limited to 
 92.11  not more than five percent of the common shares.  For this 
 92.12  purpose, neither the members of the board of directors of the 
 92.13  reorganized company nor its parent corporation, if any, is 
 92.14  considered to be affiliates or a group of persons acting in 
 92.15  concert solely by reason of their board membership. 
 92.16     (f) Unless the common shares have a public market when 
 92.17  issued, officers and directors of the issuer and their 
 92.18  affiliates shall not, for at least three years after the date of 
 92.19  conversion, purchase common shares of the issuer, except with 
 92.20  the approval of the commissioner. 
 92.21     (g) Unless the common shares have a public market when 
 92.22  issued, the issuer shall use its best efforts to encourage and 
 92.23  assist in the establishment of a public market for the common 
 92.24  shares. 
 92.25     (h) The issuer shall not, for at least three years 
 92.26  following the conversion, repurchase any of its common shares 
 92.27  except according to a pro rata tender offer to all shareholders, 
 92.28  or with the approval of the commissioner. 
 92.29     (i) A liquidation account must be established for the 
 92.30  benefit of policyholders in the event of a complete liquidation 
 92.31  of the reorganized company.  The liquidation account must be 
 92.32  equal to the equitable surplus of the converting mutual company 
 92.33  as of the effective date of the conversion.  The function of the 
 92.34  liquidation account is solely to establish a priority on 
 92.35  liquidation and its existence does not restrict the use or 
 92.36  application of the surplus of the reorganized company except as 
 93.1   specified in paragraph (a).  The liquidation account must be 
 93.2   allocated equitably as of the effective date of conversion among 
 93.3   the then participating policyholders.  The amount allocated to a 
 93.4   policy or contract must not increase and must be reduced to zero 
 93.5   when the policy or contract terminates.  In the event of a 
 93.6   complete liquidation of the reorganized company, the 
 93.7   policyholders among which the liquidation account is allocated 
 93.8   are entitled to receive a liquidation distribution in the amount 
 93.9   of the liquidation account before any liquidation distribution 
 93.10  is made with respect to shares. 
 93.11     (j) Until the liquidation account has been reduced to zero, 
 93.12  the issuer shall not declare or pay a cash dividend on, or 
 93.13  repurchase any of, its common shares in an amount in excess of 
 93.14  its cumulative earned surplus generated after the conversion 
 93.15  determined according to statutory accounting principles, if the 
 93.16  effect would be to cause the amount of the statutory surplus of 
 93.17  the reorganized company to be reduced below the then amount of 
 93.18  the liquidation account. 
 93.19     Subd. 11.  [OPTIONAL PROVISIONS.] A plan under subdivision 
 93.20  8, 9, or 10 may include, with the approval of the commissioner, 
 93.21  any of the provisions in paragraphs (a) and (b). 
 93.22     (a) A plan may provide that any shares of the stock of the 
 93.23  reorganized company or its parent corporation or a permitted 
 93.24  issuer included in the policyholders' consideration must be 
 93.25  placed on the effective date of the conversion in a trust or 
 93.26  other entity existing for the exclusive benefit of the 
 93.27  participating policyholders and established solely for the 
 93.28  purposes of effecting the reorganization.  Under this option, 
 93.29  the shares placed in trust must be sold over a period of not 
 93.30  more than ten years and the proceeds of the shares must be 
 93.31  distributed using the distribution priorities prescribed in the 
 93.32  plan. 
 93.33     (b) A plan may provide that the directors and officers of 
 93.34  the converting mutual company shall receive, without payment, 
 93.35  nontransferable subscription rights to purchase capital stock of 
 93.36  the reorganized company, its parent, or a permitted issuer.  
 94.1   Those subscription rights must be allocated among the directors 
 94.2   and officers by a fair and equitable formula. 
 94.3      (1) The total number of shares that may be purchased under 
 94.4   this clause, may not exceed 35 percent of the total number of 
 94.5   shares to be issued in the case of a converting mutual company 
 94.6   with total assets of less than $50,000,000 or 25 percent of the 
 94.7   total shares to be issued in the case of a converting mutual 
 94.8   company with total assets of more than $500,000,000.  For 
 94.9   converting mutual companies with total assets between 
 94.10  $50,000,000 and $500,000,000, the total number of shares that 
 94.11  may be purchased may not exceed an interpolated percentage 
 94.12  between 25 and 35 percent. 
 94.13     (2) Stock purchased by a director or officer under clause 
 94.14  (1) may not be sold within one year following the effective date 
 94.15  of the conversion. 
 94.16     (3) The plan may also provide that a director or officer, 
 94.17  or person acting in concert with a director or officer of the 
 94.18  converting mutual company, may not acquire any capital stock of 
 94.19  the reorganized company for three years after the effective date 
 94.20  of the conversion, except through a licensed securities broker 
 94.21  or dealer, without the permission of the commissioner.  That 
 94.22  provision may not apply to prohibit the directors and officers 
 94.23  from purchasing stock through subscription rights received in 
 94.24  the plan under clause (1). 
 94.25     (c) A plan may allocate to a tax-qualified employee benefit 
 94.26  plan nontransferable subscription rights to purchase up to ten 
 94.27  percent of the capital stock of the reorganized company, its 
 94.28  parent, or a permitted issuer.  The employee benefit plan must 
 94.29  be entitled to exercise its subscription rights regardless of 
 94.30  the amount of shares purchased by other persons. 
 94.31     Subd. 12.  [ALTERNATIVE PLAN OF CONVERSION.] In lieu of 
 94.32  selecting a plan of conversion provided for in this section, the 
 94.33  converting mutual company may convert according to a plan 
 94.34  approved by the commissioner if the commissioner finds that the 
 94.35  plan does not prejudice the interests of the members, is fair 
 94.36  and equitable, and is based upon an independent appraisal of the 
 95.1   market value of the mutual company by a qualified person, and is 
 95.2   a fair and equitable allocation of any consideration to be given 
 95.3   eligible members.  The commissioner may retain, at the 
 95.4   converting mutual company's expense, any qualified expert not 
 95.5   otherwise a part of the commissioner's staff to assist in 
 95.6   reviewing whether the alternative plan may be approved and the 
 95.7   valuation of the company. 
 95.8      Subd. 13.  [EFFECT OF CONVERSION.] (a) Upon the conversion 
 95.9   of a converting mutual company to a reorganized company 
 95.10  according to this section, the corporate existence of the 
 95.11  converting mutual company must be continued in the reorganized 
 95.12  company.  All the rights, franchises, and interests of the 
 95.13  converting mutual company in and to all property and things in 
 95.14  action belonging to this property, is considered transferred to 
 95.15  and vested in the reorganized company without any deed or 
 95.16  transfer.  Simultaneously, the reorganized company is considered 
 95.17  to have assumed all the obligations and liabilities of the 
 95.18  converting mutual company. 
 95.19     (b) The directors and officers of the converting mutual 
 95.20  company, unless otherwise specified in the plan of conversion, 
 95.21  shall serve as directors and officers of the reorganized company 
 95.22  until new directors and officers of the reorganized company are 
 95.23  duly elected according to the articles of incorporation and 
 95.24  bylaws of the reorganized company. 
 95.25     (c) All policies in force on the effective date of the 
 95.26  conversion continue to remain in force under the terms of those 
 95.27  policies, except that any voting rights of the policyholders 
 95.28  provided for under the policies are extinguished on the 
 95.29  effective date of the conversion. 
 95.30     Subd. 14.  [CONFLICT OF INTEREST.] No director, officer, 
 95.31  agent, employee of the converting mutual company, or any other 
 95.32  person shall receive a fee, commission, or other valuable 
 95.33  consideration, other than the person's usual regular salary and 
 95.34  compensation, for in any manner aiding, promoting, or assisting 
 95.35  in the conversion except as set forth in the plan approved by 
 95.36  the commissioner.  This provision does not prohibit the payment 
 96.1   of reasonable fees and compensation to attorneys, accountants, 
 96.2   investment bankers, and actuaries for services performed in the 
 96.3   independent practice of their professions. 
 96.4      Subd. 15.  [COSTS AND EXPENSES.] All the costs and expenses 
 96.5   connected with a plan of conversion must be paid for or 
 96.6   reimbursed by the converting mutual company or the reorganized 
 96.7   company except where the plan provides otherwise. 
 96.8      Subd. 16.  [LIMITATION OF ACTIONS.] (a) An action 
 96.9   challenging the validity of or arising out of acts taken or 
 96.10  proposed to be taken according to this section must be commenced 
 96.11  within 180 days after the effective date of the conversion. 
 96.12     (b) The converting mutual company, the reorganized company, 
 96.13  or any defendant in an action described in paragraph (a), may 
 96.14  petition the court in the action to order a party to give 
 96.15  security for the reasonable attorney fees that may be incurred 
 96.16  by a party to the action.  The amount of security may be 
 96.17  increased or decreased in the discretion of the court having 
 96.18  jurisdiction if a showing is made that the security provided is 
 96.19  or may become inadequate or excessive. 
 96.20     Subd. 17.  [SUPERVISORY CONVERSIONS.] The commissioner may 
 96.21  waive or alter any of the requirements of this section to 
 96.22  protect the interests of policyholders if the converting mutual 
 96.23  company is subject to the commissioner's administrative 
 96.24  supervision under chapter 60G or rehabilitation under chapter 
 96.25  60B. 
 96.26     Sec. 4.  [60A.076] [MUTUAL INSURANCE HOLDING COMPANIES.] 
 96.27     Subdivision 1.  [FORMATION.] (a) A domestic mutual 
 96.28  insurance company, upon approval of the commissioner, may 
 96.29  reorganize by forming an insurance holding company based upon a 
 96.30  mutual plan and continuing the corporate existence of the 
 96.31  reorganizing insurance company as a stock insurance company.  
 96.32  The commissioner, if satisfied that the interests of the 
 96.33  policyholders are properly protected and that the plan of 
 96.34  reorganization is fair and equitable to the policyholders, may 
 96.35  approve the proposed plan of reorganization and may require as a 
 96.36  condition of approval the modifications of the proposed plan or 
 97.1   reorganization as the commissioner finds necessary for the 
 97.2   protection of the policyholders' interests.  The commissioner 
 97.3   shall retain jurisdiction over the mutual insurance holding 
 97.4   company according to this section and chapter 60D to assure that 
 97.5   policyholder interests are protected. 
 97.6      (b) All of the initial shares of the capital stock of the 
 97.7   reorganized insurance company must be issued to the mutual 
 97.8   insurance holding company or to an intermediate stock holding 
 97.9   company that is wholly owned by the mutual insurance holding 
 97.10  company.  The membership interests of the policyholders of the 
 97.11  reorganized insurance company become membership interests in the 
 97.12  mutual insurance holding company.  "Membership interests" means 
 97.13  those interests described in section 60A.075, subdivision 1, 
 97.14  paragraph (h).  Policyholders of the reorganized insurance 
 97.15  company shall be members of the mutual insurance holding company 
 97.16  in accordance with the articles of incorporation and bylaws of 
 97.17  the mutual insurance holding company.  The mutual insurance 
 97.18  holding company shall, at all times, directly or through an 
 97.19  intermediate stock holding company, control a majority of the 
 97.20  voting shares of the capital stock of the reorganized insurance 
 97.21  company. 
 97.22     Subd. 2.  [MERGER.] (a) A domestic mutual insurance 
 97.23  company, upon the approval of the commissioner, may reorganize 
 97.24  by merging its policyholders' membership interests into a mutual 
 97.25  insurance holding company formed according to subdivision 1 and 
 97.26  continuing the corporate existence of the reorganizing insurance 
 97.27  company as a stock insurance company subsidiary of the mutual 
 97.28  insurance holding company.  "Membership interests" means those 
 97.29  interests described in section 60A.075, subdivision 1, paragraph 
 97.30  (h).  The commissioner, if satisfied that the interests of the 
 97.31  policyholder are properly protected and that the merger is fair 
 97.32  and equitable to the policyholders, may approve the proposed 
 97.33  merger and may require as a condition of approval the 
 97.34  modifications of the proposed merger as the commissioner finds 
 97.35  necessary for the protection of the policyholders' interests.  
 97.36  The commissioner shall retain jurisdiction over the mutual 
 98.1   insurance holding company organized according to this section to 
 98.2   assure that policyholder interests are protected. 
 98.3      (b) All of the initial shares of the capital stock of the 
 98.4   reorganized insurance company must be issued to the mutual 
 98.5   insurance holding company, or to an intermediate stock holding 
 98.6   company that is wholly owned by the mutual insurance holding 
 98.7   company.  The membership interests of the policyholders of the 
 98.8   reorganized insurance company become membership interests in the 
 98.9   mutual insurance holding company.  Policyholders of the 
 98.10  reorganized insurance company shall be members of the mutual 
 98.11  insurance holding company according to the articles of 
 98.12  incorporation and bylaws of the mutual insurance holding company.
 98.13     Subd. 3.  [PLAN OF REORGANIZATION; APPROVAL BY 
 98.14  COMMISSIONER.] (a) The reorganizing or merging insurer shall 
 98.15  file a plan of reorganization, approved by the affirmative vote 
 98.16  of a majority of its board of directors, for review and approval 
 98.17  by the commissioner.  The plan must provide for the following: 
 98.18     (1) establishing a mutual insurance holding company with at 
 98.19  least one stock insurance company subsidiary, the majority of 
 98.20  shares of which must be owned either directly or through an 
 98.21  intermediate stock holding company, by the mutual insurance 
 98.22  holding company; 
 98.23     (2) analyzing the benefits and risks attendant to the 
 98.24  proposed reorganization, including the rationale for the 
 98.25  reorganization and analysis of the comparative benefits and 
 98.26  risks of a demutualization under section 60A.075; 
 98.27     (3) protecting the immediate and long-term interests of 
 98.28  existing policyholders; 
 98.29     (4) ensuring immediate membership in the mutual insurance 
 98.30  holding company of all existing policyholders of the 
 98.31  reorganizing domestic insurance company; 
 98.32     (5) describing a plan providing for membership interests of 
 98.33  future policyholders; 
 98.34     (6) describing the number of members of the board of 
 98.35  directors of the mutual insurance holding company required to be 
 98.36  policyholders; 
 99.1      (7) ensuring that, in the event of proceedings under 
 99.2   chapter 60B involving a stock insurance company subsidiary of 
 99.3   the mutual insurance holding company that resulted from the 
 99.4   reorganization of a domestic mutual insurance company, the 
 99.5   assets of the mutual insurance holding company will be available 
 99.6   to satisfy the policyholder obligations of the stock insurance 
 99.7   company; 
 99.8      (8) for periodic distribution of accumulated holding 
 99.9   company earnings to members; 
 99.10     (9) describing the nature and content of the annual report 
 99.11  and financial statement to be sent to each member; 
 99.12     (10) a copy of the proposed mutual insurance holding 
 99.13  company's articles of incorporation and bylaws specifying all 
 99.14  membership rights; 
 99.15     (11) the names, addresses, and occupational information of 
 99.16  all corporate officers and members of the proposed mutual 
 99.17  insurance holding company board of directors; 
 99.18     (12) information sufficient to demonstrate that the 
 99.19  financial condition of the reorganizing or merging company will 
 99.20  not be diminished upon reorganization; 
 99.21     (13) a copy of the articles of incorporation and bylaws for 
 99.22  any proposed insurance company subsidiary or intermediate 
 99.23  holding company subsidiary; 
 99.24     (14) describing any plans for the initial sale of stock for 
 99.25  the reorganized insurance company; and 
 99.26     (15) any other information requested by the commissioner or 
 99.27  required by rule. 
 99.28     (b) The commissioner may approve the plan upon finding that 
 99.29  the requirements of this section have been fully met and the 
 99.30  plan will protect the immediate and long-term interests of 
 99.31  policyholders. 
 99.32     (c) The commissioner may retain, at the reorganizing or 
 99.33  merging mutual company's expense, any qualified experts not 
 99.34  otherwise a part of the commissioner's staff to assist in 
 99.35  reviewing the plan. 
 99.36     (d) The commissioner may, but need not, conduct a public