1.1                          A bill for an act 
  1.2             relating to insurance; regulating coverages; 
  1.3             regulating premium taxes; modifying agent 
  1.4             cancellations or terminations; providing certain 
  1.5             filing requirements for domestic insurers; regulating 
  1.6             disclosures and policy and contract provisions; 
  1.7             providing for the operation and administration of the 
  1.8             medical malpractice joint underwriting association and 
  1.9             the Minnesota joint underwriting association; 
  1.10            regulating policy cancellations or terminations and 
  1.11            claims practices; regulating information handling 
  1.12            practices; establishing solvency requirements; making 
  1.13            technical changes; regulating the provision of certain 
  1.14            insured services; requiring a study and a report; 
  1.15            amending Minnesota Statutes 1994, sections 60A.07, 
  1.16            subdivision 8; 60A.08, subdivision 14; 60A.09, 
  1.17            subdivision 4a; 60A.11, subdivision 21; 60A.171, 
  1.18            subdivision 7, and by adding a subdivision; 60A.36, 
  1.19            subdivision 1; 60C.09, subdivision 2; 60C.11, by 
  1.20            adding a subdivision; 61A.02, subdivision 2, and by 
  1.21            adding a subdivision; 61A.072, subdivision 4; 61A.32; 
  1.22            61B.20, subdivision 15; 61B.28, subdivision 7; 62A.02, 
  1.23            by adding a subdivision; 62A.31, subdivisions 1p, 1r, 
  1.24            1s, and 3; 62A.315; 62A.318; 62A.39; 62A.44, 
  1.25            subdivision 2; 62A.49, subdivision 1; 62A.60; 62F.03, 
  1.26            subdivision 6; 62F.04, subdivision 1a; 62I.02, 
  1.27            subdivisions 2, 5, and by adding a subdivision; 
  1.28            62I.07; 62L.09, subdivision 3; 65A.01, subdivision 3; 
  1.29            65A.10, subdivision 1; 65A.295; 65B.14, by adding a 
  1.30            subdivision; 65B.15, subdivision 1; 65B.64, 
  1.31            subdivision 3; 70A.07; 72A.20, subdivisions 17, 23, 
  1.32            26, 30, and by adding a subdivision; 148.235, 
  1.33            subdivisions 2 and 4; 471.617, subdivision 2, as 
  1.34            amended; and 471.98, subdivision 3, as amended; 
  1.35            Minnesota Statutes 1995 Supplement, sections 60A.07, 
  1.36            subdivision 10; 60A.15, subdivision 1; 60A.67, 
  1.37            subdivision 2; 60K.03, subdivision 7; 61A.09, 
  1.38            subdivision 1; 62A.042; 62A.135, subdivision 1; 
  1.39            62A.31, subdivision 1h; 62A.46, subdivision 2; 62A.48, 
  1.40            subdivision 1; 62C.14, subdivision 14; 62E.05, 
  1.41            subdivision 1; 62F.02, subdivision 2; 62L.045; and 
  1.42            65B.47, subdivision 1a; proposing coding for new law 
  1.43            in Minnesota Statutes, chapters 60A; 61A; 62A; 62Q; 
  1.44            and 72A; repealing Minnesota Statutes 1994, sections 
  1.45            60A.13, subdivision 8; 60A.40; 60B.27; 62I.20; 65A.25; 
  1.46            and 72A.205; Laws 1995, chapter 140, section 1. 
  2.1   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.2                              ARTICLE 1 
  2.3      Section 1.  Minnesota Statutes 1994, section 60A.08, 
  2.4   subdivision 14, is amended to read: 
  2.5      Subd. 14.  [AGREEMENT TO RESCIND POLICY OR RELEASE BAD 
  2.6   FAITH CLAIM.] (a) If the insurer has knowledge of any claims 
  2.7   against the insured that would remain unsatisfied due to the 
  2.8   financial condition of the insured, the insurer and the insured 
  2.9   may not agree to: 
  2.10     (1) rescind the policy; or 
  2.11     (2) directly or indirectly transfer to, or release to, the 
  2.12  insurer the insured's claim or potential claim against the 
  2.13  insurer based upon the insurer's refusal to settle a claim 
  2.14  against the insured.  
  2.15     (b) Before entering into an agreement to rescind a policy 
  2.16  described in paragraph (a), an insurer must make a good faith 
  2.17  effort to ascertain:  (1) the existence and identity of all 
  2.18  claims against the policy; and (2) the financial condition of 
  2.19  the insured. 
  2.20     (c) The insured must provide reasonable financial 
  2.21  information upon request of the insurer. 
  2.22     (d) An agreement made in violation of this section is void 
  2.23  and unenforceable. 
  2.24     Sec. 2.  Minnesota Statutes 1994, section 60A.09, 
  2.25  subdivision 4a, is amended to read: 
  2.26     Subd. 4a.  [ASSUMPTION TRANSACTIONS REGULATED.] No life 
  2.27  company, whether domestic, foreign, or alien, shall perform an 
  2.28  assumption transaction, including an assumption reinsurance 
  2.29  agreement, with respect to a policy issued to a Minnesota 
  2.30  resident, unless: 
  2.31     (1) the assumption agreement has been filed with the 
  2.32  commissioner; 
  2.33     (2) the assumption agreement specifically provides that the 
  2.34  original insurer remains liable to the insured in the event the 
  2.35  assuming insurer is unable to fulfill its obligations or the 
  2.36  original insurer acknowledges in writing to the commissioner 
  3.1   that it remains liable to the insured in the event the assuming 
  3.2   insurer is unable to fulfill its obligations; 
  3.3      (3) the proposed certificate of assumption to be provided 
  3.4   to the policyholder has been filed with the commissioner for 
  3.5   review and approval as provided in section 61A.02; and 
  3.6      (4) the proposed certificate of assumption contains, in 
  3.7   bold face type, the following language: 
  3.8      "Policyholder:  Please be advised that you retain all 
  3.9   rights with respect to your policy against your original insurer 
  3.10  in the event the assuming insurer is unable to fulfill its 
  3.11  obligations.  In such event, your original insurer remains 
  3.12  liable to you notwithstanding the terms of its assumption 
  3.13  agreement." 
  3.14     With respect to residents of Minnesota, the notice to 
  3.15  policyholders shall also include a statement as to the effect on 
  3.16  guaranty fund coverage, if any, that will result from the 
  3.17  transfer. 
  3.18     Clauses (2) and (4) above do not apply if the policyholder 
  3.19  consents in a signed writing to a release of the original 
  3.20  insurer from liability and to a waiver of the protections 
  3.21  provided in clauses (2) and (4) after being informed in writing 
  3.22  by the insurer of the circumstances relating to and the effect 
  3.23  of the assumption, provided that the consent form signed by the 
  3.24  policyholder has been filed with and approved by the 
  3.25  commissioner. 
  3.26     If a company is deemed by the commissioner to be in a 
  3.27  hazardous condition or is under a court ordered supervision, 
  3.28  rehabilitation, liquidation, conservation or receivership, and 
  3.29  the transfer of policies is in the best interest of the 
  3.30  policyholders, as determined by the commissioner, a transfer may 
  3.31  be effected notwithstanding the provisions in this subdivision 
  3.32  by using a different form of consent by policyholders.  This may 
  3.33  include a form of implied consent and adequate notification to 
  3.34  the policyholder of the circumstances requiring the transfer as 
  3.35  approved by the commissioner.  This paragraph does not apply 
  3.36  when a policy is transferred to the Minnesota life and health 
  4.1   guaranty association or to the Minnesota insurance guaranty 
  4.2   association. 
  4.3      Sec. 3.  Minnesota Statutes 1995 Supplement, section 
  4.4   60A.15, subdivision 1, is amended to read: 
  4.5      Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
  4.6   before April 1, June 1, and December 1 of each year, every 
  4.7   domestic and foreign company, including town and farmers' mutual 
  4.8   insurance companies, domestic mutual insurance companies, marine 
  4.9   insurance companies, health maintenance organizations, 
  4.10  integrated service networks, community integrated service 
  4.11  networks, and nonprofit health service plan corporations, shall 
  4.12  pay to the commissioner of revenue installments equal to 
  4.13  one-third of the insurer's total estimated tax for the current 
  4.14  year.  Except as provided in paragraphs (d) and (e), 
  4.15  installments must be based on a sum equal to two percent of the 
  4.16  premiums described in paragraph (b). 
  4.17     (b) Installments under paragraph (a), (d), or (e) are 
  4.18  percentages of gross premiums less return premiums on all direct 
  4.19  business received by the insurer in this state, or by its agents 
  4.20  for it, in cash or otherwise, during such year. 
  4.21     (c) Failure of a company to make payments of at least 
  4.22  one-third of either (1) the total tax paid during the previous 
  4.23  calendar year or (2) 80 percent of the actual tax for the 
  4.24  current calendar year shall subject the company to the penalty 
  4.25  and interest provided in this section, unless the total tax for 
  4.26  the current tax year is $500 or less. 
  4.27     (d) For health maintenance organizations, nonprofit health 
  4.28  services plan corporations, integrated service networks, and 
  4.29  community integrated service networks, the installments must be 
  4.30  based on an amount equal to one percent of premiums described in 
  4.31  paragraph (b) that are paid after December 31, 1995. 
  4.32     (e) For purposes of computing installments for town and 
  4.33  farmers' mutual insurance companies and for mutual property 
  4.34  casualty companies with total assets on December 31, 1989, of 
  4.35  $1,600,000,000 or less, the following rates apply: 
  4.36     (1) for all life insurance, two percent; 
  5.1      (2) for town and farmers' mutual insurance companies and 
  5.2   for mutual property and casualty companies with total assets of 
  5.3   $5,000,000 or less, on all other coverages, one percent; and 
  5.4      (3) for mutual property and casualty companies with total 
  5.5   assets on December 31, 1989, of $1,600,000,000 or less, on all 
  5.6   other coverages, 1.26 percent. 
  5.7      (f) Premiums under medical assistance, general assistance 
  5.8   medical care, the MinnesotaCare program, and the Minnesota 
  5.9   comprehensive health insurance plan are not subject to tax under 
  5.10  this section. 
  5.11     Sec. 4.  Minnesota Statutes 1994, section 60A.171, 
  5.12  subdivision 7, is amended to read: 
  5.13     Subd. 7.  The provisions of this section do not apply to 
  5.14  the termination of an agent's contract for insolvency, 
  5.15  abandonment, gross and willful misconduct, or failure to pay 
  5.16  over to the company money due to the company after receipt by 
  5.17  the agent of a written demand therefor, or after revocation of 
  5.18  the agent's license by the commissioner of commerce; nor to the 
  5.19  termination of agents who write insurance business exclusively 
  5.20  for one company or agents in the direct employ of the 
  5.21  company.  This section does not apply to the termination of an 
  5.22  agent's contract if the agent is directly employed by the 
  5.23  company or if the agent writes 80 percent or more of the agent's 
  5.24  gross annual insurance business for one company or any or all of 
  5.25  its subsidiaries. 
  5.26     Sec. 5.  Minnesota Statutes 1994, section 60A.171, is 
  5.27  amended by adding a subdivision to read: 
  5.28     Subd. 12.  For purposes of this section, a cancellation or 
  5.29  termination of an agent's contract is considered to have 
  5.30  occurred if the company cancels a line of insurance business or 
  5.31  a volume of insurance business that equals or exceeds 75 percent 
  5.32  of the insurance business placed by that agent with the company. 
  5.33     Sec. 6.  [60A.179] [LIFE OR HEALTH INSURANCE POLICY QUOTAS 
  5.34  FOR EXCLUSIVE AGENTS.] 
  5.35     Subdivision 1.  [APPLICATION.] This section applies to 
  5.36  licensed insurance agents as defined by section 60A.176. 
  6.1      Subd. 2.  [PROHIBITED PRACTICE.] No insurer shall require 
  6.2   an agent who has been licensed as an agent three years or more 
  6.3   to sell a specified number of life or health insurance policies 
  6.4   or a specified dollar amount of life and health insurance in 
  6.5   relation to the sale of other insurance products.  No insurer 
  6.6   may terminate an agent's contract or reduce or restrict an 
  6.7   agent's underwriting authority on property and casualty 
  6.8   insurance policies based upon the sale of life or health 
  6.9   insurance. 
  6.10     Sec. 7.  Minnesota Statutes 1994, section 60A.36, 
  6.11  subdivision 1, is amended to read: 
  6.12     Subdivision 1.  [REASON FOR CANCELLATION.] No insurer may 
  6.13  cancel a policy of commercial liability and/or property 
  6.14  insurance during the term of the policy, except for one or more 
  6.15  of the following reasons:  
  6.16     (1) nonpayment of premium; 
  6.17     (2) misrepresentation or fraud made by or with the 
  6.18  knowledge of the insured in obtaining the policy or in pursuing 
  6.19  a claim under the policy; 
  6.20     (3) actions by the insured that have substantially 
  6.21  increased or substantially changed the risk insured; 
  6.22     (4) refusal of the insured to eliminate known conditions 
  6.23  that increase the potential for loss after notification by the 
  6.24  insurer that the condition must be removed; 
  6.25     (5) substantial change in the risk assumed, except to the 
  6.26  extent that the insurer should reasonably have foreseen the 
  6.27  change or contemplated the risk in writing the contract; 
  6.28     (6) loss of reinsurance by the insurer which provided 
  6.29  coverage to the insurer for a significant amount of the 
  6.30  underlying risk insured.  A notice of cancellation under this 
  6.31  clause shall advise the policyholder that the policyholder has 
  6.32  ten days from the date of receipt of the notice to appeal the 
  6.33  cancellation to the commissioner of commerce and that the 
  6.34  commissioner will render a decision as to whether the 
  6.35  cancellation is justified because of the loss of reinsurance 
  6.36  within five 30 business days after receipt of the appeal; 
  7.1      (7) a determination by the commissioner that the 
  7.2   continuation of the policy could place the insurer in violation 
  7.3   of the insurance laws of this state; or 
  7.4      (8) nonpayment of dues to an association or organization, 
  7.5   other than an insurance association or organization, where 
  7.6   payment of dues is a prerequisite to obtaining or continuing the 
  7.7   insurance.  This provision for cancellation for failure to pay 
  7.8   dues does not apply to persons who are retired at 62 years of 
  7.9   age or older or who are disabled according to social security 
  7.10  standards.  
  7.11     Sec. 8.  Minnesota Statutes 1995 Supplement, section 
  7.12  60K.03, subdivision 7, is amended to read: 
  7.13     Subd. 7.  [EXCEPTIONS.] The following are exempt from the 
  7.14  general licensing requirements prescribed by this section:  
  7.15     (1) agents of township mutuals who are exempted pursuant to 
  7.16  section 60K.04; 
  7.17     (2) fraternal benefit society representatives exempted 
  7.18  pursuant to section 60K.05; 
  7.19     (3) any regular salaried officer or employee of a licensed 
  7.20  insurer, without license or other qualification, may act on 
  7.21  behalf of that licensed insurer in the negotiation of insurance 
  7.22  for that insurer, provided that a licensed agent must 
  7.23  participate in the sale of the insurance; 
  7.24     (4) employers and their officers or employees, and the 
  7.25  trustees or employees of any trust plan, to the extent that the 
  7.26  employers, officers, employees, or trustees are engaged in the 
  7.27  administration or operation of any program of employee benefits 
  7.28  for the employees of the employers or employees of their 
  7.29  subsidiaries or affiliates involving the use of insurance issued 
  7.30  by a licensed insurance company; provided that the activities of 
  7.31  the officers, employees and trustees are incidental to clerical 
  7.32  or administrative duties and their compensation does not vary 
  7.33  with the volume of insurance or applications for insurance; 
  7.34     (5) employees of a creditor who enroll debtors for credit 
  7.35  life, credit accident and health, or credit involuntary 
  7.36  unemployment insurance; provided the employees receive no 
  8.1   commission or fee for it; 
  8.2      (6) clerical or administrative employees of an insurance 
  8.3   agent who take insurance applications or receive premiums in the 
  8.4   office of their employer, if the activities are incidental to 
  8.5   clerical or administrative duties and the employee's 
  8.6   compensation does not vary with the volume of the applications 
  8.7   or premiums; 
  8.8      (7) rental vehicle companies and their employees in 
  8.9   connection with the offer of rental vehicle personal accident 
  8.10  insurance under section 72A.125; and 
  8.11     (8) employees of a retailer who enroll purchasers for 
  8.12  credit insurance associated with a retail purchase; provided the 
  8.13  employees receive no commission, fee, bonus, or other form of 
  8.14  compensation for it; and 
  8.15     (9) representatives of prepaid legal service plans in 
  8.16  connection with the sale and marketing of these plans. 
  8.17     Sec. 9.  Minnesota Statutes 1994, section 61A.02, 
  8.18  subdivision 2, is amended to read: 
  8.19     Subd. 2.  [APPROVAL REQUIRED.] No policy or certificate of 
  8.20  life insurance or annuity contract, issued to an individual, 
  8.21  group, or multiple employer trust, nor any rider of any kind or 
  8.22  description which is made a part thereof shall be issued or 
  8.23  delivered in this state, or be issued by a life insurance 
  8.24  company organized under the laws of this state, until the form 
  8.25  of the same has been approved by the commissioner.  In making a 
  8.26  determination under this section, the commissioner may require 
  8.27  the insurer to provide rates and advertising materials related 
  8.28  to policies or contracts, certificates, or similar evidence of 
  8.29  coverage issued or delivered in this state.  
  8.30     This section applies Subdivisions 1 to 5 apply to a policy, 
  8.31  certificate of insurance, or similar evidence of coverage issued 
  8.32  to a Minnesota resident or issued to provide coverage to a 
  8.33  Minnesota resident.  This section does Subdivisions 1 to 5 do 
  8.34  not apply to a certificate of insurance or similar evidence of 
  8.35  coverage that meets the conditions of section 61A.093, 
  8.36  subdivision 2. 
  9.1      Sec. 10.  Minnesota Statutes 1994, section 61A.02, is 
  9.2   amended by adding a subdivision to read: 
  9.3      Subd. 6.  [FILING BY DOMESTIC INSURERS FOR PURPOSES OF 
  9.4   COMPLYING WITH ANOTHER STATE'S FILING REQUIREMENTS.] A domestic 
  9.5   insurer may file with the commissioner for informational 
  9.6   purposes only a policy, certificate of insurance, or annuity 
  9.7   contract that is not intended to be offered or sold within this 
  9.8   state.  This subdivision only applies to the filing in Minnesota 
  9.9   of a policy, certificate of insurance, or annuity contract 
  9.10  issued to an insured, certificate holder, or annuitant located 
  9.11  outside of this state when the filing is for the express purpose 
  9.12  of complying with the law of the state in which the insured, 
  9.13  certificate holder, or annuitant resides.  In no event may a 
  9.14  policy, certificate of insurance, or annuity contract filed 
  9.15  under this subdivision for out-of-state use be issued or 
  9.16  delivered in Minnesota unless and until the policy, certificate 
  9.17  of insurance, or annuity contract is approved under subdivision 
  9.18  2. 
  9.19     Sec. 11.  Minnesota Statutes 1994, section 61A.072, 
  9.20  subdivision 4, is amended to read: 
  9.21     Subd. 4.  [LONG-TERM CARE EXPENSES.] If the right to 
  9.22  receive accelerated benefits is contingent upon the insured 
  9.23  receiving long-term care services, the contract or supplemental 
  9.24  contract shall include the following provisions:  
  9.25     (1) the minimum accelerated benefit shall be $1,200 per 
  9.26  month if the insured is receiving nursing facility services and 
  9.27  $750 per month if the insured is receiving home services with a 
  9.28  minimum lifetime benefit limit of $50,000; 
  9.29     (2) coverage is effective immediately and benefits shall 
  9.30  commence with the receipt of services as defined in section 
  9.31  62A.46, subdivision 3, 4, or 5, but may include a waiting period 
  9.32  of not more than 90 days, provided that no more than one waiting 
  9.33  period may be required per benefit period as defined in section 
  9.34  62A.46, subdivision 11; 
  9.35     (3) premium shall be waived during any period in which 
  9.36  benefits are being paid to the insured during confinement to a 
 10.1   nursing home facility; 
 10.2      (4) coverage may not be canceled or renewal refused except 
 10.3   on the grounds of nonpayment of premium; 
 10.4      (5) coverage must include preexisting conditions during the 
 10.5   first six months of coverage if the insured was not diagnosed or 
 10.6   treated for the particular condition during the 90 days 
 10.7   immediately preceding the effective date of coverage; 
 10.8      (6) the contract or supplemental contract shall contain the 
 10.9   following disclosure:  
 10.10     "THE ACCELERATED LIFE INSURANCE BENEFITS PROVIDED UNDER 
 10.11  THIS CONTRACT MAY NOT COVER ALL NURSING HOME, HOME CARE, OR 
 10.12  ADULT DAY CARE EXPENSES.  BENEFITS ARE NOT PAYABLE UPON RECEIPT 
 10.13  OF RESIDENTIAL CARE.  READ YOUR POLICY CAREFULLY TO DETERMINE 
 10.14  YOUR BENEFIT AMOUNT."; 
 10.15     (7) coverage must include mental or nervous disorders which 
 10.16  have a demonstrable organic cause such as Alzheimer's and 
 10.17  related dementias; 
 10.18     (8) (7) no prior hospitalization requirement shall be 
 10.19  allowed unless a similar requirement is allowed by section 
 10.20  62A.48, subdivision 1; and 
 10.21     (9) (8) the contract shall include a cancellation provision 
 10.22  that meets the requirements of section 62A.50, subdivision 2. 
 10.23     Sec. 12.  Minnesota Statutes 1995 Supplement, section 
 10.24  61A.09, subdivision 1, is amended to read: 
 10.25     Subdivision 1.  No group life insurance policy or group 
 10.26  annuity shall be issued for delivery in this state until the 
 10.27  form thereof and the form of any certificates issued thereunder 
 10.28  have been filed in accordance with and subject to the provisions 
 10.29  of section 61A.02.  Each person insured under such a group life 
 10.30  insurance policy (excepting policies which insure the lives of 
 10.31  debtors of a creditor or vendor to secure payment of 
 10.32  indebtedness) shall be furnished a certificate of insurance 
 10.33  issued by the insurer and containing the following: 
 10.34     (a) Name and location of the insurance company; 
 10.35     (b) A statement as to the insurance protection to which the 
 10.36  certificate holder is entitled, including any changes in such 
 11.1   protection depending on the age of the person whose life is 
 11.2   insured; 
 11.3      (c) Any and all provisions regarding the termination or 
 11.4   reduction of the certificate holder's insurance protection; 
 11.5      (d) A statement that the master group policy may be 
 11.6   examined at a reasonably accessible place; 
 11.7      (e) The maximum rate of contribution to be paid by the 
 11.8   certificate holder; 
 11.9      (f) Beneficiary and method required to change such 
 11.10  beneficiary; 
 11.11     (g) A statement that alternative methods for the payment of 
 11.12  group life policy proceeds of $15,000 or more must be offered to 
 11.13  beneficiaries in lieu of a lump sum distribution, at their 
 11.14  request.  Alternative payment methods which must be offered at 
 11.15  the request of the beneficiaries must include, but are not 
 11.16  limited to, a life income option, an income option for fixed 
 11.17  amounts or fixed time periods, and the option to select an 
 11.18  interest-bearing account with the company with the right to 
 11.19  select another option at a later date; 
 11.20     (h) In the case of a group term insurance policy if the 
 11.21  policy provides that insurance of the certificate holder will 
 11.22  terminate, in case of a policy issued to an employer, by reason 
 11.23  of termination of the certificate holder's employment, or in 
 11.24  case of a policy issued to an organization of which the 
 11.25  certificate holder is a member, by reason of termination of 
 11.26  membership, a provision to the effect that in case of 
 11.27  termination of employment or membership, or in case of 
 11.28  termination of the group policy, the certificate holder shall be 
 11.29  entitled to have issued by the insurer, without evidence of 
 11.30  insurability, upon application made to the insurer within 31 
 11.31  days after the termination, and upon payment of the premium 
 11.32  applicable to the class of risk to which that person belongs and 
 11.33  to the form and amount of the policy at that person's then 
 11.34  attained age, a policy of life insurance only, in any one of the 
 11.35  forms customarily issued by the insurer except term insurance, 
 11.36  in an amount equal to the amount of the life insurance 
 12.1   protection under such group insurance policy at the time of such 
 12.2   termination; and shall contain a further provision to the effect 
 12.3   that upon the death of the certificate holder during such 31-day 
 12.4   period and before any such individual policy has become 
 12.5   effective, the amount of insurance for which the certificate 
 12.6   holder was entitled to make application shall be payable as a 
 12.7   death benefit by the insurer.  
 12.8      This section applies to a policy, certificate of insurance, 
 12.9   or similar evidence of coverage issued to a Minnesota resident 
 12.10  or issued to provide coverage to a Minnesota resident.  This 
 12.11  section does not apply to a certificate of insurance or similar 
 12.12  evidence of coverage that meets the conditions of section 
 12.13  61A.093, subdivision 2. 
 12.14     Sec. 13.  [61A.53] [DEFINITIONS.] 
 12.15     Subdivision 1.  [APPLICABILITY.] For purposes of sections 
 12.16  61A.53 to 61A.60, the terms defined in this section have the 
 12.17  meanings given. 
 12.18     Subd. 2.  [REPLACEMENT.] "Replacement" means any 
 12.19  transaction in which new life insurance or a new annuity is to 
 12.20  be purchased, and it is known or should be known to the 
 12.21  proposing agent or broker or to the proposing insurer if there 
 12.22  is no agent, that by reason of the transaction, existing life 
 12.23  insurance or annuity has been or is to be: 
 12.24     (1) lapsed, forfeited, surrendered, or otherwise 
 12.25  terminated; 
 12.26     (2) converted to reduced paid-up insurance, continued as 
 12.27  extended term insurance, or otherwise reduced in value by the 
 12.28  use of nonforfeiture benefits or other policy values; 
 12.29     (3) amended so as to effect either a reduction in benefits 
 12.30  or in the term for which coverage would otherwise remain in 
 12.31  force or for which benefits would be paid; 
 12.32     (4) reissued with any reduction in cash value; or 
 12.33     (5) pledged as collateral or subjected to borrowing, 
 12.34  whether in a single loan or under a schedule of borrowing over a 
 12.35  period of time for amounts in the aggregate exceeding 25 percent 
 12.36  of the loan value set forth in the policy. 
 13.1      Subd. 3.  [CONSERVATION.] "Conservation" means any attempt 
 13.2   by the existing insurer or its agent or broker to dissuade a 
 13.3   policy owner or contract holder from the replacement of existing 
 13.4   life insurance or annuity.  Conservation does not include 
 13.5   routine administrative procedures such as late payment 
 13.6   reminders, late payment offers, or reinstatement offers. 
 13.7      Subd. 4.  [DIRECT-RESPONSE SALE.] "Direct-response sale" 
 13.8   means any sale of life insurance or annuity where the insurer 
 13.9   does not use an agent in the sale or delivery of the policy or 
 13.10  contract. 
 13.11     Subd. 5.  [EXISTING INSURER.] "Existing insurer" means the 
 13.12  insurance company whose policy or contract is or will be changed 
 13.13  or terminated in such a manner as described within the 
 13.14  definition of "replacement." 
 13.15     Subd. 6.  [EXISTING LIFE INSURANCE OR ANNUITY.] "Existing 
 13.16  life insurance or annuity" means any life insurance or annuity 
 13.17  in force, including life insurance under a binding or 
 13.18  conditional receipt or a life insurance policy or annuity 
 13.19  contract that is within an unconditional refund period. 
 13.20     Subd. 7.  [REPLACING INSURER.] "Replacing insurer" means 
 13.21  the insurance company that issues or proposes to issue a new 
 13.22  policy or contract which is a replacement of existing life 
 13.23  insurance or annuity. 
 13.24     Sec. 14.  [61A.54] [EXEMPTIONS.] 
 13.25     Unless otherwise specifically included, sections 61A.53 to 
 13.26  61A.60 do not apply to transactions involving: 
 13.27     (1) credit life insurance; 
 13.28     (2) group life insurance or group annuities; 
 13.29     (3) an application to the existing insurer that issued the 
 13.30  existing life insurance or annuity, where a contractual change 
 13.31  or a conversion privilege is being exercised; 
 13.32     (4) proposed life insurance that is to replace life 
 13.33  insurance under a binding or conditional receipt issued by the 
 13.34  same company; or 
 13.35     (5) transactions where the replacing insurer and the 
 13.36  existing insurer are the same, or are subsidiaries or affiliates 
 14.1   under common ownership or control; provided, however, that 
 14.2   agents or brokers proposing replacement shall comply with 
 14.3   section 61A.55, subdivision 1. 
 14.4      Sec. 15.  [61A.55] [DUTIES OF AGENTS AND BROKERS.] 
 14.5      Subdivision 1.  [SUBMISSION TO INSURER.] Each agent or 
 14.6   broker who initiates the application shall submit to the insurer 
 14.7   to which an application for life insurance or annuity is 
 14.8   presented, with or as part of each application: 
 14.9      (1) a statement signed by the applicant as to whether 
 14.10  replacement of existing life insurance or annuity is involved in 
 14.11  the transaction; and 
 14.12     (2) a signed statement as to whether the agent or broker 
 14.13  knows replacement is or may be involved in the transaction. 
 14.14     Subd. 2.  [REPLACEMENT INFORMATION.] Where a replacement is 
 14.15  involved, the agent or broker shall: 
 14.16     (1) present to the applicant, not later than at the time of 
 14.17  taking the application, a "notice regarding replacement" in the 
 14.18  form as described in section 61A.60, subdivision 1, or other 
 14.19  substantially similar form approved by the commissioner.  The 
 14.20  notice shall be fully completed and signed by both the applicant 
 14.21  and the agent or broker and left with the applicant.  The 
 14.22  completed notice must list all existing life insurance and 
 14.23  annuity to be replaced, properly identified by name of insurer, 
 14.24  the insured, and contract number.  If a contract number has not 
 14.25  been assigned by the existing insurer, alternative 
 14.26  identification, such as an application or receipt number, shall 
 14.27  be listed; 
 14.28     (2) leave with the applicant the original or a copy of any 
 14.29  written or printed communications used for presentation to the 
 14.30  applicant; and 
 14.31     (3) submit to the replacing insurer with the application a 
 14.32  copy of the fully completed and signed replacement notice 
 14.33  provided under this subdivision. 
 14.34     Subd. 3.  [MATERIALS USED TO DISSUADE REPLACEMENT.] Each 
 14.35  agent or broker who uses written or printed communications in a 
 14.36  conservation shall leave with the applicant the original or a 
 15.1   copy of the communications. 
 15.2      Sec. 16.  [61A.56] [DUTIES OF ALL INSURERS.] 
 15.3      Each insurer shall: 
 15.4      (1) inform its field representatives or other personnel 
 15.5   responsible for compliance with sections 61A.53 to 61A.60 of the 
 15.6   requirements of those sections; and 
 15.7      (2) require with or as a part of each completed application 
 15.8   for life insurance or annuity a statement signed by the 
 15.9   applicant as to whether the proposed insurance or annuity will 
 15.10  replace existing life insurance or annuity. 
 15.11     Sec. 17.  [61A.57] [DUTIES OF INSURERS THAT USE AGENTS OR 
 15.12  BROKERS.] 
 15.13     Each insurer that uses an agent or broker in a life 
 15.14  insurance or annuity sale shall: 
 15.15     (a) require with or as part of each completed application 
 15.16  for life insurance or annuity, a statement signed by the agent 
 15.17  or broker as to whether the agent or broker knows replacement is 
 15.18  or may be involved in the transaction; 
 15.19     (b) where a replacement is involved: 
 15.20     (1) require from the agent or broker with the application 
 15.21  for life insurance or annuity, a copy of the fully completed and 
 15.22  signed replacement notice provided the applicant under section 
 15.23  61A.55.  The existing life insurance or annuity must be 
 15.24  identified by name of insurer, insured, and contract number.  If 
 15.25  a number has not been assigned by the existing insurer, 
 15.26  alternative identification, such as an application or receipt 
 15.27  number, must be listed; and 
 15.28     (2) send to each existing insurer a written communication 
 15.29  advising of the replacement or proposed replacement and the 
 15.30  identification information obtained under this section.  This 
 15.31  written communication must be made within five working days of 
 15.32  the date that the application is received in the replacing 
 15.33  insurer's home or regional office, or the date the proposed 
 15.34  policy or contract is issued, whichever is sooner. 
 15.35     (c) The replacing insurer shall maintain evidence of the 
 15.36  "notice regarding replacement" and a replacement register, 
 16.1   cross-indexed, by replacing agent and existing insurer to be 
 16.2   replaced.  Evidence that all requirements were met shall be 
 16.3   maintained for at least six years. 
 16.4      (d) The replacing insurer shall provide in its policy or 
 16.5   contract, or in a separate written notice that is delivered with 
 16.6   the policy or contract, that the applicant has a right to an 
 16.7   unconditional refund of all premiums paid, which right may be 
 16.8   exercised within a period of 20 days beginning from the date of 
 16.9   delivery of the policy. 
 16.10     Sec. 18.  [61A.58] [DUTIES OF INSURERS WITH RESPECT TO 
 16.11  DIRECT RESPONSE SALES.] 
 16.12     (a) If in the solicitation of a direct response sale, the 
 16.13  insurer did not propose the replacement, and a replacement is 
 16.14  involved, the insurer shall send to the applicant with the 
 16.15  policy or contract a replacement notice as described in section 
 16.16  61A.60, subdivision 2, or other substantially similar form 
 16.17  approved by the commissioner.  
 16.18     (b) If the insurer proposed the replacement, it shall: 
 16.19     (1) provide to applicants or prospective applicants with or 
 16.20  as a part of the application a replacement notice as described 
 16.21  in section 61A.60, subdivision 2, or other substantially similar 
 16.22  form approved by the commissioner; 
 16.23     (2) request from the applicant with or as part of the 
 16.24  application, a list of all existing life insurance policies or 
 16.25  annuity contracts to be replaced and properly identified by name 
 16.26  of insurer and insured; and 
 16.27     (3) comply with the requirements of section 61A.57, 
 16.28  paragraph (b), clause (2), if the applicant furnishes the names 
 16.29  of the existing insurers, and the requirements of section 
 16.30  61A.57, paragraphs (c) and (d), except that it need not index 
 16.31  the replacement register by replacing agent. 
 16.32     Sec. 19.  [61A.59] [ENFORCEMENT; EFFECT OF COMPLIANCE.] 
 16.33     (a) An agent, broker or insurer shall not recommend the 
 16.34  replacement or conservation of an existing policy or contract by 
 16.35  use of a substantially inaccurate presentation or comparison of 
 16.36  an existing policy's or contract's premiums and benefits or 
 17.1   dividends and values, if any.  An insurer, agent, 
 17.2   representative, officer, or employee of the insurer failing to 
 17.3   comply with the requirements of sections 61A.53 to 61A.60 is 
 17.4   subject to such penalties as may be appropriate under this 
 17.5   chapter.  
 17.6      (b) Patterns of action by policyholders or contract holders 
 17.7   who purchase replacing policies or contracts from the same agent 
 17.8   or broker, after indicating on applications that replacement is 
 17.9   not involved, are prima facie evidence of the agent's or 
 17.10  broker's knowledge that replacement was intended in connection 
 17.11  with the sale of those policies, and the patterns of action are 
 17.12  prima facie evidence of the agent's or broker's intent to 
 17.13  violate sections 61A.53 to 61A.60. 
 17.14     (c) Sections 61A.53 to 61A.60 do not prohibit the use of 
 17.15  additional material other than that which is required that does 
 17.16  not violate those sections or any other statute or rule. 
 17.17     (d) Compliance by an insurer, agent, or broker with 
 17.18  sections 61A.53 to 61A.60 does not limit any cause of action or 
 17.19  other remedies that the insured may otherwise have against an 
 17.20  insurer, agent, or broker.  In a proceeding in which the 
 17.21  insured's knowledge or understanding is an issue, compliance 
 17.22  with those sections may be admitted as evidence on that issue, 
 17.23  but shall not be conclusive. 
 17.24     Sec. 20.  [61A.60] [REQUIRED REPLACEMENT NOTICE AND FORM.] 
 17.25     Subdivision 1.  [NOTICE FORM; AGENT SALES.] The notice 
 17.26  required where sections 61A.53 to 61A.60 refer to this 
 17.27  subdivision is as follows: 
 17.28                         IMPORTANT NOTICE 
 17.29  
 17.30  DEFINITION:  REPLACEMENT IS any transaction where, in connection
 17.31               with the purchase of New Insurance or a New 
 17.32               Annuity, you LAPSE, SURRENDER, CONVERT to 
 17.33               Paid-up Insurance, Place on Extended Term, 
 17.34               or BORROW all or part of the policy loan 
 17.35               values on an existing insurance policy or an 
 17.36               annuity.  (See reverse side for DEFINITIONS.) 
 18.1    
 18.2    
 18.3   IF YOU       In connection with the purchase of this insurance 
 18.4   INTEND TO    or annuity, if you have REPLACED or intend to 
 18.5   REPLACE      REPLACE your present life insurance coverage 
 18.6   COVERAGE     or annuity(ies), you should be certain that you   
 18.7                understand all the relevant factors involved.
 18.8    
 18.9                You should BE AWARE that you may be required to
 18.10               provide [EVIDENCE OF INSURABILITY] and 
 18.12               1)  If your HEALTH condition has CHANGED since 
 18.13               the application was taken on your present 
 18.14               policies, you may be required to pay ADDITIONAL 
 18.15               PREMIUMS under the NEW POLICY, or be DENIED 
 18.16               coverage. 
 18.18               2)  Your present occupation or activities [may not
 18.19               be covered or could require additional premiums.]
 18.21               3)  The INCONTESTABLE and SUICIDE CLAUSE will 
 18.22               begin anew in a new policy.  This could RESULT 
 18.23               in a [CLAIM under the new policy BEING DENIED] 
 18.24               that would otherwise have been paid.
 18.26               4)  Current law DOES NOT REQUIRE your present 
 18.27               insurer(s) to REFUND any premiums.
 18.29               5)  It is to your advantage to OBTAIN INFORMATION
 18.30               regarding your existing policies or annuity 
 18.31               contracts [from the insurer or agent from whom 
 18.32               you purchased the policy or annuity contract.]
 18.33   
 18.34               (If you are purchasing an annuity, clauses (1), 
 18.35               (2), and (3) above would not apply to the new 
 18.36               annuity contract.)
 19.2                THE INSURANCE OR ANNUITY I INTEND TO PURCHASE FROM 
 19.3                _______________________________________INSURANCE CO.
 19.4                MAY REPLACE OR ALTER EXISTING LIFE INSURANCE 
 19.5                POLICY(IES) OR ANNUITY CONTRACT(S). 
 19.7                The following policy(ies) or annuity contract(s) 
 19.8                may be replaced as a result of this transaction:
 19.10           [Insurer                              [Insured 
 19.11   as it appears on the policy        as it appears on the policy 
 19.12   or contract]                       or contract] 
 19.13  ______________________________     ______________________________
 19.14  ______________________________     ______________________________
 19.15  ______________________________     ______________________________
 19.16  ______________________________     ______________________________
 19.17   [Policy or Contract Number]             [Insured Birthdate]
 19.18  ______________________________     ______________________________
 19.19  ______________________________     ______________________________
 19.20  ______________________________     ______________________________
 19.21  ______________________________     ______________________________
 19.22          The proposed policy or contract is:
 19.23          ______________________________________  $_______________
 19.24          type of policy- or contract-generic name   face amount
 19.26          ________________________________________________________
 19.27          signature of applicant                   date
 19.29          ________________________________________________________
 19.30          address of applicant        city              state
 19.32          I certify that this form was given to and completed by 
 19.34          ________________________________________________________
 19.35                      (applicant-please print or type)
 19.37          prior to taking an application and that I am leaving a 
 19.38          signed copy for the applicant.
 19.40               ___________________________________________________
 19.41               agent's signature                    date
 19.43               ___________________________________________________
 19.44                                address
 19.46               ___________________________________________________
 19.47                       city                       state
 19.48            [NOTE IMPORTANT STATEMENT ON REVERSE SIDE]
 20.1      Subd. 2.  [NOTICE FORM; DIRECT RESPONSE SALES.] The notice 
 20.2   required where sections 61A.53 to 61A.60 refer to this 
 20.3   subdivision is as follows: 
 20.4                          IMPORTANT NOTICE
 20.5                            REQUIRED BY
 20.6                      MINNESOTA INSURANCE LAW
 20.8   DEFINITION: REPLACEMENT is any transaction where, in connection 
 20.9               with the purchase of New Insurance or a New Annuity, 
 20.10              you LAPSE, SURRENDER, CONVERT to Paid-up Insurance, 
 20.11              Place on Extended Term, or BORROW all or part of 
 20.12              the policy loan values on an existing insurance 
 20.13              policy or an annuity.  (See reverse side for 
 20.14              DEFINITIONS.) 
 20.16  IF YOU      In connection with the purchase of this insurance 
 20.17  INTEND TO   or annuity, if you have REPLACED or intend to 
 20.18  REPLACE     REPLACE your present life insurance coverage or 
 20.19  COVERAGE    annuity(ies), you should be certain that you 
 20.20              understand all the relevant factors involved. 
 20.22                You should BE AWARE that you may be required 
 20.23              to provide [Evidence of insurability] and 
 20.25              (1) If your HEALTH condition has CHANGED since 
 20.26                  the application was taken on your present 
 20.27                  policies, you may be required to pay 
 20.28                  ADDITIONAL PREMIUMS under the NEW POLICY, 
 20.29                  or be DENIED coverage. 
 20.30              (2) Your present occupation or activities [may 
 20.31                  not be covered or could require additional 
 20.32                  premiums.]
 20.33              (3) The INCONTESTABLE and SUICIDE CLAUSE will 
 20.34                  begin anew in a new policy.  This could 
 20.35                  RESULT in a [CLAIM under the new policy 
 20.36                  BEING DENIED] that would otherwise have 
 21.1                   been paid. 
 21.2               (4) Current law DOES NOT REQUIRE your present 
 21.3                   insurer(s) to REFUND any premiums. 
 21.4               (5) It may be to your advantage to OBTAIN 
 21.5                   INFORMATION regarding your existing 
 21.6                   policies or annuity contracts [from the insurer
 21.7                   or agent from whom you purchased the policy 
 21.8                   or annuity contract.]
 21.10                (If an annuity is being purchased, Items 1, 
 21.11              2 and 3 above would not apply to the new 
 21.12              contract.)
 21.14  CAUTION     If after studying the information made 
 21.15              available to you, you decide to replace your 
 21.16              existing life insurance or annuity with our policy 
 21.17              or annuity contract, you are urged not to 
 21.18              take action to terminate or alter your existing
 21.19              coverage or annuity(ies) until after you have
 21.20              been issued the new policy or annuity contract,
 21.21              examined it and found it to be acceptable to you.  If
 21.22              you should terminate or otherwise materially alter
 21.23              your existing coverage or annuity(ies) and 
 21.24              fail to qualify for the life insurance for which
 21.25              you have applied, you may find yourself unable to
 21.26              purchase other life insurance or be able to
 21.27              purchase it only at substantially higher rates. 
 21.29  INSURER'S MAILING DATE:...............................
 21.30     Subd. 3.  [DEFINITIONS.] The following definitions must 
 21.31  appear on the back of the notice forms provided in subdivisions 
 21.32  1 and 2: 
 21.33                           DEFINITIONS 
 21.34     PREMIUMS:  Premiums are the payments you make in exchange 
 21.35  for an insurance policy or annuity contract.  They are unlike 
 21.36  deposits in a savings or investment program, because if you drop 
 22.1   the policy or contract, you might get back less than you paid in.
 22.2      CASH SURRENDER VALUE:  This is the amount of money you can 
 22.3   get in cash if you surrender your life insurance policy or 
 22.4   annuity.  If there is a policy loan, the cash surrender value is 
 22.5   the difference between the cash value printed in the policy and 
 22.6   the loan value.  Not all policies have cash surrender values. 
 22.7      LAPSE:  A life insurance policy may lapse when you do not 
 22.8   pay the premiums within the grace period.  If you had a cash 
 22.9   surrender value, the insurer might change your policy to as much 
 22.10  extended term insurance or paid-up insurance as the cash 
 22.11  surrender value will buy.  Sometimes the policy lets the insurer 
 22.12  borrow from the cash surrender value to pay the premiums. 
 22.13     SURRENDER:  You surrender a life insurance policy when you 
 22.14  either let it lapse or tell the company you want to drop it.  
 22.15  Whenever a policy has a cash surrender value, you can get it in 
 22.16  cash if you return the policy to the company with a written 
 22.17  request.  Most insurers will also let you exchange the cash 
 22.18  value of the policy for paid-up or extended term insurance. 
 22.19     CONVERT TO PAID-UP INSURANCE:  This means you use your cash 
 22.20  surrender value to change your insurance to a paid-up policy 
 22.21  with the same insurer.  The death benefit generally will be 
 22.22  lower than under the old policy, but you will not have to pay 
 22.23  any more premiums. 
 22.24     PLACE ON EXTENDED TERM:  This means you use your cash 
 22.25  surrender value to change your insurance to term insurance with 
 22.26  the same insurer.  In this case, the net death benefit will be 
 22.27  the same as before.  However, you will only be covered for a 
 22.28  specified period of time stated in the policy. 
 22.29     BORROW POLICY LOAN VALUES:  If your life insurance policy 
 22.30  has a cash surrender value, you can almost always borrow all or 
 22.31  part of it from the insurer.  Interest will be charged according 
 22.32  to the terms of the policy, and if the loan with unpaid interest 
 22.33  ever exceeds the cash surrender value, your policy will be 
 22.34  surrendered.  If you die, the amount of the loan and any unpaid 
 22.35  interest due will be subtracted from the death benefits. 
 22.36     EVIDENCE OF INSURABILITY:  This means proof that you are an 
 23.1   acceptable risk.  You have to meet the insurer's standards 
 23.2   regarding age, health, occupation, etc., to be eligible for 
 23.3   coverage. 
 23.4      INCONTESTABLE CLAUSE:  This says that after two years, 
 23.5   depending on the policy or insurer, the life insurer will not 
 23.6   resist a claim because you made a false or incomplete statement 
 23.7   when you applied for the policy.  For the early years, though, 
 23.8   if there are wrong answers on the application and the insurer 
 23.9   finds out about them, the insurer can deny a claim as if the 
 23.10  policy had never existed. 
 23.11     SUICIDE CLAUSE:  This says that if you commit suicide after 
 23.12  being insured for less than two years, depending on the policy 
 23.13  and insurer, your beneficiaries will receive only a refund of 
 23.14  the premiums that were paid. 
 23.15     Subd. 4.  [PRINTING OF NOTICES.] The notices in 
 23.16  subdivisions 1 and 2 must be reproduced in their entirety on one 
 23.17  side of an 8-1/2 by 11 inch sheet of plain paper.  The 
 23.18  definitions contained in subdivision 3 must be printed on the 
 23.19  reverse side.  The insurer may print its legal name in the space 
 23.20  provided.  
 23.21     Sec. 21.  Minnesota Statutes 1994, section 61B.28, 
 23.22  subdivision 7, is amended to read: 
 23.23     Subd. 7.  [NOTICE CONCERNING LIMITATIONS AND EXCLUSIONS.] 
 23.24  (a) No person, including an insurer, agent, or affiliate of an 
 23.25  insurer or agent, shall offer for sale in this state a covered 
 23.26  life insurance, annuity, or health insurance policy or contract 
 23.27  without delivering at the time of application for that policy or 
 23.28  contract a notice in the form specified in subdivision 8, or in 
 23.29  a form approved by the commissioner under paragraph (b), 
 23.30  relating to coverage provided by the Minnesota life and health 
 23.31  insurance guaranty association.  The notice may be part of the 
 23.32  application.  A copy of the notice must be given to the 
 23.33  applicant.  The notice must be delivered to the applicant at the 
 23.34  time of application for the policy or contract, except that if 
 23.35  the application is not taken from the applicant in person, the 
 23.36  notice must be sent to the applicant within 72 hours after the 
 24.1   application is taken.  The person offering the policy or 
 24.2   contract shall document the fact that the notice was given at 
 24.3   the time of application or was sent within the specified time. 
 24.4   This does not require that the receipt of the notice be 
 24.5   acknowledged by the applicant. 
 24.6      (b) The association may prepare, and file with the 
 24.7   commissioner for approval, a form of notice as an alternative to 
 24.8   the form of notice specified in subdivision 8 describing the 
 24.9   general purposes and limitations of this chapter.  The form of 
 24.10  notice shall: 
 24.11     (1) state the name, address, and telephone number of the 
 24.12  Minnesota life and health insurance guaranty association; 
 24.13     (2) prominently warn the policy or contract holder that the 
 24.14  Minnesota life and health insurance guaranty association may not 
 24.15  cover the policy or, if coverage is available, it will be 
 24.16  subject to substantial limitations and exclusions and 
 24.17  conditioned on continued residence in the state; 
 24.18     (3) state that the insurer and its agents are prohibited by 
 24.19  law from using the existence of the Minnesota life and health 
 24.20  insurance guaranty association for the purpose of sales, 
 24.21  solicitation, or inducement to purchase any form of insurance; 
 24.22     (4) emphasize that the policy or contract holder should not 
 24.23  rely on coverage under the Minnesota life and health insurance 
 24.24  guaranty association when selecting an insurer; 
 24.25     (5) provide other information as directed by the 
 24.26  commissioner.  The commissioner may approve any form of notice 
 24.27  proposed by the association and, as to the approved form of 
 24.28  notice, the association may notify all member insurers by mail 
 24.29  that the form of notice is available as an alternative to the 
 24.30  notice specified in subdivision 8.  
 24.31     (c) A policy or contract not covered by the Minnesota Life 
 24.32  and Health Insurance Guaranty Association or the Minnesota 
 24.33  Insurance Guaranty Association must contain the following notice 
 24.34  in ten-point type, stamped in red ink or contrasting type on the 
 24.35  policy or contract and the application: 
 24.36     "THIS POLICY OR CONTRACT IS NOT PROTECTED BY THE MINNESOTA 
 25.1      LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION OR THE 
 25.2      MINNESOTA INSURANCE GUARANTY ASSOCIATION.  IN THE CASE OF 
 25.3      INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED.  ONLY THE 
 25.4      ASSETS OF THIS INSURER WILL BE AVAILABLE TO PAY YOUR CLAIM."
 25.5      This section does not apply to fraternal benefit societies 
 25.6   regulated under chapter 64B. 
 25.7      Sec. 22.  Minnesota Statutes 1994, section 62A.02, is 
 25.8   amended by adding a subdivision to read: 
 25.9      Subd. 7.  [FILING BY DOMESTIC INSURERS FOR PURPOSES OF 
 25.10  COMPLYING WITH ANOTHER STATE'S FILING REQUIREMENTS.] A domestic 
 25.11  insurer may file with the commissioner for informational 
 25.12  purposes only a policy or certificate of insurance that is not 
 25.13  intended to be offered or sold within this state.  This 
 25.14  subdivision only applies to the filing in Minnesota of a policy 
 25.15  or certificate of insurance issued to an insured or certificate 
 25.16  holder located outside of this state when the filing is for the 
 25.17  express purpose of complying with the law of the state in which 
 25.18  the insured or certificate holder resides.  In no event may a 
 25.19  policy or certificate of insurance filed under this subdivision 
 25.20  for out-of-state use be issued or delivered in Minnesota unless 
 25.21  and until the policy or certificate of insurance is approved 
 25.22  under subdivision 2. 
 25.23     Sec. 23.  Minnesota Statutes 1995 Supplement, section 
 25.24  62A.042, is amended to read: 
 25.25     62A.042 [FAMILY COVERAGE; COVERAGE OF NEWBORN INFANTS.] 
 25.26     Subdivision 1.  [INDIVIDUAL FAMILY POLICIES; RENEWALS.] (a) 
 25.27  No policy of individual accident and sickness insurance which 
 25.28  provides for insurance for more than one person under section 
 25.29  62A.03, subdivision 1, clause (3), and no individual health 
 25.30  maintenance contract which provides for coverage for more than 
 25.31  one person under chapter 62D, shall be renewed to insure or 
 25.32  cover any person in this state or be delivered or issued for 
 25.33  delivery to any person in this state unless the policy or 
 25.34  contract includes as insured or covered members of the family 
 25.35  any newborn infants, including dependent grandchildren who 
 25.36  reside with a covered grandparent, immediately from the moment 
 26.1   of birth and thereafter which insurance or contract shall 
 26.2   provide coverage for illness, injury, congenital malformation, 
 26.3   or premature birth.  For purposes of this paragraph, "newborn 
 26.4   infants" includes grandchildren who are financially dependent 
 26.5   upon a covered grandparent and who reside with that covered 
 26.6   grandparent continuously from birth.  No policy or contract 
 26.7   covered by this section may require notification to a health 
 26.8   carrier as a condition for this dependent coverage.  However, if 
 26.9   the policy or contract mandates an additional premium for each 
 26.10  dependent, the health carrier shall be entitled to all premiums 
 26.11  that would have been collected had the health carrier been aware 
 26.12  of the additional dependent.  The health carrier may withhold 
 26.13  payment of any health benefits for the new dependent until it 
 26.14  has been compensated with the applicable premium which would 
 26.15  have been owed if the health carrier had been informed of the 
 26.16  additional dependent immediately. 
 26.17     (b) The coverage under paragraph (a) includes benefits for 
 26.18  inpatient or outpatient expenses arising from medical and dental 
 26.19  treatment up to age 18, including orthodontic and oral surgery 
 26.20  treatment, involved in the management of birth defects known as 
 26.21  cleft lip and cleft palate.  If orthodontic services are 
 26.22  eligible for coverage under a dental insurance plan and another 
 26.23  policy or contract, the dental plan shall be primary and the 
 26.24  other policy or contract shall be secondary in regard to the 
 26.25  coverage required under paragraph (a).  Payment for dental or 
 26.26  orthodontic treatment not related to the management of the 
 26.27  congenital condition of cleft lip and cleft palate shall not be 
 26.28  covered under this provision.  
 26.29     Subd. 2.  [GROUP POLICIES; RENEWALS.] (a) No group accident 
 26.30  and sickness insurance policy and no group health maintenance 
 26.31  contract which provide for coverage of family members or other 
 26.32  dependents of an employee or other member of the covered group 
 26.33  shall be renewed to cover members of a group located in this 
 26.34  state or delivered or issued for delivery to any person in this 
 26.35  state unless the policy or contract includes as insured or 
 26.36  covered family members or dependents any newborn infants, 
 27.1   including dependent grandchildren who reside with a covered 
 27.2   grandparent, immediately from the moment of birth and thereafter 
 27.3   which insurance or contract shall provide coverage for illness, 
 27.4   injury, congenital malformation, or premature birth.  For 
 27.5   purposes of this paragraph, "newborn infants" includes 
 27.6   grandchildren who are financially dependent upon a covered 
 27.7   grandparent and who reside with that covered grandparent 
 27.8   continuously from birth.  No policy or contract covered by this 
 27.9   section may require notification to a health carrier as a 
 27.10  condition for this dependent coverage.  However, if the policy 
 27.11  or contract mandates an additional premium for each dependent, 
 27.12  the health carrier shall be entitled to all premiums that would 
 27.13  have been collected had the health carrier been aware of the 
 27.14  additional dependent.  The health carrier may reduce the health 
 27.15  benefits owed to the insured, certificate holder, member, or 
 27.16  subscriber by the amount of past due premiums applicable to the 
 27.17  additional dependent. 
 27.18     (b) The coverage under paragraph (a) includes benefits for 
 27.19  inpatient or outpatient expenses arising from medical and dental 
 27.20  treatment up to age 18, including orthodontic and oral surgery 
 27.21  treatment, involved in the management of birth defects known as 
 27.22  cleft lip and cleft palate.  If orthodontic services are 
 27.23  eligible for coverage under a dental insurance plan and another 
 27.24  policy or contract, the dental plan shall be primary and the 
 27.25  other policy or contract shall be secondary in regard to the 
 27.26  coverage required under paragraph (a).  Payment for dental or 
 27.27  orthodontic treatment not related to the management of the 
 27.28  congenital condition of cleft lip and cleft palate shall not be 
 27.29  covered under this provision. 
 27.30     Sec. 24.  [62A.3091] [NONDISCRIMINATE COVERAGE OF TESTS.] 
 27.31     Subdivision 1.  [SCOPE OF REQUIREMENT.] This section 
 27.32  applies to any of the following if issued or renewed to a 
 27.33  Minnesota resident or to cover a Minnesota resident: 
 27.34     (1) a health plan, as defined in section 62A.011; 
 27.35     (2) coverage described in section 62A.011, subdivision 3, 
 27.36  clauses (2), (3), or (6) to (12); and 
 28.1      (3) a policy, contract, or certificate issued by a 
 28.2   community integrated service network or an integrated service 
 28.3   network licensed under chapter 62N. 
 28.4      Subd. 2.  [REQUIREMENT.] Coverage described in subdivision 
 28.5   1 that covers laboratory tests, diagnostic tests, and X-rays 
 28.6   must provide the same coverage, without requiring additional 
 28.7   signatures, for all such tests ordered by an advanced practice 
 28.8   nurse operating pursuant to chapter 148.  Nothing in this 
 28.9   section shall be construed to interfere with any written 
 28.10  agreement between a physician and an advanced practice nurse. 
 28.11     Sec. 25.  [62A.3092] [EQUAL TREATMENT OF SURGICAL FIRST 
 28.12  ASSISTING SERVICES.] 
 28.13     Subdivision 1.  [SCOPE OF REQUIREMENT.] This section 
 28.14  applies to any of the following if issued or renewed to a 
 28.15  Minnesota resident or to cover a Minnesota resident: 
 28.16     (1) a health plan, as defined in section 62A.011; 
 28.17     (2) coverage described in section 62A.011, subdivision 3, 
 28.18  clauses (2), (3), or (6) to (12); and 
 28.19     (3) a policy, contract, or certificate issued by a 
 28.20  community integrated service network or an integrated service 
 28.21  network licensed under chapter 62N.  
 28.22     Subd. 2.  [REQUIREMENT.] Coverage described in subdivision 
 28.23  1 that provides for payment for surgical first assisting 
 28.24  benefits or services shall be construed as providing for payment 
 28.25  for a registered nurse who performs first assistant functions 
 28.26  and services that are within the scope of practice of a 
 28.27  registered nurse. 
 28.28     Sec. 26.  Minnesota Statutes 1995 Supplement, section 
 28.29  62A.135, subdivision 1, is amended to read: 
 28.30     Subdivision 1.  [DEFINITIONS.] For purposes of this 
 28.31  section, the following terms have the meanings given them: 
 28.32     (a) "fixed indemnity policy" is a policy form, other than 
 28.33  an accidental death and dismemberment policy, a disability 
 28.34  income policy, or a long-term care policy as defined in section 
 28.35  62A.46, subdivision 2, that pays a predetermined, specified, 
 28.36  fixed benefit for services provided.  Claim costs under these 
 29.1   forms are generally not subject to inflation, although they may 
 29.2   be subject to changes in the utilization of health care 
 29.3   services.  For policy forms providing both expense-incurred and 
 29.4   fixed benefits, the policy form is a fixed indemnity policy if 
 29.5   50 percent or more of the total claims are for predetermined, 
 29.6   specified, fixed benefits; 
 29.7      (b) "guaranteed renewable" means that, during the renewal 
 29.8   period (to a specified age) renewal cannot be declined nor 
 29.9   coverage changed by the insurer for any reason other than 
 29.10  nonpayment of premiums, fraud, or misrepresentation, but the 
 29.11  insurer can revise rates on a class basis upon approval by the 
 29.12  commissioner; 
 29.13     (c) "noncancelable" means that, during the renewal period 
 29.14  (to a specified age) renewal cannot be declined nor coverage 
 29.15  changed by the insurer for any reason other than nonpayment of 
 29.16  premiums, fraud, or misrepresentation and that rates cannot be 
 29.17  revised by the insurer.  This includes policies that are 
 29.18  guaranteed renewable to a specified age, such as 60 or 65, at 
 29.19  guaranteed rates; and 
 29.20     (d) "average annualized premium" means the average of the 
 29.21  estimated annualized premium per covered person based on the 
 29.22  anticipated distribution of business using all significant 
 29.23  criteria having a price difference, such as age, sex, amount, 
 29.24  dependent status, mode of payment, and rider frequency.  For 
 29.25  filing of rate revisions, the amount is the anticipated average 
 29.26  assuming the revised rates have fully taken effect. 
 29.27     Sec. 27.  Minnesota Statutes 1995 Supplement, section 
 29.28  62A.31, subdivision 1h, is amended to read: 
 29.29     Subd. 1h.  [LIMITATIONS ON DENIALS, CONDITIONS, AND PRICING 
 29.30  OF COVERAGE.] No issuer of Medicare supplement policies, 
 29.31  including policies that supplement Medicare issued by health 
 29.32  maintenance organizations or those policies governed by section 
 29.33  1833 or 1876 of the federal Social Security Act, United States 
 29.34  Code, title 42, section 1395, et seq., health carrier issuing 
 29.35  Medicare-related coverage in this state may impose preexisting 
 29.36  condition limitations or otherwise deny or condition the 
 30.1   issuance or effectiveness of any Medicare supplement insurance 
 30.2   policy form such coverage available for sale in this state, nor 
 30.3   may it discriminate in the pricing of such a policy coverage, 
 30.4   because of the health status, claims experience, receipt of 
 30.5   health care, medical condition, or age of an applicant where an 
 30.6   application for such insurance coverage is submitted prior to or 
 30.7   during the six-month period beginning with the first day of the 
 30.8   month in which an individual first enrolled for benefits under 
 30.9   Medicare Part B.  This paragraph subdivision applies to each 
 30.10  Medicare-related coverage offered by a health carrier regardless 
 30.11  of whether the individual has attained the age of 65 years.  If 
 30.12  an individual who is enrolled in Medicare Part B due to 
 30.13  disability status is involuntarily disenrolled due to loss of 
 30.14  disability status, the individual is eligible for the another 
 30.15  six-month enrollment period provided under this subdivision if 
 30.16  beginning the first day of the month in which the individual 
 30.17  later becomes eligible for and enrolls again in Medicare Part 
 30.18  B.  An individual who is or was previously enrolled in Medicare 
 30.19  Part B due to disability status is eligible for another 
 30.20  six-month enrollment period under this subdivision beginning the 
 30.21  first day of the month in which the individual has attained the 
 30.22  age of 65 years and either maintains enrollment in, or enrolls 
 30.23  again in, Medicare Part B. 
 30.24     Sec. 28.  Minnesota Statutes 1994, section 62A.31, 
 30.25  subdivision 1p, is amended to read: 
 30.26     Subd. 1p.  [RENEWAL OR CONTINUATION PROVISIONS.] Medicare 
 30.27  supplement policies and certificates shall include a renewal or 
 30.28  continuation provision.  The language or specifications of the 
 30.29  provision shall be consistent with the type of contract issued.  
 30.30  The provision shall be appropriately captioned and shall appear 
 30.31  on the first page of the policy or certificate, and shall 
 30.32  include any reservation by the issuer of the right to change 
 30.33  premiums.  Except for riders or endorsements by which the issuer 
 30.34  effectuates a request made in writing by the insured, exercises 
 30.35  a specifically reserved right under a Medicare supplement policy 
 30.36  or certificate, or is required to reduce or eliminate benefits 
 31.1   to avoid duplication of Medicare benefits, all riders or 
 31.2   endorsements added to a Medicare supplement policy or 
 31.3   certificate after the date of issue or at reinstatement or 
 31.4   renewal that reduce or eliminate benefits or coverage in the 
 31.5   policy or certificate shall require a signed acceptance by the 
 31.6   insured.  After the date of policy or certificate issue, a rider 
 31.7   or endorsement that increases benefits or coverage with a 
 31.8   concomitant increase in premium during the policy or certificate 
 31.9   term shall be agreed to in writing and signed by the insured, 
 31.10  unless the benefits are required by the minimum standards for 
 31.11  Medicare supplement policies or if the increased benefits or 
 31.12  coverage is required by law.  Where a separate additional 
 31.13  premium is charged for benefits provided in connection with 
 31.14  riders or endorsements, the premium charge shall be set forth in 
 31.15  the policy, declaration page, or certificate.  If a Medicare 
 31.16  supplement policy or certificate contains limitations with 
 31.17  respect to preexisting conditions, the limitations shall appear 
 31.18  as a separate paragraph of the policy or certificate and be 
 31.19  labeled as "preexisting condition limitations." 
 31.20     Issuers of accident and sickness policies or certificates 
 31.21  that provide hospital or medical expense coverage on an expense 
 31.22  incurred or indemnity basis, other than incidentally, to a 
 31.23  person persons eligible for Medicare by reason of age shall 
 31.24  provide to such those applicants a Medicare Supplement Buyer's " 
 31.25  Guide to Health Insurance for People with Medicare" in the form 
 31.26  developed by the Health Care Financing Administration and in a 
 31.27  type size no smaller than 12-point type.  Delivery of 
 31.28  the Buyer's guide must be made whether or not such policies or 
 31.29  certificates are advertised, solicited, or issued as Medicare 
 31.30  supplement policies or certificates as defined in this section.  
 31.31  Except in the case of direct response issuers, delivery of 
 31.32  the Buyer's guide must be made to the applicant at the time of 
 31.33  application, and acknowledgment of receipt of the Buyer's guide 
 31.34  must be obtained by the issuer.  Direct response issuers shall 
 31.35  deliver the Buyer's guide to the applicant upon request, but no 
 31.36  later than the time at which the policy is delivered. 
 32.1      Sec. 29.  Minnesota Statutes 1994, section 62A.31, 
 32.2   subdivision 1r, is amended to read: 
 32.3      Subd. 1r.  [COMMUNITY RATE.] Each health maintenance 
 32.4   organization, health service plan corporation, insurer, or 
 32.5   fraternal benefit society that sells coverage that supplements 
 32.6   Medicare-related coverage shall establish a separate community 
 32.7   rate for that coverage.  Beginning January 1, 1993, no 
 32.8   Medicare-related coverage that supplements Medicare or that is 
 32.9   governed by section 1833 or 1876 of the federal Social Security 
 32.10  Act, United States Code, title 42, section 1395, et seq., may be 
 32.11  offered, issued, sold, or renewed to a Minnesota resident, 
 32.12  except at the community rate required by this subdivision.  The 
 32.13  same community rate must apply to newly issued coverage and to 
 32.14  renewal coverage. 
 32.15     For coverage that supplements Medicare and for the Part A 
 32.16  rate calculation for plans governed by section 1833 of the 
 32.17  federal Social Security Act, United States Code, title 42, 
 32.18  section 1395, et seq., the community rate may take into account 
 32.19  only the following factors: 
 32.20     (1) actuarially valid differences in benefit designs or 
 32.21  provider networks; 
 32.22     (2) geographic variations in rates if preapproved by the 
 32.23  commissioner of commerce; and 
 32.24     (3) premium reductions in recognition of healthy lifestyle 
 32.25  behaviors, including but not limited to, refraining from the use 
 32.26  of tobacco.  Premium reductions must be actuarially valid and 
 32.27  must relate only to those healthy lifestyle behaviors that have 
 32.28  a proven positive impact on health.  Factors used by the health 
 32.29  carrier making this premium reduction must be filed with and 
 32.30  approved by the commissioner of commerce. 
 32.31     For insureds not residing in Anoka, Carver, Chisago, 
 32.32  Dakota, Hennepin, Ramsey, Scott, or Washington county, a health 
 32.33  plan may, at the option of the health carrier, phase in 
 32.34  compliance under the following timetable: 
 32.35     (i) a premium adjustment as of March 1, 1993, that consists 
 32.36  of one-half of the difference between the community rate that 
 33.1   would be applicable to the person as of March 1, 1993, and the 
 33.2   premium rate that would be applicable to the person as of March 
 33.3   1, 1993, under the rate schedule permitted on December 31, 1992. 
 33.4   A health plan may, at the option of the health carrier, 
 33.5   implement the entire premium difference described in this clause 
 33.6   for any person as of March 1, 1993, if the premium difference 
 33.7   would be 15 percent or less of the premium rate that would be 
 33.8   applicable to the person as of March 1, 1993, under the rate 
 33.9   schedule permitted on December 31, 1992, if the health plan does 
 33.10  so uniformly regardless of whether the premium difference causes 
 33.11  premiums to rise or to fall.  The premium difference described 
 33.12  in this clause is in addition to any premium adjustment 
 33.13  attributable to medical cost inflation or any other lawful 
 33.14  factor and is intended to describe only the premium difference 
 33.15  attributable to the transition to the community rate; and 
 33.16     (ii) with respect to any person whose premium adjustment 
 33.17  was constrained under clause (i), a premium adjustment as of 
 33.18  January 1, 1994, that consists of the remaining one-half of the 
 33.19  premium difference attributable to the transition to the 
 33.20  community rate, as described in clause (i). 
 33.21     A health plan that initially follows the phase-in timetable 
 33.22  may at any subsequent time comply on a more rapid timetable.  A 
 33.23  health plan that is in full compliance as of January 1, 1993, 
 33.24  may not use the phase-in timetable and must remain in full 
 33.25  compliance.  Health plans that follow the phase-in timetable 
 33.26  must charge the same premium rate for newly issued coverage that 
 33.27  they charge for renewal coverage.  A health plan whose premiums 
 33.28  are constrained by clause (i) may take the constraint into 
 33.29  account in establishing its community rate. 
 33.30     From January 1, 1993 to February 28, 1993, a health plan 
 33.31  may, at the health carrier's option, charge the community rate 
 33.32  under this paragraph or may instead charge premiums permitted as 
 33.33  of December 31, 1992. 
 33.34     Sec. 30.  Minnesota Statutes 1994, section 62A.31, 
 33.35  subdivision 1s, is amended to read: 
 33.36     Subd. 1s.  [PRESCRIPTION DRUG COVERAGE.] Beginning January 
 34.1   1, 1993, a health maintenance organization that issues 
 34.2   Medicare-related coverage that supplements Medicare or that 
 34.3   issues coverage governed by section 1833 or 1876 of the federal 
 34.4   Social Security Act, United States Code, title 42, section 1395 
 34.5   et seq., must offer, to each person to whom it offers any 
 34.6   contract described in this subdivision, at least one contract 
 34.7   that either: 
 34.8      (1) covers 80 percent of the reasonable and customary 
 34.9   charge for prescription drugs or the copayment equivalency; or 
 34.10     (2) offers the coverage described in clause (1) as an 
 34.11  optional rider that may be purchased separately from other 
 34.12  optional coverages.  
 34.13     Sec. 31.  Minnesota Statutes 1994, section 62A.31, 
 34.14  subdivision 3, is amended to read: 
 34.15     Subd. 3.  [DEFINITIONS.] (a) "Accident," "accidental 
 34.16  injury," or "accidental means" means to employ "result" language 
 34.17  and does not include words that establish an accidental means 
 34.18  test or use words such as "external," "violent," "visible 
 34.19  wounds," or similar words of description or characterization. 
 34.20     (1) The definition shall not be more restrictive than the 
 34.21  following:  "Injury or injuries for which benefits are provided 
 34.22  means accidental bodily injury sustained by the insured person 
 34.23  which is the direct result of an accident, independent of 
 34.24  disease or bodily infirmity or any other cause, and occurs while 
 34.25  insurance coverage is in force." 
 34.26     (2) The definition may provide that injuries shall not 
 34.27  include injuries for which benefits are provided or available 
 34.28  under a workers' compensation, employer's liability or similar 
 34.29  law, or motor vehicle no-fault plan, unless prohibited by law. 
 34.30     (b) "Applicant" means: 
 34.31     (1) in the case of an individual Medicare supplement policy 
 34.32  or certificate, the person who seeks to contract for insurance 
 34.33  benefits; and 
 34.34     (2) in the case of a group Medicare supplement policy or 
 34.35  certificate, the proposed certificate holder. 
 34.36     (c) "Benefit period" or "Medicare benefit period" shall not 
 35.1   be defined more restrictively than as defined in the Medicare 
 35.2   program. 
 35.3      (d) "Certificate" means a certificate delivered or issued 
 35.4   for delivery in this state or offered to a resident of this 
 35.5   state under a group Medicare supplement policy or certificate. 
 35.6      (e) "Certificate form" means the form on which the 
 35.7   certificate is delivered or issued for delivery by the issuer. 
 35.8      (f) "Convalescent nursing home," "extended care facility," 
 35.9   or "skilled nursing facility" shall not be defined more 
 35.10  restrictively than as defined in the Medicare program. 
 35.11     (g) "Health care expenses" means expenses of health 
 35.12  maintenance organizations associated with the delivery of health 
 35.13  care services which are analogous to incurred losses of 
 35.14  insurers.  The expenses shall not include: 
 35.15     (1) home office and overhead costs; 
 35.16     (2) advertising costs; 
 35.17     (3) commissions and other acquisition costs; 
 35.18     (4) taxes; 
 35.19     (5) capital costs; 
 35.20     (6) administrative costs; and 
 35.21     (7) claims processing costs. 
 35.22     (h) "Hospital" may be defined in relation to its status, 
 35.23  facilities, and available services or to reflect its 
 35.24  accreditation by the joint commission on accreditation of 
 35.25  hospitals, but not more restrictively than as defined in the 
 35.26  Medicare program. 
 35.27     (i) "Issuer" includes insurance companies, fraternal 
 35.28  benefit societies, health care service plans, health maintenance 
 35.29  organizations, and any other entity delivering or issuing for 
 35.30  delivery Medicare supplement policies or certificates in this 
 35.31  state or offering these policies or certificates to residents of 
 35.32  this state. 
 35.33     (j) "Medicare" shall be defined in the policy and 
 35.34  certificate.  Medicare may be defined as the Health Insurance 
 35.35  for the Aged Act, title XVIII of the Social Security Amendments 
 35.36  of 1965, as amended, or title I, part I, of Public Law Number 
 36.1   89-97, as enacted by the 89th Congress of the United States of 
 36.2   America and popularly known as the Health Insurance for the Aged 
 36.3   Act, as amended. 
 36.4      (k) "Medicare eligible expenses" means health care expenses 
 36.5   covered by Medicare, to the extent recognized as reasonable and 
 36.6   medically necessary by Medicare. 
 36.7      (l) "Medicare-related coverage" means a policy, contract, 
 36.8   or certificate issued as a supplement to Medicare, regulated 
 36.9   under sections 62A.31 to 62A.44, including Medicare select 
 36.10  coverage; policies, contracts, or certificates that supplement 
 36.11  Medicare issued by health maintenance organizations; or 
 36.12  policies, contracts, or certificates governed by section 1833 
 36.13  (known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA" 
 36.14  or "risk" contracts) of the federal Social Security Act, United 
 36.15  States Code, title 42, section 1395, et seq., as amended. 
 36.16     (m) "Medicare supplement policy or certificate" means a 
 36.17  group or individual policy of accident and sickness insurance or 
 36.18  a subscriber contract of hospital and medical service 
 36.19  associations or health maintenance organizations, other than a 
 36.20  policy or certificate issued under a contract under or those 
 36.21  policies or certificates covered by section 1833 or 1876 of the 
 36.22  federal Social Security Act, United States Code, title 42, 
 36.23  section 1395, et seq., or an issued policy under a demonstration 
 36.24  project authorized specified under amendments to the federal 
 36.25  Social Security Act, which is advertised, marketed, or designed 
 36.26  primarily as a supplement to reimbursements under Medicare for 
 36.27  the hospital, medical, or surgical expenses of persons eligible 
 36.28  for Medicare. 
 36.29     (m) (n) "Physician" shall not be defined more restrictively 
 36.30  than as defined in the Medicare program or section 62A.04, 
 36.31  subdivision 1, or 62A.15, subdivision 3a. 
 36.32     (n) (o) "Policy form" means the form on which the policy is 
 36.33  delivered or issued for delivery by the issuer. 
 36.34     (o) (p) "Sickness" shall not be defined more restrictively 
 36.35  than the following: 
 36.36     "Sickness means illness or disease of an insured person 
 37.1      which first manifests itself after the effective date of 
 37.2      insurance and while the insurance is in force." 
 37.3      The definition may be further modified to exclude 
 37.4   sicknesses or diseases for which benefits are provided under a 
 37.5   workers' compensation, occupational disease, employer's 
 37.6   liability, or similar law. 
 37.7      Sec. 32.  Minnesota Statutes 1994, section 62A.315, is 
 37.8   amended to read: 
 37.9      62A.315 [EXTENDED BASIC MEDICARE SUPPLEMENT PLAN; 
 37.10  COVERAGE.] 
 37.11     The extended basic Medicare supplement plan must have a 
 37.12  level of coverage so that it will be certified as a qualified 
 37.13  plan pursuant to section 62E.07, and will provide: 
 37.14     (1) coverage for all of the Medicare part A inpatient 
 37.15  hospital deductible and coinsurance amounts, and 100 percent of 
 37.16  all Medicare part A eligible expenses for hospitalization not 
 37.17  covered by Medicare; 
 37.18     (2) coverage for the daily copayment amount of Medicare 
 37.19  part A eligible expenses for the calendar year incurred for 
 37.20  skilled nursing facility care; 
 37.21     (3) coverage for the copayment amount of Medicare eligible 
 37.22  expenses under Medicare part B regardless of hospital 
 37.23  confinement, and the Medicare part B deductible amount; 
 37.24     (4) 80 percent of the usual and customary hospital and 
 37.25  medical expenses and supplies described in section 62E.06, 
 37.26  subdivision 1, not to exceed any charge limitation established 
 37.27  by the Medicare program or state law, the usual and customary 
 37.28  hospital and medical expenses and supplies, described in section 
 37.29  62E.06, subdivision 1, while in a foreign country, and 
 37.30  prescription drug expenses, not covered by Medicare's eligible 
 37.31  expenses Medicare; 
 37.32     (5) coverage for the reasonable cost of the first three 
 37.33  pints of blood, or equivalent quantities of packed red blood 
 37.34  cells as defined under federal regulations under Medicare parts 
 37.35  A and B, unless replaced in accordance with federal regulations; 
 37.36     (6) 100 percent of the cost of immunizations and routine 
 38.1   screening procedures for cancer, including mammograms and pap 
 38.2   smears; 
 38.3      (7) preventive medical care benefit:  coverage for the 
 38.4   following preventive health services: 
 38.5      (i) an annual clinical preventive medical history and 
 38.6   physical examination that may include tests and services from 
 38.7   clause (ii) and patient education to address preventive health 
 38.8   care measures; 
 38.9      (ii) any one or a combination of the following preventive 
 38.10  screening tests or preventive services, the frequency of which 
 38.11  is considered medically appropriate: 
 38.12     (A) fecal occult blood test and/or digital rectal 
 38.13  examination; 
 38.14     (B) dipstick urinalysis for hematuria, bacteriuria, and 
 38.15  proteinuria; 
 38.16     (C) pure tone (air only) hearing screening test 
 38.17  administered or ordered by a physician; 
 38.18     (D) serum cholesterol screening every five years; 
 38.19     (E) thyroid function test; 
 38.20     (F) diabetes screening; 
 38.21     (iii) any other tests or preventive measures determined 
 38.22  appropriate by the attending physician.  
 38.23     Reimbursement shall be for the actual charges up to 100 
 38.24  percent of the Medicare-approved amount for each service as if 
 38.25  Medicare were to cover the service as identified in American 
 38.26  Medical Association current procedural terminology (AMA CPT) 
 38.27  codes to a maximum of $120 annually under this benefit.  This 
 38.28  benefit shall not include payment for any procedure covered by 
 38.29  Medicare; 
 38.30     (8) at-home recovery benefit:  coverage for services to 
 38.31  provide short-term at-home assistance with activities of daily 
 38.32  living for those recovering from an illness, injury, or surgery: 
 38.33     (i) for purposes of this benefit, the following definitions 
 38.34  shall apply: 
 38.35     (A) "activities of daily living" include, but are not 
 38.36  limited to, bathing, dressing, personal hygiene, transferring, 
 39.1   eating, ambulating, assistance with drugs that are normally 
 39.2   self-administered, and changing bandages or other dressings; 
 39.3      (B) "care provider" means a duly qualified or licensed home 
 39.4   health aide/homemaker, personal care aide, or nurse provided 
 39.5   through a licensed home health care agency or referred by a 
 39.6   licensed referral agency or licensed nurses registry; 
 39.7      (C) "home" means a place used by the insured as a place of 
 39.8   residence, provided that the place would qualify as a residence 
 39.9   for home health care services covered by Medicare.  A hospital 
 39.10  or skilled nursing facility shall not be considered the 
 39.11  insured's place of residence; 
 39.12     (D) "at-home recovery visit" means the period of a visit 
 39.13  required to provide at-home recovery care, without limit on the 
 39.14  duration of the visit, except each consecutive four hours in a 
 39.15  24-hour period of services provided by a care provider is one 
 39.16  visit; 
 39.17     (ii) coverage requirements and limitations: 
 39.18     (A) at-home recovery services provided must be primarily 
 39.19  services that assist in activities of daily living; 
 39.20     (B) the insured's attending physician must certify that the 
 39.21  specific type and frequency of at-home recovery services are 
 39.22  necessary because of a condition for which a home care plan of 
 39.23  treatment was approved by Medicare; 
 39.24     (C) coverage is limited to: 
 39.25     (I) no more than the number and type of at-home recovery 
 39.26  visits certified as medically necessary by the insured's 
 39.27  attending physician.  The total number of at-home recovery 
 39.28  visits shall not exceed the number of Medicare-approved home 
 39.29  health care visits under a Medicare-approved home care plan of 
 39.30  treatment; 
 39.31     (II) the actual charges for each visit up to a maximum 
 39.32  reimbursement of $40 per visit; 
 39.33     (III) $1,600 per calendar year; 
 39.34     (IV) seven visits in any one week; 
 39.35     (V) care furnished on a visiting basis in the insured's 
 39.36  home; 
 40.1      (VI) services provided by a care provider as defined in 
 40.2   this section; 
 40.3      (VII) at-home recovery visits while the insured is covered 
 40.4   under the policy or certificate and not otherwise excluded; 
 40.5      (VIII) at-home recovery visits received during the period 
 40.6   the insured is receiving Medicare-approved home care services or 
 40.7   no more than eight weeks after the service date of the last 
 40.8   Medicare-approved home health care visit; 
 40.9      (iii) coverage is excluded for: 
 40.10     (A) home care visits paid for by Medicare or other 
 40.11  government programs; and 
 40.12     (B) care provided by family members, unpaid volunteers, or 
 40.13  providers who are not care providers. 
 40.14     Sec. 33.  Minnesota Statutes 1994, section 62A.318, is 
 40.15  amended to read: 
 40.16     62A.318 [MEDICARE SELECT POLICIES AND CERTIFICATES.] 
 40.17     (a) This section applies to Medicare select policies and 
 40.18  certificates, as defined in this section, including those issued 
 40.19  by health maintenance organizations.  No policy or certificate 
 40.20  may be advertised as a Medicare select policy or certificate 
 40.21  unless it meets the requirements of this section. 
 40.22     (b) For the purposes of this section: 
 40.23     (1) "complaint" means any dissatisfaction expressed by an 
 40.24  individual concerning a Medicare select issuer or its network 
 40.25  providers; 
 40.26     (2) "grievance" means dissatisfaction expressed in writing 
 40.27  by an individual insured under a Medicare select policy or 
 40.28  certificate with the administration, claims practices, or 
 40.29  provision of services concerning a Medicare select issuer or its 
 40.30  network providers; 
 40.31     (3) "Medicare select issuer" means an issuer offering, or 
 40.32  seeking to offer, a Medicare select policy or certificate; 
 40.33     (4) "Medicare select policy" or "Medicare select 
 40.34  certificate" means a Medicare supplement policy or certificate 
 40.35  that contains restricted network provisions; 
 40.36     (5) "network provider" means a provider of health care, or 
 41.1   a group of providers of health care, that has entered into a 
 41.2   written agreement with the issuer to provide benefits insured 
 41.3   under a Medicare select policy or certificate; 
 41.4      (6) "restricted network provision" means a provision that 
 41.5   conditions the payment of benefits, in whole or in part, on the 
 41.6   use of network providers; and 
 41.7      (7) "service area" means the geographic area approved by 
 41.8   the commissioner within which an issuer is authorized to offer a 
 41.9   Medicare select policy or certificate. 
 41.10     (c) The commissioner may authorize an issuer to offer a 
 41.11  Medicare select policy or certificate pursuant to this section 
 41.12  and section 4358 of the Omnibus Budget Reconciliation Act (OBRA) 
 41.13  of 1990, Public Law Number 101-508, if the commissioner finds 
 41.14  that the issuer has satisfied all of the requirements of 
 41.15  Minnesota Statutes. 
 41.16     (d) A Medicare select issuer shall not issue a Medicare 
 41.17  select policy or certificate in this state until its plan of 
 41.18  operation has been approved by the commissioner. 
 41.19     (e) A Medicare select issuer shall file a proposed plan of 
 41.20  operation with the commissioner, in a format prescribed by the 
 41.21  commissioner.  The plan of operation shall contain at least the 
 41.22  following information: 
 41.23     (1) evidence that all covered services that are subject to 
 41.24  restricted network provisions are available and accessible 
 41.25  through network providers, including a demonstration that: 
 41.26     (i) the services can be provided by network providers with 
 41.27  reasonable promptness with respect to geographic location, hours 
 41.28  of operation, and after-hour care.  The hours of operation and 
 41.29  availability of after-hour care shall reflect usual practice in 
 41.30  the local area.  Geographic availability shall reflect the usual 
 41.31  travel times within the community; 
 41.32     (ii) the number of network providers in the service area is 
 41.33  sufficient, with respect to current and expected policyholders, 
 41.34  either: 
 41.35     (A) to deliver adequately all services that are subject to 
 41.36  a restricted network provision; or 
 42.1      (B) to make appropriate referrals; 
 42.2      (iii) there are written agreements with network providers 
 42.3   describing specific responsibilities; 
 42.4      (iv) emergency care is available 24 hours per day and seven 
 42.5   days per week; and 
 42.6      (v) in the case of covered services that are subject to a 
 42.7   restricted network provision and are provided on a prepaid 
 42.8   basis, there are written agreements with network providers 
 42.9   prohibiting the providers from billing or otherwise seeking 
 42.10  reimbursement from or recourse against an individual insured 
 42.11  under a Medicare select policy or certificate.  This section 
 42.12  does not apply to supplemental charges or coinsurance amounts as 
 42.13  stated in the Medicare select policy or certificate; 
 42.14     (2) a statement or map providing a clear description of the 
 42.15  service area; 
 42.16     (3) a description of the grievance procedure to be used; 
 42.17     (4) a description of the quality assurance program, 
 42.18  including: 
 42.19     (i) the formal organizational structure; 
 42.20     (ii) the written criteria for selection, retention, and 
 42.21  removal of network providers; and 
 42.22     (iii) the procedures for evaluating quality of care 
 42.23  provided by network providers, and the process to initiate 
 42.24  corrective action when warranted; 
 42.25     (5) a list and description, by specialty, of the network 
 42.26  providers; 
 42.27     (6) copies of the written information proposed to be used 
 42.28  by the issuer to comply with paragraph (i); and 
 42.29     (7) any other information requested by the commissioner. 
 42.30     (f) A Medicare select issuer shall file proposed changes to 
 42.31  the plan of operation, except for changes to the list of network 
 42.32  providers, with the commissioner before implementing the 
 42.33  changes.  The changes shall be considered approved by the 
 42.34  commissioner after 30 days unless specifically disapproved. 
 42.35     An updated list of network providers shall be filed with 
 42.36  the commissioner at least quarterly. 
 43.1      (g) A Medicare select policy or certificate shall not 
 43.2   restrict payment for covered services provided by nonnetwork 
 43.3   providers if: 
 43.4      (1) the services are for symptoms requiring emergency care 
 43.5   or are immediately required for an unforeseen illness, injury, 
 43.6   or condition; and 
 43.7      (2) it is not reasonable to obtain the services through a 
 43.8   network provider. 
 43.9      (h) A Medicare select policy or certificate shall provide 
 43.10  payment for full coverage under the policy or certificate for 
 43.11  covered services that are not available through network 
 43.12  providers. 
 43.13     (i) A Medicare select issuer shall make full and fair 
 43.14  disclosure in writing of the provisions, restrictions, and 
 43.15  limitations of the Medicare select policy or certificate to each 
 43.16  applicant.  This disclosure must include at least the following: 
 43.17     (1) an outline of coverage sufficient to permit the 
 43.18  applicant to compare the coverage and premiums of the Medicare 
 43.19  select policy or certificate with: 
 43.20     (i) other Medicare supplement policies or certificates 
 43.21  offered by the issuer; and 
 43.22     (ii) other Medicare select policies or certificates; 
 43.23     (2) a description, including address, phone number, and 
 43.24  hours of operation, of the network providers, including primary 
 43.25  care physicians, specialty physicians, hospitals, and other 
 43.26  providers; 
 43.27     (3) a description of the restricted network provisions, 
 43.28  including payments for coinsurance and deductibles when 
 43.29  providers other than network providers are used; 
 43.30     (4) a description of coverage for emergency and urgently 
 43.31  needed care and other out-of-service area coverage; 
 43.32     (5) a description of limitations on referrals to restricted 
 43.33  network providers and to other providers; 
 43.34     (6) a description of the policyholder's rights to purchase 
 43.35  any other Medicare supplement policy or certificate otherwise 
 43.36  offered by the issuer; and 
 44.1      (7) a description of the Medicare select issuer's quality 
 44.2   assurance program and grievance procedure. 
 44.3      (j) Before the sale of a Medicare select policy or 
 44.4   certificate, a Medicare select issuer shall obtain from the 
 44.5   applicant a signed and dated form stating that the applicant has 
 44.6   received the information provided pursuant to paragraph (i) and 
 44.7   that the applicant understands the restrictions of the Medicare 
 44.8   select policy or certificate. 
 44.9      (k) A Medicare select issuer shall have and use procedures 
 44.10  for hearing complaints and resolving written grievances from the 
 44.11  subscribers.  The procedures shall be aimed at mutual agreement 
 44.12  for settlement and may include arbitration procedures.  
 44.13     (1) The grievance procedure must be described in the policy 
 44.14  and certificates and in the outline of coverage. 
 44.15     (2) At the time the policy or certificate is issued, the 
 44.16  issuer shall provide detailed information to the policyholder 
 44.17  describing how a grievance may be registered with the issuer. 
 44.18     (3) Grievances must be considered in a timely manner and 
 44.19  must be transmitted to appropriate decision makers who have 
 44.20  authority to fully investigate the issue and take corrective 
 44.21  action. 
 44.22     (4) If a grievance is found to be valid, corrective action 
 44.23  must be taken promptly. 
 44.24     (5) All concerned parties must be notified about the 
 44.25  results of a grievance. 
 44.26     (6) The issuer shall report no later than March 31 of each 
 44.27  year to the commissioner regarding the grievance procedure.  The 
 44.28  report shall be in a format prescribed by the commissioner and 
 44.29  shall contain the number of grievances filed in the past year 
 44.30  and a summary of the subject, nature, and resolution of the 
 44.31  grievances. 
 44.32     (l) At the time of initial purchase, a Medicare select 
 44.33  issuer shall make available to each applicant for a Medicare 
 44.34  select policy or certificate the opportunity to purchase a 
 44.35  Medicare supplement policy or certificate otherwise offered by 
 44.36  the issuer. 
 45.1      (m)(1) At the request of an individual insured under a 
 45.2   Medicare select policy or certificate, a Medicare select issuer 
 45.3   shall make available to the individual insured the opportunity 
 45.4   to purchase a Medicare supplement policy or certificate offered 
 45.5   by the issuer that has comparable or lesser benefits and that 
 45.6   does not contain a restricted network provision.  The issuer 
 45.7   shall make the policies or certificates available without 
 45.8   requiring evidence of insurability after the Medicare supplement 
 45.9   policy or certificate has been in force for six months.  If the 
 45.10  issuer does not have available for sale a policy or certificate 
 45.11  without restrictive network provisions, the issuer shall provide 
 45.12  enrollment information for the Minnesota comprehensive health 
 45.13  association Medicare supplement plans. 
 45.14     (2) For the purposes of this paragraph, a Medicare 
 45.15  supplement policy or certificate will be considered to have 
 45.16  comparable or lesser benefits unless it contains one or more 
 45.17  significant benefits not included in the Medicare select policy 
 45.18  or certificate being replaced.  For the purposes of this 
 45.19  paragraph, a significant benefit means coverage for the Medicare 
 45.20  part A deductible, coverage for prescription drugs, coverage for 
 45.21  at-home recovery services, or coverage for part B excess charges.
 45.22     (n) Medicare select policies and certificates shall provide 
 45.23  for continuation of coverage if the secretary of health and 
 45.24  human services determines that Medicare select policies and 
 45.25  certificates issued pursuant to this section should be 
 45.26  discontinued due to either the failure of the Medicare select 
 45.27  program to be reauthorized under law or its substantial 
 45.28  amendment. 
 45.29     (1) Each Medicare select issuer shall make available to 
 45.30  each individual insured under a Medicare select policy or 
 45.31  certificate the opportunity to purchase a Medicare supplement 
 45.32  policy or certificate offered by the issuer that has comparable 
 45.33  or lesser benefits and that does not contain a restricted 
 45.34  network provision.  The issuer shall make the policies and 
 45.35  certificates available without requiring evidence of 
 45.36  insurability. 
 46.1      (2) For the purposes of this paragraph, a Medicare 
 46.2   supplement policy or certificate will be considered to have 
 46.3   comparable or lesser benefits unless it contains one or more 
 46.4   significant benefits not included in the Medicare select policy 
 46.5   or certificate being replaced.  For the purposes of this 
 46.6   paragraph, a significant benefit means coverage for the Medicare 
 46.7   part A deductible, coverage for prescription drugs, coverage for 
 46.8   at-home recovery services, or coverage for part B excess charges.
 46.9      (o) A Medicare select issuer shall comply with reasonable 
 46.10  requests for data made by state or federal agencies, including 
 46.11  the United States Department of Health and Human Services, for 
 46.12  the purpose of evaluating the Medicare select program. 
 46.13     (p) Medicare select policies and certificates under this 
 46.14  section shall be regulated and approved by the department of 
 46.15  commerce. 
 46.16     (q) Medicare select policies and certificates must be 
 46.17  either a basic plan or an extended basic plan.  Before a 
 46.18  Medicare select policy or certificate is sold or issued in this 
 46.19  state, the applicant must be provided with an explanation of 
 46.20  coverage for both a Medicare select basic and a Medicare select 
 46.21  extended basic policy or certificate and must be provided with 
 46.22  the opportunity of purchasing either a Medicare select basic or 
 46.23  a Medicare select extended basic policy.  The basic plan may 
 46.24  also include any of the optional benefit riders authorized by 
 46.25  section 62A.316.  Preventive care provided by Medicare select 
 46.26  policies or certificates must be provided as set forth in 
 46.27  section 62A.315 or 62A.316, except that the benefits are as 
 46.28  defined in chapter 62D. 
 46.29     (r) Medicare select policies and certificates are exempt 
 46.30  from the requirements of section 62A.31, subdivision 1, 
 46.31  paragraph (d).  This paragraph expires January 1, 1994. 
 46.32     Sec. 34.  Minnesota Statutes 1994, section 62A.39, is 
 46.33  amended to read: 
 46.34     62A.39 [DISCLOSURE.] 
 46.35     No individual Medicare supplement plan shall be delivered 
 46.36  or issued in this state and no certificate shall be delivered 
 47.1   under a group Medicare supplement plan delivered or issued in 
 47.2   this state unless the plan is shown on the cover page and an 
 47.3   outline containing at least the following information in no less 
 47.4   than 12-point type is delivered to the applicant at the time the 
 47.5   application is made:  
 47.6      (a) A description of the principal benefits and coverage 
 47.7   provided in the policy; 
 47.8      (b) A statement of the exceptions, reductions, and 
 47.9   limitations contained in the policy including the following 
 47.10  language, as applicable, in bold print:  "THIS POLICY DOES NOT 
 47.11  COVER ALL MEDICAL EXPENSES BEYOND THOSE COVERED BY MEDICARE.  
 47.12  THIS POLICY DOES NOT COVER ALL SKILLED NURSING HOME CARE 
 47.13  EXPENSES AND DOES NOT COVER CUSTODIAL OR RESIDENTIAL NURSING 
 47.14  CARE.  READ YOUR POLICY CAREFULLY TO DETERMINE WHICH NURSING 
 47.15  HOME FACILITIES AND EXPENSES ARE COVERED BY YOUR POLICY."; 
 47.16     (c) A statement of the renewal provisions including any 
 47.17  reservations by the insurer of a right to change premiums.  The 
 47.18  premium and manner of payment shall be stated for all plans that 
 47.19  are offered to the prospective applicant.  All possible premiums 
 47.20  for the prospective applicant shall be illustrated; 
 47.21     (d)  [READ YOUR POLICY OR CERTIFICATE VERY CAREFULLY.] A 
 47.22  statement that the outline of coverage is a summary of the 
 47.23  policy issued or applied for and that the policy should be 
 47.24  consulted to determine governing contractual provisions.  
 47.25  Additionally, it does not give all the details of Medicare 
 47.26  coverage.  Contact your local Social Security office or consult 
 47.27  the Medicare handbook for more details; 
 47.28     (e) A statement of the policy's loss ratio as follows:  
 47.29  "This policy provides an anticipated loss ratio of (..%).  This 
 47.30  means that, on the average, policyholders may expect that 
 47.31  ($....) of every $100.00 in premium will be returned as benefits 
 47.32  to policyholders over the life of the contract."; 
 47.33     (f) When the outline of coverage is provided at the time of 
 47.34  application and the Medicare supplement policy or certificate is 
 47.35  issued on a basis that would require revision of the outline, a 
 47.36  substitute outline of coverage properly describing the policy or 
 48.1   certificate shall accompany the policy or certificate when it is 
 48.2   delivered and contain the following statement, in no less than 
 48.3   12-point type, immediately above the company name: 
 48.4   "NOTICE:  Read this outline of coverage carefully.  It is not 
 48.5   identical to the outline of coverage provided upon application, 
 48.6   and the coverage originally applied for has not been issued."; 
 48.7      (g)  [RIGHT TO RETURN POLICY OR CERTIFICATE.] "If you find 
 48.8   that you are not satisfied with your policy or certificate for 
 48.9   any reason, you may return it to (insert issuer's address).  If 
 48.10  you send the policy or certificate back to us within 30 days 
 48.11  after you receive it, we will treat the policy or certificate as 
 48.12  if it had never been issued and return all of your payments 
 48.13  within ten days."; 
 48.14     (h)  [POLICY OR CERTIFICATE REPLACEMENT.] "If you are 
 48.15  replacing another health insurance policy or certificate, do NOT 
 48.16  cancel it until you have actually received your new policy or 
 48.17  certificate and are sure you want to keep it."; 
 48.18     (i)  [NOTICE.] "This policy or certificate may not fully 
 48.19  cover all of your medical costs."  
 48.20     A.  (for agents:) 
 48.21     "Neither (insert company's name) nor its agents are 
 48.22  connected with Medicare." 
 48.23     B.  (for direct response:) 
 48.24     "(insert company's name) is not connected with Medicare." 
 48.25     (j) Notice regarding policies or certificates which are not 
 48.26  Medicare supplement policies.  
 48.27     Any accident and sickness insurance policy or certificate, 
 48.28  other than a Medicare supplement policy, or a policy or 
 48.29  certificate issued pursuant to a contract under the federal 
 48.30  Social Security Act, section 1833 or 1876 (United States Code, 
 48.31  title 42, section 1395, et seq.), disability income policy; 
 48.32  basic, catastrophic, or major medical expense policy; single 
 48.33  premium nonrenewable policy; or other policy, issued for 
 48.34  delivery in this state to persons eligible for Medicare shall 
 48.35  notify insureds under the policy that the policy is not a 
 48.36  Medicare supplement policy or certificate.  The notice shall 
 49.1   either be printed or attached to the first page of the outline 
 49.2   of coverage delivered to insureds under the policy, or if no 
 49.3   outline of coverage is delivered, to the first page of the 
 49.4   policy or certificate delivered to insureds.  The notice shall 
 49.5   be in no less than 12-point type and shall contain the following 
 49.6   language: 
 49.7      "THIS (POLICY OR CERTIFICATE) IS NOT A MEDICARE SUPPLEMENT 
 49.8      (POLICY OR CONTRACT).  If you are eligible for Medicare, 
 49.9      review the Medicare supplement buyer's "Guide to Health 
 49.10     Insurance for People with Medicare" available from the 
 49.11     company." 
 49.12     (k)  [COMPLETE ANSWERS ARE VERY IMPORTANT.] "When you fill 
 49.13  out the application for the new policy or certificate, be sure 
 49.14  to answer truthfully and completely all questions about your 
 49.15  medical and health history.  The company may cancel your policy 
 49.16  or certificate and refuse to pay any claims if you leave out or 
 49.17  falsify important medical information."  If the policy or 
 49.18  certificate is guaranteed issue, this paragraph need not appear. 
 49.19     "Review the application carefully before you sign it.  Be 
 49.20  certain that all information has been properly recorded."  
 49.21     Include for each plan, prominently identified in the cover 
 49.22  page, a chart showing the services, Medicare payments, plan 
 49.23  payments, and insured payments for each plan, using the same 
 49.24  language, in the same order, using uniform layout and format. 
 49.25     The outline of coverage provided to applicants pursuant to 
 49.26  this section consists of four parts:  a cover page, premium 
 49.27  information, disclosure pages, and charts displaying the 
 49.28  features of each benefit plan offered by the insurer. 
 49.29     Sec. 35.  Minnesota Statutes 1994, section 62A.44, 
 49.30  subdivision 2, is amended to read: 
 49.31     Subd. 2.  [QUESTIONS.] (a) Application forms shall include 
 49.32  the following questions designed to elicit information as to 
 49.33  whether, as of the date of the application, the applicant has 
 49.34  another Medicare supplement or other health insurance policy or 
 49.35  certificate in force or whether a Medicare supplement policy or 
 49.36  certificate is intended to replace any other accident and 
 50.1   sickness policy or certificate presently in force.  A 
 50.2   supplementary application or other form to be signed by the 
 50.3   applicant and agent containing the questions and statements may 
 50.4   be used. 
 50.5      "(1) You do not need more than one Medicare supplement 
 50.6      policy or certificate. 
 50.7      (2) If you are 65 or older, purchase this policy, you may 
 50.8      want to evaluate your existing health coverage and decide 
 50.9      if you need multiple coverages. 
 50.10     (3) You may be eligible for benefits under Medicaid and may 
 50.11     not need a Medicare supplement policy or certificate.  
 50.12     (3) (4) The benefits and premiums under your Medicare 
 50.13     supplement policy or certificate will can be suspended, if 
 50.14     requested, during your entitlement to benefits under 
 50.15     Medicaid for 24 months.  You must request this suspension 
 50.16     within 90 days of becoming eligible for Medicaid.  If you 
 50.17     are no longer entitled to Medicaid, your policy or 
 50.18     certificate will be reinstated if requested within 90 days 
 50.19     of losing Medicaid eligibility. 
 50.20     (5) Counseling services may be available in Minnesota to 
 50.21     provide advice concerning medical assistance through state 
 50.22     Medicaid, Qualified Medicare Beneficiaries (QMBs), and 
 50.23     Specified Low-Income Medicare Beneficiaries (SLMBs). 
 50.24     To the best of your knowledge: 
 50.25     (1) Do you have another Medicare supplement policy or 
 50.26     certificate in force, including health care service 
 50.27     contract or health maintenance organization contract?  
 50.28     (a) If so, with which company? 
 50.29     (b) If so, do you intend to replace your current Medicare 
 50.30  supplement policy with this policy or certificate? 
 50.31     (2) Do you have any other health insurance policies that 
 50.32     provide benefits that which this Medicare supplement policy 
 50.33     or certificate would duplicate?  
 50.34     (a) If you do so, please name the company and the. 
 50.35     (b) What kind of policy.?  
 50.36     (3) If the answer to question 1 or 2 is yes, do you intend 
 51.1      to replace these medical or health policies with this 
 51.2      policy or certificate? 
 51.3      (4) Are you covered by for medical assistance through the 
 51.4      state Medicaid program?  If so, which of the following 
 51.5      programs provides coverage for you?  
 51.6      a.  Specified Low-Income Medicare Beneficiary (SLMB), 
 51.7      b.  Qualified Medicare Beneficiary (QMB), or 
 51.8      c.  full Medicaid Beneficiary?" 
 51.9      (b) Agents shall list any other health insurance policies 
 51.10  they have sold to the applicant.  
 51.11     (1) List policies sold that are still in force.  
 51.12     (2) List policies sold in the past five years that are no 
 51.13  longer in force.  
 51.14     (c) In the case of a direct response issuer, a copy of the 
 51.15  application or supplemental form, signed by the applicant, and 
 51.16  acknowledged by the insurer, shall be returned to the applicant 
 51.17  by the insurer on delivery of the policy or certificate.  
 51.18     (d) Upon determining that a sale will involve replacement 
 51.19  of Medicare supplement coverage, any issuer, other than a direct 
 51.20  response issuer, or its agent, shall furnish the applicant, 
 51.21  before issuance or delivery of the Medicare supplement policy or 
 51.22  certificate, a notice regarding replacement of Medicare 
 51.23  supplement coverage.  One copy of the notice signed by the 
 51.24  applicant and the agent, except where the coverage is sold 
 51.25  without an agent, shall be provided to the applicant and an 
 51.26  additional signed copy shall be retained by the issuer.  A 
 51.27  direct response issuer shall deliver to the applicant at the 
 51.28  time of the issuance of the policy or certificate the notice 
 51.29  regarding replacement of Medicare supplement coverage. 
 51.30     (e) The notice required by paragraph (d) for an issuer 
 51.31  shall be provided in substantially the following form in no less 
 51.32  than 12-point type: 
 51.33             "NOTICE TO APPLICANT REGARDING REPLACEMENT 
 51.34                  OF MEDICARE SUPPLEMENT INSURANCE
 51.35               (Insurance company's name and address)
 51.36    SAVE THIS NOTICE!  IT MAY BE IMPORTANT TO YOU IN THE FUTURE.
 52.1      According to (your application) (information you have 
 52.2   furnished), you intend to terminate existing Medicare supplement 
 52.3   insurance and replace it with a policy or certificate to be 
 52.4   issued by (Company Name) Insurance Company.  Your new policy or 
 52.5   certificate will provide 30 days within which you may decide 
 52.6   without cost whether you desire to keep the policy or 
 52.7   certificate. 
 52.8      You should review this new coverage carefully.  Compare it 
 52.9   with all accident and sickness coverage you now have.  Terminate 
 52.10  your present policy only If, after due consideration, you find 
 52.11  that purchase of this Medicare supplement coverage is a wise 
 52.12  decision you should terminate your present Medicare supplement 
 52.13  policy.  You should evaluate the need for other accident and 
 52.14  sickness coverage you have that may duplicate this policy. 
 52.15     STATEMENT TO APPLICANT BY ISSUER, AGENT, (BROKER OR OTHER 
 52.16     REPRESENTATIVE):  I have reviewed your current medical or 
 52.17     health insurance coverage.  The replacement of insurance 
 52.18     involved in this transaction does not duplicate coverage, 
 52.19     To the best of my knowledge this Medicare supplement policy 
 52.20     will not duplicate your existing Medicare supplement policy 
 52.21     because you intend to terminate the existing Medicare 
 52.22     supplement policy.  The replacement policy or certificate 
 52.23     is being purchased for the following reason(s) (check one): 
 52.24     ______  Additional benefits 
 52.25     ______  No change in benefits, but lower premiums 
 52.26     ______  Fewer benefits and lower premiums 
 52.27     ______  Other (please specify)  
 52.28     ____________________________________________________________
 52.29     ____________________________________________________________
 52.30     ____________________________________________________________
 52.31     (1) Health conditions which you may presently have 
 52.32     (preexisting conditions) may not be immediately or fully 
 52.33     covered under the new policy or certificate.  This could 
 52.34     result in denial or delay of a claim for benefits under the 
 52.35     new policy or certificate, whereas a similar claim might 
 52.36     have been payable under your present policy or certificate. 
 53.1      (2) State law provides that your replacement policy or 
 53.2      certificate may not contain new preexisting conditions, 
 53.3      waiting periods, elimination periods, or probationary 
 53.4      periods.  The insurer will waive any time periods 
 53.5      applicable to preexisting conditions, waiting periods, 
 53.6      elimination periods, or probationary periods in the new 
 53.7      policy (or coverage) for similar benefits to the extent the 
 53.8      time was spent (depleted) under the original policy or 
 53.9      certificate. 
 53.10     (3) If you still wish to terminate your present policy or 
 53.11     certificate and replace it with new coverage, be certain to 
 53.12     truthfully and completely answer all questions on the 
 53.13     application concerning your medical and health history.  
 53.14     Failure to include all material medical information on an 
 53.15     application may provide a basis for the company to deny any 
 53.16     future claims and to refund your premium as though your 
 53.17     policy or certificate had never been in force.  After the 
 53.18     application has been completed and before you sign it, 
 53.19     review it carefully to be certain that all information has 
 53.20     been properly recorded.  (If the policy or certificate is 
 53.21     guaranteed issue, this paragraph need not appear.) 
 53.22     Do not cancel your present policy or certificate until you 
 53.23     have received your new policy or certificate and you are 
 53.24     sure that you want to keep it. 
 53.25     
 53.26     _____________________________________________________ 
 53.27     (Signature of Agent, Broker, or Other Representative)* 
 53.28     
 53.29     _____________________________________________________ 
 53.30     (Typed Name and Address of Issuer, Agent, or Broker) 
 53.31     
 53.32     _____________________ 
 53.33     (Date) 
 53.34     
 53.35     __________________________________ 
 53.36     (Applicant's Signature) 
 54.1      
 54.2      _____________________ 
 54.3      (Date) 
 54.4      
 54.5      *Signature not required for direct response sales." 
 54.6      
 54.7      (f) Paragraph (e), clauses (1) and (2), of the replacement 
 54.8   notice (applicable to preexisting conditions) may be deleted by 
 54.9   an issuer if the replacement does not involve application of a 
 54.10  new preexisting condition limitation. 
 54.11     Sec. 36.  Minnesota Statutes 1995 Supplement, section 
 54.12  62A.46, subdivision 2, is amended to read: 
 54.13     Subd. 2.  [LONG-TERM CARE POLICY.] "Long-term care policy" 
 54.14  means an individual or group policy, certificate, subscriber 
 54.15  contract, or other evidence of coverage that provides benefits 
 54.16  for prescribed long-term care, including nursing facility 
 54.17  services and or home care services, or both nursing facility 
 54.18  services and home care services, pursuant to the requirements of 
 54.19  sections 62A.46 to 62A.56.  
 54.20     Sections 62A.46, 62A.48, and 62A.52 to 62A.56 do not apply 
 54.21  to a long-term care policy issued to (a) an employer or 
 54.22  employers or to the trustee of a fund established by an employer 
 54.23  where only employees or retirees, and dependents of employees or 
 54.24  retirees, are eligible for coverage or (b) to a labor union or 
 54.25  similar employee organization.  The associations exempted from 
 54.26  the requirements of sections 62A.31 to 62A.44 under 62A.31, 
 54.27  subdivision 1, clause (c) shall not be subject to the provisions 
 54.28  of sections 62A.46 to 62A.56 until July 1, 1988. 
 54.29     Sec. 37.  Minnesota Statutes 1995 Supplement, section 
 54.30  62A.48, subdivision 1, is amended to read: 
 54.31     Subdivision 1.  [POLICY REQUIREMENTS.] No individual or 
 54.32  group policy, certificate, subscriber contract, or other 
 54.33  evidence of coverage of nursing home care or other long-term 
 54.34  care services shall be offered, issued, delivered, or renewed in 
 54.35  this state, whether or not the policy is issued in this state, 
 54.36  unless the policy is offered, issued, delivered, or renewed by a 
 55.1   qualified insurer and the policy satisfies the requirements of 
 55.2   sections 62A.46 to 62A.56.  A long-term care policy must cover 
 55.3   prescribed long-term care in nursing facilities and at least or 
 55.4   the prescribed long-term home care services in section 62A.46, 
 55.5   subdivision 4, clauses (1) to (5), provided by a home health 
 55.6   agency.  A long-term care policy may cover both prescribed 
 55.7   long-term care in nursing facilities and the prescribed 
 55.8   long-term home care services in section 62A.46, subdivision 4, 
 55.9   clauses (1) to (5), provided by a home health agency.  Coverage 
 55.10  under a long-term care policy, other than one that covers only 
 55.11  nursing facility services, must include:  a minimum lifetime 
 55.12  benefit limit of at least $25,000 for services, and.  A 
 55.13  long-term care policy that covers only nursing facility services 
 55.14  must include a minimum lifetime benefit limit of not less than 
 55.15  one year of nursing facility services.  Nursing facility and 
 55.16  home care coverages under a long-term care policy must not be 
 55.17  subject to separate lifetime maximums for policies that cover 
 55.18  both nursing facility and home health care.  Prior 
 55.19  hospitalization may not be required under a long-term care 
 55.20  policy. 
 55.21     The policy must cover preexisting conditions during the 
 55.22  first six months of coverage if the insured was not diagnosed or 
 55.23  treated for the particular condition during the 90 days 
 55.24  immediately preceding the effective date of coverage.  Coverage 
 55.25  under the policy may include a waiting period of up to 90 days 
 55.26  before benefits are paid, but there must be no more than one 
 55.27  waiting period per benefit period; for purposes of this 
 55.28  sentence, "days" can mean calendar or benefit days.  If benefit 
 55.29  days are used, an appropriate premium reduction and disclosure 
 55.30  must be made.  No policy may exclude coverage for mental or 
 55.31  nervous disorders which have a demonstrable organic cause, such 
 55.32  as Alzheimer's and related dementias.  No policy may require the 
 55.33  insured to be homebound or house confined to receive home care 
 55.34  services.  The policy must include a provision that the plan 
 55.35  will not be canceled or renewal refused except on the grounds of 
 55.36  nonpayment of the premium, provided that the insurer may change 
 56.1   the premium rate on a class basis on any policy anniversary 
 56.2   date.  A provision that the policyholder may elect to have the 
 56.3   premium paid in full at age 65 by payment of a higher premium up 
 56.4   to age 65 may be offered.  A provision that the premium would be 
 56.5   waived during any period in which benefits are being paid to the 
 56.6   insured during confinement in a nursing facility must be 
 56.7   included.  A nongroup policyholder may return a policy within 30 
 56.8   days of its delivery and have the premium refunded in full, less 
 56.9   any benefits paid under the policy, if the policyholder is not 
 56.10  satisfied for any reason. 
 56.11     No individual long-term care policy shall be offered or 
 56.12  delivered in this state until the insurer has received from the 
 56.13  insured a written designation of at least one person, in 
 56.14  addition to the insured, who is to receive notice of 
 56.15  cancellation of the policy for nonpayment of premium.  The 
 56.16  insured has the right to designate up to a total of three 
 56.17  persons who are to receive the notice of cancellation, in 
 56.18  addition to the insured.  The form used for the written 
 56.19  designation must inform the insured that designation of one 
 56.20  person is required and that designation of up to two additional 
 56.21  persons is optional and must provide space clearly designated 
 56.22  for listing between one and three persons.  The designation 
 56.23  shall include each person's full name, home address, and 
 56.24  telephone number.  Each time an individual policy is renewed or 
 56.25  continued, the insurer shall notify the insured of the right to 
 56.26  change this written designation. 
 56.27     The insurer may file a policy form that utilizes a plan of 
 56.28  care prepared as provided under section 62A.46, subdivision 5, 
 56.29  clause (1) or (2). 
 56.30     Sec. 38.  Minnesota Statutes 1994, section 62A.49, 
 56.31  subdivision 1, is amended to read: 
 56.32     Subdivision 1.  [GENERALLY.] Section 62A.48 does not 
 56.33  prohibit the sale of policies, certificates, subscriber 
 56.34  contracts, or other evidences of coverage that provide home care 
 56.35  services only.  This does not, however, remove the requirement 
 56.36  that home care service benefits must be provided as part of a 
 57.1   long-term care policy pursuant to that section.  Home care 
 57.2   services only policies may be sold, provided that they meet the 
 57.3   requirements set forth in sections 62A.46 to 62A.56, except that 
 57.4   they do not have to meet those conditions that relate to 
 57.5   long-term care in nursing facilities.  Disclosures and 
 57.6   representations regarding these policies must be adjusted 
 57.7   accordingly to remove references to coverage for nursing home 
 57.8   care. 
 57.9      Sec. 39.  Minnesota Statutes 1994, section 62A.60, is 
 57.10  amended to read: 
 57.11     62A.60 [RETROACTIVE DENIAL OF EXPENSES.] 
 57.12     In cases where the subscriber or insured is liable for 
 57.13  costs beyond applicable copayments or deductibles, no insurer 
 57.14  may retroactively deny payment to a person who is covered when 
 57.15  the services are provided for health care services that are 
 57.16  otherwise covered, if the insurer or its representative failed 
 57.17  to provide prior or concurrent review or authorization for the 
 57.18  expenses when required to do so under the policy, plan, or 
 57.19  certificate.  If prior or concurrent review or authorization was 
 57.20  provided by the insurer or its representative, and the 
 57.21  preexisting condition limitation provision, the general 
 57.22  exclusion provision and any other coinsurance, or other policy 
 57.23  requirements have been met, the insurer may not deny payment for 
 57.24  the authorized service or time period except in cases where 
 57.25  fraud or substantive misrepresentation occurred. 
 57.26     Sec. 40.  Minnesota Statutes 1995 Supplement, section 
 57.27  62C.14, subdivision 14, is amended to read: 
 57.28     Subd. 14.  No subscriber's individual contract or any group 
 57.29  contract which provides for coverage of family members or other 
 57.30  dependents of a subscriber or of an employee or other group 
 57.31  member of a group subscriber, shall be renewed, delivered, or 
 57.32  issued for delivery in this state unless such contract includes 
 57.33  as covered family members or dependents any newborn infants, 
 57.34  including dependent grandchildren, immediately from the moment 
 57.35  of birth and thereafter which insurance shall provide coverage 
 57.36  for illness, injury, congenital malformation or premature 
 58.1   birth.  For purposes of this paragraph, "newborn infants" 
 58.2   includes grandchildren who are financially dependent upon a 
 58.3   covered grandparent and who reside with that covered grandparent 
 58.4   continuously from birth.  No policy, contract, or agreement 
 58.5   covered by this section may require notification to a health 
 58.6   carrier as a condition for this dependent coverage.  However, if 
 58.7   the policy, contract, or agreement mandates an additional 
 58.8   premium for each dependent, the health carrier shall be entitled 
 58.9   to all premiums that would have been collected had the health 
 58.10  carrier been aware of the additional dependent.  The health 
 58.11  carrier may withhold payment of any health benefits for the new 
 58.12  dependent until it has been compensated with the applicable 
 58.13  premium which would have been owed if the health carrier had 
 58.14  been informed of the additional dependent immediately. 
 58.15     Sec. 41.  Minnesota Statutes 1995 Supplement, section 
 58.16  62E.05, subdivision 1, is amended to read: 
 58.17     Subdivision 1.  [CERTIFICATION.] Upon application by an 
 58.18  insurer, fraternal, or employer for certification of a plan of 
 58.19  health coverage as a qualified plan or a qualified medicare 
 58.20  supplement plan for the purposes of sections 62E.01 to 62E.16, 
 58.21  the commissioner shall make a determination within 90 days as to 
 58.22  whether the plan is qualified.  All plans of health coverage, 
 58.23  except Medicare supplement policies, shall be labeled as 
 58.24  "qualified" or "nonqualified" on the front of the policy or 
 58.25  evidence of insurance contract, or on the schedule page.  All 
 58.26  qualified plans shall indicate whether they are number one, two, 
 58.27  or three coverage plans. 
 58.28     Sec. 42.  Minnesota Statutes 1995 Supplement, section 
 58.29  62F.02, subdivision 2, is amended to read: 
 58.30     Subd. 2.  [DIRECTORS.] The association shall have a board 
 58.31  of directors composed of 11 persons chosen for a term of four 
 58.32  years as follows:  five persons elected by members of the 
 58.33  association at a meeting called by the commissioner; three 
 58.34  members who are health care providers appointed by the 
 58.35  commissioner prior to the election by the association; and three 
 58.36  public members, as defined in section 214.02, appointed by the 
 59.1   governor prior to the election by the association.  If the 
 59.2   commissioner determines that it is no longer cost-effective or 
 59.3   efficient to operate a separate board of directors to administer 
 59.4   the medical malpractice joint underwriting association, the 
 59.5   commissioner shall deactivate the board and assign all of the 
 59.6   board's authority and responsibilities under this chapter to the 
 59.7   Minnesota joint underwriting association board of directors 
 59.8   established under section 62I.02. 
 59.9      Sec. 43.  Minnesota Statutes 1994, section 62F.03, 
 59.10  subdivision 6, is amended to read: 
 59.11     Subd. 6.  "Net direct premiums" means gross direct premiums 
 59.12  written on personal injury liability insurance, including the 
 59.13  liability component of multiple peril package policies as 
 59.14  computed by the commissioner, less return premiums for the 
 59.15  unused or unabsorbed portions of premium deposits.  Net direct 
 59.16  premiums do not include policyholder dividends. 
 59.17     Sec. 44.  Minnesota Statutes 1994, section 62F.04, 
 59.18  subdivision 1a, is amended to read: 
 59.19     Subd. 1a.  [REAUTHORIZATION.] The authorization to issue 
 59.20  insurance is valid for a period of two years from the date it 
 59.21  was made.  The commissioner may reauthorize the issuance of 
 59.22  insurance for additional two-year periods under the terms of 
 59.23  subdivision 1 according to the procedures set forth in sections 
 59.24  62I.21 and 62I.22.  This subdivision is not a limitation on the 
 59.25  number of times the commissioner may reauthorize the issuance of 
 59.26  insurance. 
 59.27     Sec. 45.  Minnesota Statutes 1994, section 62I.02, 
 59.28  subdivision 2, is amended to read: 
 59.29     Subd. 2.  [DIRECTOR BOARD OF DIRECTORS.] The association 
 59.30  shall have a board of directors composed of 11 persons chosen as 
 59.31  follows:  five persons elected by members of the association at 
 59.32  a meeting called by the commissioner; three public members, as 
 59.33  defined in section 214.02, appointed by the commissioner; and 
 59.34  three members, appointed by the commissioner representing groups 
 59.35  to whom coverage has been extended by the association.  The 
 59.36  terms of the members shall be four years.  Terms may be 
 60.1   staggered so that no more than six members are appointed or 
 60.2   elected every two years.  Members may serve until their 
 60.3   successors are appointed or elected.  If at any time no coverage 
 60.4   is currently extended by the association, then either additional 
 60.5   public members may be appointed to fill these three positions 
 60.6   or, at the option of the commissioner, representatives from 
 60.7   groups who had previously been covered by the association may 
 60.8   serve as directors.  In the event that the commissioner assigns 
 60.9   the responsibility for administering chapter 62F to the 
 60.10  Minnesota joint underwriting association, the board of directors 
 60.11  must be increased by four additional members.  The commissioner 
 60.12  shall appoint two of the additional members, one of whom must be 
 60.13  a licensed health care provider, and one of whom must be a 
 60.14  public member.  Association members shall elect the other two 
 60.15  members, one of whom must be a representative of medical 
 60.16  malpractice insurers, and one of whom must be a representative 
 60.17  of personal injury liability insurers. 
 60.18     Sec. 46.  Minnesota Statutes 1994, section 62I.02, 
 60.19  subdivision 5, is amended to read: 
 60.20     Subd. 5.  [ACCOUNTS.] (a) For the purposes of 
 60.21  administration and assessment, and except as otherwise 
 60.22  authorized under paragraph (b), the association shall be divided 
 60.23  into two separate accounts: 
 60.24     (1) the property and casualty insurance account; and 
 60.25     (2) the personal injury liability insurance account 
 60.26  account-liquor. 
 60.27     (b) If the association is authorized by the commissioner to 
 60.28  issue medical malpractice insurance, the association shall 
 60.29  establish a third account for purposes of administration and 
 60.30  assessment.  This account must be identified as the personal 
 60.31  injury liability insurance account-medical malpractice. 
 60.32     Sec. 47.  Minnesota Statutes 1994, section 62I.02, is 
 60.33  amended by adding a subdivision to read: 
 60.34     Subd. 6.  [MEDICAL MALPRACTICE.] If the association is 
 60.35  authorized by the commissioner to issue medical malpractice 
 60.36  insurance, it shall administer the medical malpractice insurance 
 61.1   program according to chapter 62F. 
 61.2      Sec. 48.  Minnesota Statutes 1994, section 62I.07, is 
 61.3   amended to read: 
 61.4      62I.07 [MEMBERSHIP ASSESSMENTS.] 
 61.5      Subdivision 1.  [GENERAL ASSESSMENT.] Each member of the 
 61.6   association that is authorized to write property and casualty 
 61.7   insurance in the state shall participate in its losses and 
 61.8   expenses in the proportion that the direct written premiums of 
 61.9   the member on the kinds of insurance in that account bears to 
 61.10  the total aggregate direct written premiums written in this 
 61.11  state by all members on the kinds of insurance in that account.  
 61.12  The members' participation in the association shall be 
 61.13  determined annually on the direct written premiums written 
 61.14  during the preceding calendar year as reported on the annual 
 61.15  statements and other reports filed by the member with the 
 61.16  commissioner.  Direct written premiums mean that amount at page 
 61.17  14, column (2), lines 5, 8, 9, 17, 21.2, 22, 23, 24, 25, 26, and 
 61.18  27 of the annual statement filed annually with the department of 
 61.19  commerce under section 60A.13. 
 61.20     Subd. 2.  [PERSONAL INJURY LIABILITY INSURANCE ASSESSMENT; 
 61.21  LIQUOR LIABILITY.] A member of the association shall participate 
 61.22  in its writings, expenses, servicing allowance, management fees, 
 61.23  and losses in the proportion that the net direct premiums of the 
 61.24  member, excluding that portion of premiums attributable to the 
 61.25  operation of the association, written during the preceding 
 61.26  calendar year on the kinds of insurance in that account bears to 
 61.27  the aggregate net direct premiums written in this state by all 
 61.28  members on the kinds of insurance in that account.  The member's 
 61.29  participation in the association shall be determined annually on 
 61.30  the basis of net direct premiums written during the preceding 
 61.31  calendar year, as reported in the annual statements and other 
 61.32  reports filed by the member with the commissioner.  Net direct 
 61.33  premiums mean gross direct premiums written on personal injury 
 61.34  liability insurance, including the liability component of 
 61.35  multiple peril package policies as computed by the commissioner, 
 61.36  less return premiums for the unused or unabsorbed portions of 
 62.1   premium deposits.  The net direct premiums are calculated using 
 62.2   lines 5.2 CMP, and 17-other liability from page 14, column (2) 
 62.3   of the annual statement filed annually with the department of 
 62.4   commerce pursuant to section 60A.13. 
 62.5      Subd. 3.  [PERSONAL INJURY LIABILITY INSURANCE ASSESSMENT; 
 62.6   MEDICAL MALPRACTICE.] If an assessment is needed for medical 
 62.7   malpractice, the assessment is made using the following lines 
 62.8   from page 14, column (2) of the annual statement filed annually 
 62.9   with the department of commerce pursuant to section 60A.13 using 
 62.10  the following lines:  5.2 commercial multiperil liability, 11 
 62.11  medical malpractice, 17-other liability, 19.1 PIP-private 
 62.12  passenger, 19.3 PIP-commercial. 
 62.13     Sec. 49.  Minnesota Statutes 1994, section 62L.09, 
 62.14  subdivision 3, is amended to read: 
 62.15     Subd. 3.  [REENTRY PROHIBITION.] (a) Except as otherwise 
 62.16  provided in paragraph (b), a health carrier that ceases to do 
 62.17  business in the small employer market after July 1, 1993, is 
 62.18  prohibited from writing new business in the small employer 
 62.19  market in this state for a period of five years from the date of 
 62.20  notice to the commissioner.  This subdivision applies to any 
 62.21  health maintenance organization that ceases to do business in 
 62.22  the small employer market in one service area with respect to 
 62.23  that service area only.  Nothing in this subdivision prohibits 
 62.24  an affiliated health maintenance organization from continuing to 
 62.25  do business in the small employer market in that same service 
 62.26  area.  
 62.27     (b) The commissioner of commerce or the commissioner of 
 62.28  health may permit a health carrier that ceases to do business in 
 62.29  the small employer market in this state after July 1, 1993, to 
 62.30  begin writing new business in the small employer market if: 
 62.31     (1) since the carrier ceased doing business in the small 
 62.32  employer market, legislative action has occurred that has 
 62.33  significantly changed the effect on the carrier of its decision 
 62.34  to cease doing business in the small employer market; and 
 62.35     (2) the commissioner deems it appropriate. 
 62.36     Sec. 50.  [62Q.49] [ENROLLEE COST SHARING; NEGOTIATED 
 63.1   PROVIDER PAYMENTS.] 
 63.2      Subdivision 1.  [APPLICABILITY.] This section applies to 
 63.3   all health plans, as defined in section 62Q.01, subdivision 3, 
 63.4   that provide coverage for health care to be provided entirely or 
 63.5   partially: 
 63.6      (1) through contracts in which health care providers agree 
 63.7   to accept discounted charges, negotiated charges, or other 
 63.8   limits on health care provider charges; 
 63.9      (2) by employees of, or facilities or entities owned by, 
 63.10  the issuer of the health plan; or 
 63.11     (3) through contracts with health care providers that 
 63.12  provide for payment to the providers on a fully or partially 
 63.13  capitated basis or on any other non-fee-for-service basis. 
 63.14     Subd. 2.  [DISCLOSURE REQUIRED.] (a) All health plans 
 63.15  included in subdivision 1 must clearly specify how the cost of 
 63.16  health care used to calculate any copayments, coinsurance, or 
 63.17  lifetime benefits will be affected by the arrangements described 
 63.18  in subdivision 1. 
 63.19     (b) Any summary or other marketing material used in 
 63.20  connection with marketing of a health plan that is subject to 
 63.21  this section must prominently disclose and clearly explain the 
 63.22  provisions required under paragraph (a), if the summary or other 
 63.23  marketing material refers to copayments, coinsurance, or maximum 
 63.24  lifetime benefits. 
 63.25     (c) A health plan that is subject to paragraph (a) must not 
 63.26  be used in this state if the commissioner of commerce or health, 
 63.27  as appropriate, has determined that it does not comply with this 
 63.28  section. 
 63.29     Sec. 51.  [62Q.50] [PROSTATE CANCER SCREENING.] 
 63.30     A health plan must cover prostate cancer screening for men 
 63.31  40 years of age or over who are symptomatic or in a high-risk 
 63.32  category and for all men 50 years of age or older. 
 63.33     The screening must consist at a minimum of a 
 63.34  prostate-specific antigen blood test and a digital rectal 
 63.35  examination. 
 63.36     This coverage is subject to any deductible, coinsurance, 
 64.1   copayment, or other limitation on coverage applicable to other 
 64.2   coverages under the plan. 
 64.3      For purposes of this section, "health plan" includes 
 64.4   coverage that is excluded under section 62A.011, subdivision 3, 
 64.5   clauses (7) and (10). 
 64.6      Sec. 52.  [62Q.51] [POINT-OF-SERVICE OPTION.] 
 64.7      Subdivision 1.  [DEFINITION.] For purposes for this 
 64.8   section, "point-of-service option" means a health plan under 
 64.9   which the health plan company will reimburse an appropriately 
 64.10  licensed or registered provider for providing covered services 
 64.11  to an enrollee, without regard to whether the provider belongs 
 64.12  to a particular network and without regard to whether the 
 64.13  enrollee was referred to the provider by another provider.  
 64.14     Subd. 2.  [REQUIRED POINT-OF-SERVICE OPTION.] Each health 
 64.15  plan company operating in the small group or large group market 
 64.16  shall offer at least one point-of-service option in each such 
 64.17  market in which it operates. 
 64.18     Subd. 3.  [RATE APPROVAL.] The premium rates and cost 
 64.19  sharing requirements for each option must be submitted to the 
 64.20  commissioner of health or the commissioner of commerce as 
 64.21  required by law.  A health plan that includes lower enrollee 
 64.22  cost sharing for services provided by network providers than for 
 64.23  services provided by out-of-network providers, or lower enrollee 
 64.24  cost sharing for services provided with prior authorization or 
 64.25  second opinion than for services provided without prior 
 64.26  authorization or second opinion, qualifies as a point-of-service 
 64.27  option. 
 64.28     Subd. 4.  [EXEMPTION.] This section does not apply to a 
 64.29  health plan company with fewer than 50,000 enrollees. 
 64.30     Sec. 53.  Minnesota Statutes 1994, section 65A.01, 
 64.31  subdivision 3, is amended to read: 
 64.32     Subd. 3.  [POLICY PROVISIONS.] On said policy following 
 64.33  such matter as provided in subdivisions 1 and 2, printed in the 
 64.34  English language in type of such size or sizes and arranged in 
 64.35  such manner, as is approved by the commissioner of commerce, the 
 64.36  following provisions and subject matter shall be stated in the 
 65.1   following words and in the following sequence, but with the 
 65.2   convenient placing, if desired, of such matter as will act as a 
 65.3   cover or back for such policy when folded, with the blanks below 
 65.4   indicated being left to be filled in at the time of the issuing 
 65.5   of the policy, to wit: 
 65.6      (Space for listing the amounts of insurance, rates and 
 65.7   premiums for the basic coverages provided under the standard 
 65.8   form of policy and for additional coverages or perils provided 
 65.9   under endorsements attached.  The description and location of 
 65.10  the property covered and the insurable value(s) of any 
 65.11  building(s) or structure(s) covered by the policy or its 
 65.12  attached endorsements; also in the above space may be stated 
 65.13  whether other insurance is limited and if limited the total 
 65.14  amount permitted.) 
 65.15     In consideration of the provisions and stipulations herein 
 65.16  or added hereto and of the premium above specified this company, 
 65.17  for a term of ..... from ..... (At 12:01 a.m. Standard Time) to 
 65.18  ..... (At 12:01 a.m. Standard Time) at location of property 
 65.19  involved, to an amount not exceeding the amount(s) above 
 65.20  specified does insure .....  and legal representatives 
 65.21  ........................................... 
 65.22     (In above space may be stated whether other insurance is 
 65.23  limited.) (And if limited the total amount permitted.) 
 65.24     Subject to form No.(s) ..... attached hereto. 
 65.25     This policy is made and accepted subject to the foregoing 
 65.26  provisions and stipulations and those hereinafter stated, which 
 65.27  are hereby made a part of this policy, together with such 
 65.28  provisions, stipulations and agreements as may be added hereto 
 65.29  as provided in this policy. 
 65.30     The insurance effected above is granted against all loss or 
 65.31  damage by fire originating from any cause, except as hereinafter 
 65.32  provided, also any damage by lightning and by removal from 
 65.33  premises endangered by the perils insured against in this 
 65.34  policy, to the property described hereinafter while located or 
 65.35  contained as described in this policy, or pro rata for five days 
 65.36  at each proper place to which any of the property shall 
 66.1   necessarily be removed for preservation from the perils insured 
 66.2   against in this policy, but not elsewhere.  The amount of said 
 66.3   loss or damage, except in case of total loss on buildings, to be 
 66.4   estimated according to the actual value of the insured property 
 66.5   at the time when such loss or damage happens. 
 66.6      If the insured property shall be exposed to loss or damage 
 66.7   from the perils insured against, the insured shall make all 
 66.8   reasonable exertions to save and protect same. 
 66.9      This entire policy shall be void if, whether before a loss, 
 66.10  the insured has willfully, or after a loss, the insured has 
 66.11  willfully and with intent to defraud, concealed or 
 66.12  misrepresented any material fact or circumstance concerning this 
 66.13  insurance or the subject thereof, or the interests of the 
 66.14  insured therein. 
 66.15     This policy shall not cover accounts, bills, currency, 
 66.16  deeds, evidences of debt, money or securities; nor, unless 
 66.17  specifically named hereon in writing, bullion, or manuscripts. 
 66.18     This company shall not be liable for loss by fire or other 
 66.19  perils insured against in this policy caused, directly or 
 66.20  indirectly by:  (a) enemy attack by armed forces, including 
 66.21  action taken by military, naval or air forces in resisting an 
 66.22  actual or immediately impending enemy attack; (b) invasion; (c) 
 66.23  insurrection; (d) rebellion; (e) revolution; (f) civil war; (g) 
 66.24  usurped power; (h) order of any civil authority except acts of 
 66.25  destruction at the time of and for the purpose of preventing the 
 66.26  spread of fire, providing that such fire did not originate from 
 66.27  any of the perils excluded by this policy. 
 66.28     Other insurance may be prohibited or the amount of 
 66.29  insurance may be limited by so providing in the policy or an 
 66.30  endorsement, rider or form attached thereto. 
 66.31     Unless otherwise provided in writing added hereto this 
 66.32  company shall not be liable for loss occurring: 
 66.33     (a) while the hazard is increased by any means within the 
 66.34  control or knowledge of the insured; or 
 66.35     (b) while the described premises, whether intended for 
 66.36  occupancy by owner or tenant, are vacant or unoccupied beyond a 
 67.1   period of 60 consecutive days; or 
 67.2      (c) as a result of explosion or riot, unless fire ensue, 
 67.3   and in that event for loss by fire only. 
 67.4      Any other peril to be insured against or subject of 
 67.5   insurance to be covered in this policy shall be by endorsement 
 67.6   in writing hereon or added hereto. 
 67.7      The extent of the application of insurance under this 
 67.8   policy and the contributions to be made by this company in case 
 67.9   of loss, and any other provision or agreement not inconsistent 
 67.10  with the provisions of this policy, may be provided for in 
 67.11  writing added hereto, but no provision may be waived except such 
 67.12  as by the terms of this policy is subject to change. 
 67.13     No permission affecting this insurance shall exist, or 
 67.14  waiver of any provision be valid, unless granted herein or 
 67.15  expressed in writing added hereto.  No provision, stipulation or 
 67.16  forfeiture shall be held to be waived by any requirements or 
 67.17  proceeding on the part of this company relating to appraisal or 
 67.18  to any examination provided for herein. 
 67.19     This policy shall be canceled at any time at the request of 
 67.20  the insured, in which case this company shall, upon demand and 
 67.21  surrender of this policy, refund the excess of paid premium 
 67.22  above the customary short rates for the expired time.  This 
 67.23  policy may be canceled at any time by this company by giving to 
 67.24  the insured a ten 30 days' written notice of cancellation with 
 67.25  or without tender of the excess of paid premium above the pro 
 67.26  rata premium for the expired time, which excess, if not 
 67.27  tendered, shall be refunded on demand.  Notice of cancellation 
 67.28  shall state that said excess premium (if not tendered) will be 
 67.29  refunded on demand. 
 67.30     If loss hereunder is made payable, in whole or in part, to 
 67.31  a designated mortgagee or contract for deed vendor not named 
 67.32  herein as insured, such interest in this policy may be canceled 
 67.33  by giving to such mortgagee or vendor a ten days' written notice 
 67.34  of cancellation. 
 67.35     Notwithstanding any other provisions of this policy, if 
 67.36  this policy shall be made payable to a mortgagee or contract for 
 68.1   deed vendor of the covered real estate, no act or default of any 
 68.2   person other than such mortgagee or vendor or the mortgagee's or 
 68.3   vendor's agent or those claiming under the mortgagee or vendor, 
 68.4   whether the same occurs before or during the term of this 
 68.5   policy, shall render this policy void as to such mortgagee or 
 68.6   vendor nor affect such mortgagee's or vendor's right to recover 
 68.7   in case of loss on such real estate; provided, that the 
 68.8   mortgagee or vendor shall on demand pay according to the 
 68.9   established scale of rates for any increase of risks not paid 
 68.10  for by the insured; and whenever this company shall be liable to 
 68.11  a mortgagee or vendor for any sum for loss under this policy for 
 68.12  which no liability exists as to the mortgagor, vendee, or owner, 
 68.13  and this company shall elect by itself, or with others, to pay 
 68.14  the mortgagee or vendor the full amount secured by such mortgage 
 68.15  or contract for deed, then the mortgagee or vendor shall assign 
 68.16  and transfer to the company the mortgagee's or vendor's 
 68.17  interest, upon such payment, in the said mortgage or contract 
 68.18  for deed together with the note and debts thereby secured. 
 68.19     This company shall not be liable for a greater proportion 
 68.20  of any loss than the amount hereby insured shall bear to the 
 68.21  whole insurance covering the property against the peril involved.
 68.22     In case of any loss under this policy the insured shall 
 68.23  give immediate written notice to this company of any loss, 
 68.24  protect the property from further damage, and a statement in 
 68.25  writing, signed and sworn to by the insured, shall within 60 
 68.26  days be rendered to the company, setting forth the value of the 
 68.27  property insured, except in case of total loss on buildings the 
 68.28  value of said buildings need not be stated, the interest of the 
 68.29  insured therein, all other insurance thereon, in detail, the 
 68.30  purposes for which and the persons by whom the building insured, 
 68.31  or containing the property insured, was used, and the time at 
 68.32  which and manner in which the fire originated, so far as known 
 68.33  to the insured. 
 68.34     The insured, as often as may be reasonably required, shall 
 68.35  exhibit to any person designated by this company all that 
 68.36  remains of any property herein described, and, after being 
 69.1   informed of the right to counsel and that any answers may be 
 69.2   used against the insured in later civil or criminal proceedings, 
 69.3   the insured shall, within a reasonable period after demand by 
 69.4   this company, submit to examinations under oath by any person 
 69.5   named by this company, and subscribe the oath.  The insured, as 
 69.6   often as may be reasonably required, shall produce for 
 69.7   examination all records and documents reasonably related to the 
 69.8   loss, or certified copies thereof if originals are lost, at a 
 69.9   reasonable time and place designated by this company or its 
 69.10  representatives, and shall permit extracts and copies thereof to 
 69.11  be made.  
 69.12     In case the insured and this company, except in case of 
 69.13  total loss on buildings, shall fail to agree as to the actual 
 69.14  cash value or the amount of loss, then, on the written demand of 
 69.15  either, each shall select a competent and disinterested 
 69.16  appraiser and notify the other of the appraiser selected within 
 69.17  20 days of such demand.  In case either fails to select an 
 69.18  appraiser within the time provided, then a presiding judge of 
 69.19  the district court of the county wherein the loss occurs may 
 69.20  appoint such appraiser for such party upon application of the 
 69.21  other party in writing by giving five days' notice thereof in 
 69.22  writing to the party failing to appoint.  The appraisers shall 
 69.23  first select a competent and disinterested umpire; and failing 
 69.24  for 15 days to agree upon such umpire, then a presiding judge of 
 69.25  the above mentioned court may appoint such an umpire upon 
 69.26  application of party in writing by giving five days' notice 
 69.27  thereof in writing to the other party.  The appraisers shall 
 69.28  then appraise the loss, stating separately actual value and loss 
 69.29  to each item; and, failing to agree, shall submit their 
 69.30  differences, only, to the umpire.  An award in writing, so 
 69.31  itemized, of any two when filed with this company shall 
 69.32  determine the amount of actual value and loss.  Each appraiser 
 69.33  shall be paid by the selecting party, or the party for whom 
 69.34  selected, and the expense of the appraisal and umpire shall be 
 69.35  paid by the parties equally. 
 69.36     It shall be optional with this company to take all of the 
 70.1   property at the agreed or appraised value, and also to repair, 
 70.2   rebuild or replace the property destroyed or damaged with other 
 70.3   of like kind and quality within a reasonable time, on giving 
 70.4   notice of its intention so to do within 30 days after the 
 70.5   receipt of the proof of loss herein required. 
 70.6      There can be no abandonment to this company of any property.
 70.7      The amount of loss for which this company may be liable 
 70.8   shall be payable 60 days after proof of loss, as herein 
 70.9   provided, is received by this company and ascertainment of the 
 70.10  loss is made either by agreement between the insured and this 
 70.11  company expressed in writing or by the filing with this company 
 70.12  of an award as herein provided.  It is moreover understood that 
 70.13  there can be no abandonment of the property insured to the 
 70.14  company, and that the company will not in any case be liable for 
 70.15  more than the sum insured, with interest thereon from the time 
 70.16  when the loss shall become payable, as above provided. 
 70.17     No suit or action on this policy for the recovery of any 
 70.18  claim shall be sustainable in any court of law or equity unless 
 70.19  all the requirements of this policy have been complied with, and 
 70.20  unless commenced within two years after inception of the loss. 
 70.21     This company is subrogated to, and may require from the 
 70.22  insured an assignment of all right of recovery against any party 
 70.23  for loss to the extent that payment therefor is made by this 
 70.24  company; and the insurer may prosecute therefor in the name of 
 70.25  the insured retaining such amount as the insurer has paid. 
 70.26     Assignment of this policy shall not be valid except with 
 70.27  the written consent of this company. 
 70.28     IN WITNESS WHEREOF, this company has executed and attested 
 70.29  these presents. 
 70.30   
 70.31   ........................         ........................
 70.32        (Signature)                     (Signature)         
 70.33   ........................         ........................
 70.34       (Name of office)                (Name of office)     
 70.35     Sec. 54.  Minnesota Statutes 1994, section 65A.10, 
 70.36  subdivision 1, is amended to read: 
 71.1      Subdivision 1.  [BUILDINGS.] Nothing contained in sections 
 71.2   65A.08 and 65A.09 shall be construed to preclude insurance 
 71.3   against the cost, in excess of actual cash value at the time any 
 71.4   loss or damage occurs, of actually repairing, rebuilding or 
 71.5   replacing the insured property.  Subject to any applicable 
 71.6   policy limits, where an insurer offers replacement cost 
 71.7   insurance,:  (i) the insurance must cover the cost of replacing, 
 71.8   rebuilding, or repairing any loss or damaged property in 
 71.9   accordance with the minimum code as required by state or local 
 71.10  authorities; and (ii) the insurance coverage may not be 
 71.11  conditioned on replacing or rebuilding the damaged property at 
 71.12  its original location on the owner's property if the structure 
 71.13  must be relocated because of zoning or land use regulations of 
 71.14  state or local government.  In the case of a partial loss, 
 71.15  unless more extensive coverage is otherwise specified in the 
 71.16  policy, this coverage applies only to the damaged portion of the 
 71.17  property. 
 71.18     Sec. 55.  Minnesota Statutes 1994, section 65A.295, is 
 71.19  amended to read: 
 71.20     65A.295 [HOMEOWNER'S INSURANCE COVERAGE.] 
 71.21     (a) Every insurer writing homeowner's insurance in this 
 71.22  state shall make available at least one form of homeowner's 
 71.23  policy for each level of peril coverage offered by the insurer 
 71.24  in which the insured has the option to specify the dollar amount 
 71.25  of coverage provided for structures other than the dwelling and 
 71.26  for personal property.  The premium must be reduced to reflect 
 71.27  the reduced risk of lesser coverage. 
 71.28     (b) A written notice must be provided to all applicants for 
 71.29  homeowner's insurance at the time of application informing them 
 71.30  of the options provided in paragraph (a). 
 71.31     (c) Coverage for structures other than the dwelling is the 
 71.32  coverage provided under "Coverage B, Other Structures" in the 
 71.33  standard homeowner's policy.  Coverage for personal property is 
 71.34  the coverage provided under "Coverage C, Personal Property" in 
 71.35  the standard homeowner's package policy. 
 71.36     (d) (c) "Level of peril" refers to basic, broad, and all 
 72.1   risk levels of coverage. 
 72.2      Sec. 56.  Minnesota Statutes 1994, section 65B.14, is 
 72.3   amended by adding a subdivision to read: 
 72.4      Subd. 5.  [VIOLATIONS.] "Violations" means all moving 
 72.5   traffic violations that are recorded by the department of public 
 72.6   safety on a household member's motor vehicle record, and 
 72.7   violations reported by a similar authority in another state or 
 72.8   moving traffic violations reported by the insured. 
 72.9      Sec. 57.  Minnesota Statutes 1994, section 65B.15, 
 72.10  subdivision 1, is amended to read: 
 72.11     Subdivision 1.  No cancellation or reduction in the limits 
 72.12  of liability of coverage during the policy period of any policy 
 72.13  shall be effective unless notice thereof is given and unless 
 72.14  based on one or more reasons stated in the policy which shall be 
 72.15  limited to the following: 
 72.16     1.  Nonpayment of premium; or 
 72.17     2.  The policy was obtained through a material 
 72.18  misrepresentation; or 
 72.19     3.  Any insured made a false or fraudulent claim or 
 72.20  knowingly aided or abetted another in the presentation of such a 
 72.21  claim; or 
 72.22     4.  The named insured failed to disclose fully motor 
 72.23  vehicle accidents and moving traffic violations of the named 
 72.24  insured for the preceding 36 months if called for in the written 
 72.25  application; or 
 72.26     5.  The named insured failed to disclose in the written 
 72.27  application any requested information necessary for the 
 72.28  acceptance or proper rating of the risk; or 
 72.29     6.  The named insured knowingly failed to give any required 
 72.30  written notice of loss or notice of lawsuit commenced against 
 72.31  the named insured, or, when requested, refused to cooperate in 
 72.32  the investigation of a claim or defense of a lawsuit; or 
 72.33     7.  The named insured or any other operator who either 
 72.34  resides in the same household, or customarily operates an 
 72.35  automobile insured under such policy, unless the other operator 
 72.36  is identified as a named insured in another policy as an insured:
 73.1      (a) has, within the 36 months prior to the notice of 
 73.2   cancellation, had that person's driver's license under 
 73.3   suspension or revocation because the person committed a moving 
 73.4   traffic violation or because the person refused to be tested 
 73.5   under section 169.121, subdivision 1, paragraph (a); or 
 73.6      (b) is or becomes subject to epilepsy or heart attacks, and 
 73.7   such individual does not produce a written opinion from a 
 73.8   physician testifying to that person's medical ability to operate 
 73.9   a motor vehicle safely, such opinion to be based upon a 
 73.10  reasonable medical probability; or 
 73.11     (c) has an accident record, conviction record (criminal or 
 73.12  traffic), physical condition or mental condition, any one or all 
 73.13  of which are such that the person's operation of an automobile 
 73.14  might endanger the public safety; or 
 73.15     (d) has been convicted, or forfeited bail, during the 24 
 73.16  months immediately preceding the notice of cancellation for 
 73.17  criminal negligence in the use or operation of an automobile, or 
 73.18  assault arising out of the operation of a motor vehicle, or 
 73.19  operating a motor vehicle while in an intoxicated condition or 
 73.20  while under the influence of drugs; or leaving the scene of an 
 73.21  accident without stopping to report; or making false statements 
 73.22  in an application for a driver's license, or theft or unlawful 
 73.23  taking of a motor vehicle; or 
 73.24     (e) has been convicted of, or forfeited bail for, one or 
 73.25  more violations within the 18 months immediately preceding the 
 73.26  notice of cancellation, of any law, ordinance, or rule which 
 73.27  justify a revocation of a driver's license.  
 73.28     8.  The insured automobile is: 
 73.29     (1) so mechanically defective that its operation might 
 73.30  endanger public safety; or 
 73.31     (2) used in carrying passengers for hire or compensation, 
 73.32  provided however that the use of an automobile for a car pool 
 73.33  shall not be considered use of an automobile for hire or 
 73.34  compensation; or 
 73.35     (3) used in the business of transportation of flammables or 
 73.36  explosives; or 
 74.1      (4) an authorized emergency vehicle; or 
 74.2      (5) subject to an inspection law and has not been inspected 
 74.3   or, if inspected, has failed to qualify within the period 
 74.4   specified under such inspection law; or 
 74.5      (6) substantially changed in type or condition during the 
 74.6   policy period, increasing the risk substantially, such as 
 74.7   conversion to a commercial type vehicle, a dragster, sports car 
 74.8   or so as to give clear evidence of a use other than the original 
 74.9   use. 
 74.10     Sec. 58.  Minnesota Statutes 1995 Supplement, section 
 74.11  65B.47, subdivision 1a, is amended to read: 
 74.12     Subd. 1a.  [EXEMPTIONS.] Subdivision 1 does not apply to:  
 74.13     (1) a commuter van; 
 74.14     (2) a vehicle being used to transport children as part of a 
 74.15  family or group family day care program; 
 74.16     (3) a vehicle being used to transport children to school or 
 74.17  to a school-sponsored activity; 
 74.18     (4) a bus while it is in operation within the state of 
 74.19  Minnesota as to any Minnesota resident who is an insured as 
 74.20  defined in section 65B.43, subdivision 5; 
 74.21     (5) a passenger in a taxi; or 
 74.22     (6) a taxi driver, provided that this clause applies only 
 74.23  to policies issued or renewed on or after September 1, 1996, and 
 74.24  prior to September 1, 1997. 
 74.25     Sec. 59.  Minnesota Statutes 1994, section 65B.64, 
 74.26  subdivision 3, is amended to read: 
 74.27     Subd. 3.  A person shall not be entitled to basic economic 
 74.28  loss benefits through the assigned claims plan with respect to 
 74.29  injury which was sustained if at the time of such injury the 
 74.30  injured person was the owner of a private passenger motor 
 74.31  vehicle for which security is required under sections 65B.41 to 
 74.32  65B.71 and that person failed to have such security in effect. 
 74.33     For purposes of determining whether security is required 
 74.34  under section 65B.48, an owner of any vehicle is deemed to have 
 74.35  contemplated the operation or use of the vehicle at all times 
 74.36  unless the owner demonstrates to the contrary by clear and 
 75.1   convincing objective evidence. 
 75.2      Persons, whether or not related by blood or marriage, who 
 75.3   and function together with the owner as a family, other than 
 75.4   adults who have been adjudicated as incompetent and minor 
 75.5   children, shall also be disqualified from benefits through the 
 75.6   assigned claims plan. 
 75.7      Sec. 60.  Minnesota Statutes 1994, section 70A.07, is 
 75.8   amended to read: 
 75.9      70A.07 [RATES OPEN TO INSPECTION.] 
 75.10     All rates and supplementary rate information, furnished to 
 75.11  the commissioner under this chapter shall, as soon as the rates 
 75.12  are effective reviewed by the commissioner, be open to public 
 75.13  inspection at any reasonable time.  
 75.14     Sec. 61.  Minnesota Statutes 1994, section 72A.20, 
 75.15  subdivision 17, is amended to read: 
 75.16     Subd. 17.  [RETURN OF PREMIUMS.] (a) Refusing, upon 
 75.17  surrender of an individual policy of life insurance in the case 
 75.18  of the insured's death, or in the case of a surrender prior to 
 75.19  death, of an individual insurance policy not covered by the 
 75.20  standard nonforfeiture laws under section 61A.24, to refund to 
 75.21  the owner all unearned premiums paid on the policy covering the 
 75.22  insured as of the time of the insured's death or surrender if 
 75.23  the unearned premium is for a period of more than one month.  
 75.24     (b) Refusing, upon termination or cancellation of a policy 
 75.25  of automobile insurance under section 65B.14, subdivision 2, or 
 75.26  a policy of homeowner's insurance under section 65A.27, 
 75.27  subdivision 4, or a policy of accident and sickness insurance 
 75.28  under section 62A.01, or a policy of comprehensive health 
 75.29  insurance under chapter 62E, to refund to the insured all 
 75.30  unearned premiums paid on the policy covering the insured as of 
 75.31  the time of the termination or cancellation if the unearned 
 75.32  premium is for a period of more than one month.  The return of 
 75.33  unearned premium must be delivered to the insured within 30 days 
 75.34  following receipt by the insurer of the insured's request for 
 75.35  cancellation. 
 75.36     (c) This subdivision does not apply to policies of 
 76.1   insurance providing coverage only for motorcycles or other 
 76.2   seasonally rated or limited use vehicles where the rate is 
 76.3   reduced to reflect seasonal or limited use. 
 76.4      (d) For purposes of this section, a premium is unearned 
 76.5   during the period of time the insurer has not been exposed to 
 76.6   any risk of loss.  Except for premiums for motorcycle coverage 
 76.7   or other seasonally rated or limited use vehicles where the rate 
 76.8   is reduced to reflect seasonal or limited use, the unearned 
 76.9   premium is determined by multiplying the premium by the fraction 
 76.10  that results from dividing the period of time from the date of 
 76.11  termination to the date the next scheduled premium is due by the 
 76.12  period of time for which the premium was paid. 
 76.13     (e) The owner may cancel a policy referred to in this 
 76.14  section at any time during the policy period.  This provision 
 76.15  supersedes any inconsistent provision of law or any inconsistent 
 76.16  policy provision. 
 76.17     Sec. 62.  Minnesota Statutes 1994, section 72A.20, 
 76.18  subdivision 23, is amended to read: 
 76.19     Subd. 23.  [DISCRIMINATION IN AUTOMOBILE INSURANCE 
 76.20  POLICIES.] (a) No insurer that offers an automobile insurance 
 76.21  policy in this state shall: 
 76.22     (1) use the employment status of the applicant as an 
 76.23  underwriting standard or guideline; or 
 76.24     (2) deny coverage to a policyholder for the same reason. 
 76.25     (b) No insurer that offers an automobile insurance policy 
 76.26  in this state shall: 
 76.27     (1) use the applicant's status as a tenant, as the term is 
 76.28  defined in section 566.18, subdivision 2, as an underwriting 
 76.29  standard or guideline; or 
 76.30     (2) deny coverage to a policyholder for the same reason; or 
 76.31     (3) make any discrimination in offering or establishing 
 76.32  rates, premiums, dividends, or benefits of any kind, or by way 
 76.33  of rebate, for the same reason.  
 76.34     (c) No insurer that offers an automobile insurance policy 
 76.35  in this state shall: 
 76.36     (1) use the failure of the applicant to have an automobile 
 77.1   policy in force during any period of time before the application 
 77.2   is made as an underwriting standard or guideline; or 
 77.3      (2) deny coverage to a policyholder for the same reason. 
 77.4      This provision does not apply if the applicant was required 
 77.5   by law to maintain automobile insurance coverage and failed to 
 77.6   do so. 
 77.7      An insurer may require reasonable proof that the applicant 
 77.8   did not fail to maintain this coverage.  The insurer is not 
 77.9   required to accept the mere lack of a conviction or citation for 
 77.10  failure to maintain this coverage as proof of failure to 
 77.11  maintain coverage.  The insurer must provide the applicant with 
 77.12  information identifying the documentation that is required to 
 77.13  establish reasonable proof that the applicant did not fail to 
 77.14  maintain the coverage. 
 77.15     (d) No insurer that offers an automobile insurance policy 
 77.16  in this state shall use an applicant's prior claims for benefits 
 77.17  paid under section 65B.44 as an underwriting standard or 
 77.18  guideline if the applicant was 50 percent or less negligent in 
 77.19  the accident or accidents causing the claims. 
 77.20     Sec. 63.  Minnesota Statutes 1994, section 72A.20, 
 77.21  subdivision 26, is amended to read: 
 77.22     Subd. 26.  [LOSS EXPERIENCE.] An insurer shall without cost 
 77.23  to the insured provide an insured with the loss or claims 
 77.24  experience of that insured for the current policy period and for 
 77.25  the two policy periods preceding the current one for which the 
 77.26  insurer has provided coverage, within 30 days of a request for 
 77.27  the information by the policyholder.  Claims experience data 
 77.28  must be provided to the insured in accordance with state and 
 77.29  federal requirements regarding the confidentiality of medical 
 77.30  data.  The insurer shall not be responsible for providing 
 77.31  information without cost more often than once in a 12-month 
 77.32  period.  The insurer is not required to provide the information 
 77.33  if the policy covers the employee of more than one employer and 
 77.34  the information is not maintained separately for each employer 
 77.35  and not all employers request the data. 
 77.36     An insurer, health maintenance organization, or a 
 78.1   third-party administrator may not request more than three years 
 78.2   of loss or claims experience as a condition of submitting an 
 78.3   application or providing coverage. 
 78.4      This subdivision does not apply to individual life and 
 78.5   health insurance policies or personal automobile or homeowner's 
 78.6   insurance only applies to group life policies and group health 
 78.7   policies. 
 78.8      Sec. 64.  Minnesota Statutes 1994, section 72A.20, 
 78.9   subdivision 30, is amended to read: 
 78.10     Subd. 30.  [RECORDS RETENTION.] An insurer shall retain 
 78.11  copies of all underwriting documents, policy forms, and 
 78.12  applications for three years from the effective date of the 
 78.13  policy.  An insurer shall retain all claim files and 
 78.14  documentation related to a claim for three years from the date 
 78.15  the claim was paid or denied.  This subdivision does not relieve 
 78.16  the insurer of its obligation to produce these documents to the 
 78.17  department after the retention period has expired in connection 
 78.18  with an enforcement action or administrative proceeding against 
 78.19  the insurer from whom the documents are requested, if the 
 78.20  insurer has retained the documents.  Records required to be 
 78.21  retained by this section may be retained in paper, photograph, 
 78.22  microprocess, magnetic, mechanical, or electronic media, or by 
 78.23  any process which accurately reproduces or forms a durable 
 78.24  medium for the reproduction of a record. 
 78.25     Sec. 65.  Minnesota Statutes 1994, section 72A.20, is 
 78.26  amended by adding a subdivision to read: 
 78.27     Subd. 35.  [DETERMINATION OF HEALTH PLAN POLICY 
 78.28  LIMITS.] Any health plan that includes a specific policy limit 
 78.29  within its insurance policy, certificate, or subscriber 
 78.30  agreement shall calculate the policy limit by using the amount 
 78.31  actually paid on behalf of the insured, subscriber, or 
 78.32  dependents for services covered under the policy, subscriber 
 78.33  agreement, or certificate unless the amount paid is greater than 
 78.34  the billed charge. 
 78.35     Sec. 66.  [72A.207] [GRADED DEATH BENEFITS.] 
 78.36     For the purpose of this section, a graded death benefit is 
 79.1   a provision within a life insurance policy in which the death 
 79.2   benefit, in the early years of the policy, is less than the face 
 79.3   amount of the policy, but which increases with the passage of 
 79.4   time. 
 79.5      No policy of life insurance paying a graded death benefit 
 79.6   may be issued in this state unless the graded death benefit is 
 79.7   equal to at least four times the first year premium.  This 
 79.8   section does not prohibit the return of premiums or premiums 
 79.9   plus interest in connection with the voluntary or judicially 
 79.10  ordered rescission of the policy, or according to the terms of 
 79.11  the exclusions from coverage for suicide, aviation, or war risk. 
 79.12     Sec. 67.  Minnesota Statutes 1994, section 148.235, 
 79.13  subdivision 2, is amended to read: 
 79.14     Subd. 2.  [NURSE PRACTITIONERS.] A registered nurse who (1) 
 79.15  has graduated from a program of study designed to prepare 
 79.16  registered nurses for advanced practice as nurse practitioners, 
 79.17  (2) is certified through a national professional nursing 
 79.18  organization which certifies nurse practitioners and is included 
 79.19  in the list of professional nursing organizations adopted by the 
 79.20  board under section 62A.15, subdivision 3a, and (3) has a 
 79.21  written agreement with a physician based on standards 
 79.22  established by the Minnesota nurses association and the 
 79.23  Minnesota medical association that defines the delegated 
 79.24  responsibilities related to the prescription of drugs and 
 79.25  therapeutic devices, may prescribe and administer drugs and 
 79.26  therapeutic devices within the scope of the written agreement 
 79.27  and within practice as a nurse practitioner.  The written 
 79.28  agreement required under this subdivision shall be based on 
 79.29  standards established by the Minnesota nurses association and 
 79.30  the Minnesota medical association as of January 1, 1996, unless 
 79.31  both associations agree to revisions.  The written agreement 
 79.32  shall be maintained at the certified nurse practitioner's place 
 79.33  of employment and does not need to be filed with the board of 
 79.34  nursing. 
 79.35     Sec. 68.  Minnesota Statutes 1994, section 148.235, 
 79.36  subdivision 4, is amended to read: 
 80.1      Subd. 4.  [CLINICAL NURSE SPECIALISTS IN PSYCHIATRIC AND 
 80.2   MENTAL HEALTH NURSING.] A registered nurse who (1) has a masters 
 80.3   degree, (2) is certified through a national professional nursing 
 80.4   organization which certifies clinical specialists in psychiatric 
 80.5   and mental health nursing and is included in the list of 
 80.6   professional nursing organizations adopted by the board under 
 80.7   section 62A.15, subdivision 3a, (3) has successfully completed 
 80.8   no less than 30 hours of formal study in the prescribing of 
 80.9   psychotropic medications and medications to treat their side 
 80.10  effects which included instruction in health assessment, 
 80.11  psychotropic classifications, psychopharmacology, indications, 
 80.12  dosages, contraindications, side effects, and evidence of 
 80.13  application, and (4) has a verbal agreement or a written 
 80.14  agreement with a psychiatrist based on standards established by 
 80.15  the Minnesota nurses association and the Minnesota psychiatric 
 80.16  association that specifies and defines the delegated 
 80.17  responsibilities related to the prescription of drugs in 
 80.18  relationship to the diagnosis, may prescribe and administer 
 80.19  drugs used to treat psychiatric and behavioral disorders and the 
 80.20  side effects of those drugs within the scope of the written 
 80.21  agreement and within practice as a clinical specialist in 
 80.22  psychiatric and mental health nursing.  The written agreement 
 80.23  required under this subdivision shall be based on standards 
 80.24  established by the Minnesota nurses association and the 
 80.25  Minnesota medical association as of January 1, 1996, unless both 
 80.26  associations agree to revisions.  The written agreement shall be 
 80.27  maintained at the certified clinical nurse specialist's place of 
 80.28  employment and does not need to be filed with the board of 
 80.29  nursing. 
 80.30     Nothing in this subdivision removes or limits the legal 
 80.31  professional liability of the treating psychiatrist, clinical 
 80.32  nurse specialist, mental health clinic or hospital for the 
 80.33  prescription and administration of drugs by a clinical 
 80.34  specialist in accordance with this subdivision. 
 80.35     Sec. 69.  [MEDICAL MALPRACTICE INSURANCE COVERAGE; 
 80.36  REAUTHORIZATION.] 
 81.1      Any authorization to issue insurance according to Minnesota 
 81.2   Statutes, section 62F.04, valid on the effective date of this 
 81.3   section remains valid for an additional two-year period at the 
 81.4   end of the initial two-year authorization.  The additional 
 81.5   authorization period granted by this section applies only to the 
 81.6   types of coverages authorized as of the effective date of this 
 81.7   section. 
 81.8      Sec. 70.  [COMMITTEE STUDY; DISCLOSURE OF FINANCIAL 
 81.9   INCENTIVES.] 
 81.10     The house committee on financial institutions and insurance 
 81.11  shall study how best to disclose to consumers any financial 
 81.12  arrangements between health plan companies and health care 
 81.13  providers that may provide financial incentives for providers to 
 81.14  restrict care provided to consumers. 
 81.15     Sec. 71.  [TAXI INSURANCE REVIEW; REPORT] 
 81.16     The commissioner of commerce shall review the impact that 
 81.17  Laws of Minnesota 1995, chapter 227, has on the following: 
 81.18     (1) any increase in the cost of individual policies of 
 81.19  personal automobile insurance that is attributable to coverage 
 81.20  of taxi drivers as reported by insurers providing the majority 
 81.21  of coverage in the state; 
 81.22     (2) the number and dollar amount of claims for injuries 
 81.23  attributable to taxi drivers who carry individual policies of 
 81.24  insurance as reported by insurers providing the majority of 
 81.25  coverage in the state; 
 81.26     (3) the number and dollar amount of claims filed by drivers 
 81.27  of taxis insured under policies issued to owners of taxis leased 
 81.28  to drivers, to the extent that the data is available; 
 81.29     (4) the entry of insurers providing coverage for owners of 
 81.30  vehicles used as taxis; 
 81.31     (5) changes in the cost of coverage carried by owners of 
 81.32  vehicles used as taxis. 
 81.33     The commissioner shall provide a written report to the 
 81.34  chair of the committee on financial institutions and insurance 
 81.35  of the house of representatives and the chair of the committee 
 81.36  on commerce of the senate by March 1, 1997. 
 82.1      Sec. 72.  [REPEALER.] 
 82.2      (a) Minnesota Statutes 1994, sections 60A.40; 60B.27; 
 82.3   62I.20; 65A.25; and 72A.205, are repealed. 
 82.4      (b) Laws 1995, chapter 140, section 1, is repealed. 
 82.5      (c) Section 51 is repealed effective August 1, 1998. 
 82.6      Sec. 73.  [EFFECTIVE DATES.] 
 82.7      Sections 2, 5, 9, 10, 12, 21, 22, 26 to 31, 36 to 38, 41 to 
 82.8   48, 61, 64, 66, and 69 are effective the day following final 
 82.9   enactment. 
 82.10     Section 3 is effective retroactive to January 1, 1996. 
 82.11     Sections 51 and 52 are effective August 1, 1996, and 
 82.12  applies to all health plans issued or renewed to provide 
 82.13  coverage to Minnesota residents on or after that date. 
 82.14     Section 49 is effective retroactive to July 1, 1995. 
 82.15     Sections 1 and 13 to 20 are effective January 1, 1997. 
 82.16     Section 50 is effective June 30, 1997, and applies to 
 82.17  health plans issued or renewed on or after that date. 
 82.18                             ARTICLE 2 
 82.19     Section 1.  Minnesota Statutes 1994, section 60A.07, 
 82.20  subdivision 8, is amended to read: 
 82.21     Subd. 8.  [SPECIAL PROVISIONS AS TO MUTUAL COMPANIES.] (1) 
 82.22  [AMENDMENT OF ARTICLES OR CERTIFICATE OF INCORPORATION.] The 
 82.23  certificate of incorporation or articles of association of any 
 82.24  domestic insurance company without capital stock, now or 
 82.25  hereafter organized and existing under the laws of this state, 
 82.26  may be amended in respect to any matter which an original 
 82.27  certificate of incorporation or articles of association of a 
 82.28  corporation of the same kind might lawfully have contained by 
 82.29  the adoption of a resolution specifying the proposed amendment, 
 82.30  at a regular meeting of the members thereof or at a special 
 82.31  meeting called for that expressly stated purpose, by the 
 82.32  affirmative vote of a majority of the members present, in person 
 82.33  or by proxy, at the meeting, and by causing the resolution to be 
 82.34  embraced in a certificate duly executed by its president and 
 82.35  secretary or other presiding and recording officers, under its 
 82.36  corporate seal, and approved, filed, recorded, and published in 
 83.1   the manner prescribed by law for the execution, approval, 
 83.2   filing, recording, and publishing of a like original certificate 
 83.3   of incorporation or articles of association. 
 83.4      (2) [RENEWAL OF CORPORATE EXISTENCE.] Any domestic 
 83.5   insurance company or corporation having no capital stock, 
 83.6   heretofore or hereafter organized and existing under the laws of 
 83.7   this state, whose period of duration has expired or is about to 
 83.8   expire, may, on or before the date of the expiration, or within 
 83.9   six months after the date of expiration, renew its corporate 
 83.10  existence from the date of such expiration for any period 
 83.11  permitted by the laws of this state, by the adoption of a 
 83.12  resolution to that effect by the affirmative vote of 
 83.13  three-fourths of the members present, in person or by proxy, at 
 83.14  a regular meeting of the members, or at any special meeting 
 83.15  called for that expressly stated purpose, and by causing the 
 83.16  resolution to be embraced in a certificate duly executed by its 
 83.17  president and secretary or other presiding and recording 
 83.18  officers, under its corporate seal, and approved, filed, 
 83.19  recorded, and published in the manner prescribed by law for the 
 83.20  execution, approval, filing, recording, and publishing of an 
 83.21  original certificate of incorporation or articles of association.
 83.22     (3) [BYLAWS.] The bylaws of any domestic insurance 
 83.23  corporation without capital stock, in cases where the bylaws 
 83.24  must be adopted or approved by the members thereof, may be 
 83.25  adopted, altered, or amended at a regular meeting of the members 
 83.26  thereof, or at a special meeting called for that expressly 
 83.27  stated purpose, by the affirmative vote of a majority of the 
 83.28  members present, in person or by proxy, at the meeting. 
 83.29     (4) [CONVERSION OF A DOMESTIC MUTUAL INTO A STOCK INSURANCE 
 83.30  CORPORATION.] A domestic mutual corporation may be converted 
 83.31  into a stock insurance corporation as follows: 
 83.32     (a) [ACTION BY BOARD OF DIRECTORS.] The board of directors 
 83.33  shall adopt a plan of conversion. 
 83.34     (b) [PLAN OF CONVERSION.] (i) The plan of conversion shall 
 83.35  provide that, upon consummation of the conversion, each 
 83.36  policyholder at the date of the passage of the resolution by the 
 84.1   board of directors shall be entitled to such shares of stock of 
 84.2   the new company as the policyholder's equitable share of the 
 84.3   surplus of the company will purchase.  This equitable share 
 84.4   shall be determined by independent certified auditors or 
 84.5   consulting actuaries and shall be subject to approval by the 
 84.6   commissioner.  If a policyholder's equitable share of the 
 84.7   surplus of the company produces a fractional share, the 
 84.8   policyholder shall be given the option of either receiving the 
 84.9   value of the fractional share in cash or of purchasing the 
 84.10  fractional part of a share that will entitle the policyholder to 
 84.11  a full share. 
 84.12     (ii) No shares of the corporation being organized shall be 
 84.13  issued or subscribed for, formally or informally, directly or 
 84.14  indirectly during the conversion except as authorized under 
 84.15  subparagraph (i). 
 84.16     (iii) The corporation shall not pay compensation or 
 84.17  remuneration of any kind to any person in connection with the 
 84.18  proposed conversion, except at reasonable rates for printing 
 84.19  costs, and for legal and other professional fees for services 
 84.20  actually rendered. 
 84.21     (iv) The plan of conversion shall include a copy of the 
 84.22  proposed articles of incorporation which shall comply with the 
 84.23  requirements of chapter 300.  Except as otherwise specifically 
 84.24  provided, the corporation resulting from conversion under this 
 84.25  section shall be deemed to have been organized as of the date of 
 84.26  issuance of the initial certificate of authority to the mutual 
 84.27  corporation being converted. 
 84.28     (c) [APPROVAL BY POLICYHOLDERS.] Within 30 days after its 
 84.29  adoption by the board of directors, the plan of conversion shall 
 84.30  be submitted to the policyholders for approval by the 
 84.31  affirmative vote of a majority of the policyholders entitled to 
 84.32  vote, in the manner prescribed by subparagraph (1).  Every 
 84.33  policyholder as of the date of the adoption under subparagraph 
 84.34  (a) shall be entitled to one vote for each policy held.  Only 
 84.35  such policyholders shall be entitled to vote. 
 84.36     (d) [APPROVAL BY THE COMMISSIONER.] (i) Within 30 days 
 85.1   after its adoption by the policyholders, the plan of conversion 
 85.2   shall be submitted to the commissioner with an application for 
 85.3   approval. 
 85.4      (ii) The commissioner shall not approve if the value of 
 85.5   single shares is set at a figure that substantially burdens 
 85.6   policyholders who wish to purchase a fractional share under 
 85.7   subparagraph (b)(i). 
 85.8      (iii) If the commissioner finds that the plan of conversion 
 85.9   has been duly approved by the policyholders, that the conversion 
 85.10  would not violate any law and would not be contrary to the 
 85.11  interests of the policyholders, the commissioner shall approve 
 85.12  the plan of conversion and shall issue a new certificate of 
 85.13  authority to the corporation. 
 85.14     (e) [CONVERSION.] After filing an amendment of the articles 
 85.15  of incorporation as provided by chapter 300, the corporation 
 85.16  shall become a stock corporation and shall no longer be a mutual 
 85.17  corporation, and the board of directors shall execute the plan 
 85.18  of conversion. 
 85.19     (f) [SECURITIES REGULATION.] The filing with the 
 85.20  commissioner of commerce of a certified copy of the plan of 
 85.21  conversion as adopted by the policyholders and approved by the 
 85.22  commissioner shall constitute registration under chapter 80A, of 
 85.23  the securities authorized to be issued to policyholders 
 85.24  thereunder. 
 85.25     Sec. 2.  Minnesota Statutes 1995 Supplement, section 
 85.26  60A.07, subdivision 10, is amended to read: 
 85.27     Subd. 10.  [SPECIAL PROVISIONS AS TO LIFE COMPANIES.] (1) 
 85.28  [PREREQUISITES OF LIFE COMPANIES.] No mutual life company shall 
 85.29  be qualified to issue any policy until applications for at least 
 85.30  $200,000 of insurance, upon lives of at least 200 separate 
 85.31  residents, have been actually and in good faith made, accepted, 
 85.32  and entered upon its books and at least one full annual premium 
 85.33  thereunder, based upon the authorized table of mortality, 
 85.34  received in cash or in absolutely payable and collectible 
 85.35  notes.  A duplicate receipt for each premium, conditioned for 
 85.36  the return thereof unless the policy be issued within one year 
 86.1   thereafter, shall be issued, and one copy delivered to the 
 86.2   applicant and the other filed with the commissioner, together 
 86.3   with the certificate of a solvent authorized bank in the state, 
 86.4   of the deposit therein of such cash and notes, aggregating the 
 86.5   amount aforesaid, specifying the maker, payee, date, maturity, 
 86.6   and amount of each.  Such cash and notes shall be held by it not 
 86.7   longer than one year, and at or before the expiration thereof to 
 86.8   be by it paid or delivered, upon the written order of the 
 86.9   commissioner, to such company or applicants, respectively. 
 86.10     (2)  [FOREIGN COMPANIES MAY BECOME DOMESTIC.] Any company 
 86.11  organized under the laws of any other state or country, which 
 86.12  might have been originally incorporated under the laws of this 
 86.13  state, and which has been admitted to do business therein for 
 86.14  either or both the purpose of life or accident insurance, upon 
 86.15  complying with all the requirements of law relative to the 
 86.16  execution, filing, recording and publishing of original 
 86.17  certificates and payment of incorporation fees by like domestic 
 86.18  corporations, therein designating its principal place of 
 86.19  business at a place in this state, may become a domestic 
 86.20  corporation, and be entitled to like certificates of its 
 86.21  corporate existence and license to transact business in this 
 86.22  state, and be subject in all respects to the authority and 
 86.23  jurisdiction thereof. 
 86.24     (3)  [TEMPORARY CAPITAL STOCK OF MUTUAL LIFE COMPANIES.] A 
 86.25  new mutual life insurance company which has complied with the 
 86.26  provisions of clause (1) or an existing mutual life insurance 
 86.27  company may establish, a temporary capital of, such amount not 
 86.28  less than $100,000, as may be approved by the commissioner.  
 86.29  Such temporary capital shall be invested by the company in the 
 86.30  same manner as is provided for the investment of its other 
 86.31  funds.  Out of the net surplus of the company the holders of the 
 86.32  temporary capital stock may receive a dividend which may be 
 86.33  cumulative.  This capital stock shall not be a liability of the 
 86.34  company but shall be retired within a reasonable time and 
 86.35  according to terms approved by the commissioner.  At the time 
 86.36  for the retirement of this capital stock, the holders shall be 
 87.1   entitled to receive from the company the par value thereof and 
 87.2   any dividends thereon due and unpaid, and thereupon the stock 
 87.3   shall be surrendered and canceled.  In the event of the 
 87.4   liquidation of the company, the holders of temporary capital 
 87.5   stock shall have the same preference in the assets of the 
 87.6   company as shareholders have in a stock insurance company.  
 87.7   Dividends on this stock are subject to section 60D.20, 
 87.8   subdivision 2. 
 87.9      Temporary capital stock may be issued with or without 
 87.10  voting rights.  If issued with voting rights, the holders shall, 
 87.11  at all meetings, be entitled to one vote for each $10 of 
 87.12  temporary capital stock held.  
 87.13     Sec. 3.  [60A.075] [MUTUAL COMPANY CONVERSION TO STOCK 
 87.14  COMPANY.] 
 87.15     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
 87.16  section, the terms in this subdivision have the meanings given 
 87.17  them. 
 87.18     (a) "Eligible member" means a policyholder whose policy is 
 87.19  in force as of the record date, which is the date that the 
 87.20  mutual company's board of directors adopts a plan of conversion 
 87.21  or some other date specified as the record date in the plan of 
 87.22  conversion and approved by the commissioner.  Unless otherwise 
 87.23  provided in the plan, a person insured under a group policy is 
 87.24  not an eligible member, unless on the record date: 
 87.25     (1) the person is insured or covered under a group life 
 87.26  policy or group annuity contract under which funds are 
 87.27  accumulated and allocated to the respective covered persons; 
 87.28     (2) the person has the right to direct the application of 
 87.29  the funds so allocated; 
 87.30     (3) the group policyholder makes no contribution to the 
 87.31  premiums or deposits for the policy or contract; and 
 87.32     (4) the converting mutual company has the names and 
 87.33  addresses of the persons covered under the group life policy or 
 87.34  group annuity contract. 
 87.35     (b) "Reorganized company" means a Minnesota domestic stock 
 87.36  insurance company that has converted from a Minnesota domestic 
 88.1   mutual insurance company according to this section. 
 88.2      (c) "Plan of conversion" or "plan" means a plan adopted by 
 88.3   a Minnesota domestic mutual insurance company's board of 
 88.4   directors under this section to convert the mutual company into 
 88.5   a Minnesota domestic stock insurance company. 
 88.6      (d) "Policy" means a policy or contract of insurance issued 
 88.7   by a converting mutual company, including an annuity contract. 
 88.8      (e) "Commissioner" means the commissioner of commerce. 
 88.9      (f) "Converting mutual company" means a Minnesota domestic 
 88.10  mutual insurance company seeking to convert to a Minnesota 
 88.11  domestic stock insurance company according to this section. 
 88.12     (g) "Effective date of a conversion" means the date 
 88.13  determined according to subdivision 6. 
 88.14     (h) "Membership interests" means all policyholders' rights 
 88.15  as members of the converting mutual company, including but not 
 88.16  limited to, rights to vote and to participate in any 
 88.17  distributions of surplus, whether or not incident to the 
 88.18  company's liquidation. 
 88.19     (i) "Equitable surplus" means the converting mutual 
 88.20  company's surplus as regards policyholders as of the effective 
 88.21  date of the conversion determined in a manner that is not unfair 
 88.22  or inequitable to policyholders. 
 88.23     (j) "Permitted issuer" means:  (1) a corporation organized 
 88.24  and owned by the converting mutual company or by any other 
 88.25  insurance company or insurance holding company for the purpose 
 88.26  of purchasing and holding all of the stock of the reorganized 
 88.27  company; (2) a stock insurance company owned by the converting 
 88.28  mutual company or by any other insurance company or insurance 
 88.29  holding company into which the converting mutual company will be 
 88.30  merged; or (3) any other corporation approved by the 
 88.31  commissioner. 
 88.32     Subd. 2.  [AUTHORIZATION.] A mutual insurance company may 
 88.33  become a stock insurance company according to a plan of 
 88.34  conversion established and approved in the manner provided by 
 88.35  this section. 
 88.36     Subd. 3.  [ADOPTION OF A PLAN OF CONVERSION BY THE BOARD OF 
 89.1   DIRECTORS.] (a) A converting mutual company shall, by the 
 89.2   affirmative vote of a majority of its board of directors, adopt 
 89.3   a plan of conversion consistent with the requirements of this 
 89.4   section. 
 89.5      (b) At any time before approval of a plan by the 
 89.6   commissioner, the converting mutual company, by the affirmative 
 89.7   vote of a majority of its board of directors, may amend or 
 89.8   withdraw the plan. 
 89.9      Subd. 4.  [APPROVAL OF THE PLAN OF CONVERSION BY THE 
 89.10  COMMISSIONER.] (a) [DOCUMENTS TO BE FILED.] After adoption of 
 89.11  the plan by the converting mutual company's board of directors, 
 89.12  but before the members' approval of the plan, the converting 
 89.13  mutual company shall file the following documents with the 
 89.14  commissioner for review and approval: 
 89.15     (1) the plan of conversion, including an independent 
 89.16  evaluation of the pro forma market value and of the equitable 
 89.17  surplus of the company and of the estimated value of any shares 
 89.18  to be issued and an independent actuarial opinion, if required; 
 89.19     (2) the form of notice of meeting for eligible members to 
 89.20  vote on the plan; 
 89.21     (3) the form of any proxies to be solicited from eligible 
 89.22  members; 
 89.23     (4) the proposed articles of incorporation and bylaws of 
 89.24  the converted stock company; 
 89.25     (5) information required under chapter 60D if the plan 
 89.26  results in a change of control of the converting mutual company; 
 89.27  and 
 89.28     (6) other information or documentation requested by the 
 89.29  commissioner or required by rule. 
 89.30     (b) [REQUIRED FINDINGS.] The commissioner shall approve or 
 89.31  conditionally approve the plan upon finding that: 
 89.32     (1) the provisions of this section have been fully met; and 
 89.33     (2) the plan will not be unfair or inequitable to 
 89.34  policyholders. 
 89.35     (c) [TIME.] The plan of conversion shall, by order, be 
 89.36  approved, conditionally approved, or disapproved by the 
 90.1   commissioner within the later of 30 days from the commissioner's 
 90.2   receipt of all required information from the converting mutual 
 90.3   company or 30 days after the conclusion of a public hearing held 
 90.4   according to paragraph (e).  An approval or conditional approval 
 90.5   of a plan expires if the reorganization is not completed within 
 90.6   180 days after the approval or conditional approval unless this 
 90.7   time period is extended by the commissioner for good cause shown.
 90.8      (d) [CONSULTANTS.] The commissioner may retain, at the 
 90.9   converting mutual company's expense, qualified experts not 
 90.10  otherwise a part of the commissioner's staff to assist in 
 90.11  reviewing the plan and supplemental materials and valuations. 
 90.12     (e) [HEARING.] The commissioner may, but need not, conduct 
 90.13  a public hearing regarding the proposed plan of conversion.  The 
 90.14  hearing must begin no later than 30 days after submission to the 
 90.15  commissioner of a plan of conversion and all required 
 90.16  information.  The commissioner shall give the converting mutual 
 90.17  company at least 20 days' notice of the hearing.  At the 
 90.18  hearing, the converting mutual company, its policyholders, and 
 90.19  any other person whose interest may be affected by the proposed 
 90.20  conversion may present evidence, examine and cross-examine 
 90.21  witnesses, and offer oral and written arguments or comments 
 90.22  according to the procedure for contested cases under chapter 
 90.23  14.  The persons participating may conduct discovery proceedings 
 90.24  in the same manner as prescribed for the district courts of this 
 90.25  state.  All discovery proceedings must be concluded no later 
 90.26  than three days before the scheduled commencement date of the 
 90.27  public hearing. 
 90.28     Subd. 5.  [APPROVAL OF THE PLAN BY THE ELIGIBLE 
 90.29  MEMBERS.] (a) [NOTICE.] Following approval or conditional 
 90.30  approval of the plan by the commissioner, all eligible members 
 90.31  shall be given notice of a regular or special meeting of the 
 90.32  policyholders called for the purpose of considering the plan and 
 90.33  any corporate actions that are a part of, or are reasonably 
 90.34  attendant to, the accomplishment of the plan. 
 90.35     (b) [NOTICE REQUIRED.] A copy of the plan or a summary of 
 90.36  the plan must accompany the notice.  The notice must be mailed 
 91.1   to each eligible member's last known address, as shown on the 
 91.2   converting mutual company's records, within 45 days of the 
 91.3   commissioner's approval of the plan, unless the commissioner 
 91.4   directs an earlier date for mailing.  The meeting to vote upon 
 91.5   the plan must be set for a date no less than 45 days after the 
 91.6   date when the notice of the meeting is mailed by the converting 
 91.7   mutual company unless the commissioner directs an earlier date 
 91.8   for the meeting.  If the meeting to vote upon the plan is held 
 91.9   coincident with the converting mutual company's annual meeting 
 91.10  of policyholders, only one combined notice of meeting is 
 91.11  required. 
 91.12     (c) [FAILURE TO GIVE NOTICE.] If the converting mutual 
 91.13  company complies substantially and in good faith with the notice 
 91.14  requirements of this section, the converting mutual company's 
 91.15  failure to give any member or members any required notice does 
 91.16  not impair the validity of any action taken under this section. 
 91.17     (d) [VOTING.] (1) The plan must be adopted upon receiving 
 91.18  the affirmative vote of a majority of the votes cast by eligible 
 91.19  members. 
 91.20     (2) Eligible members may vote in person or by proxy.  The 
 91.21  form of any proxy must be filed with and approved by the 
 91.22  commissioner. 
 91.23     (3) The number of votes each eligible member may cast shall 
 91.24  be determined by the converting mutual company's bylaws.  If the 
 91.25  bylaws are silent, or if the commissioner determines that the 
 91.26  voting requirements under the bylaws would be unfair or would 
 91.27  prejudice the rights of the eligible members, each eligible 
 91.28  member may cast one vote. 
 91.29     Subd. 6.  [CONVERSION.] (a) [FILING.] Following approval by 
 91.30  the members, the converting mutual company shall file a copy of 
 91.31  the company's amended or restated articles of incorporation with 
 91.32  the commissioner, together with a certified copy of the minutes 
 91.33  of the meeting at which the plan was adopted and a certified 
 91.34  copy of the plan.  The commissioner shall review and, if 
 91.35  appropriate, approve the amended or restated articles.  After 
 91.36  approval by the commissioner, the converting mutual company 
 92.1   shall file the articles with the secretary of state as provided 
 92.2   by chapter 300. 
 92.3      (b) [EFFECTIVE DATE.] Effective on the date of filing an 
 92.4   amendment or restatement of the articles of incorporation with 
 92.5   the secretary of state as provided by chapter 300, or on a later 
 92.6   date if the plan so specifies, the converting mutual corporation 
 92.7   shall become a stock corporation and shall no longer be a mutual 
 92.8   corporation. 
 92.9      Subd. 7.  [PLAN NOT UNFAIR OR INEQUITABLE.] A plan of 
 92.10  conversion shall not be unfair or inequitable to policyholders.  
 92.11  A plan of conversion is not unfair or inequitable if it 
 92.12  satisfies the conditions of subdivision 8, 9, or 10.  The 
 92.13  commissioner may determine that any other plan proposed by a 
 92.14  converting mutual company is not unfair or inequitable to 
 92.15  policyholders. 
 92.16     Subd. 8.  [SHARE CONVERSION.] A plan of conversion under 
 92.17  this subdivision shall provide for exchange of policyholders' 
 92.18  membership interests in return for shares in the reorganized 
 92.19  company, according to paragraphs (a) to (c). 
 92.20     (a) The policyholders' membership interests shall be 
 92.21  exchanged, in a manner that takes into account the estimated 
 92.22  proportionate contribution of equitable surplus of each class of 
 92.23  participating policies and contracts, for all of the common 
 92.24  shares of the reorganized company or its parent company or a 
 92.25  permitted issuer, or for a combination of the common shares of 
 92.26  the reorganized company or its parent company or a permitted 
 92.27  issuer. 
 92.28     (b) Unless the anticipated issuance within a shorter period 
 92.29  is disclosed in the plan of conversion, the issuer of common 
 92.30  shares shall not, within two years after the effective date of 
 92.31  reorganization, issue either of the following: 
 92.32     (1) any of its common shares or any securities convertible 
 92.33  with or without consideration into the common shares or carrying 
 92.34  any warrant to subscribe to or purchase common shares; and 
 92.35     (2) any warrant, right, or option to subscribe to or 
 92.36  purchase the common shares or other securities described in 
 93.1   paragraph (a), except for the issue of common shares to or for 
 93.2   the benefit of policyholders according to the plan of conversion 
 93.3   and the issue of options for the purchase of common shares being 
 93.4   granted to officers, directors, or employees of the reorganized 
 93.5   company or its parent company, if any, according to this section.
 93.6      (c) Unless the common shares have a public market when 
 93.7   issued, the issuer shall use its best efforts to encourage and 
 93.8   assist in the establishment of a public market for the common 
 93.9   shares within two years of the effective date of the conversion 
 93.10  or a longer period as disclosed in the plan of conversion.  
 93.11  Within one year after any offering of stock other than the 
 93.12  initial distribution, but no later than six years after the 
 93.13  effective date of the conversion, the reorganized company shall 
 93.14  offer to make available to policyholders who received and 
 93.15  retained shares of common stock or securities described in 
 93.16  paragraph (b), clause (1), a procedure to dispose of those 
 93.17  shares of stock at market value without brokerage commissions or 
 93.18  similar fees. 
 93.19     Subd. 9.  [SURPLUS DISTRIBUTION.] A plan of conversion 
 93.20  under this subdivision shall provide for the exchange of the 
 93.21  policyholders' membership interests in return for the operation 
 93.22  of the converting mutual company's participating policies as a 
 93.23  closed block of business and for the distribution of the 
 93.24  company's equitable surplus to policyholders, and shall provide 
 93.25  for the issuance of new shares of the reorganized company or its 
 93.26  parent corporation, each according to paragraphs (a) to (i). 
 93.27     (a) The converting mutual company's participating business, 
 93.28  comprised of its participating policies and contracts in force 
 93.29  on the effective date of the conversion or other reasonable date 
 93.30  as provided in the plan, shall be operated by the reorganized 
 93.31  company as a closed block of participating business.  However, 
 93.32  at the option of the converting mutual company, group policies 
 93.33  and group contracts may be omitted from the closed block. 
 93.34     (b) Assets of the converting mutual company must be 
 93.35  allocated to the closed block of participating business in an 
 93.36  amount equal to the reserves and liabilities for the converting 
 94.1   mutual life insurer's participating policies and contracts in 
 94.2   force on the effective date of the conversion.  The plan must be 
 94.3   accompanied by an opinion of an independent qualified actuary 
 94.4   who meets the standards set forth in the insurance laws or 
 94.5   regulations for the submission of actuarial opinions as to the 
 94.6   adequacy of reserves or assets.  The opinion must relate to the 
 94.7   adequacy of the assets allocated to support the closed block of 
 94.8   business.  The actuarial opinion must be based on methods of 
 94.9   analysis considered appropriate for those purposes by the 
 94.10  Actuarial Standards Board. 
 94.11     (c) The reorganized company shall keep a separate 
 94.12  accounting for the closed block and shall make and include in 
 94.13  the annual statement to be filed with the commissioner each year 
 94.14  a separate statement showing the gains, losses, and expenses 
 94.15  properly attributable to the closed block. 
 94.16     (d) Notwithstanding the establishment of a closed block, 
 94.17  the entire assets of the reorganized company shall be available 
 94.18  for the payment of benefits to policyholders.  Payment must 
 94.19  first be made from the assets supporting the closed block until 
 94.20  exhausted, and then from the general assets of the reorganized 
 94.21  company. 
 94.22     (e) The converting mutual company's equitable surplus shall 
 94.23  be distributed to eligible participating policyholders in a form 
 94.24  or forms selected by the converting mutual company.  The form of 
 94.25  distribution may consist of cash, securities of the reorganized 
 94.26  company, securities of another institution, a certificate of 
 94.27  contribution, additional life insurance, annuity benefits, 
 94.28  increased dividends, reduced premiums, or other equitable 
 94.29  consideration or any combination of forms of consideration.  The 
 94.30  consideration, if any, given to a class or category of 
 94.31  policyholders may differ from the consideration given to another 
 94.32  class or category of policyholders.  A certificate of 
 94.33  contribution must be repayable in ten years, be equal to 100 
 94.34  percent of the value of the policyholders' membership interest, 
 94.35  and bear interest at the highest rate charged by the reorganized 
 94.36  company for policy loans on the effective date of the conversion.
 95.1      (f) The consideration must be allocated among the 
 95.2   policyholders in a manner that is fair and equitable to the 
 95.3   policyholders. 
 95.4      (g) The reorganized company or its parent corporation shall 
 95.5   issue and sell shares of one or more classes having a total 
 95.6   price equal to the estimated value in the market of the shares 
 95.7   on the initial offering date.  The estimated value must take 
 95.8   into account all of the following: 
 95.9      (1) the pro forma market value of the reorganized company; 
 95.10     (2) the consideration to be given to policyholders 
 95.11  according to paragraph (e); 
 95.12     (3) the proceeds of the sale of the shares; and 
 95.13     (4) any additional value attributable to the shares as a 
 95.14  result of a purchaser or a group of purchasers who acted in 
 95.15  concert to obtain shares in the initial offering, attaining, 
 95.16  through such purchase, control of the reorganized company or its 
 95.17  parent corporation. 
 95.18     (h) If a purchaser or a group of purchasers acting in 
 95.19  concert is to attain control in the initial offering, the mutual 
 95.20  company shall not, directly or indirectly, pay for any of the 
 95.21  costs or expenses of conversion of the mutual company, whether 
 95.22  or not the conversion is effected. 
 95.23     (i) Periodically, with the commissioner's approval, the 
 95.24  reorganized company may share in the profits of the closed block 
 95.25  of participating business for the benefit of stockholders if the 
 95.26  assets allocated to the closed block are in excess of those 
 95.27  necessary to support the closed block. 
 95.28     Subd. 10.  [SUBSCRIPTION RIGHTS.] A plan of conversion 
 95.29  under this subdivision shall provide for exchange of the 
 95.30  policyholders' membership interests in return for the operation 
 95.31  of the converting mutual company's participating policies as a 
 95.32  closed block of business, for the creation of a liquidation 
 95.33  account to protect the interests of policyholders, and for the 
 95.34  issuance of subscription rights to eligible policyholders, and 
 95.35  shall provide for the issuance of shares by the reorganized 
 95.36  company, each according to paragraphs (a) to (j). 
 96.1      (a) The converting mutual company's participating business, 
 96.2   comprised of its participating policies and contracts in force 
 96.3   on the effective date of the conversion, or such other 
 96.4   reasonable date specified in the plan, and excluding at the 
 96.5   converting mutual company's option any group policies or group 
 96.6   contracts, shall be operated by the reorganized company as a 
 96.7   closed block of participating business according to subdivision 
 96.8   9, paragraphs (a) to (d). 
 96.9      (b) The reorganized company or its parent corporation or a 
 96.10  permitted issuer shall issue and sell shares of one or more 
 96.11  classes having a total price equal to the estimated value of the 
 96.12  shares in the market on the initial offering date taking into 
 96.13  account the proceeds of the sale of shares and the consideration 
 96.14  given to policyholders. 
 96.15     (c) The policyholders shall receive nontransferable 
 96.16  preemptive subscription rights to purchase all of the common 
 96.17  shares of the issuer according to paragraph (b). 
 96.18     (d) The preemptive subscription rights to purchase the 
 96.19  common shares must be allocated among the participating 
 96.20  policyholders in whole shares in a manner provided in the plan 
 96.21  that takes into account the estimated contribution of each class 
 96.22  of participating policies and contracts to the total amount of 
 96.23  the policyholders' consideration.  The plan must provide a fair 
 96.24  and equitable means for the allocation of shares in the event of 
 96.25  an oversubscription.  The plan must further provide that any 
 96.26  shares of capital stock not subscribed by eligible members must 
 96.27  be sold in a public offering through an underwriter, unless the 
 96.28  number of shares unsubscribed is so small in number so as not to 
 96.29  warrant the expense of a public offering, in which case the plan 
 96.30  may provide for the purchase of the unsubscribed shares by 
 96.31  private placement or through any fair and equitable alternative 
 96.32  means approved by the commissioner. 
 96.33     (e) The number of the common shares that a person, together 
 96.34  with any affiliates or group of persons acting in concert, may 
 96.35  subscribe or purchase in the reorganization, must be limited to 
 96.36  not more than five percent of the common shares.  For this 
 97.1   purpose, neither the members of the board of directors of the 
 97.2   reorganized company nor its parent corporation, if any, is 
 97.3   considered to be affiliates or a group of persons acting in 
 97.4   concert solely by reason of their board membership. 
 97.5      (f) Unless the common shares have a public market when 
 97.6   issued, officers and directors of the issuer and their 
 97.7   affiliates shall not, for at least three years after the date of 
 97.8   conversion, purchase common shares of the issuer, except with 
 97.9   the approval of the commissioner. 
 97.10     (g) Unless the common shares have a public market when 
 97.11  issued, the issuer shall use its best efforts to encourage and 
 97.12  assist in the establishment of a public market for the common 
 97.13  shares. 
 97.14     (h) The issuer shall not, for at least three years 
 97.15  following the conversion, repurchase any of its common shares 
 97.16  except according to a pro rata tender offer to all shareholders, 
 97.17  or with the approval of the commissioner. 
 97.18     (i) A liquidation account must be established for the 
 97.19  benefit of policyholders in the event of a complete liquidation 
 97.20  of the reorganized company.  The liquidation account must be 
 97.21  equal to the equitable surplus of the converting mutual company 
 97.22  as of the effective date of the conversion.  The function of the 
 97.23  liquidation account is solely to establish a priority on 
 97.24  liquidation and its existence does not restrict the use or 
 97.25  application of the surplus of the reorganized company except as 
 97.26  specified in paragraph (j).  The liquidation account must be 
 97.27  allocated equitably as of the effective date of conversion among 
 97.28  the then participating policyholders.  The amount allocated to a 
 97.29  policy or contract must not increase and must be reduced to zero 
 97.30  when the policy or contract terminates.  In the event of a 
 97.31  complete liquidation of the reorganized company, the 
 97.32  policyholders among which the liquidation account is allocated 
 97.33  are entitled to receive a liquidation distribution in the amount 
 97.34  of the liquidation account before any liquidation distribution 
 97.35  is made with respect to shares. 
 97.36     (j) Until the liquidation account has been reduced to zero, 
 98.1   the issuer shall not declare or pay a cash dividend on, or 
 98.2   repurchase any of, its common shares in an amount in excess of 
 98.3   its cumulative earned surplus generated after the conversion 
 98.4   determined according to statutory accounting principles, if the 
 98.5   effect would be to cause the amount of the statutory surplus of 
 98.6   the reorganized company to be reduced below the then amount of 
 98.7   the liquidation account. 
 98.8      Subd. 11.  [OPTIONAL PROVISIONS.] A plan under subdivision 
 98.9   8, 9, or 10 may include, with the approval of the commissioner, 
 98.10  any of the provisions in paragraphs (a) and (b). 
 98.11     (a) A plan may provide that any shares of the stock of the 
 98.12  reorganized company or its parent corporation or a permitted 
 98.13  issuer included in the policyholders' consideration must be 
 98.14  placed on the effective date of the conversion in a trust or 
 98.15  other entity existing for the exclusive benefit of the 
 98.16  participating policyholders and established solely for the 
 98.17  purposes of effecting the reorganization.  Under this option, 
 98.18  the shares placed in trust must be sold over a period of not 
 98.19  more than ten years and the proceeds of the shares must be 
 98.20  distributed using the distribution priorities prescribed in the 
 98.21  plan. 
 98.22     (b) A plan may provide that the directors and officers of 
 98.23  the converting mutual company shall receive, without payment, 
 98.24  nontransferable subscription rights to purchase capital stock of 
 98.25  the reorganized company, its parent, or a permitted issuer.  
 98.26  Those subscription rights must be allocated among the directors 
 98.27  and officers by a fair and equitable formula. 
 98.28     (1) The total number of shares that may be purchased under 
 98.29  this clause, may not exceed 35 percent of the total number of 
 98.30  shares to be issued in the case of a converting mutual company 
 98.31  with total assets of less than $50,000,000 or 25 percent of the 
 98.32  total shares to be issued in the case of a converting mutual 
 98.33  company with total assets of more than $500,000,000.  For 
 98.34  converting mutual companies with total assets between 
 98.35  $50,000,000 and $500,000,000, the total number of shares that 
 98.36  may be purchased may not exceed an interpolated percentage 
 99.1   between 25 and 35 percent. 
 99.2      (2) Stock purchased by a director or officer under clause 
 99.3   (1) may not be sold within one year following the effective date 
 99.4   of the conversion. 
 99.5      (3) The plan may also provide that a director or officer, 
 99.6   or person acting in concert with a director or officer of the 
 99.7   converting mutual company, may not acquire any capital stock of 
 99.8   the reorganized company for three years after the effective date 
 99.9   of the conversion, except through a licensed securities broker 
 99.10  or dealer, without the permission of the commissioner.  That 
 99.11  provision may not apply to prohibit the directors and officers 
 99.12  from purchasing stock through subscription rights received in 
 99.13  the plan under clause (1). 
 99.14     (c) A plan may allocate to a tax-qualified employee benefit 
 99.15  plan nontransferable subscription rights to purchase up to ten 
 99.16  percent of the capital stock of the reorganized company, its 
 99.17  parent, or a permitted issuer.  The employee benefit plan must 
 99.18  be entitled to exercise its subscription rights regardless of 
 99.19  the amount of shares purchased by other persons. 
 99.20     Subd. 12.  [ALTERNATIVE PLAN OF CONVERSION.] In lieu of 
 99.21  selecting a plan of conversion provided for in this section, the 
 99.22  converting mutual company may convert according to a plan 
 99.23  approved by the commissioner if the commissioner finds that the 
 99.24  plan does not prejudice the interests of the members, is fair 
 99.25  and equitable, and is based upon an independent appraisal of the 
 99.26  market value of the mutual company by a qualified person, and is 
 99.27  a fair and equitable allocation of any consideration to be given 
 99.28  eligible members.  The commissioner may retain, at the 
 99.29  converting mutual company's expense, any qualified expert not 
 99.30  otherwise a part of the commissioner's staff to assist in 
 99.31  reviewing whether the alternative plan may be approved and the 
 99.32  valuation of the company. 
 99.33     Subd. 13.  [EFFECT OF CONVERSION.] (a) Upon the conversion 
 99.34  of a converting mutual company to a reorganized company 
 99.35  according to this section, the corporate existence of the 
 99.36  converting mutual company must be continued in the reorganized