1.1                          A bill for an act 
  1.2             relating to insurance; regulating nonrenewals of 
  1.3             homeowner's insurance; prohibiting various 
  1.4             discriminatory practices in automobile and homeowner's 
  1.5             insurance; amending Minnesota Statutes 1998, sections 
  1.6             65A.29, subdivision 8; 65B.13; and 72A.20, subdivision 
  1.7             13. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1998, section 65A.29, 
  1.10  subdivision 8, is amended to read: 
  1.11     Subd. 8.  [RULES.] (a) The commissioner may adopt rules 
  1.12  pursuant to chapter 14, to specify the grounds for nonrenewal, 
  1.13  reduction in limits of coverage, or elimination of coverage of a 
  1.14  homeowner's policy.  The rules must limit the grounds to the 
  1.15  following factors:  
  1.16     (1) reasons stated for cancellation in section 65A.01, 
  1.17  subdivision 3a; 
  1.18     (2) reasons stated in section 72A.20, subdivision 13; 
  1.19     (3) insured's loss experience, not to include natural 
  1.20  causes as limited by paragraphs (b) and (c); and 
  1.21     (4) other factors deemed reasonable by the commissioner. 
  1.22     (b) An insurer may not take the action specified in 
  1.23  paragraph (a) because of losses caused by natural causes. 
  1.24     (c) If two or fewer claims are submitted during the 
  1.25  experience period the insurer may not take the action specified 
  1.26  in paragraph (a) on the grounds of the number of claims, but the 
  2.1   insurer may take the action specified in paragraph (a) on the 
  2.2   basis of two claims submitted during the experience period, the 
  2.3   aggregate of which exceeds $3,000. 
  2.4      (d) The rules may give consideration to the form and 
  2.5   content of the termination notice to the insured, a statement as 
  2.6   to what constitutes receipt of the termination notice, and the 
  2.7   procedure by which the insured may appeal a termination notice.  
  2.8      (e) The rules adopted under this subdivision may provide 
  2.9   for imposition of a monetary penalty not greater than $500 per 
  2.10  occurrence upon insurers who are found to be in violation of the 
  2.11  law or the rules.  
  2.12     (b) (f) In addition to any rules adopted under this 
  2.13  subdivision, an insured may appeal any nonrenewal under this 
  2.14  section to the commissioner of commerce.  If the commissioner 
  2.15  finds that the nonrenewal is unjustified, arbitrary, or 
  2.16  capricious, the commissioner shall order the insurer to 
  2.17  reinstate the insured's policy.  The commissioner's order may be 
  2.18  appealed pursuant to chapter 14.  The insured's policy shall 
  2.19  continue in force pending the conclusion of the appeal to the 
  2.20  commissioner.  The insurer must notify the insured of the 
  2.21  insured's right to appeal the nonrenewal to the commissioner in 
  2.22  the notice of nonrenewal required under subdivision 7. 
  2.23     Sec. 2.  Minnesota Statutes 1998, section 65B.13, is 
  2.24  amended to read: 
  2.25     65B.13 [AUTOMOBILE INSURANCE, DISCRIMINATION IN AUTOMOBILE 
  2.26  POLICIES FORBIDDEN.] 
  2.27     No insurance company, or its agent, shall refuse to issue 
  2.28  any standard or preferred policy of motor vehicle insurance or 
  2.29  make any discrimination in the acceptance of risks, in rates, 
  2.30  premiums, dividends, or benefits of any kind, or by way of 
  2.31  rebate:  
  2.32     (a) between persons of the same class, or 
  2.33     (b) on account of race, or 
  2.34     (c) on account of physical handicap if the handicap is 
  2.35  compensated for by special training, equipment, prosthetic 
  2.36  device, corrective lenses, or medication and if the physically 
  3.1   handicapped person; 
  3.2      (1) is licensed by the department of public safety to 
  3.3   operate a motor vehicle in this state, and 
  3.4      (2) operates only vehicles which are equipped with 
  3.5   auxiliary devices and equipment necessary for safe and effective 
  3.6   operation by the handicapped person, or 
  3.7      (d) on account of marital dissolution, or 
  3.8      (e) on account of desire to purchase a policy that does not 
  3.9   include collision or comprehensive coverage on the insured 
  3.10  vehicle. 
  3.11     Every company or agent violating any of the foregoing 
  3.12  provisions shall be fined not more than $200 per violation, and 
  3.13  every officer, agent, or solicitor violating the same shall be 
  3.14  guilty of a misdemeanor.  The commissioner of commerce is 
  3.15  authorized to treat violations of this section as an unfair 
  3.16  insurance practice and to enforce this section using the 
  3.17  procedures, remedies, and penalties provided in sections 72A.17 
  3.18  to 72A.32. 
  3.19     Clause (c) prohibits routinely requiring any underwriting 
  3.20  information with respect to a physical disability, other than a 
  3.21  questionnaire to be completed by the applicant.  The 
  3.22  questionnaire must be limited to questions directly relevant to 
  3.23  the criteria provided in clause (c). 
  3.24     Sec. 3.  Minnesota Statutes 1998, section 72A.20, 
  3.25  subdivision 13, is amended to read: 
  3.26     Subd. 13.  [REFUSAL TO RENEW PROHIBITED UNDERWRITING 
  3.27  PRACTICES; HOMEOWNER'S INSURANCE.] Refusing It is an unfair 
  3.28  method of competition and an unfair and deceptive act or 
  3.29  practice to refuse to renew, declining to decline to offer or 
  3.30  write, or charging to charge differential rates for an 
  3.31  equivalent amount of homeowner's insurance coverage, as defined 
  3.32  by section 65A.27, for property located in a town or statutory 
  3.33  or home rule charter city, in which the insurer offers to sell 
  3.34  or writes homeowner's insurance, solely because:  
  3.35     (a) of the geographic area in which the property is 
  3.36  located; 
  4.1      (b) of the age of the primary structure sought to be 
  4.2   insured; 
  4.3      (c) the insured or prospective insured was denied coverage 
  4.4   of the property by another insurer, whether by cancellation, 
  4.5   nonrenewal or declination to offer coverage, for a reason other 
  4.6   than those specified in section 65A.01, subdivision 3a, clauses 
  4.7   (a) to (e); or 
  4.8      (d) the property of the insured or prospective insured has 
  4.9   been insured under the Minnesota FAIR Plan Act, shall constitute 
  4.10  an unfair method of competition and an unfair and deceptive act 
  4.11  or practice; or 
  4.12     (e) the employment status or residential stability of the 
  4.13  insured or prospective insured.  
  4.14     This subdivision prohibits an insurer from filing or 
  4.15  charging different rates for different zip code areas within the 
  4.16  same town or statutory or home rule charter city. 
  4.17     This subdivision shall not prohibit the insurer from 
  4.18  applying underwriting or rating standards which the insurer 
  4.19  applies generally in all other locations in the state and which 
  4.20  are not specifically prohibited by clauses (a) to (d) (e).  Such 
  4.21  underwriting or rating standards shall specifically include but 
  4.22  not be limited to standards based upon the proximity of the 
  4.23  insured property to an extraordinary hazard or based upon the 
  4.24  quality or availability of fire protection services or based 
  4.25  upon the density or concentration of the insurer's risks.  
  4.26  Clause (b) shall not prohibit the use of rating standards based 
  4.27  upon the age of the insured structure's plumbing, electrical, 
  4.28  heating or cooling system or other part of the structure, the 
  4.29  age of which affects the risk of loss.  Any insurer's failure to 
  4.30  comply with section 65A.29, subdivisions 2 to 4, either (1) by 
  4.31  failing to give an insured or applicant the required notice or 
  4.32  statement or (2) by failing to state specifically a bona fide 
  4.33  underwriting or other reason for the refusal to write shall 
  4.34  create a presumption that the insurer has violated this 
  4.35  subdivision.  
  4.36     Sec. 4.  [EFFECTIVE DATE.] 
  5.1      Sections 2 and 3 are effective January 1, 2000, and apply 
  5.2   to coverage applied for, issued, or renewed on or after that 
  5.3   date.  Section 1 is effective January 1, 2000, and applies to 
  5.4   losses occurring on or after that date, regardless of whether 
  5.5   the commissioner has as of that date amended Minnesota Rules to 
  5.6   comply with that section.