1.1                          A bill for an act
  1.2             relating to insurance; providing enforcement authority 
  1.3             to the commissioner; providing technical changes; 
  1.4             regulating motor vehicle service contracts; regulating 
  1.5             underwriting practices; regulating insurance brokerage 
  1.6             business; regulating real estate continuing education; 
  1.7             regulating workers' compensation self-insurance; 
  1.8             amending Minnesota Statutes 1998, sections 60A.052, 
  1.9             subdivision 1; 60A.129, subdivision 5; 60K.14, 
  1.10            subdivision 1; 61A.092, subdivision 6; 62A.136; 
  1.11            62C.11, subdivision 1; 62C.142, subdivision 2a; 
  1.12            62E.04, subdivision 4; 62H.10, subdivision 4; 62S.02, 
  1.13            subdivision 1; 64B.30, subdivision 1; 65B.29, 
  1.14            subdivisions 2 and 3; 72A.20, subdivision 17; 72A.499, 
  1.15            subdivision 1; 79A.04, subdivisions 1, 2, 7, and 9; 
  1.16            79A.11, subdivision 2, and by adding a subdivision; 
  1.17            and 79A.22, subdivisions 3 and 11; Minnesota Statutes 
  1.18            1999 Supplement, sections 60A.052, subdivision 2; 
  1.19            60K.19, subdivision 8; 62J.535, subdivision 2; 72A.20, 
  1.20            subdivision 23; 79A.22, subdivision 2; 79A.23, 
  1.21            subdivisions 1, 2, and 3; and 79A.24, subdivision 2; 
  1.22            Amending Laws 1999, chapter 177, section 89; proposing 
  1.23            coding for new law in Minnesota Statutes, chapter 60K; 
  1.24            repealing Minnesota Statutes 1998, sections 62A.285, 
  1.25            subdivision 4; 62A.651; and 65B.13. 
  1.26  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.27     Section 1.  Minnesota Statutes 1998, section 60A.052, 
  1.28  subdivision 1, is amended to read: 
  1.29     Subdivision 1.  [GROUNDS.] The commissioner may by order 
  1.30  take any or all of the following actions:  (a) deny, suspend, or 
  1.31  revoke a certificate of authority; (b) censure the insurance 
  1.32  company; or (c) impose a civil penalty as provided for in 
  1.33  section 45.027, subdivision 6; or (d) under a written agreement 
  1.34  with the insurance company based upon the company's financial 
  1.35  condition, impose conditions or restrictions on the insurance 
  2.1   company's authority to transact business in Minnesota.  In order 
  2.2   to take this action the commissioner must find that the order is 
  2.3   in the public interest, and the insurance company: 
  2.4      (1) has a board of directors or principal management that 
  2.5   is incompetent, untrustworthy, or so lacking in insurance 
  2.6   company managerial experience as to make its operation hazardous 
  2.7   to policyholders, its stockholders, or to the insurance buying 
  2.8   public; 
  2.9      (2) is controlled directly or indirectly through ownership, 
  2.10  management, reinsurance transactions, or other business 
  2.11  relations by any person or persons whose business operations are 
  2.12  or have been marked by manipulation of any assets, reinsurance, 
  2.13  or accounts as to create a hazard to the company's 
  2.14  policyholders, stockholders, or the insurance buying public; 
  2.15     (3) is in an unsound or unsafe condition; 
  2.16     (4) has the actual liabilities that exceed the actual funds 
  2.17  of the company; 
  2.18     (5) has filed an application for a license which is 
  2.19  incomplete in any material respect or contains any statement 
  2.20  which, in light of the circumstances under which it was made, 
  2.21  contained any misrepresentation or was false, misleading, or 
  2.22  fraudulent; 
  2.23     (6) has pled guilty, with or without explicitly admitting 
  2.24  guilt, pled nolo contendere, or been convicted of a felony, 
  2.25  gross misdemeanor, or misdemeanor involving moral turpitude, or 
  2.26  similar conduct; 
  2.27     (7) is permanently or temporarily enjoined by any court of 
  2.28  competent jurisdiction from engaging in or continuing any 
  2.29  conduct or practice involving any aspect of the insurance 
  2.30  business; 
  2.31     (8) has violated or failed to comply with any order of the 
  2.32  insurance regulator of any other state or jurisdiction; 
  2.33     (9) has had a certificate of authority denied, suspended, 
  2.34  or revoked, has been censured or reprimanded, has been the 
  2.35  subject of any other discipline imposed by, or has paid or has 
  2.36  been required to pay a monetary penalty or fine to, another 
  3.1   state; 
  3.2      (10) agents, officers, or directors refuse to submit to 
  3.3   examination or perform any related legal obligation; or 
  3.4      (11) has violated or failed to comply with, any of the 
  3.5   provisions of the insurance laws including chapter 45 or 
  3.6   chapters 60A to 72A or any rule or order under those chapters. 
  3.7      Sec. 2.  Minnesota Statutes 1999 Supplement, section 
  3.8   60A.052, subdivision 2, is amended to read: 
  3.9      Subd. 2.  [SUSPENSION OR REVOCATION OF AUTHORITY OR 
  3.10  CENSURE.] If the commissioner determines that one of the 
  3.11  conditions listed in subdivision 1 exists, the commissioner may 
  3.12  issue an order requiring the insurance company to show cause why 
  3.13  any or all of the following should not occur:  (1) revocation or 
  3.14  suspension of any or all certificates of authority granted to 
  3.15  the foreign or domestic insurance company or its agent; (2) 
  3.16  censuring of the insurance company; (3) cancellation of all or 
  3.17  some of the company's insurance contracts then in force in this 
  3.18  state; or (4) the imposition of a civil penalty; or (5) under a 
  3.19  written agreement with the insurance company based upon the 
  3.20  company's financial condition, imposition of conditions or 
  3.21  restrictions on the insurance company's authority to transact 
  3.22  business in Minnesota.  The order shall be calculated to give 
  3.23  reasonable notice of the time and place for hearing thereon, and 
  3.24  shall state the reasons for the entry of the order.  All 
  3.25  hearings shall be conducted in accordance with chapter 14.  The 
  3.26  insurer may waive its right to the hearing.  If the insurer is 
  3.27  under the supervision or control of the insurance department of 
  3.28  the insurer's state of domicile, that insurance department, 
  3.29  acting on behalf of the insurer, may waive the insurer's right 
  3.30  to the hearing.  After the hearing, the commissioner shall enter 
  3.31  an order disposing of the matter as the facts require.  If the 
  3.32  insurance company fails to appear at a hearing after having been 
  3.33  duly notified of it, the company shall be considered in default, 
  3.34  and the proceeding may be determined against the company upon 
  3.35  consideration of the order to show cause, the allegations of 
  3.36  which may be considered to be true. 
  4.1      Sec. 3.  Minnesota Statutes 1998, section 60A.129, 
  4.2   subdivision 5, is amended to read: 
  4.3      Subd. 5.  [CONSOLIDATED FILING.] (a) The commissioner may 
  4.4   allow an insurer to file a consolidated loss reserve 
  4.5   certification required by subdivision 2, in lieu of separate 
  4.6   loss certifications and may allow an insurer to file 
  4.7   consolidated or combined audited financial statements required 
  4.8   by subdivision 3, paragraph (a), in lieu of separate annual 
  4.9   audited financial statements, where it can be demonstrated that 
  4.10  an insurer is part of a group of insurance companies that has a 
  4.11  pooling or 100 percent reinsurance agreement which substantially 
  4.12  affects the solvency and integrity of the reserves of the 
  4.13  insurer and the insurer cedes all of its direct and assumed 
  4.14  business to the pool.  An affiliated insurance company not 
  4.15  meeting these requirements may be included in the consolidated 
  4.16  or combined audited financial statements, if the company's total 
  4.17  admitted assets are less than five percent of the consolidated 
  4.18  group's total admitted assets.  If these circumstances exist, 
  4.19  then the company may file a written application to file a 
  4.20  consolidated loss reserve certification and/or consolidated or 
  4.21  combined audited financial statements.  This application shall 
  4.22  be for a specified period. 
  4.23     (b) A consolidated annual audit filing shall include a 
  4.24  columnar consolidated or combining worksheet.  Amounts shown on 
  4.25  the audited consolidated or combined financial statement shall 
  4.26  be shown on the worksheet.  Amounts for each insurer shall be 
  4.27  stated separately.  Noninsurance operations may be shown on the 
  4.28  worksheet on a combined or individual basis.  Explanations of 
  4.29  consolidating or eliminating entries shall be shown on the 
  4.30  worksheet.  A reconciliation of any differences between the 
  4.31  amounts shown in the individual insurer columns of the worksheet 
  4.32  and comparable amounts shown on the annual statement of the 
  4.33  insurers shall be included on the worksheet. 
  4.34     Sec. 4.  [60K.081] [BROKERAGE BUSINESS.] 
  4.35     Every insurance agent licensed to transact business in this 
  4.36  state may procure the insurance of risks, or parts of risks, in 
  5.1   the class or classes of insurance for which the agent is 
  5.2   licensed, from an insurer authorized to transact business in 
  5.3   this state, when the agent is not an appointed agent of the 
  5.4   insurer, but the insurance must be consummated only through an 
  5.5   appointed agent of the insurer. 
  5.6      Sec. 5.  Minnesota Statutes 1998, section 60K.14, 
  5.7   subdivision 1, is amended to read: 
  5.8      Subdivision 1.  [PERSONAL SOLICITATION OF INSURANCE SALES.] 
  5.9   (a)  [DEFINITIONS.] For the purposes of this section, the 
  5.10  following terms have the meanings given them:  
  5.11     (1) "agent" means a person, copartnership, or corporation 
  5.12  required to be licensed pursuant to section 60K.02; and 
  5.13     (2) "personal solicitation" means any contact by an agent, 
  5.14  or any person acting on behalf of an agent, made for the purpose 
  5.15  of selling or attempting to sell insurance, when either the 
  5.16  agent or a person acting for the agent contacts the buyer by 
  5.17  telephone or in person, except:  (i) an attempted sale in which 
  5.18  the buyer personally knows the identity of the agent, the name 
  5.19  of the general agency, if any, which the agent represents, and 
  5.20  the fact that the agent is an insurance agent; (ii) an attempted 
  5.21  sale in which the prospective purchaser of insurance initiated 
  5.22  the contact; or (iii) a personal contact which takes place at 
  5.23  the agent's place of business.  
  5.24     (b)  [DISCLOSURE REQUIREMENT.] Before a personal 
  5.25  solicitation, the agent or person acting for an agent shall, at 
  5.26  the time of initial personal contact with the potential buyer, 
  5.27  clearly and expressly disclose in writing:  
  5.28     (1) the name and state insurance agent license number of 
  5.29  the person making the contact; 
  5.30     (2) the name of the agent, general agency, or insurer that 
  5.31  person represents; and 
  5.32     (3) the fact that the agent, agency, or insurer is in the 
  5.33  business of selling insurance.  
  5.34     If the initial personal contact is made by telephone, the 
  5.35  disclosures required by this subdivision need not be made in 
  5.36  writing. 
  6.1      (c)  [FALSE REPRESENTATION OF GOVERNMENT AFFILIATION.] No 
  6.2   agent or person acting for an agent shall make any communication 
  6.3   to a potential buyer that indicates or gives the impression that 
  6.4   the agent is acting on behalf of a government agency. 
  6.5      Sec. 6.  Minnesota Statutes 1999 Supplement, section 
  6.6   60K.19, subdivision 8, is amended to read: 
  6.7      Subd. 8.  [MINIMUM EDUCATION REQUIREMENT.] Each person 
  6.8   subject to this section shall complete a minimum of 30 credit 
  6.9   hours of courses accredited by the commissioner during each 
  6.10  24-month licensing period, two hours of which must be devoted to 
  6.11  state law, regulations, and rules applicable to the line or 
  6.12  lines of insurance for which the agent is licensed.  Any person 
  6.13  whose initial licensing period extends more than six months 
  6.14  shall complete 15 hours of courses accredited by the 
  6.15  commissioner during the initial license period.  Any person 
  6.16  teaching or lecturing at an accredited course qualifies for 
  6.17  1-1/2 times the number of credit hours that would be granted to 
  6.18  a person completing the accredited course.  No more than 15 
  6.19  credit hours per licensing period may be credited to a person 
  6.20  for courses sponsored by, offered by, or affiliated with an 
  6.21  insurance company or its agents.  Courses sponsored by, offered 
  6.22  by, or affiliated with an insurance company or agent may 
  6.23  restrict its students to agents of the company or agency. 
  6.24     Sec. 7.  Minnesota Statutes 1998, section 61A.092, 
  6.25  subdivision 6, is amended to read: 
  6.26     Subd. 6.  [APPLICATION.] This section applies to a policy, 
  6.27  certificate of insurance, or similar evidence of coverage issued 
  6.28  to a Minnesota resident or issued to provide coverage to a 
  6.29  Minnesota resident.  This section does not apply to:  (1) a 
  6.30  certificate of insurance or similar evidence of coverage that 
  6.31  meets the conditions of section 61A.093, subdivision 2; or (2) a 
  6.32  group life insurance policy that contains a provision permitting 
  6.33  the certificate holder, upon termination or layoff from 
  6.34  employment, to retain the coverage provided under the group 
  6.35  policy by paying premiums directly to the insurer, provided that 
  6.36  the employer shall give the employee notice of the employee's 
  7.1   and each related certificate holder's right to continue the 
  7.2   insurance by paying premiums directly to the insurer.  A related 
  7.3   certificate holder is an insured spouse or dependent child of 
  7.4   the employee.  Upon termination of this group policy, each 
  7.5   covered employee, spouse, and dependent child is entitled to 
  7.6   have issued to them a life conversion policy as prescribed in 
  7.7   section 61A.09, subdivision 1, paragraph (h). 
  7.8      Sec. 8.  Minnesota Statutes 1998, section 62A.136, is 
  7.9   amended to read: 
  7.10     62A.136 [DENTAL AND VISION PLAN COVERAGE.] 
  7.11     The following provisions do not apply to health plans 
  7.12  providing dental or vision coverage only:  sections 62A.041; 
  7.13  62A.0411; 62A.047; 62A.149; 62A.151; 62A.152; 62A.154; 62A.155; 
  7.14  62A.17, subdivision 6; 62A.21, subdivision 2b; 62A.26; 
  7.15  62A.28; and 62A.285; 62A.30; 62A.304; 62A.3093; and 62E.16. 
  7.16     Sec. 9.  Minnesota Statutes 1998, section 62C.11, 
  7.17  subdivision 1, is amended to read: 
  7.18     Subdivision 1.  A service plan corporation shall annually 
  7.19  on or before the last day of March, file with the commissioner a 
  7.20  financial statement, in such form as the commissioner shall 
  7.21  prescribe, verified by not less than two of its principal 
  7.22  officers, showing the financial condition of the corporation as 
  7.23  of December 31 of the preceding year.  The statement shall 
  7.24  include an audit report certified by an independent certified 
  7.25  public accountant and reconciled and adjusted to conform to the 
  7.26  financial statement.  
  7.27     Sec. 10.  Minnesota Statutes 1998, section 62C.142, 
  7.28  subdivision 2a, is amended to read: 
  7.29     Subd. 2a.  [CONTINUATION PRIVILEGE.] Every subscriber 
  7.30  contract, other than a contract whose continuance is contingent 
  7.31  upon continued employment or membership, shall contain a 
  7.32  provision which permits continuation of coverage under the 
  7.33  contract for the subscriber's former spouse and children upon 
  7.34  entry of a valid decree of dissolution of marriage, if the 
  7.35  decree requires the subscriber to provide continued coverage for 
  7.36  those persons.  The coverage may be continued until the earlier 
  8.1   of the following dates:  
  8.2      (a) the date of remarriage of either the subscriber or the 
  8.3   subscriber's former spouse becomes covered under any other group 
  8.4   health plan; or 
  8.5      (b) the date coverage would otherwise terminate under the 
  8.6   subscriber contract.  
  8.7      The contract must require the group contract holder to, 
  8.8   upon request, provide the insured with written verification from 
  8.9   the insurer of the cost of this coverage promptly at the time of 
  8.10  eligibility for this coverage and at any time during the 
  8.11  continuation period.  In no event shall the amount of premium 
  8.12  charged exceed 102 percent of the cost to the plan for such 
  8.13  period of coverage for other similarly situated spouses and 
  8.14  dependent children with respect to whom the marital relationship 
  8.15  has not dissolved, without regard to whether such cost is paid 
  8.16  by the employer or employee. 
  8.17     Sec. 11.  Minnesota Statutes 1998, section 62E.04, 
  8.18  subdivision 4, is amended to read: 
  8.19     Subd. 4.  [MAJOR MEDICAL COVERAGE.] Each insurer and 
  8.20  fraternal shall affirmatively offer coverage of major medical 
  8.21  expenses to every applicant who applies to the insurer or 
  8.22  fraternal for a new unqualified policy, which has a lifetime 
  8.23  benefit limit of less than $1,000,000, at the time of 
  8.24  application and annually to every holder of such an unqualified 
  8.25  policy of accident and health insurance renewed by the insurer 
  8.26  or fraternal.  The coverage shall provide that when a covered 
  8.27  individual incurs out-of-pocket expenses of $5,000 or more 
  8.28  within a calendar year for services covered in section 62E.06, 
  8.29  subdivision 1, benefits shall be payable, subject to any 
  8.30  copayment authorized by the commissioner, up to a maximum 
  8.31  lifetime limit of $500,000.  The offer of coverage of major 
  8.32  medical expenses may consist of the offer of a rider on an 
  8.33  existing unqualified policy or a new policy which is a qualified 
  8.34  plan. 
  8.35     Sec. 12.  Minnesota Statutes 1998, section 62H.10, 
  8.36  subdivision 4, is amended to read: 
  9.1      Subd. 4.  [BROKER.] "Broker" means an agent engaged in 
  9.2   brokerage business pursuant to section 60K.08 60K.081. 
  9.3      Sec. 13.  Minnesota Statutes 1999 Supplement, section 
  9.4   62J.535, subdivision 2, is amended to read: 
  9.5      Subd. 2.  [COMPLIANCE.] (a) Concurrent with the effective 
  9.6   dates date of required compliance established under United 
  9.7   States Code, title 42, sections 1320d to 1320d-8, as amended 
  9.8   from time to time, for uniform electronic billing standards, all 
  9.9   health care providers must conform to the uniform billing 
  9.10  standards developed under subdivision 1. 
  9.11     (b) Notwithstanding paragraph (a), the requirements for the 
  9.12  uniform remittance advice report shall be effective 12 months 
  9.13  after the date of the required compliance of the standards for 
  9.14  the electronic remittance advice transaction are effective under 
  9.15  United States Code, title 42, sections 1320d to 1320d-8, as 
  9.16  amended from time to time. 
  9.17     Sec. 14.  Minnesota Statutes 1998, section 62S.02, 
  9.18  subdivision 1, is amended to read: 
  9.19     Subdivision 1.  [REQUIREMENTS.] A qualified long-term care 
  9.20  insurance policy may not be offered, issued, delivered, or 
  9.21  renewed in this state unless the policy satisfies the 
  9.22  requirements of this chapter and the filing provisions of 
  9.23  section 62A.02.  A qualified long-term care insurance policy 
  9.24  must cover qualified long-term care services. 
  9.25     Sec. 15.  Minnesota Statutes 1998, section 64B.30, 
  9.26  subdivision 1, is amended to read: 
  9.27     Subdivision 1.  [VISITATION AND EXAMINATION.] The 
  9.28  commissioner, or any person the commissioner may appoint, shall 
  9.29  have the power of visitation and examination into the affairs of 
  9.30  any domestic society.  The commissioner shall conduct an 
  9.31  examination at least once in every three years as often as is 
  9.32  required in section 60A.031, subdivision 1.  The commissioner 
  9.33  may: 
  9.34     (1) employ assistance for the purposes of examination and 
  9.35  the commissioner, or any person the commissioner may appoint, 
  9.36  shall have free access to any books, papers, and documents that 
 10.1   relate to the business of the association; and 
 10.2      (2) summon and qualify as witnesses, under oath, and 
 10.3   examine its officers, agents, and employees, or other persons, 
 10.4   in relation to the affairs, transactions, and condition of the 
 10.5   association. 
 10.6      Sec. 16.  Minnesota Statutes 1998, section 65B.29, 
 10.7   subdivision 2, is amended to read: 
 10.8      Subd. 2.  [INSURANCE REQUIRED.] No motor vehicle service 
 10.9   contract may be issued, sold, or offered for sale in this state 
 10.10  unless the provider of the service contract is insured under a 
 10.11  motor vehicle service contract reimbursement insurance policy 
 10.12  issued by an insurer authorized to do business in this 
 10.13  state.  Insurers issuing such a policy are required to have 
 10.14  capital and surplus equal to at least $5,000,000 at the end of 
 10.15  the preceding year.  Capital and surplus must be calculated 
 10.16  using the accounting standards required by section 60A.13. 
 10.17     Sec. 17.  Minnesota Statutes 1998, section 65B.29, 
 10.18  subdivision 3, is amended to read: 
 10.19     Subd. 3.  [FILING REQUIREMENTS.] No motor vehicle service 
 10.20  contract may be issued, sold, or offered for sale in this state 
 10.21  unless a true and correct copy of the service contract and the 
 10.22  provider's reimbursement insurance policy have been filed with 
 10.23  the commissioner and either (1) the commissioner has approved it 
 10.24  or (2) 60 days have elapsed and the commissioner has not 
 10.25  disapproved it as misleading or violative of public policy.  The 
 10.26  commissioner may, by written notice to the provider, extend the 
 10.27  review for an additional period not to exceed 60 days. 
 10.28     Sec. 18.  Minnesota Statutes 1998, section 72A.20, 
 10.29  subdivision 17, is amended to read: 
 10.30     Subd. 17.  [RETURN OF PREMIUMS.] (a) Refusing, upon 
 10.31  surrender of an individual policy of life insurance in the case 
 10.32  of the insured's death, or in the case of a surrender prior to 
 10.33  death, of an individual insurance policy not covered by the 
 10.34  standard nonforfeiture laws under section 61A.24, to refund to 
 10.35  the owner all unearned premiums paid on the policy covering the 
 10.36  insured as of the time of the insured's death or surrender if 
 11.1   the unearned premium is for a period of more than one 
 11.2   month.  The return of unearned premium must be delivered to the 
 11.3   insured within 30 days following receipt by the insurer of the 
 11.4   insured's request for cancellation.  
 11.5      (b) Refusing, upon termination or cancellation of a policy 
 11.6   of automobile insurance under section 65B.14, subdivision 2, or 
 11.7   a policy of homeowner's insurance under section 65A.27, 
 11.8   subdivision 4, or a policy of accident and sickness insurance 
 11.9   under section 62A.01, or a policy of comprehensive health 
 11.10  insurance under chapter 62E, to refund to the insured all 
 11.11  unearned premiums paid on the policy covering the insured as of 
 11.12  the time of the termination or cancellation if the unearned 
 11.13  premium is for a period of more than one month.  The return of 
 11.14  unearned premium must be delivered to the insured within 30 days 
 11.15  following receipt by the insurer of the insured's request for 
 11.16  cancellation. 
 11.17     (c) This subdivision does not apply to policies of 
 11.18  insurance providing coverage only for motorcycles or other 
 11.19  seasonally rated or limited use vehicles where the rate is 
 11.20  reduced to reflect seasonal or limited use. 
 11.21     (d) For purposes of this section, a premium is unearned 
 11.22  during the period of time the insurer has not been exposed to 
 11.23  any risk of loss.  Except for premiums for motorcycle coverage 
 11.24  or other seasonally rated or limited use vehicles where the rate 
 11.25  is reduced to reflect seasonal or limited use, the unearned 
 11.26  premium is determined by multiplying the premium by the fraction 
 11.27  that results from dividing the period of time from the date of 
 11.28  termination to the date the next scheduled premium is due by the 
 11.29  period of time for which the premium was paid. 
 11.30     (e) The owner may cancel a policy referred to in this 
 11.31  section at any time during the policy period.  This provision 
 11.32  supersedes any inconsistent provision of law or any inconsistent 
 11.33  policy provision. 
 11.34     Sec. 19.  Minnesota Statutes 1999 Supplement, section 
 11.35  72A.20, subdivision 23, is amended to read: 
 11.36     Subd. 23.  [DISCRIMINATION IN AUTOMOBILE INSURANCE 
 12.1   POLICIES.] (a) No insurer that offers an automobile insurance 
 12.2   policy in this state shall: 
 12.3      (1) use the employment status of the applicant as an 
 12.4   underwriting standard or guideline; or 
 12.5      (2) deny coverage to a policyholder for the same reason. 
 12.6      (b) No insurer that offers an automobile insurance policy 
 12.7   in this state shall: 
 12.8      (1) use the applicant's status as a residential tenant, as 
 12.9   the term is defined in section 504B.001, subdivision 12, as an 
 12.10  underwriting standard or guideline; or 
 12.11     (2) deny coverage to a policyholder for the same reason; or 
 12.12     (3) make any discrimination in offering or establishing 
 12.13  rates, premiums, dividends, or benefits of any kind, or by way 
 12.14  of rebate, for the same reason.  
 12.15     (c) No insurer that offers an automobile insurance policy 
 12.16  in this state shall: 
 12.17     (1) use the failure of the applicant to have an automobile 
 12.18  policy in force during any period of time before the application 
 12.19  is made as an underwriting standard or guideline; or 
 12.20     (2) deny coverage to a policyholder for the same reason. 
 12.21     This provision Paragraph (c) does not apply if the 
 12.22  applicant was required by law to maintain automobile insurance 
 12.23  coverage and failed to do so. 
 12.24     An insurer may require reasonable proof that the applicant 
 12.25  did not fail to maintain this coverage.  The insurer is not 
 12.26  required to accept the mere lack of a conviction or citation for 
 12.27  failure to maintain this coverage as proof of failure to 
 12.28  maintain coverage.  The insurer must provide the applicant with 
 12.29  information identifying the documentation that is required to 
 12.30  establish reasonable proof that the applicant did not fail to 
 12.31  maintain the coverage. 
 12.32     (d) No insurer that offers an automobile insurance policy 
 12.33  in this state shall use an applicant's prior claims for benefits 
 12.34  paid under section 65B.44 as an underwriting standard or 
 12.35  guideline if the applicant was 50 percent or less negligent in 
 12.36  the accident or accidents causing the claims. 
 13.1      (e) No insurer shall refuse to issue any standard or 
 13.2   preferred policy of motor vehicle insurance or make any 
 13.3   discrimination in the acceptance of risks, in rates, premiums, 
 13.4   dividends, or benefits of any kind, or by way of rebate:  
 13.5      (1) between persons of the same class, or 
 13.6      (2) on account of race, or 
 13.7      (3) on account of physical handicap if the handicap is 
 13.8   compensated for by special training, equipment, prosthetic 
 13.9   device, corrective lenses, or medication and if the physically 
 13.10  handicapped person: 
 13.11     (i) is licensed by the department of public safety to 
 13.12  operate a motor vehicle in this state, and 
 13.13     (ii) operates only vehicles that are equipped with 
 13.14  auxiliary devices and equipment necessary for safe and effective 
 13.15  operation by the handicapped person, or 
 13.16     (4) on account of marital dissolution.  
 13.17     Sec. 20.  Minnesota Statutes 1998, section 72A.499, 
 13.18  subdivision 1, is amended to read: 
 13.19     Subdivision 1.  [NOTICE AND INFORMATION.] (a) In the event 
 13.20  of an adverse underwriting decision, the insurer or insurance 
 13.21  agent responsible for the decision shall provide in writing to 
 13.22  the applicant, policyholder, or individual proposed for coverage:
 13.23     (1) the specific reason or reasons for the adverse 
 13.24  underwriting decision, a summary of the person's rights under 
 13.25  sections 72A.497 and 72A.498, and that upon request the person 
 13.26  may receive the specific items of personal information that 
 13.27  support those reasons and the specific sources of the 
 13.28  information; or 
 13.29     (2) the specific reason or reasons for the adverse 
 13.30  underwriting decision, the specific items of personal and 
 13.31  privileged information that support those reasons, the names and 
 13.32  addresses of the sources that supplied the specific items of 
 13.33  information specified, and a summary of the rights established 
 13.34  under sections 72A.497 and 72A.498.  
 13.35     (b) In addition to the requirements of paragraph (a), if 
 13.36  the adverse underwriting decision is either solely or partially 
 14.1   based upon a report of credit worthiness, credit standing, or 
 14.2   credit capacity that an insurer receives from a consumer 
 14.3   reporting agency, the insurer or insurance agent responsible for 
 14.4   the decision shall provide in writing to the applicant, 
 14.5   policyholder, or individual proposed for coverage the primary 
 14.6   reason or reasons for the credit score or other credit based 
 14.7   information used by the insurer in the insurer's adverse 
 14.8   underwriting decision. 
 14.9      Sec. 21.  Minnesota Statutes 1998, section 79A.04, 
 14.10  subdivision 1, is amended to read: 
 14.11     Subdivision 1.  [ANNUAL SECURING OF LIABILITY.] Each year 
 14.12  every private self-insuring employer shall secure incurred 
 14.13  liabilities for the payment of compensation and the performance 
 14.14  of the its obligations and the obligations of all self-insuring 
 14.15  employers imposed under chapter 176 by renewing the prior year's 
 14.16  security deposit or by making a new deposit of security.  If a 
 14.17  new deposit is made, it must be posted within 60 days of the 
 14.18  filing of the self-insured employer's annual report with the 
 14.19  commissioner, but in no event later than July 1. 
 14.20     Sec. 22.  Minnesota Statutes 1998, section 79A.04, 
 14.21  subdivision 2, is amended to read: 
 14.22     Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 110 
 14.23  percent of the private self-insurer's estimated future liability.
 14.24  Up to ten percent of that The deposit may be used to secure 
 14.25  payment of all administrative and legal costs, and unpaid 
 14.26  assessments required by section 79A.12, subdivision 2, relating 
 14.27  to or arising from the employer's its or other employers' 
 14.28  self-insuring.  As used in this section, "private self-insurer" 
 14.29  includes both current and former members of the self-insurers' 
 14.30  security fund; and "private self-insurers' estimated future 
 14.31  liability" means the private self-insurers' total of estimated 
 14.32  future liability as determined by an Associate or Fellow of the 
 14.33  Casualty Actuarial Society every year for group member private 
 14.34  self-insurers and, for a nongroup member private self-insurer's 
 14.35  authority to self-insure, every year for the first five years.  
 14.36  After the first five years, the nongroup member's total shall be 
 15.1   as determined by an Associate or Fellow of the Casualty 
 15.2   Actuarial Society at least every two years, and each such 
 15.3   actuarial study shall include a projection of future losses 
 15.4   during the period until the next scheduled actuarial study, less 
 15.5   payments anticipated to be made during that time.  
 15.6      All data and information furnished by a private 
 15.7   self-insurer to an Associate or Fellow of the Casualty Actuarial 
 15.8   Society for purposes of determining private self-insurers' 
 15.9   estimated future liability must be certified by an officer of 
 15.10  the private self-insurer to be true and correct with respect to 
 15.11  payroll and paid losses, and must be certified, upon information 
 15.12  and belief, to be true and correct with respect to reserves.  
 15.13  The certification must be made by sworn affidavit.  In addition 
 15.14  to any other remedies provided by law, the certification of 
 15.15  false data or information pursuant to this subdivision may 
 15.16  result in a fine imposed by the commissioner of commerce on the 
 15.17  private self-insurer up to the amount of $5,000, and termination 
 15.18  of the private self-insurers' authority to self-insure.  The 
 15.19  determination of private self-insurers' estimated future 
 15.20  liability by an Associate or Fellow of the Casualty Actuarial 
 15.21  Society shall be conducted in accordance with standards and 
 15.22  principles for establishing loss and loss adjustment expense 
 15.23  reserves by the Actuarial Standards Board, an affiliate of the 
 15.24  American Academy of Actuaries.  The commissioner may reject an 
 15.25  actuarial report that does not meet the standards and principles 
 15.26  of the Actuarial Standards Board, and may further disqualify the 
 15.27  actuary who prepared the report from submitting any future 
 15.28  actuarial reports pursuant to this chapter.  Within 30 days 
 15.29  after the actuary has been served by the commissioner with a 
 15.30  notice of disqualification, an actuary who is aggrieved by the 
 15.31  disqualification may request a hearing to be conducted in 
 15.32  accordance with chapter 14.  Based on a review of the actuarial 
 15.33  report, the commissioner of commerce may require an increase in 
 15.34  the minimum security deposit in an amount the commissioner 
 15.35  considers sufficient. 
 15.36     Estimated future liability is determined by first taking 
 16.1   the total amount of the self-insured's future liability of 
 16.2   workers' compensation claims and then deducting the total amount 
 16.3   which is estimated to be returned to the self-insurer from any 
 16.4   specific excess insurance coverage, aggregate excess insurance 
 16.5   coverage, and any supplementary benefits or second injury 
 16.6   benefits which are estimated to be reimbursed by the special 
 16.7   compensation fund. Supplementary benefits or second injury 
 16.8   benefits will not be reimbursed by the special compensation fund 
 16.9   unless the special compensation fund assessment pursuant to 
 16.10  section 176.129 is paid and the reports required thereunder are 
 16.11  filed with the special compensation fund.  In the case of surety 
 16.12  bonds, bonds shall secure administrative and legal costs in 
 16.13  addition to the liability for payment of compensation reflected 
 16.14  on the face of the bond.  In no event shall the security be less 
 16.15  than the last retention limit selected by the self-insurer with 
 16.16  the workers' compensation reinsurance association, provided that 
 16.17  the commissioner may allow former members to post less than the 
 16.18  workers' compensation reinsurance association retention level if 
 16.19  that amount is adequate to secure payment of the self-insurers' 
 16.20  estimated future liability, as defined in this subdivision, 
 16.21  including payment of claims, administrative and legal costs, and 
 16.22  unpaid assessments required by section 79A.12, subdivision 2.  
 16.23  The posting or depositing of security pursuant to this section 
 16.24  shall release all previously posted or deposited security from 
 16.25  any obligations under the posting or depositing and any surety 
 16.26  bond so released shall be returned to the surety.  Any other 
 16.27  security shall be returned to the depositor or the person 
 16.28  posting the bond. 
 16.29     As a condition for the granting or renewing of a 
 16.30  certificate to self-insure, the commissioner may require a 
 16.31  private self-insurer to furnish any additional security the 
 16.32  commissioner considers sufficient to insure payment of all 
 16.33  claims under chapter 176. 
 16.34     Sec. 23.  Minnesota Statutes 1998, section 79A.04, 
 16.35  subdivision 7, is amended to read: 
 16.36     Subd. 7.  [PERFECTION OF SECURITY.] Upon the commissioner 
 17.1   sending a request to renew, request to post, or request to 
 17.2   increase a security deposit, a perfected security interest is 
 17.3   created in the private self-insured's assets in favor of the 
 17.4   commissioner to the extent of any then unsecured portion of the 
 17.5   self-insured's incurred liabilities.  That perfected security 
 17.6   interest is transferred to any cash or securities thereafter 
 17.7   posted by the private self-insured with the state treasurer and 
 17.8   is released only upon either of the following: 
 17.9      (1) the acceptance by the commissioner of a surety bond or 
 17.10  irrevocable letter of credit for the full amount of the incurred 
 17.11  liabilities for the payment of compensation; or 
 17.12     (2) the return of cash or securities by the commissioner. 
 17.13     The private self-insured employer loses all right, title, 
 17.14  and interest in and any right to control all assets or 
 17.15  obligations posted or left on deposit as security.  In the event 
 17.16  of a declaration of bankruptcy or insolvency by a court of 
 17.17  competent jurisdiction that a private self-insurer is the 
 17.18  subject of a voluntary or involuntary petition under the United 
 17.19  States Bankruptcy Code, title 11, or a court of competent 
 17.20  jurisdiction has declared the private self-insurer to be 
 17.21  bankrupt or insolvent, or in the event of the issuance of a 
 17.22  certificate of default by the commissioner, the commissioner 
 17.23  shall liquidate the deposit as provided in this chapter, and 
 17.24  transfer it to the self-insurer's security fund for application 
 17.25  to the self-insured employer's incurred liability and other 
 17.26  current or future obligations of the self-insurers' security 
 17.27  fund.  In the event that a private self-insurer is the subject 
 17.28  of a voluntary or involuntary petition under the United States 
 17.29  Bankruptcy Code, title 11, or a court of competent jurisdiction 
 17.30  has declared the private self-insurer to be bankrupt or 
 17.31  insolvent, or in the event of the issuance of a certificate of 
 17.32  default by the commissioner, all right, title, and interest in 
 17.33  and any right to control all assets or obligations which have 
 17.34  been posted or deposited as security must be transferred to the 
 17.35  self-insurers' security fund. 
 17.36     Sec. 24.  Minnesota Statutes 1998, section 79A.04, 
 18.1   subdivision 9, is amended to read: 
 18.2      Subd. 9.  [INSOLVENCY, BANKRUPTCY, OR DEFAULT; UTILIZATION 
 18.3   OF SECURITY DEPOSIT.] The commissioner of labor and industry 
 18.4   shall notify the commissioner and the security fund if the 
 18.5   commissioner of labor and industry has knowledge that any 
 18.6   private self-insurer has failed to pay workers' compensation 
 18.7   benefits as required by chapter 176.  If the commissioner 
 18.8   determines that a private self-insurer is the subject of a 
 18.9   voluntary or involuntary petition under the United States 
 18.10  Bankruptcy Code, title 11, or the commissioner determines that a 
 18.11  court of competent jurisdiction has declared the private 
 18.12  self-insurer to be bankrupt or insolvent, and the private 
 18.13  self-insurer has failed to pay workers' compensation as required 
 18.14  by chapter 176 or, if the commissioner issues a certificate of 
 18.15  default against a private self-insurer for failure to pay 
 18.16  workers' compensation as required by chapter 176, or failure to 
 18.17  pay an assessment to the self-insurers' security fund when due, 
 18.18  then the security deposit shall be utilized to administer and 
 18.19  pay the private self-insurers' workers' compensation or 
 18.20  assessment obligations or any other current or future 
 18.21  obligations of the self-insurers' security fund.  
 18.22     Sec. 25.  Minnesota Statutes 1998, section 79A.11, 
 18.23  subdivision 2, is amended to read: 
 18.24     Subd. 2.  [SECURITY DEPOSITS.] The security fund shall have 
 18.25  the right and obligation to obtain from and retain the security 
 18.26  deposit of an insolvent private self-insurer the amount of to 
 18.27  apply to the private self-insurer's current or future 
 18.28  compensation obligations, including reasonable administrative 
 18.29  and legal costs, paid or assumed by the security fund and to 
 18.30  other current or future obligations of the security fund.  
 18.31  Reimbursement of administrative costs, including legal costs, 
 18.32  shall be subject to approval by a majority of the security 
 18.33  fund's voting trustees.  The security fund shall be a party in 
 18.34  interest in any action to obtain the security deposit for the 
 18.35  payment of compensation obligations of an insolvent self-insurer.
 18.36     Sec. 26.  Minnesota Statutes 1998, section 79A.11, is 
 19.1   amended by adding a subdivision to read: 
 19.2      Subd. 2a.  [REPLACEMENT INSURANCE POLICY.] The insolvent 
 19.3   self-insurer may obtain an insurance policy as described in 
 19.4   section 79A.06, subdivision 5, to discharge further workers' 
 19.5   compensation obligations assumed by the self-insurers' security 
 19.6   fund on behalf of the insolvent insurer.  At the self-insurers' 
 19.7   security fund's option and in its sole discretion, any part of 
 19.8   the insolvent self-insurer's security deposit may be used to 
 19.9   fund the acquisition of this policy.  After the security deposit 
 19.10  has been used to:  (1) fund the acquisition of this policy; (2) 
 19.11  pay all direct and indirect administrative and professional 
 19.12  expenses of the fund related to the insolvent self-insurer; and 
 19.13  (3) to the extent not covered by the insurance policy, pay the 
 19.14  insolvent self-insurer's losses, allocated loss expense and 
 19.15  unallocated loss expense, any part of the insolvent 
 19.16  self-insurer's security deposit that remains must be promptly 
 19.17  returned to the insolvent self-insurer. 
 19.18     Sec. 27.  Minnesota Statutes 1999 Supplement, section 
 19.19  79A.22, subdivision 2, is amended to read: 
 19.20     Subd. 2.  [FINANCIAL STANDARDS.] Commercial self-insurance 
 19.21  groups shall have and maintain: 
 19.22     (1) combined net worth of all of the members in an amount 
 19.23  at least equal to 12 ten times the group's selected retention 
 19.24  level of the workers' compensation reinsurance association.  For 
 19.25  purposes of this clause, the amount of any retained surplus by 
 19.26  the group is considered part of the combined net worth of all 
 19.27  the members; 
 19.28     (2) sufficient assets and liquidity in the group's common 
 19.29  claims fund to promptly and completely meet all obligations of 
 19.30  its members under this chapter and chapter 176. 
 19.31     Sec. 28.  Minnesota Statutes 1998, section 79A.22, 
 19.32  subdivision 3, is amended to read: 
 19.33     Subd. 3.  [NEW MEMBERSHIP.] The commercial self-insurance 
 19.34  group shall file with the commissioner the name of any new 
 19.35  employer that has been accepted in the group prior to the 
 19.36  initiation date of membership along with the member's signed 
 20.1   indemnity agreement and evidence the member has deposited 
 20.2   sufficient premiums with the group as required by the commercial 
 20.3   self-insurance group's bylaws or plan of operation.  The 
 20.4   security deposit of the group will shall be increased quarterly 
 20.5   to an amount equal to 50 percent of the new member's premium 
 20.6   members' premiums for that quarter.  If the total increase of 
 20.7   new members' premiums for the first quarter is less than five 
 20.8   percent of the total annual premium of the group, no quarterly 
 20.9   increase is necessary until the cumulative quarterly increases 
 20.10  for that calendar year exceed five percent of the total premium 
 20.11  of the group.  The department of commerce commissioner may, at 
 20.12  its the commissioner's option, review the financial statement of 
 20.13  any applicant whose premium equals 25 percent or more of the 
 20.14  group's total premium. 
 20.15     Sec. 29.  Minnesota Statutes 1998, section 79A.22, 
 20.16  subdivision 11, is amended to read: 
 20.17     Subd. 11.  [DISBURSEMENT OF FUND SURPLUS.] (a) One hundred 
 20.18  percent of any surplus money for a fund year in excess of 125 
 20.19  percent of the amount necessary to fulfill all obligations under 
 20.20  the Workers' Compensation Act, chapter 176, for that fund year 
 20.21  may be declared refundable to a member at any time.  The date 
 20.22  shall be no earlier than 18 months following the end of such 
 20.23  fund year.  The first disbursement of fund surplus may not be 
 20.24  made prior to the completion of an operational audit by the 
 20.25  commissioner written approval of the commissioner.  There can be 
 20.26  no more than one refund made in any 12-month period.  When all 
 20.27  the claims of any one fund year have been fully paid, as 
 20.28  certified by an actuary, all surplus money from that fund year 
 20.29  may be declared refundable. 
 20.30     (b) The commercial self-insurance group shall give notice 
 20.31  to the commissioner of any refund.  Said notice shall be 
 20.32  accompanied by a statement from the commercial self-insurer 
 20.33  group's certified public accountant certifying that the proposed 
 20.34  refund is in compliance with paragraph (a). 
 20.35     Sec. 30.  Minnesota Statutes 1999 Supplement, section 
 20.36  79A.23, subdivision 1, is amended to read: 
 21.1      Subdivision 1.  [REQUIRED REPORTS TO COMMISSIONER.] Each 
 21.2   commercial self-insurance group shall submit the following 
 21.3   documents to the commissioner.  
 21.4      (a) An annual report shall be submitted by April 1 showing 
 21.5   the incurred losses, paid and unpaid, specifying indemnity and 
 21.6   medical losses by classification, payroll by classification, and 
 21.7   current estimated outstanding liability for workers' 
 21.8   compensation on a calendar year basis, in a manner and on forms 
 21.9   available from the commissioner.  In addition each group will 
 21.10  submit a quarterly interim loss report showing incurred losses 
 21.11  for all its membership. 
 21.12     (b) Each commercial self-insurance group shall submit 
 21.13  within 45 days of the end of each quarter:  
 21.14     (1) a schedule showing all the members who participate in 
 21.15  the group, their date of inception, and date of withdrawal, if 
 21.16  applicable; 
 21.17     (2) a separate section identifying which members were added 
 21.18  or withdrawn during that quarter; and 
 21.19     (3) an internal financial statement and copies of the 
 21.20  fiscal agent's statements supporting the balances in the common 
 21.21  claims fund. 
 21.22     (c) The commercial self-insurance group shall submit an 
 21.23  annual certified financial audit report of the commercial 
 21.24  self-insurance group fund by April 1 of the following year.  The 
 21.25  report must be accompanied by an expense schedule showing the 
 21.26  commercial self-insurance group's operational costs for the same 
 21.27  year including service company charges, accounting and actuarial 
 21.28  fees, fund administration charges, reinsurance premiums, 
 21.29  commissions, and any other costs associated with the 
 21.30  administration of the group program. 
 21.31     (d) An officer of the commercial self-insurance group 
 21.32  shall, under oath, attest to the accuracy of each report 
 21.33  submitted under paragraphs (a), (b), and (c).  Upon sufficient 
 21.34  cause, the commissioner shall require the commercial 
 21.35  self-insurance group to submit a certified audit of payroll and 
 21.36  claim records conducted by an independent auditor approved by 
 22.1   the commissioner, based on generally accepted accounting 
 22.2   principles and generally accepted auditing standards, and 
 22.3   supported by an actuarial review and opinion of the future 
 22.4   contingent liabilities.  The basis for sufficient cause shall 
 22.5   include the following factors: 
 22.6      (1) where the losses reported appear significantly 
 22.7   different from similar types of groups; 
 22.8      (2) where major changes in the reports exist from year to 
 22.9   year, which are not solely attributable to economic factors; or 
 22.10     (3) where the commissioner has reason to believe that the 
 22.11  losses and payroll in the report do not accurately reflect the 
 22.12  losses and payroll of the commercial self-insurance group.  
 22.13  If any discrepancy is found, the commissioner shall require 
 22.14  changes in the commercial self-insurance group's business plan 
 22.15  or service company recordkeeping practices. 
 22.16     (e) Each commercial self-insurance group shall submit by 
 22.17  September 15 a copy of the group's annual federal and state 
 22.18  income tax returns or provide proof that it has received an 
 22.19  exemption from these filings. 
 22.20     (f) With the annual loss report each commercial 
 22.21  self-insurance group shall report to the commissioner any 
 22.22  worker's compensation claim where the full, undiscounted value 
 22.23  is estimated to exceed $50,000, in a manner and on forms 
 22.24  prescribed by the commissioner. 
 22.25     (g) Each commercial self-insurance group shall submit by 
 22.26  May 1 a list of all members and the percentage of premium each 
 22.27  represents to the total group's premium for the previous 
 22.28  calendar year.  
 22.29     (h) Each commercial self-insurance group shall submit by 
 22.30  October 15 the following documents prepared by the group's 
 22.31  certified public accountant:  
 22.32     (1) a compiled combined financial statement of group 
 22.33  members and a list of members included in this statement.  An 
 22.34  "Agreed Upon Procedures" report, as determined by the 
 22.35  commissioner, indicating combined net worth, total assets, cash 
 22.36  flow, and net income of the group members may be filed in lieu 
 23.1   of the compiled combined financial statement; and 
 23.2      (2) a report that the statements which were combined have 
 23.3   met the requirements of subdivision 2.  
 23.4      (i) If any group member comprises over 25 percent of total 
 23.5   group premium, that member's financial statement must be 
 23.6   reviewed or audited, and, at the commissioner's option, must be 
 23.7   filed with the department of commerce commissioner by October 15 
 23.8   of the following year. 
 23.9      (j) Each commercial self-insurance group shall submit a 
 23.10  copy of each member's accountant's report letter from the 
 23.11  reports used in compiling the combined financial 
 23.12  statements.  This requirement does not apply to any group that 
 23.13  has been in existence for at least three years. 
 23.14     Sec. 31.  Minnesota Statutes 1999 Supplement, section 
 23.15  79A.23, subdivision 2, is amended to read: 
 23.16     Subd. 2.  [REQUIRED REPORTS FROM MEMBERS TO GROUP.] (a) 
 23.17  Each member of the commercial self-insurance group shall, by 
 23.18  September 15, submit to the group its most recent annual 
 23.19  financial statement, together with other financial information 
 23.20  the group may require.  These financial statements submitted 
 23.21  must not have a fiscal year end date older than January 15 of 
 23.22  the group's calendar year end.  Individual group members 
 23.23  constituting at least 25 percent of the group's annual premium 
 23.24  shall submit to the group reviewed or audited financial 
 23.25  statements.  The remaining members must submit compilation level 
 23.26  statements.  
 23.27     (b) For groups that have been in existence for at least 
 23.28  three years, individual group members may satisfy the 
 23.29  requirements of paragraph (a) by submitting compiled, reviewed, 
 23.30  or audited statements or the most recent federal income tax 
 23.31  return filed by the member. 
 23.32     Sec. 32.  Minnesota Statutes 1999 Supplement, section 
 23.33  79A.23, subdivision 3, is amended to read: 
 23.34     Subd. 3.  [OPERATIONAL AUDIT.] (a) The commissioner, prior 
 23.35  to authorizing surplus distribution of a commercial 
 23.36  self-insurance group's first fund year or no later than after 
 24.1   the third anniversary of the group's authority to self-insure, 
 24.2   shall may conduct an operational audit of the commercial 
 24.3   self-insurance group's claim handling and reserve practices as 
 24.4   well as its underwriting procedures to determine if they adhere 
 24.5   to the group's business plan.  The commissioner may select 
 24.6   outside consultants to assist in conducting the audit.  After 
 24.7   completion of the audit, the commissioner shall either renew or 
 24.8   revoke the commercial self-insurance group's authority to 
 24.9   self-insure.  The commissioner may also order any changes deemed 
 24.10  necessary in the claims handling, reserving practices, or 
 24.11  underwriting procedures of the group. 
 24.12     (b) The cost of the operational audit shall be borne by the 
 24.13  commercial self-insurance group. 
 24.14     Sec. 33.  Minnesota Statutes 1999 Supplement, section 
 24.15  79A.24, subdivision 2, is amended to read: 
 24.16     Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 125 
 24.17  percent of the commercial self-insurance group's estimated 
 24.18  future liability for the payment of compensation as determined 
 24.19  by an actuary.  If all the members of the commercial 
 24.20  self-insurance group have submitted reviewed or audited 
 24.21  financial statements to the group's accountant has been in 
 24.22  existence for three years, this minimum deposit shall be 110 
 24.23  percent of the commercial self-insurance group's estimated 
 24.24  future liability for the payment of workers' compensation as 
 24.25  determined by an actuary.  The group must file a letter with the 
 24.26  commissioner from the group's accountant which confirms that the 
 24.27  compiled combined financial statements were prepared from 
 24.28  members reviewed or audited financial statements only before the 
 24.29  lower security deposit is allowed.  Each actuarial study shall 
 24.30  include a projection of future losses during a one-year period 
 24.31  until the next scheduled actuarial study, less payments 
 24.32  anticipated to be made during that time.  Deduction should be 
 24.33  made for the total amount which is estimated to be returned to 
 24.34  the commercial self-insurance group from any specific excess 
 24.35  insurance coverage, aggregate excess insurance coverage, and any 
 24.36  supplementary benefits which are estimated to be reimbursed by 
 25.1   the special compensation fund.  Supplementary benefits will not 
 25.2   be reimbursed by the special compensation fund unless the 
 25.3   special compensation fund assessment pursuant to section 176.129 
 25.4   is paid and the required reports are filed with the special 
 25.5   compensation fund.  In the case of surety bonds, bonds shall 
 25.6   secure administrative and legal costs in addition to the 
 25.7   liability for payment of compensation reflected on the face of 
 25.8   the bond.  In no event shall the security be less than the 
 25.9   group's selected retention limit of the workers' compensation 
 25.10  reinsurance association.  The posting or depositing of security 
 25.11  under this section shall release all previously posted or 
 25.12  deposited security from any obligations under the posting or 
 25.13  depositing and any surety bond so released shall be returned to 
 25.14  the surety.  Any other security shall be returned to the 
 25.15  depositor or the person posting the bond. 
 25.16     Sec. 34.  Laws 1999, chapter 177, section 89, is amended to 
 25.17  read: 
 25.18     Sec. 89.  [EFFECTIVE DATES.] 
 25.19     (a) Sections 1, 3, 5 to 8, 20, 22 to 28, 31, 34, 35, 38, 
 25.20  39, 44 to 51, 54 to 56, 58 to 60, 66, 67, 69 to 87, and 88, 
 25.21  paragraph (b), are effective the day following final enactment. 
 25.22     (b) Sections 13 to 15 are effective the day following final 
 25.23  enactment and apply to plans of merger approved on or after that 
 25.24  date by the board of directors of the first of the constituent 
 25.25  corporations to grant such approval.  Merging or consolidating 
 25.26  insurance corporations may, however, elect to have the changes 
 25.27  made by sections 13 to 15 not apply to a merger or consolidation 
 25.28  arising out of a joint agreement entered into prior to January 
 25.29  1, 2000. 
 25.30     (c) Section 32 is effective July 1, 2000 2001. 
 25.31     (d) Section 33 is effective December 1, 1999, and applies 
 25.32  to all license renewals on or after that date. 
 25.33     (e) Section 30 is effective as follows: 
 25.34     (1) The amendment to Minnesota Statutes, section 60K.03, 
 25.35  subdivision 2, paragraph (d), is effective January 1, 2000. 
 25.36     (2) The amendment to Minnesota Statutes, section 60K.03, 
 26.1   subdivision 2, paragraph (e), is effective the day following 
 26.2   final enactment. 
 26.3      Sec. 35.  [REPEALER.] 
 26.4      Minnesota Statutes 1998, sections 62A.285, subdivision 4; 
 26.5   62A.651; and 65B.13, are repealed. 
 26.6      Sec. 36.  [EFFECTIVE DATE.] 
 26.7      Sections 1, 2, 4, 5, 6, 8, 9, 10, 12, 13, 14, 15, 19, and 
 26.8   21 to 35 are effective the day following final enactment.  
 26.9   Section 16 is effective January 1, 2001.