1.1 	A bill for an act
1.2 	relating to consumer protection; protecting senior citizens from financial 
1.3 	exploitation; regulating annuity transactions; appropriating money;proposing 
1.4 	coding for new law in Minnesota Statutes, chapters 45; 47; 61A.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	ARTICLE 1
1.7 	PROTECTION OF SENIOR CITIZENS

1.8 	Section 1. [45.25] DEPARTMENT OF COMMERCE; ASSISTANCE TO 
1.9 	FINANCIALLY EXPLOITED SENIOR CITIZENS.
1.10 		Subdivision 1.Hotline. The commissioner of commerce shall establish a toll-free 
1.11 	telephone hotline to report financial exploitation of senior citizens to the Department of 
1.12 	Commerce. Citizens must be offered the option of making the report confidentially. For 
1.13 	purposes of this section, "senior citizen" means an individual who is at least 60 years 
1.14 	of age.
1.15 		Subd. 2.Publicizing the hotline. The commissioner of commerce shall publicize 
1.16 	the hotline by using cost-effective advertising in publications read by senior citizens and 
1.17 	through organizations that communicate with senior citizens.
1.18 		Subd. 3.Use of reports. The commissioner shall attempt to resolve the complaints 
1.19 	appropriately, including referral to federal, state, or local law enforcement authorities, or 
1.20 	to other entities that may be helpful in resolving the complaints.

1.21 	EFFECTIVE DATE. This section is effective July 1, 2006.

2.1 	Sec. 2. [47.195] FINANCIAL INSTITUTIONS; COOPERATION WITH STATE 
2.2 	AND LOCAL AGENCIES.
2.3 		Subdivision 1.Definitions. (a) For purposes of this section, the terms defined in 
2.4 	this subdivision have the meanings given. 
2.5 	(b) "Financial exploitation" means the use of a position of trust or undue influence to 
2.6 	acquire possession, ownership, or control of the assets of another person to the benefit of 
2.7 	the person using the position of trust and to the detriment of the other person, without the 
2.8 	other person??a??a??s informed consent. 
2.9 	(c) "Financial records" means any original paper or electronic document, any copy 
2.10 	of it, or any information contained in it, held by or in the custody of a financial institution, 
2.11 	when the document, copy, or information is identifiable as pertaining to one or more 
2.12 	customers of a financial institution. 
2.13 	(d) "Financial institution" means a bank, savings bank, savings association, trust 
2.14 	company, credit union, or industrial loan and thrift, whether federally chartered or 
2.15 	state-chartered. 
2.16 	(e) "Law enforcement agency" has the meaning given in section 626.84, subdivision 
2.17 	1. 
2.18 	(f) "Senior citizen customer" means any individual who is at least 60 years old, who 
2.19 	is transacting or has transacted business with a financial institution, or who is using or has 
2.20 	used the services of a financial institution, or for whom or which a financial institution has 
2.21 	acted or is acting as a fiduciary.
2.22 		Subd. 2.Disclosure permitted. A financial institution may, in its discretion, 
2.23 	initiate contact with, communicate with, and disclose customer records to appropriate law 
2.24 	enforcement agencies concerning any suspected theft or financial exploitation in which a 
2.25 	senior citizen customer is a victim.
2.26 		Subd. 3.Liability. A financial institution is not liable to any person for any loss, 
2.27 	damage, or injury arising out of or in any way pertaining to the financial institution 
2.28 	performing, or not performing, any action permitted under subdivision 2.

2.29 	EFFECTIVE DATE. This section is effective July 1, 2006.

2.30 	Sec. 3. APPROPRIATION.
 2.31 	$....... is appropriated from the general fund to the commissioner of commerce for 
2.32 	fiscal year 2007 for purposes of section 1.

3.1 	ARTICLE 2
3.2 	CONSUMER PROTECTION IN ANNUITY TRANSACTIONS

3.3 	Section 1. [61A.61] CONSUMER PROTECTION IN ANNUITY 
3.4 	TRANSACTIONS.
3.5 		Subdivision 1.Applicability and scope. This section applies to all group and 
3.6 	individual annuity contracts and certificates except:
3.7 	(1) registered or nonregistered variable annuities or other registered products;
3.8 	(2) immediate and deferred annuities that contain no nonguaranteed elements;
3.9 	(3) (A) annuities used to fund:
3.10 	(i) an employee pension plan which is covered by the federal Employee Retirement 
3.11 	Income Security Act (ERISA);
3.12 	(ii) a plan described by section 401(a), 401(k), or 403(b) of the Internal Revenue 
3.13 	Code, where the plan, for purposes of ERISA, is established or maintained by an employer;
3.14 	(iii) a governmental or church plan defined in section 414 or a deferred compensation 
3.15 	plan of a state or local government or a tax-exempt organization under section 457 of the 
3.16 	Internal Revenue Code; or
3.17 	(iv) a nonqualified deferred compensation arrangement established or maintained by 
3.18 	an employer or plan sponsor; and
3.19 	(B) notwithstanding paragraph (A), the regulation shall apply to annuities used to 
3.20 	fund a plan or arrangement that is funded solely by contributions an employee elects 
3.21 	to make whether on a pretax or after-tax basis, and where the insurance company has 
3.22 	been notified that plan participants may choose from among two or more fixed annuity 
3.23 	providers and there is a direct solicitation of an individual employee by a producer for the 
3.24 	purchase of an annuity contract. As used in this subsection, direct solicitation shall not 
3.25 	include any meeting held by a producer solely for the purpose of educating or enrolling 
3.26 	employees in the plan or arrangement;
3.27 	(4) structured settlement annuities;
3.28 	(5) charitable gift annuities; and
3.29 	(6) funding agreements.
3.30 		Subd. 2.Definitions. (a) For the purposes of this section, the terms defined in 
3.31 	this subdivision have the meanings given.
3.32 	(b) "Buyer's guide" means the Buyer's Guide to Fixed Annuities provided as an 
3.33 	appendix to the Annuity Disclosure Model Regulation of the National Association of 
3.34 	Insurance Commissioners, including any future amendments and including the appendix 
3.35 	to the buyer's guide.
4.1 	(c) "Charitable gift annuity" means a transfer of cash or other property by a donor 
4.2 	to a charitable organization in return for an annuity payable over one or two lives, under 
4.3 	which the actuarial value of the annuity is less than the value of the cash or other property 
4.4 	transferred and the differences in value constitutes a charitable deduction for federal tax 
4.5 	purposes, but does not include a charitable remainder trust or a charitable lead trust or 
4.6 	other similar arrangement where the charitable organization does not issue an annuity and 
4.7 	incur a financial obligation to guarantee annuity payments.
4.8 	(d) "Contract owner" means the owner named in the annuity contract or certificate 
4.9 	holder in the case of a group annuity contract.
4.10 	(e) "Determinable elements" means elements that are derived from processes or 
4.11 	methods that are guaranteed at issue and not subject to company discretion, but where 
4.12 	the values or amounts cannot be determined until some point after issue. These elements 
4.13 	include the premiums; credited interest rates, including any bonus; benefits; values; 
4.14 	noninterest based credits; and charges or elements of formulas used to determine any of 
4.15 	these. These elements may be described as guaranteed but not determined at issue. An 
4.16 	element is considered determinable if it was calculated from underlying determinable 
4.17 	elements only, or from both determinable and guaranteed elements.
4.18 	(f) "Funding agreement" means an agreement for an insurer to accept and accumulate 
4.19 	funds and to make one or more payments at future dates in amounts that are not based 
4.20 	on mortality or morbidity contingencies.
4.21 	(g) "Generic name" means a short title descriptive of the annuity contract being 
4.22 	applied for or illustrated such as "single premium deferred annuity."
4.23 	(h) "Guaranteed elements" means the premiums; credited interest rates, including 
4.24 	any bonus; benefits; values; noninterest based credits; and charges or elements of formulas 
4.25 	used to determine any of these, that are guaranteed and determined at issue. An element 
4.26 	is considered guaranteed if all of the underlying elements that go into its calculation 
4.27 	are guaranteed.
4.28 	(i) "Nonguaranteed elements" means the premiums; credited interest rates, including 
4.29 	any bonus; benefits; values; noninterest based credits; and charges or elements of 
4.30 	formulas used to determine any of these, that are subject to company discretion and are 
4.31 	not guaranteed at issue. An element is considered nonguaranteed if any of the underlying 
4.32 	nonguaranteed elements are used in its calculation.
4.33 	(j) "Structured settlement annuity" means a "qualified funding asset" as defined 
4.34 	in section 130(d) of the Internal Revenue Code or an annuity that would be a qualified 
4.35 	funding asset under section 130(d) but for the fact that it is not owned by an assignee 
4.36 	under a qualified assignment.
5.1 		Subd. 3.Standards for disclosure document and buyer's guide. (a) Where the 
5.2 	application for an annuity contract is taken in a face-to-face meeting, the applicant shall 
5.3 	at or before the time of application be given both the disclosure document described in 
5.4 	paragraph (d) and the buyer's guide.
5.5 	(b) Where the application for an annuity contract is taken by means other than in 
5.6 	a face-to-face meeting, the applicant shall be sent both the disclosure document and the 
5.7 	buyer's guide no later than five business days after the completed application is received 
5.8 	by the insurer, provided that:
5.9 	(1) with respect to an application received as a result of a direct solicitation through 
5.10 	the mail:
5.11 	(i) providing a buyer's guide in a mailing inviting prospective applicants to apply for 
5.12 	an annuity contract shall be deemed to satisfy the requirement that the buyer's guide be 
5.13 	provided no later than five business days after receipt of the application; and
5.14 	(ii) providing a disclosure document in a mailing inviting a prospective applicant to 
5.15 	apply for an annuity contract shall be deemed to satisfy the requirement that the disclosure 
5.16 	document be provided no later than five business days after receipt of the application;
5.17 	(2) with respect to an application received via the Internet:
5.18 	(i) taking reasonable steps to make the buyer's guide available for viewing and 
5.19 	printing on the insurer's Web site shall be deemed to satisfy the requirement that the 
5.20 	buyer's guide be provided no later than five business days after receipt of the application; 
5.21 	and
5.22 	(ii) taking reasonable steps to make the disclosure document available for viewing 
5.23 	and printing on the insurer's Web site shall be deemed to satisfy the requirement that 
5.24 	the disclosure document be provided no later than five business days after receipt of 
5.25 	the application; and
5.26 	(3) a solicitation for an annuity contract provided in other than a face-to-face 
5.27 	meeting shall include a statement that the proposed applicant may contact the insurance 
5.28 	department of the state for a free annuity buyer's guide. In lieu of the foregoing statement, 
5.29 	an insurer may include a statement that the prospective applicant may contact the insurer 
5.30 	for a free annuity buyer's guide.
5.31 	(c) Where the buyer's guide and disclosure statement are not provided at or before 
5.32 	the time of application, a free look period of no less than 15 days shall be provided for 
5.33 	the applicant to return the annuity contract without penalty. This free look shall run 
5.34 	concurrently with any other free look provided under state law or regulation.
5.35 	(d) At a minimum, the following information shall be included in the disclosure 
5.36 	document required to be provided under this section:
6.1 	(1) the generic name of the contract, the company product name, if different, and 
6.2 	form number, and the fact that it is an annuity;
6.3 	(2) the insurer's name and address;
6.4 	(3) a description of the contract and its benefits, emphasizing its long-term nature, 
6.5 	including examples where appropriate:
6.6 	(i) the guaranteed, nonguaranteed, and determinable elements of the contract, and 
6.7 	their limitations, if any, and an explanation of how they operate;
6.8 	(ii) an explanation of the initial crediting rate, specifying any bonus or introductory 
6.9 	portion, the duration of the rate, and the fact that rates may change from time to time 
6.10 	and are not guaranteed;
6.11 	(iii) periodic income options both on a guaranteed and nonguaranteed basis;
6.12 	(iv) any value reductions caused by withdrawals from or surrender of the contract;
6.13 	(v) how values in the contract can be accessed;
6.14 	(vi) the death benefit, if available, and how it will be calculated;
6.15 	(vii) a summary of the federal tax status of the contract and any penalties applicable 
6.16 	on withdrawal of values from the contract; and
6.17 	(viii) impact of any rider, such as a long-term care rider;
6.18 	(4) specific dollar amount or percentage charges and fees shall be listed with an 
6.19 	explanation of how they apply; and
6.20 	(5) information about the current guaranteed rate for new contracts that contains a 
6.21 	clear notice that the rate is subject to change.
6.22 	(e) Insurers shall define terms used in the disclosure statement in language that 
6.23 	facilitates the understanding by a typical person within the segment of the public to which 
6.24 	the disclosure statement is directed.
6.25 		Subd. 4.Report to contract owners. For annuities in the payout period with 
6.26 	changes in nonguaranteed elements and for the accumulation period of a deferred annuity, 
6.27 	the insurer shall provide each contract owner with a report, at least annually, on the status 
6.28 	of the contract that contains at least the following information:
6.29 	(1) the beginning and end date of the current report period;
6.30 	(2) the accumulation and cash surrender value, if any, at the end of the previous 
6.31 	report period and at the end of the current report period;
6.32 	(3) the total amounts, if any, that have been credited, charged to the contract value, 
6.33 	or paid during the current report period; and
6.34 	(4) the amount of outstanding loans, if any, as of the end of the current report period.
7.1 		Subd. 5.Penalties. In addition to any other penalties provided by the laws of this 
7.2 	state, an insurer or producer that violates a requirement of this section shall be guilty of a 
7.3 	violation of sections 72A.17 to 72A.32.

7.4 	EFFECTIVE DATE. This section is effective January 1, 2007, and applies to 
7.5 	contracts sold on or after that date.