1.1A bill for an act1.2relating to commerce; regulating insurance fees, coverages, contracts, filings, 1.3and forms; regulating financial planners, motor vehicle retail installment sales, 1.4service contracts, real estate appraisers, subdivided lands, domestic mutual 1.5insurance companies, and collection agencies; merging certain joint underwriting 1.6associations; making technical and clarifying changes;amending Minnesota 1.7Statutes 2006, sections 53C.01, subdivision 2; 59B.01; 59B.02, subdivision 1.811, by adding a subdivision; 59B.05, subdivision 5; 60A.71, subdivision 7; 1.961A.57; 62A.149, subdivision 1; 62A.152, subdivision 2; 62A.44, by adding a 1.10subdivision; 62E.10, subdivision 2; 62F.02, by adding a subdivision; 62M.02, 1.11subdivision 21; 62Q.47; 62Q.64; 62S.01, by adding subdivisions; 62S.13, 1.12subdivision 4; 62S.15; 62S.18, subdivision 2; 62S.20, subdivision 6, by adding 1.13subdivisions; 62S.26, subdivision 2; 62S.266, subdivisions 4, 10; 62S.29, by 1.14adding subdivisions; 65A.37; 66A.02, subdivision 4; 66A.07, subdivision 2, by 1.15adding a subdivision; 66A.41, subdivision 1; 67A.31, subdivision 2; 72A.51, 1.16subdivision 2; 79A.06, subdivision 5; 79A.22, subdivisions 3, 4; 79A.23, 1.17subdivision 2; 82B.23, subdivision 1; 83.25, by adding a subdivision; Minnesota 1.18Statutes 2007 Supplement, sections 61A.257, subdivision 1; 62A.30, subdivision 1.192; 62S.23, subdivision 1; 72A.52, subdivision 1; proposing coding for new law 1.20in Minnesota Statutes, chapters 62S; 332; repealing Minnesota Statutes 2006, 1.21sections 62A.149, subdivision 2; 65B.29; Laws 2006, chapter 255, section 26.1.22BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:1.23    Section 1. Minnesota Statutes 2006, section 53C.01, subdivision 2, is amended to read:1.24    Subd. 2. Cash sale price. "Cash sale price" means the price at which the seller 1.25would in good faith sell to the buyer, and the buyer would in good faith buy from the seller, 1.26the motor vehicle which is the subject matter of the retail installment contract, if such sale 1.27were a sale for cash, instead of a retail installment sale. The cash sale price may include 1.28any taxes, charges for delivery, servicing, repairing, or improving the motor vehicle, 1.29including accessories and their installation, and any other charges agreed upon between 1.30the parties. The cash price may not include a documentary fee or document administration 1.31fee in excess of $50 $75 for services actually rendered to, for, or on behalf of, the retail 2.1buyer in preparing, handling, and processing documents relating to the motor vehicle and 2.2the closing of the retail sale. "Documentary fee" and "document administration fee" do 2.3not include an optional electronic transfer fee as defined under subdivision 14.2.4    Sec. 2. Minnesota Statutes 2006, section 59B.01, is amended to read:2.559B.01 SCOPE AND PURPOSE.2.6    (a) The purpose of this chapter is to create a legal framework within which service 2.7contracts may be sold in this state.2.8    (b) The following are exempt from this chapter:2.9    (1) warranties;2.10    (2) maintenance agreements;2.11    (3) warranties, service contracts, or maintenance agreements offered by public 2.12utilities, as defined in section 
         216B.02, subdivision 4, or an entity or operating unit owned 2.13by or under common control with a public utility;2.14    (4) service contracts sold or offered for sale to persons other than consumers;2.15    (5) service contracts on tangible property where the tangible property for which the 2.16service contract is sold has a purchase price of $250 or less, exclusive of sales tax;2.17    (6) motor vehicle service contracts as defined in section 65B.29, subdivision 1, 2.18paragraph (1);2.19    (7) (6) service contracts for home security equipment installed by a licensed 2.20technology systems contractor; and2.21    (8) (7) motor club membership contracts that typically provide roadside assistance 2.22services to motorists stranded for reasons that include, but are not limited to, mechanical 2.23breakdown or adverse road conditions.2.24    (c) The types of agreements referred to in paragraph (b) are not subject to chapters 2.2560A to 79A, except as otherwise specifically provided by law.2.26    (d) Service contracts issued by motor vehicle manufacturers covering private 2.27passenger automobiles are only subject to sections 59B.03, subdivision 5, 59B.05, and 2.2859B.07.2.29    Sec. 3. Minnesota Statutes 2006, section 59B.02, is amended by adding a subdivision 2.30to read:2.31    Subd. 5a.Motor vehicle manufacturer."Motor vehicle manufacturer" means 2.32a person that:2.33    (1) manufactures or produces motor vehicles and sells motor vehicles under its 2.34own name or label;3.1    (2) is a wholly owned subsidiary of the person that manufactures or produces motor 3.2vehicles;3.3    (3) is a corporation which owns 100 percent of the person that manufactures or 3.4produces motor vehicles;3.5    (4) does not manufacture or produce motor vehicles, but sells motor vehicles under 3.6the trade name or label of another person that manufactures or produces motor vehicles;3.7    (5) manufactures or produces motor vehicles and sells the motor vehicles under the 3.8trade name or label of another person that manufactures or produces motor vehicles; or3.9    (6) does not manufacture or produce motor vehicles but, pursuant to a written 3.10contract, licenses the use of its trade name or label to another person that manufactures 3.11or produces motor vehicles and that sells motor vehicles under the licensor's trade name 3.12or label.3.13    Sec. 4. Minnesota Statutes 2006, section 59B.02, subdivision 11, is amended to read:3.14    Subd. 11. Service contract. "Service contract" means a contract or agreement for a 3.15separately stated consideration for a specific duration to perform the repair, replacement, 3.16or maintenance of property or indemnification for repair, replacement, or maintenance, for 3.17the operational or structural failure due to a defect in materials, workmanship, or normal 3.18wear and tear, with or without additional provisions for incidental payment of indemnity 3.19under limited circumstances, including without limitation, towing, rental, emergency 3.20road service, and road hazard protection. Service contracts may provide for the repair, 3.21replacement, or maintenance of property for damage resulting from power surges and 3.22accidental damage from handling.3.23    Sec. 5. Minnesota Statutes 2006, section 59B.05, subdivision 5, is amended to read:3.24    Subd. 5. Coverages, limitations, and exclusions. No particular causes of loss or 3.25property are required to be covered, but service contracts must specify the merchandise 3.26and services to be provided and, with equal prominence, any limitations, exceptions, or 3.27exclusions including, but not limited to, any damage or breakdown not covered by the 3.28service contract. Service contracts may cover damage resulting from rust, corrosion, or 3.29damage caused by a noncovered part or system.3.30    Sec. 6. Minnesota Statutes 2006, section 60A.71, subdivision 7, is amended to read:3.31    Subd. 7. Duration; fees.(a) Each applicant for a reinsurance intermediary license 3.32shall pay to the commissioner a fee of $200 for an initial two-year license and a fee of 4.1$150 for each renewal. Applications shall be submitted on forms prescribed by the 4.2commissioner.4.3    (b) Initial licenses issued under this chapter are valid for a period not to exceed 24 4.4months and expire on October 31 of the renewal year assigned by the commissioner. Each 4.5renewal reinsurance intermediary license is valid for a period of 24 months. Licensees 4.6who submit renewal applications postmarked or delivered on or before October 15 of the 4.7renewal year may continue to transact business whether or not the renewal license has been 4.8received by November 1. Licensees who submit applications postmarked or delivered 4.9after October 15 of the renewal year must not transact business after the expiration date 4.10of the license until the renewal license has been received.4.11    (c) All fees are nonreturnable, except that an overpayment of any fee may be 4.12refunded upon proper application.4.13    Sec. 7. Minnesota Statutes 2007 Supplement, section 61A.257, subdivision 1, is 4.14amended to read:4.15    Subdivision 1. Definitions. (a) For the purposes of this section only, the following 4.16terms have the meanings given them.4.17    (b) "2001 CSO Mortality Table" means that mortality table, consisting of separate 4.18rates of mortality for male and female lives, developed by the American Academy of 4.19Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the 4.20Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and 4.21adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in 4.22the Proceedings of the NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO 4.23Preferred Class Structure Mortality Table defined in paragraph (c). Unless the context 4.24indicates otherwise, the "2001 CSO Mortality Table" includes both the ultimate form of 4.25that table and the select and ultimate form of that table and includes both the smoker and 4.26nonsmoker mortality tables and the composite mortality tables. It also includes both the 4.27age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables 4.28in the 2001 CSO Mortality Table include the following:4.29    (1) "2001 CSO Mortality Table (F)" means that mortality table consisting of the rates 4.30of mortality for female lives from the 2001 CSO Mortality Table;4.31    (2) "2001 CSO Mortality Table (M)" means that mortality table consisting of the 4.32rates of mortality for male lives from the 2001 CSO Mortality Table;4.33    (3) "composite mortality tables" means mortality tables with rates of mortality that 4.34do not distinguish between smokers and nonsmokers; and5.1    (4) "smoker and nonsmoker mortality tables" means mortality tables with separate 5.2rates of mortality for smokers and nonsmokers.5.3    (c) "2001 CSO Preferred Class Structure Mortality Table" means mortality tables 5.4with separate rates of mortality for the super preferred Nonsmokers nonsmoker, preferred 5.5Nonsmokers nonsmoker, residual standard Nonsmokers nonsmoker, preferred Smokers5.6smoker, and residual standard smoker splits of the 2001 CSO Nonsmoker and Smoker 5.7Mortality Tables as adopted by the NAIC at the September 2006 national meeting and 5.8published in the NAIC Proceedings (3rd Quarter 2006). Unless the context indicates 5.9otherwise, the "2001 CSO Preferred Class Structure Mortality Table" includes both the 5.10ultimate form of that table and the select and ultimate form of that table, the smoker and 5.11nonsmoker mortality tables, both the male and female mortality tables and the gender 5.12composite mortality tables, and both the age-nearest-birthday and age-last-birthday bases 5.13of the mortality table.5.14    (d) "Statistical agent" means an entity with proven systems for protecting the 5.15confidentiality of individual insured and insurer information; demonstrated resources 5.16for and history of ongoing electronic communications and data transfer ensuring data 5.17integrity with insurers, which are its members or subscribers; and a history of and means 5.18for aggregation of data and accurate promulgation of the experience modifications in a 5.19timely manner.5.20    Sec. 8. Minnesota Statutes 2006, section 61A.57, is amended to read:5.2161A.57 DUTIES OF INSURERS THAT USE AGENTS OR BROKERS.5.22    Each insurer that uses an agent or broker in a life insurance or annuity sale shall:5.23    (a) Require with or as part of each completed application for life insurance or 5.24annuity, a statement signed by the agent or broker as to whether the agent or broker knows 5.25replacement is or may be involved in the transaction.5.26    (b) Where a replacement is involved:5.27    (1) require from the agent or broker with the application for life insurance or 5.28annuity, a copy of the fully completed and signed replacement notice provided the 5.29applicant under section 
         61A.55. The existing life insurance or annuity must be identified 5.30by name of insurer, insured, and contract number. If a number has not been assigned by 5.31the existing insurer, alternative identification, such as an application or receipt number, 5.32must be listed; and 5.33    (2) send to each existing insurer a written communication advising of the 5.34replacement or proposed replacement and the identification information obtained under 5.35this section. This written communication must be made within five working days of the 6.1date that the application is received in the replacing insurer's home or regional office, or 6.2the date the proposed policy or contract is issued, whichever is sooner.6.3    (c) The replacing insurer shall maintain evidence of the "notice regarding 6.4replacement" and a replacement register, cross-indexed, by replacing agent and existing 6.5insurer to be replaced. Evidence that all requirements were met shall be maintained for at 6.6least six years.6.7    (d) The replacing insurer shall provide in its policy or contract, or in a separate 6.8written notice that is delivered with the policy or contract, that the applicant has a right 6.9to an unconditional refund of all premiums paid, which right may be exercised within a 6.10period of 20 30 days beginning from the date of delivery of the policy.6.11EFFECTIVE DATE.This section is effective January 1, 2009.6.12    Sec. 9. Minnesota Statutes 2006, section 62A.149, subdivision 1, is amended to read:6.13    Subdivision 1. Application. The provisions of this section apply to all group 6.14policies of accident and health insurance and group subscriber contracts offered by 6.15nonprofit health service plan corporations regulated under chapter 62C, and to a plan or 6.16policy that is individually underwritten or provided for a specific individual and family 6.17members as a nongroup policy unless the individual elects in writing to refuse benefits 6.18under this subdivision in exchange for an appropriate reduction in premiums or subscriber 6.19charges under the policy or plan, when the policies or subscriber contracts are issued or 6.20delivered in Minnesota or provide benefits to Minnesota residents enrolled thereunder.6.21    This section does not apply to policies designed primarily to provide coverage 6.22payable on a per diem, fixed indemnity or nonexpense incurred basis or policies that 6.23provide accident only coverage.6.24    Every insurance policy or subscriber contract included within the provisions of this 6.25subdivision, upon issuance or renewal, shall provide for payment of benefits coverage 6.26that complies with the requirements of section 62Q.47, paragraphs (b) and (c),  for the 6.27treatment of alcoholism, chemical dependency or drug addiction to any Minnesota resident 6.28entitled to coverage.thereunder on the same basis as coverage for other benefits when 6.29treatment is rendered in6.30    (1) a licensed hospital,6.31    (2) a residential treatment program as licensed by the state of Minnesota pursuant 6.32to diagnosis or recommendation by a doctor of medicine,6.33    (3) a nonresidential treatment program approved or licensed by the state of 6.34Minnesota.7.1    Sec. 10. Minnesota Statutes 2006, section 62A.152, subdivision 2, is amended to read:7.2    Subd. 2. Minimum benefits.(a) All group policies and all group subscriber 7.3contracts providing benefits for mental or nervous disorder treatments in a hospital shall 7.4also provide coverage on the same basis as coverage for other benefits for at least 80 7.5percent of the cost of the usual and customary charges of the first ten hours of treatment 7.6incurred over a 12-month benefit period, for mental or nervous disorder consultation, 7.7diagnosis and treatment services delivered while the insured person is not a bed patient 7.8in a hospital, and at least 75 percent of the cost of the usual and customary charges for 7.9any additional hours of treatment during the same 12-month benefit period for serious or 7.10persistent mental or nervous disorders, if the services are furnished by (1) a licensed or 7.11accredited hospital, (2) a community mental health center or mental health clinic approved 7.12or licensed by the commissioner of human services or other authorized state agency, or (3) 7.13a mental health professional, as defined in sections 245.462, subdivision 18, clauses (1) to 7.14(5); and 245.4871, subdivision 27, clauses (1) to (5). Prior authorization from an accident 7.15and health insurance company, or a nonprofit health service corporation, shall be required 7.16for an extension of coverage beyond ten hours of treatment. This prior authorization 7.17must be based upon the severity of the disorder, the patient's risk of deterioration without 7.18ongoing treatment and maintenance, degree of functional impairment, and a concise 7.19treatment plan. Authorization for extended treatment may be limited to a maximum of 30 7.20visit hours during any 12-month benefit period.7.21    (b) For purposes of this section, covered treatment for a minor includes treatment for 7.22the family if family therapy is recommended by a provider listed in paragraph (a). For 7.23purposes of determining benefits under this section, "hours of treatment" means treatment 7.24rendered on an individual or single-family basis. If treatment is rendered on a group basis, 7.25the hours of covered group treatment must be provided at a ratio of no less than two group 7.26treatment sessions to one individual treatment hour. that complies with the requirements 7.27of section 62Q.47, paragraphs (b) and (c).7.28    Sec. 11. Minnesota Statutes 2007 Supplement, section 62A.30, subdivision 2, is 7.29amended to read:7.30    Subd. 2. Required coverage. Every policy, plan, certificate, or contract referred to 7.31in subdivision 1 that provides coverage to a Minnesota resident must provide coverage 7.32for routine screening procedures for cancer and the office or facility visit, including 7.33mammograms, surveillance tests for ovarian cancer for women who are at risk for ovarian 7.34cancer as defined in subdivision 3, pap smears, and colorectal screening tests for men 8.1and women, when ordered or provided by a physician in accordance with the standard 8.2practice of medicine.8.3    Sec. 12. Minnesota Statutes 2006, section 62A.44, is amended by adding a subdivision 8.4to read:8.5    Subd. 2a.Electronic enrollment.(a) For any Medicare supplement plan as defined 8.6in section 62A.3099, any requirement that a signature of an insured be obtained by 8.7an agent or insurer is satisfied if:8.8    (1) the consent is obtained by telephonic or electronic enrollment by the group 8.9policyholder or insured. A verification of the enrollment information must be provided to 8.10the applicant;8.11    (2) the telephonic or electronic enrollment provides necessary and reasonable 8.12safeguards to ensure the accuracy, retention, and prompt retrieval of records; and8.13    (3) the telephonic or electronic enrollment provides necessary and reasonable 8.14safeguards to ensure that the confidentiality of individual information and privileged 8.15information as defined in section 72A.491, subdivision 19, is maintained.8.16    (b) The insurer shall make available, upon request of the commissioner, records that 8.17will demonstrate the insurer's ability to confirm enrollment and coverage.8.18    Sec. 13. Minnesota Statutes 2006, section 62E.10, subdivision 2, is amended to read:8.19    Subd. 2. Board of directors; organization. The board of directors of the 8.20association shall be made up of eleven members as follows: six directors selected by 8.21contributing members, subject to approval by the commissioner, one of which must be 8.22a health actuary; five public directors selected by the commissioner, at least two of 8.23whom must be plan enrollees, two of whom must be representatives of employers whose 8.24accident and health insurance premiums are part of the association's assessment base, are 8.25covered under an individual plan subject to assessment under section 62E.11 or group 8.26plan offered by an employer subject to assessment under section 62E.11, and one of 8.27whom must be a licensed insurance agent. At least two of the public directors must reside 8.28outside of the seven county metropolitan area. In determining voting rights at members' 8.29meetings, each member shall be entitled to vote in person or proxy. The vote shall be 8.30a weighted vote based upon the member's cost of self-insurance, accident and health 8.31insurance premium, subscriber contract charges, health maintenance contract payment, or 8.32community integrated service network payment derived from or on behalf of Minnesota 8.33residents in the previous calendar year, as determined by the commissioner. In approving 8.34directors of the board, the commissioner shall consider, among other things, whether all 9.1types of members are fairly represented. Directors selected by contributing members 9.2may be reimbursed from the money of the association for expenses incurred by them as 9.3directors, but shall not otherwise be compensated by the association for their services. The 9.4costs of conducting meetings of the association and its board of directors shall be borne 9.5by members of the association.9.6    Sec. 14. Minnesota Statutes 2006, section 62F.02, is amended by adding a subdivision 9.7to read:9.8    Subd. 3.Merger.Effective January 1, 2008, the association is merged into the joint 9.9underwriting association under chapter 62I.9.10    Sec. 15. Minnesota Statutes 2006, section 62M.02, subdivision 21, is amended to read:9.11    Subd. 21. Utilization review organization. "Utilization review organization" 9.12means an entity including but not limited to an insurance company licensed under chapter 9.1360A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 9.1462A.01
         ; a prepaid limited health service organization issued a certificate of authority 9.15and operating under sections 62A.451 to 62A.4528; a health service plan licensed under 9.16chapter 62C; a health maintenance organization licensed under chapter 62D; a community 9.17integrated service network licensed under chapter 62N; an accountable provider network 9.18operating under chapter 62T; a fraternal benefit society operating under chapter 64B; 9.19a joint self-insurance employee health plan operating under chapter 62H; a multiple 9.20employer welfare arrangement, as defined in section 3 of the Employee Retirement 9.21Income Security Act of 1974 (ERISA), United States Code, title 29, section 1103, as 9.22amended; a third party administrator licensed under section 
         60A.23, subdivision 8, which 9.23conducts utilization review and determines certification of an admission, extension of stay, 9.24or other health care services for a Minnesota resident; or any entity performing utilization 9.25review that is affiliated with, under contract with, or conducting utilization review on 9.26behalf of, a business entity in this state. Utilization review organization does not include 9.27a clinic or health care system acting pursuant to a written delegation agreement with an 9.28otherwise regulated utilization review organization that contracts with the clinic or health 9.29care system. The regulated utilization review organization is accountable for the delegated 9.30utilization review activities of the clinic or health care system. 9.31    Sec. 16. Minnesota Statutes 2006, section 62Q.47, is amended to read:9.3262Q.47 ALCOHOLISM, MENTAL HEALTH, AND CHEMICAL 9.33DEPENDENCY SERVICES.10.1    (a) All health plans, as defined in section 
         62Q.01, that provide coverage for 10.2alcoholism, mental health, or chemical dependency services, must comply with the 10.3requirements of this section. 10.4    (b) Cost-sharing requirements and benefit or service limitations for outpatient 10.5mental health and outpatient chemical dependency and alcoholism services, except for 10.6persons placed in chemical dependency services under Minnesota Rules, parts 9530.6600 10.7to 9530.6660, must not place a greater financial burden on the insured or enrollee, or be 10.8more restrictive than those requirements and limitations for outpatient medical services.10.9    (c) Cost-sharing requirements and benefit or service limitations for inpatient hospital 10.10mental health and inpatient hospital and residential chemical dependency and alcoholism 10.11services, except for persons placed in chemical dependency services under Minnesota 10.12Rules, parts 9530.6600 to 9530.6660, must not place a greater financial burden on the 10.13insured or enrollee, or be more restrictive than those requirements and limitations for 10.14inpatient hospital medical services.10.15    Sec. 17. Minnesota Statutes 2006, section 62Q.64, is amended to read:10.1662Q.64 DISCLOSURE OF EXECUTIVE COMPENSATION.10.17    (a) Each health plan company doing business in this state whose annual Minnesota 10.18premiums exceed $10,000,000 based on the most recent assessment base of the Minnesota 10.19Comprehensive Health Association shall annually file with the Consumer Advisory Board 10.20created in section 62J.75 either the commissioner of commerce or the commissioner 10.21of health, as appropriate: 10.22    (1) a copy of the health plan company's form 990 filed with the federal Internal 10.23Revenue Service; or10.24    (2) if the health plan company did not file a form 990 with the federal Internal 10.25Revenue Service, a list of the amount and recipients of the health plan company's five 10.26highest salaries, including all types of compensation, in excess of $50,000.10.27    (b) A filing under this section is public data under section 
         13.03. 10.28    Sec. 18. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision 10.29to read:10.30    Subd. 16a.Hands-on assistance."Hands-on assistance" means minimal, moderate, 10.31or maximal physical assistance without which the individual would not be able to perform 10.32the activity of daily living.11.1    Sec. 19. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision 11.2to read:11.3    Subd. 22a.Personal care."Personal care" means the provision of hands-on services 11.4to assist an individual with activities of daily living.11.5    Sec. 20. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision 11.6to read:11.7    Subd. 23b.Providers of services.All providers of services, including but not 11.8limited to "skilled nursing facility," "extended care facility," "convalescent nursing home," 11.9"personal care facility," "specialized care providers," "assisted living facility," and 11.10"home care agency" are defined in relation to the services and facilities required to be 11.11available and the licensure, certification, registration, or degree status of those providing 11.12or supervising the services. When the definition requires that the provider be appropriately 11.13licensed, certified, or registered, it must also state what requirements a provider must 11.14meet in lieu of licensure, certification, or registration when the state in which the service 11.15is to be furnished does not require a provider of these services to be licensed, certified, 11.16or registered, or when the state licenses, certifies, or registers the provider of services 11.17under another name.11.18    Sec. 21. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision 11.19to read:11.20    Subd. 25b.Skilled nursing care, personal care, home care, specialized care, 11.21assisted living care, and other services."Skilled nursing care," "personal care," "home 11.22care," "specialized care," "assisted living care," and other services are defined in relation 11.23to the level of skill required, the nature of the care, and the setting in which care must 11.24be delivered.11.25    Sec. 22. Minnesota Statutes 2006, section 62S.13, subdivision 4, is amended to read:11.26    Subd. 4. Field issue prohibition. A long-term care insurance policy or certificate 11.27may not be field issued based on medical or health status. For purposes of this section, 11.28"field issued" means a policy or certificate issued by an agent or a third-party administrator 11.29under the underwriting authority granted to the agent or third-party administrator by an 11.30insurer and using the insurer's underwriting guidelines.11.31    Sec. 23. Minnesota Statutes 2006, section 62S.15, is amended to read:11.3262S.15 AUTHORIZED LIMITATIONS AND EXCLUSIONS.12.1    (a) No policy may be delivered or issued for delivery in this state as long-term care 12.2insurance if the policy limits or excludes coverage by type of illness, treatment, medical 12.3condition, or accident, except as follows:12.4    (1) preexisting conditions or diseases;12.5    (2) mental or nervous disorders; except that the exclusion or limitation of benefits on 12.6the basis of Alzheimer's disease is prohibited;12.7    (3) alcoholism and drug addiction;12.8    (4) illness, treatment, or medical condition arising out of war or act of war; 12.9participation in a felony, riot, or insurrection; service in the armed forces or auxiliary 12.10units; suicide, attempted suicide, or intentionally self-inflicted injury; or non-fare-paying 12.11aviation; 12.12    (5) treatment provided in a government facility unless otherwise required by 12.13law, services for which benefits are available under Medicare or other government 12.14program except Medicaid, state or federal workers' compensation, employer's liability 12.15or occupational disease law, motor vehicle no-fault law; services provided by a member 12.16of the covered person's immediate family; and services for which no charge is normally 12.17made in the absence of insurance; and12.18    (6) expenses for services or items available or paid under another long-term care 12.19insurance or health insurance policy.; and12.20    (7) in the case of a qualified long-term care insurance contract, expenses for services 12.21or items to the extent that the expenses are reimbursable under title XVIII of the Social 12.22Security Act or would be so reimbursable but for the application of a deductible or 12.23coinsurance amount.12.24    (b) This subdivision does not prohibit exclusions and limitations by type of provider 12.25or territorial limitations. However, no long-term care issuer may deny a claim because 12.26services are provided in a state other than the state of policy issued under the following 12.27conditions:12.28    (1) when the state other than the state of policy issue does not have the provider 12.29licensing, certification, or registration required in the policy, but where the provider 12.30satisfies the policy requirements outlined for providers in lieu of licensure, certification, or 12.31registration; or12.32    (2) when the state other than the state of policy issue licenses, certifies, or registers 12.33the provider under another name.12.34    For purposes of this paragraph, "state of policy issue" means the state in which the 12.35individual policy or certificate was originally issued.13.1    Sec. 24. Minnesota Statutes 2006, section 62S.18, subdivision 2, is amended to read:13.2    Subd. 2. Premiums.(a) The premiums charged to an insured for long-term care 13.3insurance replaced under subdivision 1 shall not increase due to either the increasing 13.4age of the insured at ages beyond 65 or the duration the insured has been covered under 13.5this policy.13.6    (b) The purchase of additional coverage must not be considered a premium rate 13.7increase, but for purposes of the calculation required under section 62S.291, the portion 13.8of the premium attributable to the additional coverage must be added to and considered 13.9part of the initial annual premium.13.10    (c) A reduction in benefits must not be considered a premium change, but for 13.11purpose of the calculation required under section 62S.291, the initial annual premium must 13.12be based on the reduced benefits.13.13    Sec. 25. [62S.181] ELECTRONIC ENROLLMENT FOR GROUP POLICIES.13.14    Subdivision 1.Employers or labor unions.In the case of a group defined in section 13.1562S.01, subdivision 15, clause (1), any requirement that a signature of an insured be 13.16obtained by an agent or insurer is satisfied if:13.17    (1) the consent is obtained by telephonic or electronic enrollment by the group 13.18policyholder or insurer. A verification of enrollment information must be provided to the 13.19enrollee;13.20    (2) the telephonic or electronic enrollment provides necessary and reasonable 13.21safeguards to ensure the accuracy, retention, and prompt retrieval of records; and13.22    (3) the telephonic or electronic enrollment provides necessary and reasonable 13.23safeguards to ensure that the confidentiality of individually identifiable information and 13.24"privileged information" as defined by section 72A.491, subdivision 19, is maintained.13.25    Subd. 2.Availability of insurer records.The insurer shall make available, upon 13.26request of the commissioner, records that will demonstrate the insurer's ability to confirm 13.27enrollment and coverage amounts.13.28    Sec. 26. Minnesota Statutes 2006, section 62S.20, is amended by adding a subdivision 13.29to read:13.30    Subd. 5a.Disclosure of tax consequences.With regard to life insurance policies 13.31that provide an accelerated benefit for long-term care, a disclosure statement is required 13.32at the time of application for the policy or rider and at the same time the accelerated 13.33benefit payment request is submitted that receipt of these accelerated benefits may be 13.34taxable, and that assistance should be sought from a personal tax advisor. The disclosure 14.1statement must be prominently displayed on the first page of the policy or rider and any 14.2other related documents. This subdivision does not apply to qualified long-term care 14.3insurance contracts.14.4    Sec. 27. Minnesota Statutes 2006, section 62S.20, is amended by adding a subdivision 14.5to read:14.6    Subd. 5b.Benefit triggers.Activities of daily living and cognitive impairment 14.7must be used to measure an insured's need for long-term care and must be described 14.8in the policy or certificate in a separate paragraph and must be labeled "Eligibility for 14.9the Payment of Benefits." Any additional benefit triggers must also be explained in this 14.10section. If these triggers differ for different benefits, explanation of the trigger must 14.11accompany each benefit description. If an attending physician or other specified person 14.12must certify a certain level of functional dependency in order to be eligible for benefits, 14.13this too shall be specified.14.14    Sec. 28. Minnesota Statutes 2006, section 62S.20, subdivision 6, is amended to read:14.15    Subd. 6. Qualified long-term care insurance policy. A qualified long-term care 14.16insurance policy must include a disclosure statement in the policy that the policy is 14.17intended to be a qualified long-term care insurance policy under section 7702B(b) of the 14.18Internal Revenue Code of 1986, as amended.14.19    Sec. 29. Minnesota Statutes 2007 Supplement, section 62S.23, subdivision 1, is 14.20amended to read:14.21    Subdivision 1. Inflation protection feature. (a) No insurer may offer a long-term 14.22care insurance policy unless the insurer also offers to the policyholder, in addition to any 14.23other inflation protection, the option to purchase a policy that provides for benefit levels to 14.24increase with benefit maximums or reasonable durations which are meaningful to account 14.25for reasonably anticipated increases in the costs of long-term care services covered by 14.26the policy. In addition to other options that may be offered, insurers must offer to each 14.27policyholder, at the time of purchase, the option to purchase a policy with an inflation 14.28protection feature no less favorable than one of the following:14.29    (1) increases benefit levels annually in a manner so that the increases are 14.30compounded annually at a rate not less than five percent;14.31    (2) guarantees the insured individual the right to periodically increase benefit levels 14.32without providing evidence of insurability or health status so long as the option for the 14.33previous period has not been declined. The amount of the additional benefit shall be no 15.1less than the difference between the existing policy benefit and that benefit compounded 15.2annually at a rate of at least five percent for the period beginning with the purchase of the 15.3existing benefit and extending until the year in which the offer is made; or15.4    (3) covers a specified percentage of actual or reasonable charges and does not 15.5include a maximum specified indemnity amount or limit.15.6    (b) A long-term care partnership policy must provide the inflation protection 15.7described in this subdivision. If the policy is sold to an individual who:15.8    (1) has not attained age 61 as of the date of purchase, the policy must provide 15.9compound annual inflation protection;15.10    (2) has attained age 61, but has not attained age 76 as of such date, the policy must 15.11provide some level of inflation protection; and15.12    (3) has attained the age of 76 as of such date, the policy may, but is not required to, 15.13provide some level of inflation protection.15.14    Inflation protection for a long-term care partnership policy may not be less than 15.15three percent per year or a rate based on changes in the Consumer Price Index. The 15.16commissioner, however, may approve other types of inflation protection that comply with 15.17this section and further the goals of the partnership program.15.18    Sec. 30. [62S.251] RESERVE STANDARDS.15.19    Subdivision 1.Benefits provided through acceleration of benefits under life 15.20policies.When long-term care benefits are provided through the acceleration of benefits 15.21under group or individual life policies or riders to these policies, policy reserves for the 15.22benefits must be determined in accordance with section 61A.25. Claim reserves must also 15.23be established in the case when the policy or rider is in claim status.15.24    Reserves for policies and riders subject to this section must be based on the multiple 15.25decrement model utilizing all relevant decrements except for voluntary termination rates. 15.26Single decrement approximations are acceptable if the calculation produces essentially 15.27similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. 15.28The calculations may take into account the reduction in life insurance benefits due to 15.29the payment of long-term care benefits. However, in no event must the reserves for the 15.30long-term care benefit and the life insurance benefit be less than the reserves for the life 15.31insurance benefit assuming no long-term care benefit.15.32    In the development and calculation of reserves for policies and riders subject to this 15.33subdivision, due regard must be given to the applicable policy provisions, marketing 15.34methods, administrative procedures, and all other considerations which have an impact on 15.35projected claim costs, including, but not limited to, the following:16.1    (1) definition of insured events;16.2    (2) covered long-term care facilities;16.3    (3) existence of home convalescence care coverage;16.4    (4) definition of facilities;16.5    (5) existence or absence of barriers to eligibility;16.6    (6) premium waiver provision;16.7    (7) renewability;16.8    (8) ability to raise premiums;16.9    (9) marketing method;16.10    (10) underwriting procedures;16.11    (11) claims adjustment procedures;16.12    (12) waiting period;16.13    (13) maximum benefit;16.14    (14) availability of eligible facilities;16.15    (15) margins in claim costs;16.16    (16) optional nature of benefit;16.17    (17) delay in eligibility for benefit;16.18    (18) inflation protection provisions; and16.19    (19) guaranteed insurability option.16.20    Any applicable valuation morbidity table shall be certified as appropriate as a 16.21statutory valuation table by a member of the American Academy of Actuaries.16.22    Subd. 2.Benefits provided otherwise.When long-term care benefits are provided 16.23other than as in subdivision 1, reserves must be determined in accordance with sections 16.2460A.76 to 60A.768.16.25    Sec. 31. Minnesota Statutes 2006, section 62S.26, subdivision 2, is amended to read:16.26    Subd. 2. Life insurance policies. Subdivision 1 shall not apply to life insurance 16.27policies that accelerate benefits for long-term care. A life insurance policy that funds 16.28long-term care benefits entirely by accelerating the death benefit is considered to provide 16.29reasonable benefits in relation to premiums paid, if the policy complies with all of the 16.30following provisions:16.31    (1) the interest credited internally to determine cash value accumulations, including 16.32long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest 16.33rate for cash value accumulations without long-term care set forth in the policy;16.34    (2) the portion of the policy that provides life insurance benefits meets the 16.35nonforfeiture requirements of section 
         61A.24;17.1    (3) the policy meets the disclosure requirements of sections 
         62S.09, 
         62S.10, and 17.262S.11
         ; and17.3    (4) any policy illustration that meets the applicable requirements of the NAIC Life 17.4Insurance Illustrations Model Regulation; and17.5    (4)(5) an actuarial memorandum is filed with the commissioner that includes:17.6    (i) a description of the basis on which the long-term care rates were determined;17.7    (ii) a description of the basis for the reserves;17.8    (iii) a summary of the type of policy, benefits, renewability, general marketing 17.9method, and limits on ages of issuance;17.10    (iv) a description and a table of each actuarial assumption used. For expenses, 17.11an insurer must include percentage of premium dollars per policy and dollars per unit 17.12of benefits, if any;17.13    (v) a description and a table of the anticipated policy reserves and additional reserves 17.14to be held in each future year for active lives;17.15    (vi) the estimated average annual premium per policy and the average issue age; 17.16    (vii) a statement as to whether underwriting is performed at the time of application. 17.17The statement shall indicate whether underwriting is used and, if used, the statement 17.18shall include a description of the type or types of underwriting used, such as medical 17.19underwriting or functional assessment underwriting. Concerning a group policy, the 17.20statement shall indicate whether the enrollee or any dependent will be underwritten and 17.21when underwriting occurs; and17.22    (viii) a description of the effect of the long-term care policy provision on the required 17.23premiums, nonforfeiture values, and reserves on the underlying life insurance policy, both 17.24for active lives and those in long-term care claim status.17.25    Sec. 32. Minnesota Statutes 2006, section 62S.266, subdivision 4, is amended to read:17.26    Subd. 4. Contingent benefit upon lapse. (a) After rejection of the offer required 17.27under subdivision 2, for individual and group policies without nonforfeiture benefits 17.28issued after July 1, 2001, the insurer shall provide a contingent benefit upon lapse.17.29    (b)  If a group policyholder elects to make the nonforfeiture benefit an option to 17.30the certificate holder, a certificate shall provide either the nonforfeiture benefit or the 17.31contingent benefit upon lapse.17.32    (c) The contingent benefit on lapse must be triggered every time an insurer increases 17.33the premium rates to a level which results in a cumulative increase of the annual premium 17.34equal to or exceeding the percentage of the insured's initial annual premium based on 17.35the insured's issue age provided in this paragraph, and the policy or certificate lapses 18.1within 120 days of the due date of the premium increase. Unless otherwise required, 18.2policyholders shall be notified at least 30 days prior to the due date of the premium 18.3reflecting the rate increase.18.4Triggers for a Substantial Premium Increase

18.518.6Issue AgePercent Increase Over 
                  		Initial Premium

18.729 and Under20018.830-3419018.935-3917018.1040-4415018.1145-4913018.1250-5411018.1355-599018.14607018.15616618.16626218.17635818.18645418.19655018.20664818.21674618.22684418.23694218.24704018.25713818.26723618.27733418.28743218.29753018.30762818.31772618.32782418.33792218.34802018.35811918.36821818.37831718.38841618.39851518.40861418.41871318.42881219.1891119.290 and over10

19.3    (d) A contingent benefit on lapse must also be triggered for policies with a fixed 19.4or limited premium paying period every time an insurer increases the premium rates to a 19.5level that results in a cumulative increase of the annual premium equal to or exceeding the 19.6percentage of the insured's initial annual premium set forth below based on the insured's 19.7issue age, the policy or certificate lapses within 120 days of the due date of the premium 19.8so increased, and the ratio in paragraph (e), clause (2), is 40 percent or more. Unless 19.9otherwise required, policyholders shall be notified at least 30 days prior to the due date of 19.10the premium reflecting the rate increase.

19.11Triggers for a Substantial Premium Increase19.12Issue AgePercent Increase Over Initial Premium19.13Under 6550%19.1465-8030%19.15Over 8010%

19.16    This provision shall be in addition to the contingent benefit provided by paragraph 19.17(c) and where both are triggered, the benefit provided must be at the option of the insured.19.18    (e) On or before the effective date of a substantial premium increase as defined in 19.19paragraph (c), the insurer shall:19.20    (1)  offer to reduce policy benefits provided by the current coverage without the 19.21requirement of additional underwriting so that required premium payments are not 19.22increased;19.23    (2) offer to convert the coverage to a paid-up status with a shortened benefit period 19.24according to the terms of subdivision 5. This option may be elected at any time during the 19.25120-day period referenced in paragraph (c); and19.26    (3) notify the policyholder or certificate holder that a default or lapse at any time 19.27during the 120-day period referenced in paragraph (c) is deemed to be the election of 19.28the offer to convert in clause (2).19.29    (f) On or before the effective date of a substantial premium increase as defined in 19.30paragraph (d), the insurer shall:19.31    (1) offer to reduce policy benefits provided by the current coverage without the 19.32requirement of additional underwriting so that required premium payments are not 19.33increased;19.34    (2) offer to convert the coverage to a paid-up status where the amount payable for 19.35each benefit is 90 percent of the amount payable in effect immediately prior to lapse times 20.1the ratio of the number of completed months of paid premiums divided by the number of 20.2months in the premium paying period. This option may be elected at any time during the 20.3120-day period referenced in paragraph (d); and20.4    (3) notify the policyholder or certificate holder that a default or lapse at any time 20.5during the 120-day period referenced in paragraph (d) shall be deemed to be the election 20.6of the offer to convert in clause (2) if the ratio is 40 percent or more.20.7    Sec. 33. Minnesota Statutes 2006, section 62S.266, subdivision 10, is amended to read:20.8    Subd. 10. Purchased blocks of business. To determine whether contingent 20.9nonforfeiture upon lapse provisions are triggered under subdivision 4, paragraph (c) or (d), 20.10a replacing insurer that purchased or otherwise assumed a block or blocks of long-term 20.11care insurance policies from another insurer shall calculate the percentage increase based 20.12on the initial annual premium paid by the insured when the policy was first purchased 20.13from the original insurer.20.14    Sec. 34. [62S.267] STANDARDS FOR BENEFIT TRIGGERS.20.15    Subdivision 1.Benefit payment determinations.A long-term care insurance 20.16policy must condition the payment of benefits on a determination of the insured's ability 20.17to perform activities of daily living and on cognitive impairment. Eligibility for the 20.18payment of benefits must not be more restrictive than requiring either a deficiency in 20.19the ability to perform not more than two of the activities of daily living or the presence 20.20of cognitive impairment.20.21    Activities of daily living include at least the following as defined in section 62S.01 20.22and in the policy: bathing, continence, dressing, eating, toileting, and transferring.20.23    Insurers may use activities of daily living to trigger covered benefits in addition to 20.24those contained in this subdivision as long as they are defined in the policy.20.25    Subd. 2.Additional provisions for determining benefit payments.An insurer 20.26may use additional provisions for the determination of when benefits are payable under a 20.27policy or certificate if the provisions do not restrict, and are not in lieu of, the requirements 20.28contained in subdivision 1.20.29    Subd. 3.Deficiency determination.For purposes of this section, the determination 20.30of a deficiency must not be more restrictive than requiring the hands-on assistance of 20.31another person to perform the prescribed activities of daily living, or of the deficiency is 20.32due to the presence of a cognitive impairment, supervision or verbal cueing by another 20.33person is needed in order to protect the insured or others.21.1    Subd. 4.Assessments.Assessments of activities if daily living and cognitive 21.2impairment must be performed by licensed or certified professionals, such as physicians, 21.3nurses, or social workers.21.4    Subd. 5.Appeal process.Long-term care insurance policies must include a clear 21.5description of the process for appealing and resolving benefit determinations.21.6EFFECTIVE DATE.This section is effective and applies to a long-term care 21.7policy issued in this state on or after the effective date of this section. This section does 21.8not apply to certificates issued on or after the effective date of this section, under a group 21.9long-term care insurance policy as defined in section 62S.01, subdivision 15, that was in 21.10force at the time this section became effective.21.11    Sec. 35. [62S.268] ADDITIONAL STANDARDS FOR BENEFIT TRIGGERS 21.12FOR QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS.21.13    Subdivision 1.Definitions.For purposes of this section, the following terms have 21.14the meanings given them:21.15    (a) "Qualified long-term care services" means services that meet the requirements 21.16of section 7702(c)(1) of the Internal Revenue Code of 1986, as amended, as follows: 21.17necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation, and 21.18rehabilitative services, and maintenance or personal care services which are required by 21.19a chronically ill individual, and are provided pursuant to a plan of care prescribed by a 21.20licensed health care practitioner.21.21    (b) "Chronically ill individual" has the meaning prescribed for this term by section 21.227702B(c)(2) of the Internal Revenue Code of 1986, as amended. Under this provision, a 21.23chronically ill individual means any individual who has been certified by a licensed health 21.24care practitioner as being unable to perform, without substantial assistance from another 21.25individual, at least two activities of daily living for a period of at least 90 days due to a 21.26loss of functional capacity, or requiring substantial supervision to protect the individual 21.27from threats to health and safety due to severe cognitive impairment.21.28    The term "chronically ill individual" does not include an individual otherwise 21.29meeting these requirements unless within the preceding 12-month period a licensed health 21.30care practitioner has certified that the individual meets these requirements.21.31    (c) "Licensed health care practitioner" means a physician, as defined in section 21.321861(r)(1) of the Social Security Act, a registered professional nurse, licensed social 21.33worker, or other individual who meets requirements prescribed by the Secretary of the 21.34Treasury.22.1    (d) "Maintenance or personal care services" means any care the primary purpose 22.2of which is the provision of needed assistance with any of the disabilities as a result of 22.3which the individual is a chronically ill individual, including the protection from threats 22.4to health and safety due to severe cognitive impairment.22.5    Subd. 2.Services.A qualified long-term care insurance contract shall pay only for 22.6qualified long-term care services received by a chronically ill individual provided pursuant 22.7to a plan of care prescribed by a licensed health care practitioner.22.8    Subd. 3.Payment of benefits.A qualified long-term care insurance contract 22.9shall condition the payment of benefits on a determination of the insured's inability to 22.10perform activities of daily living for an expected period of at least 90 days due to a loss 22.11of functional capacity or to severe cognitive impairment.22.12    Subd. 4.Certifications.(a) Certifications regarding activities of daily living 22.13and cognitive impairment required pursuant to subdivision 3 shall be performed by the 22.14following licensed or certified professionals: physicians, registered professional nurses, 22.15licensed social workers, or other individuals who meet requirements prescribed by the 22.16Secretary of the Treasury.22.17    (b) Certifications required pursuant to subdivision 3 may be performed by a licensed 22.18health care professional at the direction of the carrier as is reasonably necessary with 22.19respect to a specific claim, except that when a licensed health care practitioner has certified 22.20that an insured is unable to perform activities of daily living for an expected period of at 22.21least 90 days due to a loss of functional capacity and the insured is in claim status, the 22.22certification may not be rescinded and additional certifications may not be performed until 22.23after the expiration of the 90-day period.22.24    Subd. 5.Dispute resolution.Qualified long-term care insurance contracts shall 22.25include a clear description of the process for appealing and resolving disputes with respect 22.26to benefit determinations.22.27    Sec. 36. Minnesota Statutes 2006, section 62S.29, is amended by adding a subdivision 22.28to read:22.29    Subd. 2a.Associations to educate members.With respect to the obligations set 22.30forth in this section, the primary responsibility of an association, as defined in section 22.3162S.01, subdivision 15, clause (2), when endorsing or selling long-term care insurance is 22.32to educate its members concerning long-term care issues in general so that its members 22.33can make informed decisions. Associations shall provide objective information regarding 22.34long-term care insurance policies or certificates endorsed or sold by the associations to 23.1ensure that members of such associations receive a balanced and complete explanation of 23.2the features in the policies or certificates that are being endorsed or sold.23.3    Sec. 37. Minnesota Statutes 2006, section 62S.29, is amended by adding a subdivision 23.4to read:23.5    Subd. 6a.Additional association duties.An association shall also at the time of 23.6the association's decision to endorse, engage the services of a person with expertise in 23.7long-term care insurance not affiliated with the insurer to conduct an examination of the 23.8policies, including its benefits, features, and rates and update the examination thereafter in 23.9the event of material change; actively monitor the marketing efforts of the insurer and its 23.10agents; and review and approve all marketing materials or other insurance communications 23.11used to promote sales or sent to members regarding the policies or certificates. This 23.12subdivision does not apply to qualified long-term care insurance contracts.23.13    Sec. 38. Minnesota Statutes 2006, section 62S.29, is amended by adding a subdivision 23.14to read:23.15    Subd. 9.Unfair trade practices.Failure to comply with the filing and certification 23.16requirements of this section constitutes an unfair trade practice in violation of sections 23.1772A.17 to 72A.32.23.18    Sec. 39. [62S.291] AVAILABILITY OF NEW SERVICES OR PROVIDERS.23.19    Subdivision 1.Requirement.An insurer shall notify policyholders of the 23.20availability of a new long-term policy series that provides coverage for new long-term 23.21care services or providers material in nature and not previously available through the 23.22insurer to the general public. The notice must be provided within 12 months of the date 23.23that the new policy series is made available for sale in this state.23.24    Subd. 2.Exception.(a) Notwithstanding subdivision 1, notification is not required 23.25for any policy issued before the effective date of this section or to any policyholder or 23.26certificate holder who is currently eligible for benefits, within an elimination period or on 23.27a claim, or who previously had been in claim status, or who would not be eligible to apply 23.28for coverage due to issue age limitations under the new policy. The insurer may require 23.29that policyholders meet all eligibility requirements, including underwriting and payment 23.30of the required premium to add such new services or providers.23.31    (b) An insurer is not required to notify policyholders of a new proprietary policy 23.32series created and filed for use in a limited distribution channel. For purposes of this 23.33subdivision, "limited distribution channel" means through a discrete entity, such as a 24.1financial institution or brokerage, for which specialized products are available that are 24.2not available for sale to the general public. Policyholders that purchased such a new 24.3proprietary policy shall be notified when a new long-term care policy series that provides 24.4coverage for new long-term care services or providers material in nature is made available 24.5to that limited distribution channel.24.6    Subd. 3.Compliance.An insurer shall make the new coverage available in one of 24.7the following ways:24.8    (1) by adding a rider to the existing policy and charging a separate premium for the 24.9new rider based in the insured's attained age;24.10    (2) by exchanging the existing policy or certificate for one with an issue age based 24.11on the present age of the insured and recognizing past insured status by granting premium 24.12credits toward the premiums for the new policy or certificate. The premium credits must 24.13be based on premiums paid or reserves held for the prior policy or certificate;24.14    (3) by exchanging the existing policy or certificate for a new policy or certificate in 24.15which consideration for past insured status is recognized by setting the premium for the 24.16new policy or certificate at the issue age of the policy or certificate being exchanged. The 24.17cost for the new policy or certificate may recognize the difference in reserves between the 24.18new policy or certificate and the original policy or certificate; or24.19    (4) by an alternative program developed by the insurer that meets the intent of this 24.20section if the program is filed with and approved by the commissioner.24.21    Subd. 4.Policies considered exchanges.Policies issued pursuant to this section 24.22shall be considered exchanges and not replacements. These exchanges are not subject 24.23to sections 62S.24 and 62S.30, and the reporting requirements of section 62S.25, 24.24subdivisions 1 to 6.24.25    Subd. 5.Notification to certain groups.Where the policy is offered through 24.26an employer, labor organization, professional, trade, or occupational organization, the 24.27required notification in subdivision 1 must be made to the offering entity. However, if 24.28the policy is issued to a group defined in section 62S.01, subdivision 15, clause (4), the 24.29notification shall be made to each certificate holder.24.30    Subd. 6.Effect on coverage offers and requests for coverage.Nothing in this 24.31section prohibits an insurer from offering any policy, rider, certificate, or coverage change 24.32to any policyholder or certificate holder. However, upon request any policyholder may 24.33apply for currently available coverage that includes the new services or providers. 24.34The insurer may require that policyholders meet all eligibility requirements, including 24.35underwriting and payment of the required premium to add such new services or providers.25.1    Subd. 7.Life policies or riders.This section does not apply to life insurance 25.2policies or riders containing accelerated long-term care benefits.25.3    Sec. 40. [62S.292] RIGHT TO REDUCE COVERAGE AND LOWER 25.4PREMIUMS.25.5    Subdivision 1.Required policy or certificate provision.Every long-term care 25.6insurance policy and certificate shall include a provision that allows the policyholder or 25.7certificate holder to reduce coverage and lower the policy or certificate premium in at 25.8least one of the following ways:25.9    (1) reducing the maximum benefit; or25.10    (2) reducing the daily, weekly, or monthly benefit amount.25.11    The insurer may also offer other reduction options that are consistent with the policy 25.12or certificate design or the carrier's administrative processes.25.13    The provision shall include a description of the ways in which coverage may be 25.14reduced and the process for requesting and implementing a reduction in coverage.25.15    Subd. 2.Age determination.The age to determine the premium for the reduced 25.16coverage shall be based on the age used to determine the premiums for the coverage 25.17currently in force.25.18    Subd. 3.Limitation.The insurer may limit any reduction in coverage to plans or 25.19options available for that policy form and to those for which benefits will be available 25.20after consideration of claims paid or payable.25.21    Subd. 4.Written reminder.If a policy or certificate is about to lapse, the insurer 25.22shall provide a written reminder to the policyholder or certificate holder of his or her right 25.23to reduce coverage and premiums in the notice required by section 7A(3) of this regulation.25.24    Subd. 5.Nonapplication.This section does not apply to life insurance policies or 25.25riders containing accelerated long-term care benefits.25.26EFFECTIVE DATE.This section applies to any long-term care policy issued in 25.27this state on or after August 1, 2008.25.28    Sec. 41. Minnesota Statutes 2006, section 65A.37, is amended to read:25.2965A.37 POLICY FORMS.25.30    All policies must be on standard policy forms published by Insurance Services 25.31Office, issued for a term of one year, and approved by the commissioner.25.32    Sec. 42. Minnesota Statutes 2006, section 66A.02, subdivision 4, is amended to read:26.1    Subd. 4. Exceptions. The following provisions of chapter 302A do not apply 26.2to domestic mutual insurance companies: sections 
         302A.011, subdivisions 2, 6, 6a, 7, 26.310, 20, 21, 25, 26, 27, 28, 29, 31, 32, and 37
          to 59; 
         302A.105; 
         302A.137; 
         302A.161, 26.4subdivision 19
         ; 
         302A.201, subdivision 2; 
         302A.401 to 
         302A.429; 
         302A.433, subdivisions 26.51, paragraphs (a), (b), (c), and (e), and 2
         ; 
         302A.437, subdivision 2; 302A.443;302A.445, 26.6subdivisions 3 to 6
         ; 
         302A.449, subdivision 7; 
         302A.453 to 
         302A.457; 
         302A.461; 26.7302A.463
         ; 
         302A.471 to 
         302A.473; 
         302A.553; 
         302A.601 to 
         302A.651; 
         302A.671 to 26.8302A.675
         ; 
         302A.681 to 
         302A.691; and 
         302A.701 to 
         302A.791. Those clauses of section 26.9302A.111
          that refer to any of the sections previously referenced in this subdivision do 26.10not apply to domestic mutual insurance companies. The following sections of chapter 26.11302A are modified in their application to domestic mutual insurance companies in the 26.12manner indicated:26.13    (1) with regard to section 
         302A.133, the articles may be amended pursuant to section 26.14302A.171
          by the incorporators or by the board before the issuance of any policies by 26.15the company;26.16    (2) with regard to section 
         302A.135, subdivision 2, a resolution proposing an 26.17amendment to the certificate of authority must be filed with the corporate secretary no less 26.18than 30 days before the meeting to consider the proposed amendment;26.19    (3) with regard to section 
         302A.161, subdivision 19 of that section does not apply, 26.20except this must not be construed to limit the power of a mutual insurance company 26.21from issuing securities other than stock;26.22    (4) with regard to section 
         302A.201, the references in subdivision 1 of that section 26.23to "subdivision 2" and "section 
         302A.457" do not apply;26.24    (5) with regard to section 
         302A.203, the board shall consist of no less than five 26.25directors;26.26    (6) with regard to section 
         302A.215, subdivisions 2 and 3 of that section only apply 26.27if the corporation's certificate of incorporation provides cumulative voting;26.28    (7) with regard to section 
         302A.433, subdivision 1 of that section, special meetings of 26.29the members may be called for any purpose or purposes at any time by a person or persons 26.30authorized in the articles or bylaws to call special meetings, and with regard to subdivision 26.313 of that section, special meetings must be held on the date and at the time and place fixed 26.32by a person or persons authorized by the articles or bylaws to call a meeting; and26.33    (8) with regard to section 
         302A.435, if the company complies substantially and in 26.34good faith with the notice requirements of section 
         302A.435, the company's failure to give 26.35any member or members the required notice does not impair the validity of any action 26.36taken at the members' meeting.27.1EFFECTIVE DATE.This section is effective January 1, 2008.27.2    Sec. 43. Minnesota Statutes 2006, section 66A.07, subdivision 2, is amended to read:27.3    Subd. 2. Life insurance companies. (a) Unless otherwise approved by the 27.4commissioner of commerce, a domestic mutual life insurance company member is any 27.5person who is listed on the records of the company as the owner of an in-force policy, 27.6and each member is entitled to one vote regardless of the number of policies owned by 27.7the member or the amounts of coverage provided to the member. For purposes of this 27.8section, "policy" means a policy or contract of insurance, including an annuity contract 27.9issued by the company, but excluding individual noncontributory insurance policies for 27.10which the premiums are paid by a financial institution, association, employer, or other 27.11institutional entity. Except as otherwise provided in the company's certificate or bylaws, a 27.12person covered under a group policy is not a member by virtue of such coverage, except 27.13that a person insured under a group life insurance policy is a member if: (1) the person 27.14is insured under a group life policy under which cash value has accumulated and been27.15some cash value is allocated to the insured persons person; and (2) the group policyholder 27.16makes no contribution to the premiums or deposits for the policy.27.17    (b) Every member of a mutual life insurance company must be notified of its annual 27.18meetings by a written notice mailed to the member's address, or by an imprint on the front 27.19or back of the policy, premium notice, receipt, or certificate of renewal, substantially 27.20as follows:27.21    "The policyowner is hereby notified that by virtue of his or her ownership of this 27.22policy, the policyowner is a member of the .......... Insurance Company, and that the annual 27.23meetings of said company are held at its home office on the .... day of .... in each year, 27.24at .... o'clock."27.25    For mutual life insurance holding companies, the notice of the annual meeting may 27.26be modified to reflect that the policyowner, by virtue of his or her ownership of a policy 27.27issued by a subsidiary insurance company reorganized under section 
         66A.40, is a member 27.28of the mutual insurance holding company. Notice given in this manner is deemed to 27.29comply with the requirements of section 
         302A.435.27.30    Sec. 44. Minnesota Statutes 2006, section 66A.07, is amended by adding a subdivision 27.31to read:27.32    Subd. 5.Quorum.The number of members present in person or by proxy at a 27.33member meeting are a quorum for the transaction of business, unless a larger proportion 27.34or number is provided in the articles or bylaws. If a quorum is present when a duly called 28.1or held meeting is convened, the members present may continue to transact business until 28.2adjournment, even though the withdrawal of members originally present leaves less than 28.3the proportion or number otherwise required for a quorum.28.4EFFECTIVE DATE.This section is effective January 1, 2008.28.5    Sec. 45. Minnesota Statutes 2006, section 66A.41, subdivision 1, is amended to read:28.6    Subdivision 1. Definitions. (a) For the purposes of this section, the terms in this 28.7subdivision have the meanings given them.28.8    (b) "Converting mutual insurer" means a Minnesota domestic mutual insurance 28.9company seeking to reorganize according to this section.28.10    (c) "Converting mutual holding company" means a Minnesota domestic mutual 28.11insurance holding company seeking to reorganize according to this section.28.12    (d) "Converting mutual company" means a converting mutual insurer or a converting 28.13mutual holding company seeking to convert according to this section.28.14    (e) "Reorganized company" means a converting mutual insurer or a converting 28.15mutual holding company, as the case may be, that has reorganized according to this section.28.16    (f) "Eligible member" means:28.17    (1) for converting mutual insurers, a policyholder whose policy is in force as of the 28.18record date. Unless otherwise provided in the plan, a person covered under a group policy 28.19is not an eligible member, except that a person insured under a group life insurance policy 28.20is an eligible member if, on the record date:28.21    (i) the person is insured under a group life policy under which cash value has 28.22accumulated and been some cash value is allocated to the insured persons person; and28.23    (ii) the group policyholder makes no contribution to the premiums for the group 28.24policy; and28.25    (2) for converting mutual holding companies, a person who is a member of the 28.26converting mutual holding company, as defined by the converting mutual holding 28.27company's articles of incorporation and bylaws, determined as of the record date.28.28    (g) "Plan of conversion" or "plan" means a plan adopted by a converting mutual 28.29company's board of directors under this section.28.30    (h) "Policy" means a policy or contract of insurance, including an annuity contract, 28.31issued by a converting mutual insurer or issued by a reorganized insurance company 28.32subsidiary of a mutual holding company, but excluding individual noncontributory 28.33insurance policies for which the premiums are paid by a financial institution, association, 28.34employer, or other institutional entity.29.1    (i) "Active participating policy" means an individual policy of a converting mutual 29.2company or its subsidiary that: (1) is a participating policy; (2) is among a class of similar 29.3policies that have been credited with policy dividends at any time within the 12 months 29.4preceding the effective date of the conversion or that will, under the then current dividend 29.5scale, be credited with policy dividends if in force on a future policy anniversary; (3) gives 29.6rise to membership interests in the converting mutual company; and (4) is in force on the 29.7effective date or some other reasonable date identified in the plan.29.8    (j) "Commissioner" means the commissioner of commerce.29.9    (k) "Effective date of a conversion" means the date determined according to 29.10subdivision 6.29.11    (l) "Record date" means the date that the converting mutual company's board 29.12of directors adopts a plan of conversion, unless another date is specified in the plan of 29.13conversion and approved by the commissioner.29.14    (m) "Membership interests" means all rights as members of the converting 29.15mutual company, including, but not limited to, the rights to vote and to participate in 29.16any distributions of distributable net worth, whether or not incident to the company's 29.17liquidation.29.18    (n) "Distributable net worth" means the value of the converting mutual company 29.19as of the record date of the conversion, or other date approved by the commissioner, 29.20determined as set forth in the plan and approved by the commissioner. The commissioner 29.21may approve a valuation method based on any of the following: (1) the surplus as regards 29.22policyholders of a converting mutual insurer determined according to statutory accounting 29.23principles, which may be adjusted to reflect the current market values of assets and 29.24liabilities, together with any other adjustments that are appropriate in the circumstances; 29.25(2) the net equity of a converting mutual holding company or a converting mutual insurer 29.26determined according to generally accepted accounting principles, which may be adjusted 29.27to reflect the current market values of assets and liabilities, together with any other 29.28adjustments that are appropriate in the circumstances; (3) the fair market value of the 29.29converting mutual company determined by an independent, qualified person; or (4) any 29.30other reasonable valuation method.29.31    (o) "Permitted issuer" means: (1) a corporation organized and owned by the 29.32converting mutual company or by any other insurance company or insurance holding 29.33company for the purpose of purchasing and holding securities representing a majority of 29.34voting control of the reorganized company; (2) a stock insurance company owned by the 29.35converting mutual company or by any other insurance company or insurance holding 30.1company into which the converting mutual company will be merged; or (3) any other 30.2corporation approved by the commissioner.30.3    Sec. 46. Minnesota Statutes 2006, section 67A.31, subdivision 2, is amended to read:30.4    Subd. 2. Insurable property in cities. They may also insure churches and 30.5dwellings, together with the usual outbuildings and the usual contents of both those 30.6dwellings and churches and outbuildings, in any city except a city of the first or second30.7class, or a city of the second class only with approval granted by the commissioner.30.8    Sec. 47. Minnesota Statutes 2006, section 72A.51, subdivision 2, is amended to read:30.9    Subd. 2. Return of policy or contract; notice. Any individual person may cancel 30.10an individual policy of insurance against loss or damage by reason of the sickness of the 30.11assured or the assured's dependents, a nonprofit health service plan contract providing 30.12benefits for hospital, surgical and medical care, a health maintenance organization 30.13subscriber contract, or a policy of insurance authorized by section 
         60A.06, subdivision 1, 30.14clause (4), by returning the policy or contract and by giving written notice of cancellation 30.15any time before midnight of the tenth day following the date of purchase. Notice of 30.16cancellation may be given personally, or by mail, or by telegram. The policy or contract 30.17may be returned personally or by mail. If by mail, the notice or return of the policy or 30.18contract is effective upon being postmarked, properly addressed and postage prepaid.30.19EFFECTIVE DATE.This section is effective January 1, 2009.30.20    Sec. 48. Minnesota Statutes 2007 Supplement, section 72A.52, subdivision 1, is 30.21amended to read:30.22    Subdivision 1. Contents. In addition to all other legal requirements a policy or 30.23contract of insurance described in section 
         72A.51 shall show the name and address of the 30.24insurer and the seller of the policy or contract and shall state include a notice, clearly and 30.25conspicuously in boldface type of a minimum size of ten points, a right to cancel notice30.26which shall include the following elements:30.27    (1) a minimum of ten days to cancel the policy beginning on the date the policy 30.28is received by the owner;30.29    (2) if the policy is a replacement policy, a minimum of 30 days beginning on the 30.30date the policy is received by the owner if the policy is a replacement policy. Pursuant to 30.31section 61A.57, this requirement may also be provided in a separate written notice that 30.32is delivered with the policy or contract;31.1    (3) a requirement for the return of the policy to the company or an agent of the 31.2company;31.3    (4) a statement that the policy is considered void from the beginning and the parties 31.4shall be in the same position as if no policy had been issued;31.5    (5) a for policies or contracts other than a variable annuity or a variable life policy, a 31.6statement that the insurer will refund of all premiums paid, including any fees or charges, 31.7if the policy is returned; and31.8    (6) a statement that notice given by mail and return of the policy or contract by mail 31.9are effective on being postmarked, properly addressed, and postage prepaid describing 31.10when the cancellation becomes effective.31.11    The insurer must return all payments made for this policy within ten days after it 31.12receives notice of cancellation and the returned policy. For variable annuity contracts 31.13issued pursuant to sections 
         61A.13 to 
         61A.21, this notice shall be suitably modified so as 31.14to notify the purchaser that the purchaser is entitled to a refund of the amount calculated 31.15in accordance with the provisions of section 
         72A.51, subdivision 3. For variable life 31.16insurance policies, this notice must be suitably modified so as to notify the purchaser that 31.17the purchaser is entitled to a refund of: (i) the premiums paid; or (ii) the variable account 31.18value plus any amount deducted from the portion of the premium applied to the account.31.19EFFECTIVE DATE.This section is effective January 1, 2009.31.20    Sec. 49. Minnesota Statutes 2006, section 79A.06, subdivision 5, is amended to read:31.21    Subd. 5. Private employers who have ceased to be self-insured. (a) Private 31.22employers who have ceased to be private self-insurers shall discharge their continuing 31.23obligations to secure the payment of compensation which is accrued during the period of 31.24self-insurance, for purposes of Laws 1988, chapter 674, sections 1 to 21, by compliance 31.25with all of the following obligations of current certificate holders:31.26    (1) Filing reports with the commissioner to carry out the requirements of this chapter;31.27    (2) Depositing and maintaining a security deposit for accrued liability for the 31.28payment of any compensation which may become due, pursuant to chapter 176. However, 31.29if a private employer who has ceased to be a private self-insurer purchases an insurance 31.30policy from an insurer authorized to transact workers' compensation insurance in this state 31.31which provides coverage of all claims for compensation arising out of injuries occurring 31.32during the entire period the employer was self-insured, whether or not reported during 31.33that period, the policy will:31.34    (i) discharge the obligation of the employer to maintain a security deposit for the 31.35payment of the claims covered under the policy;32.1    (ii) discharge any obligation which the self-insurers' security fund has or may have 32.2for payment of all claims for compensation arising out of injuries occurring during the 32.3period the employer was self-insured, whether or not reported during that period; and32.4    (iii) discharge the obligations of the employer to pay any future assessments to 32.5the self-insurers' security fund.32.6    A private employer who has ceased to be a private self-insurer may instead buy an 32.7insurance policy described above, except that it covers only a portion of the period of time 32.8during which the private employer was self-insured; purchase of such a policy discharges 32.9any obligation that the self-insurers' security fund has or may have for payment of all 32.10claims for compensation arising out of injuries occurring during the period for which the 32.11policy provides coverage, whether or not reported during that period.32.12    A policy described in this clause may not be issued by an insurer unless it has 32.13previously been approved as to form and substance by the commissioner; and32.14    (3) Paying within 30 days all assessments of which notice is sent by the security 32.15fund, for a period of seven years from the last day its certificate of self-insurance was in 32.16effect. Thereafter, the private employer who has ceased to be a private self-insurer may 32.17either: (i) continue to pay within 30 days all assessments of which notice is sent by the 32.18security fund until it has no incurred liabilities for the payment of compensation arising 32.19out of injuries during the period of self-insurance; or (ii) pay the security fund a cash 32.20payment equal to four percent of the net present value of all remaining incurred liabilities 32.21for the payment of compensation under sections 
         176.101 and 
         176.111 as certified by a 32.22member of the casualty actuarial society. Assessments shall be based on the benefits paid 32.23by the employer during the calendar year immediately preceding the calendar year in 32.24which the employer's right to self-insure is terminated or withdrawn.32.25    (b) With respect to a self-insurer who terminates its self-insurance authority after 32.26April 1, 1998, that member shall obtain and file with the commissioner an actuarial 32.27opinion of its outstanding liabilities as determined by an associate or fellow of the 32.28Casualty Actuarial Society within 120 days of the date of its termination. If the actuarial 32.29opinion is not timely filed, the self-insurers' security fund may, at its discretion, engage 32.30the services of an actuary for this purpose. The expense of this actuarial opinion must 32.31be assessed against and be the obligation of the self-insurer. The commissioner may 32.32issue a certificate of default against the self-insurer for failure to pay this assessment 32.33to the self-insurers' security fund as provided by section 
         79A.04, subdivision 9. The 32.34opinion must separate liability for indemnity benefits from liability from medical benefits, 32.35and must discount each up to four percent per annum to net present value. Within 30 32.36days after notification of approval of the actuarial opinion by the commissioner, the 33.1member shall pay to the security fund an amount equal to 120 percent of that discounted 33.2outstanding indemnity liability, multiplied by the greater of the average annualized 33.3assessment rate since inception of the security fund or the annual rate at the time of the 33.4most recent assessment before termination. If the payment is not made within 30 days of 33.5the notification, interest on it at the rate prescribed by section 
         549.09 must be paid by the 33.6former member to the security fund until the principal amount is paid in full.33.7    (c) A former member who terminated its self-insurance authority before April 1, 33.81998, who has paid assessments to the self-insurers' security fund for seven years, and 33.9whose annualized assessment is $500 $15,000 or less, may buy out of its outstanding 33.10liabilities to the self-insurers' security fund by an amount calculated as follows: 
         1.3533.11multiplied by the indemnity case reserves at the time of the calculation, multiplied by the 33.12then current self-insurers' security fund annualized assessment rate.33.13    (d) A former member who terminated its self-insurance authority before April 1, 33.141998, and who is paying assessments within the first seven years after ceasing to be 33.15self-insured under paragraph (a), clause (3), may elect to buy out its outstanding liabilities 33.16to the self-insurers' security fund by obtaining and filing with the commissioner an 33.17actuarial opinion of its outstanding liabilities as determined by an associate or fellow of 33.18the Casualty Actuarial Society. The opinion must separate liability for indemnity benefits 33.19from liability for medical benefits, and must discount each up to four percent per annum to 33.20net present value. Within 30 days after notification of approval of the actuarial opinion 33.21by the commissioner, the member shall pay to the security fund an amount equal to 120 33.22percent of that discounted outstanding indemnity liability, multiplied by the greater of the 33.23average annualized assessment rate since inception of the security fund or the annual rate 33.24at the time of the most recent assessment.33.25    (e) A former member who has paid the security fund according to paragraphs (b) to 33.26(d) and subsequently receives authority from the commissioner to again self-insure shall be 33.27assessed under section 
         79A.12, subdivision 2, only on indemnity benefits paid on injuries 33.28that occurred after the former member received authority to self-insure again; provided 33.29that the member furnishes verified data regarding those benefits to the security fund.33.30    (f) In addition to proceedings to establish liabilities and penalties otherwise 33.31provided, a failure to comply may be the subject of a proceeding before the commissioner. 33.32An appeal from the commissioner's determination may be taken pursuant to the contested 33.33case procedures of chapter 14 within 30 days of the commissioner's written determination.33.34    Any current or past member of the self-insurers' security fund is subject to service of 33.35process on any claim arising out of chapter 176 or this chapter in the manner provided by 33.36section 
         5.25, or as otherwise provided by law. The issuance of a certificate to self-insure 34.1to the private self-insured employer shall be deemed to be the agreement that any process 34.2which is served in accordance with this section shall be of the same legal force and effect 34.3as if served personally within this state.34.4    Sec. 50. Minnesota Statutes 2006, section 79A.22, subdivision 3, is amended to read:34.5    Subd. 3. New membership. The commercial self-insurance group shall file with 34.6the commissioner the name of any new employer that has been accepted in the group 34.7prior to the initiation date of membership within five business days of the initiation date 34.8of membership along with the member's signed indemnity agreement and evidence the 34.9member has deposited sufficient premiums with the group as required by the commercial 34.10self-insurance group's bylaws or plan of operation. The security deposit of the group shall 34.11be increased quarterly to an amount equal to 50 percent of the new members' premiums 34.12for that quarter. If the total increase of new members' premiums for the first quarter is 34.13less than five percent of the total annual premium of the group, no quarterly increase 34.14is necessary until the cumulative quarterly increases for that calendar year exceed five 34.15percent of the total premium of the group. The commissioner may, at the commissioner's 34.16option, review the financial statement of any applicant whose premium equals 25 percent 34.17or more of the group's total premium.34.18    Sec. 51. Minnesota Statutes 2006, section 79A.22, subdivision 4, is amended to read:34.19    Subd. 4. Commercial self-insurance group common claims fund. (a) Each 34.20commercial self-insurance group shall establish a common claims fund.34.21    (b) Each commercial self-insurance group shall, not less than ten days prior to the 34.22proposed effective date of the group, collect cash premiums from each member equal to 34.23not less than 20 percent of the member's annual workers' compensation premium to be 34.24paid into a common claims fund, maintained by the group in a designated depository. The 34.25remaining balance of the member's premium shall be paid to the group in a reasonable 34.26manner over the remainder of the year. Payments in subsequent years shall be made 34.27according to the business plan.34.28    (c) Each commercial self-insurance group shall initiate proceedings against a 34.29member when that member becomes more than 15 30 days delinquent in any payment 34.30of premium to the fund.34.31    (d) There shall be no commingling of any assets of the common claims fund with the 34.32assets of any individual member or with any other account of the service company or fiscal 34.33agent unrelated to the payment of workers' compensation liabilities incurred by the group.35.1    Sec. 52. Minnesota Statutes 2006, section 79A.23, subdivision 2, is amended to read:35.2    Subd. 2. Required reports from members to group. (a) Each member of the 35.3commercial self-insurance group shall, by September 15, submit to the group its most 35.4recent annual financial statement, together with other financial information the group may 35.5require. These financial statements submitted must not have a fiscal year end date older 35.6than January 15 of the group's calendar year end. Individual group members constituting 35.7at least 25 percent of the group's annual premium shall submit to the group reviewed or 35.8audited financial statements. The remaining members must submit compilation level 35.9statements.35.10    (b) For groups that have been in existence for at least three years, individual group 35.11members may satisfy the requirements of paragraph (a) by submitting compiled, reviewed, 35.12or audited statements or the most recent federal income tax return filed by the member.35.13    (c) Groups that have been in existence for at least five years may satisfy the 35.14requirement of paragraph (a) through submissions from members representing at least 35.1550 percent of the group's total earned premium. Of those submissions, those from 35.16members representing at least 25 percent of the entire group's total earned premium must 35.17be audited or reviewed financial statements. The remainder of the submissions may be 35.18compiled, reviewed, or audited financial statements or the most recent tax return filed by 35.19the members.35.20    Sec. 53. Minnesota Statutes 2006, section 82B.23, subdivision 1, is amended to read:35.21    Subdivision 1. Requirement. The commissioner shall certify and transmit to the 35.22appraisal subcommittee established pursuant to the Federal Institutions Reform, Recovery, 35.23and Enforcement Act of 1989, Public Law 100-73, the names of those licensees who 35.24have satisfied the requirements for certification and licensure established by the appraisal 35.25subcommittee and to collect and transmit any required fees.35.26    Sec. 54. Minnesota Statutes 2006, section 83.25, is amended by adding a subdivision 35.27to read:35.28    Subd. 4.Limited broker licensee.An individual acting on behalf of a limited 35.29broker licensee issued a license under section 82.34, subdivision 13, is not required to be 35.30an officer of a corporation or a partner of a partnership if:35.31    (1) the individual is solely engaged in the business of selling a timeshare interest as 35.32defined in section 83.20, subdivision 13;35.33    (2) the individual is adequately supervised by the limited broker licensee; and36.1    (3) the limited broker licensee maintains a roster of individuals selling a timeshare 36.2interest including the date the individual started selling. This roster must be made 36.3available to the commissioner upon demand within three days of the request.36.4    Sec. 55. [332.345] SEGREGATED ACCOUNTS.36.5    A payment collected by a collector or collection agency on behalf of a customer 36.6shall be held by the collector or collection agency in a separate trust account clearly 36.7designated for customer funds. The account must be in a bank or other depository 36.8institution authorized or chartered under the laws of any state or of the United States.36.9    Sec. 56. REPEALER.36.10(a) Minnesota Statutes 2006, sections 62A.149, subdivision 2; and 65B.29, are 36.11repealed.36.12(b) Laws 2006, chapter 255, section 26, is repealed.