1.1A bill for an act
1.2relating to appropriations; appropriating money to Department of Commerce
1.3and Public Utilities Commission to finance activities related to commerce and
1.4energy; modifying provisions related to Telecommunications Access Minnesota
1.5assessments, insurance audits, insurers and insurance products, certain financial
1.6institutions, regulated activities related to certain mortgage transactions and
1.7professionals, and debt management and debt settlement services; providing
1.8penalties and remedies; appropriating and allocating federal stimulus money for
1.9various energy programs;amending Minnesota Statutes 2008, sections 45.011,
1.10subdivision 1; 45.027, subdivision 1; 46.04, subdivision 1; 46.05; 46.131,
1.11subdivision 2; 47.58, subdivision 1; 47.60, subdivisions 1, 3, 6; 48.21; 58.05,
1.12subdivision 3; 58.06, subdivision 2; 58.126; 58.13, subdivision 1; 60A.124;
1.1360A.14, subdivision 1; 60B.03, subdivision 15; 60L.02, subdivision 3; 61B.19,
1.14subdivision 4; 61B.28, subdivisions 4, 8; 67A.01; 67A.06; 67A.07; 67A.14,
1.15subdivisions 1, 7; 67A.18, subdivision 1; 216B.62, subdivisions 3, 4, 5, by
1.16adding a subdivision; 237.295, subdivisions 2, 3; 325E.311, subdivision 6;
1.17332A.02, subdivisions 5, 8, 9, 10, 13, by adding a subdivision; 332A.04,
1.18subdivision 6; 332A.08; 332A.10; 332A.11, subdivision 2; 332A.14; proposing
1.19coding for new law in Minnesota Statutes, chapters 60A; 61A; 67A; proposing
1.20coding for new law as Minnesota Statutes, chapter 332B; repealing Minnesota
1.21Statutes 2008, sections 60A.129; 61B.19, subdivision 6; 67A.14, subdivision 5;
1.2267A.17; 67A.19; Minnesota Rules, parts 2675.2180; 2675.7100; 2675.7110;
1.232675.7120; 2675.7130; 2675.7140.
1.24BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.25
ARTICLE 1
1.26
APPROPRIATIONS
1.27
Section 1. new text begin SUMMARY OF APPROPRIATIONS.new text end
1.28
new text begin The amounts shown in this section summarize direct appropriations, by fund, made new text end
1.29
new text begin in this article.new text end
1.30
new text begin 2010new text end
new text begin 2011new text end
new text begin Totalnew text end
1.31
new text begin Generalnew text end
new text begin $new text end
new text begin 28,041,000new text end
new text begin $new text end
new text begin 27,041,000new text end
new text begin $new text end
new text begin 55,082,000new text end
2.1
new text begin Petroleum Tank Cleanupnew text end
new text begin 1,084,000new text end
new text begin 1,084,000new text end
new text begin 2,168,000new text end
2.2
new text begin Workers' Compensationnew text end
new text begin 751,000new text end
new text begin 751,000new text end
new text begin 1,502,000new text end
2.3
new text begin Special Revenuenew text end
new text begin 300,000new text end
new text begin 300,000new text end
new text begin 600,000new text end
2.4
new text begin Totalnew text end
new text begin $new text end
new text begin 30,176,000new text end
new text begin $new text end
new text begin 29,176,000new text end
new text begin $new text end
new text begin 59,352,000new text end
2.5
Sec. 2. new text begin ENERGY FINANCE APPROPRIATIONS.new text end
2.6
new text begin The sums shown in the columns marked "Appropriations" are appropriated to the new text end
2.7
new text begin agencies and for the purposes specified in this article. The appropriations are from the new text end
2.8
new text begin general fund, or another named fund, and are available for the fiscal years indicated new text end
2.9
new text begin for each purpose. The figures "2010" and "2011" used in this article mean that the new text end
2.10
new text begin appropriations listed under them are available for the fiscal year ending June 30, 2010, or new text end
2.11
new text begin June 30, 2011, respectively. "The first year" is fiscal year 2010. "The second year" is fiscal new text end
2.12
new text begin year 2011. "The biennium" is fiscal years 2010 and 2011. Appropriations for the fiscal new text end
2.13
new text begin year ending June 30, 2009, are effective the day following final enactment.new text end
2.14
new text begin APPROPRIATIONSnew text end
2.15
new text begin Available for the Yearnew text end
2.16
new text begin Ending June 30new text end
2.17
new text begin 2010new text end
new text begin 2011new text end
2.18
Sec. 3. new text begin DEPARTMENT OF COMMERCEnew text end
2.19
new text begin Subdivision 1.new text end new text begin Total Appropriationnew text end
new text begin $new text end
new text begin 24,743,000new text end
new text begin $new text end
new text begin 23,743,000new text end
2.20
new text begin Appropriations by Fundnew text end
2.21
new text begin 2010new text end
new text begin 2011new text end
2.22
new text begin Generalnew text end
new text begin 22,608,000new text end
new text begin 21,608,000new text end
2.23
new text begin Petroleum Cleanupnew text end
new text begin 1,084,000new text end
new text begin 1,084,000new text end
2.24
2.25
new text begin Workers' new text end
new text begin Compensationnew text end
new text begin 751,000new text end
new text begin 751,000new text end
2.26
new text begin Special Revenuenew text end
new text begin 300,000new text end
new text begin 300,000new text end
2.27
new text begin The amounts that may be spent for each new text end
2.28
new text begin purpose are specified in the following new text end
2.29
new text begin subdivisions.new text end
2.30
new text begin Subd. 2.new text end new text begin Financial Institutionsnew text end
new text begin 6,638,000new text end
new text begin 6,638,000new text end
2.31
new text begin $1,000 each year is for consumer small loan new text end
2.32
new text begin regulation modifications in article 7. This new text end
2.33
new text begin appropriation is added to the department's new text end
2.34
new text begin base.new text end
3.1
3.2
new text begin Subd. 3.new text end new text begin Petroleum Tank Release Cleanup new text end
new text begin Boardnew text end
new text begin 1,084,000new text end
new text begin 1,084,000new text end
3.3
new text begin This appropriation is from the petroleum new text end
3.4
new text begin tank release cleanup fund. The base funding new text end
3.5
new text begin for this program ends June 30, 2012.new text end
3.6
new text begin Subd. 4.new text end new text begin Administrative Servicesnew text end
new text begin 4,300,000new text end
new text begin 4,300,000new text end
3.7
new text begin Subd. 5.new text end new text begin Telecommunicationsnew text end
new text begin 1,010,000new text end
new text begin 1,010,000new text end
3.8
new text begin Subd. 6.new text end new text begin Market Assurancenew text end
new text begin 7,421,000new text end
new text begin 7,421,000new text end
3.9
new text begin Appropriations by Fundnew text end
3.10
new text begin Generalnew text end
new text begin 6,670,000new text end
new text begin 6,670,000new text end
3.11
3.12
new text begin Workers' new text end
new text begin Compensationnew text end
new text begin 751,000new text end
new text begin 751,000new text end
3.13
new text begin Subd. 7.new text end new text begin Office of Energy Securitynew text end
new text begin 3,990,000new text end
new text begin 2,990,000new text end
3.14
3.15
new text begin Subd. 8.new text end new text begin Telecommunications Access new text end
new text begin Minnesotanew text end
new text begin 300,000new text end
new text begin 300,000new text end
3.16
new text begin $300,000 the first year and $300,000 new text end
3.17
new text begin the second year are for transfer to the new text end
3.18
new text begin commissioner of human services to new text end
3.19
new text begin supplement the ongoing operational expenses new text end
3.20
new text begin of the Minnesota Commission Serving new text end
3.21
new text begin Deaf and Hard-of-Hearing People. This new text end
3.22
new text begin appropriation is from the telecommunication new text end
3.23
new text begin access Minnesota fund, and is added to new text end
3.24
new text begin the commission's base. This appropriation new text end
3.25
new text begin consolidates, and is not in addition to, new text end
3.26
new text begin appropriation language from Laws 2006, new text end
3.27
new text begin chapter 282, article 11, section 4, and new text end
3.28
new text begin Laws 2007, chapter 57, article 2, section 3, new text end
3.29
new text begin subdivision 7.new text end
3.30
Sec. 4. new text begin PUBLIC UTILITIES COMMISSIONnew text end
new text begin $new text end
new text begin 5,433,000new text end
new text begin $new text end
new text begin 5,433,000new text end
3.31 Sec. 5. Minnesota Statutes 2008, section 45.027, subdivision 1, is amended to read:
3.32 Subdivision 1.
General powers. In connection with the duties and responsibilities
3.33entrusted to the commissioner, and Laws 1993, chapter 361, section 2, the commissioner
3.34of commerce may:
4.1(1) make public or private investigations within or without this state as the
4.2commissioner considers necessary to determine whether any person has violated or is
4.3about to violate any law, rule, or order related to the duties and responsibilities entrusted
4.4to the commissioner;
4.5(2) require or permit any person to file a statement in writing, under oath or otherwise
4.6as the commissioner determines, as to all the facts and circumstances concerning the
4.7matter being investigated;
4.8(3) hold hearings, upon reasonable notice, in respect to any matter arising out of the
4.9duties and responsibilities entrusted to the commissioner;
4.10(4) conduct investigations and hold hearings for the purpose of compiling
4.11information related to the duties and responsibilities entrusted to the commissioner;
4.12(5) examine the books, accounts, records, and files of every licensee, and of every
4.13person who is engaged in any activity regulated; the commissioner or a designated
4.14representative shall have free access during normal business hours to the offices and
4.15places of business of the person, and to all books, accounts, papers, records, files, safes,
4.16and vaults maintained in the place of business;
4.17(6) publish information which is contained in any order issued by the commissioner;
4.18and
4.19(7) require any person subject to duties and responsibilities entrusted to the
4.20commissioner, to report all sales or transactions that are regulated. The reports must
4.21be made within ten days after the commissioner has ordered the report. The report is
4.22accessible only to the respondent and other governmental agencies unless otherwise
4.23ordered by a court of competent jurisdiction.
new text begin ; andnew text end
4.24
new text begin (8) assess a licensee the necessary expenses of the investigation performed by the new text end
4.25
new text begin department when an investigation is made by order of the commissioner. The cost of the new text end
4.26
new text begin investigation shall be determined by the commissioner and is based on the salary cost new text end
4.27
new text begin of investigators or assistants and at an average rate per day or fraction thereof so as to new text end
4.28
new text begin provide for the total cost of the investigations. All money collected must be deposited new text end
4.29
new text begin into the general fund.new text end
4.30 Sec. 6. Minnesota Statutes 2008, section 60A.14, subdivision 1, is amended to read:
4.31 Subdivision 1.
Fees other than examination fees. In addition to the fees and
4.32charges provided for examinations, the following fees must be paid to the commissioner
4.33for deposit in the general fund:
4.34(a) by township mutual fire insurance companies;
4.35(1) for filing certificate of incorporation $25 and amendments thereto, $10;
5.1(2) for filing annual statements, $15;
5.2(3) for each annual certificate of authority, $15;
5.3(4) for filing bylaws $25 and amendments thereto, $10;
5.4(b) by other domestic and foreign companies including fraternals and reciprocal
5.5exchanges;
5.6(1) for filing an application for an initial certification of authority to be admitted
5.7to transact business in this state, $1,500;
5.8(2) for filing certified copy of certificate of articles of incorporation, $100;
5.9(3) for filing annual statement, $225;
5.10(4) for filing certified copy of amendment to certificate or articles of incorporation,
5.11$100;
5.12(5) for filing bylaws, $75 or amendments thereto, $75;
5.13(6) for each company's certificate of authority, $575, annually;
5.14(c) the following general fees apply:
5.15(1) for each certificate, including certified copy of certificate of authority, renewal,
5.16valuation of life policies, corporate condition or qualification, $25;
5.17(2) for each copy of paper on file in the commissioner's office 50 cents per page,
5.18and $2.50 for certifying the same;
5.19(3) for license to procure insurance in unadmitted foreign companies, $575;
5.20(4) for valuing the policies of life insurance companies, one cent per $1,000 of
5.21insurance so valued, provided that the fee shall not exceed $13,000 per year for any
5.22company. The commissioner may, in lieu of a valuation of the policies of any foreign life
5.23insurance company admitted, or applying for admission, to do business in this state, accept
5.24a certificate of valuation from the company's own actuary or from the commissioner of
5.25insurance of the state or territory in which the company is domiciled;
5.26(5) for receiving and filing certificates of policies by the company's actuary, or by
5.27the commissioner of insurance of any other state or territory, $50;
5.28(6) for each appointment of an agent filed with the commissioner, $10;
5.29(7) for filing forms, rates, and compliance certifications under section
60A.315, $90
new text begin new text end
5.30
new text begin $140new text end per filing, or $75
new text begin $125 new text end per filing when submitted via electronic filing system. Filing
5.31fees may be paid on a quarterly basis in response to an invoice. Billing and payment may
5.32be made electronically;
5.33(8) for annual renewal of surplus lines insurer license, $300.
5.34The commissioner shall adopt rules to define filings that are subject to a fee.
5.35 Sec. 7. Minnesota Statutes 2008, section 216B.62, subdivision 3, is amended to read:
6.1 Subd. 3.
Assessing all public utilities. The department and commission shall
6.2quarterly, at least 30 days before the start of each quarter, estimate the total of their
6.3expenditures in the performance of their duties relating to (1) public utilities under section
6.4, sections
new text begin 216A.085 and new text end
216B.01 to
216B.67, other than amounts chargeable
6.5to public utilities under subdivision 2 or
new text begin ,new text end 6, and (2) alternative energy engineering
6.6activity under section
new text begin 7, or 8new text end . The remainder, except the amount assessed
6.7against cooperatives and municipalities for alternative energy engineering activity under
6.8subdivision 5, shall be assessed by the commission and department to the several public
6.9utilities in proportion to their respective gross operating revenues from retail sales of gas
6.10or electric service within the state during the last calendar year. The assessment shall be
6.11paid into the state treasury within 30 days after the bill has been transmitted via mail,
6.12personal delivery, or electronic service to the several public utilities, which shall constitute
6.13notice of the assessment and demand of payment thereof. The total amount which may
6.14be assessed to the public utilities, under authority of this subdivision, shall not exceed
6.15one-sixth of one percent of the total gross operating revenues of the public utilities
6.16during the calendar year from retail sales of gas or electric service within the state. The
6.17assessment for the third quarter of each fiscal year shall be adjusted to compensate for the
6.18amount by which actual expenditures by the commission and department for the preceding
6.19fiscal year were more or less than the estimated expenditures previously assessed.
6.20 Sec. 8. Minnesota Statutes 2008, section 216B.62, subdivision 4, is amended to read:
6.21 Subd. 4.
Objections. Within 30 days after the date of the transmittal of any bill as
6.22provided by subdivisions
new text begin subdivision new text end 2 and
new text begin ,new text end 3,
new text begin 7, or 8, new text end the public utility against which
6.23the bill has been rendered may file with the commission objections setting out the
6.24grounds upon which it is claimed the bill is excessive, erroneous, unlawful or invalid.
6.25The commission shall within 60 days hold a hearing and issue an order in accordance
6.26with its findings. The order shall be appealable in the same manner as other final orders
6.27of the commission.
6.28 Sec. 9. Minnesota Statutes 2008, section 216B.62, subdivision 5, is amended to read:
6.29 Subd. 5.
Assessing cooperatives and municipals. The commission and department
6.30may charge cooperative electric associations, generation and transmission cooperative
6.31electric associations, municipal power agencies, and municipal electric utilities their
6.32proportionate share of the expenses incurred in the review and disposition of resource
6.33plans, adjudication of service area disputes, proceedings under section
216B.1691,
6.34216B.2425
, or
216B.243, and the costs incurred in the adjudication of complaints over
7.1service standards, practices, and rates. Cooperative electric associations electing to
7.2become subject to rate regulation by the commission pursuant to section
216B.026,
7.3subdivision 4
, are also subject to this section. Neither a cooperative electric association
7.4nor a municipal electric utility is liable for costs and expenses in a calendar year in excess
7.5of the limitation on costs that may be assessed against public utilities under subdivision
7.62. A cooperative electric association, generation and transmission cooperative electric
7.7association, municipal power agency, or municipal electric utility may object to and appeal
7.8bills of the commission and department as provided in subdivision 4.
7.9The department shall assess cooperatives and municipalities for the costs of
7.10alternative energy engineering activities under section
. Each cooperative and
7.11municipality shall be assessed in proportion that its gross operating revenues for the sale
7.12of gas and electric service within the state for the last calendar year bears to the total of
7.13those revenues for all public utilities, cooperatives, and municipalities.
7.14 Sec. 10. Minnesota Statutes 2008, section 216B.62, is amended by adding a
7.15subdivision to read:
7.16
new text begin Subd. 7.new text end new text begin Assessing all utilities.new text end new text begin The department shall assess public utilities, new text end
7.17
new text begin cooperative electric associations, and municipal utilities for the costs of activities under new text end
7.18
new text begin chapter 216C. The department shall not assess for costs of grants, loans, or other aids or new text end
7.19
new text begin for costs that can be recovered through other assessment authority. Each public utility, new text end
7.20
new text begin cooperative, and municipal utility shall be assessed in the proportion that its gross new text end
7.21
new text begin operating revenue for the sale of gas and electric service within the state for the last new text end
7.22
new text begin calendar year bears to the total of those revenues for all public utilities, cooperatives, new text end
7.23
new text begin and municipalities.new text end
7.24 Sec. 11. Minnesota Statutes 2008, section 237.295, subdivision 2, is amended to read:
7.25 Subd. 2.
Assessment of costs. The department and commission shall quarterly, at
7.26least 30 days before the start of each quarter, estimate the total of their expenditures
7.27in the performance of their duties relating to telephone companies, other than amounts
7.28chargeable to telephone companies under subdivision 1, 5, or 6
new text begin , or 7new text end . The remainder
7.29must be assessed by the department to the telephone companies operating in this state
7.30in proportion to their respective gross jurisdictional operating revenues during the last
7.31calendar year. The assessment must be paid into the state treasury within 30 days after the
7.32bill has been transmitted via mail, personal delivery, or electronic service to the telephone
7.33companies. The bill constitutes notice of the assessment and demand of payment. The
7.34total amount that may be assessed to the telephone companies under this subdivision may
8.1not exceed three-eighths of one percent of the total gross jurisdictional operating revenues
8.2during the calendar year. The assessment for the third quarter of each fiscal year must be
8.3adjusted to compensate for the amount by which actual expenditures by the commission
8.4and department for the preceding fiscal year were more or less than the estimated
8.5expenditures previously assessed. A telephone company with gross jurisdictional
8.6operating revenues of less than $5,000 is exempt from assessments under this subdivision.
8.7 Sec. 12. Minnesota Statutes 2008, section 237.295, subdivision 3, is amended to read:
8.8 Subd. 3.
Objection. Within 30 days after the date of the transmittal of any bill
8.9as provided by subdivisions 1, 2, 5, and 6,
new text begin or 7, new text end the parties to the proceeding, against
8.10which the bill has been assessed, may file with the commission objections setting out the
8.11grounds upon which it is claimed the bill is excessive, erroneous, unlawful, or invalid.
8.12The commission shall within 60 days issue an order in accordance with its findings. The
8.13order is appealable in the same manner as other final orders of the commission.
8.14
ARTICLE 2
8.15
DEFINITIONS; GOALS; LEGISLATIVE REVIEW
8.16 Section 1.
new text begin FEDERAL STIMULUS FUNDING; GOAL OF ENERGY new text end
8.17
new text begin PROGRAMS.new text end
8.18
new text begin Subdivision 1.new text end new text begin Definitions.new text end new text begin For the purposes of articles 2 to 6, the following terms new text end
8.19
new text begin have the meaning given them.new text end
8.20
new text begin (a) "Act" means the American Recovery and Reinvestment Act of 2009.new text end
8.21
new text begin (b) "Commissioner" means the commissioner of commerce.new text end
8.22
new text begin (c) "Stimulus funding" or "funding" means funding provided to the state under new text end
8.23
new text begin the act for:new text end
8.24
new text begin (1) energy efficiency and conservation block grants authorized under subtitle E of new text end
8.25
new text begin title V of the federal Energy Independence and Security Act of 2007, United States Code, new text end
8.26
new text begin title 42, section 17151 et seq.;new text end
8.27
new text begin (2) the Weatherization Assistance Program authorized under part A of title IV of the new text end
8.28
new text begin federal Energy Conservation and Production Act, United States Code, title 42, section new text end
8.29
new text begin 6861, et seq.; andnew text end
8.30
new text begin (3) the State Energy Program authorized under part D of title III of the federal new text end
8.31
new text begin Energy Policy and Conservation Act, United States Code, title 42, section 6321, et seq.new text end
8.32
new text begin Subd. 2.new text end new text begin Stimulus funding allocation and use goals.new text end new text begin To the extent allowed by new text end
8.33
new text begin federal law and regulation and consistent with the purposes and principles of the act, new text end
9.1
new text begin stimulus funding must be allocated and expended under articles 2 to 4 for activities that new text end
9.2
new text begin best achieve the following goals:new text end
9.3
new text begin (1) job retention and creation;new text end
9.4
new text begin (2) improved energy efficiency and increased renewable energy production capacity;new text end
9.5
new text begin (3) coordination with and leveraging of other resources to increase the total benefits new text end
9.6
new text begin derived from stimulus funding;new text end
9.7
new text begin (4) timely implementation of funded activities;new text end
9.8
new text begin (5) long-term sustainability of benefits derived from stimulus funds;new text end
9.9
new text begin (6) geographic distribution across the state; andnew text end
9.10
new text begin (7) compliance with the disadvantaged business enterprise outreach requirements in new text end
9.11
new text begin Minnesota Statutes, section 16C.16, subdivision 4.new text end
9.12
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
9.13 Sec. 2.
new text begin LEGISLATIVE REVIEW.new text end
9.14
new text begin The Office of Energy Security shall, prior to expending any stimulus funds, submit new text end
9.15
new text begin to the chairs and ranking minority members of the senate and house of representatives new text end
9.16
new text begin committees with primary jurisdiction over energy policy and finance the criteria it new text end
9.17
new text begin proposes to use to rank the programs in articles 2 to 6 in order to allocate stimulus funding new text end
9.18
new text begin among the programs. Comments on the proposed criteria must be submitted to the Office new text end
9.19
new text begin of Energy Security within ten working days of receipt of the criteria. The Office of Energy new text end
9.20
new text begin Security shall consider the comments before establishing the final allocation criteria, and new text end
9.21
new text begin shall submit a report on the amount of stimulus funds allocated to each of the programs new text end
9.22
new text begin under articles 2 to 6 the chairs and ranking minority members of the senate and house of new text end
9.23
new text begin representatives committees with primary jurisdiction over energy policy and finance new text end
9.24
new text begin within ten working days of establishing the stimulus funding allocations.new text end
9.25
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
9.26
ARTICLE 3
9.27
ENERGY EFFICIENCY
9.28 Section 1.
new text begin WEATHERIZATION.new text end
9.29
new text begin Subdivision 1.new text end new text begin Allocation of funds.new text end new text begin All stimulus funds for weatherization must be new text end
9.30
new text begin allocated by the director of the Office of Energy Security, consistent with federal allocation new text end
9.31
new text begin requirements and state allocation formulas in the state weatherization plan. Existing new text end
9.32
new text begin providers of weatherization services must be fully utilized, consistent with effective new text end
9.33
new text begin program delivery, before additional providers of weatherization services are added.new text end
10.1
new text begin Subd. 2.new text end new text begin Rental units.new text end new text begin Programs that include rental units must be developed, new text end
10.2
new text begin including developing procedures to increase low-income rental unit participation in new text end
10.3
new text begin programs. Priority must be given to serving the largest number of new weatherization new text end
10.4
new text begin clients consistent with federal eligibility requirements.new text end
10.5
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
10.6 Sec. 2.
new text begin LOCAL GOVERNMENT AND SCHOOL DISTRICT BUILDING new text end
10.7
new text begin RENOVATIONS.new text end
10.8
new text begin The Office of Energy Security must coordinate the use of stimulus funds with the new text end
10.9
new text begin local public building enhanced energy-efficiency program under Minnesota Statutes, new text end
10.10
new text begin section 216C.43. The Office of Energy Security shall prioritize lighting upgrades, energy new text end
10.11
new text begin recommissioning, and other cost-effective energy projects that are ready for immediate new text end
10.12
new text begin implementation. Stimulus funds may be used for, but are not limited to, grants for a portion new text end
10.13
new text begin of costs incurred by local governments to implement energy efficiency improvements new text end
10.14
new text begin under the local public building enhanced energy-efficiency program. The Office of Energy new text end
10.15
new text begin Security may require a local government, as a condition of receiving a grant, to commit to new text end
10.16
new text begin implement future activities, including, but not limited to, staff training, that are designed new text end
10.17
new text begin to create additional energy or operating savings to the local government. The Office of new text end
10.18
new text begin Energy Security shall coordinate with the Department of Education to prioritize school new text end
10.19
new text begin district projects for funding under this section, consistent with the principles of statewide new text end
10.20
new text begin geographic distribution of projects, optimized energy savings, and an improved learning new text end
10.21
new text begin environment for schoolchildren.new text end
10.22
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
10.23 Sec. 3.
new text begin STATE GOVERNMENT BUILDINGS.new text end
10.24
new text begin The Department of Administration shall develop a plan and procedures to select, new text end
10.25
new text begin fund, and implement projects using stimulus funds. The plan and procedures shall new text end
10.26
new text begin prioritize lighting upgrades, energy-efficient windows, energy recommissioning, and other new text end
10.27
new text begin cost-effective energy projects that are ready for immediate implementation. Funds may be new text end
10.28
new text begin used for, but are not limited to, grants for a portion of costs incurred by state agencies in new text end
10.29
new text begin implementing energy efficiency improvements. The Department of Administration may new text end
10.30
new text begin require a state agency, as a condition of receiving stimulus funds, to commit to implement new text end
10.31
new text begin future activities, including, but not limited to, staff training, that are designed to create new text end
10.32
new text begin additional energy or operating savings to the state agency.new text end
10.33
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
11.1 Sec. 4.
new text begin RESIDENTIAL ENERGY EFFICIENCY PROGRAMS.new text end
11.2
new text begin The Office of Energy Security shall coordinate with the Minnesota Housing Finance new text end
11.3
new text begin Agency to use stimulus funds in conjunction with the Minnesota Housing Finance new text end
11.4
new text begin Agency's existing financing programs to improve energy efficiency in dwellings.new text end
11.5
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
11.6 Sec. 5.
new text begin TRAINING AND WORKFORCE DEVELOPMENT.new text end
11.7
new text begin (a) The Department of Employment and Economic Development, in consultation new text end
11.8
new text begin with the Office of Energy Security and the Office of Higher Education, shall develop a new text end
11.9
new text begin plan and procedures to:new text end
11.10
new text begin (1) allocate stimulus funds to training programs to train energy professionals needed new text end
11.11
new text begin to implement the energy programs described in sections 2 to 4, including but not limited to new text end
11.12
new text begin energy auditors, energy managers, and building operators;new text end
11.13
new text begin (2) coordinate, oversee, and monitor the training and certification of energy new text end
11.14
new text begin professionals; andnew text end
11.15
new text begin (3) allocate stimulus funding for the purposes of clauses (1) and (2) and to training new text end
11.16
new text begin providers.new text end
11.17
new text begin (b) Training strategies must be designed to meet the wide range of facilities new text end
11.18
new text begin managers and building sizes and types, and must protect the occupational health and safety new text end
11.19
new text begin of workers employed on these energy projects. Technical skills training must include new text end
11.20
new text begin insulation, air sealing, and mechanical work.new text end
11.21
new text begin (c) The plan must include procedures to:new text end
11.22
new text begin (1) train individuals already employed in implementing energy programs;new text end
11.23
new text begin (2) recruit individuals to be trained to perform work in energy projects using new text end
11.24
new text begin stimulus funding who are unemployed, especially targeting communities experiencing new text end
11.25
new text begin disproportionately high rates of unemployment, including, but not limited to, low-income, new text end
11.26
new text begin rural, or tribal communities and individuals in construction trades and crafts; andnew text end
11.27
new text begin (3) ensure that the full capacity of current training providers is utilized, including, new text end
11.28
new text begin but not limited to, opportunities industrialization centers, skilled trades labor unions, tribal new text end
11.29
new text begin colleges or nonprofits working in tribal communities, community action partnerships, new text end
11.30
new text begin utility companies, higher education institutions, and nonprofit organizations with new text end
11.31
new text begin demonstrated expertise in energy efficiency.new text end
11.32
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
11.33 Sec. 6.
new text begin ACCOUNTABILITY AND TRANSPARENCY REPORTING.new text end
12.1
new text begin The director of the Office of Energy Security, after compiling information supplied new text end
12.2
new text begin by the Departments of Administration, Education, and Employment and Economic new text end
12.3
new text begin Development, and the Office of Higher Education, shall report on the progress of the new text end
12.4
new text begin programs funded under articles 2 to 6 to the house of representatives and senate committees new text end
12.5
new text begin with jurisdiction over energy finance and workforce development policy by September 1, new text end
12.6
new text begin 2009, January 15, 2010, April 1, 2010, and September 1, 2010. The report must include a new text end
12.7
new text begin complete accounting of all stimulus funds spent on the programs funded under articles 2 to new text end
12.8
new text begin 6, to the extent allowable by state and federal law, including, but not limited to:new text end
12.9
new text begin (1) the specific projects funded, including the location, building owner, and project new text end
12.10
new text begin manager;new text end
12.11
new text begin (2) the number of jobs retained or created by each project;new text end
12.12
new text begin (3) the total calculated and actual energy savings for each project;new text end
12.13
new text begin (4) the remaining balances in each stimulus fund;new text end
12.14
new text begin (5) the nonstimulus funding leveraged by stimulus funds for each project;new text end
12.15
new text begin (6) the training courses provided, including the location and provider of courses new text end
12.16
new text begin offered, the funding source for each training course, and the total number of trainees; andnew text end
12.17
new text begin (7) compliance with prevailing wage, veterans, and disadvantaged business new text end
12.18
new text begin enterprise requirements.new text end
12.19
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
12.20
ARTICLE 4
12.21
RENEWABLE ENERGY
12.22 Section 1.
new text begin RENEWABLE ENERGY GRANT PROGRAM.new text end
12.23
new text begin (a) The commissioner of commerce shall establish a program to award grants to new text end
12.24
new text begin energy projects that meet the following conditions:new text end
12.25
new text begin (1) the project qualifies as a community-based energy development (C-BED) project, new text end
12.26
new text begin as defined in Minnesota Statutes, section 216B.1612, subdivision 2, paragraph (g);new text end
12.27
new text begin (2) for wind projects, the project is located in an area where the measured wind new text end
12.28
new text begin resource is Class 4 or above;new text end
12.29
new text begin (3) the project begins commercial operation after July 1, 2009;new text end
12.30
new text begin (4) the project does not receive renewable energy payment incentives under new text end
12.31
new text begin Minnesota Statutes, section 216C.41; andnew text end
12.32
new text begin (5) the project meets any other conditions established under the American Recovery new text end
12.33
new text begin and Reinvestment Act of 2009, Public Law 111-5, for use of these funds.new text end
13.1
new text begin (b) The department shall develop an application form, application review procedures, new text end
13.2
new text begin criteria that projects must meet in order to be considered for a grant award, procedures new text end
13.3
new text begin and guidelines for project monitoring and evaluation, and other administrative procedures new text end
13.4
new text begin necessary to fully implement a grant program.new text end
13.5
new text begin (c) The maximum grant to a project is $500,000.new text end
13.6
new text begin (d) No more than two projects in a single county may receive a grant under this new text end
13.7
new text begin section.new text end
13.8
new text begin (e) No C-BED qualifying owner may financially participate in more than one project new text end
13.9
new text begin that receives a grant under this section.new text end
13.10
new text begin (f) Grant awards must be geographically dispersed throughout the state.new text end
13.11
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
13.12 Sec. 2.
new text begin RENEWABLE ELECTRIC GENERATION FACILITY REBATES.new text end
13.13
new text begin (a) The commissioner shall establish a program to award rebates to qualifying new text end
13.14
new text begin facilities that generate electricity from a renewable source and that:new text end
13.15
new text begin (1) begin operation after July 1, 2009; new text end
13.16
new text begin (2) meet all other conditions established under the act; andnew text end
13.17
new text begin (3) provide electricity to:new text end
13.18
new text begin (i) a homeowner's primary residence; ornew text end
13.19
new text begin (ii) a business, with 20 or fewer full-time employees.new text end
13.20
new text begin (b) The commissioner shall develop an application form, application review new text end
13.21
new text begin procedures, criteria that projects must meet in order to be considered for a rebate, new text end
13.22
new text begin procedures and guidelines for project monitoring and evaluation, and other administrative new text end
13.23
new text begin procedures necessary to fully implement a rebate program.new text end
13.24
new text begin (c) The owner of a qualifying facility may apply to the commissioner for a rebate of new text end
13.25
new text begin the lesser of $2,500 or 35 percent of the cost of the electric generation facility, including new text end
13.26
new text begin installation costs.new text end
13.27
new text begin (d) The commissioner shall award rebates only from funds appropriated for that new text end
13.28
new text begin purpose and to the extent of those appropriations. Grants must be made to applicants in new text end
13.29
new text begin the order of the time of receipt of a complete application.new text end
13.30
new text begin (e) For purposes of this section:new text end
13.31
new text begin (1) "Qualifying facility" means an electric generation facility with a capacity of less new text end
13.32
new text begin than 40 kilowatts that generates electricity from a renewable energy source.new text end
13.33
new text begin (2) "Renewable energy source" means:new text end
13.34
new text begin (i) solar;new text end
13.35
new text begin (ii) wind;new text end
14.1
new text begin (iii) hydroelectric;new text end
14.2
new text begin (iv) hydrogen, provided that after January 1, 2010, the hydrogen must be generated new text end
14.3
new text begin from the resources listed in this clause; ornew text end
14.4
new text begin (v) biomass, which includes, without limitation, landfill gas; an anaerobic digester new text end
14.5
new text begin system; and the predominantly organic components of wastewater effluent, sludge, or new text end
14.6
new text begin related by-products from publicly owned treatment works, but not including incineration new text end
14.7
new text begin of wastewater sludge to produce electricity.new text end
14.8
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
14.9 Sec. 3.
new text begin SOLAR ENERGY PROJECTS IN PUBLIC BUILDINGS AND new text end
14.10
new text begin SCHOOLS.new text end
14.11
new text begin (a) The commissioner shall establish a program to award grants to:new text end
14.12
new text begin (1) local units of government to pay the costs of installing solar energy projects to new text end
14.13
new text begin generate energy used in public buildings; ornew text end
14.14
new text begin (2) to school districts to pay the costs of installing solar energy projects to generate new text end
14.15
new text begin energy used in K-12 schools.new text end
14.16
new text begin (b) To be eligible to receive a grant, a project must:new text end
14.17
new text begin (1) begin operation after July 1, 2009; andnew text end
14.18
new text begin (2) meet all other conditions established under the act.new text end
14.19
new text begin (c) The commissioner shall develop an application form, application review new text end
14.20
new text begin procedures, criteria that a project must meet in order to be considered for a grant award, new text end
14.21
new text begin procedures and guidelines for project monitoring and evaluation, and other administrative new text end
14.22
new text begin procedures necessary to fully implement a grant program.new text end
14.23
new text begin (d) In awarding grants, the commissioner must determine, at a minimum, the new text end
14.24
new text begin following:new text end
14.25
new text begin (1) that the physical condition of the building is sufficient to support the efficient new text end
14.26
new text begin operation of the solar energy project;new text end
14.27
new text begin (2) that there is no significant possibility that the building may close within ten new text end
14.28
new text begin years, which determination, for a school, must be based on enrollment projections; andnew text end
14.29
new text begin (3) that the projected cumulative energy savings exceed the grant amount within 15 new text end
14.30
new text begin years for a qualifying solar thermal project, and within 20 years for a photovoltaic device.new text end
14.31
new text begin (e) In awarding grants, the commissioner must also consider:new text end
14.32
new text begin (1) the reliability and cost-effectiveness of the solar technology to be installed;new text end
14.33
new text begin (2) the extent to which the proposal effectively coordinates with the conservation new text end
14.34
new text begin and energy efficiency programs offered by the energy utilities serving the building in new text end
15.1
new text begin which the project is located, and with the public building enhanced energy efficiency new text end
15.2
new text begin program under section 216C.43, if applicable;new text end
15.3
new text begin (3) life cycle energy use reductions and greenhouse gas emissions reductions new text end
15.4
new text begin projected per dollar of installed cost of the project; andnew text end
15.5
new text begin (4) the geographic distribution of grant recipients throughout the state.new text end
15.6
new text begin (f) For the purposes of this section:new text end
15.7
new text begin (1) "public building" means any publicly owned building, sports arena, or other new text end
15.8
new text begin facility of a county, city, or other local unit of government; andnew text end
15.9
new text begin (2) "solar energy" means:new text end
15.10
new text begin (i) a photovoltaic device, as defined in Minnesota Statutes, section 216C.06, new text end
15.11
new text begin subdivision 16; ornew text end
15.12
new text begin (ii) a qualifying thermal project, as defined in Minnesota Statutes, section new text end
15.13
new text begin 216B.2411, subdivision 2, that includes modifications made to a distribution system to new text end
15.14
new text begin distribute heating or cooling throughout a building.new text end
15.15
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
15.16
ARTICLE 5
15.17
MISCELLANEOUS PROGRAMS
15.18 Section 1.
new text begin ENERGY PROGRAMS IN COMMERCIAL AND INDUSTRIAL new text end
15.19
new text begin BUILDINGS.new text end
15.20
new text begin (a) The commissioner shall establish a program to award grants to commercial new text end
15.21
new text begin and industrial facilities for the purpose of installing energy-efficiency improvements or new text end
15.22
new text begin creating renewable energy sources to generate electricity or to heat or cool a building. To new text end
15.23
new text begin be eligible to receive a grant, a project must:new text end
15.24
new text begin (1) begin commercial operation after July 1, 2009; andnew text end
15.25
new text begin (2) meet all other conditions established under the act.new text end
15.26
new text begin (b) The commissioner shall develop an application form, application review new text end
15.27
new text begin procedures, criteria that a project must meet in order to be considered for a grant award, new text end
15.28
new text begin procedures and guidelines for project monitoring and evaluation, and other administrative new text end
15.29
new text begin procedures necessary to fully implement a grant program.new text end
15.30
new text begin (c) For the purposes of this section, "renewable energy source" means:new text end
15.31
new text begin (i) solar;new text end
15.32
new text begin (ii) wind;new text end
15.33
new text begin (iii) hydroelectric;new text end
16.1
new text begin (iv) hydrogen, provided that after January 1, 2010, the hydrogen must be generated new text end
16.2
new text begin from the resources listed in this clause; ornew text end
16.3
new text begin (v) biomass, which includes, without limitation, landfill gas; an anaerobic digester new text end
16.4
new text begin system; and the predominantly organic components of wastewater effluent, sludge, or new text end
16.5
new text begin related by-products from publicly owned treatment works, but not including incineration new text end
16.6
new text begin of wastewater sludge to produce electricity.new text end
16.7
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
16.8 Sec. 2.
new text begin ENERGY EDUCATION, TRAINING, AND DATA SYSTEMS.new text end
16.9
new text begin The Office of Energy Security shall establish programs to work with teachers and new text end
16.10
new text begin other energy experts to include energy issues in K-12 curricula; develop training and new text end
16.11
new text begin certification programs for technicians to install and service wind and solar energy systems; new text end
16.12
new text begin and upgrade data systems to enable accurate tracking of energy savings resulting from the new text end
16.13
new text begin conservation improvement program and other state energy programs.new text end
16.14
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
16.15 Sec. 3.
new text begin ENERGY EFFICIENCY GRANTS TO LOCAL GOVERNMENTS.new text end
16.16
new text begin The Office of Energy Security shall establish a grant program to award grants to new text end
16.17
new text begin local units of government to enhance energy efficiency and reduce energy use. Energy new text end
16.18
new text begin efficiency and conservation block grant funds may be used for grants for planning, new text end
16.19
new text begin consultant services, energy audits, implementing energy-efficient building codes and new text end
16.20
new text begin inspection services, energy efficiency renovations, street lighting, and the installation of new text end
16.21
new text begin renewable energy devices deployed on public buildings.new text end
16.22
ARTICLE 6
16.23
APPROPRIATIONS
16.24 Section 1.
new text begin WEATHERIZATION ASSISTANCE PROGRAM APPROPRIATION.new text end
16.25
new text begin Of the funds available to the state of Minnesota from the federal stimulus funding for new text end
16.26
new text begin the weatherization assistance program under the American Recovery and Reinvestment new text end
16.27
new text begin Act of 2009, Public Law 111-5, $131,937,411 is appropriated to the commissioner of new text end
16.28
new text begin commerce. The funds must be administered consistent with the requirements in article 3, new text end
16.29
new text begin section 1.new text end
16.30 Sec. 2.
new text begin ENERGY EFFICIENCY AND CONSERVATION BLOCK PROGRAM new text end
16.31
new text begin APPROPRIATION.new text end
17.1
new text begin Of the funds available to the state of Minnesota from the federal stimulus funding new text end
17.2
new text begin for the Energy Efficiency and Conservation Block Grant Program under the American new text end
17.3
new text begin Recovery and Reinvestment Act of 2009, Public Law 111-5, $10,644,100, is appropriated new text end
17.4
new text begin to the commissioner of commerce. The appropriation must be distributed as follows:new text end
17.5
new text begin (1) $6,546,121 is for energy efficiency grants to local government in article 5, new text end
17.6
new text begin section 3; andnew text end
17.7
new text begin (2) $4,097,979, is for local government and school district buildings consistent new text end
17.8
new text begin with the requirements in article 3, section 2.new text end
17.9
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
17.10 Sec. 3.
new text begin STATE ENERGY PROGRAM APPROPRIATION.new text end
17.11
new text begin Of the funds available to the state of Minnesota from the federal stimulus funding new text end
17.12
new text begin for the State Energy Program under the American Recovery and Reinvestment Act of new text end
17.13
new text begin 2009, Public Law 111-5, $54,172,000 is appropriated to the commissioner of commerce. new text end
17.14
new text begin Of this amount:new text end
17.15
new text begin (1) $10,650,000 is for local government and school district buildings consistent new text end
17.16
new text begin with the requirements in article 3, section 2;new text end
17.17
new text begin (2) $8,000,000 is for state government buildings consistent with the requirements in new text end
17.18
new text begin article 3, section 3;new text end
17.19
new text begin (3) $12,000,000 is for the residential energy financing program in article 3, section 5;new text end
17.20
new text begin (4) $12,000,000 is for renewable energy programs, including, but not limited to, the new text end
17.21
new text begin programs specified in article 4;new text end
17.22
new text begin (6) $5,000,000 is for grants to commercial and industrial facilities for energy new text end
17.23
new text begin efficiency and renewable energy projects in article 5, section 1;new text end
17.24
new text begin (7) $5,022,000 is for energy education, training, and information and data systems in new text end
17.25
new text begin article 5, section 2; andnew text end
17.26
new text begin (8) $1,500,000 is for a grant to the Board of Trustees of the Minnesota State Colleges new text end
17.27
new text begin and Universities for the International Renewable Energy Technology Institute (IRETI) to new text end
17.28
new text begin be located at Minnesota State University, Mankato, as a public and private partnership to new text end
17.29
new text begin support applied research in renewable energy and energy efficiency to aid in the transfer of new text end
17.30
new text begin technology from Sweden to Minnesota and to support technology commercialization from new text end
17.31
new text begin companies located in Minnesota and throughout the world.new text end
17.32
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment.new text end
18.1
ARTICLE 1
18.2
DEPARTMENT OF COMMERCE; OTHER REGULATORY PROVISIONS
18.3 Section 1. Minnesota Statutes 2008, section 47.58, subdivision 1, is amended to read:
18.4 Subdivision 1.
Definitions. For the purposes of this section, the terms defined in this
18.5subdivision have the meanings given them.
18.6(a) "Reverse mortgage loan" means a loan:
18.7(1) Made to a borrower wherein the committed principal amount is paid to the
18.8borrower in equal or unequal installments over a period of months or years, interest is
18.9assessed, and authorized closing costs are incurred as specified in the loan agreement;
18.10(2) Which is secured by a mortgage on residential property owned solely by the
18.11borrower; and
18.12(3) Which is due when the committed principal amount has been fully paid to the
18.13borrower, or upon sale of the property securing the loan, or upon the death of the last
18.14surviving borrower, or upon the borrower terminating use of the property as principal
18.15residence so as to disqualify the property from the homestead credit given in chapter 290A.
18.16(b) "Lender" means any bank subject to chapter 48, credit union subject to chapter
18.1752, savings bank organized and operated pursuant to chapter 50, savings association
18.18subject to chapter 51A,
new text begin any residential mortgage originator subject to chapter 58,new text end or any
18.19insurance company as defined in section
60A.02, subdivision 4. "Lender" also includes
18.20any federally chartered bank supervised by the comptroller of the currency or federally
18.21chartered savings association supervised by the Federal Home Loan Bank Board or
18.22federally chartered credit union supervised by the National Credit Union Administration,
18.23to the extent permitted by federal law.
18.24(c) "Borrower" includes any natural person holding an interest in severalty or as joint
18.25tenant or tenant-in-common in the property securing a reverse mortgage loan.
18.26(d) "Outstanding loan balance" means the current net amount of money owed by the
18.27borrower to the lender whether or not that sum is suspended pursuant to the terms of the
18.28reverse mortgage loan agreement or is immediately due and payable. The outstanding
18.29loan balance is calculated by adding the current totals of the items described in clauses (1)
18.30to (5) and subtracting the current totals of the item described in clause (6):
18.31(1) The sum of all payments made by the lender which are necessary to clear the
18.32property securing the loan of any outstanding mortgage encumbrance or mechanics or
18.33material supplier's lien.
18.34(2) The total disbursements made by the lender to date pursuant to the loan
18.35agreement as formulated in accordance with subdivision 3.
19.1(3) All taxes, assessments, insurance premiums and other similar charges paid to
19.2date by the lender pursuant to subdivision 6, which charges were not reimbursed by the
19.3borrower within 60 days.
19.4(4) All actual closing costs which the borrower has deferred, if a deferral provision
19.5is contained in the loan agreement as authorized by subdivision 7.
19.6(5) The total accrued interest to date, as authorized by subdivision 5.
19.7(6) All payments made by the borrower pursuant to subdivision 4.
19.8(e) "Actual closing costs" mean reasonable charges or sums ordinarily paid at the
19.9time of closing for the following, whether or not retained by the lender:
19.10(1) Any insurance premiums on policies covering the mortgaged property including
19.11but not limited to premiums for title insurance, fire and extended coverage insurance, flood
19.12insurance, and private mortgage insurance.
19.13(2) Abstracting, title examination and search, and examination of public records
19.14related to the mortgaged property.
19.15(3) The preparation and recording of any or all documents required by law or custom
19.16for closing a reverse mortgage loan agreement.
19.17(4) Appraisal and survey of real property securing a reverse mortgage loan.
19.18(5) A single service charge, which service charge shall include any consideration,
19.19not otherwise specified in this section as an "actual closing cost," paid by the borrower to
19.20the lender for or in relation to the acquisition, making, refinancing or modification of a
19.21reverse mortgage loan, and shall also include any consideration received by the lender
19.22for making a commitment for a reverse mortgage loan, whether or not an actual loan
19.23follows the commitment. The service charge shall not exceed one percent of the bona fide
19.24committed principal amount of the reverse mortgage loan.
19.25(6) Charges and fees necessary for or related to the transfer of real property securing
19.26a reverse mortgage loan or the closing of a reverse mortgage loan agreement paid by the
19.27borrower and received by any party other than the lender.
19.28 Sec. 2. Minnesota Statutes 2008, section 47.60, subdivision 1, is amended to read:
19.29 Subdivision 1.
Definitions. For purposes of this section, the terms defined have
19.30the meanings given them:
19.31(a) "Consumer small loan" is a loan transaction in which cash is advanced to a
19.32borrower for the borrower's own personal, family, or household purpose. A consumer
19.33small loan is a short-term, unsecured loan to be repaid in a single installment. The cash
19.34advance of a consumer small loan is equal to or less than $350. A consumer small loan
20.1includes an indebtedness evidenced by but not limited to a promissory note or agreement
20.2to defer the presentation of a personal check for a fee.
20.3(b) "Consumer small loan lender" is a financial institution as defined in section
20.447.59
or a person
new text begin business entitynew text end registered with the commissioner and engaged in the
20.5business of making consumer small loans.
20.6 Sec. 3. Minnesota Statutes 2008, section 47.60, subdivision 3, is amended to read:
20.7 Subd. 3.
Filing. Before a person
new text begin business entitynew text end other than a financial institution
20.8as defined by section
47.59 engages in the business of making consumer small loans
new text begin to new text end
20.9
new text begin Minnesota residentsnew text end , the person
new text begin business entitynew text end shall file with the commissioner as a
20.10consumer small loan lender. The filing must be on a form prescribed by the commissioner
20.11together with a fee of $250 for each place of business and contain the following
20.12information in addition to the information required by the commissioner:
20.13(1) evidence that the filer has available for the operation of the business at the
20.14location specified, liquid assets of at least $50,000; and
20.15(2) a biographical statement on the principal person responsible for the operation
20.16and management of the business to be certified.
20.17Revocation of the filing and the right to engage in the business of a consumer small
20.18loan lender is the same as in the case of a regulated lender license in section
56.09.
20.19
new text begin For purposes of this subdivision, "business entity" includes one that does not have a new text end
20.20
new text begin physical location in Minnesota that makes a consumer small loan electronically via the new text end
20.21
new text begin Internet. new text end
20.22 Sec. 4. Minnesota Statutes 2008, section 47.60, subdivision 6, is amended to read:
20.23 Subd. 6.
Penalties for violation. A person
new text begin business entitynew text end or the person's
new text begin entity'snew text end
20.24members, officers, directors, agents, and employees who violate or participate in the
20.25violation of any of the provisions of this section may be liable in the same manner as in
20.26section
56.19.
20.27 Sec. 5. Minnesota Statutes 2008, section 48.21, is amended to read:
20.28
48.21 REAL ESTATE; RESTRICTIONS ON HOLDING.
20.29 Subdivision 1.
Specific restrictions. new text begin (a) new text end A bank may purchase, carry as an asset,
20.30and convey real estate only:
20.31(1) as provided for in section
47.10;
20.32(2) if acquired through foreclosure of a mortgage given to it in good faith as security
20.33for loans made by or money due to it;
21.1(3) if conveyed to it in satisfaction of debts previously contracted in good faith in
21.2the course of its dealings;
21.3(4) if acquired by sale on execution or judgment of a court in its favor; or
21.4(5) if reasonably necessary to mitigate or avoid loss on a loan or investment
21.5theretofore made.
21.6
new text begin (b) new text end Real estate acquired under clauses (2) to (5) shall be carried as an asset only in
21.7accordance with rules the commissioner prescribes.
new text begin The maximum period for holding new text end
21.8
new text begin other real estate as an asset shall be five years, provided that upon application to the new text end
21.9
new text begin commissioner, the commissioner may approve the possession of such real estate by a bank new text end
21.10
new text begin for a period longer than five years, but not to exceed an additional five years, if:new text end
21.11
new text begin (1) the bank has made a good faith attempt to dispose of the real estate within the new text end
21.12
new text begin initial five-year period; ornew text end
21.13
new text begin (2) disposal within the initial five-year period would be detrimental to the bank.new text end
21.14 Subd. 2.
Real estate holdings not bank liabilities. Real estate owned by a bank
21.15as a result of actions authorized in clauses (2) to (5) of subdivision 1 and subsequently
21.16sold to any buyer on a contract for deed may not be considered creating a liability to a
21.17bank for purposes of section
48.24.
21.18 Subd. 3.
Real estate holdings not sold; authority to write off. Notwithstanding
21.19any rules of the commissioner to the contrary, if real estate owned by a bank pursuant to
21.20clauses (2) to (5) of subdivision 1 is not sold or otherwise disposed of within the maximum
21.21period established by rule by the commissioner, the bank may write off any remaining
21.22balance at a rate not less than one-fifth of that balance each subsequent calendar year.
21.23 Sec. 6. Minnesota Statutes 2008, section 58.05, subdivision 3, is amended to read:
21.24 Subd. 3.
Certificate of exemption. A person must obtain a certificate of exemption
21.25from the commissioner to qualify as an exempt person under section
58.04, subdivision 1,
21.26paragraph (c), a financial institution under clause (2), or by order of the commissioner
21.27under clause (6); or under section
58.04, subdivision 2, paragraph (b), as a financial
21.28institution under clause (3)
new text begin (4)new text end , or by order of the commissioner under clause (7)
new text begin (8)new text end .
21.29 Sec. 7. Minnesota Statutes 2008, section 58.06, subdivision 2, is amended to read:
21.30 Subd. 2.
Application contents. (a) The application must contain the name and
21.31complete business address or addresses of the license applicant. The license applicant
21.32must be a partnership, limited liability partnership, association, limited liability company,
21.33corporation, or other form of business organization, and the application must contain the
21.34names and complete business addresses of each partner, member, director, and principal
22.1officer. The application must also include a description of the activities of the license
22.2applicant, in the detail and for the periods the commissioner may require.
22.3 (b) An
new text begin A residential mortgage originatornew text end applicant must submit one of the following:
22.4 (1) evidence which shows, to the commissioner's satisfaction, that either the federal
22.5Department of Housing and Urban Development or the Federal National Mortgage
22.6Association has approved the
new text begin residential mortgage originator new text end applicant as a mortgagee;
22.7 (2) a surety bond or irrevocable letter of credit in the amount of not less than
22.8$50,000 in a form approved by the commissioner, issued by an insurance company or bank
22.9authorized to do so in this state. The bond or irrevocable letter of credit must be available
22.10for the recovery of expenses, fines, and fees levied by the commissioner under this chapter
22.11and for losses incurred by borrowers. The bond or letter of credit must be submitted with
22.12the license application, and evidence of continued coverage must be submitted with each
22.13renewal. Any change in the bond or letter of credit must be submitted for approval by the
22.14commissioner within ten days of its execution; or
22.15 (3) a copy of the
new text begin residential mortgage originator new text end applicant's most recent audited
22.16financial statement, including balance sheet, statement of income or loss, statements of
22.17changes in shareholder equity, and statement of changes in financial position. Financial
22.18statements must be as of a date within 12 months of the date of application.
22.19 (c) The application must also include all of the following:
22.20 (1) an affirmation under oath that the applicant:
22.21 (i) is in compliance with the requirements of section
58.125;
22.22 (ii) will maintain a perpetual roster of individuals employed as residential mortgage
22.23originators, including employees and independent contractors, which includes the date
new text begin new text end
22.24
new text begin datesnew text end that mandatory
new text begin testing,new text end initial education was
new text begin , and continuing education werenew text end
22.25completed. In addition, the roster must be made available to the commissioner on demand,
22.26within three business days of the commissioner's request;
22.27 (iii) will advise the commissioner of any material changes to the information
22.28submitted in the most recent application within ten days of the change;
22.29 (iv) will advise the commissioner in writing immediately of any bankruptcy petitions
22.30filed against or by the applicant or licensee;
22.31 (v) will maintain at all times either a net worth, net of intangibles, of at least
22.32$250,000 or a surety bond or irrevocable letter of credit in the amount of at least $50,000;
22.33 (vi) complies with federal and state tax laws; and
22.34 (vii) complies with sections
345.31 to
345.60, the Minnesota unclaimed property
22.35law;
23.1 (2) information as to the mortgage lending, servicing, or brokering experience of the
23.2applicant and persons in control of the applicant;
23.3 (3) information as to criminal convictions, excluding traffic violations, of persons in
23.4control of the license applicant;
23.5 (4) whether a court of competent jurisdiction has found that the applicant or persons
23.6in control of the applicant have engaged in conduct evidencing gross negligence, fraud,
23.7misrepresentation, or deceit in performing an act for which a license is required under
23.8this chapter;
23.9 (5) whether the applicant or persons in control of the applicant have been the subject
23.10of: an order of suspension or revocation, cease and desist order, or injunctive order, or
23.11order barring involvement in an industry or profession issued by this or another state or
23.12federal regulatory agency or by the Secretary of Housing and Urban Development within
23.13the ten-year period immediately preceding submission of the application; and
23.14 (6) other information required by the commissioner.
23.15 Sec. 8. Minnesota Statutes 2008, section 58.126, is amended to read:
23.16
58.126 EDUCATION new text begin AND TESTING new text end REQUIREMENT.
23.17
new text begin (a) new text end No individual shall engage in residential mortgage origination or make residential
23.18mortgage loans, whether as an employee or independent contractor, before the completion
23.19of 15
new text begin 20new text end hours of educational training which has been approved by the commissioner, and
23.20covering state and federal laws concerning residential mortgage lending.
23.21
new text begin (b) In addition to the initial education requirements in paragraph (a), each individual new text end
23.22
new text begin must also complete eight hours of continuing education annually. The education must new text end
23.23
new text begin include:new text end
23.24
new text begin (1) three hours of federal law and regulations;new text end
23.25
new text begin (2) two hours of ethics, which must include fraud, consumer protection, and fair new text end
23.26
new text begin lending; and new text end
23.27
new text begin (3) two hours of standards governing nontraditional mortgage lending.new text end
23.28
new text begin (c) The commissioner may by rule establish testing requirements for individuals new text end
23.29
new text begin subject to the requirements of paragraphs (a) and (b). An individual must satisfy the new text end
23.30
new text begin testing requirements established by the commissioner before engaging in residential new text end
23.31
new text begin mortgage loan origination or making residential mortgage loans.new text end
23.32
new text begin EFFECTIVE DATE.new text end new text begin This section is effective September 1, 2009, and applies to new text end
23.33
new text begin license applications and renewals made on or after that date.new text end
24.1 Sec. 9. Minnesota Statutes 2008, section 58.13, subdivision 1, is amended to read:
24.2 Subdivision 1.
Generally. (a) No person acting as a residential mortgage originator
24.3or servicer, including a person required to be licensed under this chapter, and no person
24.4exempt from the licensing requirements of this chapter under section
58.04, except as
24.5otherwise provided in paragraph (b), shall:
24.6 (1) fail to maintain a trust account to hold trust funds received in connection with a
24.7residential mortgage loan;
24.8 (2) fail to deposit all trust funds into a trust account within three business days of
24.9receipt; commingle trust funds with funds belonging to the licensee or exempt person; or
24.10use trust account funds for any purpose other than that for which they are received;
24.11 (3) unreasonably delay the processing of a residential mortgage loan application,
24.12or the closing of a residential mortgage loan. For purposes of this clause, evidence of
24.13unreasonable delay includes but is not limited to those factors identified in section
47.206,
24.14subdivision 7
, clause (d);
24.15 (4) fail to disburse funds according to its contractual or statutory obligations;
24.16 (5) fail to perform in conformance with its written agreements with borrowers,
24.17investors, other licensees, or exempt persons;
24.18 (6) charge a fee for a product or service where the product or service is not actually
24.19provided, or misrepresent the amount charged by or paid to a third party for a product
24.20or service;
24.21 (7) fail to comply with sections
345.31 to
345.60, the Minnesota unclaimed property
24.22law;
24.23 (8) violate any provision of any other applicable state or federal law regulating
24.24residential mortgage loans including, without limitation, sections
47.20 to
47.208new text begin , and new text end
24.25
new text begin 47.58new text end ;
24.26 (9) make or cause to be made, directly or indirectly, any false, deceptive, or
24.27misleading statement or representation in connection with a residential loan transaction
24.28including, without limitation, a false, deceptive, or misleading statement or representation
24.29regarding the borrower's ability to qualify for any mortgage product;
24.30 (10) conduct residential mortgage loan business under any name other than that
24.31under which the license or certificate of exemption was issued;
24.32 (11) compensate, whether directly or indirectly, coerce or intimidate an appraiser for
24.33the purpose of influencing the independent judgment of the appraiser with respect to the
24.34value of real estate that is to be covered by a residential mortgage or is being offered as
24.35security according to an application for a residential mortgage loan;
25.1 (12) issue any document indicating conditional qualification or conditional approval
25.2for a residential mortgage loan, unless the document also clearly indicates that final
25.3qualification or approval is not guaranteed, and may be subject to additional review;
25.4 (13) make or assist in making any residential mortgage loan with the intent that the
25.5loan will not be repaid and that the residential mortgage originator will obtain title to
25.6the property through foreclosure;
25.7 (14) provide or offer to provide for a borrower, any brokering or lending services
25.8under an arrangement with a person other than a licensee or exempt person, provided that
25.9a person may rely upon a written representation by the residential mortgage originator that
25.10it is in compliance with the licensing requirements of this chapter;
25.11 (15) claim to represent a licensee or exempt person, unless the person is an employee
25.12of the licensee or exempt person or unless the person has entered into a written agency
25.13agreement with the licensee or exempt person;
25.14 (16) fail to comply with the record keeping and notification requirements identified
25.15in section
58.14 or fail to abide by the affirmations made on the application for licensure;
25.16 (17) represent that the licensee or exempt person is acting as the borrower's agent
25.17after providing the nonagency disclosure required by section
58.15, unless the disclosure
25.18is retracted and the licensee or exempt person complies with all of the requirements of
25.19section
58.16;
25.20 (18) make, provide, or arrange for a residential mortgage loan that is of a lower
25.21investment grade if the borrower's credit score or, if the originator does not utilize credit
25.22scoring or if a credit score is unavailable, then comparable underwriting data, indicates
25.23that the borrower may qualify for a residential mortgage loan, available from or through
25.24the originator, that is of a higher investment grade, unless the borrower is informed that
25.25the borrower may qualify for a higher investment grade loan with a lower interest rate
25.26and/or lower discount points, and consents in writing to receipt of the lower investment
25.27grade loan;
25.28 For purposes of this section, "investment grade" refers to a system of categorizing
25.29residential mortgage loans in which the loans are: (i) commonly referred to as "prime" or
25.30"subprime"; (ii) commonly designated by an alphabetical character with "A" being the
25.31highest investment grade; and (iii) are distinguished by interest rate or discount points
25.32or both charged to the borrower, which vary according to the degree of perceived risk
25.33of default based on factors such as the borrower's credit, including credit score and
25.34credit patterns, income and employment history, debt ratio, loan-to-value ratio, and prior
25.35bankruptcy or foreclosure;
26.1 (19) make, publish, disseminate, circulate, place before the public, or cause to be
26.2made, directly or indirectly, any advertisement or marketing materials of any type, or any
26.3statement or representation relating to the business of residential mortgage loans that is
26.4false, deceptive, or misleading;
26.5 (20) advertise loan types or terms that are not available from or through the licensee
26.6or exempt person on the date advertised, or on the date specified in the advertisement.
26.7For purposes of this clause, advertisement includes, but is not limited to, a list of sample
26.8mortgage terms, including interest rates, discount points, and closing costs provided by
26.9licensees or exempt persons to a print or electronic medium that presents the information
26.10to the public;
26.11 (21) use or employ phrases, pictures, return addresses, geographic designations, or
26.12other means that create the impression, directly or indirectly, that a licensee or other
26.13person is a governmental agency, or is associated with, sponsored by, or in any manner
26.14connected to, related to, or endorsed by a governmental agency, if that is not the case;
26.15 (22) violate section
82.49, relating to table funding;
26.16(23) make, provide, or arrange for a residential mortgage loan all or a portion
26.17of the proceeds of which are used to fully or partially pay off a "special mortgage"
26.18unless the borrower has obtained a written certification from an authorized independent
26.19loan counselor that the borrower has received counseling on the advisability of the
26.20loan transaction. For purposes of this section, "special mortgage" means a residential
26.21mortgage loan originated, subsidized, or guaranteed by or through a state, tribal, or
26.22local government, or nonprofit organization, that bears one or more of the following
26.23nonstandard payment terms which substantially benefit the borrower: (i) payments vary
26.24with income; (ii) payments of principal or interest are not required or can be deferred under
26.25specified conditions; (iii) principal or interest is forgivable under specified conditions;
26.26or (iv) where no interest or an annual interest rate of two percent or less is charged in
26.27connection with the loan. For purposes of this section, "authorized independent loan
26.28counselor" means a nonprofit, third-party individual or organization providing homebuyer
26.29education programs, foreclosure prevention services, mortgage loan counseling, or credit
26.30counseling certified by the United States Department of Housing and Urban Development,
26.31the Minnesota Home Ownership Center, the Minnesota Mortgage Foreclosure Prevention
26.32Association, AARP, or NeighborWorks America;
26.33 (24) make, provide, or arrange for a residential mortgage loan without verifying
26.34the borrower's reasonable ability to pay the scheduled payments of the following, as
26.35applicable: principal; interest; real estate taxes; homeowner's insurance, assessments,
26.36and mortgage insurance premiums. For loans in which the interest rate may vary, the
27.1reasonable ability to pay shall be determined based on a fully indexed rate and a repayment
27.2schedule which achieves full amortization over the life of the loan. For all residential
27.3mortgage loans, the borrower's income and financial resources must be verified by tax
27.4returns, payroll receipts, bank records, or other similarly reliable documents.
27.5 Nothing in this section shall be construed to limit a mortgage originator's or exempt
27.6person's ability to rely on criteria other than the borrower's income and financial resources
27.7to establish the borrower's reasonable ability to repay the residential mortgage loan,
27.8including criteria established by the United States Department of Veterans Affairs or the
27.9United States Department of Housing and Urban Development for interest rate reduction
27.10refinancing loans or streamline loans, or criteria authorized or promulgated by the
27.11Federal National Mortgage Association or Federal Home Loan Mortgage Corporation;
27.12however, such other criteria must be verified through reasonably reliable methods and
27.13documentation. The mortgage originator's analysis of the borrower's reasonable ability
27.14to repay may include, but is not limited to, consideration of the following items, if
27.15verified: (1) the borrower's current and expected income; (2) current and expected cash
27.16flow; (3) net worth and other financial resources other than the consumer's equity in the
27.17dwelling that secures the loan; (4) current financial obligations; (5) property taxes and
27.18insurance; (6) assessments on the property; (7) employment status; (8) credit history; (9)
27.19debt-to-income ratio; (10) credit scores; (11) tax returns; (12) pension statements; and
27.20(13) employment payment records, provided that no mortgage originator shall disregard
27.21facts and circumstances that indicate that the financial or other information submitted by
27.22the consumer is inaccurate or incomplete. A statement by the borrower to the residential
27.23mortgage originator or exempt person of the borrower's income and resources or sole
27.24reliance on any single item listed above is not sufficient to establish the existence of the
27.25income or resources when verifying the reasonable ability to pay.
27.26 (25) engage in "churning." As used in this section, "churning" means knowingly or
27.27intentionally making, providing, or arranging for a residential mortgage loan when the
27.28new residential mortgage loan does not provide a reasonable, tangible net benefit to the
27.29borrower considering all of the circumstances including the terms of both the new and
27.30refinanced loans, the cost of the new loan, and the borrower's circumstances;
27.31 (26) the first time a residential mortgage originator orally informs a borrower of the
27.32anticipated or actual periodic payment amount for a first-lien residential mortgage loan
27.33which does not include an amount for payment of property taxes and hazard insurance,
27.34the residential mortgage originator must inform the borrower that an additional amount
27.35will be due for taxes and insurance and, if known, disclose to the borrower the amount of
27.36the anticipated or actual periodic payments for property taxes and hazard insurance. This
28.1same oral disclosure must be made each time the residential mortgage originator orally
28.2informs the borrower of a different anticipated or actual periodic payment amount change
28.3from the amount previously disclosed. A residential mortgage originator need not make
28.4this disclosure concerning a refinancing loan if the residential mortgage originator knows
28.5that the borrower's existing loan that is anticipated to be refinanced does not have an
28.6escrow account; or
28.7 (27) make, provide, or arrange for a residential mortgage loan, other than a reverse
28.8mortgage pursuant to United States Code, title 15, chapter 41, if the borrower's compliance
28.9with any repayment option offered pursuant to the terms of the loan will result in negative
28.10amortization during any six-month period.
28.11 (b) Paragraph (a), clauses (24) through (27), do not apply to a state or federally
28.12chartered bank, savings bank, or credit union, an institution chartered by Congress under
28.13the Farm Credit Act, or to a person making, providing, or arranging a residential mortgage
28.14loan originated or purchased by a state agency or a tribal or local unit of government. This
28.15paragraph supersedes any inconsistent provision of this chapter.
28.16 Sec. 10. Minnesota Statutes 2008, section 60A.124, is amended to read:
28.17
60A.124 INDEPENDENT AUDIT.
28.18The audit report of the independent certified public accountant that performs the
28.19audit of an insurer's annual statement as required under section
60A.129new text begin 60A.1291new text end ,
28.20subdivision 3new text begin 2new text end
, paragraph (a), should contain a statement as to whether anything, in
28.21connection with their audit, came to their attention that caused them to believe that the
28.22insurer failed to adopt and consistently apply the valuation procedure as required by
28.23sections
60A.122 and
60A.123.
28.24 Sec. 11.
new text begin [60A.1291] ANNUAL AUDIT.new text end
28.25
new text begin Subdivision 1.new text end new text begin Definitions.new text end new text begin The definitions in this subdivision apply to this section.new text end
28.26
new text begin (a) "Accountant" and "independent public accountant" mean an independent certified new text end
28.27
new text begin public accountant or accounting firm in good standing with the American Institute of new text end
28.28
new text begin Certified Public Accountants and in all states in which the accountant or firm is licensed new text end
28.29
new text begin or is required to be licensed to practice. For Canadian and British companies, the term new text end
28.30
new text begin means a Canadian-chartered or British-chartered accountant.new text end
28.31
new text begin (b) "Audit committee" means a committee or equivalent body established by the new text end
28.32
new text begin board of directors of an entity for the purpose of overseeing the accounting and financial new text end
28.33
new text begin reporting processes of an insurer or group of insurers, and audits of financial statements of new text end
28.34
new text begin the insurer or group of insurers. The audit committee of any entity that controls a group of new text end
29.1
new text begin insurers may be deemed to be the audit committee for one or more of these controlled new text end
29.2
new text begin insurers solely for the purposes of this section at the election of the controlling person new text end
29.3
new text begin under subdivision 15, paragraph (e). If an audit committee is not designated by the insurer, new text end
29.4
new text begin the insurer's entire board of directors constitutes the audit committee.new text end
29.5
new text begin (c) "Indemnification" means an agreement of indemnity or a release from liability new text end
29.6
new text begin where the intent or effect is to shift or limit in any manner the potential liability of the new text end
29.7
new text begin person or firm for failure to adhere to applicable auditing or professional standards, new text end
29.8
new text begin whether or not resulting in part from knowing of other misrepresentations made by the new text end
29.9
new text begin insurer or its representatives.new text end
29.10
new text begin (d) "Independent board member" has the same meaning as described in subdivision new text end
29.11
new text begin 15, paragraph (c).new text end
29.12
new text begin (e) "Internal control over financial reporting" means a process effected by an entity's new text end
29.13
new text begin board of directors, management and other personnel designed to provide reasonable new text end
29.14
new text begin assurance regarding the reliability of the financial statements, for example, those items new text end
29.15
new text begin specified in subdivision 4, paragraphs (a), clauses (2) to (6), (b), and (c), and includes new text end
29.16
new text begin those policies and procedures that:new text end
29.17
new text begin (1) pertain to the maintenance of records that, in reasonable detail, accurately and new text end
29.18
new text begin fairly reflect the transactions and dispositions of assets;new text end
29.19
new text begin (2) provide reasonable assurance that transactions are recorded as necessary to permit new text end
29.20
new text begin preparation of the financial statements, for example, those items specified in subdivision 4, new text end
29.21
new text begin paragraphs (a), clauses (2) to (6), (b), and (c), and that receipts and expenditures are being new text end
29.22
new text begin made only in accordance with authorizations of management and directors; andnew text end
29.23
new text begin (3) provide reasonable assurance regarding prevention or timely detection of new text end
29.24
new text begin unauthorized acquisition, use or disposition of assets that could have a material effect on new text end
29.25
new text begin the financial statements, for example, those items specified in subdivision 4, paragraphs new text end
29.26
new text begin (a), clauses (2) to (6), (b), and (c).new text end
29.27
new text begin (f) "SEC" means the United States Securities and Exchange Commission.new text end
29.28
new text begin (g) "Section 404" means Section 404 of the Sarbanes-Oxley Act of 2002 and the new text end
29.29
new text begin SEC's rules and regulations promulgated under it.new text end
29.30
new text begin (h) "Section 404 report" means management's report on "internal control over new text end
29.31
new text begin financial reporting" as defined by the SEC and the related attestation report of the new text end
29.32
new text begin independent certified public accountant as described in paragraph (a).new text end
29.33
new text begin (i) "SOX compliant entity" means an entity that either is required to be new text end
29.34
new text begin compliant with, or voluntarily is compliant with, all of the following provisions of the new text end
29.35
new text begin Sarbanes-Oxley Act of 2002: (i) the preapproval requirements of Section 201 (section new text end
29.36
new text begin 10A(i) of the Securities Exchange Act of 1934); (ii) the audit committee independence new text end
30.1
new text begin requirements of Section 301 (section 10A(m)(3) of the Securities Exchange Act of 1934); new text end
30.2
new text begin and (iii) the internal control over financial reporting requirements of Section 404 (Item new text end
30.3
new text begin 308 of SEC Regulation S-K).new text end
30.4
new text begin Subd. 2.new text end new text begin Filing requirements.new text end new text begin Every insurance company doing business in this new text end
30.5
new text begin state, including fraternal benefit societies, reciprocal exchanges, service plan corporations new text end
30.6
new text begin licensed pursuant to chapter 62C, and legal service plans licensed pursuant to chapter new text end
30.7
new text begin 62G, unless exempted by the commissioner pursuant to subdivision 9, paragraph (a), or by new text end
30.8
new text begin subdivision 18, shall have an annual audit of the financial activities of the most recently new text end
30.9
new text begin completed calendar year performed by an independent certified public accountant, and new text end
30.10
new text begin shall file the report of this audit with the commissioner on or before June 1 for the new text end
30.11
new text begin immediately preceding year ending December 31. The commissioner may require an new text end
30.12
new text begin insurer to file an audited financial report earlier than June 1 with 90 days' advance notice new text end
30.13
new text begin to the insurer.new text end
30.14
new text begin Extensions of the June 1 filing date may be granted by the commissioner for 30-day new text end
30.15
new text begin periods upon a showing by the insurer and its independent certified public accountant of new text end
30.16
new text begin the reasons for requesting the extension and a determination by the commissioner of good new text end
30.17
new text begin cause for the extension.new text end
30.18
new text begin The request for extension must be submitted in writing not less than ten days before new text end
30.19
new text begin the due date in sufficient detail to permit the commissioner to make an informed decision new text end
30.20
new text begin with respect to the requested extension.new text end
30.21
new text begin If an extension is granted in accordance with this subdivision, a similar extension of new text end
30.22
new text begin 30 days is granted to the filing of management's report of internal control over financial new text end
30.23
new text begin reporting.new text end
30.24
new text begin Every insurer required to file an annual audited financial report pursuant to this new text end
30.25
new text begin subdivision shall designate a group of individuals as constituting its audit committee. The new text end
30.26
new text begin audit committee of an entity that controls an insurer may be deemed to be the insurer's new text end
30.27
new text begin audit committee for purposes of this subdivision at the election of the controlling person.new text end
30.28
new text begin Subd. 3.new text end new text begin Exemptions.new text end new text begin Foreign and alien insurers filing audited financial reports in new text end
30.29
new text begin another state under the other state's requirements of audited financial reports which have new text end
30.30
new text begin been found by the commissioner to be substantially similar to these requirements are new text end
30.31
new text begin exempt from this subdivision if a copy of the audited financial report, communication of new text end
30.32
new text begin internal control related matters noted in an audit, accountant's letter of qualifications, and new text end
30.33
new text begin report on significant deficiencies in internal controls, which are filed with the other state, new text end
30.34
new text begin are filed with the commissioner in accordance with the filing dates specified in subdivision new text end
30.35
new text begin 2 (Canadian insurers may submit accountants' reports as filed with the Canadian Dominion new text end
30.36
new text begin Department of Insurance); and a copy of any notification of adverse financial condition new text end
31.1
new text begin report filed with the other state is filed with the commissioner within the time specified new text end
31.2
new text begin in subdivision 11. Foreign or alien insurers required to file management's report of new text end
31.3
new text begin internal control over financial reporting in another state are exempt from filing the report new text end
31.4
new text begin in this state provided the other state has substantially similar reporting requirements and new text end
31.5
new text begin the report is filed with the commissioner of the other state within the time specified. new text end
31.6
new text begin This subdivision does not prohibit or in any way limit the commissioner from ordering, new text end
31.7
new text begin conducting, and performing examinations of insurers under the authority of this chapter.new text end
31.8
new text begin Subd. 4.new text end new text begin Contents of annual audit; financial report.new text end new text begin (a) The annual audited new text end
31.9
new text begin financial report must report, in conformity with statutory accounting practices required new text end
31.10
new text begin or permitted by the commissioner of insurance of the state of domicile, the financial new text end
31.11
new text begin position of the insurer as of the end of the most recent calendar year and the results of new text end
31.12
new text begin its operations, cash flows, and changes in capital and surplus for the year ended. The new text end
31.13
new text begin annual audited financial report must include:new text end
31.14
new text begin (1) a report of an independent certified public accountant;new text end
31.15
new text begin (2) a balance sheet reporting admitted assets, liabilities, capital, and surplus;new text end
31.16
new text begin (3) a statement of operations;new text end
31.17
new text begin (4) a statement of cash flows;new text end
31.18
new text begin (5) a statement of changes in capital and surplus; andnew text end
31.19
new text begin (6) notes to the financial statements.new text end
31.20
new text begin (b) The notes required under paragraph (a) are those required by the appropriate new text end
31.21
new text begin National Association of Insurance Commissioners (NAIC) annual statement instructions new text end
31.22
new text begin and National Association of Insurance Commissioners Accounting Practices and new text end
31.23
new text begin Procedures Manual and include reconciliation of differences, if any, between the audited new text end
31.24
new text begin statutory financial statements and the annual statement filed under section 60A.13, new text end
31.25
new text begin subdivision 1, with a written description of the nature of these differences.new text end
31.26
new text begin (c) The financial statements included in the audited financial report must be prepared new text end
31.27
new text begin in a form and using language and groupings substantially the same as the relevant sections new text end
31.28
new text begin of the annual statement of the insurer filed with the commissioner. The financial statement new text end
31.29
new text begin must be comparative, presenting the amounts as of December 31 of the current year and new text end
31.30
new text begin the amounts as of the immediately preceding December 31. In the first year in which new text end
31.31
new text begin an insurer is required to file an audited financial report, the comparative data may be new text end
31.32
new text begin omitted. The amounts may be rounded to the nearest $1,000, and all immaterial amounts new text end
31.33
new text begin may be combined.new text end
31.34
new text begin Subd. 5.new text end new text begin Designation of independent certified public accountant.new text end new text begin Each insurer new text end
31.35
new text begin required by this section to file an annual audited financial report must notify the new text end
31.36
new text begin commissioner in writing of the name and address of the independent certified public new text end
32.1
new text begin accountant or accounting firm retained to conduct the annual audit within 60 days after new text end
32.2
new text begin becoming subject to the annual audit requirement. The insurer shall obtain from the new text end
32.3
new text begin accountant a letter which states that the accountant is aware of the provisions that relate new text end
32.4
new text begin to accounting and financial matters in the insurance laws and the rules of the insurance new text end
32.5
new text begin regulatory authority of the state of domicile. The letter shall affirm that the accountant will new text end
32.6
new text begin express an opinion on the financial statements in terms of their conformity to the statutory new text end
32.7
new text begin accounting practices prescribed or otherwise permitted by that insurance regulatory new text end
32.8
new text begin authority, specifying the exceptions believed to be appropriate. A copy of the accountant's new text end
32.9
new text begin letter shall be filed with the commissioner.new text end
32.10
new text begin Subd. 6.new text end new text begin Report of disagreements.new text end new text begin If an accountant who was the accountant for new text end
32.11
new text begin the immediately preceding filed audited financial report is dismissed or resigns, the new text end
32.12
new text begin insurer shall notify the commissioner of this event within five business days. Within new text end
32.13
new text begin ten business days of this notification, the insurer shall also furnish the commissioner new text end
32.14
new text begin with a separate letter stating whether in the 24 months preceding this event there were new text end
32.15
new text begin any disagreements with the former accountant on any matter of accounting principles or new text end
32.16
new text begin practices, financial statement disclosure, or auditing scope or procedure, which, if not new text end
32.17
new text begin resolved to the satisfaction of the former accountant, would have caused that person to new text end
32.18
new text begin make reference to the subject matter of the disagreement in connection with the opinion new text end
32.19
new text begin on the financial statements. The disagreements required to be reported in response to this new text end
32.20
new text begin subdivision include both those resolved to the former accountant's satisfaction and those new text end
32.21
new text begin not resolved to the former accountant's satisfaction. Disagreements contemplated by this new text end
32.22
new text begin subdivision are those disagreements between personnel of the insurer responsible for new text end
32.23
new text begin presentation of its financial statements and personnel of the accounting firm responsible new text end
32.24
new text begin for rendering its report. The insurer shall also in writing request the former accountant new text end
32.25
new text begin to furnish a letter addressed to the insurer stating whether the accountant agrees with new text end
32.26
new text begin the statements contained in the insurer's letter and, if not, stating the reasons for any new text end
32.27
new text begin disagreement. The insurer shall furnish this responsive letter from the former accountant new text end
32.28
new text begin to the commissioner together with its own.new text end
32.29
new text begin Subd. 7.new text end new text begin Qualifications of independent certified public accountant.new text end new text begin (a) The new text end
32.30
new text begin commissioner shall not recognize any person or firm as a qualified independent certified new text end
32.31
new text begin public accountant that is not in good standing with the American Institute of Certified new text end
32.32
new text begin Public Accountants and in all states in which the accountant is licensed or is required new text end
32.33
new text begin to be licensed to practice, or for a Canadian or British company, that is not a chartered new text end
32.34
new text begin accountant. Except as otherwise provided, an independent certified public accountant must new text end
32.35
new text begin be recognized as qualified as long as the person conforms to the standards of the person's new text end
32.36
new text begin profession, as contained in the Code of Professional Conduct of the American Institute new text end
33.1
new text begin of Certified Public Accountants and the Code of Professional Conduct of the Minnesota new text end
33.2
new text begin Board of Public Accountancy or similar code and the person is properly licensed in good new text end
33.3
new text begin standing with all required state boards of accountancy.new text end
33.4
new text begin (b) The lead or coordinating audit partner, having primary responsibility for the new text end
33.5
new text begin audit, may not act in that capacity for more than five consecutive years. The person shall new text end
33.6
new text begin be disqualified from acting in that or a similar capacity for the same company or its new text end
33.7
new text begin insurance subsidiaries or affiliates for a period of five consecutive years. An insurer may new text end
33.8
new text begin make application to the commissioner for relief from this rotation requirement on the new text end
33.9
new text begin basis of unusual circumstances. This application must be made at least 30 days before new text end
33.10
new text begin the end of the calendar year. The commissioner may consider the following factors in new text end
33.11
new text begin determining if the relief should be granted:new text end
33.12
new text begin (1) number of partners, expertise of the partners, or the number of insurance clients new text end
33.13
new text begin in the currently registered firm;new text end
33.14
new text begin (2) premium volume of the insurer; ornew text end
33.15
new text begin (3) number of jurisdictions in which the insurer transacts business.new text end
33.16
new text begin The insurer shall file, with its annual statement filing, the approval for relief from this new text end
33.17
new text begin paragraph with the states that it is licensed in or doing business in and with the NAIC. If new text end
33.18
new text begin the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the new text end
33.19
new text begin approval in an electronic format acceptable to the NAIC.new text end
33.20
new text begin (c) The commissioner shall not recognize as a qualified independent certified public new text end
33.21
new text begin accountant, nor accept an annual audited financial report, prepared in whole or in part by new text end
33.22
new text begin an accountant who provides to an insurer, contemporaneously with the audit, the following new text end
33.23
new text begin nonaudit services:new text end
33.24
new text begin (1) bookkeeping or other services related to the accounting records or financial new text end
33.25
new text begin statements of the insurer;new text end
33.26
new text begin (2) financial information systems design and implementation;new text end
33.27
new text begin (3) appraisal or valuation services, fairness opinions, or contribution in-kind reports;new text end
33.28
new text begin (4) actuarially oriented advisory services involving the determination of amounts new text end
33.29
new text begin recorded in the financial statements. The accountant may assist an insurer in understanding new text end
33.30
new text begin the methods, assumptions, and inputs used in the determination of amounts recorded in the new text end
33.31
new text begin financial statement only if it is reasonable to conclude that the services provided will not new text end
33.32
new text begin be subject to audit procedures during an audit of the insurer's financial statements. An new text end
33.33
new text begin accountant's actuary may also issue an actuarial opinion or certification on an insurer's new text end
33.34
new text begin reserves if the following conditions have been met:new text end
33.35
new text begin (i) neither the accountant nor the accountant's actuary has performed any new text end
33.36
new text begin management functions or made any management decisions;new text end
34.1
new text begin (ii) the insurer has competent personnel, or engages a third-party actuary, to estimate new text end
34.2
new text begin the loss reserves for which management takes responsibility; andnew text end
34.3
new text begin (iii) the accountant's actuary tests the reasonableness of the reserves after the new text end
34.4
new text begin insurer's management has determined the amount of the loss reserves;new text end
34.5
new text begin (5) internal audit outsourcing services;new text end
34.6
new text begin (6) management functions or human resources;new text end
34.7
new text begin (7) broker or dealer, investment adviser, or investment banking services;new text end
34.8
new text begin (8) legal services or expert services unrelated to the audit; andnew text end
34.9
new text begin (9) any other services that the commissioner determines, by rule, are impermissible.new text end
34.10
new text begin (d) The commissioner shall not recognize as a qualified independent certified public new text end
34.11
new text begin accountant, nor accept any audited financial report, prepared in whole or in part by any new text end
34.12
new text begin natural person who has been convicted of fraud, bribery, a violation of the Racketeer new text end
34.13
new text begin Influenced and Corrupt Organizations Act, United States Code, title 18, sections 1961 to new text end
34.14
new text begin 1968, or any dishonest conduct or practices under federal or state law, has been found to new text end
34.15
new text begin have violated the insurance laws of this state with respect to any previous reports submitted new text end
34.16
new text begin under this section, or has demonstrated a pattern or practice of failing to detect or disclose new text end
34.17
new text begin material information in previous reports filed under the provisions of this section.new text end
34.18
new text begin (e) The commissioner, after notice and hearing under chapter 14, may find that new text end
34.19
new text begin the accountant is not qualified for purposes of expressing an opinion on the financial new text end
34.20
new text begin statements in the annual audited financial report. The commissioner may require the new text end
34.21
new text begin insurer to replace the accountant with another whose relationship with the insurer is new text end
34.22
new text begin qualified within the meaning of this section.new text end
34.23
new text begin Subd. 8.new text end new text begin Exemptions to qualifications of certified public accountant.new text end new text begin (a) Insurers new text end
34.24
new text begin having direct written and assumed premiums of less than $100,000,000 in any calendar new text end
34.25
new text begin year may request an exemption from subdivision 7, paragraph (c). The insurer shall new text end
34.26
new text begin file with the commissioner a written statement discussing the reasons why the insurer new text end
34.27
new text begin should be exempt from these provisions. If the commissioner finds, upon review of this new text end
34.28
new text begin statement, that compliance with this section would constitute a financial or organizational new text end
34.29
new text begin hardship upon the insurer, an exemption may be granted.new text end
34.30
new text begin (b) A qualified independent certified public accountant who performs the audit new text end
34.31
new text begin may engage in other nonaudit services, including tax services, that are not described in new text end
34.32
new text begin subdivision 7, paragraph (c), only if the activity is approved in advance by the audit new text end
34.33
new text begin committee, in accordance with paragraph (c).new text end
34.34
new text begin (c) All auditing services and nonaudit services provided to an insurer by the qualified new text end
34.35
new text begin independent certified public accountant of the insurer must be preapproved by the audit new text end
34.36
new text begin committee. The preapproval requirement is waived with respect to nonaudit services if new text end
35.1
new text begin the insurer is a SOX compliant entity or a direct or indirect wholly owned subsidiary of a new text end
35.2
new text begin SOX compliant entity or:new text end
35.3
new text begin (1) the aggregate amount of all such nonaudit services provided to the insurer new text end
35.4
new text begin constitutes not more than five percent of the total amount of fees paid by the insurer to new text end
35.5
new text begin its qualified independent certified public accountant during the fiscal year in which the new text end
35.6
new text begin nonaudit services are provided;new text end
35.7
new text begin (2) the services were not recognized by the insurer at the time of the engagement to new text end
35.8
new text begin be nonaudit services; andnew text end
35.9
new text begin (3) the services are promptly brought to the attention of the audit committee and new text end
35.10
new text begin approved before the completion of the audit by the audit committee or by one or more new text end
35.11
new text begin members of the audit committee who are the members of the board of directors to whom new text end
35.12
new text begin authority to grant such approvals has been delegated by the audit committee.new text end
35.13
new text begin (d) The audit committee may delegate to one or more designated members of the new text end
35.14
new text begin audit committee the authority to grant the preapprovals required by paragraph (c). The new text end
35.15
new text begin decisions of any member to whom this authority is delegated must be presented to the full new text end
35.16
new text begin audit committee at each of its scheduled meetings.new text end
35.17
new text begin (e) The commissioner shall not recognize an independent certified public accountant new text end
35.18
new text begin as qualified for a particular insurer if a member of the board, president, chief executive new text end
35.19
new text begin officer, controller, chief financial officer, chief accounting officer, or any person serving in new text end
35.20
new text begin an equivalent position for that insurer, was employed by the independent certified public new text end
35.21
new text begin accountant and participated in the audit of that insurer during the one-year period preceding new text end
35.22
new text begin the date that the most current statutory opinion is due. This paragraph applies only to new text end
35.23
new text begin partners and senior managers involved in the audit. An insurer may make application to new text end
35.24
new text begin the commissioner for relief from this paragraph on the basis of unusual circumstances.new text end
35.25
new text begin (f) The insurer shall file, with its annual statement filing, the approval for relief with new text end
35.26
new text begin the states that it is licensed in or doing business in and the NAIC. If the nondomestic state new text end
35.27
new text begin accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic new text end
35.28
new text begin format acceptable to the NAIC.new text end
35.29
new text begin Subd. 9.new text end new text begin Consolidated or combined audits.new text end new text begin (a) The commissioner may allow new text end
35.30
new text begin an insurer to file consolidated or combined audited financial statements required by new text end
35.31
new text begin subdivision 2, in lieu of separate annual audited financial statements, where it can be new text end
35.32
new text begin demonstrated that an insurer is part of a group of insurance companies that has a pooling new text end
35.33
new text begin or 100 percent reinsurance agreement which substantially affects the solvency and new text end
35.34
new text begin integrity of the reserves of the insurer and the insurer cedes all of its direct and assumed new text end
35.35
new text begin business to the pool. An affiliated insurance company not meeting these requirements may new text end
35.36
new text begin be included in the consolidated or combined audited financial statements, if the company's new text end
36.1
new text begin total admitted assets are less than five percent of the consolidated group's total admitted new text end
36.2
new text begin assets. If these circumstances exist, then the company may file a written application to new text end
36.3
new text begin file consolidated or combined audited financial statements. This application must be for new text end
36.4
new text begin a specified period.new text end
36.5
new text begin (b) Upon written application by a domestic insurer, the commissioner may new text end
36.6
new text begin authorize the domestic insurer to include additional affiliated insurance companies in the new text end
36.7
new text begin consolidated or combined audited financial statements. A foreign insurer must obtain the new text end
36.8
new text begin prior written authorization of the commissioner of its state of domicile in order to submit new text end
36.9
new text begin an application for authority to file consolidated or combined audited financial statements. new text end
36.10
new text begin This application must be for a specified period.new text end
36.11
new text begin (c) A consolidated annual audit filing must include a columnar consolidated or new text end
36.12
new text begin combining worksheet. Amounts shown on the audited consolidated or combined financial new text end
36.13
new text begin statement must be shown on the worksheet. Amounts for each insurer must be stated new text end
36.14
new text begin separately. Noninsurance operations may be shown on the worksheet on a combined or new text end
36.15
new text begin individual basis. Explanations of consolidating or eliminating entries must be shown on new text end
36.16
new text begin the worksheet. A reconciliation of any differences between the amounts shown in the new text end
36.17
new text begin individual insurer columns of the worksheet and comparable amounts shown on the annual new text end
36.18
new text begin statement of the insurers must be included on the worksheet.new text end
36.19
new text begin Subd. 10.new text end new text begin Scope of audit and report of independent certified public accountant.new text end
36.20
new text begin Financial statements furnished pursuant to subdivision 4 must be examined by an new text end
36.21
new text begin independent certified public accountant. The audit of the insurer's financial statements new text end
36.22
new text begin must be conducted in accordance with generally accepted auditing standards. In new text end
36.23
new text begin accordance with AICPA Statement on Auditing Standards (SAS) No. 109, Understanding new text end
36.24
new text begin the Entity and its Environment and Assessing the Risks of Material Misstatement, or its new text end
36.25
new text begin replacement, the independent certified public accountant should obtain an understanding new text end
36.26
new text begin of internal control sufficient to plan the audit. To the extent required by SAS No. 109, new text end
36.27
new text begin for those insurers required to file a management's report of internal control over financial new text end
36.28
new text begin reporting pursuant to subdivision 17, the independent certified public accountant should new text end
36.29
new text begin consider (as that term is defined in SAS No. 102, Defining Professional Requirements in new text end
36.30
new text begin Statements on Auditing Standards or its replacement) the most recently available report in new text end
36.31
new text begin planning and performing the audit of the statutory financial statements. Consideration new text end
36.32
new text begin should be given to other procedures illustrated in the Financial Condition Examiners new text end
36.33
new text begin Handbook promulgated by the National Association of Insurance Commissioners as the new text end
36.34
new text begin independent certified public accountant deems necessary.new text end
36.35
new text begin Subd. 11.new text end new text begin Notification of adverse financial condition.new text end new text begin The insurer required to new text end
36.36
new text begin furnish the annual audited financial report shall require the independent certified public new text end
37.1
new text begin accountant to provide written notice within five business days to the board of directors of new text end
37.2
new text begin the insurer or its audit committee of any determination by that independent certified public new text end
37.3
new text begin accountant that the insurer has materially misstated its financial condition as reported to new text end
37.4
new text begin the commissioner as of the balance sheet date currently under audit or that the insurer does new text end
37.5
new text begin not meet the minimum capital and surplus requirement of sections new text end
new text begin , new text end
new text begin , and new text end
37.6
new text begin as of that date. An insurer required to file an annual audited financial report who new text end
37.7
new text begin received a notification of adverse financial condition from the accountant shall file a new text end
37.8
new text begin copy of the notification with the commissioner within five business days of the receipt new text end
37.9
new text begin of the notification. The insurer shall provide the independent certified public accountant new text end
37.10
new text begin making the notification with evidence of the report being furnished to the commissioner. new text end
37.11
new text begin If the independent certified public accountant fails to receive the evidence within the new text end
37.12
new text begin required five-day period, the independent certified public accountant shall furnish to the new text end
37.13
new text begin commissioner a copy of the notification to the board of directors or its audit committee new text end
37.14
new text begin within the next five business days. No independent certified public accountant is liable in new text end
37.15
new text begin any manner to any person for any statement made in connection with this subdivision if new text end
37.16
new text begin the statement is made in good faith in compliance with this subdivision. If the accountant new text end
37.17
new text begin becomes aware of facts which might have affected the audited financial report after new text end
37.18
new text begin the date it was filed, the accountant shall take the action prescribed by AU section new text end
37.19
new text begin 561, Subsequent Discovery of Facts Existing at the Date of the Auditor's Report of the new text end
37.20
new text begin Professional Standards issued by the American Institute of Certified Public Accountants, new text end
37.21
new text begin or its replacement.new text end
37.22
new text begin Subd. 12.new text end new text begin Communication of internal control related matters noted in an new text end
37.23
new text begin audit.new text end new text begin In addition to the annual audited financial report, each insurer shall furnish the new text end
37.24
new text begin commissioner with a written communication as to any unremediated material weaknesses new text end
37.25
new text begin in its internal control over financial reporting noted during the audit. The communication new text end
37.26
new text begin must be prepared by the accountant within 60 days after the filing of the annual audited new text end
37.27
new text begin financial report, and must contain a description of any unremediated material weakness, as new text end
37.28
new text begin the term material weakness is defined by SAS No. 115, Communicating Internal Control new text end
37.29
new text begin Related Matters Identified in an Audit, as of December 31 immediately preceding so as new text end
37.30
new text begin to coincide with the audited financial report discussed in subdivision 2 in the insurer's new text end
37.31
new text begin internal control over financial reporting noted by the accountant during the course of their new text end
37.32
new text begin audit of the financial statements. If no unremediated material weaknesses were noted, the new text end
37.33
new text begin communication should so state.new text end
37.34
new text begin The insurer is required to provide a description of remedial actions taken or new text end
37.35
new text begin proposed to correct unremediated material weaknesses, if the actions are not described in new text end
37.36
new text begin the accountant's communication.new text end
38.1
new text begin Subd. 13.new text end new text begin Accountant's letter of qualification.new text end new text begin The accountant shall furnish the new text end
38.2
new text begin insurer in connection with, and for inclusion in, the filing of the annual audited financial new text end
38.3
new text begin report, a letter stating that the accountant is independent with respect to the insurer and new text end
38.4
new text begin conforms to the standards of the accountant's profession as contained in the Code of new text end
38.5
new text begin Professional Conduct of the American Institute of Certified Public Accountants and the new text end
38.6
new text begin Code of Professional Conduct of the Minnesota Board of Accountancy or similar code; new text end
38.7
new text begin the background and experience in general, and the experience in audits of insurers of the new text end
38.8
new text begin staff assigned to the engagement and whether each is an independent certified public new text end
38.9
new text begin accountant; that the accountant understands that the annual audited financial report and the new text end
38.10
new text begin opinion on it will be filed in compliance with this statute and that the commissioner will new text end
38.11
new text begin be relying on this information in the monitoring and regulation of the financial position of new text end
38.12
new text begin insurers; that the accountant consents to the requirements of subdivision 14 and that the new text end
38.13
new text begin accountant consents and agrees to make available for review by the commissioner, or the new text end
38.14
new text begin commissioner's designee or appointed agent, the work papers, as defined in subdivision new text end
38.15
new text begin 14; a representation that the accountant is properly licensed in good standing by the new text end
38.16
new text begin appropriate state licensing authorities and is a member in good standing in the American new text end
38.17
new text begin Institute of Certified Public Accountants; and a representation that the accountant complies new text end
38.18
new text begin with subdivision 7. Nothing in this section prohibits the accountant from utilizing staff new text end
38.19
new text begin the accountant deems appropriate where use is consistent with the standards prescribed new text end
38.20
new text begin by generally accepted auditing standards.new text end
38.21
new text begin Subd. 14.new text end new text begin Availability and maintenance of independent certified public new text end
38.22
new text begin accountants' work papers.new text end new text begin Work papers are the records kept by the independent certified new text end
38.23
new text begin public accountant of the procedures followed, tests performed, information obtained, and new text end
38.24
new text begin conclusions reached pertinent to the independent certified public accountant's audit of the new text end
38.25
new text begin financial statements of an insurer. Work papers may include audit planning documents, new text end
38.26
new text begin work programs, analyses, memoranda, letters of confirmation and representation, new text end
38.27
new text begin management letters, abstracts of company documents, and schedules or commentaries new text end
38.28
new text begin prepared or obtained by the independent certified public accountant in the course of the new text end
38.29
new text begin audit of the financial statements of an insurer and that support the accountant's opinion. new text end
38.30
new text begin Every insurer required to file an audited financial report shall require the accountant, new text end
38.31
new text begin through the insurer, to make available for review by the examiners the work papers new text end
38.32
new text begin prepared in the conduct of the audit and any communications related to the audit between new text end
38.33
new text begin the accountant and the insurer. The work papers must be made available at the offices of new text end
38.34
new text begin the insurer, at the offices of the commissioner, or at any other reasonable place designated new text end
38.35
new text begin by the commissioner. The insurer shall require that the accountant retain the audit work new text end
38.36
new text begin papers and communications until the commissioner has filed a report on examination new text end
39.1
new text begin covering the period of the audit but no longer than seven years after the period reported new text end
39.2
new text begin upon, provided retention of the working papers beyond the seven years is not required by new text end
39.3
new text begin other professional or regulatory requirements. In the conduct of the periodic review by new text end
39.4
new text begin the examiners, it must be agreed that photocopies of pertinent audit work papers may be new text end
39.5
new text begin made and retained by the commissioner. These copies shall be part of the commissioner's new text end
39.6
new text begin work papers and must be given the same confidentiality as other examination work papers new text end
39.7
new text begin generated by the commissioner.new text end
39.8
new text begin Subd. 15.new text end new text begin Requirements for audit committee.new text end new text begin (a) The audit committee must new text end
39.9
new text begin be directly responsible for the appointment, compensation, and oversight of the work new text end
39.10
new text begin of any accountant including resolution of disagreements between management and the new text end
39.11
new text begin accountant regarding financial reporting for the purpose of preparing or issuing the audited new text end
39.12
new text begin financial report or related work pursuant to this regulation. Each accountant shall report new text end
39.13
new text begin directly to the audit committee.new text end
39.14
new text begin (b) Each member of the audit committee must be a member of the board of directors new text end
39.15
new text begin of the insurer or a member of the board of directors of an entity elected pursuant to new text end
39.16
new text begin paragraph (e) and subdivision 1, paragraph (b).new text end
39.17
new text begin (c) In order to be considered independent for purposes of this section, a member of new text end
39.18
new text begin the audit committee may not, other than in his or her capacity as a member of the audit new text end
39.19
new text begin committee, the board of directors, or any other board committee, accept any consulting, new text end
39.20
new text begin advisory, or other compensatory fee from the entity or be an affiliated person of the entity new text end
39.21
new text begin or any subsidiary of the entity. However, if law requires board participation by otherwise new text end
39.22
new text begin nonindependent members, that law shall prevail and such members may participate in the new text end
39.23
new text begin audit committee and be designated as independent for audit committee purposes, unless new text end
39.24
new text begin they are an officer or employee of the insurer or one of its affiliates.new text end
39.25
new text begin (d) If a member of the audit committee ceases to be independent for reasons outside new text end
39.26
new text begin the member's reasonable control, that person, with notice by the responsible entity to the new text end
39.27
new text begin state, may remain an audit committee member of the responsible entity until the earlier of new text end
39.28
new text begin the next annual meeting of the responsible entity or one year from the occurrence of the new text end
39.29
new text begin event that caused the member to be no longer independent.new text end
39.30
new text begin (e) To exercise the election of the controlling person to designate the audit committee new text end
39.31
new text begin for purposes of this section, the ultimate controlling person shall provide written notice to new text end
39.32
new text begin the commissioners of the affected insurers. Notification must be made timely before the new text end
39.33
new text begin issuance of the statutory audit report and include a description of the basis for the election. new text end
39.34
new text begin The election can be changed through notice to the commissioner by the insurer, which new text end
39.35
new text begin shall include a description of the basis for the change. The election remains in effect for new text end
39.36
new text begin perpetuity, until rescinded.new text end
40.1
new text begin (f) The audit committee shall require the accountant that performs for an insurer any new text end
40.2
new text begin audit required by this section to timely report to the audit committee in accordance with new text end
40.3
new text begin the requirements of SAS No. 114, The Auditor's Communication with Those Charged new text end
40.4
new text begin with Governance, including:new text end
40.5
new text begin (1) all significant accounting policies and material permitted practices;new text end
40.6
new text begin (2) all material alternative treatments of financial information within statutory new text end
40.7
new text begin accounting principles that have been discussed with management officials of the insurer, new text end
40.8
new text begin ramifications of the use of the alternative disclosures and treatments, and the treatment new text end
40.9
new text begin preferred by the accountant; and new text end
40.10
new text begin (3) other material written communications between the accountant and the new text end
40.11
new text begin management of the insurer, such as any management letter or schedule of unadjusted new text end
40.12
new text begin differences.new text end
40.13
new text begin (g) If an insurer is a member of an insurance holding company system, the reports new text end
40.14
new text begin required by paragraph (f) may be provided to the audit committee on an aggregate basis new text end
40.15
new text begin for insurers in the holding company system, provided that any substantial differences new text end
40.16
new text begin among insurers in the system are identified to the audit committee.new text end
40.17
new text begin (h) The proportion of independent audit committee members shall meet or exceed new text end
40.18
new text begin the following criteria:new text end
40.19
new text begin (1) for companies with prior calendar year direct written and assumed premiums $0 new text end
40.20
new text begin to $300,000,000, no minimum requirements;new text end
40.21
new text begin (2) for companies with prior calendar year direct written and assumed premiums new text end
40.22
new text begin over $300,000,000 to $500,000,000, majority of members must be independent; andnew text end
40.23
new text begin (3) for companies with prior calendar year direct written and assumed premiums new text end
40.24
new text begin over $500,000,000, 75 percent or more must be independent.new text end
40.25
new text begin (i) An insurer with direct written and assumed premium, excluding premiums new text end
40.26
new text begin reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less new text end
40.27
new text begin than $500,000,000 may make application to the commissioner for a waiver from the new text end
40.28
new text begin requirements of this subdivision based upon hardship. The insurer shall file, with its new text end
40.29
new text begin annual statement filing, the approval for relief from this subdivision with the states that new text end
40.30
new text begin it is licensed in or doing business in and the NAIC. If the nondomestic state accepts new text end
40.31
new text begin electronic filing with the NAIC, the insurer shall file the approval in an electronic format new text end
40.32
new text begin acceptable to the NAIC.new text end
40.33
new text begin This subdivision does not apply to foreign or alien insurers licensed in this state or new text end
40.34
new text begin an insurer that is a SOX compliant entity or a direct or indirect wholly-owned subsidiary new text end
40.35
new text begin of a SOX compliant entity.new text end
41.1
new text begin Subd. 16.new text end new text begin Conduct of insurer in connection with the preparation of required new text end
41.2
new text begin reports and documents.new text end new text begin (a) No director or officer of an insurer shall, directly or indirectly:new text end
41.3
new text begin (1) make or cause to be made a materially false or misleading statement to an new text end
41.4
new text begin accountant in connection with any audit, review, or communication required under this new text end
41.5
new text begin section; ornew text end
41.6
new text begin (2) omit to state, or cause another person to omit to state, any material fact necessary new text end
41.7
new text begin in order to make statements made, in light of the circumstances under which the statements new text end
41.8
new text begin were made, not misleading to an accountant in connection with any audit, review, or new text end
41.9
new text begin communication required under this section.new text end
41.10
new text begin (b) No officer or director of an insurer, or any other person acting under the direction new text end
41.11
new text begin thereof, shall directly or indirectly take any action to coerce, manipulate, mislead, or new text end
41.12
new text begin fraudulently influence any accountant engaged in the performance of an audit pursuant to new text end
41.13
new text begin this section if that person knew or should have known that the action, if successful, could new text end
41.14
new text begin result in rendering the insurer's financial statements materially misleading.new text end
41.15
new text begin (c) For purposes of paragraph (b), actions that, "if successful, could result in new text end
41.16
new text begin rendering the insurer's financial statements materially misleading" include, but are not new text end
41.17
new text begin limited to, actions taken at any time with respect to the professional engagement period to new text end
41.18
new text begin coerce, manipulate, mislead, or fraudulently influence an accountant:new text end
41.19
new text begin (1) to issue or reissue a report on an insurer's financial statements that is not new text end
41.20
new text begin warranted in the circumstances due to material violations of statutory accounting new text end
41.21
new text begin principles prescribed by the commissioner, generally accepted auditing standards, or new text end
41.22
new text begin other professional or regulatory standards;new text end
41.23
new text begin (2) not to perform audit, review, or other procedures required by generally accepted new text end
41.24
new text begin auditing standards or other professional standards;new text end
41.25
new text begin (3) not to withdraw an issued report; ornew text end
41.26
new text begin (4) not to communicate matters to an insurer's audit committee.new text end
41.27
new text begin Subd. 17.new text end new text begin Management's report of internal control over financial reporting.new text end
41.28
new text begin (a) Every insurer required to file an audited financial report pursuant to this section that new text end
41.29
new text begin has annual direct written and assumed premiums, excluding premiums reinsured with the new text end
41.30
new text begin Federal Crop Insurance Corporation and Federal Flood Program, of $500,000,000 or new text end
41.31
new text begin more, shall prepare a report of the insurer's or group of insurers' internal control over new text end
41.32
new text begin financial reporting, as these terms are defined in subdivision 1. The report must be filed new text end
41.33
new text begin with the commissioner along with the communication of internal control related matters new text end
41.34
new text begin noted in an audit described under subdivision 12. Management's report of internal control new text end
41.35
new text begin over financial reporting shall be as of December 31 immediately preceding.new text end
42.1
new text begin (b) Notwithstanding the premium threshold in paragraph (a), the commissioner may new text end
42.2
new text begin require an insurer to file management's report of internal control over financial reporting if new text end
42.3
new text begin the insurer is in any RBC level event, or meets any one or more of the standards of an new text end
42.4
new text begin insurer deemed to be in hazardous financial condition as pursuant to sections 606.20 new text end
42.5
new text begin to 606.22.new text end
42.6
new text begin (c) An insurer or a group of insurers that is:new text end
42.7
new text begin (1) directly subject to Section 404;new text end
42.8
new text begin (2) part of a holding company system whose parent is directly subject to Section 404;new text end
42.9
new text begin (3) not directly subject to Section 404 but is a SOX compliant entity; ornew text end
42.10
new text begin (4) a member of a holding company system whose parent is not directly subject to new text end
42.11
new text begin Section 404 but is a SOX compliant entity;new text end
42.12
new text begin may file its or its parent's Section 404 report and an addendum in satisfaction of this new text end
42.13
new text begin requirement provided that those internal controls of the insurer or group of insurers new text end
42.14
new text begin having a material impact on the preparation of the insurer's or group of insurers' audited new text end
42.15
new text begin statutory financial statements, consisting of those items included in subdivision 4, new text end
42.16
new text begin paragraphs (a), clauses (2) to (6), (b), and (c), were included in the scope of the Section new text end
42.17
new text begin 404 report. The addendum shall be a positive statement by management that there are new text end
42.18
new text begin no material processes with respect to the preparation of the insurer's or group of insurers' new text end
42.19
new text begin audited statutory financial statements, consisting of those items included in subdivision 4, new text end
42.20
new text begin paragraphs (a), clauses (2) to (6), (b), and (c), excluded from the Section 404 report. If new text end
42.21
new text begin there are internal controls of the insurer or group of insurers that have a material impact on new text end
42.22
new text begin the preparation of the insurer's or group of insurers' audited statutory financial statements new text end
42.23
new text begin and those internal controls were not included in the scope of the Section 404 report, the new text end
42.24
new text begin insurer or group of insurers may either file (i) a report under this subdivision, or (ii) the new text end
42.25
new text begin Section 404 report and a report under this subdivision for those internal controls that have new text end
42.26
new text begin a material impact on the preparation of the insurer's or group of insurers' audited statutory new text end
42.27
new text begin financial statements not covered by the Section 404 report.new text end
42.28
new text begin (d) Management's report of internal control over financial reporting shall include:new text end
42.29
new text begin (1) a statement that management is responsible for establishing and maintaining new text end
42.30
new text begin adequate internal control over financial reporting;new text end
42.31
new text begin (2) a statement that management has established internal control over financial new text end
42.32
new text begin reporting and an assertion, to the best of management's knowledge and belief, after diligent new text end
42.33
new text begin inquiry, as to whether its internal control over financial reporting is effective to provide new text end
42.34
new text begin reasonable assurance regarding the reliability of financial statements in accordance with new text end
42.35
new text begin statutory accounting principles;new text end
43.1
new text begin (3) a statement that briefly describes the approach or processes by which new text end
43.2
new text begin management evaluated the effectiveness of its internal control over financial reporting;new text end
43.3
new text begin (4) a statement that briefly describes the scope of work that is included and whether new text end
43.4
new text begin any internal controls were excluded;new text end
43.5
new text begin (5) disclosure of any unremediated material weaknesses in the internal control over new text end
43.6
new text begin financial reporting identified by management as of December 31 immediately preceding. new text end
43.7
new text begin Management is not permitted to conclude that the internal control over financial reporting new text end
43.8
new text begin is effective to provide reasonable assurance regarding the reliability of financial statements new text end
43.9
new text begin in accordance with statutory accounting principles if there is one or more unremediated new text end
43.10
new text begin material weaknesses in its internal control over financial reporting;new text end
43.11
new text begin (6) a statement regarding the inherent limitations of internal control systems; andnew text end
43.12
new text begin (7) signatures of the chief executive officer and the chief financial officer or new text end
43.13
new text begin equivalent position or title.new text end
43.14
new text begin (e) Management shall document and make available upon financial condition new text end
43.15
new text begin examination the basis upon which its assertions, required in paragraph (d), are made. new text end
43.16
new text begin Management may base its assertions, in part, upon its review, monitoring, and testing of new text end
43.17
new text begin internal controls undertaken in the normal course of its activities.new text end
43.18
new text begin (1) Management has discretion as to the nature of the internal control framework new text end
43.19
new text begin used, and the nature and extent of documentation, in order to make its assertion in a new text end
43.20
new text begin cost-effective manner and, as such, may include assembly of or reference to existing new text end
43.21
new text begin documentation.new text end
43.22
new text begin (2) Management's report on internal control over financial reporting, required by new text end
43.23
new text begin paragraph (a), and any documentation provided in support of the report during the course new text end
43.24
new text begin of a financial condition examination, must be kept confidential by the Department of new text end
43.25
new text begin Commerce.new text end
43.26
new text begin Subd. 18.new text end new text begin Exemptions.new text end new text begin (a) Upon written application of any insurer, the new text end
43.27
new text begin commissioner may grant an exemption from compliance with the provisions of this new text end
43.28
new text begin section. In order to receive an exemption, an insurer must demonstrate to the satisfaction new text end
43.29
new text begin of the commissioner that compliance would constitute a financial or organizational new text end
43.30
new text begin hardship upon the insurer. An exemption may be granted at any time and from time new text end
43.31
new text begin to time for specified periods. Within ten days from the denial of an insurer's written new text end
43.32
new text begin request for an exemption, the insurer may request in writing a hearing on its application new text end
43.33
new text begin for an exemption. This hearing must be held in accordance with chapter 14. Upon written new text end
43.34
new text begin application of any insurer, the commissioner may permit an insurer to file annual audited new text end
43.35
new text begin financial reports on some basis other than a calendar year basis for a specified period. An new text end
43.36
new text begin exemption may not be granted until the insurer presents an alternative method satisfying new text end
44.1
new text begin the purposes of this section. Within ten days from a denial of a written request for an new text end
44.2
new text begin exemption, the insurer may request in writing a hearing on its application. The hearing new text end
44.3
new text begin must be held in accordance with chapter 14.new text end
44.4
new text begin (b) This section applies to all insurers, unless otherwise indicated, required to file new text end
44.5
new text begin an annual audit by subdivision 2, except insurers having less than $1,000,000 of direct new text end
44.6
new text begin written premiums in this state in any calendar year and fewer than 1,000 policyholders new text end
44.7
new text begin or certificate holders of directly written policies nationwide at the end of the calendar new text end
44.8
new text begin year, are exempt from this section for that year, unless the commissioner makes a new text end
44.9
new text begin specific finding that compliance is necessary for the commissioner to carry out statutory new text end
44.10
new text begin responsibilities, except that insurers having assumed premiums from reinsurance contracts new text end
44.11
new text begin or treaties of $1,000,000 or more are not exempt.new text end
44.12
new text begin Subd. 19.new text end new text begin Canadian and British companies.new text end new text begin (a) In the case of Canadian and new text end
44.13
new text begin British insurers, the annual audited financial report means the annual statement of total new text end
44.14
new text begin business on the form filed by these companies with their domiciliary supervision authority new text end
44.15
new text begin and duly audited by an independent chartered accountant.new text end
44.16
new text begin (b) For these insurers the letter required in subdivision 5 shall state that the new text end
44.17
new text begin accountant is aware of the requirements relating to the annual audited statement filed new text end
44.18
new text begin with the commissioner under subdivision 2, and shall affirm that the opinion expressed new text end
44.19
new text begin is in conformity with those requirements.new text end
44.20
new text begin Subd. 20.new text end new text begin Commercial mortgage loan valuation procedures.new text end new text begin A report of the new text end
44.21
new text begin independent certified public accountant that performs the audit of an insurer's annual new text end
44.22
new text begin statement as required under subdivision 2, shall be filed and contain a statement as to new text end
44.23
new text begin whether anything in connection with the audit came to the accountant's attention that new text end
44.24
new text begin caused the accountant to believe that the insurer failed to adopt and consistently apply the new text end
44.25
new text begin valuation procedures as required by sections new text end
new text begin and new text end
new text begin . new text end
44.26
new text begin Subd. 21.new text end new text begin Examinations.new text end new text begin (a) The commissioner or a designated representative shall new text end
44.27
new text begin determine the nature, scope, and frequency of examinations under this section conducted new text end
44.28
new text begin by examiners under section new text end
new text begin . These examinations may cover all aspects of the new text end
44.29
new text begin insurer's assets, condition, affairs, and operations and may include and be supplemented new text end
44.30
new text begin by audit procedures performed by independent certified public accountants. Scheduling new text end
44.31
new text begin of examinations will take into account all relevant matters with respect to the insurer's new text end
44.32
new text begin condition, including results of the National Association of Insurance Commissioners, new text end
44.33
new text begin Insurance Regulatory Information Systems, changes in management, results of market new text end
44.34
new text begin conduct examinations, and audited financial reports. The type of examinations performed new text end
44.35
new text begin by examiners under this section must be compliance examinations, targeted examinations, new text end
44.36
new text begin and comprehensive examinations. new text end
45.1
new text begin (b) Compliance examinations will consist of a review of the accountant's workpapers new text end
45.2
new text begin defined under this section and a general review of the insurer's corporate affairs and new text end
45.3
new text begin insurance operations to determine compliance with the Minnesota insurance laws and new text end
45.4
new text begin the rules of the Department of Commerce. The examiners may perform alternative or new text end
45.5
new text begin additional examination procedures to supplement those performed by the accountant new text end
45.6
new text begin when the examiners determine that the procedures are necessary to verify the financial new text end
45.7
new text begin condition of the insurer.new text end
45.8
new text begin (c) Targeted examinations may cover limited areas of the insurer's operations as new text end
45.9
new text begin the commissioner may deem appropriate.new text end
45.10
new text begin (d) Comprehensive examinations will be performed when the report of the new text end
45.11
new text begin accountant as provided for in subdivision 7, paragraph (b), the notification required by new text end
45.12
new text begin subdivision 7, paragraph (c), the results of compliance or targeted examinations, or other new text end
45.13
new text begin circumstances indicate in the judgment of the commissioner or a designated representative new text end
45.14
new text begin that a complete examination of the condition and affairs of the insurer is necessary.new text end
45.15
new text begin (e) Upon completion of each targeted, compliance, or comprehensive examination, new text end
45.16
new text begin the examiner appointed by the commissioner shall make a full and true report on the new text end
45.17
new text begin results of the examination. Each report shall include a general description of the audit new text end
45.18
new text begin procedures performed by the examiners and the procedures of the accountant that new text end
45.19
new text begin the examiners may have utilized to supplement their examination procedures and the new text end
45.20
new text begin procedures that were performed by the registered independent certified public accountant new text end
45.21
new text begin if included as a supplement to the examination.new text end
45.22
new text begin Subd. 22.new text end new text begin Penalties.new text end new text begin An annual statement, report, or document related to the new text end
45.23
new text begin business of insurance must not be filed with the commissioner or issued to the public if it new text end
45.24
new text begin is signed by anyone who is represented in the instrument as an "accountant," unless the new text end
45.25
new text begin person is qualified as defined by this section. A violation of this subdivision is a violation new text end
45.26
new text begin of section new text end
new text begin and punishable in accordance with section new text end
new text begin .new text end
45.27
new text begin EFFECTIVE DATE.new text end new text begin (a) Domestic insurers retaining a certified public accountant new text end
45.28
new text begin on the effective date of this section who qualify as independent shall comply with this new text end
45.29
new text begin section for the year ending December 31, 2010, and each year thereafter unless the new text end
45.30
new text begin commissioner permits otherwise.new text end
45.31
new text begin (b) Domestic insurers not retaining a certified public accountant on the effective new text end
45.32
new text begin date of this section who qualifies as independent shall meet the following schedule for new text end
45.33
new text begin compliance unless the commissioner permits otherwise.new text end
45.34
new text begin (1) As of December 31, 2010, file with the commissioner an audited financial report.new text end
45.35
new text begin (2) For the year ending December 31, 2010, and each year thereafter, such insurers new text end
45.36
new text begin shall file with the commissioner all reports and communication required by this section.new text end
46.1
new text begin (c) Foreign insurers shall comply with this section for the year ending December 31, new text end
46.2
new text begin 2010, and each year thereafter, unless the commissioner permits otherwise.new text end
46.3
new text begin (d) The requirements of subdivision 7, paragraph (b), are in effect for audits of the new text end
46.4
new text begin year beginning January 1, 2010, and thereafter.new text end
46.5
new text begin (e) The requirements of subdivision 15 are in effect January 1, 2010. An insurer or new text end
46.6
new text begin group of insurers that is not required to have independent audit committee members or new text end
46.7
new text begin only a majority of independent audit committee members, as opposed to a supermajority, new text end
46.8
new text begin because the total written and assumed premium is below the threshold and subsequently new text end
46.9
new text begin becomes subject to one of the independence requirements due to changes in premium has new text end
46.10
new text begin one year following the year the threshold is exceeded, but not earlier than January 1, new text end
46.11
new text begin 2010, to comply with the independence requirements. Likewise, an insurer that becomes new text end
46.12
new text begin subject to one of the independence requirements as a result of a business combination new text end
46.13
new text begin has one calendar year following the date of acquisition or combination to comply with new text end
46.14
new text begin the independence requirements.new text end
46.15
new text begin (f) An insurer or group of insurers that is not required to file a report because the total new text end
46.16
new text begin written premium is below the threshold and subsequently becomes subject to the reporting new text end
46.17
new text begin requirements has two years following the year the threshold is exceeded, but not earlier new text end
46.18
new text begin than December 31, 2010, to file a report. Likewise, an insurer acquired in a business new text end
46.19
new text begin combination has two calendar years following the date of acquisition or combination to new text end
46.20
new text begin comply with the reporting requirements.new text end
46.21
new text begin (g) The requirements and provisions contained in this section are effective January new text end
46.22
new text begin 1, 2010, and thereafter.new text end
46.23 Sec. 12. Minnesota Statutes 2008, section 60B.03, subdivision 15, is amended to read:
46.24 Subd. 15.
Insolvency. "Insolvency" means:
46.25(a) For an insurer organized under sections
67A.01 to
67A.26, the inability to pay
46.26any uncontested debt as it becomes due or any other loss within 30 days after the due date
46.27specified in the first assessment notice issued pursuant to section
.
46.28(b) For any other insurer, that it is unable to pay its debts or meet its obligations
46.29as they mature or that its assets do not exceed its liabilities plus the greater of (1) any
46.30capital and surplus required by law to be constantly maintained, or (2) its authorized and
46.31issued capital stock. For purposes of this subdivision, "assets" includes one-half of the
46.32maximum total assessment liability of the policyholders of the insurer, and "liabilities"
46.33includes reserves required by law. For policies issued on the basis of unlimited assessment
46.34liability, the maximum total liability, for purposes of determining solvency only, shall be
47.1deemed to be that amount that could be obtained if there were 100 percent collection of an
47.2assessment at the rate of ten mills per dollar of insurance written by it and in force.
47.3 Sec. 13. Minnesota Statutes 2008, section 60L.02, subdivision 3, is amended to read:
47.4 Subd. 3.
Additional requirements. (a) In order to be eligible to be governed by
47.5sections
60L.01 to
60L.15, the insurer must meet the requirements specified under this
47.6subdivision.
47.7(b) The insurer shall:
47.8(1) have been in continuous operation for a minimum of five years; and
47.9(2) maintain a minimum claims-paying, financial strength, or equivalent rating from
47.10at least one nationally recognized statistical rating organization in one of the organization's
47.11three highest rating categories for the time period during which sections
60L.01 to
60L.15
47.12apply to the insurer. For purposes of this subdivision, the rating must be based on a
47.13review of the insurer by the nationally recognized statistical rating organization with the
47.14cooperation of the insurer; must not depend on a guarantee or other credit enhancement
47.15from another entity; and must not be modified or otherwise qualified to show dependence
47.16of the rating on the performance or a contractual obligation of, or the insurer's affiliation
47.17with, another insurer.
47.18(c) The insurer or an affiliate, as defined in section
60D.15, subdivision 2, of the
47.19insurer shall employ at least one individual as a professional investment manager for
47.20the insurer's investments whom the board of directors or trustees of the insurer finds
47.21is qualified on the basis of experience, education or training, competence, personal
47.22integrity, and who conducts professional investment management activities in accordance
47.23with the Code of Ethics and Standards of Professional Conduct of the Association for
47.24Investment Management and Research. For purposes of complying with this paragraph,
47.25an employee of an affiliate may only be used if they are responsible for managing the
47.26insurer's investments.
47.27(d) The board of directors of the insurer must annually adopt a resolution finding
47.28that the insurer or an affiliate, as defined in section
60D.15, subdivision 2, of the insurer
47.29has employed a professional investment manager for the insurer's investments with
47.30sufficient expertise and has sufficient other resources to implement and monitor the
47.31insurer's investment policies and strategies.
47.32(e) In the report required under section
60A.129new text begin 60A.1291new text end , subdivision 3new text begin 12new text end ,
47.33paragraph (l), the insurer's independent auditor shall not have identified any significant
47.34deficiencies in the insurer's internal control structure related to investments during any of
48.1the five years immediately preceding the date on which sections
60L.01 to
60L.15 begin to
48.2apply to the insurer, and as long as sections
60L.01 to
60L.15 apply to the insurer.
48.3 Sec. 14.
new text begin [61A.258] PRENEED INSURANCE PRODUCTS; MINIMUM new text end
48.4
new text begin MORTALITY STANDARDS FOR RESERVES AND NONFORFEITURE VALUES.new text end
48.5
new text begin Subdivision 1.new text end new text begin Definitions.new text end new text begin For the purposes of this section, the following terms new text end
48.6
new text begin have the meanings given them:new text end
48.7
new text begin (1) "2001 CSO Mortality Table (2001 CSO)" means that mortality table, consisting new text end
48.8
new text begin of separate rates of mortality for male and female lives, developed by the American new text end
48.9
new text begin Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table new text end
48.10
new text begin developed by the Society of Actuaries Individual Life Insurance Valuation Mortality new text end
48.11
new text begin Task Force, and adopted by the National Association of Insurance Commissioners new text end
48.12
new text begin (NAIC) in December 2002. The 2001 CSO Mortality Table (2001 CSO) is included in new text end
48.13
new text begin the Proceedings of the NAIC (2nd Quarter 2002). Unless the context indicates otherwise, new text end
48.14
new text begin the "2001 CSO Mortality Table (2001 CSO)" includes both the ultimate form of that new text end
48.15
new text begin table and the select and ultimate form of that table and includes both the smoker and new text end
48.16
new text begin nonsmoker mortality tables and the composite mortality tables. It also includes both the new text end
48.17
new text begin age-nearest-birthday and age-last-birthday bases of the mortality tables;new text end
48.18
new text begin (2) "Ultimate 1980 CSO" means the Commissioners' 1980 Standard Ordinary Life new text end
48.19
new text begin Valuation Mortality Tables (1980 CSO) without ten-year selection factors, incorporated new text end
48.20
new text begin into the 1980 amendments to the NAIC Standard Valuation Law approved in December new text end
48.21
new text begin 1983; andnew text end
48.22
new text begin (3) "preneed insurance" is any life insurance policy or certificate that is issued new text end
48.23
new text begin in combination with, in support of, with an assignment to, or as a guarantee for a new text end
48.24
new text begin prearrangement agreement for goods and services to be provided at the time of and new text end
48.25
new text begin immediately following the death of the insured. Goods and services may include, but new text end
48.26
new text begin are not limited to embalming, cremation, body preparation, viewing or visitation, coffin new text end
48.27
new text begin or urn, memorial stone, and transportation of the deceased. The status of the policy or new text end
48.28
new text begin contract as preneed insurance is determined at the time of issue in accordance with the new text end
48.29
new text begin policy form filing.new text end
48.30
new text begin Subd. 2.new text end new text begin Minimum valuation mortality standards.new text end new text begin For preneed insurance new text end
48.31
new text begin contracts, the minimum mortality standard for determining reserve liabilities and new text end
48.32
new text begin nonforfeiture values for both male and female insureds shall be the Ultimate 1980 CSO.new text end
48.33
new text begin Subd. 3.new text end new text begin Minimum valuation interest rate standards.new text end new text begin (a) The interest rates used new text end
48.34
new text begin in determining the minimum standard for valuation of preneed insurance shall be the new text end
48.35
new text begin calendar year statutory valuation interest rates as defined in section 61A.25.new text end
49.1
new text begin (b) The interest rates used in determining the minimum standard for nonforfeiture new text end
49.2
new text begin values for preneed insurance shall be the calendar year statutory nonforfeiture interest new text end
49.3
new text begin rates as defined in section 61A.24.new text end
49.4
new text begin Subd. 4.new text end new text begin Minimum valuation method standards.new text end new text begin (a) The method used in new text end
49.5
new text begin determining the standard for the minimum valuation of reserves of preneed insurance shall new text end
49.6
new text begin be the method defined in section 61A.25.new text end
49.7
new text begin (b) The method used in determining the standard for the minimum nonforfeiture new text end
49.8
new text begin values for preneed insurance shall be the method defined in section 61A.24.new text end
49.9
new text begin EFFECTIVE DATE; TRANSITION RULES.new text end new text begin (a) This section is effective January new text end
49.10
new text begin 1, 2009, and applies to preneed insurance policies and certificates issued on or after that new text end
49.11
new text begin date.new text end
49.12
new text begin (b) For preneed insurance policies issued on or after the effective date of this new text end
49.13
new text begin section and before January 1, 2012, the 2001 CSO may be used as the minimum standard new text end
49.14
new text begin for reserves and minimum standard for nonforfeiture benefits for both male and female new text end
49.15
new text begin insureds.new text end
49.16
new text begin (c) If an insurer elects to use the 2001 CSO as a minimum standard for any policy new text end
49.17
new text begin issued on or after the effective date of section 1 and before January 1, 2012, the insurer new text end
49.18
new text begin shall provide, as a part of the actuarial opinion memorandum submitted in support of new text end
49.19
new text begin the company's asset adequacy testing, an annual written notification to the domiciliary new text end
49.20
new text begin commissioner. The notification shall include:new text end
49.21
new text begin (1) a complete list of all preneed policy forms that use the 2001 CSO as a minimum new text end
49.22
new text begin standard;new text end
49.23
new text begin (2) a certification signed by the appointed actuary stating that the reserve new text end
49.24
new text begin methodology employed by the company in determining reserves for the preneed policies new text end
49.25
new text begin issued after the effective date and using the 2001 CSO as a minimum standard, develops new text end
49.26
new text begin adequate reserves (For the purposes of this certification, the preneed insurance policies new text end
49.27
new text begin using the 2001 CSO as a minimum standard cannot be aggregated with any other new text end
49.28
new text begin policies.); andnew text end
49.29
new text begin (3) supporting information regarding the adequacy of reserves for preneed insurance new text end
49.30
new text begin policies issued after the effective date of section 1 and using the 2001 CSO as a minimum new text end
49.31
new text begin standard for reserves.new text end
49.32
new text begin (d) Preneed insurance policies issued on or after January 1, 2012, must use the new text end
49.33
new text begin Ultimate 1980 CSO in the calculation of minimum nonforfeiture values and minimum new text end
49.34
new text begin reserves.new text end
49.35 Sec. 15. Minnesota Statutes 2008, section 61B.19, subdivision 4, is amended to read:
50.1 Subd. 4.
Limitation of benefits. The benefits for which the association may become
50.2liable shall in no event exceed the lesser of:
50.3(1) the contractual obligations for which the insurer is liable or would have been
50.4liable if it were not an impaired or insolvent insurer; or
50.5(2) subject to the limitation in clause (5), with respect to any one life, regardless of
50.6the number of policies or contracts:
50.7(i) $300,000
new text begin $500,000new text end in life insurance death benefits, but not more than $100,000
new text begin new text end
50.8
new text begin $130,000new text end in net cash surrender and net cash withdrawal values for life insurance;
50.9(ii) $300,000
new text begin $500,000new text end in health insurance benefits, including any net cash surrender
50.10and net cash withdrawal values;
50.11(iii) $100,000
new text begin $250,000new text end in annuity net cash surrender and net cash withdrawal values;
50.12(iv) $300,000
new text begin $410,000new text end in present value of annuity benefits for structured settlement
50.13annuities or for annuities in regard to which periodic annuity benefits, for a period of not
50.14less than the annuitant's lifetime or for a period certain of not less than ten years, have
50.15begun to be paid, on or before the date of impairment or insolvency; or
50.16(3) subject to the limitations in clauses (5) and (6), with respect to each individual
50.17resident participating in a retirement plan, except a defined benefit plan, established under
50.18section 401, 403(b), or 457 of the Internal Revenue Code of 1986, as amended through
50.19December 31, 1992, covered by an unallocated annuity contract, or the beneficiaries
50.20of each such individual if deceased, in the aggregate, $100,000
new text begin $250,000new text end in net cash
50.21surrender and net cash withdrawal values;
50.22(4) where no coverage limit has been specified for a covered policy or benefit, the
50.23coverage limit shall be $300,000
new text begin $500,000new text end in present value;
50.24(5) in no event shall the association be liable to expend more than $300,000
new text begin new text end
50.25
new text begin $500,000new text end in the aggregate with respect to any one life under clause (2), items (i), (ii), (iii),
50.26(iv), and clause (4), and any one individual under clause (3);
50.27(6) in no event shall the association be liable to expend more than $7,500,000
new text begin new text end
50.28
new text begin $10,000,000new text end with respect to all unallocated annuities of a retirement plan, except a defined
50.29benefit plan, established under section 401, 403(b), or 457 of the Internal Revenue Code
50.30of 1986, as amended through December 31, 1992. If total claims from a plan exceed
50.31$7,500,000
new text begin $10,000,000new text end , the $7,500,000
new text begin $10,000,000new text end shall be prorated among the
50.32claimants;
50.33(7) for purposes of applying clause (2)(ii) and clause (5), with respect only to
50.34health insurance benefits, the term "any one life" applies to each individual covered by a
50.35health insurance policy;
51.1(8) where covered contractual obligations are equal to or less than the limits stated in
51.2this subdivision, the association will pay the difference between the covered contractual
51.3obligations and the amount credited by the estate of the insolvent or impaired insurer, if
51.4that amount has been determined or, if it has not, the covered contractual limit, subject
51.5to the association's right of subrogation;
51.6(9) where covered contractual obligations exceed the limits stated in this subdivision,
51.7the amount payable by the association will be determined as though the covered
51.8contractual obligations were equal to those limits. In making the determination, the estate
51.9shall be deemed to have credited the covered person the same amount as the estate would
51.10credit a covered person with contractual obligations equal to those limits; or
51.11(10) the following illustrates how the principles stated in clauses (8) and (9) apply.
51.12The example illustrated concerns hypothetical claims subject to the limit stated in clause
51.13(2)(iii). The principles stated in clauses (8) and (9), and illustrated in this clause, apply
51.14to claims subject to any limits stated in this subdivision.
51.15CONTRACTUAL OBLIGATIONS OF:
51.16
$50,000
51.17
51.18
Estate
Guaranty
Association
51.19
51.20
0% recovery
from estate
$ 0
$ 50,000
51.21
51.22
25% recovery
from estate
$ 12,500
$ 37,500
51.23
51.24
50% recovery
from estate
$ 25,000
$ 25,000
51.25
51.26
75% recovery
from estate
$ 37,500
$ 12,500
51.27
$100,000
51.28
51.29
Estate
Guaranty
Association
51.30
51.31
0% recovery
from estate
$ 0
$ 100,000
51.32
51.33
25% recovery
from estate
$ 25,000
$ 75,000
51.34
51.35
50% recovery
from estate
$ 50,000
$ 50,000
51.36
51.37
75% recovery
from estate
$ 75,000
$ 25,000
51.38
$200,000
51.39
51.40
Estate
Guaranty
Association
51.41
51.42
0% recovery
from estate
$ 0
$ 100,000
52.1
52.2
25% recovery
from estate
$ 50,000
$ 75,000
52.3
52.4
50% recovery
from estate
$ 100,000
$ 50,000
52.5
52.6
75% recovery
from estate
$ 150,000
$ 25,000
52.7For purposes of this subdivision, the commissioner shall determine the discount rate
52.8to be used in determining the present value of annuity benefits.
52.9
new text begin EFFECTIVE DATE.new text end new text begin This section is effective the day following final enactment new text end
52.10
new text begin and applies to member insurers who are first determined to be impaired or insolvent on or new text end
52.11
new text begin after that date. Member insurers who are subject to an order of impairment in effect on the new text end
52.12
new text begin effective date but are not declared insolvent until after the effective date shall continue to new text end
52.13
new text begin be governed by the law in effect prior to the effective date.new text end
52.14 Sec. 16. Minnesota Statutes 2008, section 61B.28, subdivision 4, is amended to read:
52.15 Subd. 4.
Prohibited sales practice. No person, including an insurer, agent, or
52.16affiliate of an insurer, shall make, publish, disseminate, circulate, or place before the
52.17public, or cause directly or indirectly, to be made, published, disseminated, circulated,
52.18or placed before the public, in any newspaper, magazine, or other publication, or in the
52.19form of a notice, circular, pamphlet, letter, or poster, or over any radio station or television
52.20station, or in any other way, an advertisement, announcement, or statement, written or
52.21oral, which uses the existence of the Minnesota Life and Health Insurance Guaranty
52.22Association for the purpose of sales, solicitation, or inducement to purchase any form of
52.23insurance covered by sections
61B.18 to
61B.32. The notice required by subdivision 8
52.24is not a violation of this subdivision
new text begin nor is it a violation of this subdivision to explain new text end
52.25
new text begin verbally to an applicant or potential applicant the coverage provided by the Minnesota new text end
52.26
new text begin Life and Health Insurance Guaranty Association at any time during the application process new text end
52.27
new text begin or thereafternew text end . This subdivision does not apply to the Minnesota Life and Health Insurance
52.28Guaranty Association or an entity that does not sell or solicit insurance. A person violating
52.29this section is guilty of a misdemeanor.
52.30 Sec. 17. Minnesota Statutes 2008, section 61B.28, subdivision 8, is amended to read:
52.31 Subd. 8.
Form. The form of notice referred to in subdivision 7, paragraph (a),
52.32is as follows:
52.33"....................
52.34....................
52.35....................
53.1(insert name, current address, and
53.2telephone number of insurer)
53.3NOTICE CONCERNING POLICYHOLDER RIGHTS IN AN
53.4INSOLVENCY UNDER THE MINNESOTA LIFE AND HEALTH
53.5INSURANCE GUARANTY ASSOCIATION LAW
53.6If the insurer that issued your life, annuity, or health insurance policy becomes
53.7impaired or insolvent, you are entitled to compensation for your policy from the assets of
53.8that insurer. The amount you recover will depend on the financial condition of the insurer.
53.9In addition, residents of Minnesota who purchase life insurance, annuities, or health
53.10insurance from insurance companies authorized to do business in Minnesota are protected,
53.11SUBJECT TO LIMITS AND EXCLUSIONS, in the event the insurer becomes financially
53.12impaired or insolvent. This protection is provided by the Minnesota Life and Health
53.13Insurance Guaranty Association.
53.14Minnesota Life and Health Insurance Guaranty Association
53.15(insert current
53.16address and telephone number)
53.17The maximum amount the guaranty association will pay for all policies issued on
53.18one life by the same insurer is limited to $300,000
new text begin $500,000new text end . Subject to this $300,000
new text begin new text end
53.19
new text begin $500,000new text end limit, the guaranty association will pay up to $300,000
new text begin $500,000new text end in life
53.20insurance death benefits, $100,000
new text begin $130,000new text end in net cash surrender and net cash withdrawal
53.21values for life insurance, $300,000
new text begin $500,000new text end in health insurance benefits, including any
53.22net cash surrender and net cash withdrawal values, $100,000
new text begin $250,000new text end in annuity net
53.23cash surrender and net cash withdrawal values, $300,000
new text begin $410,000new text end in present value of
53.24annuity benefits for annuities which are part of a structured settlement or for annuities
53.25in regard to which periodic annuity benefits, for a period of not less than the annuitant's
53.26lifetime or for a period certain of not less than ten years, have begun to be paid on or
53.27before the date of impairment or insolvency, or if no coverage limit has been specified
53.28for a covered policy or benefit, the coverage limit shall be $300,000
new text begin $500,000new text end in present
53.29value. Unallocated annuity contracts issued to retirement plans, other than defined benefit
53.30plans, established under section 401, 403(b), or 457 of the Internal Revenue Code of
53.311986, as amended through December 31, 1992, are covered up to $100,000
new text begin $250,000new text end in
53.32net cash surrender and net cash withdrawal values, for Minnesota residents covered by
53.33the plan provided, however, that the association shall not be responsible for more than
53.34$7,500,000
new text begin $10,000,000new text end in claims from all Minnesota residents covered by the plan. If
53.35total claims exceed $7,500,000
new text begin $10,000,000new text end , the $7,500,000
new text begin $10,000,000new text end shall be prorated
53.36among all claimants. These are the maximum claim amounts. Coverage by the guaranty
53.37association is also subject to other substantial limitations and exclusions and requires
53.38continued residency in Minnesota. If your claim exceeds the guaranty association's limits,
54.1you may still recover a part or all of that amount from the proceeds of the liquidation of
54.2the insolvent insurer, if any exist. Funds to pay claims may not be immediately available.
54.3The guaranty association assesses insurers licensed to sell life and health insurance in
54.4Minnesota after the insolvency occurs. Claims are paid from this assessment.
54.5THE COVERAGE PROVIDED BY THE GUARANTY ASSOCIATION IS NOT
54.6A SUBSTITUTE FOR USING CARE IN SELECTING INSURANCE COMPANIES
54.7THAT ARE WELL MANAGED AND FINANCIALLY STABLE. IN SELECTING AN
54.8INSURANCE COMPANY OR POLICY, YOU SHOULD NOT RELY ON COVERAGE
54.9BY THE GUARANTY ASSOCIATION.
54.10THIS NOTICE IS REQUIRED BY MINNESOTA STATE LAW TO ADVISE
54.11POLICYHOLDERS OF LIFE, ANNUITY, OR HEALTH INSURANCE POLICIES
54.12OF THEIR RIGHTS IN THE EVENT THEIR INSURANCE CARRIER BECOMES
54.13FINANCIALLY INSOLVENT. THIS NOTICE IN NO WAY IMPLIES THAT THE
54.14COMPANY CURRENTLY HAS ANY TYPE OF FINANCIAL PROBLEMS. ALL LIFE,
54.15ANNUITY, AND HEALTH INSURANCE POLICIES ARE REQUIRED TO PROVIDE
54.16THIS NOTICE."
54.17Additional language may be added to the notice if approved by the commissioner
54.18prior to its use in the form. This section does not apply to fraternal benefit societies
54.19regulated under chapter 64B.
54.20 Sec. 18. Minnesota Statutes 2008, section 67A.01, is amended to read:
54.21
67A.01 NUMBER OF MEMBERS REQUIRED, PROPERTY AND
54.22
TERRITORY.
54.23
new text begin Subdivision 1.new text end new text begin Number of members.new text end (a) It shall be lawful for any number of
54.24persons, not less than 25, residing in adjoining townships
new text begin countiesnew text end in this state, who shall
54.25collectively own property worth at least $50,000, to form themselves into a corporation
54.26for mutual insurance against loss or damage by the perils listed in section
67A.13.
54.27(b) Except as otherwise provided in this section, the company shall operate in no
54.28more than 150 adjoining townships in the aggregate at the same time. The company may,
54.29if approval has been granted by the commissioner, operate in more than 150 adjoining
54.30townships in the aggregate at the same time, subject to a maximum of 300 townships.
54.31If the company confines its operations to one county it may transact business in that
54.32county by so providing in its certificate of incorporation. In case of merger of two or
54.33more companies having contiguous territories, the surviving company in the merger may
54.34transact business in the entire territory of the merged companies, but the territory of the
54.35surviving company in the merger must not be larger than 300 townships.
55.1
new text begin Subd. 2.new text end new text begin Authorized territory.new text end new text begin (a) A township mutual fire insurance company may new text end
55.2
new text begin be authorized to write business in up to nine adjoining counties in the aggregate at the new text end
55.3
new text begin same time. If policyholder surplus is at least $500,000 as reported in the company's last new text end
55.4
new text begin annual financial statement filed with the commissioner, the company may, if approval has new text end
55.5
new text begin been granted by the commissioner, be authorized to write business in ten or more counties new text end
55.6
new text begin in the aggregate at the same time, subject to a maximum of 20 adjoining counties, in new text end
55.7
new text begin accordance with the following schedule:new text end
55.8
55.9
new text begin Number of new text end
new text begin Countiesnew text end
new text begin Surplus new text end
new text begin Requirementnew text end
55.10
new text begin 10new text end
new text begin $500,000new text end
55.11
new text begin 11new text end
new text begin 600,000new text end
55.12
new text begin 12new text end
new text begin 700,000new text end
55.13
new text begin 13new text end
new text begin 800,000new text end
55.14
new text begin 14new text end
new text begin 900,000new text end
55.15
new text begin 15new text end
new text begin 1,000,000new text end
55.16
new text begin 16new text end
new text begin 1,100,000new text end
55.17
new text begin 17new text end
new text begin 1,200,000new text end
55.18
new text begin 18new text end
new text begin 1,300,000new text end
55.19
new text begin 19new text end
new text begin 1,400,000new text end
55.20
new text begin 20new text end
new text begin 1,500,000new text end
55.21
new text begin (b) In the case of a merger of two or more companies having contiguous territories, new text end
55.22
new text begin the surviving company in the merger may transact business in the entire territory of the new text end
55.23
new text begin merged companies; however, the territory of the surviving company in the merger may not new text end
55.24
new text begin be larger than 20 counties.new text end
55.25
new text begin (c) A township mutual fire insurance company may write new and renewal insurance new text end
55.26
new text begin on property in cities within the company's authorized territory having a population less new text end
55.27
new text begin than 25,000. A township mutual may continue to write new and renewal insurance once new text end
55.28
new text begin the population increases to 25,000 or greater provided that amended and restated articles new text end
55.29
new text begin are filed with the commissioner along with a certification that such city's population has new text end
55.30
new text begin increased to 25,000 or greater.new text end
55.31
new text begin (d) A township mutual fire insurance company may write new and renewal insurance new text end
55.32
new text begin on property in cities within the company's authorized territory with a population of 25,000 new text end
55.33
new text begin or greater, but less than 150,000, if approval has been granted by the commissioner. new text end
55.34
new text begin No township mutual fire insurance company shall insure any property in cities with a new text end
55.35
new text begin population of 150,000 or greater.new text end
55.36
new text begin (e) If a township mutual fire insurance company provides evidence to the new text end
55.37
new text begin commissioner that the company had insurance in force on December 31, 2007, in a city new text end
55.38
new text begin within the company's authorized territory with a population of 25,000 or greater, but less new text end
56.1
new text begin than 150,000, the company may write new and renewal insurance on property in that city new text end
56.2
new text begin provided that the company files amended and restated articles by July 31, 2010, naming new text end
56.3
new text begin that city.new text end
56.4 Sec. 19. Minnesota Statutes 2008, section 67A.06, is amended to read:
56.5
67A.06 POWERS OF CORPORATION.
56.6Every corporation formed under the provisions of sections
67A.01 to
67A.26,
56.7shall have power:
56.8(1) to have succession by its corporate name for the time stated in its certificate of
56.9incorporation;
56.10(2) to sue and be sued in any court;
56.11(3) to have and use a common seal and alter the same at pleasure;
56.12(4) to acquire, by purchase or otherwise, and to hold, enjoy, improve, lease,
56.13encumber, and convey all real and personal property necessary for the purpose of its
56.14organization, subject to such limitations as may be imposed by law or by its articles of
56.15incorporation;
56.16(5) to elect or appoint in such manner as it may determine all necessary or proper
56.17officers, agents, boards, and committees, fix their compensation, and define their powers
56.18and duties;
56.19(6) to make and amend consistently with law bylaws providing for the management
56.20of its property and the regulation and government of its affairs;
56.21(7) to wind up and liquidate its business in the manner provided by chapter 60B; and
56.22(8) to indemnify certain persons against expenses and liabilities as provided in
56.23section
302A.521. In applying section
302A.521 for this purpose, the term "members"
56.24shall be substituted for the terms "shareholders" and "stockholders."
new text begin ; andnew text end
56.25
new text begin (9) to eliminate or limit a director's personal liability to the company or its members new text end
56.26
new text begin for monetary damages for breach of fiduciary duty as a director. A company shall not new text end
56.27
new text begin eliminate or limit the liability of a director:new text end
56.28
new text begin (i) for breach of loyalty to the company or its members;new text end
56.29
new text begin (ii) for acts or omissions made in bad faith or with intentional misconduct or new text end
56.30
new text begin knowing violation of law;new text end
56.31
new text begin (iii) for transactions from which the director derived an improper personal benefit; ornew text end
56.32
new text begin (iv) for acts or omissions occurring before the date that the provisions in the articles new text end
56.33
new text begin eliminating or limiting liability become effective.new text end
57.1 Sec. 20. Minnesota Statutes 2008, section 67A.07, is amended to read:
57.2
67A.07 PRINCIPAL OFFICE.
57.3The principal office of a township mutual fire insurance company shall be located in
57.4a township or in a city in a township
new text begin countynew text end in which the company is authorized to do
57.5business.
57.6 Sec. 21. Minnesota Statutes 2008, section 67A.14, subdivision 1, is amended to read:
57.7 Subdivision 1.
Kinds of propertynew text begin ; property outside authorized territorynew text end . (a)
57.8Township mutual fire insurance companies may insure qualified property. Qualified
57.9property means dwellings, household goods, appurtenant structures, farm buildings, farm
57.10personal property, churches, church personal property, county fair buildings, community
57.11and township meeting halls and their usual contents.
57.12(b) Township mutual fire insurance companies may extend coverage to include
57.13an insured's secondary property if the township mutual fire insurance company covers
57.14qualified property belonging to the insured. Secondary property means any real or
57.15personal property that is not considered qualified property for a township mutual fire
57.16insurance company to cover under this chapter. The maximum amount of coverage that a
57.17township mutual fire insurance company may write for secondary property is 25 percent of
57.18the total limit of liability of the policy issued to an insured covering the qualified property.
57.19
new text begin (c) A township mutual fire insurance company may insure any real or personal new text end
57.20
new text begin property, including qualified or secondary property, subject to the limitations in new text end
57.21
new text begin subdivision 1, paragraph (b), located outside the limits of the territory in which the new text end
57.22
new text begin company is authorized by its certificate or articles of incorporation to transact business, if new text end
57.23
new text begin the company is already covering qualified property belonging to the insured, inside the new text end
57.24
new text begin limits of the company's territory.new text end
57.25
new text begin (d) A township mutual fire insurance company may insure property temporarily new text end
57.26
new text begin outside of the authorized territory of the township mutual fire insurance company.new text end
57.27 Sec. 22. Minnesota Statutes 2008, section 67A.14, subdivision 7, is amended to read:
57.28 Subd. 7.
Amount of insurable risk. No township mutual
new text begin fire new text end insurance company
57.29shall insure or reinsure a single risk or hazard in a larger sum than the greater of $3,000, or
57.30one tenth of its net assets plus two tenths of a mill of its insurance in force; provided that
57.31no portion of any such risk or hazard which shall have been reinsured, as authorized by
57.32the laws of this state, shall be included in determining the limitation of risk prescribed
57.33by this subdivision.
58.1 Sec. 23.
new text begin [67A.175] SURPLUS REQUIREMENTS.new text end
58.2
new text begin Subdivision 1.new text end new text begin Minimum.new text end new text begin Township mutual fire insurance companies shall maintain new text end
58.3
new text begin a minimum policyholders' surplus of $300,000 at all times.new text end
58.4
new text begin Subd. 2.new text end new text begin Corrective action plan; filing.new text end new text begin A township mutual fire insurance company new text end
58.5
new text begin that falls below the $300,000 minimum surplus requirement must file a corrective action new text end
58.6
new text begin plan with the commissioner. The plan shall state how the company will correct its surplus new text end
58.7
new text begin deficiency. The plan must be submitted within 45 days of the company falling below the new text end
58.8
new text begin minimum surplus level.new text end
58.9
new text begin Subd. 3.new text end new text begin Corrective action plan; commissioner's notification.new text end new text begin Within 30 days new text end
58.10
new text begin after the submission by a township mutual fire insurance company of a corrective action new text end
58.11
new text begin plan, the commissioner shall notify the insurer whether the plan may be implemented or new text end
58.12
new text begin is, in the judgment of the commissioner, unsatisfactory. If the commissioner determines new text end
58.13
new text begin the plan is unsatisfactory, the notification to the company must set forth the reasons for the new text end
58.14
new text begin determination, and may set forth proposed revisions that will render the plan satisfactory new text end
58.15
new text begin in the judgment of the commissioner. Upon notification from the commissioner, the new text end
58.16
new text begin insurer shall prepare a revised corrective action plan that may incorporate by reference new text end
58.17
new text begin any revisions proposed by the commissioner, and shall submit the revised plan to the new text end
58.18
new text begin commissioner within 45 days.new text end
58.19 Sec. 24. Minnesota Statutes 2008, section 67A.18, subdivision 1, is amended to read:
58.20 Subdivision 1.
By member. Any member may terminate membership in the
58.21company by giving written notice or returning the member's policy to the secretary and
58.22paying the withdrawing member's share of all existing claims.
58.23 Sec. 25.
new text begin REPEALER.new text end
58.24
new text begin Subdivision 1.new text end new text begin Annual audits.new text end new text begin Minnesota Statutes 2008, section 60A.129,new text end new text begin is new text end
58.25
new text begin repealed.new text end
58.26
new text begin Subd. 2.new text end new text begin Township mutual insured properties, joint or partial risks, and new text end
58.27
new text begin assessments.new text end new text begin Minnesota Statutes 2008, sections 67A.14, subdivision 5; 67A.17; and new text end
58.28
new text begin 67A.19,new text end new text begin are repealed.new text end
58.29
new text begin Subd. 3.new text end new text begin Banking procedures; real estate tax records.new text end new text begin Minnesota Rules, part new text end
58.30
new text begin 2675.2180,new text end new text begin is repealed.new text end
58.31
new text begin Subd. 4.new text end new text begin Debt prorating companies.new text end new text begin Minnesota Rules, parts 2675.7100; new text end
58.32
new text begin 2675.7110; 2675.7120; 2675.7130; and 2675.7140,new text end new text begin are repealed.new text end
58.33
new text begin Subd. 5.new text end new text begin Guaranty association; inflation indexing.new text end new text begin Minnesota Statutes 2008, new text end
58.34
new text begin section 61B.19, subdivision 6,new text end new text begin is repealed.new text end
59.1
ARTICLE 8
59.2
DEBT MANAGEMENT AND DEBT SETTLEMENT SERVICE
59.3 Section 1. Minnesota Statutes 2008, section 45.011, subdivision 1, is amended to read:
59.4 Subdivision 1.
Scope. As used in chapters 45 to 83, 155A, 332, 332A,
new text begin 332B, new text end
59.5345, and 359, and sections
325D.30 to
325D.42,
326B.802 to
326B.885, and
386.61 to
59.6386.78
, unless the context indicates otherwise, the terms defined in this section have
59.7the meanings given them.
59.8 Sec. 2. Minnesota Statutes 2008, section 46.04, subdivision 1, is amended to read:
59.9 Subdivision 1.
General. The commissioner of commerce, referred to in chapters 46
59.10to 59A, and chapter 332A,
new text begin and 332Bnew text end as the commissioner, is vested with all the powers,
59.11authority, and privileges which, prior to the enactment of Laws 1909, chapter 201, were
59.12conferred by law upon the public examiner, and shall take over all duties in relation to
59.13state banks, savings banks, trust companies, savings associations, and other financial
59.14institutions within the state which, prior to the enactment of chapter 201, were imposed
59.15upon the public examiner. The commissioner of commerce shall exercise a constant
59.16supervision, either personally or through the examiners herein provided for, over the
59.17books and affairs of all state banks, savings banks, trust companies, savings associations,
59.18credit unions, industrial loan and thrift companies, and other financial institutions doing
59.19business within this state; and shall, through examiners, examine each financial institution
59.20at least once every 24 calendar months. In satisfying this examination requirement, the
59.21commissioner may accept reports of examination prepared by a federal agency having
59.22comparable supervisory powers and examination procedures. With the exception of
59.23industrial loan and thrift companies which do not have deposit liabilities and licensed
59.24regulated lenders, it shall be the principal purpose of these examinations to inspect and
59.25verify the assets and liabilities of each and so far investigate the character and value of
59.26the assets of each institution as to determine with reasonable certainty that the values are
59.27correctly carried on its books. Assets and liabilities shall be verified in accordance with
59.28methods of procedure which the commissioner may determine to be adequate to carry out
59.29the intentions of this section. It shall be the further purpose of these examinations to
59.30assess the adequacy of capital protection and the capacity of the institution to meet usual
59.31and reasonably anticipated deposit withdrawals and other cash commitments without
59.32resorting to excessive borrowing or sale of assets at a significant loss, and to investigate
59.33each institution's compliance with applicable laws and rules. Based on the examination
59.34findings, the commissioner shall make a determination as to whether the institution
60.1is being operated in a safe and sound manner. None of the above provisions limits the
60.2commissioner in making additional examinations as deemed necessary or advisable. The
60.3commissioner shall investigate the methods of operation and conduct of these institutions
60.4and their systems of accounting, to ascertain whether these methods and systems are
60.5in accordance with law and sound banking principles. The commissioner may make
60.6requirements as to records as deemed necessary to facilitate the carrying out of the
60.7commissioner's duties and to properly protect the public interest. The commissioner may
60.8examine, or cause to be examined by these examiners, on oath, any officer, director,
60.9trustee, owner, agent, clerk, customer, or depositor of any financial institution touching
60.10the affairs and business thereof, and may issue, or cause to be issued by the examiners,
60.11subpoenas, and administer, or cause to be administered by the examiners, oaths. In
60.12case of any refusal to obey any subpoena issued under the commissioner's direction,
60.13the refusal may at once be reported to the district court of the district in which the bank
60.14or other financial institution is located, and this court shall enforce obedience to these
60.15subpoenas in the manner provided by law for enforcing obedience to subpoenas of the
60.16court. In all matters relating to official duties, the commissioner of commerce has the
60.17power possessed by courts of law to issue subpoenas and cause them to be served and
60.18enforced, and all officers, directors, trustees, and employees of state banks, savings banks,
60.19trust companies, savings associations, and other financial institutions within the state,
60.20and all persons having dealings with or knowledge of the affairs or methods of these
60.21institutions, shall afford reasonable facilities for these examinations, make returns and
60.22reports to the commissioner of commerce as the commissioner may require; attend and
60.23answer, under oath, the commissioner's lawful inquiries; produce and exhibit any books,
60.24accounts, documents, and property as the commissioner may desire to inspect, and in all
60.25things aid the commissioner in the performance of duties.
60.26 Sec. 3. Minnesota Statutes 2008, section 46.05, is amended to read:
60.27
46.05 SUPERVISION OVER FINANCIAL INSTITUTIONS.
60.28 Every state bank, savings bank, trust company, savings association, debt management
60.29services provider,
new text begin debt settlement services provider, new text end and other financial institutions shall
60.30be at all times under the supervision and subject to the control of the commissioner
60.31of commerce. If, and whenever in the performance of duties, the commissioner finds
60.32it necessary to make a special investigation of any financial institution under the
60.33commissioner's supervision, and other than a complete examination, the commissioner
60.34shall make a charge therefor to include only the necessary costs thereof. Such a fee shall
60.35be payable to the commissioner on the commissioner's making a request for payment.
61.1 Sec. 4. Minnesota Statutes 2008, section 46.131, subdivision 2, is amended to read:
61.2 Subd. 2.
Assessment authority. Each bank, trust company, savings bank, savings
61.3association, regulated lender, industrial loan and thrift company, credit union, motor
61.4vehicle sales finance company, debt management services provider
new text begin , debt settlement new text end
61.5
new text begin services provider,new text end and insurance premium finance company organized under the laws of
61.6this state or required to be administered by the commissioner of commerce shall pay
61.7into the state treasury its proportionate share of the cost of maintaining the Department
61.8of Commerce.
61.9 Sec. 5. Minnesota Statutes 2008, section 325E.311, subdivision 6, is amended to read:
61.10 Subd. 6.
Telephone solicitation. "Telephone solicitation" means any voice
61.11communication over a telephone line for the purpose of encouraging the purchase or
61.12rental of, or investment in, property, goods, or services, whether the communication is
61.13made by a live operator, through the use of an automatic dialing-announcing device as
61.14defined in section
325E.26, subdivision 2, or by other means. Telephone solicitation
61.15does not include communications:
61.16 (1) to any residential subscriber with that subscriber's prior express invitation or
61.17permission; or
61.18 (2) by or on behalf of any person or entity with whom a residential subscriber has a
61.19prior or current business or personal relationship.
61.20Telephone solicitation also does not include communications if the caller is identified by a
61.21caller identification service and the call is:
61.22 (i) by or on behalf of an organization that is identified as a nonprofit organization
61.23under state or federal law, unless the organization is a debt management services provider
61.24defined in section
332A.02new text begin or a debt settlement services provider defined in section new text end
61.25
new text begin 332B.02new text end ;
61.26 (ii) by a person soliciting without the intent to complete, and who does not in
61.27fact complete, the sales presentation during the call, but who will complete the sales
61.28presentation at a later face-to-face meeting between the solicitor who makes the call
61.29and the prospective purchaser; or
61.30 (iii) by a political party as defined under section
200.02, subdivision 6.
61.31 Sec. 6. Minnesota Statutes 2008, section 332A.02, is amended by adding a subdivision
61.32to read:
61.33
new text begin Subd. 2a.new text end new text begin Advertise.new text end new text begin "Advertise" means to solicit business through any means or new text end
61.34
new text begin medium.new text end
62.1 Sec. 7. Minnesota Statutes 2008, section 332A.02, subdivision 5, is amended to read:
62.2 Subd. 5.
Controlling or affiliated party. "Controlling or affiliated party" means
62.3any person
new text begin or entity that controls or is controlled, new text end directly or indirectly controlling,
62.4controlled by, or
new text begin is new text end under common control with another person.
new text begin Controlling or affiliated new text end
62.5
new text begin party includes, but is not limited to, employees, officers, independent contractors, new text end
62.6
new text begin corporations, partnerships, and limited liability corporations.new text end
62.7 Sec. 8. Minnesota Statutes 2008, section 332A.02, subdivision 8, is amended to read:
62.8 Subd. 8.
Debt management services provider. "Debt management services
62.9provider" means any person offering or providing debt management services to a debtor
62.10domiciled in this state, regardless of whether or not a fee is charged for the services and
62.11regardless of whether the person maintains a physical presence in the state. This term
62.12
new text begin includes any person to whom duties under a debt management services agreement or new text end
62.13
new text begin debt management services plan are delegated, and new text end does not include services performed
62.14by the following when engaged in the regular course of their respective businesses and
62.15professions:
62.16 (1) attorneys at law, escrow agents, accountants, broker-dealers in securities;
62.17 (2) state or national banks, trust companies, savings associations, title insurance
62.18companies, insurance companies, and all other lending institutions duly authorized to
62.19transact business in Minnesota, provided no fee is charged for the service;
62.20 (3) persons who, as employees on a regular salary or wage of an employer not
62.21engaged in the business of debt management, perform credit services for their employer;
62.22 (4) public officers acting in their official capacities and persons acting as a debt
62.23management services provider pursuant to court order;
62.24 (5) any person while performing services incidental to the dissolution, winding up,
62.25or liquidation of a partnership, corporation, or other business enterprise;
62.26 (6) the state, its political subdivisions, public agencies, and their employees;
62.27 (7) credit unions and collection agencies, provided no fee is charged for the service
62.28
new text begin that the services are provided to a creditornew text end ;
62.29 (8) "qualified organizations" designated as representative payees for purposes of the
62.30Social Security and Supplemental Security Income Representative Payee System and the
62.31federal Omnibus Budget Reconciliation Act of 1990, Public Law 101-508;
62.32 (9) accelerated mortgage payment providers. "Accelerated mortgage payment
62.33providers" are persons who, after satisfying the requirements of sections
332.30 to
62.34332.303
, receive funds to make mortgage payments to a lender or lenders, on behalf
62.35of mortgagors, in order to exceed regularly scheduled minimum payment obligations
63.1under the terms of the indebtedness. The term does not include: (i) persons or entities
63.2described in clauses (1) to (8); (ii) mortgage lenders or servicers, industrial loan and
63.3thrift companies, or regulated lenders under chapter 56; or (iii) persons authorized to
63.4make loans under section
47.20, subdivision 1. For purposes of this clause and sections
63.5332.30
to
332.303, "lender" means the original lender or that lender's assignee, whichever
63.6is the current mortgage holder;
63.7 (10) trustees, guardians, and conservators; and
63.8 (11) debt settlement
new text begin services new text end providers.
new text begin ; andnew text end
63.9
new text begin (12) credit unions.new text end
63.10 Sec. 9. Minnesota Statutes 2008, section 332A.02, subdivision 9, is amended to read:
63.11 Subd. 9.
Debt management services. "Debt management services" means the
63.12provision of any one or more of the following services in connection with debt incurred
63.13primarily for personal, family, or household services:
63.14 (1) managing the financial affairs of an individual by distributing income or money
63.15to the individual's creditors;
63.16 (2) receiving funds for the purpose of distributing the funds among creditors in
63.17payment or partial payment of obligations of a debtor; or
63.18 (3) adjusting, prorating, pooling, or liquidating the indebtedness of a debtor
new text begin whereby new text end
63.19
new text begin a debt management services provider assists in managing the financial affairs of a debtor new text end
63.20
new text begin by distributing periodic payments to the debtor's creditors from funds that the debt new text end
63.21
new text begin management services provider receives from the debtor and where the primary purpose new text end
63.22
new text begin of the services is to effect repayment of debt incurred primarily for personal, family, or new text end
63.23
new text begin household servicesnew text end .
63.24Any person so engaged or holding out as so engaged is deemed to be engaged in the
63.25provision of debt management services regardless of whether or not a fee is charged for
63.26such services.
63.27 Sec. 10. Minnesota Statutes 2008, section 332A.02, subdivision 10, is amended to read:
63.28 Subd. 10.
Debtor. "Debtor" means the person for whom the debt prorating service
63.29is
new text begin management services arenew text end performed.
63.30 Sec. 11. Minnesota Statutes 2008, section 332A.02, subdivision 13, is amended to read:
63.31 Subd. 13.
Debt settlement new text begin services new text end provider. "Debt settlement
new text begin services new text end provider"
63.32means any person engaging in or holding out as engaging in the business of negotiating,
63.33adjusting, or settling debt incurred primarily for personal, family, or household purposes
64.1without holding or receiving the debtor's funds or personal property and without paying
64.2the debtor's funds to, or distributing the debtor's property among, creditors
new text begin has the new text end
64.3
new text begin meaning given in section 332B.02, subdivision 10new text end . The term shall not include persons
64.4listed in subdivision 8, clauses (1) to (10).
64.5 Sec. 12. Minnesota Statutes 2008, section 332A.04, subdivision 6, is amended to read:
64.6 Subd. 6.
Right of action on bond. If the registrant has failed to account to a debtor
64.7or distribute to the debtor's creditors the amounts required by this chapter and
new text begin , or has new text end
64.8
new text begin failed to perform any of the services promised in new text end the debt management services agreement
64.9between the debtor and registrant,
new text begin the registrant is in default. new text end The debtor or the debtor's
64.10legal representative or receiver, the commissioner, or the attorney general, shall have, in
64.11addition to all other legal remedies, a right of action in the name of the debtor on the bond
64.12or the security given under this section, for loss suffered by the debtor, not exceeding the
64.13face amount of the bond or security, and without the necessity of joining the registrant
64.14in the suit or action
new text begin based on the defaultnew text end .
64.15 Sec. 13. Minnesota Statutes 2008, section 332A.08, is amended to read:
64.16
332A.08 DENIAL OF REGISTRATION.
64.17 The commissioner, with notice to the applicant by certified mail sent to the address
64.18listed on the application, may deny an application for a registration upon finding that
64.19the applicant:
64.20 (1) has submitted an application required under section
332A.04 that contains
64.21incorrect, misleading, incomplete, or materially untrue information. An application is
64.22incomplete if it does not include all the information required in section
332A.04;
64.23 (2) has failed to pay any fee or pay or maintain any bond required by this chapter,
64.24or failed to comply with any order, decision, or finding of the commissioner made under
64.25and within the authority of this chapter;
64.26 (3) has violated any provision of this chapter or any rule or direction lawfully made
64.27by the commissioner under and within the authority of this chapter;
64.28 (4) or any controlling or affiliated party has ever been convicted of a crime or found
64.29civilly liable for an offense involving moral turpitude, including forgery, embezzlement,
64.30obtaining money under false pretenses, larceny, extortion, conspiracy to defraud, or any
64.31other similar offense or violation, or any violation of a federal or state law or regulation
64.32in connection with activities relating to the rendition of debt management services or
64.33any consumer fraud, false advertising, deceptive trade practices, or similar consumer
64.34protection law;
65.1 (5) has had a registration or license previously revoked or suspended in this state or
65.2any other state or the applicant or licensee has been permanently or temporarily enjoined
65.3by any court of competent jurisdiction from engaging in or continuing any conduct or
65.4practice involving any aspect of the debt management services provider business; or
65.5any controlling or affiliated party has been an officer, director, manager, or shareholder
65.6owning more than a ten percent interest in a debt management services provider whose
65.7registration has previously been revoked or suspended in this state or any other state, or
65.8who has been permanently or temporarily enjoined by any court of competent jurisdiction
65.9from engaging in or continuing any conduct or practice involving any aspect of the debt
65.10management services provider business;
65.11 (6) has made any false statement or representation to the commissioner;
65.12 (7) is insolvent;
65.13 (8) refuses to fully comply with an investigation or examination of the debt
65.14management services provider by the commissioner;
65.15 (9) has improperly withheld, misappropriated, or converted any money or properties
65.16received in the course of doing business;
65.17 (10) has failed to have a trust account with an actual cash balance equal to or greater
65.18than the sum of the escrow balances of each debtor's account;
65.19 (11) has defaulted in making payments to creditors on behalf of debtors as required
65.20by agreements between the provider and debtor; or
65.21 (12) has used fraudulent, coercive, or dishonest practices, or demonstrated
65.22incompetence, untrustworthiness, or financial irresponsibility in this state or elsewhere
new text begin ; ornew text end
65.23
new text begin (13) has been shown to have engaged in a pattern of failing to perform the services new text end
65.24
new text begin promisednew text end .
65.25 Sec. 14. Minnesota Statutes 2008, section 332A.10, is amended to read:
65.26
332A.10 WRITTEN DEBT MANAGEMENT SERVICES AGREEMENT.
65.27 Subdivision 1.
Written agreement required. new text begin (a) new text end A debt management services
65.28provider may not perform any debt management services or receive any money related
65.29to a debt management services plan until the provider has obtained a debt management
65.30services agreement that contains all terms of the agreement between the debt management
65.31services provider and the debtor.
65.32
new text begin (b)new text end A debt management services agreement must
new text begin :new text end
65.33
new text begin (1) new text end be in writing, dated, and signed by the debt management services provider and
65.34the debtor
new text begin ;new text end
66.1
new text begin (2) conspicuously indicate whether or not the debt management services provider new text end
66.2
new text begin is registered with the Minnesota Department of Commerce and include any registration new text end
66.3
new text begin number; andnew text end
66.4
new text begin (3) be written in the debtor's primary language if the debt management services new text end
66.5
new text begin provider advertised in that languagenew text end .
66.6
new text begin (c) new text end The registrant must furnish the debtor with a copy of the signed contract upon
66.7execution.
66.8 Subd. 2.
Actions prior to written agreement. No person may provide debt
66.9management services for a debtor
new text begin or execute a debt management services agreement new text end
66.10unless the person first has:
66.11 (1) provided the debtor individualized counseling and educational information
66.12that, at a minimum, addresses managing household finances, managing credit and debt,
66.13budgeting, and personal savings strategies;
66.14 (2) prepared in writing and provided to the debtor, in a form that the debtor may
66.15keep, an individualized financial analysis and a proposed debt management services
66.16plan listing the debtor's known debts with specific recommendations regarding actions
66.17the debtor should take to reduce or eliminate the amount of the debts, including written
66.18disclosure that debt management services are not suitable for all debtors and that there are
66.19other ways, including bankruptcy, to deal with indebtedness;
66.20 (3) made a determination supported by an individualized financial analysis that the
66.21debtor can reasonably meet the requirements of the proposed debt management services
66.22plan and that there is a net tangible benefit to the debtor of entering into the proposed debt
66.23management services plan; and
66.24 (4) prepared, in a form the debtor may keep, a written list identifying all known
66.25creditors of the debtor that the provider reasonably expects to participate in the plan
66.26and the creditors, including secured creditors, that the provider reasonably expects not
66.27to participate
new text begin ; andnew text end
66.28
new text begin (5) disclosed, in addition to the written disclosure on the agreement required under new text end
66.29
new text begin subdivision 1, whether or not the debt management services provider is registered with the new text end
66.30
new text begin Minnesota Department of Commerce and any registration numbernew text end .
66.31 Subd. 3.
Required termsnew text begin provisionsnew text end . (a) Each debt management services
66.32agreement must contain the following terms
new text begin provisionsnew text end , which must be disclosed
66.33prominently and clearly in bold print on the front page of the agreement, segregated by
66.34bold lines from all other information on the page:
66.35 (1) the
new text begin origination new text end fee amount to be paid by the debtor and whether
new text begin all or a portion new text end
66.36
new text begin of new text end the initial
new text begin originationnew text end fee amount is refundable or nonrefundable;
67.1 (2) the monthly fee amount or percentage to be paid by the debtor; and
67.2 (3) the total amount of fees reasonably anticipated to be paid by the debtor over
67.3the term of the agreement.
67.4 (b) Each debt management services agreement must also contain the following:
67.5 (1) a disclosure that if the amount of debt owed is increased by interest, late fees,
67.6over the limit fees, and other amounts imposed by the creditors, the length of the debt
67.7management services agreement will be extended and remain in force and that the total
67.8dollar charges agreed upon may increase at the rate agreed upon in the original contract
67.9agreement;
67.10 (2) a prominent statement describing the terms upon which the debtor may cancel
67.11the contract as set forth in section
332A.11;
67.12 (3) a detailed description of all services to be performed by the debt management
67.13services provider for the debtor;
67.14 (4) the debt management services provider's refund policy; and
67.15 (5) the debt management services provider's principal business address and the name
67.16and address of its agent in this state authorized to receive service of process.
67.17 Subd. 4.
Prohibited terms. The following terms shall not be included in the debt
67.18management services agreement:
67.19 (1) a hold harmless clause;
67.20 (2) a confession of judgment, or a power of attorney to confess judgment against the
67.21debtor or appear as the debtor in any judicial proceeding;
67.22 (3) a waiver of the right to a jury trial, if applicable, in any action brought by
67.23or against a debtor;
67.24 (4) an assignment of or an order for payment of wages or other compensation for
67.25services;
67.26 (5) a provision in which the debtor agrees not to assert any claim or defense arising
67.27out of the debt management services agreement;
67.28 (6) a waiver of any provision of this chapter or a release of any obligation required
67.29to be performed on the part of the debt management services provider; or
67.30 (7) a mandatory arbitration
new text begin or choice of law new text end clause.
67.31 Subd. 5.
New debt management services agreements; modification of existing
67.32
agreements. (a) Separate and additional debt management services agreements that
67.33comply with this chapter may be entered into by the debt management services provider
67.34and the debtor provided that no additional initial
new text begin originationnew text end fee may be charged by the
67.35debt management services provider.
68.1 (b) Any modification of an existing debt management services agreement, including
68.2any increase in the number or amount of debts included in the debt management service
new text begin new text end
68.3
new text begin services agreementnew text end , must be in writing and signed by both parties, except that the signature
68.4of the debtor is not required if:
68.5 (1) a creditor is added to or deleted from a debt management services agreement
68.6at the request of the debtor or a debtor voluntarily increases the amount of a payment,
68.7provided the debt management services provider must provide an updated payment
68.8schedule to the debtor within seven days; or
68.9 (2) the payment amount to a creditor in the agreement increases by $10 or less
68.10and the total payment amount to all creditors increases a total of $20 or less as a result
68.11of incorrect or incomplete information provided by the debtor regarding the amount of
68.12debt owed a creditor, provided the debt management services provider must notify the
68.13debtor of the increase within seven days.
68.14 No fees, charges, or other consideration may be demanded from the debtor for
68.15the modification, other than an increase in the amount of the monthly maintenance fee
68.16established in the original debt management services agreement.
68.17 Sec. 15. Minnesota Statutes 2008, section 332A.11, subdivision 2, is amended to read:
68.18 Subd. 2.
Notice of debtor's right to cancel. A debt management services
68.19agreement must contain, on its face, in an easily readable typeface
new text begin typenew text end immediately
68.20adjacent to the space for signature by the debtor, the following notice: "Right To Cancel:
68.21You have the right to cancel this contract at any time on ten days' written notice."
68.22 Sec. 16. Minnesota Statutes 2008, section 332A.14, is amended to read:
68.23
332A.14 PROHIBITIONS.
68.24 A registrant
new text begin (a) No debt management services providernew text end shall not:
68.25 (1) purchase from a creditor any obligation of a debtor;
68.26 (2) use, threaten to use, seek to have used, or seek to have threatened the use of any
68.27legal process, including but not limited to garnishment and repossession of personal
68.28property, against any debtor while the debt management services agreement between the
68.29registrant and the debtor remains executory;
68.30 (3) advise
new text begin , counsel, or encouragenew text end a debtor to stop paying a creditor until a debt
68.31management services plan is in place
new text begin , or imply, infer, encourage, or in any other way new text end
68.32
new text begin indicate, that it is advisable to stop paying a creditornew text end ;
69.1
new text begin (4) sanction or condone the act by a debtor of ceasing payments or imply, infer, new text end
69.2
new text begin or in any manner indicate that the act of ceasing payments is advisable or beneficial to new text end
69.3
new text begin the debtor;new text end
69.4 (4)
new text begin (5)new text end require as a condition of performing debt management services the purchase
69.5of any services, stock, insurance, commodity, or other property or any interest therein
69.6either by the debtor or the registrant;
69.7 (5)
new text begin (6)new text end compromise any debts unless the prior written approval of the debtor has
69.8been obtained to such compromise and unless such compromise inures solely to the
69.9benefit of the debtor;
69.10 (6)
new text begin (7)new text end receive from any debtor as security or in payment of any fee a promissory
69.11note or other promise to pay or any mortgage or other security, whether as to real or
69.12personal property;
69.13 (7)
new text begin (8)new text end lend money or provide credit to any debtor if any interest or fee is charged,
69.14or directly or indirectly collect any fee for referring, advising, procuring, arranging, or
69.15assisting a consumer in obtaining any extension of credit or other debtor service from a
69.16lender or debt management services provider;
69.17 (8)
new text begin (9)new text end structure a debt management services agreement that would result in negative
69.18amortization of any debt in the plan;
69.19 (9)
new text begin (10)new text end engage in any unfair, deceptive, or unconscionable act or practice in
69.20connection with any service provided to any debtor;
69.21 (10)
new text begin (11)new text end offer, pay, or give any material cash fee, gift, bonus, premium, reward, or
69.22other compensation to any person for referring any prospective customer to the registrant
69.23or for enrolling a debtor in a debt management services plan, or provide any other
69.24incentives for employees or agents of the debt management services provider to induce
69.25debtors to enter into a debt management services plan;
69.26 (11)
new text begin (12)new text end receive any cash, fee, gift, bonus, premium, reward, or other compensation
69.27from any person other than the debtor or a person on the debtor's behalf in connection
69.28with activities as a registrant, provided that this paragraph does not apply to a registrant
69.29which is a bona fide nonprofit corporation duly organized under chapter 317A or under
69.30the similar laws of another state;
69.31 (12)
new text begin (13)new text end enter into a contract with a debtor unless a thorough written budget analysis
69.32indicates that the debtor can reasonably meet the requirements of the financial adjustment
69.33plan and will be benefited by the plan;
69.34 (13)
new text begin (14)new text end in any way charge or purport to charge or provide any debtor credit
69.35insurance in conjunction with any contract or agreement involved in the debt management
69.36services plan;
70.1 (14)
new text begin (15)new text end operate or employ a person who is an employee or owner of a collection
70.2agency or process-serving business; or
70.3 (15)
new text begin (16)new text end solicit, demand, collect, require, or attempt to require payment of a sum
70.4that the registrant states, discloses, or advertises to be a voluntary contribution
new text begin to a debt new text end
70.5
new text begin management services provider or designee new text end from the debtor.
70.6 Sec. 17.
new text begin [332B.02] DEFINITIONS.new text end
70.7
new text begin Subdivision 1.new text end new text begin Scope.new text end new text begin Unless a different meaning is clearly indicated by the context, new text end
70.8
new text begin for the purposes of this chapter, the terms defined in this section have the meanings given new text end
70.9
new text begin them.new text end
70.10
new text begin Subd. 2.new text end new text begin Advertise.new text end new text begin "Advertise" means to solicit business through any means or new text end
70.11
new text begin medium.new text end
70.12
new text begin Subd. 3.new text end new text begin Aggregate debt.new text end new text begin "Aggregate debt" means the total of principal and interest new text end
70.13
new text begin that is owed by the debtor to the creditors at the time of execution of the debt settlement new text end
70.14
new text begin agreement.new text end
70.15
new text begin Subd. 4.new text end new text begin Attorney general.new text end new text begin "Attorney general" means the attorney general of the new text end
70.16
new text begin state of Minnesota.new text end
70.17
new text begin Subd. 5.new text end new text begin Commissioner.new text end new text begin "Commissioner" means the commissioner of commerce.new text end
70.18
new text begin Subd. 6.new text end new text begin Controlling or affiliated party.new text end new text begin "Controlling or affiliated party" means new text end
70.19
new text begin any person or entity that controls or is controlled, directly or indirectly, or is under new text end
70.20
new text begin common control with another person. Controlling or affiliated party includes, but is not new text end
70.21
new text begin limited to, employees, officers, independent contractors, corporations, partnerships, and new text end
70.22
new text begin limited liability corporations.new text end
70.23
new text begin Subd. 7.new text end new text begin Debt settlement services.new text end new text begin "Debt settlement services" means any one or new text end
70.24
new text begin more of the following activities:new text end
70.25
new text begin (1) offering to provide advice, or offering to act or acting as an intermediary between new text end
70.26
new text begin a debtor and one or more of the debtor's creditors, where the primary purpose of the new text end
70.27
new text begin advice or action is to obtain a settlement for less than the full amount of debt, whether new text end
70.28
new text begin in principal, interest, fees, or other charges, incurred primarily for personal, family, or new text end
70.29
new text begin household purposes including, but not limited to, offering debt negotiation, debt reduction, new text end
70.30
new text begin or debt relief services; ornew text end
70.31
new text begin (2) advising, encouraging, assisting, or counseling a debtor to accumulate funds in new text end
70.32
new text begin an account for future payment of a reduced amount of debt to one or more of the debtor's new text end
70.33
new text begin creditors.new text end
71.1
new text begin Any person so engaged or holding out as so engaged is deemed to be engaged in new text end
71.2
new text begin the provision of debt settlement services, regardless of whether or not a fee is charged for new text end
71.3
new text begin such services.new text end
71.4
new text begin Subd. 8.new text end new text begin Debt settlement services agreement.new text end new text begin "Debt settlement services new text end
71.5
new text begin agreement" means the written contract between the debt settlement services provider new text end
71.6
new text begin and the debtor.new text end
71.7
new text begin Subd. 9.new text end new text begin Debt settlement services plan.new text end new text begin "Debt settlement services plan" means the new text end
71.8
new text begin debtor's individualized package of debt settlement services set forth in the debt settlement new text end
71.9
new text begin services agreement.new text end
71.10
new text begin Subd. 10.new text end new text begin Debt settlement services provider.new text end new text begin "Debt settlement services provider" new text end
71.11
new text begin means any person offering or providing debt settlement services to a debtor domiciled new text end
71.12
new text begin in this state, regardless of whether or not a fee is charged for the services and regardless new text end
71.13
new text begin of whether the person maintains a physical presence in the state. The term includes any new text end
71.14
new text begin person to whom duties under a debt management agreement or debt management plan new text end
71.15
new text begin are delegated.new text end
71.16
new text begin Subd. 11.new text end new text begin Person.new text end new text begin "Person" means an individual, firm, partnership, association, new text end
71.17
new text begin or corporation.new text end
71.18 Sec. 18.
new text begin [332B.03] REQUIREMENT OF REGISTRATION.new text end
71.19
new text begin On or after August 1, 2009, it is unlawful for any person, whether or not located new text end
71.20
new text begin in this state, to operate as a debt settlement services provider or provide debt settlement new text end
71.21
new text begin services including, but not limited to, offering, advertising, or executing or causing to be new text end
71.22
new text begin executed any debt settlement services or debt settlement services agreement, except as new text end
71.23
new text begin authorized by law, without first becoming registered as provided in this chapter. Debt new text end
71.24
new text begin settlement services providers may continue to provide debt settlement services without new text end
71.25
new text begin complying with this chapter to those debtors who entered into a contract to participate new text end
71.26
new text begin in a debt settlement services plan prior to August 1, 2009, but may not enter into a debt new text end
71.27
new text begin settlement services agreement with a debt on or after August 1, 2009, without complying new text end
71.28
new text begin with this chapter.new text end
71.29 Sec. 19.
new text begin [332B.04] REGISTRATION.new text end
71.30
new text begin Subdivision 1.new text end new text begin Form.new text end new text begin Application for registration to operate as a debt settlement new text end
71.31
new text begin services provider in this state must be made in writing to the commissioner, under oath, in new text end
71.32
new text begin the form prescribed by the commissioner, and must contain:new text end
71.33
new text begin (1) the full name of each principal of the entity applying;new text end
72.1
new text begin (2) the address, which must not be a post office box, and the telephone number and, new text end
72.2
new text begin if applicable, the e-mail address, of the applicant;new text end
72.3
new text begin (3) consent to the jurisdiction of the courts of this state;new text end
72.4
new text begin (4) the name and address of the registered agent authorized to accept service of new text end
72.5
new text begin process on behalf of the applicant or appointment of the commissioner as the applicant's new text end
72.6
new text begin agent for purposes of accepting service of process;new text end
72.7
new text begin (5) disclosure of:new text end
72.8
new text begin (i) whether any controlling or affiliated party has ever been convicted of a crime new text end
72.9
new text begin or found civilly liable for an offense involving moral turpitude, including forgery, new text end
72.10
new text begin embezzlement, obtaining money under false pretenses, larceny, extortion, conspiracy to new text end
72.11
new text begin defraud, or any other similar offense or violation, or any violation of a federal or state new text end
72.12
new text begin law or regulation in connection with activities relating to the rendition of debt settlement new text end
72.13
new text begin services or involving any consumer fraud, false advertising, deceptive trade practices, or new text end
72.14
new text begin similar consumer protection law;new text end
72.15
new text begin (ii) any judgments, private or public litigation, tax liens, written complaints, new text end
72.16
new text begin administrative actions, or investigations by any government agency against the applicant new text end
72.17
new text begin or any officer, director, manager, or shareholder owning more than five percent interest new text end
72.18
new text begin in the applicant, unresolved or otherwise, filed or otherwise commenced within the new text end
72.19
new text begin preceding ten years;new text end
72.20
new text begin (iii) whether the applicant or any person employed by the applicant has had a record new text end
72.21
new text begin of having defaulted in the payment of money collected for others, including the discharge new text end
72.22
new text begin of debts through bankruptcy proceedings; andnew text end
72.23
new text begin (iv) whether the applicant's license or registration to provide debt settlement services new text end
72.24
new text begin in any other state has ever been revoked or suspended;new text end
72.25
new text begin (6) a copy of the applicant's standard debt settlement services agreement that the new text end
72.26
new text begin applicant intends to execute with debtors;new text end
72.27
new text begin (7) proof of accreditation; andnew text end
72.28
new text begin (8) any other information and material as the commissioner may require.new text end
72.29
new text begin The commissioner may, for good cause shown, temporarily waive any requirement new text end
72.30
new text begin of this subdivision.new text end
72.31
new text begin Subd. 2.new text end new text begin Term and scope of registration.new text end new text begin A registration is effective until 11:59 new text end
72.32
new text begin p.m. on December 31 of the year for which the application for registration is filed or until new text end
72.33
new text begin it is surrendered by the registrant or revoked or suspended by the commissioner. The new text end
72.34
new text begin registration is limited solely to the business of providing debt settlement services.new text end
72.35
new text begin Subd. 3.new text end new text begin Fees; bond.new text end new text begin An applicant for registration as a debt settlement services new text end
72.36
new text begin provider must comply with the requirements of section 332A.04, subdivisions 3, 4, and 5.new text end
73.1
new text begin Subd. 4.new text end new text begin Right of action on bond.new text end new text begin If the registrant has failed to account to a debtor, new text end
73.2
new text begin or has failed to perform any of the services promised, the registrant is in default. The new text end
73.3
new text begin debtor or the debtor's legal representative or receiver, the commissioner, or the attorney new text end
73.4
new text begin general, shall have, in addition to all other legal remedies, a right of action in the name of new text end
73.5
new text begin the debtor on the bond or the security given under this section, for loss suffered by the new text end
73.6
new text begin debtor, not exceeding the face amount of the bond or security, and without the necessity of new text end
73.7
new text begin joining the registrant in the suit or action based on the default.new text end
73.8
new text begin Subd. 5.new text end new text begin Registrant list.new text end new text begin The commissioner must maintain a list of registered debt new text end
73.9
new text begin settlement services providers. The list must be made available to the public in written new text end
73.10
new text begin form upon request and on the Department of Commerce Web site.new text end
73.11
new text begin Subd. 6.new text end new text begin Renewal of registration.new text end new text begin Each year, each registrant under the provisions new text end
73.12
new text begin of this chapter must not, more than 60 nor less than 30 days before its registration is to new text end
73.13
new text begin expire, apply to the commissioner for renewal of its registration on a form prescribed by new text end
73.14
new text begin the commissioner. The application must be signed by the registrant under penalty of new text end
73.15
new text begin perjury, contain current information on all matters required in the original application, and new text end
73.16
new text begin be accompanied by a payment of $250. The registrant must maintain a continuous surety new text end
73.17
new text begin bond that satisfies the requirements of section 332A.04, subdivision 4. The renewal is new text end
73.18
new text begin effective for one year. The commissioner may, for good cause shown, temporarily waive new text end
73.19
new text begin any requirement of this section.new text end
73.20 Sec. 20.
new text begin [332B.05] DENIAL, SUSPENSION, REVOCATION, OR new text end
73.21
new text begin NONRENEWAL OF REGISTRATION.new text end
73.22
new text begin Subdivision 1.new text end new text begin Denial.new text end new text begin The commissioner, with notice to the applicant by certified new text end
73.23
new text begin mail sent to the address listed on the application, may deny an application for a registration new text end
73.24
new text begin for any of the reasons specified under section 332A.08.new text end
73.25
new text begin Subd. 2.new text end new text begin Suspension, revocation, or nonrenewal.new text end new text begin The commissioner may suspend, new text end
73.26
new text begin revoke, or refuse to renew any registration issued under this chapter, or may levy a civil new text end
73.27
new text begin penalty under section 45.027, or any combination of actions, if the debt settlement services new text end
73.28
new text begin provider or any controlling or affiliated person has committed any act or omission for new text end
73.29
new text begin which the commissioner could have refused to issue an initial registration.new text end
73.30
new text begin Subd. 3.new text end new text begin Procedure.new text end new text begin Suspension, revocation, or nonrenewal must be upon notice new text end
73.31
new text begin and under the conditions prescribed in section 332A.09, subdivision 1. Upon issuance of new text end
73.32
new text begin an order suspending, revoking, or refusing to renew a registration, the commissioner:new text end
73.33
new text begin (1) shall follow the procedure established in section 332A.09, subdivision 2; andnew text end
73.34
new text begin (2) may follow the procedure specified in section 332A.09, subdivision 3, concerning new text end
73.35
new text begin the appointment of a receiver for funds of sanctioned registrants.new text end
74.1 Sec. 21.
new text begin [332B.06] WRITTEN DEBT SETTLEMENT SERVICES AGREEMENT; new text end
74.2
new text begin DISCLOSURES; TRUST ACCOUNT.new text end
74.3
new text begin Subdivision 1.new text end new text begin Written agreement required.new text end new text begin (a) A debt settlement services new text end
74.4
new text begin provider may not perform, or impose any charges or receive any payment for, any debt new text end
74.5
new text begin settlement services until the provider and the debtor have executed a debt settlement new text end
74.6
new text begin services agreement that contains all terms of the agreement between the debt settlement new text end
74.7
new text begin services provider and the debtor and complies with all the applicable requirements of new text end
74.8
new text begin this chapter.new text end
74.9
new text begin (b) A debt settlement services agreement must:new text end
74.10
new text begin (1) be in writing, dated, and signed by the debt settlement services provider and new text end
74.11
new text begin the debtor;new text end
74.12
new text begin (2) conspicuously indicate whether or not the debt settlement services provider is new text end
74.13
new text begin registered with the Minnesota Department of Commerce and include any registration new text end
74.14
new text begin number; andnew text end
74.15
new text begin (3) be written in the debtor's primary language if the debt settlement services new text end
74.16
new text begin provider advertises in that language.new text end
74.17
new text begin (c) The registrant must furnish the debtor with a copy of the signed contract upon new text end
74.18
new text begin execution.new text end
74.19
new text begin Subd. 2.new text end new text begin Actions prior to executing a written agreement.new text end new text begin No person may provide new text end
74.20
new text begin debt settlement services for a debtor or execute a debt settlement services agreement new text end
74.21
new text begin unless the person first has: new text end
74.22
new text begin (1) provided the debtor individualized counseling that, at a minimum, addresses new text end
74.23
new text begin managing household finances, managing credit and debt, budgeting, personal savings new text end
74.24
new text begin strategies, and a detailed description of all the various ways to reduce or eliminate the new text end
74.25
new text begin debt, which must, at a minimum, include bankruptcy; andnew text end
74.26
new text begin (2) prepared in writing and provided to the debtor, in a form the debtor may keep, new text end
74.27
new text begin an individualized financial analysis of the debtor's financial circumstances, including new text end
74.28
new text begin income and liabilities, and made a determination supported by the individualized financial new text end
74.29
new text begin analysis that:new text end
74.30
new text begin (i) the debt settlement plan proposed for addressing the debt is suitable for the new text end
74.31
new text begin individual debtor;new text end
74.32
new text begin (ii) the debtor can reasonably meet the requirements of the proposed debt settlement new text end
74.33
new text begin services plan; andnew text end
74.34
new text begin (iii) there is a net tangible benefit to the debtor of entering into the proposed debt new text end
74.35
new text begin settlement services plan.new text end
75.1
new text begin Subd. 3.new text end new text begin Disclosures.new text end new text begin (a) A person offering to provide or providing debt settlement new text end
75.2
new text begin services must disclose both orally and in writing whether or not the person is registered new text end
75.3
new text begin with the Minnesota Department of Commerce and any registration number.new text end
75.4
new text begin (b) No person may provide debt settlement services unless the person first has new text end
75.5
new text begin provided, both orally and in writing, on a single sheet of paper, separate from any other new text end
75.6
new text begin document or writing, the following verbatim notice:new text end
75.7
new text begin WARNINGnew text end
75.8
new text begin We CANNOT GUARANTEE that you will successfully reduce or eliminate your new text end
75.9
new text begin debt.new text end
75.10
new text begin You SHOULD NOT stop paying your creditors.new text end
75.11
new text begin Fees, interest, and other charges will continue to mount up during the (insert new text end
75.12
new text begin number) months this plan is in effect.new text end
75.13
new text begin Even if you sign up for this service:new text end
75.14
new text begin • YOUR WAGES OR BANK ACCOUNT MAY STILL BE GARNISHED.new text end
75.15
new text begin • YOU MAY STILL BE CONTACTED BY CREDITORS.new text end
75.16
new text begin • YOU MAY STILL BE SUED BY CREDITORS for the money you owe.new text end
75.17
new text begin Even if we do settle your debt, YOU MAY STILL HAVE TO PAY TAXES on new text end
75.18
new text begin the amount forgiven.new text end
75.19
new text begin Your credit rating may be adversely affected.new text end
75.20
new text begin (c) The heading, "WARNING," must be in bold, underlined, 28-point type, and the new text end
75.21
new text begin remaining text must be in 14-point type, with a double space between each statement.new text end
75.22
new text begin (d) The disclosure and notice required under this subdivision must be provided in new text end
75.23
new text begin the debtor's primary language if the debt settlement provider advertises in that language.new text end
75.24
new text begin Subd. 4.new text end new text begin Required information.new text end new text begin (a) Each debt settlement services agreement must new text end
75.25
new text begin contain the following information, which must be disclosed prominently and clearly in new text end
75.26
new text begin bold print on the front page of the agreement, segregated by bold lines from all other new text end
75.27
new text begin information on the page:new text end
75.28
new text begin (1) the origination fee amount to be paid by the debtor and whether all or part of the new text end
75.29
new text begin origination fee is refundable or nonrefundable; andnew text end
75.30
new text begin (2) the service fee formula and the total amount of service fees reasonably new text end
75.31
new text begin anticipated to be paid by the debtor over the term of the agreement.new text end
75.32
new text begin (b) Each debt settlement services agreement must also contain the following:new text end
75.33
new text begin (1) a prominent statement describing the terms upon which the debtor may cancel new text end
75.34
new text begin the contract as set forth in section 332B.07;new text end
75.35
new text begin (2) a detailed description of all services to be performed by the debt settlement new text end
75.36
new text begin services provider for the debtor;new text end
76.1
new text begin (3) the debt settlement services provider's refund policy;new text end
76.2
new text begin (4) the debt settlement services provider's principal business address, which must new text end
76.3
new text begin not be a post office box, and the name and address of its agent in this state authorized to new text end
76.4
new text begin receive service of process; andnew text end
76.5
new text begin (5) the name of each creditor the debtor has listed and the aggregate debt owed to new text end
76.6
new text begin each creditor that will be the subject of settlement.new text end
76.7
new text begin Subd. 5.new text end new text begin Prohibited terms.new text end new text begin A debt settlement services agreement may not contain new text end
76.8
new text begin any of the terms prohibited under section 332A.10, subdivision 4.new text end
76.9
new text begin Subd. 6.new text end new text begin New debt settlement services agreements; modifications of existing new text end
76.10
new text begin agreements.new text end new text begin (a) Separate and additional debt settlement services agreements that comply new text end
76.11
new text begin with this chapter may be entered into by the debt settlement services provider and the new text end
76.12
new text begin debtor, provided that no additional origination fee may be charged by the debt settlement new text end
76.13
new text begin services provider.new text end
76.14
new text begin (b) Any modification of an existing debt settlement services agreement, including new text end
76.15
new text begin any increase in the number or amount of debts included in the debt settlement services new text end
76.16
new text begin agreement, must be in writing and signed by both parties. No fee may be charged to new text end
76.17
new text begin modify an existing agreement.new text end
76.18
new text begin Subd. 7.new text end new text begin Payments held in trust.new text end new text begin If the registrant holds funds for the debtor, the new text end
76.19
new text begin registrant must maintain a separate trust account and deposit in the account all payments new text end
76.20
new text begin received from the moment that the funds are available, except that the registrant may new text end
76.21
new text begin commingle the payment with the registrant's own property or funds, but only to the extent new text end
76.22
new text begin necessary to ensure the maintenance of a minimum balance if the financial institution at new text end
76.23
new text begin which the trust account is held requires a minimum balance to avoid the assessment of new text end
76.24
new text begin fees or penalties for failure to maintain a minimum balance. All disbursements, whether new text end
76.25
new text begin to the debtor or to the creditors of the debtor, or to the registrant, must be made from new text end
76.26
new text begin such account.new text end
76.27 Sec. 22.
new text begin [332B.07] RIGHT TO CANCEL.new text end
76.28
new text begin Subdivision 1.new text end new text begin Debtor's right to cancel.new text end new text begin (a) A debtor has the right to cancel a debt new text end
76.29
new text begin settlement services agreement without cause at any time upon ten days' written notice new text end
76.30
new text begin to the debt settlement services provider.new text end
76.31
new text begin (b) In the event of cancellation, the debt settlement services provider must, within new text end
76.32
new text begin ten days of the cancellation, notify the debtor's creditors of the cancellation and provide new text end
76.33
new text begin a refund of all funds paid by or for the debtor to the debt settlement services provider, new text end
76.34
new text begin except for the origination fee specified in section 332B.09, subdivision 1.new text end
77.1
new text begin Subd. 2.new text end new text begin Notice of debtor's right to cancel.new text end new text begin A debt settlement services agreement new text end
77.2
new text begin must contain, on its face, in an easily readable type immediately adjacent to the space for new text end
77.3
new text begin signature by the debtor, the following notice: "Right to Cancel: You have the right to new text end
77.4
new text begin cancel this contract at any time on ten days' written notice."new text end
77.5
new text begin Subd. 3.new text end new text begin Automatic termination.new text end new text begin Upon the payment of all listed or settled debts new text end
77.6
new text begin and fees, the debt settlement services agreement must automatically terminate, and all new text end
77.7
new text begin unexpended funds paid by or for the debtor to the debt settlement services provider must new text end
77.8
new text begin be immediately returned to the debtor.new text end
77.9
new text begin Subd. 4.new text end new text begin Debt settlement services provider's right to cancel.new text end new text begin (a) A debt settlement new text end
77.10
new text begin services provider may cancel a debt settlement services agreement with good cause upon new text end
77.11
new text begin 30 days' written notice to the debtor.new text end
77.12
new text begin (b) Within ten days after the cancellation, the debt settlement services provider must:new text end
77.13
new text begin (1) notify the debtor's creditors of the cancellation; andnew text end
77.14
new text begin (2) return to the debtor all funds paid by or for the debtor to the debt settlement new text end
77.15
new text begin provider, except for the origination fee specified in section 332B.09, subdivision 1.new text end
77.16 Sec. 23.
new text begin [332B.08] BOOKS, RECORDS, AND INFORMATION.new text end
77.17
new text begin Subdivision 1.new text end new text begin Records retention; annual report.new text end new text begin Every registrant must keep, and new text end
77.18
new text begin use in the registrant's business, such books, accounts, and records, including electronic new text end
77.19
new text begin records, as will enable the commissioner to determine whether the registrant is complying new text end
77.20
new text begin with this chapter and the rules, orders, and directives adopted by the commissioner under new text end
77.21
new text begin this chapter. Every registrant must preserve such books, accounts, and records for at least new text end
77.22
new text begin six years after making the final entry on any transaction recorded therein. Examinations new text end
77.23
new text begin of the books, records, and method of operations conducted under the supervision of the new text end
77.24
new text begin commissioner shall be done at the cost of the registrant. The cost must be assessed as new text end
77.25
new text begin determined under section 46.131.new text end
77.26
new text begin Subd. 2.new text end new text begin Annual report.new text end new text begin On or before March 15 of each calendar year, each new text end
77.27
new text begin registrant must file a report with the commissioner containing such information as the new text end
77.28
new text begin commissioner may require about the preceding calendar year. The report must be in a new text end
77.29
new text begin form the commissioner prescribes.new text end
77.30
new text begin Subd. 3.new text end new text begin Statements to debtors.new text end new text begin (a) Each registrant must:new text end
77.31
new text begin (1) maintain and make available records and accounts that will enable each debtor to new text end
77.32
new text begin ascertain the amounts paid to the creditors of the debtor. A statement showing amounts new text end
77.33
new text begin received from the debtor, disbursements to each creditor, amounts that any creditor has new text end
77.34
new text begin agreed to as payment in full for any debt owed the creditor by the debtor, charges deducted new text end
77.35
new text begin by the registrant, and other information as the commissioner may prescribe, must be new text end
78.1
new text begin furnished by the registrant to the debtor at least monthly and, in addition, upon any new text end
78.2
new text begin cancellation or termination of the contract;new text end
78.3
new text begin (2) include in the statement furnished to debtors a list of all activities conducted new text end
78.4
new text begin pursuant to the contract, including the number and description of communications with new text end
78.5
new text begin each creditor during the reporting period; andnew text end
78.6
new text begin (3) prepare and retain in the file of each debtor a written analysis of the debtor's new text end
78.7
new text begin income and expenses to substantiate that the plan of payment is feasible and practicable.new text end
78.8
new text begin (b) Each debtor must have reasonable access, without cost, by electronic or other new text end
78.9
new text begin means, to information in the registrant's files applicable to the debtor. These statements, new text end
78.10
new text begin records, and accounts must otherwise remain confidential, except for duly authorized new text end
78.11
new text begin state and government officials, the commissioner, the attorney general, the debtor, and new text end
78.12
new text begin the debtor's representative and designees.new text end
78.13 Sec. 24.
new text begin [332B.09] FEES, PAYMENTS, AND CONSENT OF CREDITORS.new text end
78.14
new text begin Subdivision 1.new text end new text begin Origination fee.new text end new text begin A debt settlement services provider may charge a new text end
78.15
new text begin nonrefundable origination fee of not more than $50.new text end
78.16
new text begin Subd. 2.new text end new text begin Service fee.new text end new text begin In addition to the origination fee under subdivision 1, a debt new text end
78.17
new text begin settlement services provider may charge a service fee equal to five percent of the savings new text end
78.18
new text begin actually negotiated by the debt settlement services provider. No other fees may be charged. new text end
78.19
new text begin The savings shall be calculated as the difference between the aggregate debt that is stated new text end
78.20
new text begin in the debt settlement services agreement at the time of its execution and total amount new text end
78.21
new text begin that the debtor actually pays to settle all the debts stated in the debt settlement services new text end
78.22
new text begin agreement, provided that only savings resulting from concessions actually negotiated by new text end
78.23
new text begin the debt settlement services provider may be counted.new text end
78.24
new text begin Subd. 3.new text end new text begin Collection of fees.new text end new text begin No debt settlement services provider may claim, new text end
78.25
new text begin demand, charge, collect, or receive any compensation until after the debt settlement new text end
78.26
new text begin service provider has fully performed each and every service the provider has contracted to new text end
78.27
new text begin perform or represented would be performed or as otherwise provided in this section.new text end
78.28
new text begin Subd. 4.new text end new text begin Consent of creditors.new text end new text begin Before providing any services, a debt settlement new text end
78.29
new text begin services provider must obtain the written consent of all creditors that agree to participate in new text end
78.30
new text begin the debt settlement services plan set forth in the debt management services agreement. The new text end
78.31
new text begin debt settlement services provider must notify the debtor within ten days after any failure to new text end
78.32
new text begin obtain the required consent of any creditor and of the debtor's right to cancel the agreement new text end
78.33
new text begin without penalty. If not all creditors listed in the debt settlement services agreement have new text end
78.34
new text begin consented to participate in the debt settlement services plan, the debt settlement services new text end
79.1
new text begin provider must obtain the written authorization from the debtor to proceed with the debt new text end
79.2
new text begin settlement services agreement without the participation of all listed creditors.new text end
79.3
new text begin Subd. 5.new text end new text begin Withdrawal of creditor.new text end new text begin Whenever a creditor withdraws from a debt new text end
79.4
new text begin settlement services plan, the debt settlement services provider must promptly notify the new text end
79.5
new text begin debtor of the withdrawal, identify the creditor, and inform the debtor of the right to cancel new text end
79.6
new text begin the debt settlement services agreement. In no case may this notice be provided more new text end
79.7
new text begin than 15 days after the debt settlement services provider learns of the creditor's decision new text end
79.8
new text begin to withdraw from a plan.new text end
79.9
new text begin Subd. 6.new text end new text begin Timely notification of settlement.new text end new text begin A debt settlement services provider new text end
79.10
new text begin must notify the debtor within 24 hours of settlement of a debt with a creditor.new text end
79.11 Sec. 25.
new text begin [332B.10] PROHIBITIONS.new text end
79.12
new text begin No debt settlement services provider shall:new text end
79.13
new text begin (1) engage in any activity, act, or omission prohibited under section 332A.14;new text end
79.14
new text begin (2) promise, guarantee, or directly or indirectly imply, infer, or in any manner new text end
79.15
new text begin represent that any debt will be settled prior to the presentation to the debtor of an offer by new text end
79.16
new text begin the creditors participating in the debt settlement plan to settle;new text end
79.17
new text begin (3) misrepresent the timing of negotiations with creditors;new text end
79.18
new text begin (4) imply, infer, or in any manner represent that:new text end
79.19
new text begin (i) fees, interest, and other charges will not continue to accrue prior to the time new text end
79.20
new text begin debts are settled;new text end
79.21
new text begin (ii) wages or bank accounts are not subject to garnishment;new text end
79.22
new text begin (iii) creditors will not continue to contact the debtor;new text end
79.23
new text begin (iv) the debtor is not subject to legal action; andnew text end
79.24
new text begin (v) the debtor will not be subject to tax consequences for the portion of any debts new text end
79.25
new text begin forgiven;new text end
79.26
new text begin (5) execute a power of attorney or any other agreement, oral or written, express new text end
79.27
new text begin or implied, that extinguishes or limits the debtor's right at any time to contract or new text end
79.28
new text begin communicate with any creditor or the creditor's right at any time to communicate with new text end
79.29
new text begin the debtor;new text end
79.30
new text begin (6) exercise or attempt to exercise a power of attorney after an individual has new text end
79.31
new text begin terminated an agreement;new text end
79.32
new text begin (7) state, imply, infer, or, in any other manner, indicate that entering into a debt new text end
79.33
new text begin settlement services agreement or settling debts will either have no effect on, or improve, new text end
79.34
new text begin the debtor's credit, credit rating, and credit score;new text end
79.35
new text begin (8) challenge a debt without the written consent of the debtor;new text end
80.1
new text begin (9) make any false or misleading claim regarding a creditor's right to collect a debt;new text end
80.2
new text begin (10) represent that the debt settlement services provider can negotiate better new text end
80.3
new text begin settlement terms with a creditor than the debtor alone can negotiate;new text end
80.4
new text begin (11) provide or offer to provide legal advice or legal services unless the person new text end
80.5
new text begin providing or offering to provide legal advice is licensed to practice law in the state;new text end
80.6
new text begin (12) misrepresent that it is authorized or competent to furnish legal advice or new text end
80.7
new text begin perform legal services; andnew text end
80.8
new text begin (13) settle a debt or lead an individual to believe that a payment to a creditor is in new text end
80.9
new text begin settlement of a debt to the creditor unless, at the time of settlement, the individual receives new text end
80.10
new text begin a certification from the creditor that the payment is in full settlement of the debt.new text end
80.11 Sec. 26.
new text begin [332B.11] ADVERTISEMENT OF DEBT SETTLEMENT SERVICES new text end
80.12
new text begin PLAN.new text end
80.13
new text begin No debt settlement services provider may engage in any activity proscribed by new text end
80.14
new text begin section 332A.16, or represent, claim, imply, or infer that secured debts may be settled.new text end
80.15 Sec. 27.
new text begin [332B.12] DEBT SETTLEMENT SERVICES AGREEMENT new text end
80.16
new text begin RESCISSION.new text end
80.17
new text begin Any debtor has the right to rescind any debt settlement services agreement with a new text end
80.18
new text begin debt settlement services provider that commits a material violation of this chapter. On new text end
80.19
new text begin rescission, all fees paid to the debt settlement services provider or any other person other new text end
80.20
new text begin than creditors of the debtor must be returned to the debtor entering into the debt settlement new text end
80.21
new text begin services agreement within ten days of rescission of the debt settlement services agreement.new text end
80.22 Sec. 28.
new text begin [332B.13] ENFORCEMENT; REMEDIES.new text end
80.23
new text begin Subdivision 1.new text end new text begin Violation as deceptive practice.new text end new text begin A violation of any of the provisions new text end
80.24
new text begin of this chapter is considered an unfair or deceptive trade practice under section 8.31, new text end
80.25
new text begin subdivision 1. A private right of action under section 8.31 by an aggrieved debtor is in new text end
80.26
new text begin the public interest.new text end
80.27
new text begin Subd. 2.new text end new text begin Private right of action.new text end new text begin (a) A debt settlement provider who fails to comply new text end
80.28
new text begin with any of the provisions of this chapter is liable under this section in an individual new text end
80.29
new text begin action for the sum of:new text end
80.30
new text begin (1) actual, incidental, and consequential damages sustained by the debtor as a result new text end
80.31
new text begin of the failure; andnew text end
80.32
new text begin (2) statutory damages of up to $5,000.new text end
81.1
new text begin (b) A debt settlement provider who fails to comply with any of the provisions of this new text end
81.2
new text begin chapter is liable to the named plaintiffs under this section in a class action for the amount new text end
81.3
new text begin that each named plaintiff could recover under paragraph (a), clause (1), and to the other new text end
81.4
new text begin class members for such amount as the court may allow.new text end
81.5
new text begin (c) In determining the amount of statutory damages, the court shall consider, among new text end
81.6
new text begin other relevant factors:new text end
81.7
new text begin (1) the frequency, nature, and persistence of noncompliance;new text end
81.8
new text begin (2) the extent to which the noncompliance was intentional; andnew text end
81.9
new text begin (3) in the case of a class action, the number of debtors adversely affected.new text end
81.10
new text begin (d) A plaintiff or class successful in a legal or equitable action under this section is new text end
81.11
new text begin entitled to the costs of the action, plus reasonable attorney fees.new text end
81.12
new text begin Subd. 3.new text end new text begin Injunctive relief.new text end new text begin A debtor may sue a debt settlement services provider new text end
81.13
new text begin for temporary or permanent injunctive or other appropriate equitable relief to prevent new text end
81.14
new text begin violations of any provision of this chapter. A court must grant injunctive relief on a new text end
81.15
new text begin showing that the debt settlement services provider has violated any provision of this new text end
81.16
new text begin chapter, or in the case of a temporary injunction, on a showing that the debtor is likely to new text end
81.17
new text begin prevail on allegations that the debt settlement services provider violated any provision new text end
81.18
new text begin of this chapter.new text end
81.19
new text begin Subd. 4.new text end new text begin Remedies cumulative.new text end new text begin The remedies provided in this section are new text end
81.20
new text begin cumulative and do not restrict any remedy that is otherwise available. The provisions new text end
81.21
new text begin of this chapter are not exclusive and are in addition to any other requirements, rights, new text end
81.22
new text begin remedies, and penalties provided by law.new text end
81.23
new text begin Subd. 5.new text end new text begin Public enforcement.new text end new text begin The attorney general shall enforce this chapter new text end
81.24
new text begin under section 8.31.new text end
81.25 Sec. 29.
new text begin [332B.14] INVESTIGATIONS.new text end
81.26
new text begin At any reasonable time, the commissioner may examine the books and records of new text end
81.27
new text begin every registrant and of any person engaged in the business of providing debt settlement new text end
81.28
new text begin services. The commissioner, once during any calendar year, may require the submission new text end
81.29
new text begin of an audit prepared by a certified public accountant of the books and records of each new text end
81.30
new text begin registrant. If the registrant has, within one year previous to the commissioner's demand, new text end
81.31
new text begin had an audit prepared for some other purpose, this audit may be submitted to satisfy the new text end
81.32
new text begin requirement of this section. The commissioner may investigate any complaint concerning new text end
81.33
new text begin violations of this chapter and may require the attendance and sworn testimony of witnesses new text end
81.34
new text begin and the production of documents.new text end
