HF 292

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; prohibiting enforcement of 
  1.3             noncompete clauses against agents in certain 
  1.4             circumstances; proposing coding for new law in 
  1.5             Minnesota Statutes, chapter 60A. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [60A.1771] [NONCOMPETE CLAUSES; INVOLUNTARY 
  1.8   TERMINATION OF CAPTIVE AGENTS.] 
  1.9      Subdivision 1.  [DEFINITION.] For purposes of this section, 
  1.10  "captive agent" means an agent who is not in the employ of the 
  1.11  insurance company, who has had an agency contractual 
  1.12  relationship with the insurance company, and who was writing, 
  1.13  prior to termination, 80 percent or more of the agent's business 
  1.14  through that insurance company or its affiliates. 
  1.15     Subd. 2.  [NONCOMPETE CLAUSE; PROHIBITION ON ENFORCEMENT.] 
  1.16  (a) When an insurance company has involuntarily terminated an 
  1.17  agency contractual relationship with a captive agent, any 
  1.18  noncompete clause in the agency contractual relationship is null 
  1.19  and void.  The insurance company must not attempt to enforce the 
  1.20  noncompete clause after the involuntary termination. 
  1.21     (b) Any noncompete clause in an agency contract between a 
  1.22  captive agent and an insurance company must be consistent with 
  1.23  this section. 
  1.24     (c) No waiver of this section is permitted in an agency 
  1.25  contractual relationship.  Any such waiver is null and void. 
  2.1      (d) This section does not apply to an involuntary 
  2.2   termination that is due to the agent's fraud or dishonesty, 
  2.3   noncompliance with insurance laws, or intentional failure to 
  2.4   comply with the agency contract. 
  2.5      Sec. 2.  [EFFECTIVE DATE; APPLICATION.] 
  2.6      Section 1 is effective August 1, 2003, and applies to 
  2.7   agency contractual relationships entered into, renewed, or 
  2.8   amended on or after that date.