HF 504

as introduced - 88th Legislature (2013 - 2014) Posted on 04/10/2013 12:25pm

A bill for an act
relating to workers' compensation reinsurance; eliminating the reinsurance
association prefunded limit; amending Minnesota Statutes 2012, section 79.35.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2012, section 79.35, is amended to read:

79.35 DUTIES; RESPONSIBILITIES; POWERS.

The reinsurance association shall do the following on behalf of its members:

(1) assume 100 percent of the liability as provided in section 79.34;

(2) establish procedures by which members shall promptly report to the reinsurance
association each claim which, on the basis of the injury sustained, may reasonably be
anticipated to involve liability to the reinsurance association if the member is held liable
under chapter 176. Solely for the purpose of reporting claims, the member shall in
all instances consider itself legally liable for the injury. The member shall advise the
reinsurance association of subsequent developments likely to materially affect the interest
of the reinsurance association in the claim;

(3) maintain relevant loss and expense data relative to all liabilities of the reinsurance
association and require each member to furnish statistics in connection with liabilities of
the reinsurance association at the times and in the form and detail as may be required
by the plan of operation;

(4) calculate and charge to members a total premium sufficient to cover the expected
liability which the reinsurance association will incur, together with incurred or estimated
to be incurred operating and administrative expenses for the period to which this premium
applies deleted text begin and actual claim payments to be made by members, during the period to which
this premium applies, for claims in excess of the prefunded limit in effect at the time the
loss was incurred deleted text end . Each member shall be charged a premium established by the board as
sufficient to cover the reinsurance association's incurred liabilities and expenses deleted text begin between
deleted text end new text begin in excess of new text end the member's selected retention limit deleted text begin and the prefunded limit. The prefunded
limit shall be 20 times the lower retention limit established in section 79.34, subdivision
2 deleted text end . Each member shall be charged a proportion of the total premium calculated for its
selected retention limit in an amount equal to its proportion of the exposure base of all
members during the period to which the reinsurance association premium will apply. The
exposure base shall be determined by the board and is subject to the approval of the
commissioner of labor and industry. In determining the exposure base, the board shall
consider, among other things, equity, administrative convenience, records maintained by
members, amenability to audit, and degree of risk refinement. Each member shall also be
charged a premium determined by the board to equitably distribute excess or deficient
premiums from previous periods including any excess or deficient premiums resulting
from a retroactive change in the prefunded limit. The premiums charged to members
shall not be unfairly discriminatory as defined in section 79.074. All premiums shall be
approved by the commissioner of labor and industry;

(5) require and accept the payment of premiums from members of the reinsurance
association;

(6) receive and distribute all sums required by the operation of the reinsurance
association;

(7) establish procedures for reviewing claims procedures and practices of members
of the reinsurance association. If the claims procedures or practices of a member are
considered inadequate to properly service the liabilities of the reinsurance association, the
reinsurance association may undertake, or may contract with another person, including
another member, to adjust or assist in the adjustment of claims which create a potential
liability to the association. The reinsurance association may charge the cost of the
adjustment under this paragraph to the member, except that any penalties or interest
incurred under sections 176.183, 176.221, 176.225, and 176.82 as a result of actions by the
reinsurance association after it has undertaken adjustment of the claim shall not be charged
to the member but shall be included in the ultimate loss and listed as a separate item; and

(8) provide each member of the reinsurance association with an annual report of the
operations of the reinsurance association in a form the board of directors may specify.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2015.
new text end