HF 1405

2nd Engrossment - 87th Legislature (2011 - 2012) Posted on 05/23/2011 11:19am

A bill for an act
relating to insurance; regulating claims processing for insurance on portable
electronics products; permitting use of an automated claims processing system
subject to certain requirements and safeguards; amending Minnesota Statutes
2010, sections 72B.02, by adding a subdivision; 72B.03, subdivision 1; 72B.041,
subdivisions 1, 2, by adding a subdivision; 72B.05.

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

Section 1.

Minnesota Statutes 2010, section 72B.02, is amended by adding a
subdivision to read:

new text begin Subd. 23. new text end

new text begin Automated claims adjudication system. new text end

new text begin "Automated claims
adjudication system" means a preprogrammed computer system designed for the
collection, data entry, calculation, and final resolution of portable electronics insurance
claims relating to coverage regulated by section 60K.381, which:
new text end

new text begin (1) may be utilized only by a licensed independent adjuster; licensed insurance
producer as defined in section 60K.31, subdivision 6; or a supervised individual operating
under section 72B.03, subdivision 1, paragraph (a), clause (14); and
new text end

new text begin (2) must comply with all claims payment requirements of the insurance laws of
this state.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2012.
new text end

Sec. 2.

Minnesota Statutes 2010, section 72B.03, subdivision 1, is amended to read:

Subdivision 1.

Requirement; exceptions.

(a) A person shall not act or hold out
as an independent adjuster, public adjuster, or public adjuster solicitor unless the person
is licensed as an independent adjuster, public adjuster, or public adjuster solicitor in
accordance with this chapter, or is exempt from licensure as an independent adjuster,
public adjuster, or public adjuster solicitor under this chapter.

(b) The definition of adjuster does not include, and a license as an adjuster is not
required of, the following:

(1) attorneys-at-law admitted to practice in this state, when acting in the attorney's
professional capacity as an attorney;

(2) a person employed solely to obtain facts surrounding a claim or to furnish
technical assistance to a licensed adjuster;

(3) an individual who is employed to investigate suspected fraudulent insurance
claims but who does not adjust losses or determine claims payments;

(4) a person who solely performs executive, administrative, managerial, or clerical
duties or any combination of these duties and who does not investigate, negotiate, or settle
claims with policyholders, claimants, or their legal representative;

(5) a licensed health care provider or its employee who provides managed care
services so long as the services do not include the determination of compensability;

(6) a managed care organization or any of its employees or an employee of any
organization providing managed care services so long as the services do not include the
determination of compensability;

(7) a person who settles only reinsurance or subrogation claims;

(8) an officer, director, manager, or employee of an authorized insurer, a surplus lines
insurer, a risk retention group, or an attorney-in-fact of a reciprocal insurer;

(9) a United States manager of the United States branch of an alien insurer;

(10) a person who investigates, negotiates, or settles life, accident and health,
annuity, or disability insurance claims;

(11) an individual employee, under a self-insured arrangement, who adjusts claims
on behalf of the employee's employer;

(12) a licensed insurance producer, attorney-in-fact of a reciprocal insurer, or
managing general agent of the insurer to whom claim authority has been granted by the
insurer;

(13) a person authorized to adjust workers' compensation or disability claims under
the authority of a third-party administrator license pursuant to section 60A.23, subdivision
8 deleted text begin . deleted text end new text begin ; or
new text end

new text begin (14) an individual who:
new text end

new text begin (i) collects claim information from, or furnishes claim information to, insureds or
claimants; and
new text end

new text begin (ii) conducts data entry including entering data into an automated claims adjudication
system, provided that the individual is an employee of a licensed independent adjuster or
its affiliate where no more than 25 such persons are under the supervision of one licensed
independent adjuster or licensed insurance producer who is exempt from licensure under
clause (12).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2012.
new text end

Sec. 3.

Minnesota Statutes 2010, section 72B.041, subdivision 1, is amended to read:

Subdivision 1.

Application.

(a) An individual applying for a resident adjuster
license must make application to the commissioner on the appropriate National
Association of Insurance Commissioners (NAIC) Uniform Individual Application in
a format prescribed by the commissioner and declare under penalty of suspension,
revocation, or refusal of the license that the statements made in the application are true,
correct, and complete to the best of the individual's knowledge and belief. Before
approving the application, the commissioner must find that the individual:

(1) is at least 18 years of age;

(2) is eligible to designate this state as the individual's home state;

(3) is trustworthy, reliable, and of good reputation, evidence of which must be
determined by the commissioner;

(4) has not committed any act that is a ground for probation, suspension, revocation,
or refusal of an adjuster's license as set forth in section 72B.08;

(5) has successfully passed the examination for the lines of authority for which
the individual has applied; and

(6) has paid the fees set forth in subdivision 9.

An applicant for licensing as a public adjuster solicitor under sections 72B.01 to
72B.14 must be at least 18 years of age, must be competent and trustworthy, and must not
have been engaged in any practice which would be grounds for suspension or revocation
of a license under sections 72B.01 to 72B.14 within the three years next preceding the
date of the application.

In the case of any applicant who has been convicted of a felony within the ten years
next preceding the date of the application, and who in the judgment of the commissioner,
meets the other qualifications, the commissioner may impose the additional requirement of
the filing of a bond in accordance with the requirements of section 72B.08, subdivision 8.

(b) A business entity applying for a resident adjuster license must make application
to the commissioner on the appropriate NAIC Uniform Business Entity Application
in a format prescribed by the commissioner and declare under penalty of suspension,
revocation, or refusal of the license that the statements made in the application are true,
correct, and complete to the best of the business entity's knowledge and belief. Before
approving the application, the commissioner shall find that the business entity:

(1) is eligible to designate this state as its home state;

(2) has designated a licensed independent or public adjuster responsible for the
business entity's compliance with the insurance laws, rules, and regulations of this state;

(3) has not committed an act that is a ground for probation, suspension, revocation,
or refusal of an adjuster's license as set forth in section 72B.08; and

(4) has paid the fees set forth in subdivision 9.

new text begin (c) No resident of Canada may be licensed under this section or may designate
Minnesota as the applicant's home state, unless the applicant has successfully passed
the adjuster examination and has complied with the other applicable provisions of this
section, except that such applicant shall not be subject to paragraph (a), clause (2), and
section 270C.72, subdivision 4.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2012.
new text end

Sec. 4.

Minnesota Statutes 2010, section 72B.041, subdivision 2, is amended to read:

Subd. 2.

Criminal history record check; fingerprints.

(a) An individual applying
for a resident independent or public adjuster license must:

(1) consent to a criminal history record check;

(2) submit a fingerprint card in a form acceptable to the commissioner; and

(3) pay the fee required to perform criminal history record checks with the Minnesota
Bureau of Criminal Apprehension and the Federal Bureau of Investigation.

(b) The commissioner may contract for the collection and transmission of
fingerprints required under this chapter and may order the fee for collecting and
transmitting fingerprints to be payable directly to the contractor by the applicant. The
commissioner may agree to a reasonable fingerprinting fee to be charged by the contractor.

(c) The commissioner must treat and maintain an applicant's fingerprints and any
criminal history record information obtained under this chapter as confidential and must
apply security measures consistent with the standards specified by the Criminal Justice
Information Services Division of the Federal Bureau of Investigation for the electronic
storage of fingerprints and necessary identifying information. The commissioner must
limit the use of records solely to the purposes authorized in this chapter. The fingerprints
and any criminal history record information must not be subject to subpoena, other than
one issued in a criminal action or investigation.

(d) The commissioner may receive criminal history record information from another
government agency in lieu of the Minnesota Bureau of Criminal Apprehension.

(e) The commissioner may require any documents reasonably necessary to verify the
information contained in the application.

(f) All applicants for a license as a public adjuster must attach to their application
evidence that the bonding requirement in subdivision 3 has been satisfied.

new text begin (g) All executive officers and directors of a business entity applying for a resident
independent adjuster license to adjust claims relating to portable electronics insurance
claims relating to coverage regulated by section 60K.381 and all executive officers
and directors of entities and any individuals owning, directly or indirectly, more than
50 percent of the outstanding voting securities of that applicant, are subject to the
requirements of this subdivision, paragraphs (a) to (e).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2012.
new text end

Sec. 5.

Minnesota Statutes 2010, section 72B.041, is amended by adding a subdivision
to read:

new text begin Subd. 10. new text end

new text begin Business entity. new text end

new text begin All executive officers and directors of a business
entity applying for a nonresident independent adjuster license to adjust claims relating to
portable electronics insurance claims relating to coverage regulated by section 60K.381
and all executive officers and directors of entities and any individuals owning, directly or
indirectly, more than 50 percent of the outstanding voting securities of that applicant, are
subject to the requirements of subdivision 2, paragraphs (a) to (e). A nonresident business
entity whose home state subjects the applicant to requirements substantially similar to
those under subdivision 2 is not required to comply with subdivision 2.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2012.
new text end

Sec. 6.

Minnesota Statutes 2010, section 72B.05, is amended to read:

72B.05 NONRESIDENTS.

(a) Unless refused licensure pursuant to section 72B.08, a nonresident person shall
receive a nonresident adjuster license if:

(1) the person is currently licensed in good standing as an adjuster in the person's
resident or home state;

(2) the person has submitted the proper request for licensure and has paid the fees
required by section 72B.041, subdivision 9;

(3) the person has submitted or transmitted to the commissioner the appropriate
completed application for licensure; and

(4) the person's designated home state awards nonresident adjuster licenses to
persons of this state on the same basis.

(b) The commissioner may verify the adjuster's licensing status through any
appropriate database, including the producer database maintained by the National
Association of Insurance Commissioners, its affiliates, or its subsidiaries, or may request
certification of good standing as described in section 72B.041, subdivision 5.

(c) As a condition to the continuation of a nonresident adjuster license, the licensee
must maintain a resident adjuster license in the licensee's home state. The nonresident
adjuster license issued under this chapter must terminate and be surrendered immediately
to the commissioner if the resident adjuster license terminates for any reason, unless
the termination is due to the adjuster being issued a new resident adjuster license in the
adjuster's new home state. The new state resident adjuster license must have reciprocity
with the licensing nonresident states, otherwise, the nonresident adjuster license must
terminate. Notice of resident adjuster license termination must be given to any state
that issued a nonresident adjuster license. Notice must be given within 30 days of the
termination date; if terminated for change in the resident home state, then the notice must
include both the previous and current address. Maintaining a resident adjuster license is
required for the nonresident adjuster license to remain valid.

new text begin (d) No resident of Canada may be licensed under this section, unless the applicant is
licensed as a resident adjuster under the laws of another state, except that such applicant
shall not be subject to section 270C.72, subdivision 4.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2012.
new text end