HF 1669

2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; regulating certain fees, rate 
  1.3             filings, and policy renewals and alterations; 
  1.4             regulating the collection of certain information; 
  1.5             amending Minnesota Statutes 2004, sections 60A.08, 
  1.6             subdivision 3; 60A.14, subdivision 1; 60A.171, 
  1.7             subdivisions 1, 2; 60A.351; 60K.46, subdivision 7; 
  1.8             61A.02, subdivision 2, by adding a subdivision; 
  1.9             62A.02, subdivision 1; 70A.06, subdivision 1; 72A.501, 
  1.10            subdivision 2; proposing coding for new law in 
  1.11            Minnesota Statutes, chapter 60A; repealing Minnesota 
  1.12            Statutes 2004, section 60A.171, subdivision 4. 
  1.13  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.14     Section 1.  Minnesota Statutes 2004, section 60A.08, 
  1.15  subdivision 3, is amended to read: 
  1.16     Subd. 3.  [RENEWAL; NEW POLICY.] Any insurance policy 
  1.17  terminating by its provisions at a specified expiration date or 
  1.18  limited as to term by any statute and not otherwise renewable 
  1.19  may be renewed or extended at the option of the insurer, at the 
  1.20  premium rate then required therefor, for a specific additional 
  1.21  period or periods by a certificate, and without requiring the 
  1.22  issuance of a new policy more than once in any five-year 
  1.23  period.  The insurer must also post the current policy form on 
  1.24  its Web site, and must inform the policyholder annually in 
  1.25  writing that a copy of the current policy form is available on 
  1.26  request. 
  1.27     Sec. 2.  Minnesota Statutes 2004, section 60A.14, 
  1.28  subdivision 1, is amended to read: 
  1.29     Subdivision 1.  [FEES OTHER THAN EXAMINATION FEES.] In 
  2.1   addition to the fees and charges provided for examinations, the 
  2.2   following fees must be paid to the commissioner for deposit in 
  2.3   the general fund: 
  2.4      (a) by township mutual fire insurance companies; 
  2.5      (1) for filing certificate of incorporation $25 and 
  2.6   amendments thereto, $10; 
  2.7      (2) for filing annual statements, $15; 
  2.8      (3) for each annual certificate of authority, $15; 
  2.9      (4) for filing bylaws $25 and amendments thereto, $10; 
  2.10     (b) by other domestic and foreign companies including 
  2.11  fraternals and reciprocal exchanges; 
  2.12     (1) for filing certified copy of certificate of articles of 
  2.13  incorporation, $100; 
  2.14     (2) for filing annual statement, $225; 
  2.15     (3) for filing certified copy of amendment to certificate 
  2.16  or articles of incorporation, $100; 
  2.17     (4) for filing bylaws, $75 or amendments thereto, $75; 
  2.18     (5) for each company's certificate of authority, $575, 
  2.19  annually; 
  2.20     (c) the following general fees apply: 
  2.21     (1) for each certificate, including certified copy of 
  2.22  certificate of authority, renewal, valuation of life policies, 
  2.23  corporate condition or qualification, $25; 
  2.24     (2) for each copy of paper on file in the commissioner's 
  2.25  office 50 cents per page, and $2.50 for certifying the same; 
  2.26     (3) for license to procure insurance in unadmitted foreign 
  2.27  companies, $575; 
  2.28     (4) for valuing the policies of life insurance companies, 
  2.29  one cent per $1,000 of insurance so valued, provided that the 
  2.30  fee shall not exceed $13,000 per year for any company.  The 
  2.31  commissioner may, in lieu of a valuation of the policies of any 
  2.32  foreign life insurance company admitted, or applying for 
  2.33  admission, to do business in this state, accept a certificate of 
  2.34  valuation from the company's own actuary or from the 
  2.35  commissioner of insurance of the state or territory in which the 
  2.36  company is domiciled; 
  3.1      (5) for receiving and filing certificates of policies by 
  3.2   the company's actuary, or by the commissioner of insurance of 
  3.3   any other state or territory, $50; 
  3.4      (6) for each appointment of an agent filed with the 
  3.5   commissioner, $10; 
  3.6      (7) for filing forms and, rates, and compliance 
  3.7   certifications under section 60A.315, $75 per filing, which may 
  3.8   be paid on a quarterly basis in response to an invoice.  Billing 
  3.9   and payment may be made electronically; 
  3.10     (8) for annual renewal of surplus lines insurer license, 
  3.11  $300; 
  3.12     (9) $250 filing fee for a large risk alternative rating 
  3.13  option plan that meets the $250,000 threshold requirement. 
  3.14     The commissioner shall adopt rules to define filings that 
  3.15  are subject to a fee. 
  3.16     Sec. 3.  [60A.315] [EXPEDITED FORM AND RATE FILING.] 
  3.17     Subdivision 1.  [AUTHORITY.] An insurer or rate service 
  3.18  organization otherwise required to file rates and forms under 
  3.19  section 70A.06 may use the expedited filing procedure under this 
  3.20  section for homeowner's insurance and personal automobile 
  3.21  insurance. 
  3.22     Subd. 2.  [COMPLIANCE CERTIFICATIONS.] An insurer or rate 
  3.23  service organization shall file with the Department of Commerce 
  3.24  on a prescribed form a description of the policy, amendment, or 
  3.25  endorsement and a written certification signed by an officer of 
  3.26  the insurer that the forms, policies, amendments, endorsements, 
  3.27  and rates comply with all applicable Minnesota statutes and 
  3.28  rules.  If the filing will impact rates, the description must 
  3.29  identify the rate or rates and rating rules for the product.  
  3.30  Forms and rates filed under this procedure are effective upon 
  3.31  submission to and receipt by the department. 
  3.32     Subd. 3.  [FEES.] In order to be effective, the filing must 
  3.33  be accompanied by payment of the filing fee applicable to the 
  3.34  policy, amendment, endorsement, or rate unless the fee is 
  3.35  remitted in accordance with an alternative procedure allowed 
  3.36  under section 60A.14. 
  4.1      Subd. 4.  [RECORD KEEPING.] The insurer or rate service 
  4.2   organization shall retain the policy, amendment, or endorsement 
  4.3   for at least one year after the insurer or rate service 
  4.4   organization had ceased using the form and shall provide to the 
  4.5   Department of Commerce upon request a copy of any form in use 
  4.6   pursuant to these filing procedures. 
  4.7      Subd. 5.  [REVIEW.] The commissioner of commerce may review 
  4.8   any rate used or filed for use in Minnesota to determine whether 
  4.9   it is excessive, inadequate, or unfairly discriminatory. 
  4.10     Sec. 4.  Minnesota Statutes 2004, section 60A.171, 
  4.11  subdivision 1, is amended to read: 
  4.12     Subdivision 1.  [TERMINATION RIGHTS AND OBLIGATIONS.] (a) 
  4.13  After an agency contractual relationship has been in effect for 
  4.14  a period of three years, an insurance company writing fire or 
  4.15  casualty loss insurance in this state may not terminate the 
  4.16  agency contractual relationship with any appointed agent unless 
  4.17  the company has attempted to rehabilitate the agent as provided 
  4.18  in subdivision 4.  The insurer shall provide written notice of 
  4.19  intent to rehabilitate. 
  4.20     (b) If the agent and company are not able to reach a 
  4.21  mutually acceptable plan of rehabilitation, the company may 
  4.22  terminate the agency contractual relationship after providing 
  4.23  provided written notice of termination to the agent at least 90 
  4.24  60 days in advance of the effective date of the termination. 
  4.25     (c) (b) The notice of termination must include the reasons 
  4.26  for termination and a copy of the notice of intent to 
  4.27  rehabilitate. 
  4.28     (d) (c) An insurance company may not terminate an agency 
  4.29  contract based upon any of the following: 
  4.30     (1) an adverse loss experience for a single year; 
  4.31     (2) the geographic location of the agent's auto and 
  4.32  homeowners insurance business; or 
  4.33     (3) the performance of obligations required of an insurer 
  4.34  under Minnesota Statutes. 
  4.35     (e) (d) For purposes of this section, "fire or casualty 
  4.36  loss insurance" means any line of insurance which an insurance 
  5.1   agent with a personal lines, property, or casualty license under 
  5.2   sections 60K.30 to 60K.56 may write in this state. 
  5.3      Sec. 5.  Minnesota Statutes 2004, section 60A.171, 
  5.4   subdivision 2, is amended to read: 
  5.5      Subd. 2.  [AGENT REQUEST TO RENEW INSURANCE CONTRACT.] The 
  5.6   company shall at the request of the agent renew any insurance 
  5.7   contract written by the agent for the company for not more than 
  5.8   one year for fire or casualty loss insurance during a period 
  5.9   of nine 18 months after the effective date of the termination, 
  5.10  but in the event any risk does not meet current underwriting 
  5.11  standards of the company, the company may decline its renewal, 
  5.12  provided that the company shall give the agent not less than 60 
  5.13  days' notice of its intention not to renew the contract of 
  5.14  insurance.  The company shall not reduce the agent's 
  5.15  commissions, unless the company is reducing the commissions for 
  5.16  other appointed agents in the state at the same time. 
  5.17     Sec. 6.  Minnesota Statutes 2004, section 60A.351, is 
  5.18  amended to read: 
  5.19     60A.351 [RENEWAL OF INSURANCE POLICY WITH ALTERED RATES.] 
  5.20     If an insurance company licensed to do business in this 
  5.21  state offers or purports to offer to renew any commercial 
  5.22  liability and/or property insurance policy at less favorable 
  5.23  terms as to the dollar amount of coverage or deductibles, higher 
  5.24  rates, and/or higher rating plan, the new terms, the new rates 
  5.25  and/or rating plan may take effect on the renewal date of the 
  5.26  policy if the insurer has sent to the policyholder notice of the 
  5.27  new terms, new rates and/or rating plan at least 60 days prior 
  5.28  to the expiration date.  If the insurer has not so notified the 
  5.29  policyholder, the policyholder may elect to cancel the renewal 
  5.30  policy within the 60-day period after receipt of the notice.  
  5.31  Earned premium for the period of coverage, if any, shall be 
  5.32  calculated pro rata upon the prior rate.  This subdivision 
  5.33  section does not apply to ocean marine insurance, accident and 
  5.34  health insurance, and reinsurance, and coverage under the 
  5.35  federal Terrorism Risk Insurance Act. 
  5.36     This section does not apply if the change relates to guide 
  6.1   "a" rates or excess rates also known as "consent to rates" or if 
  6.2   there has been any change in the risk insured. 
  6.3      Sec. 7.  Minnesota Statutes 2004, section 60K.46, 
  6.4   subdivision 7, is amended to read: 
  6.5      Subd. 7.  [ALTERING EXISTING POLICIES; WRITTEN BINDERS 
  6.6   REQUIRED.] An insurance producer having express authority to 
  6.7   bind coverage, who orally agrees on behalf of an insurer to 
  6.8   provide insurance coverage, or to alter an existing insurance 
  6.9   agreement, shall execute and deliver forward a written 
  6.10  memorandum or binder containing the terms of the oral agreement 
  6.11  to the insured within three five business days from the time the 
  6.12  oral agreement is entered, unless the insurer forwards the 
  6.13  information.  The memorandum of coverage or binder may be 
  6.14  forwarded by mail, facsimile, or electronically.  The memorandum 
  6.15  of coverage or binder must be forwarded by mail, unless the 
  6.16  insured authorizes facsimile or electronic transmission of it.  
  6.17  A memorandum of coverage or binder must be provided by the 
  6.18  insurer to the policyholder upon request.  
  6.19     Sec. 8.  Minnesota Statutes 2004, section 61A.02, 
  6.20  subdivision 2, is amended to read: 
  6.21     Subd. 2.  [APPROVAL REQUIRED.] Except as otherwise 
  6.22  authorized pursuant to subdivision 2a, no policy or certificate 
  6.23  of life insurance or annuity contract, issued to an individual, 
  6.24  group, or multiple employer trust, nor any rider of any kind or 
  6.25  description which is made a part thereof shall be issued or 
  6.26  delivered in this state, or be issued by a life insurance 
  6.27  company organized under the laws of this state, until the form 
  6.28  of the same has been approved by the commissioner.  In making a 
  6.29  determination under this section, the commissioner may require 
  6.30  the insurer to provide rates and advertising materials related 
  6.31  to policies or contracts, certificates, or similar evidence of 
  6.32  coverage issued or delivered in this state.  
  6.33     Subdivisions 1 to 5 apply to a policy, certificate of 
  6.34  insurance, or similar evidence of coverage issued to a Minnesota 
  6.35  resident or issued to provide coverage to a Minnesota resident.  
  6.36  Subdivisions 1 to 5 do not apply to a certificate of insurance 
  7.1   or similar evidence of coverage that meets the conditions of 
  7.2   section 61A.093, subdivision 2. 
  7.3      Sec. 9.  Minnesota Statutes 2004, section 61A.02, is 
  7.4   amended by adding a subdivision to read: 
  7.5      Subd. 2a.  [EXPEDITED PROCEDURE FOR LIFE OR ANNUITY 
  7.6   CONTRACTS.] (a) An insurer may file a life or annuity contract 
  7.7   form and all related riders of any kind or description with the 
  7.8   commissioner for a review under this subdivision by an actuary 
  7.9   specified by the commissioner.  The review must be completed 
  7.10  within 60 days of a completed filing.  The cost of this review 
  7.11  must be paid by the insurer submitting the filing under this 
  7.12  subdivision. 
  7.13     (b) If a filing has been disapproved and is resubmitted, 
  7.14  the cover letter must note the disapproval and any changes made 
  7.15  since the earlier filing, with an explanation of why the new 
  7.16  filing should be approved.  Resubmission of disapproved forms 
  7.17  should, where possible, be made within 90 days of disapproval. 
  7.18     (c) The filer may request a hearing within ten days of 
  7.19  receiving a final disapproval.  Within 20 days of the receipt of 
  7.20  the request, the commissioner shall schedule a date for the 
  7.21  hearing, which must occur within 30 days of the scheduling.  At 
  7.22  least ten days' written notice of the hearing must be given to 
  7.23  all interested parties. 
  7.24     (d) The hearing officer may order a prehearing conference 
  7.25  for the resolution or simplification of issues, to be held no 
  7.26  less than three days before the scheduled date of a hearing. 
  7.27     (e) All actuaries used by the commissioner to review rate 
  7.28  applications submitted by insurers pursuant to this subdivision, 
  7.29  whether employed by the department or secured by contract, must 
  7.30  be members of the American Academy of Actuaries with at least 
  7.31  five years' relevant experience in annuity pricing.  If the 
  7.32  department does not have actuaries with the experience required 
  7.33  by this subdivision, the commissioner shall contract with 
  7.34  actuaries to review all rate applications submitted by insurers 
  7.35  pursuant to this subdivision. 
  7.36     Sec. 10.  Minnesota Statutes 2004, section 62A.02, 
  8.1   subdivision 1, is amended to read: 
  8.2      Subdivision 1.  [FILING.] For purposes of this section, 
  8.3   "health plan" means a health plan as defined in section 62A.011 
  8.4   or a policy of accident and sickness insurance as defined in 
  8.5   section 62A.01.  No health plan shall be issued or delivered to 
  8.6   any person in this state, nor shall any application, rider, or 
  8.7   endorsement be used in connection with the health plan, until a 
  8.8   copy of its form and of the classification of risks and the 
  8.9   premium rates pertaining to the form have been filed with the 
  8.10  commissioner.  The filing for nongroup health plan forms shall 
  8.11  include a statement of actuarial reasons and data to support the 
  8.12  rate.  For health benefit plans as defined in section 62L.02, 
  8.13  and for health plans to be issued to individuals, the health 
  8.14  carrier shall file with the commissioner the information 
  8.15  required in section 62L.08, subdivision 8.  For group health 
  8.16  plans for which approval is sought for sales only outside of the 
  8.17  small employer market as defined in section 62L.02, this section 
  8.18  applies only to policies or contracts of accident and sickness 
  8.19  insurance.  All forms intended for issuance in the individual or 
  8.20  small employer market must be accompanied by a statement as to 
  8.21  the expected loss ratio for the form.  Premium rates and forms 
  8.22  relating to specific insureds or proposed insureds, whether 
  8.23  individuals or groups, need not be filed, unless requested by 
  8.24  the commissioner.  Notwithstanding the requirements of this 
  8.25  section, an insurer issuing a long-term care policy, as defined 
  8.26  in section 62A.46 or 62S.01, may elect to use the expedited form 
  8.27  and rate filing procedure under section 60A.315. 
  8.28     Sec. 11.  Minnesota Statutes 2004, section 70A.06, 
  8.29  subdivision 1, is amended to read: 
  8.30     Subdivision 1.  [GENERALLY.] Every licensed insurer and 
  8.31  every rate service organization licensed under section 70A.14, 
  8.32  and every licensed insurer except as otherwise provided in 
  8.33  section 60A.315, shall file with the commissioner all rates and 
  8.34  all changes and amendments of rates made by it for use in this 
  8.35  state not later than their effective date.  No rates contained 
  8.36  in a filing shall become effective unless they have been filed 
  9.1   with the commissioner.  In any filing, the commissioner may 
  9.2   require the insurer or rate service organization to file 
  9.3   supporting data and explanatory data which shall include: 
  9.4      (1) the experience and judgment of the filer, and, to the 
  9.5   extent it wishes or the commissioner requires, of other insurers 
  9.6   or rate service organizations; 
  9.7      (2) its interpretation of any statistical data relied upon; 
  9.8      (3) descriptions of the actuarial and statistical methods 
  9.9   employed; and 
  9.10     (4) any other matters deemed relevant by the commissioner 
  9.11  or the filer.  
  9.12     Notwithstanding the foregoing, if the supporting data is 
  9.13  not filed within 30 days after so requested by the commissioner, 
  9.14  the rate is no longer effective and is presumed to be an 
  9.15  excessive rate. 
  9.16     Sec. 12.  Minnesota Statutes 2004, section 72A.501, 
  9.17  subdivision 2, is amended to read: 
  9.18     Subd. 2.  [APPLICATION.] (a) If the authorization is signed 
  9.19  to collect information in connection with an application for a 
  9.20  property and casualty insurance policy, a policy reinstatement, 
  9.21  or a request for a change in benefits, the authorization must 
  9.22  not remain is valid for longer than one year from the date the 
  9.23  authorization is signed or the date the insurer grants or denies 
  9.24  coverage, reinstatement, or change in benefits, whichever is 
  9.25  sooner as long as the individual is continually insured with the 
  9.26  insurer.  At each renewal of the policy, the insurer must remind 
  9.27  the insured in writing that the authorization remains in effect. 
  9.28     (b) If the authorization is signed to collect information 
  9.29  in connection with an application for a life, disability, and 
  9.30  health insurance policy or contract, reinstatement, or request 
  9.31  for change in benefits, the authorization may not remain is 
  9.32  valid for longer than 26 months from the date the authorization 
  9.33  is signed as long as the individual is continually insured with 
  9.34  the insurer.  At each renewal of the policy, the insurer must 
  9.35  remind the insured in writing that the authorization remains in 
  9.36  effect. 
 10.1      (c) This section and section 72A.502, subdivisions 1 and 
 10.2   12, do not apply to the collection and use of a numeric product 
 10.3   referred to as an insurance score or credit score that is used 
 10.4   by a licensed insurance agent exclusively for the purpose of 
 10.5   underwriting or rating an insurance policy, if the agent informs 
 10.6   the policyholder or prospective policyholder requesting the 
 10.7   insurance coverage that an insurance score or credit score will 
 10.8   be obtained for the purpose of underwriting or rating the policy.
 10.9      (d) This section and section 72A.502, subdivisions 1 and 
 10.10  12, do not apply to the collection and use of a consumer report, 
 10.11  information from a consumer report, or a numeric product 
 10.12  referred to as an insurance score or credit score, that is used 
 10.13  by a licensed insurer exclusively for the purpose of 
 10.14  underwriting or rating an insurance policy, if the insurer or a 
 10.15  licensed insurance agent acting on behalf of the insurer informs 
 10.16  the policyholder or prospective policyholder requesting the 
 10.17  insurance coverage that a consumer report information from a 
 10.18  consumer report, or a numeric product referred to as an 
 10.19  insurance score or credit score, will be obtained for the 
 10.20  purpose of underwriting or rating the policy.  This paragraph is 
 10.21  intended to clarify the provisions of this section and section 
 10.22  72A.502, subdivisions 1 and 12, which do not apply to the 
 10.23  disclosure and collection of consumer report information. 
 10.24     Sec. 13.  [REPEALER.] 
 10.25     Minnesota Statutes 2004, section 60A.171, subdivision 4, is 
 10.26  repealed. 
 10.27     Sec. 14.  [EFFECTIVE DATE; APPLICATION.] 
 10.28     Sections 2, 3, 9, 10, and 11 are effective the day 
 10.29  following final enactment and apply to filings made on or after 
 10.30  that date.