Minnesota Legislature
HF 1938
as introduced - 89th Legislature (2015 - 2016) Posted on 03/17/2015 11:34am
Bill Text Versions
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| Introduction | Posted on 03/17/2015 |
Current Version - as introduced
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A bill for an act
relating to insurance; modifying the workers' compensation self-insurance
program; requiring reports; amending Minnesota Statutes 2014, sections 79A.01,
by adding subdivisions; 79A.02, subdivisions 1, 2, 3; 79A.04, subdivisions 1, 3a;
79A.09, subdivisions 1, 4; 79A.12, subdivision 2; proposing coding for new law
in Minnesota Statutes, chapter 79A.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2014, section 79A.01, is amended by adding a
subdivision to read:
new text begin Subd. 12. new text end
new text begin Alternative security program. new text end
new text begin
"Alternative security program" means
the program authorized under section 79A.041.
new text end
Sec. 2.
Minnesota Statutes 2014, section 79A.01, is amended by adding a subdivision
to read:
new text begin Subd. 13. new text end
new text begin Financial advisor. new text end
new text begin
"Financial advisor" means an entity that provides risk
and investment analysis.
new text end
Sec. 3.
Minnesota Statutes 2014, section 79A.02, subdivision 1, is amended to read:
Subdivision 1.
Membership.
For the purposes of assisting the commissionernew text begin
and the security fundnew text end , there is established a Workers' Compensation Self-insurers'
Advisory Committee of five members that arenew text begin representatives ofnew text end employers authorized to
self-insure in Minnesota. Three of the members and three alternates shall be elected by the
self-insurers' security fund board of trustees and two members and two alternates shall
be appointed by the commissioner.new text begin The commissioner or the commissioner's designee
shall be an ex officio, nonvoting member.
new text end
Sec. 4.
Minnesota Statutes 2014, section 79A.02, subdivision 2, is amended to read:
Subd. 2.
Advice to commissionernew text begin or security fundnew text end .
At the request of the
commissionernew text begin or the security fundnew text end , the committee shall meet and shall advise the
commissionernew text begin and the security fundnew text end with respect to whether or not an applicant to become
a private self-insurer in the state of Minnesota has met the statutory requirements to
self-insurenew text begin , or to participate in the alternative security program under section 79A.041new text end .
The Department of Commerce may furnish the committee with any financial data which
it has, but a member of the advisory committee who may have a conflict of interest
in reviewing the financial data shall not have access to the data nor participate in the
discussions concerning the applicant. Financial data received from the commissioner is
nonpublic data. The committee shall advise the commissionernew text begin and the security fundnew text end if it
has any information that any private self-insurer may become insolvent.
Sec. 5.
Minnesota Statutes 2014, section 79A.02, subdivision 3, is amended to read:
Subd. 3.
Audit of self-insurance application.
(a) The self-insurers' security fund
may retain a certified public accountantnew text begin or financial advisornew text end to perform services for, and
report directly to, the commissioner of commercenew text begin or the security fundnew text end . When requested
by the Workers' Compensation Self-Insurers' Advisory Committee, the certified public
accountantnew text begin or financial advisornew text end shall review an application to self-insure, including the
applicant's financial datanew text begin and creditworthiness established under the alternative security
programnew text end . The certified public accountantnew text begin or financial advisornew text end shall provide a report to
the commissioner of commercenew text begin and the security fundnew text end indicating whether that applicant
has met the requirements of section 79A.03, subdivisions 2 and 3new text begin , or the alternative
security programnew text end . Additionally, the certified public accountantnew text begin or financial advisornew text end shall
provide advice and counsel to the commissionernew text begin and the security fundnew text end about relevant facts
regarding that applicant's financial condition.
(b) If the report of the certified public accountantnew text begin or financial advisornew text end is used by the
commissioner as the basis for the commissioner's determination regarding the applicant's
self-insurance statusnew text begin or the security fund's determination of eligibility to participate in the
alternative security programnew text end , the certified public accountantnew text begin or financial advisornew text end shall be
made available to the commissioner for any hearings or other proceedings arising from
that determination.
(c) The commissioner shall provide the advisory committee with the summary report
by the certified public accountantnew text begin or financial advisornew text end and any financial data in possession
of the Department of Commerce that is otherwise available to the public.
The cost of the review shall be the obligation of the self-insurer's security fund.
Sec. 6.
Minnesota Statutes 2014, section 79A.04, subdivision 1, is amended to read:
Subdivision 1.
Annual securing of liability.
Each year every private self-insuring
employer shall secure incurred liabilities for the payment of compensation and the
performance of its obligations and the obligations of all self-insuring employers imposed
under chapter 176 bynew text begin participating in the alternative security program, if it is established
by the security fund under section 79A.041, ornew text end renewing the prior year's security deposit
or by making a new deposit of security. If a new deposit is made, it must be posted in the
following manner: within 60 days of the filing of the annual report, the security posting
for all prior years plus one-third of the posting for the current year; by July 31, one-third
of the posting for the current year; by October 31, the final one-third of the posting for
the current year.
Sec. 7.
Minnesota Statutes 2014, section 79A.04, subdivision 3a, is amended to read:
Subd. 3a.
Acceptable securities.
The following are acceptable securities and surety
bonds for the purpose of funding self-insurance plans and group self-insurance plans:
(1) direct obligations of the United States government except mortgage-backed
securities of deleted text begin the Government National Mortgage Associationdeleted text end new text begin any kindnew text end ;
(2) bonds, notes, debentures, and other instruments which are obligations of
agencies and instrumentalities of the United States deleted text begin including, but not limited to, the
Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation,
the Federal Home Loan Bank, the Student Loan Marketing Association, and the Farm
Credit System, and their successorsdeleted text end , but not including collateralized mortgage obligations
or mortgage pass-through instruments;
(3) bonds or securities that are issued by the state of Minnesota and that are secured
by the full faith and credit of the state;
(4) certificates of deposit which are insured by the Federal Deposit Insurance
Corporation and deleted text begin are issued by a Minnesota depository institutiondeleted text end new text begin approved by the
commissioner of commercenew text end ;
(5) obligations of, or instruments unconditionally guaranteed by, deleted text begin Minnesota
depositorydeleted text end new text begin financialnew text end institutions whose long-term debt rating is at least AA-, Aa3, or their
equivalent, by at least two nationally recognized rating agencies;
(6) surety bonds issued by a corporate surety authorized by the commissioner of
commerce to transact such business in the state;
(7) obligations of or instruments unconditionally guaranteed by Minnesota insurance
companies, whose long-term debt rating is at least AA-, Aa3, or their equivalent, by at least
two nationally recognized rating agencies and whose rating is A+ by A. M. Best, Inc.; and
(8) deleted text begin any guarantee from the United States government whereby the payment of
the workers' compensation liability of a self-insurer is guaranteed; and bonds which are
the general obligation of the Minnesota Housing Finance Agencydeleted text end new text begin time deposits that are
fully insured by a federal agencynew text end .
Sec. 8.
new text begin
[79A.041] ALTERNATIVE SECURITY PROGRAM.
new text end
new text begin Subdivision 1. new text end
new text begin Creation. new text end
new text begin
Notwithstanding any other provision of this chapter, the
security fund may establish an alternative security program for the purpose of acquiring a
pool of funds to meet its obligations under this chapter, and as an alternative or supplement
to the requirement that members deposit security under section 79A.04, subdivision 1.
new text end
new text begin Subd. 2. new text end
new text begin Member participation. new text end
new text begin
If an alternative security program is established,
all members must participate in the program. The security deposited under section
79A.04, subdivision 1, by members participating in the program shall be released by the
commissioner upon payment of the members' alternative security program assessments.
Except for the obligation to make or renew a deposit of security under section 79A.04,
all other provisions of chapter 79A shall apply with respect to any private self-insurer
that qualifies for and is required to participate in the alternative security program under
this section.
new text end
new text begin Subd. 3. new text end
new text begin Member assessments. new text end
new text begin
(a) The security fund shall assess each member
participating in the alternative security program. The amount of the assessment charged to
each member participating in the program shall be based on the security fund's reasonable
consideration of the following factors:
new text end
new text begin
(1) total amount of assessments necessary to provide security for all participating
members;
new text end
new text begin
(2) individual member's total workers' compensation liabilities under chapter 176;
new text end
new text begin
(3) financial strength and creditworthiness of the individual member; and
new text end
new text begin
(4) any other relevant factors as determined by the security fund.
new text end
new text begin
(b) In order to enable the security fund to determine the workers' compensation
liabilities, financial strength, and creditworthiness of each member, all members
participating in the program are required to file with the security fund the same financial
statements, documents, and reports required to be filed with the commissioner under
section 79A.03. If a member fails to file the required financial statements, documents, and
reports with the security fund, the security fund may establish an assessment rate for the
member that is equal to the highest rate established for any other member. Any financial
statements, documents, or reports provided by the member may not be publicly disclosed
by the security fund and shall be used only for the purpose of implementing the program.
new text end
new text begin
(c) All assessments paid by members to the security fund pursuant to the alternative
security program will be the property of the security fund. Members shall have no right,
claim, or interest in such assessments paid to the security fund. Assessments paid by any
member pursuant to the alternative security program are not a deposit of security and shall
not satisfy any obligation of a member to provide a deposit of security.
new text end
new text begin
(d) The security fund may purchase the financial instruments it determines necessary
to reduce risk in the security fund's financial portfolio, including the purchase of credit
insurance.
new text end
new text begin Subd. 4. new text end
new text begin Annual report to commissioner. new text end
new text begin
If the security fund establishes an
alternative security program, the security fund shall report annually to the commissioner
on the operation of the program. The report must include:
new text end
new text begin
(1) the methodology used to determine the financial strength and creditworthiness of
individual and group private self-insurers participating in the alternative security program;
new text end
new text begin
(2) the standards used to determine which members are excluded from the program;
new text end
new text begin
(3) the capital target range for the program;
new text end
new text begin
(4) the risk management strategies used by the security fund to reduce risk in its
financial portfolio and protect the members from loss;
new text end
new text begin
(5) the investment policy used to govern the investment of the program's financial
assets; and
new text end
new text begin
(6) information about any other provisions the security fund determined were
necessary to implement the program.
new text end
new text begin Subd. 5. new text end
new text begin Termination. new text end
new text begin
The security fund may choose to terminate the alternative
security program. Prior to termination of the alternative security program, the security fund
shall create a plan for termination. The plan is subject to approval by the commissioner.
The security fund shall provide written notice to the members and commissioner at least
six months prior to termination.
new text end
Sec. 9.
Minnesota Statutes 2014, section 79A.09, subdivision 1, is amended to read:
Subdivision 1.
Creation.
The self-insurers' security fund is established as a
nonprofit corporation pursuant to the Minnesota Nonprofit Corporation Act, sections
317A.001 to 317A.909. If any provision of the Minnesota Nonprofit Corporation Act
conflicts with any provision of this chapter, the provisions of this chapter apply. Each
private self-insurer who is self-insured on July 1, 1988, or who becomes self-insured
thereafter, shall participate as a member in the security fund. This participation shall be a
condition of maintaining its certificate to self-insure.new text begin The members of the security fund
are jointly and severally liable for the compensation obligations of the security fund.
new text end
Sec. 10.
Minnesota Statutes 2014, section 79A.09, subdivision 4, is amended to read:
Subd. 4.
Confidential information.
The security fund may receive private
data concerning the financial condition of private self-insurers whose liabilities to pay
compensation have become its responsibility. deleted text begin The data shall become public data upon
its receipt by the security fund.
deleted text end
Sec. 11.
Minnesota Statutes 2014, section 79A.12, subdivision 2, is amended to read:
Subd. 2.
Assessment.
The security fund may assess each of its members a pro
rata share of the funding necessary to carry out its obligation and the purposes of this
chapter. deleted text begin Total annual assessments in any calendar year shall not exceed ten percent of
paid indemnity losses, as defined in section 176.129, made by the self-insured employer
during the preceding calendar year. The annual assessment calculation shall not include
supplementary benefits paid which will be reimbursed by the special compensation fund.deleted text end
Funds obtained by assessments pursuant to this subdivision may only be used for the
purposes of this chapter. The trustees shall certify to the commissioner the collection and
receipt of all money from assessments, noting any delinquencies. The trustees shall take
any action deemed appropriate to collect any delinquent assessments.
Sec. 12. new text begin EFFECTIVE DATE.
new text end
new text begin
Sections 1 to 11 are effective the day following final enactment.
new text end