Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

HF 2994

as introduced - 89th Legislature (2015 - 2016) Posted on 06/02/2016 09:04am

KEY: stricken = removed, old language.
underscored = added, new language.
Line numbers 1.1 1.2 1.3 1.4
1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 1.23 1.24 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20 2.21 2.22 2.23 2.24 2.25 2.26 2.27 2.28 2.29 2.30 2.31 2.32 2.33 2.34 2.35 2.36 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25

A bill for an act
relating to workers' compensation; reinsurance; modifying retention limits;
amending Minnesota Statutes 2014, section 79.34, subdivision 2.

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

Section 1.

Minnesota Statutes 2014, section 79.34, subdivision 2, is amended to read:


Subd. 2.

Losses; retention limits.

The reinsurance association shall provide and
each member shall accept indemnification for 100 percent of the amount of ultimate loss
sustained in each loss occurrence relating to one or more claims arising out of a single
compensable event, including aggregate losses related to a single event or occurrence
which constitutes a single loss occurrence, under chapter 176 on and after October 1,
1979, in excess of a low, a high, deleted text beginordeleted text end a supernew text begin, or a jumbonew text end retention limit, at the option of
the member. In case of occupational disease causing disablement on and after October
1, 1979, each person suffering disablement due to occupational disease is considered
to be involved in a separate loss occurrence. deleted text beginOn January 1, 1995, the lower retention
limit is $250,000, which shall also be known as the 1995 base retention limit. On each
January 1 thereafter, the cumulative annual percentage changes in the statewide average
weekly wage after October 1, 1994, as determined in accordance with section 176.011,
subdivision 1b
, shall first be multiplied by the 1995 base retention limit, the result of which
shall then be added to the 1995 base retention limit. The resulting figure shall be rounded
to the nearest $10,000, yielding the low retention limit for that year, provided that the low
retention limit shall not be reduced in any year.
deleted text endnew text begin The low retention limit shall be $500,000
in 2016. The board may determine future adjustments to the low retention limit subject to
the approval of the commissioner of labor and industry. In determining whether to approve
an adjustment to the low retention limit, the commissioner shall consider costs, inflation,
the impact on members, and workers' compensation reinsurance markets in other states.
new text endThe high retention limit shall be two times the low retention limit and shall be adjusted
when the low retention limit is adjusted. The super retention limit shall be four times the
low retention limit and shall be adjusted when the low retention limit is adjusted.new text begin Effective
January 1, 2018, the jumbo retention limit shall be ten times the low retention limit and
shall be adjusted when the low retention limit is adjusted.
new text end Ultimate loss as used in this
section means the actual loss amount which a member is obligated to pay and which is paid
by the member for workers' compensation benefits payable under chapter 176 and shall not
include claim expenses, assessments, damages or penalties. For losses incurred on or after
January 1, 1979, any amounts paid by a member pursuant to sections 176.183, 176.221,
176.225, and 176.82 shall not be included in ultimate loss and shall not be indemnified by
the reinsurance association. A loss is incurred by the reinsurance association on the date
on which the accident or other compensable event giving rise to the loss occurs, and a
member is liable for a loss up to its retention limit in effect at the time that the loss was
incurred, except that members which are determined by the reinsurance association to be
controlled by or under common control with another member, and which are liable for
claims from one or more employees entitled to compensation for a single compensable
event, including aggregate losses relating to a single loss occurrence, may aggregate their
losses and obtain indemnification from the reinsurance association for the aggregate losses
in excess of the highest retention limit selected by any of the members in effect at the time
the loss was incurred. Each member is liable for payment of its ultimate loss and shall be
entitled to indemnification from the reinsurance association for the ultimate loss in excess
of the member's retention limit in effect at the time of the loss occurrence.

A member that chooses the high deleted text beginordeleted text endnew text begin,new text end supernew text begin, or jumbonew text end retention limit shall retain
the liability for all losses below the chosen retention limit itself and shall not transfer
the liability to any other entity or reinsure or otherwise contract for reimbursement or
indemnification for losses below its retention limit, except in the following cases: (a)
when the reinsurance or contract is with another member which, directly or indirectly,
through one or more intermediaries, control or are controlled by or are under common
control with the member; (b) when the reinsurance or contract provides for reimbursement
or indemnification of a member if and only if the total of all claims which the member
pays or incurs, but which are not reimbursable or subject to indemnification by the
reinsurance association for a given period of time, exceeds a dollar value or percentage of
premium written or earned and stated in the reinsurance agreement or contract; (c) when
the reinsurance or contract is a pooling arrangement with other insurers where liability of
the member to pay claims pursuant to chapter 176 is incidental to participation in the pool
and not as a result of providing workers' compensation insurance to employers on a direct
basis under chapter 176; (d) when the reinsurance or contract is limited to all the claims of
a specific insured of a member which are reimbursed or indemnified by a reinsurer which,
directly or indirectly, through one or more intermediaries, controls or is controlled by
or is under common control with the insured of the member so long as any subsequent
contract or reinsurance of the reinsurer relating to the claims of the insured of a member is
not inconsistent with the bases of exception provided under clauses (a), (b) and (c); or (e)
when the reinsurance or contract is limited to all claims of a specific self-insurer member
which are reimbursed or indemnified by a reinsurer which, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common control with
the self-insurer member so long as any subsequent contract or reinsurance of the reinsurer
relating to the claims of the self-insurer member are not inconsistent with the bases for
exception provided under clauses (a), (b) and (c).

Whenever it appears to the commissioner of labor and industry that any member
that chooses the high deleted text beginordeleted text endnew text begin,new text end supernew text begin, or jumbonew text end retention limit has participated in the transfer
of liability to any other entity or reinsured or otherwise contracted for reimbursement
or indemnification of losses below its retention limit in a manner inconsistent with the
bases for exception provided under clauses (a), (b), (c), (d), and (e), the commissioner
may, after giving notice and an opportunity to be heard, order the member to pay to the
state of Minnesota an amount not to exceed twice the difference between the reinsurance
premium for the high deleted text beginordeleted text endnew text begin,new text end supernew text begin, or jumbonew text end retention limit, as appropriate, and the low
retention limit applicable to the member for each year in which the prohibited reinsurance
or contract was in effect. Any member subject to this penalty provision shall continue to
be bound by its selection of the high deleted text beginordeleted text endnew text begin,new text end supernew text begin, or jumbonew text end retention limit for purposes of
membership in the reinsurance association.