HF 3491

1st Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; providing technical changes; 
  1.3             regulating personal solicitation sales and insurance 
  1.4             information reporting; amending Minnesota Statutes 
  1.5             1998, sections 60A.052, subdivision 1; 60A.129, 
  1.6             subdivision 5; 60K.14, subdivision 1; 61A.092, 
  1.7             subdivision 6; 62A.136; 62C.11, subdivision 1; 
  1.8             62C.142, subdivision 2a; 62S.02, subdivision 1; 
  1.9             64B.30, subdivision 1; 72A.20, subdivision 17; and 
  1.10            72A.499, subdivision 1; Minnesota Statutes 1999 
  1.11            Supplement, sections 60A.052, subdivision 2; and 
  1.12            72A.20, subdivision 23; repealing Minnesota Statutes 
  1.13            1998, sections 62A.285, subdivision 4; 62A.651; 
  1.14            62H.10, subdivision 4; and 65B.13. 
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16     Section 1.  Minnesota Statutes 1998, section 60A.052, 
  1.17  subdivision 1, is amended to read: 
  1.18     Subdivision 1.  [GROUNDS.] The commissioner may by order 
  1.19  take any or all of the following actions:  (a) deny, suspend, or 
  1.20  revoke a certificate of authority; (b) censure the insurance 
  1.21  company; or (c) impose a civil penalty as provided for in 
  1.22  section 45.027, subdivision 6; or (d) under a written agreement 
  1.23  with the insurance company based upon the company's financial 
  1.24  condition, impose conditions or restrictions on the insurance 
  1.25  company's authority to transact business in Minnesota.  In order 
  1.26  to take this action the commissioner must find that the order is 
  1.27  in the public interest, and the insurance company: 
  1.28     (1) has a board of directors or principal management that 
  1.29  is incompetent, untrustworthy, or so lacking in insurance 
  1.30  company managerial experience as to make its operation hazardous 
  2.1   to policyholders, its stockholders, or to the insurance buying 
  2.2   public; 
  2.3      (2) is controlled directly or indirectly through ownership, 
  2.4   management, reinsurance transactions, or other business 
  2.5   relations by any person or persons whose business operations are 
  2.6   or have been marked by manipulation of any assets, reinsurance, 
  2.7   or accounts as to create a hazard to the company's 
  2.8   policyholders, stockholders, or the insurance buying public; 
  2.9      (3) is in an unsound or unsafe condition; 
  2.10     (4) has the actual liabilities that exceed the actual funds 
  2.11  of the company; 
  2.12     (5) has filed an application for a license which is 
  2.13  incomplete in any material respect or contains any statement 
  2.14  which, in light of the circumstances under which it was made, 
  2.15  contained any misrepresentation or was false, misleading, or 
  2.16  fraudulent; 
  2.17     (6) has pled guilty, with or without explicitly admitting 
  2.18  guilt, pled nolo contendere, or been convicted of a felony, 
  2.19  gross misdemeanor, or misdemeanor involving moral turpitude, or 
  2.20  similar conduct; 
  2.21     (7) is permanently or temporarily enjoined by any court of 
  2.22  competent jurisdiction from engaging in or continuing any 
  2.23  conduct or practice involving any aspect of the insurance 
  2.24  business; 
  2.25     (8) has violated or failed to comply with any order of the 
  2.26  insurance regulator of any other state or jurisdiction; 
  2.27     (9) has had a certificate of authority denied, suspended, 
  2.28  or revoked, has been censured or reprimanded, has been the 
  2.29  subject of any other discipline imposed by, or has paid or has 
  2.30  been required to pay a monetary penalty or fine to, another 
  2.31  state; 
  2.32     (10) agents, officers, or directors refuse to submit to 
  2.33  examination or perform any related legal obligation; or 
  2.34     (11) has violated or failed to comply with, any of the 
  2.35  provisions of the insurance laws including chapter 45 or 
  2.36  chapters 60A to 72A or any rule or order under those chapters. 
  3.1      Sec. 2.  Minnesota Statutes 1999 Supplement, section 
  3.2   60A.052, subdivision 2, is amended to read: 
  3.3      Subd. 2.  [SUSPENSION OR REVOCATION OF AUTHORITY OR 
  3.4   CENSURE.] If the commissioner determines that one of the 
  3.5   conditions listed in subdivision 1 exists, the commissioner may 
  3.6   issue an order requiring the insurance company to show cause why 
  3.7   any or all of the following should not occur:  (1) revocation or 
  3.8   suspension of any or all certificates of authority granted to 
  3.9   the foreign or domestic insurance company or its agent; (2) 
  3.10  censuring of the insurance company; (3) cancellation of all or 
  3.11  some of the company's insurance contracts then in force in this 
  3.12  state; or (4) the imposition of a civil penalty; or (5) under a 
  3.13  written agreement with the insurance company based upon the 
  3.14  company's financial condition, imposition of conditions or 
  3.15  restrictions on the insurance company's authority to transact 
  3.16  business in Minnesota.  The order shall be calculated to give 
  3.17  reasonable notice of the time and place for hearing thereon, and 
  3.18  shall state the reasons for the entry of the order.  All 
  3.19  hearings shall be conducted in accordance with chapter 14.  The 
  3.20  insurer may waive its right to the hearing.  If the insurer is 
  3.21  under the supervision or control of the insurance department of 
  3.22  the insurer's state of domicile, that insurance department, 
  3.23  acting on behalf of the insurer, may waive the insurer's right 
  3.24  to the hearing.  After the hearing, the commissioner shall enter 
  3.25  an order disposing of the matter as the facts require.  If the 
  3.26  insurance company fails to appear at a hearing after having been 
  3.27  duly notified of it, the company shall be considered in default, 
  3.28  and the proceeding may be determined against the company upon 
  3.29  consideration of the order to show cause, the allegations of 
  3.30  which may be considered to be true. 
  3.31     Sec. 3.  Minnesota Statutes 1998, section 60A.129, 
  3.32  subdivision 5, is amended to read: 
  3.33     Subd. 5.  [CONSOLIDATED FILING.] (a) The commissioner may 
  3.34  allow an insurer to file a consolidated loss reserve 
  3.35  certification required by subdivision 2, in lieu of separate 
  3.36  loss certifications and may allow an insurer to file 
  4.1   consolidated or combined audited financial statements required 
  4.2   by subdivision 3, paragraph (a), in lieu of separate annual 
  4.3   audited financial statements, where it can be demonstrated that 
  4.4   an insurer is part of a group of insurance companies that has a 
  4.5   pooling or 100 percent reinsurance agreement which substantially 
  4.6   affects the solvency and integrity of the reserves of the 
  4.7   insurer and the insurer cedes all of its direct and assumed 
  4.8   business to the pool.  An affiliated insurance company not 
  4.9   meeting these requirements may be included in the consolidated 
  4.10  or combined audited financial statements, if the company's total 
  4.11  admitted assets are less than five percent of the consolidated 
  4.12  group's total admitted assets.  If these circumstances exist, 
  4.13  then the company may file a written application to file a 
  4.14  consolidated loss reserve certification and/or consolidated or 
  4.15  combined audited financial statements.  This application shall 
  4.16  be for a specified period. 
  4.17     (b) A consolidated annual audit filing shall include a 
  4.18  columnar consolidated or combining worksheet.  Amounts shown on 
  4.19  the audited consolidated or combined financial statement shall 
  4.20  be shown on the worksheet.  Amounts for each insurer shall be 
  4.21  stated separately.  Noninsurance operations may be shown on the 
  4.22  worksheet on a combined or individual basis.  Explanations of 
  4.23  consolidating or eliminating entries shall be shown on the 
  4.24  worksheet.  A reconciliation of any differences between the 
  4.25  amounts shown in the individual insurer columns of the worksheet 
  4.26  and comparable amounts shown on the annual statement of the 
  4.27  insurers shall be included on the worksheet. 
  4.28     Sec. 4.  Minnesota Statutes 1998, section 60K.14, 
  4.29  subdivision 1, is amended to read: 
  4.30     Subdivision 1.  [PERSONAL SOLICITATION OF INSURANCE SALES.] 
  4.31  (a) [DEFINITIONS.] For the purposes of this section, the 
  4.32  following terms have the meanings given them:  
  4.33     (1) "agent" means a person, copartnership, or corporation 
  4.34  required to be licensed pursuant to section 60K.02; and 
  4.35     (2) "personal solicitation" means any contact by an agent, 
  4.36  or any person acting on behalf of an agent, made for the purpose 
  5.1   of selling or attempting to sell insurance, when either the 
  5.2   agent or a person acting for the agent contacts the buyer by 
  5.3   telephone or in person, except:  (i) an attempted sale in which 
  5.4   the buyer personally knows the identity of the agent, the name 
  5.5   of the general agency, if any, which the agent represents, and 
  5.6   the fact that the agent is an insurance agent; (ii) an attempted 
  5.7   sale in which the prospective purchaser of insurance initiated 
  5.8   the contact; or (iii) a personal contact which takes place at 
  5.9   the agent's place of business.  
  5.10     (b)  [DISCLOSURE REQUIREMENT.] Before a personal 
  5.11  solicitation, the agent or person acting for an agent shall, at 
  5.12  the time of initial personal contact with the potential buyer, 
  5.13  clearly and expressly disclose in writing:  
  5.14     (1) the name and state insurance agent license number of 
  5.15  the person making the contact; 
  5.16     (2) the name of the agent, general agency, or insurer that 
  5.17  person represents; and 
  5.18     (3) the fact that the agent, agency, or insurer is in the 
  5.19  business of selling insurance.  
  5.20     If the initial personal contact is made by telephone, the 
  5.21  disclosures required by this subdivision need not be made in 
  5.22  writing. 
  5.23     (c)  [FALSE REPRESENTATION OF GOVERNMENT AFFILIATION.] No 
  5.24  agent or person acting for an agent shall make any communication 
  5.25  to a potential buyer that indicates or gives the impression that 
  5.26  the agent is acting on behalf of a government agency. 
  5.27     Sec. 5.  Minnesota Statutes 1998, section 61A.092, 
  5.28  subdivision 6, is amended to read: 
  5.29     Subd. 6.  [APPLICATION.] This section applies to a policy, 
  5.30  certificate of insurance, or similar evidence of coverage issued 
  5.31  to a Minnesota resident or issued to provide coverage to a 
  5.32  Minnesota resident.  This section does not apply to:  (1) a 
  5.33  certificate of insurance or similar evidence of coverage that 
  5.34  meets the conditions of section 61A.093, subdivision 2; or (2) a 
  5.35  group life insurance policy that contains a provision permitting 
  5.36  the certificate holder, upon termination or layoff from 
  6.1   employment, to retain the coverage provided under the group 
  6.2   policy by paying premiums directly to the insurer, provided that 
  6.3   the employer shall give the employee notice of the employee's 
  6.4   and each related certificate holder's right to continue the 
  6.5   insurance by paying premiums directly to the insurer.  A related 
  6.6   certificate holder is an insured spouse or dependent child of 
  6.7   the employee.  Upon termination of this group policy, each 
  6.8   covered employee, spouse, and dependent child is entitled to 
  6.9   have issued to them a life conversion policy as prescribed in 
  6.10  section 61A.09, subdivision 1, paragraph (h). 
  6.11     Sec. 6.  Minnesota Statutes 1998, section 62A.136, is 
  6.12  amended to read: 
  6.13     62A.136 [DENTAL AND VISION PLAN COVERAGE.] 
  6.14     The following provisions do not apply to health plans 
  6.15  providing dental or vision coverage only:  sections 62A.041; 
  6.16  62A.0411; 62A.047; 62A.149; 62A.151; 62A.152; 62A.154; 62A.155; 
  6.17  62A.17, subdivision 6; 62A.21, subdivision 2b; 62A.26; 
  6.18  62A.28; and 62A.285; 62A.30; 62A.304; 62A.3093; and 62E.16. 
  6.19     Sec. 7.  Minnesota Statutes 1998, section 62C.11, 
  6.20  subdivision 1, is amended to read: 
  6.21     Subdivision 1.  A service plan corporation shall annually 
  6.22  on or before the last day of March, file with the commissioner a 
  6.23  financial statement, in such form as the commissioner shall 
  6.24  prescribe, verified by not less than two of its principal 
  6.25  officers, showing the financial condition of the corporation as 
  6.26  of December 31 of the preceding year.  The statement shall 
  6.27  include an audit report certified by an independent certified 
  6.28  public accountant and reconciled and adjusted to conform to the 
  6.29  financial statement.  
  6.30     Sec. 8.  Minnesota Statutes 1998, section 62C.142, 
  6.31  subdivision 2a, is amended to read: 
  6.32     Subd. 2a.  [CONTINUATION PRIVILEGE.] Every subscriber 
  6.33  contract, other than a contract whose continuance is contingent 
  6.34  upon continued employment or membership, shall contain a 
  6.35  provision which permits continuation of coverage under the 
  6.36  contract for the subscriber's former spouse and children upon 
  7.1   entry of a valid decree of dissolution of marriage, if the 
  7.2   decree requires the subscriber to provide continued coverage for 
  7.3   those persons.  The coverage may be continued until the earlier 
  7.4   of the following dates:  
  7.5      (a) the date of remarriage of either the subscriber or the 
  7.6   subscriber's former spouse becomes covered under any other group 
  7.7   health plan; or 
  7.8      (b) the date coverage would otherwise terminate under the 
  7.9   subscriber contract.  
  7.10     The contract must require the group contract holder to, 
  7.11  upon request, provide the insured with written verification from 
  7.12  the insurer of the cost of this coverage promptly at the time of 
  7.13  eligibility for this coverage and at any time during the 
  7.14  continuation period.  In no event shall the amount of premium 
  7.15  charged exceed 102 percent of the cost to the plan for such 
  7.16  period of coverage for other similarly situated spouses and 
  7.17  dependent children with respect to whom the marital relationship 
  7.18  has not dissolved, without regard to whether such cost is paid 
  7.19  by the employer or employee. 
  7.20     Sec. 9.  Minnesota Statutes 1998, section 62S.02, 
  7.21  subdivision 1, is amended to read: 
  7.22     Subdivision 1.  [REQUIREMENTS.] A qualified long-term care 
  7.23  insurance policy may not be offered, issued, delivered, or 
  7.24  renewed in this state unless the policy satisfies the 
  7.25  requirements of this chapter and the filing provisions of 
  7.26  section 62A.02.  A qualified long-term care insurance policy 
  7.27  must cover qualified long-term care services. 
  7.28     Sec. 10.  Minnesota Statutes 1998, section 64B.30, 
  7.29  subdivision 1, is amended to read: 
  7.30     Subdivision 1.  [VISITATION AND EXAMINATION.] The 
  7.31  commissioner, or any person the commissioner may appoint, shall 
  7.32  have the power of visitation and examination into the affairs of 
  7.33  any domestic society.  The commissioner shall conduct an 
  7.34  examination at least once in every three years as often as is 
  7.35  required in section 60A.031, subdivision 1.  The commissioner 
  7.36  may: 
  8.1      (1) employ assistance for the purposes of examination and 
  8.2   the commissioner, or any person the commissioner may appoint, 
  8.3   shall have free access to any books, papers, and documents that 
  8.4   relate to the business of the association; and 
  8.5      (2) summon and qualify as witnesses, under oath, and 
  8.6   examine its officers, agents, and employees, or other persons, 
  8.7   in relation to the affairs, transactions, and condition of the 
  8.8   association. 
  8.9      Sec. 11.  Minnesota Statutes 1998, section 72A.20, 
  8.10  subdivision 17, is amended to read: 
  8.11     Subd. 17.  [RETURN OF PREMIUMS.] (a) Refusing, upon 
  8.12  surrender of an individual policy of life insurance in the case 
  8.13  of the insured's death, or in the case of a surrender prior to 
  8.14  death, of an individual insurance policy not covered by the 
  8.15  standard nonforfeiture laws under section 61A.24, to refund to 
  8.16  the owner all unearned premiums paid on the policy covering the 
  8.17  insured as of the time of the insured's death or surrender if 
  8.18  the unearned premium is for a period of more than one 
  8.19  month.  The return of unearned premium must be delivered to the 
  8.20  insured within 30 days following surrender of the policy and 
  8.21  receipt by the insurer of the insured's request for cancellation.
  8.22     (b) Refusing, upon termination or cancellation of a policy 
  8.23  of automobile insurance under section 65B.14, subdivision 2, or 
  8.24  a policy of homeowner's insurance under section 65A.27, 
  8.25  subdivision 4, or a policy of accident and sickness insurance 
  8.26  under section 62A.01, or a policy of comprehensive health 
  8.27  insurance under chapter 62E, to refund to the insured all 
  8.28  unearned premiums paid on the policy covering the insured as of 
  8.29  the time of the termination or cancellation if the unearned 
  8.30  premium is for a period of more than one month.  The return of 
  8.31  unearned premium must be delivered to the insured within 30 days 
  8.32  following receipt by the insurer of the insured's request for 
  8.33  cancellation. 
  8.34     (c) This subdivision does not apply to policies of 
  8.35  insurance providing coverage only for motorcycles or other 
  8.36  seasonally rated or limited use vehicles where the rate is 
  9.1   reduced to reflect seasonal or limited use. 
  9.2      (d) For purposes of this section, a premium is unearned 
  9.3   during the period of time the insurer has not been exposed to 
  9.4   any risk of loss.  Except for premiums for motorcycle coverage 
  9.5   or other seasonally rated or limited use vehicles where the rate 
  9.6   is reduced to reflect seasonal or limited use, the unearned 
  9.7   premium is determined by multiplying the premium by the fraction 
  9.8   that results from dividing the period of time from the date of 
  9.9   termination to the date the next scheduled premium is due by the 
  9.10  period of time for which the premium was paid. 
  9.11     (e) The owner may cancel a policy referred to in this 
  9.12  section at any time during the policy period.  This provision 
  9.13  supersedes any inconsistent provision of law or any inconsistent 
  9.14  policy provision. 
  9.15     Sec. 12.  Minnesota Statutes 1999 Supplement, section 
  9.16  72A.20, subdivision 23, is amended to read: 
  9.17     Subd. 23.  [DISCRIMINATION IN AUTOMOBILE INSURANCE 
  9.18  POLICIES.] (a) No insurer that offers an automobile insurance 
  9.19  policy in this state shall: 
  9.20     (1) use the employment status of the applicant as an 
  9.21  underwriting standard or guideline; or 
  9.22     (2) deny coverage to a policyholder for the same reason. 
  9.23     (b) No insurer that offers an automobile insurance policy 
  9.24  in this state shall: 
  9.25     (1) use the applicant's status as a residential tenant, as 
  9.26  the term is defined in section 504B.001, subdivision 12, as an 
  9.27  underwriting standard or guideline; or 
  9.28     (2) deny coverage to a policyholder for the same reason; or 
  9.29     (3) make any discrimination in offering or establishing 
  9.30  rates, premiums, dividends, or benefits of any kind, or by way 
  9.31  of rebate, for the same reason.  
  9.32     (c) No insurer that offers an automobile insurance policy 
  9.33  in this state shall: 
  9.34     (1) use the failure of the applicant to have an automobile 
  9.35  policy in force during any period of time before the application 
  9.36  is made as an underwriting standard or guideline; or 
 10.1      (2) deny coverage to a policyholder for the same reason. 
 10.2      This provision Paragraph (c) does not apply if the 
 10.3   applicant was required by law to maintain automobile insurance 
 10.4   coverage and failed to do so. 
 10.5      An insurer may require reasonable proof that the applicant 
 10.6   did not fail to maintain this coverage.  The insurer is not 
 10.7   required to accept the mere lack of a conviction or citation for 
 10.8   failure to maintain this coverage as proof of failure to 
 10.9   maintain coverage.  The insurer must provide the applicant with 
 10.10  information identifying the documentation that is required to 
 10.11  establish reasonable proof that the applicant did not fail to 
 10.12  maintain the coverage. 
 10.13     (d) No insurer that offers an automobile insurance policy 
 10.14  in this state shall use an applicant's prior claims for benefits 
 10.15  paid under section 65B.44 as an underwriting standard or 
 10.16  guideline if the applicant was 50 percent or less negligent in 
 10.17  the accident or accidents causing the claims. 
 10.18     (e) No insurer shall refuse to issue any standard or 
 10.19  preferred policy of motor vehicle insurance or make any 
 10.20  discrimination in the acceptance of risks, in rates, premiums, 
 10.21  dividends, or benefits of any kind, or by way of rebate:  
 10.22     (1) between persons of the same class, or 
 10.23     (2) on account of race, or 
 10.24     (3) on account of physical handicap if the handicap is 
 10.25  compensated for by special training, equipment, prosthetic 
 10.26  device, corrective lenses, or medication and if the physically 
 10.27  handicapped person: 
 10.28     (i) is licensed by the department of public safety to 
 10.29  operate a motor vehicle in this state, and 
 10.30     (ii) operates only vehicles that are equipped with 
 10.31  auxiliary devices and equipment necessary for safe and effective 
 10.32  operation by the handicapped person, or 
 10.33     (4) on account of marital dissolution.  
 10.34     Sec. 13.  Minnesota Statutes 1998, section 72A.499, 
 10.35  subdivision 1, is amended to read: 
 10.36     Subdivision 1.  [NOTICE AND INFORMATION.] In the event of 
 11.1   an adverse underwriting decision, the insurer or insurance agent 
 11.2   responsible for the decision shall provide in writing to the 
 11.3   applicant, policyholder, or individual proposed for coverage: 
 11.4      (1) the specific reason or reasons for the adverse 
 11.5   underwriting decision, a summary of the person's rights under 
 11.6   sections 72A.497 and 72A.498, and that upon request the person 
 11.7   may receive the specific items of personal information that 
 11.8   support those reasons and the specific sources of the 
 11.9   information; or 
 11.10     (2) the specific reason or reasons for the adverse 
 11.11  underwriting decision, the specific items of personal and 
 11.12  privileged information that support those reasons, the names and 
 11.13  addresses of the sources that supplied the specific items of 
 11.14  information specified, and a summary of the rights established 
 11.15  under sections 72A.497 and 72A.498; or 
 11.16     (3) if the adverse underwriting decision is either solely 
 11.17  or partially based upon a report of credit worthiness, credit 
 11.18  standing, or credit capacity that an insurer receives from a 
 11.19  consumer reporting agency, the primary reason or reasons for the 
 11.20  credit score or codes or other credit based information used by 
 11.21  the insurer in the insurer's underwriting. 
 11.22     Sec. 14.  [REPEALER.] 
 11.23     Minnesota Statutes 1998, sections 62A.285, subdivision 4; 
 11.24  62A.651; 62H.10, subdivision 4; and 65B.13, are repealed. 
 11.25     Sec. 15.  [EFFECTIVE DATES.] 
 11.26     Sections 1, 2, 4, 6, 7, 8, 9, and 12 to 14 are effective 
 11.27  the day following enactment.