relating to commerce; regulating insurance fees, coverages, contracts, filings,
and forms; regulating financial planners, motor vehicle retail installment sales,
service contracts, real estate appraisers, subdivided lands, domestic mutual
insurance companies, and collection agencies; merging certain joint underwriting
associations; making technical and clarifying changes;amending Minnesota
Statutes 2006, sections 53C.01, subdivision 2; 59B.01; 59B.02, subdivision
11, by adding a subdivision; 59B.05, subdivision 5; 60A.71, subdivision 7;
61A.57; 62A.149, subdivision 1; 62A.152, subdivision 2; 62A.44, by adding a
subdivision; 62E.10, subdivision 2; 62F.02, by adding a subdivision; 62M.02,
subdivision 21; 62Q.47; 62Q.64; 62S.01, by adding subdivisions; 62S.13,
subdivision 4; 62S.15; 62S.18, subdivision 2; 62S.20, subdivision 6, by adding
subdivisions; 62S.26, subdivision 2; 62S.266, subdivisions 4, 10; 62S.29, by
adding subdivisions; 65A.37; 66A.02, subdivision 4; 66A.07, subdivision 2, by
adding a subdivision; 66A.41, subdivision 1; 67A.31, subdivision 2; 72A.51,
subdivision 2; 79A.06, subdivision 5; 79A.22, subdivisions 3, 4; 79A.23,
subdivision 2; 82B.23, subdivision 1; 83.25, by adding a subdivision; Minnesota
Statutes 2007 Supplement, sections 61A.257, subdivision 1; 62A.30, subdivision
2; 62S.23, subdivision 1; 72A.52, subdivision 1; proposing coding for new law
in Minnesota Statutes, chapters 62S; 332; repealing Minnesota Statutes 2006,
sections 62A.149, subdivision 2; 65B.29; Laws 2006, chapter 255, section 26.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 2006, section 53C.01, subdivision 2, is amended to read:
Subd. 2. Cash sale price.
"Cash sale price" means the price at which the seller
would in good faith sell to the buyer, and the buyer would in good faith buy from the seller,
the motor vehicle which is the subject matter of the retail installment contract, if such sale
were a sale for cash, instead of a retail installment sale. The cash sale price may include
any taxes, charges for delivery, servicing, repairing, or improving the motor vehicle,
including accessories and their installation, and any other charges agreed upon between
the parties. The cash price may not include a documentary fee or document administration
fee in excess of
for services actually rendered to, for, or on behalf of, the retail
buyer in preparing, handling, and processing documents relating to the motor vehicle and
the closing of the retail sale. "Documentary fee" and "document administration fee" do
not include an optional electronic transfer fee as defined under subdivision 14.
Sec. 2. Minnesota Statutes 2006, section 59B.01, is amended to read:
2.559B.01 SCOPE AND PURPOSE.
(a) The purpose of this chapter is to create a legal framework within which service
contracts may be sold in this state.
(b) The following are exempt from this chapter:
(2) maintenance agreements;
(3) warranties, service contracts, or maintenance agreements offered by public
utilities, as defined in section
216B.02, subdivision 4
, or an entity or operating unit owned
by or under common control with a public utility;
(4) service contracts sold or offered for sale to persons other than consumers;
(5) service contracts on tangible property where the tangible property for which the
service contract is sold has a purchase price of $250 or less, exclusive of sales tax;
(6) motor vehicle service contracts as defined in section
65B.29, subdivision 1 ,
2.18 paragraph (1);
2.19 (7) (6)
service contracts for home security equipment installed by a licensed
technology systems contractor; and
motor club membership contracts that typically provide roadside assistance
services to motorists stranded for reasons that include, but are not limited to, mechanical
breakdown or adverse road conditions.
(c) The types of agreements referred to in paragraph (b) are not subject to chapters
60A to 79A, except as otherwise specifically provided by law.
2.26 (d) Service contracts issued by motor vehicle manufacturers covering private
2.27passenger automobiles are only subject to sections 59B.03, subdivision 5, 59B.05, and
Sec. 3. Minnesota Statutes 2006, section 59B.02, is amended by adding a subdivision
2.31 Subd. 5a. Motor vehicle manufacturer. "Motor vehicle manufacturer" means
2.32a person that:
2.33 (1) manufactures or produces motor vehicles and sells motor vehicles under its
2.34own name or label;
3.1 (2) is a wholly owned subsidiary of the person that manufactures or produces motor
3.3 (3) is a corporation which owns 100 percent of the person that manufactures or
3.4produces motor vehicles;
3.5 (4) does not manufacture or produce motor vehicles, but sells motor vehicles under
3.6the trade name or label of another person that manufactures or produces motor vehicles;
3.7 (5) manufactures or produces motor vehicles and sells the motor vehicles under the
3.8trade name or label of another person that manufactures or produces motor vehicles; or
3.9 (6) does not manufacture or produce motor vehicles but, pursuant to a written
3.10contract, licenses the use of its trade name or label to another person that manufactures
3.11or produces motor vehicles and that sells motor vehicles under the licensor's trade name
Sec. 4. Minnesota Statutes 2006, section 59B.02, subdivision 11, is amended to read:
Subd. 11. Service contract.
"Service contract" means a contract or agreement for a
separately stated consideration for a specific duration to perform the repair, replacement,
or maintenance of property or indemnification for repair, replacement, or maintenance, for
the operational or structural failure due to a defect in materials, workmanship, or normal
wear and tear, with or without additional provisions for incidental payment of indemnity
under limited circumstances, including without limitation, towing, rental, emergency
3.20road service, and road hazard protection
. Service contracts may provide for the repair,
replacement, or maintenance of property for damage resulting from power surges and
accidental damage from handling.
Sec. 5. Minnesota Statutes 2006, section 59B.05, subdivision 5, is amended to read:
Subd. 5. Coverages, limitations, and exclusions.
No particular causes of loss or
property are required to be covered, but service contracts must specify the merchandise
and services to be provided and, with equal prominence, any limitations, exceptions, or
exclusions including, but not limited to, any damage or breakdown not covered by the
service contract. Service contracts may cover damage resulting from rust, corrosion, or
3.29damage caused by a noncovered part or system.
Sec. 6. Minnesota Statutes 2006, section 60A.71, subdivision 7, is amended to read:
Subd. 7. Duration; fees. (a)
Each applicant for a reinsurance intermediary license
shall pay to the commissioner a fee of $200 for an initial two-year license and a fee of
$150 for each renewal. Applications shall be submitted on forms prescribed by the
4.3 (b) Initial licenses issued under this chapter are valid for a period not to exceed 24
4.4months and expire on October 31 of the renewal year assigned by the commissioner. Each
4.5renewal reinsurance intermediary license is valid for a period of 24 months. Licensees
4.6who submit renewal applications postmarked or delivered on or before October 15 of the
4.7renewal year may continue to transact business whether or not the renewal license has been
4.8received by November 1. Licensees who submit applications postmarked or delivered
4.9after October 15 of the renewal year must not transact business after the expiration date
4.10of the license until the renewal license has been received.
4.11 (c) All fees are nonreturnable, except that an overpayment of any fee may be
4.12refunded upon proper application.
Sec. 7. Minnesota Statutes 2007 Supplement, section 61A.257, subdivision 1, is
amended to read:
Subdivision 1. Definitions.
(a) For the purposes of this section only, the following
terms have the meanings given them.
(b) "2001 CSO Mortality Table" means that mortality table, consisting of separate
rates of mortality for male and female lives, developed by the American Academy of
Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the
Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and
adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in
the Proceedings of the NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO
Preferred Class Structure Mortality Table defined in paragraph (c). Unless the context
indicates otherwise, the "2001 CSO Mortality Table" includes both the ultimate form of
that table and the select and ultimate form of that table and includes both the smoker and
nonsmoker mortality tables and the composite mortality tables. It also includes both the
age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables
in the 2001 CSO Mortality Table include the following:
(1) "2001 CSO Mortality Table (F)" means that mortality table consisting of the rates
of mortality for female lives from the 2001 CSO Mortality Table;
(2) "2001 CSO Mortality Table (M)" means that mortality table consisting of the
rates of mortality for male lives from the 2001 CSO Mortality Table;
(3) "composite mortality tables" means mortality tables with rates of mortality that
do not distinguish between smokers and nonsmokers; and
(4) "smoker and nonsmoker mortality tables" means mortality tables with separate
rates of mortality for smokers and nonsmokers.
(c) "2001 CSO Preferred Class Structure Mortality Table" means mortality tables
with separate rates of mortality for the
, residual standard
, and residual standard smoker splits of the 2001 CSO Nonsmoker and Smoker
Tables as adopted by the NAIC at the September 2006 national meeting and
published in the NAIC Proceedings (3rd Quarter 2006). Unless the context indicates
otherwise, the "2001 CSO Preferred Class Structure Mortality Table" includes both the
ultimate form of that table and the select and ultimate form of that table, the smoker and
nonsmoker mortality tables, both the male and female mortality tables and the gender
composite mortality tables, and both the age-nearest-birthday and age-last-birthday bases
of the mortality table.
(d) "Statistical agent" means an entity with proven systems for protecting the
confidentiality of individual insured and insurer information; demonstrated resources
for and history of ongoing electronic communications and data transfer ensuring data
integrity with insurers, which are its members or subscribers; and a history of and means
for aggregation of data and accurate promulgation of the experience modifications in a
Sec. 8. Minnesota Statutes 2006, section 61A.57, is amended to read:
5.2161A.57 DUTIES OF INSURERS THAT USE AGENTS OR BROKERS.
Each insurer that uses an agent or broker in a life insurance or annuity sale shall:
(a) Require with or as part of each completed application for life insurance or
annuity, a statement signed by the agent or broker as to whether the agent or broker knows
replacement is or may be involved in the transaction.
(b) Where a replacement is involved:
(1) require from the agent or broker with the application for life insurance or
annuity, a copy of the fully completed and signed replacement notice provided the
applicant under section
. The existing life insurance or annuity must be identified
by name of insurer, insured, and contract number. If a number has not been assigned by
the existing insurer, alternative identification, such as an application or receipt number,
must be listed; and
(2) send to each existing insurer a written communication advising of the
replacement or proposed replacement and the identification information obtained under
this section. This written communication must be made within five working days of the
date that the application is received in the replacing insurer's home or regional office, or
the date the proposed policy or contract is issued, whichever is sooner.
(c) The replacing insurer shall maintain evidence of the "notice regarding
replacement" and a replacement register, cross-indexed, by replacing agent and existing
insurer to be replaced. Evidence that all requirements were met shall be maintained for at
least six years.
(d) The replacing insurer shall provide in its policy or contract, or in a separate
written notice that is delivered with the policy or contract, that the applicant has a right
to an unconditional refund of all premiums paid, which right may be exercised within a
days beginning from the date of delivery of the policy.
6.11EFFECTIVE DATE.This section is effective January 1, 2009.
Sec. 9. Minnesota Statutes 2006, section 62A.149, subdivision 1, is amended to read:
Subdivision 1. Application.
The provisions of this section apply to all group
policies of accident and health insurance and group subscriber contracts offered by
nonprofit health service plan corporations regulated under chapter 62C, and to a plan or
policy that is individually underwritten or provided for a specific individual and family
members as a nongroup policy unless the individual elects in writing to refuse benefits
under this subdivision in exchange for an appropriate reduction in premiums or subscriber
charges under the policy or plan, when the policies or subscriber contracts are issued or
delivered in Minnesota or provide benefits to Minnesota residents enrolled thereunder.
This section does not apply to policies designed primarily to provide coverage
payable on a per diem, fixed indemnity or nonexpense incurred basis or policies that
provide accident only coverage.
Every insurance policy or subscriber contract included within the provisions of this
subdivision, upon issuance or renewal, shall provide
for payment of benefits coverage
6.26that complies with the requirements of section 62Q.47, paragraphs (b) and (c),
treatment of alcoholism, chemical dependency or drug addiction to any Minnesota resident
entitled to coverage.
thereunder on the same basis as coverage for other benefits when
6.29 treatment is rendered in
6.30 (1) a licensed hospital,
6.31 (2) a residential treatment program as licensed by the state of Minnesota pursuant
6.32 to diagnosis or recommendation by a doctor of medicine,
6.33 (3) a nonresidential treatment program approved or licensed by the state of
Sec. 10. Minnesota Statutes 2006, section 62A.152, subdivision 2, is amended to read:
Subd. 2. Minimum benefits.
All group policies and all group subscriber
contracts providing benefits for mental or nervous disorder treatments in a hospital shall
also provide coverage
on the same basis as coverage for other benefits for at least 80
7.5 percent of the cost of the usual and customary charges of the first ten hours of treatment
7.6 incurred over a 12-month benefit period, for mental or nervous disorder consultation,
7.7 diagnosis and treatment services delivered while the insured person is not a bed patient
7.8 in a hospital, and at least 75 percent of the cost of the usual and customary charges for
7.9 any additional hours of treatment during the same 12-month benefit period for serious or
7.10 persistent mental or nervous disorders, if the services are furnished by (1) a licensed or
7.11 accredited hospital, (2) a community mental health center or mental health clinic approved
7.12 or licensed by the commissioner of human services or other authorized state agency, or (3)
7.13 a mental health professional, as defined in sections
245.462, subdivision 18 , clauses (1) to
7.14 (5); and
245.4871, subdivision 27 , clauses (1) to (5). Prior authorization from an accident
7.15 and health insurance company, or a nonprofit health service corporation, shall be required
7.16 for an extension of coverage beyond ten hours of treatment. This prior authorization
7.17 must be based upon the severity of the disorder, the patient's risk of deterioration without
7.18 ongoing treatment and maintenance, degree of functional impairment, and a concise
7.19 treatment plan. Authorization for extended treatment may be limited to a maximum of 30
7.20 visit hours during any 12-month benefit period.
7.21 (b) For purposes of this section, covered treatment for a minor includes treatment for
7.22 the family if family therapy is recommended by a provider listed in paragraph (a). For
7.23 purposes of determining benefits under this section, "hours of treatment" means treatment
7.24 rendered on an individual or single-family basis. If treatment is rendered on a group basis,
7.25 the hours of covered group treatment must be provided at a ratio of no less than two group
7.26 treatment sessions to one individual treatment hour. that complies with the requirements
7.27of section 62Q.47, paragraphs (b) and (c).
Sec. 11. Minnesota Statutes 2007 Supplement, section 62A.30, subdivision 2, is
amended to read:
Subd. 2. Required coverage.
Every policy, plan, certificate, or contract referred to
in subdivision 1 that provides coverage to a Minnesota resident must provide coverage
for routine screening procedures for cancer and the office or facility visit
mammograms, surveillance tests for ovarian cancer for women who are at risk for ovarian
cancer as defined in subdivision 3, pap smears, and colorectal screening tests for men
and women, when ordered or provided by a physician in accordance with the standard
practice of medicine.
Sec. 12. Minnesota Statutes 2006, section 62A.44, is amended by adding a subdivision
8.5 Subd. 2a. Electronic enrollment. (a) For any Medicare supplement plan as defined
8.6in section 62A.3099, any requirement that a signature of an insured be obtained by
8.7an agent or insurer is satisfied if:
8.8 (1) the consent is obtained by telephonic or electronic enrollment by the group
8.9policyholder or insured. A verification of the enrollment information must be provided to
8.11 (2) the telephonic or electronic enrollment provides necessary and reasonable
8.12safeguards to ensure the accuracy, retention, and prompt retrieval of records; and
8.13 (3) the telephonic or electronic enrollment provides necessary and reasonable
8.14safeguards to ensure that the confidentiality of individual information and privileged
8.15information as defined in section 72A.491, subdivision 19, is maintained.
8.16 (b) The insurer shall make available, upon request of the commissioner, records that
8.17will demonstrate the insurer's ability to confirm enrollment and coverage.
Sec. 13. Minnesota Statutes 2006, section 62E.10, subdivision 2, is amended to read:
Subd. 2. Board of directors; organization.
The board of directors of the
association shall be made up of eleven members as follows: six directors selected by
contributing members, subject to approval by the commissioner, one of which must be
a health actuary; five public directors selected by the commissioner, at least two of
whom must be plan enrollees, two of whom
must be representatives of employers whose
8.24 accident and health insurance premiums are part of the association's assessment base, are
8.25covered under an individual plan subject to assessment under section 62E.11 or group
8.26plan offered by an employer subject to assessment under section 62E.11,
and one of
whom must be a licensed insurance agent. At least two of the public directors must reside
outside of the seven county metropolitan area. In determining voting rights at members'
meetings, each member shall be entitled to vote in person or proxy. The vote shall be
a weighted vote based upon the member's cost of self-insurance, accident and health
insurance premium, subscriber contract charges, health maintenance contract payment, or
community integrated service network payment derived from or on behalf of Minnesota
residents in the previous calendar year, as determined by the commissioner. In approving
directors of the board, the commissioner shall consider, among other things, whether all
types of members are fairly represented. Directors selected by contributing members
may be reimbursed from the money of the association for expenses incurred by them as
directors, but shall not otherwise be compensated by the association for their services. The
costs of conducting meetings of the association and its board of directors shall be borne
by members of the association.
Sec. 14. Minnesota Statutes 2006, section 62F.02, is amended by adding a subdivision
9.8 Subd. 3. Merger. Effective January 1, 2008, the association is merged into the joint
9.9underwriting association under chapter 62I.
Sec. 15. Minnesota Statutes 2006, section 62M.02, subdivision 21, is amended to read:
Subd. 21. Utilization review organization.
"Utilization review organization"
means an entity including but not limited to an insurance company licensed under chapter
60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section
; a prepaid limited health service organization issued a certificate of authority
9.15and operating under sections 62A.451 to 62A.4528;
a health service plan licensed under
chapter 62C; a health maintenance organization licensed under chapter 62D; a community
integrated service network licensed under chapter 62N; an accountable provider network
operating under chapter 62T; a fraternal benefit society operating under chapter 64B;
a joint self-insurance employee health plan operating under chapter 62H; a multiple
employer welfare arrangement, as defined in section 3 of the Employee Retirement
Income Security Act of 1974 (ERISA), United States Code, title 29, section 1103, as
amended; a third party administrator licensed under section
60A.23, subdivision 8
conducts utilization review and determines certification of an admission, extension of stay,
or other health care services for a Minnesota resident; or any entity performing utilization
review that is affiliated with, under contract with, or conducting utilization review on
behalf of, a business entity in this state. Utilization review organization does not include
a clinic or health care system acting pursuant to a written delegation agreement with an
otherwise regulated utilization review organization that contracts with the clinic or health
care system. The regulated utilization review organization is accountable for the delegated
utilization review activities of the clinic or health care system.
Sec. 16. Minnesota Statutes 2006, section 62Q.47, is amended to read:
9.3262Q.47 ALCOHOLISM, MENTAL HEALTH, AND CHEMICAL
(a) All health plans, as defined in section
, that provide coverage for
or chemical dependency services, must comply with the
requirements of this section.
(b) Cost-sharing requirements and benefit or service limitations for outpatient
mental health and outpatient chemical dependency and alcoholism
services, except for
persons placed in chemical dependency services under Minnesota Rules, parts 9530.6600
to 9530.6660, must not place a greater financial burden on the insured or enrollee, or be
more restrictive than those requirements and limitations for outpatient medical services.
(c) Cost-sharing requirements and benefit or service limitations for inpatient hospital
mental health and inpatient hospital and residential chemical dependency and alcoholism
services, except for persons placed in chemical dependency services under Minnesota
Rules, parts 9530.6600 to 9530.6660, must not place a greater financial burden on the
insured or enrollee, or be more restrictive than those requirements and limitations for
inpatient hospital medical services.
Sec. 17. Minnesota Statutes 2006, section 62Q.64, is amended to read:
10.1662Q.64 DISCLOSURE OF EXECUTIVE COMPENSATION.
(a) Each health plan company doing business in this state whose annual Minnesota
10.18premiums exceed $10,000,000 based on the most recent assessment base of the Minnesota
10.19Comprehensive Health Association
shall annually file with
the Consumer Advisory Board
10.20 created in section
62J.75 either the commissioner of commerce or the commissioner
10.21of health, as appropriate
(1) a copy of the health plan company's form 990 filed with the federal Internal
Revenue Service; or
(2) if the health plan company did not file a form 990 with the federal Internal
Revenue Service, a list of the amount and recipients of the health plan company's five
highest salaries, including all types of compensation, in excess of $50,000.
(b) A filing under this section is public data under section
Sec. 18. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision
10.30 Subd. 16a. Hands-on assistance. "Hands-on assistance" means minimal, moderate,
10.31or maximal physical assistance without which the individual would not be able to perform
10.32the activity of daily living.
Sec. 19. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision
11.3 Subd. 22a. Personal care. "Personal care" means the provision of hands-on services
11.4to assist an individual with activities of daily living.
Sec. 20. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision
11.7 Subd. 23b. Providers of services. All providers of services, including but not
11.8limited to "skilled nursing facility," "extended care facility," "convalescent nursing home,"
11.9"personal care facility," "specialized care providers," "assisted living facility," and
11.10"home care agency" are defined in relation to the services and facilities required to be
11.11available and the licensure, certification, registration, or degree status of those providing
11.12or supervising the services. When the definition requires that the provider be appropriately
11.13licensed, certified, or registered, it must also state what requirements a provider must
11.14meet in lieu of licensure, certification, or registration when the state in which the service
11.15is to be furnished does not require a provider of these services to be licensed, certified,
11.16or registered, or when the state licenses, certifies, or registers the provider of services
11.17under another name.
Sec. 21. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision
11.20 Subd. 25b. Skilled nursing care, personal care, home care, specialized care,
11.21assisted living care, and other services. "Skilled nursing care," "personal care," "home
11.22care," "specialized care," "assisted living care," and other services are defined in relation
11.23to the level of skill required, the nature of the care, and the setting in which care must
Sec. 22. Minnesota Statutes 2006, section 62S.13, subdivision 4, is amended to read:
Subd. 4. Field issue prohibition.
A long-term care insurance policy or certificate
may not be field issued based on medical or health status. For purposes of this section,
"field issued" means a policy or certificate issued by an agent or a third-party administrator
under the underwriting authority granted to the agent or third-party administrator by an
insurer and using the insurer's underwriting guidelines
Sec. 23. Minnesota Statutes 2006, section 62S.15, is amended to read:
11.3262S.15 AUTHORIZED LIMITATIONS AND EXCLUSIONS.
No policy may be delivered or issued for delivery in this state as long-term care
insurance if the policy limits or excludes coverage by type of illness, treatment, medical
condition, or accident, except as follows:
(1) preexisting conditions or diseases;
(2) mental or nervous disorders; except that the exclusion or limitation of benefits on
the basis of Alzheimer's disease is prohibited;
(3) alcoholism and drug addiction;
(4) illness, treatment, or medical condition arising out of war or act of war;
participation in a felony, riot, or insurrection; service in the armed forces or auxiliary
units; suicide, attempted suicide, or intentionally self-inflicted injury; or non-fare-paying
(5) treatment provided in a government facility unless otherwise required by
law, services for which benefits are available under Medicare or other government
program except Medicaid, state or federal workers' compensation, employer's liability
or occupational disease law, motor vehicle no-fault law; services provided by a member
of the covered person's immediate family; and services for which no charge is normally
made in the absence of insurance;
(6) expenses for services or items available or paid under another long-term care
insurance or health insurance policy
12.20 (7) in the case of a qualified long-term care insurance contract, expenses for services
12.21or items to the extent that the expenses are reimbursable under title XVIII of the Social
12.22Security Act or would be so reimbursable but for the application of a deductible or
This subdivision does not prohibit exclusions and limitations by type of provider
or territorial limitations. However, no long-term care issuer may deny a claim because
12.26services are provided in a state other than the state of policy issued under the following
12.28 (1) when the state other than the state of policy issue does not have the provider
12.29licensing, certification, or registration required in the policy, but where the provider
12.30satisfies the policy requirements outlined for providers in lieu of licensure, certification, or
12.32 (2) when the state other than the state of policy issue licenses, certifies, or registers
12.33the provider under another name.
12.34 For purposes of this paragraph, "state of policy issue" means the state in which the
12.35individual policy or certificate was originally issued.
Sec. 24. Minnesota Statutes 2006, section 62S.18, subdivision 2, is amended to read:
Subd. 2. Premiums. (a)
The premiums charged to an insured for long-term care
insurance replaced under subdivision 1 shall not increase due to either the increasing
age of the insured at ages beyond 65 or the duration the insured has been covered under
13.6 (b) The purchase of additional coverage must not be considered a premium rate
13.7increase, but for purposes of the calculation required under section 62S.291, the portion
13.8of the premium attributable to the additional coverage must be added to and considered
13.9part of the initial annual premium.
13.10 (c) A reduction in benefits must not be considered a premium change, but for
13.11purpose of the calculation required under section 62S.291, the initial annual premium must
13.12be based on the reduced benefits.
Sec. 25. [62S.181] ELECTRONIC ENROLLMENT FOR GROUP POLICIES.
13.14 Subdivision 1. Employers or labor unions. In the case of a group defined in section
13.1562S.01, subdivision 15, clause (1), any requirement that a signature of an insured be
13.16obtained by an agent or insurer is satisfied if:
13.17 (1) the consent is obtained by telephonic or electronic enrollment by the group
13.18policyholder or insurer. A verification of enrollment information must be provided to the
13.20 (2) the telephonic or electronic enrollment provides necessary and reasonable
13.21safeguards to ensure the accuracy, retention, and prompt retrieval of records; and
13.22 (3) the telephonic or electronic enrollment provides necessary and reasonable
13.23safeguards to ensure that the confidentiality of individually identifiable information and
13.24"privileged information" as defined by section 72A.491, subdivision 19, is maintained.
13.25 Subd. 2. Availability of insurer records. The insurer shall make available, upon
13.26request of the commissioner, records that will demonstrate the insurer's ability to confirm
13.27enrollment and coverage amounts.
Sec. 26. Minnesota Statutes 2006, section 62S.20, is amended by adding a subdivision
13.30 Subd. 5a. Disclosure of tax consequences. With regard to life insurance policies
13.31that provide an accelerated benefit for long-term care, a disclosure statement is required
13.32at the time of application for the policy or rider and at the same time the accelerated
13.33benefit payment request is submitted that receipt of these accelerated benefits may be
13.34taxable, and that assistance should be sought from a personal tax advisor. The disclosure
14.1statement must be prominently displayed on the first page of the policy or rider and any
14.2other related documents. This subdivision does not apply to qualified long-term care
Sec. 27. Minnesota Statutes 2006, section 62S.20, is amended by adding a subdivision
14.6 Subd. 5b. Benefit triggers. Activities of daily living and cognitive impairment
14.7must be used to measure an insured's need for long-term care and must be described
14.8in the policy or certificate in a separate paragraph and must be labeled "Eligibility for
14.9the Payment of Benefits." Any additional benefit triggers must also be explained in this
14.10section. If these triggers differ for different benefits, explanation of the trigger must
14.11accompany each benefit description. If an attending physician or other specified person
14.12must certify a certain level of functional dependency in order to be eligible for benefits,
14.13this too shall be specified.
Sec. 28. Minnesota Statutes 2006, section 62S.20, subdivision 6, is amended to read:
Subd. 6. Qualified long-term care insurance policy.
A qualified long-term care
insurance policy must include a disclosure statement in the policy that the policy is
intended to be a qualified long-term care insurance policy under section 7702B(b) of the
14.18Internal Revenue Code of 1986, as amended
Sec. 29. Minnesota Statutes 2007 Supplement, section 62S.23, subdivision 1, is
amended to read:
Subdivision 1. Inflation protection feature.
(a) No insurer may offer a long-term
care insurance policy unless the insurer also offers to the policyholder, in addition to any
other inflation protection, the option to purchase a policy that provides for benefit levels to
increase with benefit maximums or reasonable durations which are meaningful to account
for reasonably anticipated increases in the costs of long-term care services covered by
the policy. In addition to other options that may be offered, insurers must offer to each
policyholder, at the time of purchase, the option to purchase a policy with an inflation
protection feature no less favorable than one of the following:
(1) increases benefit levels annually in a manner so that the increases are
compounded annually at a rate not less than five percent;
(2) guarantees the insured individual the right to periodically increase benefit levels
without providing evidence of insurability or health status so long as the option for the
previous period has not been declined. The amount of the additional benefit shall be no
less than the difference between the existing policy benefit and that benefit compounded
annually at a rate of at least five percent for the period beginning with the purchase of the
existing benefit and extending until the year in which the offer is made; or
(3) covers a specified percentage of actual or reasonable charges and does not
include a maximum specified indemnity amount or limit.
(b) A long-term care partnership policy must provide the inflation protection
described in this subdivision. If the policy is sold to an individual who:
(1) has not attained age 61 as of the date of purchase, the policy must provide
compound annual inflation protection;
(2) has attained age 61, but has not attained age 76 as of such date, the policy must
provide some level of inflation protection; and
(3) has attained the age of 76 as of such date, the policy may, but is not required to,
provide some level of inflation protection.
15.14 Inflation protection for a long-term care partnership policy may not be less than
15.15three percent per year or a rate based on changes in the Consumer Price Index. The
15.16commissioner, however, may approve other types of inflation protection that comply with
15.17this section and further the goals of the partnership program.
Sec. 30. [62S.251] RESERVE STANDARDS.
15.19 Subdivision 1. Benefits provided through acceleration of benefits under life
15.20policies. When long-term care benefits are provided through the acceleration of benefits
15.21under group or individual life policies or riders to these policies, policy reserves for the
15.22benefits must be determined in accordance with section 61A.25. Claim reserves must also
15.23be established in the case when the policy or rider is in claim status.
15.24 Reserves for policies and riders subject to this section must be based on the multiple
15.25decrement model utilizing all relevant decrements except for voluntary termination rates.
15.26Single decrement approximations are acceptable if the calculation produces essentially
15.27similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial.
15.28The calculations may take into account the reduction in life insurance benefits due to
15.29the payment of long-term care benefits. However, in no event must the reserves for the
15.30long-term care benefit and the life insurance benefit be less than the reserves for the life
15.31insurance benefit assuming no long-term care benefit.
15.32 In the development and calculation of reserves for policies and riders subject to this
15.33subdivision, due regard must be given to the applicable policy provisions, marketing
15.34methods, administrative procedures, and all other considerations which have an impact on
15.35projected claim costs, including, but not limited to, the following:
16.1 (1) definition of insured events;
16.2 (2) covered long-term care facilities;
16.3 (3) existence of home convalescence care coverage;
16.4 (4) definition of facilities;
16.5 (5) existence or absence of barriers to eligibility;
16.6 (6) premium waiver provision;
16.7 (7) renewability;
16.8 (8) ability to raise premiums;
16.9 (9) marketing method;
16.10 (10) underwriting procedures;
16.11 (11) claims adjustment procedures;
16.12 (12) waiting period;
16.13 (13) maximum benefit;
16.14 (14) availability of eligible facilities;
16.15 (15) margins in claim costs;
16.16 (16) optional nature of benefit;
16.17 (17) delay in eligibility for benefit;
16.18 (18) inflation protection provisions; and
16.19 (19) guaranteed insurability option.
16.20 Any applicable valuation morbidity table shall be certified as appropriate as a
16.21statutory valuation table by a member of the American Academy of Actuaries.
16.22 Subd. 2. Benefits provided otherwise. When long-term care benefits are provided
16.23other than as in subdivision 1, reserves must be determined in accordance with sections
16.2460A.76 to 60A.768.
Sec. 31. Minnesota Statutes 2006, section 62S.26, subdivision 2, is amended to read:
Subd. 2. Life insurance policies.
Subdivision 1 shall not apply to life insurance
policies that accelerate benefits for long-term care. A life insurance policy that funds
long-term care benefits entirely by accelerating the death benefit is considered to provide
reasonable benefits in relation to premiums paid, if the policy complies with all of the
(1) the interest credited internally to determine cash value accumulations, including
long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest
rate for cash value accumulations without long-term care set forth in the policy;
(2) the portion of the policy that provides life insurance benefits meets the
nonforfeiture requirements of section
(3) the policy meets the disclosure requirements of sections
17.3 (4) any policy illustration that meets the applicable requirements of the NAIC Life
17.4Insurance Illustrations Model Regulation; and
17.5 (4) (5)
an actuarial memorandum is filed with the commissioner that includes:
(i) a description of the basis on which the long-term care rates were determined;
(ii) a description of the basis for the reserves;
(iii) a summary of the type of policy, benefits, renewability, general marketing
method, and limits on ages of issuance;
(iv) a description and a table of each actuarial assumption used. For expenses,
an insurer must include percentage of premium dollars per policy and dollars per unit
of benefits, if any;
(v) a description and a table of the anticipated policy reserves and additional reserves
to be held in each future year for active lives;
(vi) the estimated average annual premium per policy and the average issue age;
(vii) a statement as to whether underwriting is performed at the time of application.
The statement shall indicate whether underwriting is used and, if used, the statement
shall include a description of the type or types of underwriting used, such as medical
underwriting or functional assessment underwriting. Concerning a group policy, the
statement shall indicate whether the enrollee or any dependent will be underwritten and
when underwriting occurs; and
(viii) a description of the effect of the long-term care policy provision on the required
premiums, nonforfeiture values, and reserves on the underlying life insurance policy, both
for active lives and those in long-term care claim status.
Sec. 32. Minnesota Statutes 2006, section 62S.266, subdivision 4, is amended to read:
Subd. 4. Contingent benefit upon lapse.
(a) After rejection of the offer required
under subdivision 2, for individual and group policies without nonforfeiture benefits
issued after July 1, 2001, the insurer shall provide a contingent benefit upon lapse.
(b) If a group policyholder elects to make the nonforfeiture benefit an option to
the certificate holder, a certificate shall provide either the nonforfeiture benefit or the
contingent benefit upon lapse.
(c) The contingent benefit on lapse must be triggered every time an insurer increases
the premium rates to a level which results in a cumulative increase of the annual premium
equal to or exceeding the percentage of the insured's initial annual premium based on
the insured's issue age provided in this paragraph, and the policy or certificate lapses
within 120 days of the due date of the premium increase. Unless otherwise required,
policyholders shall be notified at least 30 days prior to the due date of the premium
reflecting the rate increase.
Triggers for a Substantial Premium Increase
||Percent Increase Over
||29 and Under
||90 and over
(d) A contingent benefit on lapse must also be triggered for policies with a fixed
19.4or limited premium paying period every time an insurer increases the premium rates to a
19.5level that results in a cumulative increase of the annual premium equal to or exceeding the
19.6percentage of the insured's initial annual premium set forth below based on the insured's
19.7issue age, the policy or certificate lapses within 120 days of the due date of the premium
19.8so increased, and the ratio in paragraph (e), clause (2), is 40 percent or more. Unless
19.9otherwise required, policyholders shall be notified at least 30 days prior to the due date of
19.10the premium reflecting the rate increase.
19.16 This provision shall be in addition to the contingent benefit provided by paragraph
19.17(c) and where both are triggered, the benefit provided must be at the option of the insured.
|Triggers for a Substantial Premium Increase
|Percent Increase Over Initial Premium
On or before the effective date of a substantial premium increase as defined in
paragraph (c), the insurer shall:
(1) offer to reduce policy benefits provided by the current coverage without the
requirement of additional underwriting so that required premium payments are not
(2) offer to convert the coverage to a paid-up status with a shortened benefit period
according to the terms of subdivision 5. This option may be elected at any time during the
120-day period referenced in paragraph (c); and
(3) notify the policyholder or certificate holder that a default or lapse at any time
during the 120-day period referenced in paragraph (c) is deemed to be the election of
the offer to convert in clause (2).
19.29 (f) On or before the effective date of a substantial premium increase as defined in
19.30paragraph (d), the insurer shall:
19.31 (1) offer to reduce policy benefits provided by the current coverage without the
19.32requirement of additional underwriting so that required premium payments are not
19.34 (2) offer to convert the coverage to a paid-up status where the amount payable for
19.35each benefit is 90 percent of the amount payable in effect immediately prior to lapse times
20.1the ratio of the number of completed months of paid premiums divided by the number of
20.2months in the premium paying period. This option may be elected at any time during the
20.3120-day period referenced in paragraph (d); and
20.4 (3) notify the policyholder or certificate holder that a default or lapse at any time
20.5during the 120-day period referenced in paragraph (d) shall be deemed to be the election
20.6of the offer to convert in clause (2) if the ratio is 40 percent or more.
Sec. 33. Minnesota Statutes 2006, section 62S.266, subdivision 10, is amended to read:
Subd. 10. Purchased blocks of business.
To determine whether contingent
nonforfeiture upon lapse provisions are triggered under subdivision 4, paragraph (c) or (d)
a replacing insurer that purchased or otherwise assumed a block or blocks of long-term
care insurance policies from another insurer shall calculate the percentage increase based
on the initial annual premium paid by the insured when the policy was first purchased
from the original insurer.
Sec. 34. [62S.267] STANDARDS FOR BENEFIT TRIGGERS.
20.15 Subdivision 1. Benefit payment determinations. A long-term care insurance
20.16policy must condition the payment of benefits on a determination of the insured's ability
20.17to perform activities of daily living and on cognitive impairment. Eligibility for the
20.18payment of benefits must not be more restrictive than requiring either a deficiency in
20.19the ability to perform not more than two of the activities of daily living or the presence
20.20of cognitive impairment.
20.21 Activities of daily living include at least the following as defined in section 62S.01
20.22and in the policy: bathing, continence, dressing, eating, toileting, and transferring.
20.23 Insurers may use activities of daily living to trigger covered benefits in addition to
20.24those contained in this subdivision as long as they are defined in the policy.
20.25 Subd. 2. Additional provisions for determining benefit payments. An insurer
20.26may use additional provisions for the determination of when benefits are payable under a
20.27policy or certificate if the provisions do not restrict, and are not in lieu of, the requirements
20.28contained in subdivision 1.
20.29 Subd. 3. Deficiency determination. For purposes of this section, the determination
20.30of a deficiency must not be more restrictive than requiring the hands-on assistance of
20.31another person to perform the prescribed activities of daily living, or of the deficiency is
20.32due to the presence of a cognitive impairment, supervision or verbal cueing by another
20.33person is needed in order to protect the insured or others.
21.1 Subd. 4. Assessments. Assessments of activities if daily living and cognitive
21.2impairment must be performed by licensed or certified professionals, such as physicians,
21.3nurses, or social workers.
21.4 Subd. 5. Appeal process. Long-term care insurance policies must include a clear
21.5description of the process for appealing and resolving benefit determinations.
21.6EFFECTIVE DATE.This section is effective and applies to a long-term care
21.7policy issued in this state on or after the effective date of this section. This section does
21.8not apply to certificates issued on or after the effective date of this section, under a group
21.9long-term care insurance policy as defined in section 62S.01, subdivision 15, that was in
21.10force at the time this section became effective.
Sec. 35. [62S.268] ADDITIONAL STANDARDS FOR BENEFIT TRIGGERS
21.12FOR QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS.
21.13 Subdivision 1. Definitions. For purposes of this section, the following terms have
21.14the meanings given them:
21.15 (a) "Qualified long-term care services" means services that meet the requirements
21.16of section 7702(c)(1) of the Internal Revenue Code of 1986, as amended, as follows:
21.17necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation, and
21.18rehabilitative services, and maintenance or personal care services which are required by
21.19a chronically ill individual, and are provided pursuant to a plan of care prescribed by a
21.20licensed health care practitioner.
21.21 (b) "Chronically ill individual" has the meaning prescribed for this term by section
21.227702B(c)(2) of the Internal Revenue Code of 1986, as amended. Under this provision, a
21.23chronically ill individual means any individual who has been certified by a licensed health
21.24care practitioner as being unable to perform, without substantial assistance from another
21.25individual, at least two activities of daily living for a period of at least 90 days due to a
21.26loss of functional capacity, or requiring substantial supervision to protect the individual
21.27from threats to health and safety due to severe cognitive impairment.
21.28 The term "chronically ill individual" does not include an individual otherwise
21.29meeting these requirements unless within the preceding 12-month period a licensed health
21.30care practitioner has certified that the individual meets these requirements.
21.31 (c) "Licensed health care practitioner" means a physician, as defined in section
21.321861(r)(1) of the Social Security Act, a registered professional nurse, licensed social
21.33worker, or other individual who meets requirements prescribed by the Secretary of the
22.1 (d) "Maintenance or personal care services" means any care the primary purpose
22.2of which is the provision of needed assistance with any of the disabilities as a result of
22.3which the individual is a chronically ill individual, including the protection from threats
22.4to health and safety due to severe cognitive impairment.
22.5 Subd. 2. Services. A qualified long-term care insurance contract shall pay only for
22.6qualified long-term care services received by a chronically ill individual provided pursuant
22.7to a plan of care prescribed by a licensed health care practitioner.
22.8 Subd. 3. Payment of benefits. A qualified long-term care insurance contract
22.9shall condition the payment of benefits on a determination of the insured's inability to
22.10perform activities of daily living for an expected period of at least 90 days due to a loss
22.11of functional capacity or to severe cognitive impairment.
22.12 Subd. 4. Certifications. (a) Certifications regarding activities of daily living
22.13and cognitive impairment required pursuant to subdivision 3 shall be performed by the
22.14following licensed or certified professionals: physicians, registered professional nurses,
22.15licensed social workers, or other individuals who meet requirements prescribed by the
22.16Secretary of the Treasury.
22.17 (b) Certifications required pursuant to subdivision 3 may be performed by a licensed
22.18health care professional at the direction of the carrier as is reasonably necessary with
22.19respect to a specific claim, except that when a licensed health care practitioner has certified
22.20that an insured is unable to perform activities of daily living for an expected period of at
22.21least 90 days due to a loss of functional capacity and the insured is in claim status, the
22.22certification may not be rescinded and additional certifications may not be performed until
22.23after the expiration of the 90-day period.
22.24 Subd. 5. Dispute resolution. Qualified long-term care insurance contracts shall
22.25include a clear description of the process for appealing and resolving disputes with respect
22.26to benefit determinations.
Sec. 36. Minnesota Statutes 2006, section 62S.29, is amended by adding a subdivision
22.29 Subd. 2a. Associations to educate members. With respect to the obligations set
22.30forth in this section, the primary responsibility of an association, as defined in section
22.3162S.01, subdivision 15, clause (2), when endorsing or selling long-term care insurance is
22.32to educate its members concerning long-term care issues in general so that its members
22.33can make informed decisions. Associations shall provide objective information regarding
22.34long-term care insurance policies or certificates endorsed or sold by the associations to
23.1ensure that members of such associations receive a balanced and complete explanation of
23.2the features in the policies or certificates that are being endorsed or sold.
Sec. 37. Minnesota Statutes 2006, section 62S.29, is amended by adding a subdivision
23.5 Subd. 6a. Additional association duties. An association shall also at the time of
23.6the association's decision to endorse, engage the services of a person with expertise in
23.7long-term care insurance not affiliated with the insurer to conduct an examination of the
23.8policies, including its benefits, features, and rates and update the examination thereafter in
23.9the event of material change; actively monitor the marketing efforts of the insurer and its
23.10agents; and review and approve all marketing materials or other insurance communications
23.11used to promote sales or sent to members regarding the policies or certificates. This
23.12subdivision does not apply to qualified long-term care insurance contracts.
Sec. 38. Minnesota Statutes 2006, section 62S.29, is amended by adding a subdivision
23.15 Subd. 9. Unfair trade practices. Failure to comply with the filing and certification
23.16requirements of this section constitutes an unfair trade practice in violation of sections
23.1772A.17 to 72A.32.
Sec. 39. [62S.291] AVAILABILITY OF NEW SERVICES OR PROVIDERS.
23.19 Subdivision 1. Requirement. An insurer shall notify policyholders of the
23.20availability of a new long-term policy series that provides coverage for new long-term
23.21care services or providers material in nature and not previously available through the
23.22insurer to the general public. The notice must be provided within 12 months of the date
23.23that the new policy series is made available for sale in this state.
23.24 Subd. 2. Exception. (a) Notwithstanding subdivision 1, notification is not required
23.25for any policy issued before the effective date of this section or to any policyholder or
23.26certificate holder who is currently eligible for benefits, within an elimination period or on
23.27a claim, or who previously had been in claim status, or who would not be eligible to apply
23.28for coverage due to issue age limitations under the new policy. The insurer may require
23.29that policyholders meet all eligibility requirements, including underwriting and payment
23.30of the required premium to add such new services or providers.
23.31 (b) An insurer is not required to notify policyholders of a new proprietary policy
23.32series created and filed for use in a limited distribution channel. For purposes of this
23.33subdivision, "limited distribution channel" means through a discrete entity, such as a
24.1financial institution or brokerage, for which specialized products are available that are
24.2not available for sale to the general public. Policyholders that purchased such a new
24.3proprietary policy shall be notified when a new long-term care policy series that provides
24.4coverage for new long-term care services or providers material in nature is made available
24.5to that limited distribution channel.
24.6 Subd. 3. Compliance. An insurer shall make the new coverage available in one of
24.7the following ways:
24.8 (1) by adding a rider to the existing policy and charging a separate premium for the
24.9new rider based in the insured's attained age;
24.10 (2) by exchanging the existing policy or certificate for one with an issue age based
24.11on the present age of the insured and recognizing past insured status by granting premium
24.12credits toward the premiums for the new policy or certificate. The premium credits must
24.13be based on premiums paid or reserves held for the prior policy or certificate;
24.14 (3) by exchanging the existing policy or certificate for a new policy or certificate in
24.15which consideration for past insured status is recognized by setting the premium for the
24.16new policy or certificate at the issue age of the policy or certificate being exchanged. The
24.17cost for the new policy or certificate may recognize the difference in reserves between the
24.18new policy or certificate and the original policy or certificate; or
24.19 (4) by an alternative program developed by the insurer that meets the intent of this
24.20section if the program is filed with and approved by the commissioner.
24.21 Subd. 4. Policies considered exchanges. Policies issued pursuant to this section
24.22shall be considered exchanges and not replacements. These exchanges are not subject
24.23to sections 62S.24 and 62S.30, and the reporting requirements of section 62S.25,
24.24subdivisions 1 to 6.
24.25 Subd. 5. Notification to certain groups. Where the policy is offered through
24.26an employer, labor organization, professional, trade, or occupational organization, the
24.27required notification in subdivision 1 must be made to the offering entity. However, if
24.28the policy is issued to a group defined in section 62S.01, subdivision 15, clause (4), the
24.29notification shall be made to each certificate holder.
24.30 Subd. 6. Effect on coverage offers and requests for coverage. Nothing in this
24.31section prohibits an insurer from offering any policy, rider, certificate, or coverage change
24.32to any policyholder or certificate holder. However, upon request any policyholder may
24.33apply for currently available coverage that includes the new services or providers.
24.34The insurer may require that policyholders meet all eligibility requirements, including
24.35underwriting and payment of the required premium to add such new services or providers.
25.1 Subd. 7. Life policies or riders. This section does not apply to life insurance
25.2policies or riders containing accelerated long-term care benefits.
Sec. 40. [62S.292] RIGHT TO REDUCE COVERAGE AND LOWER
25.5 Subdivision 1. Required policy or certificate provision. Every long-term care
25.6insurance policy and certificate shall include a provision that allows the policyholder or
25.7certificate holder to reduce coverage and lower the policy or certificate premium in at
25.8least one of the following ways:
25.9 (1) reducing the maximum benefit; or
25.10 (2) reducing the daily, weekly, or monthly benefit amount.
25.11 The insurer may also offer other reduction options that are consistent with the policy
25.12or certificate design or the carrier's administrative processes.
25.13 The provision shall include a description of the ways in which coverage may be
25.14reduced and the process for requesting and implementing a reduction in coverage.
25.15 Subd. 2. Age determination. The age to determine the premium for the reduced
25.16coverage shall be based on the age used to determine the premiums for the coverage
25.17currently in force.
25.18 Subd. 3. Limitation. The insurer may limit any reduction in coverage to plans or
25.19options available for that policy form and to those for which benefits will be available
25.20after consideration of claims paid or payable.
25.21 Subd. 4. Written reminder. If a policy or certificate is about to lapse, the insurer
25.22shall provide a written reminder to the policyholder or certificate holder of his or her right
25.23to reduce coverage and premiums in the notice required by section 7A(3) of this regulation.
25.24 Subd. 5. Nonapplication. This section does not apply to life insurance policies or
25.25riders containing accelerated long-term care benefits.
25.26EFFECTIVE DATE.This section applies to any long-term care policy issued in
25.27this state on or after August 1, 2008.
Sec. 41. Minnesota Statutes 2006, section 65A.37, is amended to read:
25.2965A.37 POLICY FORMS.
All policies must be on standard policy forms
published by Insurance Services
issued for a term of one year
and approved by the commissioner.
Sec. 42. Minnesota Statutes 2006, section 66A.02, subdivision 4, is amended to read:
Subd. 4. Exceptions.
The following provisions of chapter 302A do not apply
to domestic mutual insurance companies: sections
302A.011, subdivisions 2, 6, 6a, 7,
26.310, 20, 21, 25, 26, 27, 28, 29, 31, 32, and 37
302A.201, subdivision 2
26.51, paragraphs (a), (b), (c), and (e), and 2
302A.437, subdivision 2
26.6subdivisions 3 to 6
302A.449, subdivision 7
. Those clauses of section
that refer to any of the sections previously referenced in this subdivision do
not apply to domestic mutual insurance companies. The following sections of chapter
302A are modified in their application to domestic mutual insurance companies in the
(1) with regard to section
, the articles may be amended pursuant to section
by the incorporators or by the board before the issuance of any policies by
(2) with regard to section
302A.135, subdivision 2
, a resolution proposing an
amendment to the certificate of authority must be filed with the corporate secretary no less
than 30 days before the meeting to consider the proposed amendment;
(3) with regard to section
302A.161, subdivision 19
of that section does not apply,
except this must not be construed to limit the power of a mutual insurance company
from issuing securities other than stock;
(4) with regard to section
, the references in subdivision 1 of that section
to "subdivision 2" and "section
" do not apply;
(5) with regard to section
, the board shall consist of no less than five
(6) with regard to section
302A.215, subdivisions 2 and 3
of that section only apply
if the corporation's certificate of incorporation provides cumulative voting;
(7) with regard to section
302A.433, subdivision 1
of that section, special meetings of
the members may be called for any purpose or purposes at any time by a person or persons
authorized in the articles or bylaws to call special meetings, and with regard to subdivision
3 of that section, special meetings must be held on the date and at the time and place fixed
by a person or persons authorized by the articles or bylaws to call a meeting; and
(8) with regard to section
, if the company complies substantially and in
good faith with the notice requirements of section
, the company's failure to give
any member or members the required notice does not impair the validity of any action
taken at the members' meeting.
27.1EFFECTIVE DATE.This section is effective January 1, 2008.
Sec. 43. Minnesota Statutes 2006, section 66A.07, subdivision 2, is amended to read:
Subd. 2. Life insurance companies.
(a) Unless otherwise approved by the
commissioner of commerce, a domestic mutual life insurance company member is any
person who is listed on the records of the company as the owner of an in-force policy,
and each member is entitled to one vote regardless of the number of policies owned by
the member or the amounts of coverage provided to the member. For purposes of this
section, "policy" means a policy or contract of insurance, including an annuity contract
issued by the company, but excluding individual noncontributory insurance policies for
which the premiums are paid by a financial institution, association, employer, or other
institutional entity. Except as otherwise provided in the company's certificate or bylaws, a
person covered under a group policy is not a member by virtue of such coverage, except
that a person insured under a group life insurance policy is a member if: (1) the person
is insured under a group life policy under which cash value has accumulated and
27.15some cash value is
allocated to the insured
; and (2) the group policyholder
makes no contribution to the premiums or deposits for the policy.
(b) Every member of a mutual life insurance company must be notified of its annual
meetings by a written notice mailed to the member's address, or by an imprint on the front
or back of the policy, premium notice, receipt, or certificate of renewal, substantially
"The policyowner is hereby notified that by virtue of his or her ownership of this
policy, the policyowner is a member of the .......... Insurance Company, and that the annual
meetings of said company are held at its home office on the .... day of .... in each year,
at .... o'clock."
For mutual life insurance holding companies, the notice of the annual meeting may
be modified to reflect that the policyowner, by virtue of his or her ownership of a policy
issued by a subsidiary insurance company reorganized under section
, is a member
of the mutual insurance holding company. Notice given in this manner is deemed to
comply with the requirements of section
Sec. 44. Minnesota Statutes 2006, section 66A.07, is amended by adding a subdivision
27.32 Subd. 5. Quorum. The number of members present in person or by proxy at a
27.33member meeting are a quorum for the transaction of business, unless a larger proportion
27.34or number is provided in the articles or bylaws. If a quorum is present when a duly called
28.1or held meeting is convened, the members present may continue to transact business until
28.2adjournment, even though the withdrawal of members originally present leaves less than
28.3the proportion or number otherwise required for a quorum.
28.4EFFECTIVE DATE.This section is effective January 1, 2008.
Sec. 45. Minnesota Statutes 2006, section 66A.41, subdivision 1, is amended to read:
Subdivision 1. Definitions.
(a) For the purposes of this section, the terms in this
subdivision have the meanings given them.
(b) "Converting mutual insurer" means a Minnesota domestic mutual insurance
company seeking to reorganize according to this section.
(c) "Converting mutual holding company" means a Minnesota domestic mutual
insurance holding company seeking to reorganize according to this section.
(d) "Converting mutual company" means a converting mutual insurer or a converting
mutual holding company seeking to convert according to this section.
(e) "Reorganized company" means a converting mutual insurer or a converting
mutual holding company, as the case may be, that has reorganized according to this section.
(f) "Eligible member" means:
(1) for converting mutual insurers, a policyholder whose policy is in force as of the
record date. Unless otherwise provided in the plan, a person covered under a group policy
is not an eligible member, except that a person insured under a group life insurance policy
is an eligible member if, on the record date:
(i) the person is insured under a group life policy under which cash value has
been some cash value is
allocated to the insured
(ii) the group policyholder makes no contribution to the premiums for the group
(2) for converting mutual holding companies, a person who is a member of the
converting mutual holding company, as defined by the converting mutual holding
company's articles of incorporation and bylaws, determined as of the record date.
(g) "Plan of conversion" or "plan" means a plan adopted by a converting mutual
company's board of directors under this section.
(h) "Policy" means a policy or contract of insurance, including an annuity contract,
issued by a converting mutual insurer or issued by a reorganized insurance company
subsidiary of a mutual holding company, but excluding individual noncontributory
insurance policies for which the premiums are paid by a financial institution, association,
employer, or other institutional entity.
(i) "Active participating policy" means an individual policy of a converting mutual
company or its subsidiary that: (1) is a participating policy; (2) is among a class of similar
policies that have been credited with policy dividends at any time within the 12 months
preceding the effective date of the conversion or that will, under the then current dividend
scale, be credited with policy dividends if in force on a future policy anniversary; (3) gives
rise to membership interests in the converting mutual company; and (4) is in force on the
effective date or some other reasonable date identified in the plan.
(j) "Commissioner" means the commissioner of commerce.
(k) "Effective date of a conversion" means the date determined according to
(l) "Record date" means the date that the converting mutual company's board
of directors adopts a plan of conversion, unless another date is specified in the plan of
conversion and approved by the commissioner.
(m) "Membership interests" means all rights as members of the converting
mutual company, including, but not limited to, the rights to vote and to participate in
any distributions of distributable net worth, whether or not incident to the company's
(n) "Distributable net worth" means the value of the converting mutual company
as of the record date of the conversion, or other date approved by the commissioner,
determined as set forth in the plan and approved by the commissioner. The commissioner
may approve a valuation method based on any of the following: (1) the surplus as regards
policyholders of a converting mutual insurer determined according to statutory accounting
principles, which may be adjusted to reflect the current market values of assets and
liabilities, together with any other adjustments that are appropriate in the circumstances;
(2) the net equity of a converting mutual holding company or a converting mutual insurer
determined according to generally accepted accounting principles, which may be adjusted
to reflect the current market values of assets and liabilities, together with any other
adjustments that are appropriate in the circumstances; (3) the fair market value of the
converting mutual company determined by an independent, qualified person; or (4) any
other reasonable valuation method.
(o) "Permitted issuer" means: (1) a corporation organized and owned by the
converting mutual company or by any other insurance company or insurance holding
company for the purpose of purchasing and holding securities representing a majority of
voting control of the reorganized company; (2) a stock insurance company owned by the
converting mutual company or by any other insurance company or insurance holding
company into which the converting mutual company will be merged; or (3) any other
corporation approved by the commissioner.
Sec. 46. Minnesota Statutes 2006, section 67A.31, subdivision 2, is amended to read:
Subd. 2. Insurable property in cities.
They may also insure churches and
dwellings, together with the usual outbuildings and the usual contents of
dwellings and churches and outbuildings, in any city except a city of the first
class, or a city of the second class only with approval granted by the commissioner
Sec. 47. Minnesota Statutes 2006, section 72A.51, subdivision 2, is amended to read:
Subd. 2. Return of policy or contract; notice.
Any individual person may cancel
an individual policy of insurance against loss or damage by reason of the sickness of the
assured or the assured's dependents, a nonprofit health service plan contract providing
benefits for hospital, surgical and medical care, a health maintenance organization
subscriber contract, or a policy of insurance authorized by section
60A.06, subdivision 1
clause (4), by returning the policy or contract and by giving written notice of cancellation
any time before midnight of the tenth day following the date of purchase. Notice of
cancellation may be given personally
, or by telegram
. The policy or contract
may be returned personally or by mail. If by mail, the notice or return of the policy or
contract is effective upon being postmarked, properly addressed and postage prepaid.
30.19EFFECTIVE DATE.This section is effective January 1, 2009.
Sec. 48. Minnesota Statutes 2007 Supplement, section 72A.52, subdivision 1, is
amended to read:
Subdivision 1. Contents.
In addition to all other legal requirements a policy or
contract of insurance described in section
shall show the name and address of the
insurer and the seller of the policy or contract and shall
state include a notice
, clearly and
conspicuously in boldface type of a minimum size of ten points,
a right to cancel notice
which shall include the following elements
(1) a minimum of ten days to cancel the policy
beginning on the date the policy
is received by the owner;
(2) if the policy is a replacement policy,
a minimum of 30 days beginning on the
date the policy is received by the owner
if the policy is a replacement policy. Pursuant to
30.31section 61A.57, this requirement may also be provided in a separate written notice that
30.32is delivered with the policy or contract
(3) a requirement for the return of the policy to the company or an agent of the
(4) a statement that the policy is considered void from the beginning
and the parties
31.4 shall be in the same position as if no policy had been issued
a for policies or contracts other than a variable annuity or a variable life policy, a
31.6statement that the insurer will
all premiums paid, including any fees or charges,
if the policy is returned; and
(6) a statement
that notice given by mail and return of the policy or contract by mail
31.9 are effective on being postmarked, properly addressed, and postage prepaid describing
31.10when the cancellation becomes effective
31.11 The insurer must return all payments made for this policy within ten days after it
31.12receives notice of cancellation and the returned policy.
For variable annuity contracts
issued pursuant to sections
, this notice shall be suitably modified so as
to notify the purchaser that the purchaser is entitled to a refund of the amount calculated
in accordance with the provisions of section
72A.51, subdivision 3
. For variable life
31.16insurance policies, this notice must be suitably modified so as to notify the purchaser that
31.17the purchaser is entitled to a refund of: (i) the premiums paid; or (ii) the variable account
31.18value plus any amount deducted from the portion of the premium applied to the account.
31.19EFFECTIVE DATE.This section is effective January 1, 2009.
Sec. 49. Minnesota Statutes 2006, section 79A.06, subdivision 5, is amended to read:
Subd. 5. Private employers who have ceased to be self-insured.
employers who have ceased to be private self-insurers shall discharge their continuing
obligations to secure the payment of compensation which is accrued during the period of
self-insurance, for purposes of Laws 1988, chapter 674, sections 1 to 21, by compliance
with all of the following obligations of current certificate holders:
(1) Filing reports with the commissioner to carry out the requirements of this chapter;
(2) Depositing and maintaining a security deposit for accrued liability for the
payment of any compensation which may become due, pursuant to chapter 176. However,
if a private employer who has ceased to be a private self-insurer purchases an insurance
policy from an insurer authorized to transact workers' compensation insurance in this state
which provides coverage of all claims for compensation arising out of injuries occurring
during the entire period the employer was self-insured, whether or not reported during
that period, the policy will:
(i) discharge the obligation of the employer to maintain a security deposit for the
payment of the claims covered under the policy;
(ii) discharge any obligation which the self-insurers' security fund has or may have
for payment of all claims for compensation arising out of injuries occurring during the
period the employer was self-insured, whether or not reported during that period; and
(iii) discharge the obligations of the employer to pay any future assessments to
the self-insurers' security fund.
A private employer who has ceased to be a private self-insurer may instead buy an
insurance policy described above, except that it covers only a portion of the period of time
during which the private employer was self-insured; purchase of such a policy discharges
any obligation that the self-insurers' security fund has or may have for payment of all
claims for compensation arising out of injuries occurring during the period for which the
policy provides coverage, whether or not reported during that period.
A policy described in this clause may not be issued by an insurer unless it has
previously been approved as to form and substance by the commissioner; and
(3) Paying within 30 days all assessments of which notice is sent by the security
fund, for a period of seven years from the last day its certificate of self-insurance was in
effect. Thereafter, the private employer who has ceased to be a private self-insurer may
either: (i) continue to pay within 30 days all assessments of which notice is sent by the
security fund until it has no incurred liabilities for the payment of compensation arising
out of injuries during the period of self-insurance; or (ii) pay the security fund a cash
payment equal to four percent of the net present value of all remaining incurred liabilities
for the payment of compensation under sections
as certified by a
member of the casualty actuarial society. Assessments shall be based on the benefits paid
by the employer during the calendar year immediately preceding the calendar year in
which the employer's right to self-insure is terminated or withdrawn.
(b) With respect to a self-insurer who terminates its self-insurance authority after
April 1, 1998, that member shall obtain and file with the commissioner an actuarial
opinion of its outstanding liabilities as determined by an associate or fellow of the
Casualty Actuarial Society within 120 days of the date of its termination. If the actuarial
opinion is not timely filed, the self-insurers' security fund may, at its discretion, engage
the services of an actuary for this purpose. The expense of this actuarial opinion must
be assessed against and be the obligation of the self-insurer. The commissioner may
issue a certificate of default against the self-insurer for failure to pay this assessment
to the self-insurers' security fund as provided by section
79A.04, subdivision 9
opinion must separate liability for indemnity benefits from liability from medical benefits,
and must discount each up to four percent per annum to net present value. Within 30
days after notification of approval of the actuarial opinion by the commissioner, the
member shall pay to the security fund an amount equal to 120 percent of that discounted
outstanding indemnity liability, multiplied by the greater of the average annualized
assessment rate since inception of the security fund or the annual rate at the time of the
most recent assessment before termination. If the payment is not made within 30 days of
the notification, interest on it at the rate prescribed by section
must be paid by the
former member to the security fund until the principal amount is paid in full.
(c) A former member who terminated its self-insurance authority before April 1,
1998, who has paid assessments to the self-insurers' security fund for seven years, and
whose annualized assessment is
or less, may buy out of its outstanding
liabilities to the self-insurers' security fund by an amount calculated as follows:
multiplied by the indemnity case reserves at the time of the calculation, multiplied by the
then current self-insurers' security fund annualized assessment rate.
(d) A former member who terminated its self-insurance authority before April 1,
1998, and who is paying assessments within the first seven years after ceasing to be
self-insured under paragraph (a), clause (3), may elect to buy out its outstanding liabilities
to the self-insurers' security fund by obtaining and filing with the commissioner an
actuarial opinion of its outstanding liabilities as determined by an associate or fellow of
the Casualty Actuarial Society. The opinion must separate liability for indemnity benefits
from liability for medical benefits, and must discount each up to four percent per annum to
net present value. Within 30 days after notification of approval of the actuarial opinion
by the commissioner, the member shall pay to the security fund an amount equal to 120
percent of that discounted outstanding indemnity liability, multiplied by the greater of the
average annualized assessment rate since inception of the security fund or the annual rate
at the time of the most recent assessment.
(e) A former member who has paid the security fund according to paragraphs (b) to
(d) and subsequently receives authority from the commissioner to again self-insure shall be
assessed under section
79A.12, subdivision 2
, only on indemnity benefits paid on injuries
that occurred after the former member received authority to self-insure again; provided
that the member furnishes verified data regarding those benefits to the security fund.
(f) In addition to proceedings to establish liabilities and penalties otherwise
provided, a failure to comply may be the subject of a proceeding before the commissioner.
An appeal from the commissioner's determination may be taken pursuant to the contested
case procedures of chapter 14 within 30 days of the commissioner's written determination.
Any current or past member of the self-insurers' security fund is subject to service of
process on any claim arising out of chapter 176 or this chapter in the manner provided by
, or as otherwise provided by law. The issuance of a certificate to self-insure
to the private self-insured employer shall be deemed to be the agreement that any process
which is served in accordance with this section shall be of the same legal force and effect
as if served personally within this state.
Sec. 50. Minnesota Statutes 2006, section 79A.22, subdivision 3, is amended to read:
Subd. 3. New membership.
The commercial self-insurance group shall file with
the commissioner the name of any new employer that has been accepted in the group
prior to the initiation date of membership within five business days of the initiation date
along with the member's signed indemnity agreement and evidence the
member has deposited sufficient premiums with the group as required by the commercial
self-insurance group's bylaws or plan of operation. The security deposit of the group shall
be increased quarterly to an amount equal to 50 percent of the new members' premiums
for that quarter. If the total increase of new members' premiums for the first quarter is
less than five percent of the total annual premium of the group, no quarterly increase
is necessary until the cumulative quarterly increases for that calendar year exceed five
percent of the total premium of the group. The commissioner may, at the commissioner's
option, review the financial statement of any applicant whose premium equals 25 percent
or more of the group's total premium.
Sec. 51. Minnesota Statutes 2006, section 79A.22, subdivision 4, is amended to read:
Subd. 4. Commercial self-insurance group common claims fund.
commercial self-insurance group shall establish a common claims fund.
(b) Each commercial self-insurance group shall, not less than ten days prior to the
proposed effective date of the group, collect cash premiums from each member equal to
not less than 20 percent of the member's annual workers' compensation premium to be
paid into a common claims fund, maintained by the group in a designated depository. The
remaining balance of the member's premium shall be paid to the group in a reasonable
manner over the remainder of the year. Payments in subsequent years shall be made
according to the business plan.
(c) Each commercial self-insurance group shall initiate proceedings against a
member when that member becomes more than
days delinquent in any payment
of premium to the fund.
(d) There shall be no commingling of any assets of the common claims fund with the
assets of any individual member or with any other account of the service company or fiscal
agent unrelated to the payment of workers' compensation liabilities incurred by the group.
Sec. 52. Minnesota Statutes 2006, section 79A.23, subdivision 2, is amended to read:
Subd. 2. Required reports from members to group.
(a) Each member of the
commercial self-insurance group shall, by September 15, submit to the group its most
recent annual financial statement, together with other financial information the group may
require. These financial statements submitted must not have a fiscal year end date older
than January 15 of the group's calendar year end. Individual group members constituting
at least 25 percent of the group's annual premium shall submit to the group reviewed or
audited financial statements. The remaining members must submit compilation level
(b) For groups that have been in existence for at least three years, individual group
members may satisfy the requirements of paragraph (a) by submitting compiled, reviewed,
or audited statements or the most recent federal income tax return filed by the member.
35.13 (c) Groups that have been in existence for at least five years may satisfy the
35.14requirement of paragraph (a) through submissions from members representing at least
35.1550 percent of the group's total earned premium. Of those submissions, those from
35.16members representing at least 25 percent of the entire group's total earned premium must
35.17be audited or reviewed financial statements. The remainder of the submissions may be
35.18compiled, reviewed, or audited financial statements or the most recent tax return filed by
Sec. 53. Minnesota Statutes 2006, section 82B.23, subdivision 1, is amended to read:
Subdivision 1. Requirement.
The commissioner shall certify and transmit to the
appraisal subcommittee established pursuant to the Federal Institutions Reform, Recovery,
and Enforcement Act of 1989, Public Law 100-73, the names of those licensees who
have satisfied the requirements for certification and licensure
established by the appraisal
subcommittee and to collect and transmit any required fees.
Sec. 54. Minnesota Statutes 2006, section 83.25, is amended by adding a subdivision
35.28 Subd. 4. Limited broker licensee. An individual acting on behalf of a limited
35.29broker licensee issued a license under section 82.34, subdivision 13, is not required to be
35.30an officer of a corporation or a partner of a partnership if:
35.31 (1) the individual is solely engaged in the business of selling a timeshare interest as
35.32defined in section 83.20, subdivision 13;
35.33 (2) the individual is adequately supervised by the limited broker licensee; and
36.1 (3) the limited broker licensee maintains a roster of individuals selling a timeshare
36.2interest including the date the individual started selling. This roster must be made
36.3available to the commissioner upon demand within three days of the request.
Sec. 55. [332.345] SEGREGATED ACCOUNTS.
36.5 A payment collected by a collector or collection agency on behalf of a customer
36.6shall be held by the collector or collection agency in a separate trust account clearly
36.7designated for customer funds. The account must be in a bank or other depository
36.8institution authorized or chartered under the laws of any state or of the United States.
Sec. 56. REPEALER.
36.10(a) Minnesota Statutes 2006, sections 62A.149, subdivision 2; and 65B.29, are
36.12(b) Laws 2006, chapter 255, section 26, is repealed.