HF 837

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

  1.1                          A bill for an act 
  1.2             relating to insurance; regulating insurers, agents, 
  1.3             and coverages; modifying reporting requirements; 
  1.4             regulating the rehabilitation and liquidation of 
  1.5             insurers; modifying certain notice and disclosure 
  1.6             provisions; modifying certain definitions; making 
  1.7             technical changes; amending Minnesota Statutes 1998, 
  1.8             sections 60A.02, by adding a subdivision; 60A.052, 
  1.9             subdivision 2, and by adding a subdivision; 60A.06, 
  1.10            subdivisions 1 and 2; 60A.092, subdivisions 6 and 11; 
  1.11            60A.10, subdivision 1; 60A.111, subdivision 1; 60A.13, 
  1.12            subdivision 1; 60A.19, subdivision 1; 60B.04, by 
  1.13            adding a subdivision; 60B.21, subdivision 2; 60B.25; 
  1.14            60B.26, subdivision 1; 60B.39, subdivision 2; 60B.44, 
  1.15            subdivisions 4, 6, and by adding subdivisions; 60D.20, 
  1.16            subdivision 2; 60K.02, subdivision 1; 60K.03, 
  1.17            subdivisions 2 and 3; 60K.19, subdivisions 7 and 8; 
  1.18            61A.60, subdivision 1; 61B.19, subdivision 3; 62A.04, 
  1.19            subdivision 3; 62A.135, subdivision 5; 62A.50, 
  1.20            subdivision 3; 62A.61; 62A.65, subdivision 5; 62B.04, 
  1.21            subdivision 2; 62E.02, subdivision 1; 62E.05, 
  1.22            subdivision 1; 62E.09; 62E.13, subdivisions 6 and 8; 
  1.23            62E.14, subdivision 2; 62E.15, subdivision 2; 62L.02, 
  1.24            subdivision 24; 62L.05, subdivision 5; 62L.14, 
  1.25            subdivision 7; 62M.01, subdivision 2; 62M.02, 
  1.26            subdivision 7, and by adding subdivisions; 62M.15; 
  1.27            62S.01, subdivision 14; 62S.05, subdivision 2; 65A.01, 
  1.28            subdivisions 1, 3, and by adding a subdivision; 
  1.29            65A.27, subdivision 4; 65A.29, subdivision 4; 65B.02, 
  1.30            subdivision 2; 65B.44, subdivision 1; 65B.48, 
  1.31            subdivision 5; 72A.125, subdivision 3; 72A.20, 
  1.32            subdivision 29; 72B.04, subdivision 10; 79A.01, 
  1.33            subdivision 10, and by adding a subdivision; 79A.02, 
  1.34            subdivisions 1 and 4; 79A.03, subdivisions 6, 7, 9, 
  1.35            10, and by adding a subdivision; 79A.21, subdivision 
  1.36            2; 79A.23, subdivisions 1 and 2; and 256B.0644; 
  1.37            proposing coding for new law in Minnesota Statutes, 
  1.38            chapter 60B; repealing Minnesota Statutes 1998, 
  1.39            sections 60A.11, subdivision 24a; 60B.36; 60B.44, 
  1.40            subdivision 3; 65A.29, subdivision 12; and 79A.04, 
  1.41            subdivision 8; Minnesota Rules, part 2780.0500, item C.
  1.42  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.43     Section 1.  Minnesota Statutes 1998, section 60A.02, is 
  2.1   amended by adding a subdivision to read: 
  2.2      Subd. 2b.  [FILED.] In cases where a law requires documents 
  2.3   
  2.4   to be filed with the commissioner, the documents will be 
  2.5   considered filed when they are received by the department of 
  2.6   commerce. 
  2.7      Sec. 2.  Minnesota Statutes 1998, section 60A.052, 
  2.8   subdivision 2, is amended to read: 
  2.9      Subd. 2.  [SUSPENSION OR REVOCATION OF AUTHORITY OR 
  2.10  CENSURE.] If the commissioner determines that one of the 
  2.11  conditions listed in subdivision 1 exists, the commissioner may 
  2.12  issue an order requiring the insurance company to show cause why 
  2.13  any or all of the following should not occur:  (1) revocation or 
  2.14  suspension of any or all certificates of authority granted to 
  2.15  the foreign or domestic insurance company or its agent; (2) 
  2.16  censuring of the insurance company; or (3) cancellation of all 
  2.17  or some of the company's insurance contracts then in force in 
  2.18  this state; or (4) the imposition of a civil penalty.  The order 
  2.19  shall be calculated to give reasonable notice of the time and 
  2.20  place for hearing thereon, and shall state the reasons for the 
  2.21  entry of the order.  All hearings shall be conducted in 
  2.22  accordance with chapter 14.  The insurer may waive its right to 
  2.23  the hearing.  If the insurer is under the supervision or control 
  2.24  of the insurance department of the insurer's state of domicile, 
  2.25  that insurance department, acting on behalf of the insurer, may 
  2.26  waive the insurer's right to the hearing.  After the hearing, 
  2.27  the commissioner shall enter an order disposing of the matter as 
  2.28  the facts require.  If the insurance company fails to appear at 
  2.29  a hearing after having been duly notified of it, the company 
  2.30  shall be considered in default, and the proceeding may be 
  2.31  determined against the company upon consideration of the order 
  2.32  to show cause, the allegations of which may be considered to be 
  2.33  true. 
  2.34     Sec. 3.  Minnesota Statutes 1998, section 60A.052, is 
  2.35  amended by adding a subdivision to read: 
  2.36     Subd. 4a.  [WITHDRAWAL OF INSURER FROM STATE.] No insurer 
  2.37  shall withdraw from this state until its direct liability to its 
  3.1   policyholders and obligees under all its insurance contracts 
  3.2   then in force in this state have been assumed by another 
  3.3   licensed insurer according to section 60A.09, subdivision 4a. 
  3.4      Sec. 4.  Minnesota Statutes 1998, section 60A.06, 
  3.5   subdivision 1, is amended to read: 
  3.6      Subdivision 1.  [STATUTORY LINES.] Insurance corporations 
  3.7   may be authorized to transact in any state or territory in the 
  3.8   United States, in the Dominion of Canada, and in foreign 
  3.9   countries, when specified in their charters or certificates of 
  3.10  incorporation, either as originally granted or as thereafter 
  3.11  amended, any of the following kinds of business, upon the stock 
  3.12  plan, or upon the mutual plan when the formation of such mutual 
  3.13  companies is otherwise authorized by law; and business trusts as 
  3.14  authorized by law of this state shall only be authorized to 
  3.15  transact in this state the following kind of business 
  3.16  hereinafter specified in clause (7) hereof when specified in 
  3.17  their "declaration of trust": 
  3.18     (1) To insure against loss or damage to property on land 
  3.19  and against loss of rents and rental values, leaseholds of 
  3.20  buildings, use and occupancy and direct or consequential loss or 
  3.21  damage caused by fire, smoke or smudge, water or other fluid or 
  3.22  substance, lightning, windstorm, tornado, cyclone, earthquake, 
  3.23  collapse and slippage, rain, hail, frost, snow, freeze, change 
  3.24  of temperature, weather or climatic conditions, excess or 
  3.25  deficiency of moisture, floods, the rising of waters, oceans, 
  3.26  lakes, rivers or their tributaries, bombardment, invasion, 
  3.27  insurrection, riot, civil war or commotion, military or usurped 
  3.28  power, electrical power interruption or electrical breakdown 
  3.29  from any cause, railroad equipment, motor vehicles or aircraft, 
  3.30  accidental injury to sprinklers, pumps, conduits or containers 
  3.31  or other apparatus erected for extinguishing fires, explosion, 
  3.32  whether fire ensues or not, except explosions on risks specified 
  3.33  in clause (3); provided, however, that there may be insured 
  3.34  hereunder the following:  (a) explosion of any kind originating 
  3.35  outside the insured building or outside of the building 
  3.36  containing the property insured, (b) explosion of pressure 
  4.1   vessels which do not contain steam or which are not operated 
  4.2   with steam coils or steam jackets; and (c) risks under home 
  4.3   owners multiple peril policies; 
  4.4      (2)(a) To insure vessels, freight, goods, wares, 
  4.5   merchandise, specie, bullion, jewels, profits, commissions, bank 
  4.6   notes, bills of exchange, and other evidences of debt, bottomry 
  4.7   and respondentia interest, and every insurance appertaining to 
  4.8   or connected with risks of transportation and navigation on and 
  4.9   under water, on land or in the air; 
  4.10     (b) To insure all personal property floater risks; 
  4.11     (3) To insure against any loss from either direct or 
  4.12  indirect damage to any property or interest of the assured or of 
  4.13  another, resulting from the explosion of or injury to (a) any 
  4.14  boiler, heater or other fired pressure vessel; (b) any unfired 
  4.15  pressure vessel; (c) pipes or containers connected with any of 
  4.16  said boilers or vessels; (d) any engine, turbine, compressor, 
  4.17  pump or wheel; (e) any apparatus generating, transmitting or 
  4.18  using electricity; (f) any other machinery or apparatus 
  4.19  connected with or operated by any of the previously named 
  4.20  boilers, vessels or machines; and including the incidental power 
  4.21  to make inspections of and to issue certificates of inspection 
  4.22  upon, any such boilers, apparatus, and machinery, whether 
  4.23  insured or otherwise; 
  4.24     (4) To make contracts of life and endowment insurance, to 
  4.25  grant, purchase, or dispose of annuities or endowments of any 
  4.26  kind; and, in such contracts, or in contracts supplemental 
  4.27  thereto to provide for additional benefits in event of death of 
  4.28  the insured by accidental means, total permanent disability of 
  4.29  the insured, or specific dismemberment or disablement suffered 
  4.30  by the insured, or acceleration of life or endowment or annuity 
  4.31  benefits in advance of the time they would otherwise be payable; 
  4.32     (5)(a) To insure against loss or damage by the sickness, 
  4.33  bodily injury or death by accident of the assured or dependents, 
  4.34  or those for whom the assured has assumed a portion of the 
  4.35  liability for the loss or damage, including liability for 
  4.36  payment of medical care costs or for provisions of medical care; 
  5.1      (b) To insure against the legal liability, whether imposed 
  5.2   by common law or by statute or assumed by contract, of employers 
  5.3   for the death or disablement of, or injury to, employees; 
  5.4      (6) To guarantee the fidelity of persons in fiduciary 
  5.5   positions, public or private, or to act as surety on official 
  5.6   and other bonds, and for the performance of official or other 
  5.7   obligations; 
  5.8      (7) To insure owners and others interested in real estate 
  5.9   against loss or damage, by reason of defective titles, 
  5.10  encumbrances, or otherwise; 
  5.11     (8) To insure against loss or damage by breakage of glass, 
  5.12  located or in transit; 
  5.13     (9)(a) To insure against loss by burglary, theft, or 
  5.14  forgery; 
  5.15     (b) To insure against loss of or damage to moneys, coins, 
  5.16  bullion, securities, notes, drafts, acceptance or any other 
  5.17  valuable paper or document, resulting from any cause, except 
  5.18  while in the custody or possession of and being transported by 
  5.19  any carrier for hire or in the mail; 
  5.20     (c) To insure individuals by means of an all risk type of 
  5.21  policy commonly known as the "personal property floater" against 
  5.22  any kind and all kinds of loss of or damage to, or loss of use 
  5.23  of, any personal property other than merchandise; 
  5.24     (d) To insure against loss or damage by water or other 
  5.25  fluid or substance; 
  5.26     (10) To insure against loss from death of domestic animals 
  5.27  and to furnish veterinary service; 
  5.28     (11) To guarantee merchants and those engaged in business, 
  5.29  and giving credit, from loss by reason of giving credit to those 
  5.30  dealing with them; this shall be known as credit insurance; 
  5.31     (12) To insure against loss or damage to automobiles or 
  5.32  other vehicles or aircraft and their contents, by collision, 
  5.33  fire, burglary, or theft, and other perils of operation, and 
  5.34  against liability for damage to persons, or property of others, 
  5.35  by collision with such vehicles or aircraft, and to insure 
  5.36  against any loss or hazard incident to the ownership, operation, 
  6.1   or use of motor or other vehicles or aircraft; 
  6.2      (13) To insure against liability for loss or damage to the 
  6.3   property or person of another caused by the insured or by those 
  6.4   for whom the insured is responsible, including insurance of 
  6.5   medical, hospital, surgical, funeral or other related expense of 
  6.6   the insured or other person injured, irrespective of legal 
  6.7   liability of the insured, when issued with or supplemental to 
  6.8   policies of liability insurance; 
  6.9      (14) To insure against loss of or damage to any property of 
  6.10  the insured, resulting from the ownership, maintenance or use of 
  6.11  elevators, except loss or damage by fire; 
  6.12     (15) To insure against attorneys fees, court costs, witness 
  6.13  fees and incidental expenses incurred in connection with the use 
  6.14  of the professional services of attorneys at law.  
  6.15     Sec. 5.  Minnesota Statutes 1998, section 60A.06, 
  6.16  subdivision 2, is amended to read: 
  6.17     Subd. 2.  [OTHER LINES.] Any insurance corporation or 
  6.18  association heretofore or hereafter licensed to transact within 
  6.19  the state any of the kinds or classes of insurance specifically 
  6.20  authorized under the laws of this state may, when authorized by 
  6.21  its charter, transact within and without the state any lines of 
  6.22  insurance germane to its charter powers and not specifically 
  6.23  provided for under the laws of this state when these lines, or 
  6.24  combinations of lines, of insurance are not in violation of the 
  6.25  constitution or the laws of the state and, in the opinion of the 
  6.26  commissioner, not contrary to public policy, provided the 
  6.27  company or association shall first obtain authority of the 
  6.28  commissioner and meet such requirements as to capital or 
  6.29  surplus, or both, and other solvency and policy form 
  6.30  requirements as the commissioner shall prescribe.  These 
  6.31  additional hazards may be insured against by attachment to, or 
  6.32  in extension of, any policy which the company may be authorized 
  6.33  to issue under the laws of this state.  This subdivision shall 
  6.34  apply to companies operating upon the stock or mutual plan, 
  6.35  reciprocal or interinsurance exchanges.  
  6.36     Sec. 6.  Minnesota Statutes 1998, section 60A.092, 
  7.1   subdivision 6, is amended to read: 
  7.2      Subd. 6.  [SINGLE ASSUMING INSURER; TRUST FUND 
  7.3   REQUIREMENTS.] In the case of a single assuming insurer, the 
  7.4   trust shall consist of a trusteed account representing the 
  7.5   assuming insurer's liabilities attributable to business written 
  7.6   in the United States and, in addition, the assuming insurer 
  7.7   shall maintain a trusteed surplus of not less than $20,000,000 
  7.8   or an additional amount as the commissioner considers necessary. 
  7.9   The assuming insurer shall maintain a its surplus as regards 
  7.10  policyholders in an amount not less than $50,000,000 for 
  7.11  long-tail casualty reinsurers as provided under subdivision 3, 
  7.12  paragraph (a), clause (5). 
  7.13     Sec. 7.  Minnesota Statutes 1998, section 60A.092, 
  7.14  subdivision 11, is amended to read: 
  7.15     Subd. 11.  [REINSURANCE AGREEMENT REQUIREMENTS.] (a) If the 
  7.16  assuming insurer is not licensed or accredited to transact 
  7.17  insurance or reinsurance in this state, the credit authorized 
  7.18  under subdivisions 4 and 5 shall not be allowed unless the 
  7.19  assuming insurer agrees in the reinsurance agreements: 
  7.20     (1) that in the event of the failure of the assuming 
  7.21  insurer to perform its obligations under the terms of the 
  7.22  reinsurance agreement, the assuming insurer shall submit to the 
  7.23  jurisdiction of any court of competent jurisdiction in any state 
  7.24  of the United States, comply with all requirements necessary to 
  7.25  give the court jurisdiction, and abide by the final decision of 
  7.26  the court or of any appellate court in the event of an appeal; 
  7.27  and 
  7.28     (2) to designate the commissioner or a designated attorney 
  7.29  as its true and lawful attorney upon whom may be served any 
  7.30  lawful process in any action, suit, or proceeding instituted by 
  7.31  or on behalf of the ceding company. 
  7.32     (b) Paragraph (a) is not intended to conflict with or 
  7.33  override the obligation of the parties to a reinsurance 
  7.34  agreement to arbitrate their disputes, if an obligation to do so 
  7.35  is created in the agreement. 
  7.36     (c) Credit will not be granted, nor an asset or a reduction 
  8.1   from liability allowed, to a ceding insurer for reinsurance 
  8.2   effected with assuming insurers meeting the requirements of 
  8.3   subdivision 2, 3, 4, 5, 6, or 7, unless the reinsurance contract 
  8.4   provides that in the event of the insolvency of the ceding 
  8.5   insurer, the reinsurance will be payable under the contract 
  8.6   without diminution because of that insolvency. 
  8.7      Sec. 8.  Minnesota Statutes 1998, section 60A.10, 
  8.8   subdivision 1, is amended to read: 
  8.9      Subdivision 1.  [DOMESTIC COMPANIES.] (1)  [DEPOSIT AS 
  8.10  SECURITY FOR ALL POLICYHOLDERS REQUIRED.] No company in this 
  8.11  state, other than farmers' mutual, or real estate title 
  8.12  insurance companies, shall do business in this state unless it 
  8.13  has on deposit with the commissioner, for the protection of both 
  8.14  its resident and nonresident policyholders, securities to an 
  8.15  amount, the actual market value of which, exclusive of interest, 
  8.16  shall never be less than $200,000 until July 1, 1986, $300,000 
  8.17  until July 1, 1987, $400,000 until July 1, 1988, and $500,000 on 
  8.18  and after July 1, 1988 or one-half the applicable financial 
  8.19  requirement set forth in section 60A.07, whichever is less.  The 
  8.20  securities shall be retained under the control of the 
  8.21  commissioner as long as any policies of the depositing company 
  8.22  remain in force. 
  8.23     (2)  [SECURITIES DEFINED.] For the purpose of this 
  8.24  subdivision, the word "securities" means bonds or other 
  8.25  obligations of, or bonds or other obligations insured or 
  8.26  guaranteed by, the United States, any state of the United 
  8.27  States, any municipality of this state, or any agency or 
  8.28  instrumentality of the foregoing. 
  8.29     (3)  [PROTECTION OF DEPOSIT FROM LEVY.] No judgment 
  8.30  creditor or other claimant may levy upon any securities held on 
  8.31  deposit with, or for the account of, the commissioner.  Upon the 
  8.32  entry of an order by a court of competent jurisdiction for the 
  8.33  rehabilitation, liquidation or conservation of any depositing 
  8.34  company as provided in chapter 60B, that company's deposit 
  8.35  together with any accrued income thereon shall be transferred to 
  8.36  the commissioner as rehabilitator, liquidator, or conservator. 
  9.1      Sec. 9.  Minnesota Statutes 1998, section 60A.111, 
  9.2   subdivision 1, is amended to read: 
  9.3      Subdivision 1.  [REPORT.] Annually, or more frequently if 
  9.4   determined by the commissioner to be necessary for the 
  9.5   protection of policyholders, each foreign, alien and domestic 
  9.6   insurance company other than a life insurance company shall 
  9.7   report to the commissioner the ratio of its qualified assets to 
  9.8   its required liabilities.  
  9.9      Sec. 10.  Minnesota Statutes 1998, section 60A.13, 
  9.10  subdivision 1, is amended to read: 
  9.11     Subdivision 1.  [ANNUAL STATEMENTS REQUIRED.] Every 
  9.12  insurance company, including fraternal benefit societies, and 
  9.13  reciprocal exchanges, doing business in this state, shall 
  9.14  transmit to file with the commissioner, annually, on or before 
  9.15  March 1, the appropriate verified National Association of 
  9.16  Insurance Commissioners' annual statement blank, prepared in 
  9.17  accordance with the association's instructions handbook and 
  9.18  following those accounting procedures and practices prescribed 
  9.19  by the association's accounting practices and procedures manual, 
  9.20  unless the commissioner requires or finds another method of 
  9.21  valuation reasonable under the circumstances.  Another method of 
  9.22  valuation permitted by the commissioner must be at least as 
  9.23  conservative as those prescribed in the association's manual.  
  9.24  All companies required to file an annual statement under this 
  9.25  subdivision must may also be required to file with the 
  9.26  commissioner and the National Association of Insurance 
  9.27  Commissioners a copy of their annual statement on computer 
  9.28  diskette in an electronic form prescribed by the commissioner.  
  9.29  All Minnesota domestic insurers required to file annual 
  9.30  statements under this subdivision must also file quarterly 
  9.31  statements with the commissioner for the first, second, and 
  9.32  third calendar quarter on or before 45 days after the end of the 
  9.33  applicable quarter, prepared in accordance with the 
  9.34  association's instruction handbook.  All companies required to 
  9.35  file quarterly statements under this subdivision must also file 
  9.36  a copy of their quarterly statement on computer diskette may 
 10.1   also be required to file with the commissioner and the National 
 10.2   Association of Insurance Commissioners in an electronic form 
 10.3   prescribed by the commissioner.  In addition, the commissioner 
 10.4   may require the filing of any other information determined to be 
 10.5   reasonably necessary for the continual enforcement of these 
 10.6   laws.  The statement may be limited to the insurer's business 
 10.7   and condition in the United States unless the commissioner finds 
 10.8   that the business conducted outside the United States may 
 10.9   detrimentally affect the interests of policyholders in this 
 10.10  state.  The statements shall also contain a verified schedule 
 10.11  showing all details required by law for assessment and 
 10.12  taxation.  The statement or schedules shall be in the form and 
 10.13  shall contain all matters the commissioner may prescribe, and it 
 10.14  may be varied as to different types of insurers so as to elicit 
 10.15  a true exhibit of the condition of each insurer. 
 10.16     Sec. 11.  Minnesota Statutes 1998, section 60A.19, 
 10.17  subdivision 1, is amended to read: 
 10.18     Subdivision 1.  [REQUIREMENTS.] Any insurance company of 
 10.19  another state, upon compliance with all laws governing such 
 10.20  corporations in general and with the foregoing provisions so far 
 10.21  as applicable and the following requirements, shall be admitted 
 10.22  to do business in this state: 
 10.23     (1) It shall deposit with the commissioner a certified copy 
 10.24  of its charter or certificate of incorporation and its bylaws, 
 10.25  and a statement showing its financial condition and business, 
 10.26  verified by its president and secretary or other proper 
 10.27  officers; 
 10.28     (2) It shall furnish the commissioner satisfactory evidence 
 10.29  of its legal organization and authority to transact the proposed 
 10.30  business and that its capital, assets, deposits with the proper 
 10.31  official of its own state, amount insured, number of risks, 
 10.32  reserve and other securities, and guaranties for protection of 
 10.33  policyholders, creditors, and the public, comply with those 
 10.34  required of like domestic companies; 
 10.35     (3) By a duly executed instrument filed in the office of 
 10.36  the commissioner, it shall appoint the commissioner and 
 11.1   successors in office its lawful attorneys in fact and therein 
 11.2   irrevocably agree that legal process in any action or proceeding 
 11.3   against it may be served upon them with the same force and 
 11.4   effect as if personally served upon it, so long as any of its 
 11.5   liability exists in this state; 
 11.6      (4) It shall appoint, as its agents in this state, 
 11.7   residents thereof, and obtain from the commissioner a license to 
 11.8   transact business; 
 11.9      (5) Regardless of what lines of business an insurer of 
 11.10  another state is seeking to write in this state, the lines of 
 11.11  business it is licensed to write in its state of incorporation 
 11.12  shall be the basis for establishing the financial requirements 
 11.13  it must meet for admission in this state or for continuance of 
 11.14  its authority to write business in this state; 
 11.15     (6) No insurer of another state shall be admitted to do 
 11.16  business in this state for a line of business that it is not 
 11.17  authorized to write in its state of incorporation, unless the 
 11.18  statutes of that state prohibit all insurers from writing that 
 11.19  line of business. 
 11.20     Sec. 12.  Minnesota Statutes 1998, section 60B.04, is 
 11.21  amended by adding a subdivision to read: 
 11.22     Subd. 7.  [JURISDICTION.] If there is a delinquency 
 11.23  proceeding under this chapter, the provisions of this chapter 
 11.24  govern those proceedings, and all conflicting contractual 
 11.25  provisions contained in a contract between the insurer that is 
 11.26  subject to the delinquency proceeding and a third party, 
 11.27  including, but not limited to, the choice of law or arbitration 
 11.28  provisions, are subordinated to the provisions of this chapter. 
 11.29     Sec. 13.  [60B.085] [IMMUNITY AND INDEMNIFICATION OF THE 
 11.30  RECEIVER AND EMPLOYEES.] 
 11.31     Subdivision 1.  [SCOPE.] The persons entitled to protection 
 11.32  under this section are: 
 11.33     (1) all receivers responsible for the conduct of a 
 11.34  delinquency proceeding under this chapter, including present and 
 11.35  former receivers; and 
 11.36     (2) their employees, meaning all present and former special 
 12.1   deputies and assistant special deputies, and all persons whom 
 12.2   the commissioner, special deputies, or assistant special 
 12.3   deputies have employed to assist in a delinquency proceeding 
 12.4   under this chapter.  Attorneys, accountants, auditors, and other 
 12.5   professional persons or firms, who are retained by the receiver 
 12.6   as independent contractors and their employees shall not be 
 12.7   considered employees of the receiver for purposes of this 
 12.8   section. 
 12.9      Subd. 2.  [IMMUNITY FROM LIABILITY.] The receiver and the 
 12.10  receiver's employees shall have official immunity and shall be 
 12.11  immune from suit and liability, both personally and in their 
 12.12  official capacities, for a claim for damage to or loss of 
 12.13  property or personal injury or other civil liability caused by 
 12.14  or resulting from an alleged act, error, or omission of the 
 12.15  receiver or an employee arising out of or by reason of their 
 12.16  duties or employment.  Nothing in this subdivision shall be 
 12.17  construed to hold the receiver or an employee immune from suit 
 12.18  and liability for damage, loss, injury, or other civil liability 
 12.19  caused by the intentional or willful and wanton misconduct of 
 12.20  the receiver or an employee. 
 12.21     Subd. 3.  [INDEMNIFICATION.] If a legal action is commenced 
 12.22  against the receiver or any employee, whether against the 
 12.23  receiver or employee personally or in their official capacity, 
 12.24  alleging property damage, property loss, personal injury, or 
 12.25  other civil liability caused by or resulting from an alleged 
 12.26  act, error, or omission of the receiver or an employee arising 
 12.27  out of or by reason of their duties or employment, the receiver 
 12.28  and employee must be indemnified from the assets of the insurer 
 12.29  for all expenses, attorneys' fees, judgments, settlements, 
 12.30  decrees, or amounts due and owing or paid in satisfaction or 
 12.31  incurred in the defense of the legal action unless it is 
 12.32  determined upon a final adjudication on the merits that the 
 12.33  alleged act, error, or omission of the receiver or employee 
 12.34  giving rise to the claim did not arise out of or by reason of 
 12.35  the receiver's or employee's duties or employment, or was caused 
 12.36  by intentional or willful and wanton misconduct. 
 13.1      (a) Attorney's fees and related expenses incurred in 
 13.2   defending a legal action for which immunity or indemnity is 
 13.3   available under this section must be paid from the assets of the 
 13.4   insurer, as they are incurred, in advance of the final 
 13.5   disposition of the action upon receipt of an undertaking by or 
 13.6   on behalf of the receiver or employee to repay the attorneys' 
 13.7   fees and expenses if it is ultimately determined upon a final 
 13.8   adjudication on the merits that the receiver or employee is not 
 13.9   entitled to immunity or indemnity under this section. 
 13.10     (b) Indemnification for expense payments, judgments, 
 13.11  settlements, decrees, attorneys' fees, surety bond premiums, or 
 13.12  other amounts paid or to be paid from the insurer's assets 
 13.13  according to this section is an administrative expense of the 
 13.14  insurer. 
 13.15     (c) In the event of an actual or threatened litigation 
 13.16  against a receiver or an employee for which immunity or 
 13.17  indemnity may be available under this section, a reasonable 
 13.18  amount of funds which in the judgment of the commissioner may be 
 13.19  needed to provide immunity or indemnity must be segregated and 
 13.20  reserved from the assets of the insurer as security for the 
 13.21  payment of indemnity until all applicable statutes of limitation 
 13.22  have run and all actual or threatened actions against the 
 13.23  receiver or an employee have been completely and finally 
 13.24  resolved, and all obligations of the insurer and the 
 13.25  commissioner under this section have been satisfied. 
 13.26     (d) In lieu of segregation and reserving of funds, the 
 13.27  commissioner may, in the commissioner's discretion, obtain a 
 13.28  surety bond or make other arrangements that will enable the 
 13.29  commissioner to fully secure the payment of all obligations 
 13.30  under this section. 
 13.31     Subd. 4.  [SETTLEMENT COVERAGE.] If a legal action against 
 13.32  an employee for which indemnity may be available under this 
 13.33  section is settled before final adjudication on the merits, the 
 13.34  insurer must pay the settlement amount on behalf of the 
 13.35  employee, or indemnify the employee for the settlement amount, 
 13.36  unless the commissioner determines: 
 14.1      (1) that the claim did not arise out of or by reason of the 
 14.2   employee's duties or employment; or 
 14.3      (2) that the claim was caused by the intentional or willful 
 14.4   and wanton misconduct of the employee. 
 14.5      Subd. 5.  [SETTLEMENT APPROVAL.] In a legal action in which 
 14.6   the receiver is a defendant, that portion of a settlement 
 14.7   relating to the alleged act, error, or omission of the receiver 
 14.8   is subject to the approval of the court before which the 
 14.9   delinquency proceeding is pending.  The court shall not approve 
 14.10  that portion of the settlement if it determines: 
 14.11     (1) that the claim did not arise out of or by reason of the 
 14.12  receiver's duties or employment; or 
 14.13     (2) that the claim was caused by the intentional or willful 
 14.14  and wanton misconduct of the receiver. 
 14.15     Subd. 6.  [CONSTRUCTION.] Nothing contained or implied in 
 14.16  this section operates, or shall be construed or applied, to 
 14.17  deprive the receiver or an employee of immunity, indemnity, 
 14.18  benefits of law, rights, or any defense otherwise available. 
 14.19     Sec. 14.  Minnesota Statutes 1998, section 60B.21, 
 14.20  subdivision 2, is amended to read: 
 14.21     Subd. 2.  [FIXING OF RIGHTS.] Upon issuance of the order, 
 14.22  the rights and liabilities of any such insurer and of its 
 14.23  creditors, policyholders, shareholders, members, and all other 
 14.24  persons interested in its estate are fixed as of the date of 
 14.25  filing of the petition for liquidation, except as provided in 
 14.26  sections 60B.22, 60B.25, clause (22), and 60B.39. 
 14.27     Sec. 15.  Minnesota Statutes 1998, section 60B.25, is 
 14.28  amended to read: 
 14.29     60B.25 [POWERS OF LIQUIDATOR.] 
 14.30     The liquidator shall report to the court monthly, or at 
 14.31  other intervals specified by the court, on the progress of the 
 14.32  liquidation in whatever detail the court orders.  The liquidator 
 14.33  shall coordinate activities with those of each guaranty 
 14.34  association having an interest in the liquidation and shall 
 14.35  submit a report detailing how coordination will be achieved to 
 14.36  the court for its approval within 30 days following appointment, 
 15.1   or within the time which the court, in its discretion, may 
 15.2   establish.  Subject to the court's control, the liquidator may: 
 15.3      (1) Appoint a special deputy to act under sections 60B.01 
 15.4   to 60B.61 and determine the deputy's compensation.  The special 
 15.5   deputy shall have all powers of the liquidator granted by this 
 15.6   section.  The special deputy shall serve at the pleasure of the 
 15.7   liquidator. 
 15.8      (2) Appoint or engage employees and agents, actuaries, 
 15.9   accountants, appraisers, consultants, and other personnel deemed 
 15.10  necessary to assist in the liquidation without regard to chapter 
 15.11  14. 
 15.12     (3) Fix the compensation of persons under clause (2), 
 15.13  subject to the control of the court. 
 15.14     (4) Defray all expenses of taking possession of, 
 15.15  conserving, conducting, liquidating, disposing of, or otherwise 
 15.16  dealing with the business and property of the insurer.  If the 
 15.17  property of the insurer does not contain sufficient cash or 
 15.18  liquid assets to defray the costs incurred, the liquidator may 
 15.19  advance the costs so incurred out of the appropriation made to 
 15.20  the department of commerce.  Any amounts so paid shall be deemed 
 15.21  expense of administration and shall be repaid for the credit of 
 15.22  the department of commerce out of the first available money of 
 15.23  the insurer. 
 15.24     (5) Hold hearings, subpoena witnesses and compel their 
 15.25  attendance, administer oaths, examine any person under oath and 
 15.26  compel any person to subscribe to testimony after it has been 
 15.27  correctly reduced to writing, and in connection therewith 
 15.28  require the production of any books, papers, records, or other 
 15.29  documents which the liquidator deems relevant to the inquiry. 
 15.30     (6) Collect all debts and money due and claims belonging to 
 15.31  the insurer, wherever located, and for this purpose institute 
 15.32  timely action in other jurisdictions, in order to forestall 
 15.33  garnishment and attachment proceedings against such debts; do 
 15.34  such other acts as are necessary or expedient to collect, 
 15.35  conserve, or protect its assets or property, including sell, 
 15.36  compound, compromise, or assign for purposes of collection, upon 
 16.1   such terms and conditions as the liquidator deems best, any bad 
 16.2   or doubtful debts; and pursue any creditor's remedies available 
 16.3   to enforce claims. 
 16.4      (7) Conduct public and private sales of the property of the 
 16.5   insurer in a manner prescribed by the court. 
 16.6      (8) Use assets of the estate to transfer coverage 
 16.7   obligations to a solvent assuming insurer, if the transfer can 
 16.8   be arranged without prejudice to applicable priorities under 
 16.9   section 60B.44. 
 16.10     (9) Acquire, hypothecate, encumber, lease, improve, sell, 
 16.11  transfer, abandon, or otherwise dispose of or deal with any 
 16.12  property of the insurer at its market value or upon such terms 
 16.13  and conditions as are fair and reasonable, except that no 
 16.14  transaction involving property the market value of which exceeds 
 16.15  $10,000 shall be concluded without express permission of the 
 16.16  court.  The liquidator may also execute, acknowledge, and 
 16.17  deliver any deeds, assignments, releases, and other instruments 
 16.18  necessary or proper to effectuate any sale of property or other 
 16.19  transaction in connection with the liquidation.  In cases where 
 16.20  real property sold by the liquidator is located other than in 
 16.21  the county where the liquidation is pending, the liquidator 
 16.22  shall cause to be filed with the county recorder for the county 
 16.23  in which the property is located a certified copy of the order 
 16.24  of appointment. 
 16.25     (10) Borrow money on the security of the insurer's assets 
 16.26  or without security and execute and deliver all documents 
 16.27  necessary to that transaction for the purpose of facilitating 
 16.28  the liquidation. 
 16.29     (11) Enter into such contracts as are necessary to carry 
 16.30  out the order to liquidate, and affirm or disavow any contracts 
 16.31  to which the insurer is a party. 
 16.32     (12) Continue to prosecute and institute in the name of the 
 16.33  insurer or in the liquidator's own name any suits and other 
 16.34  legal proceedings, in this state or elsewhere, and abandon the 
 16.35  prosecution of claims the liquidator deems unprofitable to 
 16.36  pursue further.  If the insurer is dissolved under section 
 17.1   60B.23, the liquidator may apply to any court in this state or 
 17.2   elsewhere for leave to be substituted for the insurer as 
 17.3   plaintiff. 
 17.4      (13) Prosecute any action which may exist in behalf of the 
 17.5   creditors, members, policyholders, or shareholders of the 
 17.6   insurer against any officer of the insurer, or any other person. 
 17.7      (14) Remove any records and property of the insurer to the 
 17.8   offices of the commissioner or to such other place as is 
 17.9   convenient for the purposes of efficient and orderly execution 
 17.10  of the liquidation. 
 17.11     (15) Deposit in one or more banks in this state such sums 
 17.12  as are required for meeting current administration expenses and 
 17.13  dividend distributions. 
 17.14     (16) Deposit with the state board of investment for 
 17.15  investment pursuant to section 11A.24, all sums not currently 
 17.16  needed, unless the court orders otherwise. 
 17.17     (17) File any necessary documents for record in the office 
 17.18  of any county recorder or record office in this state or 
 17.19  elsewhere where property of the insurer is located. 
 17.20     (18) Assert all defenses available to the insurer as 
 17.21  against third persons, including statutes of limitations, 
 17.22  statutes of frauds, and the defense of usury.  A waiver of any 
 17.23  defense by the insurer after a petition for liquidation has been 
 17.24  filed shall not bind the liquidator. 
 17.25     (19) Exercise and enforce all the rights, remedies, and 
 17.26  powers of any creditor, shareholder, policyholder, or member, 
 17.27  including any power to avoid any transfer or lien that may be 
 17.28  given by law and that is not included within sections 60B.30 and 
 17.29  60B.32. 
 17.30     (20) Intervene in any proceeding wherever instituted that 
 17.31  might lead to the appointment of a receiver or trustee, and act 
 17.32  as the receiver or trustee whenever the appointment is offered. 
 17.33     (21) Enter into agreements with any receiver or 
 17.34  commissioner of any other state relating to the rehabilitation, 
 17.35  liquidation, conservation, or dissolution of an insurer doing 
 17.36  business in both states. 
 18.1      (22) Collect from an insured any unpaid earned premium or 
 18.2   retrospectively rated premium due the insurer based on the 
 18.3   termination of coverage under section 60B.22.  Premium on surety 
 18.4   business is considered earned at inception if no policy term can 
 18.5   be determined.  All other premium will be considered earned and 
 18.6   will be prorated over the determined policy term, regardless of 
 18.7   any provision in the bond, guaranty, contract, or other 
 18.8   agreement. 
 18.9      (22) (23) Exercise all powers now held or hereafter 
 18.10  conferred upon receivers by the laws of this state not 
 18.11  inconsistent with sections 60B.01 to 60B.61. 
 18.12     (23) (24) The enumeration in this section of the powers and 
 18.13  authority of the liquidator is not a limitation, nor does it 
 18.14  exclude the right to do such other acts not herein specifically 
 18.15  enumerated or otherwise provided for as are necessary or 
 18.16  expedient for the accomplishment of or in aid of the purpose of 
 18.17  liquidation. 
 18.18     (24) (25) The power of the liquidator of a health 
 18.19  maintenance organization includes the power to transfer coverage 
 18.20  obligations to a solvent and voluntary health maintenance 
 18.21  organization, insurer, or nonprofit health service plan, and to 
 18.22  assign provider contracts of the insolvent health maintenance 
 18.23  organization to an assuming health maintenance organization, 
 18.24  insurer, or nonprofit health service plan permitted to enter 
 18.25  into such agreements.  The liquidator is not required to meet 
 18.26  the notice requirements of section 62D.121.  Transferees of 
 18.27  coverage obligations or provider contracts shall have no 
 18.28  liability to creditors or obligees of the health maintenance 
 18.29  organization except those liabilities expressly assumed. 
 18.30     Sec. 16.  Minnesota Statutes 1998, section 60B.26, 
 18.31  subdivision 1, is amended to read: 
 18.32     Subdivision 1.  [NOTICE REQUIRED.] (a) The liquidator shall 
 18.33  give notice of the liquidation order as soon as possible by 
 18.34  first class mail and either by telegram or telephone to the 
 18.35  commissioner of commerce of each jurisdiction in which the 
 18.36  insurer is licensed to do business, by first class mail and by 
 19.1   telephone to the department of labor and industry of this state 
 19.2   if the insurer is or has been an insurer of workers' 
 19.3   compensation, by first class mail within this state and by 
 19.4   airmail outside this state to all agents of the insurer having a 
 19.5   duty under section 60B.27 this chapter, by first class mail, if 
 19.6   the insurer is a surety company to every district court judge 
 19.7   exercising probate jurisdiction and the court administrator of 
 19.8   all courts of record in this state and upon receipt of such 
 19.9   notice it shall be the duty of those judges and court 
 19.10  administrators to notify and require every executor, 
 19.11  administrator, guardian, trustee, or other fiduciary having 
 19.12  filed a bond on which such company is surety, to forthwith file 
 19.13  a new bond with new sureties, and by first class mail within 
 19.14  this state and by airmail outside this state at the last known 
 19.15  address to all persons known or reasonably expected to have 
 19.16  claims against the insurer, including all policyholders.  The 
 19.17  liquidator also shall publish a notice three consecutive times 
 19.18  in a newspaper of general circulation in the county in which the 
 19.19  liquidation is pending or in Ramsey county, the last publication 
 19.20  to be not less than three months before the earliest deadline 
 19.21  specified in the notice under subdivision 2. 
 19.22     (b) Notice to agents shall inform them of their duties 
 19.23  under section 60B.27 this chapter and inform them what 
 19.24  information they must communicate to policyholders.  Notice to 
 19.25  policyholders shall include notice of impairment and termination 
 19.26  of coverage under section 60B.22.  When it is applicable, notice 
 19.27  to policyholders shall include (1) notice of withdrawal of the 
 19.28  insurer from the defense of any case in which the policyholder 
 19.29  is interested, and (2) notice of the right to file a claim under 
 19.30  section 60B.40, subdivision 2, and (3) information about the 
 19.31  existence of section 79.28, relating to certain unpaid workers' 
 19.32  compensation awards. 
 19.33     (c) Within 15 days of the date of entry of the order, the 
 19.34  liquidator shall report to the court what notice has been 
 19.35  given.  The court may order such additional notice as it deems 
 19.36  appropriate. 
 20.1      Sec. 17.  [60B.365] [REINSURER'S LIABILITY.] 
 20.2      Subdivision 1.  [GENERALLY.] The amount recoverable by the 
 20.3   liquidator from reinsurers must not be reduced as a result of 
 20.4   the delinquency proceedings, regardless of any provision in the 
 20.5   reinsurance contract or other agreement. 
 20.6      Subd. 2.  [PAYMENTS.] Payments by the reinsurer must be 
 20.7   made directly to the ceding insurer or its receiver, except 
 20.8   where the contract of insurance or reinsurance specifically 
 20.9   provides for another payee for the reinsurance in the event of 
 20.10  insolvency of the ceding insurer according to the applicable 
 20.11  requirements of statutes, rules, or orders of the domiciliary 
 20.12  state of the ceding insurer.  The receiver and reinsurer are 
 20.13  entitled to recover from a person who unsuccessfully makes a 
 20.14  claim directly against the reinsurer the receiver's attorneys' 
 20.15  fees and expenses incurred in preventing any collection by the 
 20.16  person. 
 20.17     Sec. 18.  Minnesota Statutes 1998, section 60B.39, 
 20.18  subdivision 2, is amended to read: 
 20.19     Subd. 2.  [CLAIMS UNDER TERMINATED POLICIES.] Any claim 
 20.20  that would have become absolute if there had been no termination 
 20.21  of coverage under section 60B.22, and which was not covered by 
 20.22  insurance acquired to replace the terminated coverage, shall be 
 20.23  allowed as if the coverage had remained in effect, unless at 
 20.24  least ten days before the insured event occurred either the 
 20.25  claimant had actual notice of the termination or notice was 
 20.26  mailed to the claimant as prescribed by section 60B.26, 
 20.27  subdivision 1, or 60B.27, subdivision 1 this chapter.  If 
 20.28  allowed the claim shall share in distributions under section 
 20.29  60B.44, subdivision 9.  
 20.30     Sec. 19.  Minnesota Statutes 1998, section 60B.44, 
 20.31  subdivision 4, is amended to read: 
 20.32     Subd. 4.  [LOSS CLAIMS; INCLUDING CLAIMS NOT COVERED BY A 
 20.33  GUARANTY ASSOCIATION.] All claims under policies or contracts of 
 20.34  coverage for losses incurred including third party claims, and 
 20.35  all claims against the insurer for liability for bodily injury 
 20.36  or for injury to or destruction of tangible property which are 
 21.1   not under policies or contracts.  All claims under life 
 21.2   insurance and annuity policies, whether for death proceeds, 
 21.3   annuity proceeds, or investment values, shall be treated as loss 
 21.4   claims.  That portion of any loss for which indemnification is 
 21.5   provided by other benefits or advantages recovered or 
 21.6   recoverable by the claimant shall not be included in this class, 
 21.7   other than benefits or advantages recovered or recoverable in 
 21.8   discharge of familial obligations of support or by way of 
 21.9   succession at death or as proceeds of life insurance, or as 
 21.10  gratuities.  No payment made by an employer to an employee shall 
 21.11  be treated as a gratuity.  Claims not covered by a guaranty 
 21.12  association are loss claims.  If any portion of a claim is 
 21.13  covered by a reinsurance treaty or similar contractual 
 21.14  obligation, that claim shall be entitled to a pro rata share, 
 21.15  based upon the relationship the claim amount bears to all claims 
 21.16  payable under the treaty or contract, of the proceeds received 
 21.17  under that treaty or contractual obligation.  
 21.18     Claims receiving pro rata payments shall not, as to any 
 21.19  remaining unpaid portion of their claim, be treated in a 
 21.20  different manner than if no such payment had been received.  
 21.21     Sec. 20.  Minnesota Statutes 1998, section 60B.44, is 
 21.22  amended by adding a subdivision to read: 
 21.23     Subd. 4a.  [FEDERAL GOVERNMENT.] Claims of the federal 
 21.24  government. 
 21.25     Sec. 21.  Minnesota Statutes 1998, section 60B.44, is 
 21.26  amended by adding a subdivision to read: 
 21.27     Subd. 4b.  [WAGES.] (a) Debts due to employees for services 
 21.28  performed, not to exceed $1,000 to each employee, that have been 
 21.29  earned within one year before the filing of the petition for 
 21.30  liquidation, subject to payment of applicable federal, state, or 
 21.31  local government taxes required by law to be withheld from the 
 21.32  debts.  Officers are not entitled to the benefit of this 
 21.33  priority.  In cases where there are no claims and no potential 
 21.34  claims of the federal government in the estate, these claims 
 21.35  will have priority over claims in subdivision 4. 
 21.36     (b) The priority in paragraph (a) is in lieu of other 
 22.1   similar priority authorized by law as to wages or compensation 
 22.2   of employees. 
 22.3      Sec. 22.  Minnesota Statutes 1998, section 60B.44, 
 22.4   subdivision 6, is amended to read: 
 22.5      Subd. 6.  [RESIDUAL CLASSIFICATION.] All other claims 
 22.6   including claims of the federal or any state or local 
 22.7   government, not falling within other classes under this 
 22.8   section.  Claims, including those of any governmental body for a 
 22.9   penalty or forfeiture, shall be allowed in this class only to 
 22.10  the extent of the pecuniary loss sustained from the act, 
 22.11  transaction, or proceeding out of which the penalty or 
 22.12  forfeiture arose, with reasonable and actual costs occasioned 
 22.13  thereby.  The remainder of such claims shall be postponed to the 
 22.14  class of claims under subdivision 9.  
 22.15     Sec. 23.  Minnesota Statutes 1998, section 60D.20, 
 22.16  subdivision 2, is amended to read: 
 22.17     Subd. 2.  [DIVIDENDS AND OTHER DISTRIBUTIONS.] (a) Subject 
 22.18  to the limitations and requirements of this subdivision, the 
 22.19  board of directors of any domestic insurer within an insurance 
 22.20  holding company system may authorize and cause the insurer to 
 22.21  declare and pay any dividend or distribution to its shareholders 
 22.22  as the directors deem prudent from the earned surplus of the 
 22.23  insurer.  An insurer's earned surplus, also known as unassigned 
 22.24  funds, shall be determined in accordance with the accounting 
 22.25  procedures and practices governing preparation of its annual 
 22.26  statement, minus 25 percent of earned surplus attributable to 
 22.27  net unrealized capital gains.  Dividends which are paid from 
 22.28  sources other than an insurer's earned surplus as of the end of 
 22.29  the immediately preceding quarter for which the insurer has 
 22.30  filed a quarterly or annual statement as appropriate, or are 
 22.31  extraordinary dividends or distributions may be paid only as 
 22.32  provided in paragraphs (d), (e), and (f). 
 22.33     (b) The insurer shall notify the commissioner within five 
 22.34  business days following declaration of a dividend declared 
 22.35  pursuant to paragraph (a) and at least ten days prior to its 
 22.36  payment.  The commissioner shall promptly consider the 
 23.1   notification filed pursuant to this paragraph, taking into 
 23.2   consideration the factors described in subdivision 4. 
 23.3      (c) The commissioner shall review at least annually the 
 23.4   dividends paid by an insurer pursuant to paragraph (a) for the 
 23.5   purpose of determining if the dividends are reasonable based 
 23.6   upon (1) the adequacy of the level of surplus as regards 
 23.7   policyholders remaining after the dividend payments, and (2) the 
 23.8   quality of the insurer's earnings and extent to which the 
 23.9   reported earnings include extraordinary items, such as surplus 
 23.10  relief reinsurance transactions and reserve destrengthening. 
 23.11     (d) No domestic insurer shall pay any extraordinary 
 23.12  dividend or make any other extraordinary distribution to its 
 23.13  shareholders until:  (1) 30 days after the commissioner has 
 23.14  received notice of the declaration of it and has not within the 
 23.15  period disapproved the payment; or (2) the commissioner has 
 23.16  approved the payment within the 30-day period. 
 23.17     (e) For purposes of this section, an extraordinary dividend 
 23.18  or distribution includes any dividend or distribution of cash or 
 23.19  other property, whose fair market value together with that of 
 23.20  other dividends or distributions made within the preceding 12 
 23.21  months exceeds the greater of (1) ten percent of the insurer's 
 23.22  surplus as regards policyholders as of the 31st day of December 
 23.23  next preceding on December 31 of the preceding year; or (2) the 
 23.24  net gain from operations of the insurer, if the insurer is a 
 23.25  life insurer, or the net income, if the insurer is not a life 
 23.26  insurer, not including realized capital gains, for the 12-month 
 23.27  period ending the 31st day of December next preceding on 
 23.28  December 31 of the preceding year, but does not include pro rata 
 23.29  distributions of any class of the insurer's own securities.  
 23.30     (f) Notwithstanding any other provision of law, an insurer 
 23.31  may declare an extraordinary dividend or distribution that is 
 23.32  conditional upon the commissioner's approval, and the 
 23.33  declaration shall confer no rights upon shareholders until:  (1) 
 23.34  the commissioner has approved the payment of such a dividend or 
 23.35  distribution; or (2) the commissioner has not disapproved the 
 23.36  payment within the 30-day period referred to above. 
 24.1      Sec. 24.  Minnesota Statutes 1998, section 60K.02, 
 24.2   subdivision 1, is amended to read: 
 24.3      Subdivision 1.  [REQUIREMENT.] No person shall act or 
 24.4   assume to act as an insurance agent in the solicitation or 
 24.5   procurement of applications for insurance, nor in the sale of 
 24.6   insurance or policies of insurance, nor in any manner aid as an 
 24.7   insurance agent in the negotiation of insurance by or with an 
 24.8   insurer, including resident agents or reciprocal or 
 24.9   interinsurance exchanges and fraternal benefit societies, until 
 24.10  that person obtains from the commissioner a license for that 
 24.11  purpose.  The license must specifically set forth the name of 
 24.12  the person authorized to act as an agent and the class or 
 24.13  classes of insurance for which that person is authorized to 
 24.14  solicit or countersign policies.  An insurance agent may qualify 
 24.15  for a license in the following classes to sell:  (1) life and 
 24.16  health; and (2) life and health and variable contracts; (3) 
 24.17  property and casualty; (4) travel baggage; (5) bail bonds; (6) 
 24.18  title insurance; and (7) farm property and liability.  
 24.19     No insurer shall appoint or reappoint a natural person, 
 24.20  partnership, or corporation to act as an insurance agent on its 
 24.21  behalf until that natural person, partnership, or corporation 
 24.22  obtains a license as an insurance agent.  
 24.23     Sec. 25.  Minnesota Statutes 1998, section 60K.03, 
 24.24  subdivision 2, is amended to read: 
 24.25     Subd. 2.  [RESIDENT AGENT.] The commissioner shall issue a 
 24.26  resident insurance agent's license to a qualified resident of 
 24.27  this state as follows:  
 24.28     (a) A person may qualify as a resident of this state if 
 24.29  that person resides in this state or the principal place of 
 24.30  business of that person is maintained in this state.  
 24.31  Application for a license claiming residency in this state for 
 24.32  licensing purposes constitutes an election of residency in this 
 24.33  state.  A license issued upon an application claiming residency 
 24.34  in this state is void if the licensee, while holding a resident 
 24.35  license in this state, also holds, or makes application for, a 
 24.36  resident license in, or thereafter claims to be a resident of, 
 25.1   any other state or jurisdiction or if the licensee ceases to be 
 25.2   a resident of this state; provided, however, if the applicant is 
 25.3   a resident of a community or trade area, the border of which is 
 25.4   contiguous with the state line of this state, the applicant may 
 25.5   qualify for a resident license in this state and at the same 
 25.6   time hold a resident license from the contiguous state. 
 25.7      (b) The commissioner shall subject each applicant who is a 
 25.8   natural person to a written examination as to the applicant's 
 25.9   competence to act as an insurance agent.  The examination must 
 25.10  be held at a reasonable time and place designated by the 
 25.11  commissioner. 
 25.12     (c) The examination shall be approved for use by the 
 25.13  commissioner and shall test the applicant's knowledge of the 
 25.14  lines of insurance, policies, and transactions to be handled 
 25.15  under the class of license applied for, of the duties and 
 25.16  responsibilities of the licensee, and pertinent insurance laws 
 25.17  of this state. 
 25.18     (d) The examination shall be given only after the applicant 
 25.19  has completed a program of classroom studies in a school, which 
 25.20  shall not include a school sponsored by, offered by, or 
 25.21  affiliated with an insurance company or its agents; except that 
 25.22  this limitation does not preclude a bona fide professional 
 25.23  association of agents, not acting on behalf of an insurer, from 
 25.24  offering courses.  The course of study shall consist of 30 hours 
 25.25  of classroom study devoted to the basic fundamentals of 
 25.26  insurance for those seeking a Minnesota license for the first 
 25.27  time,; three hours devoted to state laws, regulations, and rules 
 25.28  applicable to the line or lines of insurance for which licensure 
 25.29  is being applied; 15 hours devoted to specific life and health 
 25.30  topics for those seeking a life and health license,; and 15 
 25.31  hours devoted to specific property and casualty topics for those 
 25.32  seeking a property and casualty license.  The program of studies 
 25.33  or study course shall have been approved by the commissioner in 
 25.34  order to qualify under this paragraph.  If the applicant has 
 25.35  been previously licensed for the particular line of insurance in 
 25.36  the state of Minnesota, the requirement of a program of studies 
 26.1   or a study course shall be waived.  A certification of 
 26.2   compliance by the organization offering the course shall 
 26.3   accompany the applicant's license application.  This program of 
 26.4   studies in a school or a study course shall not apply to farm 
 26.5   property perils and farm liability applicants, or to agents 
 26.6   writing such other lines of insurance as the commissioner may 
 26.7   exempt from examination by order. 
 26.8      (e) The applicant must pass the examination with a grade 
 26.9   determined by the commissioner to indicate satisfactory 
 26.10  knowledge and understanding of the class or classes of insurance 
 26.11  for which the applicant seeks qualification.  The commissioner 
 26.12  shall inform the applicant as to whether or not the applicant 
 26.13  has passed.  Examination results are valid for a period of three 
 26.14  years from the date of the examination.  The applicant must pass 
 26.15  the examination with a grade determined by the commissioner. 
 26.16     (f) An applicant who has failed to pass an examination may 
 26.17  take subsequent examinations.  Examination fees for subsequent 
 26.18  examinations shall not be waived. 
 26.19     (g) Any applicant for a license covering the same class or 
 26.20  classes of insurance for which the applicant was licensed under 
 26.21  a similar license in this state, other than a temporary license, 
 26.22  within the three years preceding the date of the application 
 26.23  shall be exempt from the requirement of a written examination, 
 26.24  unless the previous license was revoked or suspended by the 
 26.25  commissioner.  An applicant whose license is not renewed under 
 26.26  section 60K.12 is exempt from the requirement of a written 
 26.27  examination.  
 26.28     Sec. 26.  Minnesota Statutes 1998, section 60K.03, 
 26.29  subdivision 3, is amended to read: 
 26.30     Subd. 3.  [NONRESIDENT AGENT.] The commissioner shall issue 
 26.31  a nonresident insurance agent's license to a qualified person 
 26.32  who is a resident of another state or country as follows: 
 26.33     (a) A person may qualify for a license under this section 
 26.34  as a nonresident only if that person holds a license in another 
 26.35  state, province of Canada, or other foreign country which, in 
 26.36  the opinion of the commissioner, qualifies that person for the 
 27.1   same activity as that for which a license is sought. 
 27.2      (b) The commissioner shall not issue a license to a 
 27.3   nonresident applicant until that person files with the 
 27.4   commissioner a designation of the commissioner and the 
 27.5   commissioner's successors in office as the applicant's true and 
 27.6   lawful attorney upon whom may be served all lawful process in an 
 27.7   action, suit, or proceeding instituted by or on behalf of an 
 27.8   interested person arising out of the applicant's insurance 
 27.9   business in this state.  This designation constitutes an 
 27.10  agreement that this service of process is of the same legal 
 27.11  force and validity as personal service of process in this state 
 27.12  upon that applicant.  
 27.13     Service of process upon a licensee in an action or 
 27.14  proceeding begun in a court of competent jurisdiction of this 
 27.15  state may be made in compliance with section 45.028, subdivision 
 27.16  2.  
 27.17     (c) A nonresident agent shall be held to the same knowledge 
 27.18  of insurance law, regulations, and rules as that required of a 
 27.19  resident agent according to subdivision 2, paragraph (d). 
 27.20     (c) (d) A nonresident license terminates automatically when 
 27.21  the resident license for that class of license in the state, 
 27.22  province, or foreign country in which the licensee is a resident 
 27.23  is terminated for any reason.  
 27.24     Sec. 27.  Minnesota Statutes 1998, section 60K.19, 
 27.25  subdivision 7, is amended to read: 
 27.26     Subd. 7.  [CRITERIA FOR COURSE ACCREDITATION.] (a) The 
 27.27  commissioner may accredit a course only to the extent it is 
 27.28  designed to impart substantive and procedural knowledge of the 
 27.29  insurance field.  The burden of demonstrating that the course 
 27.30  satisfies this requirement is on the individual or organization 
 27.31  seeking accreditation.  The commissioner shall approve any 
 27.32  educational program approved by Minnesota Continuing Legal 
 27.33  Education relating to the insurance field.  The commissioner is 
 27.34  authorized to establish a procedure for renewal of course 
 27.35  accreditation. 
 27.36     (b) The commissioner shall approve or disapprove 
 28.1   professional designation examinations that are recommended for 
 28.2   approval by the advisory task force.  In order for an agent to 
 28.3   receive full continuing education credit for a professional 
 28.4   designation examination, the agent must pass the examination.  
 28.5   An agent may not receive credit for classroom instruction 
 28.6   preparing for the professional designation examination and also 
 28.7   receive continuing education credit for passing the professional 
 28.8   designation examination. 
 28.9      (c) The commissioner may not accredit a course:  
 28.10     (1) that is designed to prepare students for a license 
 28.11  examination; 
 28.12     (2) in mechanical office or business skills, including 
 28.13  typing, speedreading, use of calculators, or other machines or 
 28.14  equipment; 
 28.15     (3) in sales promotion, including meetings held in 
 28.16  conjunction with the general business of the licensed agent; or 
 28.17     (4) in motivation, the art of selling, psychology, or time 
 28.18  management; or. 
 28.19     (5) which can be completed by the student at home or 
 28.20  outside the classroom without the supervision of an instructor 
 28.21  approved by the department of commerce, except that home-study 
 28.22  courses may be accredited by the commissioner if the student is 
 28.23  a nonresident agent residing in a state which is not contiguous 
 28.24  to Minnesota.  
 28.25     Sec. 28.  Minnesota Statutes 1998, section 60K.19, 
 28.26  subdivision 8, is amended to read: 
 28.27     Subd. 8.  [MINIMUM EDUCATION REQUIREMENT.] Each person 
 28.28  subject to this section shall complete a minimum of 30 credit 
 28.29  hours of courses accredited by the commissioner during each 
 28.30  24-month licensing period after the expiration of the person's 
 28.31  initial licensing period, two hours of which must be devoted to 
 28.32  state law, regulations, and rules applicable to the line or 
 28.33  lines of insurance for which the agent is licensed.  At least 15 
 28.34  of the 30 credit hours must be completed during the first 12 
 28.35  months of the 24-month licensing period.  Any person whose 
 28.36  initial licensing period extends more than six months shall 
 29.1   complete 15 hours of courses accredited by the commissioner 
 29.2   during the initial license period.  Any person teaching or 
 29.3   lecturing at an accredited course qualifies for 1-1/2 times the 
 29.4   number of credit hours that would be granted to a person 
 29.5   completing the accredited course.  No more than 15 credit hours 
 29.6   per licensing period may be credited to a person for courses 
 29.7   sponsored by, offered by, or affiliated with an insurance 
 29.8   company or its agents.  Courses sponsored by, offered by, or 
 29.9   affiliated with an insurance company or agent may restrict its 
 29.10  students to agents of the company or agency. 
 29.11     Sec. 29.  Minnesota Statutes 1998, section 61A.60, 
 29.12  subdivision 1, is amended to read: 
 29.13     Subdivision 1.  [NOTICE FORM; AGENT SALES.] The notice 
 29.14  required where sections 61A.53 to 61A.60 refer to this 
 29.15  subdivision is as follows: 
 29.16                          IMPORTANT NOTICE 
 29.17  
 29.18  DEFINITION   REPLACEMENT is any transaction where, in connection
 29.19               with the purchase of New Insurance or a New 
 29.20               Annuity, you LAPSE, SURRENDER, CONVERT to 
 29.21               Paid-up Insurance, Place on Extended Term, 
 29.22               or BORROW all or part of the policy loan 
 29.23               values on an existing insurance policy or an 
 29.24               annuity.  (See reverse side for DEFINITIONS.) 
 29.25   
 29.26   
 29.27  IF YOU       In connection with the purchase of this insurance 
 29.28  INTEND TO    or annuity, if you have REPLACED or intend to 
 29.29  REPLACE      REPLACE your present life insurance coverage 
 29.30  COVERAGE     or annuity(ies), you should be certain that you   
 29.31               understand all the relevant factors involved.
 29.32   
 29.33               You should BE AWARE that you may be required to
 29.34               provide EVIDENCE OF INSURABILITY and 
 29.36               (1)  If your HEALTH condition has CHANGED since 
 30.1                the application was taken on your present 
 30.2                policies, you may be required to pay ADDITIONAL 
 30.3                PREMIUMS under the NEW POLICY, or be DENIED 
 30.4                coverage. 
 30.6                (2)  Your present occupation or activities may not
 30.7                be covered or could require additional premiums.  
 30.9                (3)  The INCONTESTABLE and SUICIDE CLAUSE will 
 30.10               begin anew in a new policy.  This could RESULT 
 30.11               in a CLAIM under the new policy BEING DENIED 
 30.12               that would otherwise have been paid.
 30.14               (4)  Current law DOES MAY NOT REQUIRE your present 
 30.15               insurer(s) to REFUND any premiums.
 30.17               (5)  It is to your advantage to OBTAIN INFORMATION
 30.18               regarding your existing policies or annuity 
 30.19               contracts  [FROM THE INSURER OR AGENT FROM WHOM 
 30.20               YOU PURCHASED THE POLICY OR ANNUITY CONTRACT.] 
 30.21   
 30.22               (If you are purchasing an annuity, clauses (1), 
 30.23               (2), and (3) above would not apply to the new 
 30.24               annuity contract.)
 30.26               THE INSURANCE OR ANNUITY I INTEND TO PURCHASE FROM 
 30.27               _______________________________________INSURANCE CO.
 30.28               MAY REPLACE OR ALTER EXISTING LIFE INSURANCE 
 30.29               POLICY(IES) OR ANNUITY CONTRACT(S). 
 30.31               The following policy(ies) or annuity contract(s) 
 30.32               may be replaced as a result of this transaction:
 30.34            Insurer                               Insured 
 30.35   as it appears on the policy        as it appears on the policy 
 30.36   or contract                        or contract  
 31.1   ______________________________     ______________________________
 31.2   ______________________________     ______________________________
 31.3   ______________________________     ______________________________
 31.4   ______________________________     ______________________________
 31.5     Policy or contract number               Insured birthdate 
 31.6   ______________________________     ______________________________
 31.7   ______________________________     ______________________________
 31.8   ______________________________     ______________________________
 31.9   ______________________________     ______________________________
 31.10          The proposed policy or contract is:
 31.11          ______________________________________  $_______________
 31.12          type of policy- or contract-generic name   face amount
 31.14          ________________________________________________________
 31.15          signature of applicant                   date
 31.17          ________________________________________________________
 31.18          address of applicant        city              state
 31.20          I certify that this form was given to and completed by 
 31.22          ________________________________________________________
 31.23                      (applicant-please print or type)
 31.25          prior to taking an application and that I am leaving a 
 31.26          signed copy for the applicant.
 31.28               ___________________________________________________
 31.29               agent's signature                    date
 31.31               ___________________________________________________
 31.32                                address
 31.34               ___________________________________________________
 31.35                       city                       state
 31.36            Note important statement on reverse side 
 31.37     Sec. 30.  Minnesota Statutes 1998, section 61B.19, 
 31.38  subdivision 3, is amended to read: 
 31.39     Subd. 3.  [LIMITATION OF COVERAGE.] Sections 61B.18 to 
 31.40  61B.32 do not provide coverage for: 
 31.41     (1) a portion of a policy or contract under which the 
 31.42  investment risk is borne by the policy or contract holder; 
 31.43     (2) a policy or contract of reinsurance, unless assumption 
 31.44  certificates have been issued and the insured has consented to 
 31.45  the assumption as provided under section 60A.09, subdivision 4a; 
 31.46     (3) a policy or contract issued by an assessment benefit 
 31.47  association operating under section 61A.39, or a fraternal 
 31.48  benefit society operating under chapter 64B; 
 32.1      (4) any obligation to nonresident participants of a covered 
 32.2   retirement plan or to the plan sponsor, employer, trustee, or 
 32.3   other party who owns the contract; in these cases, the 
 32.4   association is obligated under this chapter only to participants 
 32.5   in a covered plan who are residents of the state of Minnesota on 
 32.6   the date of impairment or insolvency; 
 32.7      (5) an annuity contract issued in connection with and for 
 32.8   the purpose of funding a structured settlement of a liability 
 32.9   claim, where the liability insurer remains liable; 
 32.10     (6) a portion of an unallocated annuity contract which is 
 32.11  not issued to or in connection with a specific employee, union, 
 32.12  or association of natural persons benefit plan or a governmental 
 32.13  lottery, including but not limited to, a contract issued to, or 
 32.14  purchased at the direction of, any governmental bonding 
 32.15  authority, such as a municipal guaranteed investment contract; 
 32.16     (7) a plan or program of an employer, association, or 
 32.17  similar entity to provide life, health, or annuity benefits to 
 32.18  its employees or members to the extent that the plan or program 
 32.19  is self-funded or uninsured, including benefits payable by an 
 32.20  employer, association, or similar entity under: 
 32.21     (i) a multiple employer welfare arrangement as defined in 
 32.22  the Employee Retirement Income Security Act of 1974, United 
 32.23  States Code, title 29, section 1002(40)(A), as amended; 
 32.24     (ii) a minimum premium group insurance plan; 
 32.25     (iii) a stop-loss group insurance plan; or 
 32.26     (iv) an administrative services only contract; 
 32.27     (8) any policy or contract issued by an insurer at a time 
 32.28  when it was not licensed or did not have a certificate of 
 32.29  authority to issue the policy or contract in this state; 
 32.30     (9) an unallocated annuity contract issued to an employee 
 32.31  benefit plan protected under the federal Pension Benefit 
 32.32  Guaranty Corporation; and 
 32.33     (10) a portion of a policy or contract to the extent that 
 32.34  it provides dividends or experience rating credits except to the 
 32.35  extent the dividends or experience rating credits have actually 
 32.36  become due and payable or have been credited to the policy or 
 33.1   contract before the date of impairment or insolvency, or 
 33.2   provides that a fee or allowance be paid to a person, including 
 33.3   the policy or contract holder, in connection with the service 
 33.4   to, or administration of, the policy or contract.; and 
 33.5      (11) a contractual agreement that establishes the member 
 33.6   insurer's obligations to provide a book value accounting 
 33.7   guaranty for defined contribution benefit plan participants by 
 33.8   reference to a portfolio of assets that is owned by the benefit 
 33.9   plan or its trustee, which in each case is not an affiliate of 
 33.10  the member insurer. 
 33.11     Sec. 31.  Minnesota Statutes 1998, section 62A.04, 
 33.12  subdivision 3, is amended to read: 
 33.13     Subd. 3.  [OPTIONAL PROVISIONS.] Except as provided in 
 33.14  subdivision 4, no such policy delivered or issued for delivery 
 33.15  to any person in this state shall contain provisions respecting 
 33.16  the matters set forth below unless such provisions are in the 
 33.17  words in which the same appear in this section.  The insurer 
 33.18  may, at its option, use in lieu of any such provision a 
 33.19  corresponding provision of different wording approved by the 
 33.20  commissioner which is not less favorable in any respect to the 
 33.21  insured or the beneficiary.  Any such provision contained in the 
 33.22  policy shall be preceded individually by the appropriate caption 
 33.23  appearing in this subdivision or, at the option of the insurer, 
 33.24  by such appropriate individual or group captions or subcaptions 
 33.25  as the commissioner may approve. 
 33.26     (1) A provision as follows: 
 33.27     CHANGE OF OCCUPATION:  If the insured be injured or 
 33.28  contract sickness after having changed occupations to one 
 33.29  classified by the insurer as more hazardous than that stated in 
 33.30  this policy or while doing for compensation anything pertaining 
 33.31  to an occupation so classified, the insurer will pay only such 
 33.32  portion of the indemnities provided in this policy as the 
 33.33  premiums paid would have purchased at the rates and within the 
 33.34  limits fixed by the insurer for such more hazardous occupation.  
 33.35  If the insured changes occupations to one classified by the 
 33.36  insurer as less hazardous than that stated in this policy, the 
 34.1   insurer, upon receipt of proof of such change of occupation will 
 34.2   reduce the premium rate accordingly, and will return the excess 
 34.3   pro rata unearned premium from the date of change of occupation 
 34.4   or from the policy anniversary date immediately preceding 
 34.5   receipt of such proof, whichever is the more recent.  In 
 34.6   applying this provision, the classification of occupational risk 
 34.7   and the premium rates shall be such as have been last filed by 
 34.8   the insurer prior to the occurrence of the loss for which the 
 34.9   insurer is liable or prior to date of proof of change in 
 34.10  occupation with the state official having supervision of 
 34.11  insurance in the state where the insured resided at the time 
 34.12  this policy was issued; but if such filing was not required, 
 34.13  then the classification of occupational risk and the premium 
 34.14  rates shall be those last made effective by the insurer in such 
 34.15  state prior to the occurrence of the loss or prior to the date 
 34.16  of proof of change of occupation. 
 34.17     (2) A provision as follows: 
 34.18     MISSTATEMENT OF AGE:  If the age of the insured has been 
 34.19  misstated, all amounts payable under this policy shall be such 
 34.20  as the premium paid would have purchased at the correct age. 
 34.21     (3) A provision as follows: 
 34.22     OTHER INSURANCE IN THIS INSURER:  If an accident or 
 34.23  sickness or accident and sickness policy or policies previously 
 34.24  issued by the insurer to the insured be in force concurrently 
 34.25  herewith, making the aggregate indemnity for ..... (insert type 
 34.26  of coverage or coverages) in excess of $..... (insert maximum 
 34.27  limit of indemnity or indemnities) the excess insurance shall be 
 34.28  void and all premiums paid for such excess shall be returned to 
 34.29  the insured or to the insured's estate, or, in lieu thereof: 
 34.30     Insurance effective at any one time on the insured under a 
 34.31  like policy or policies in this insurer is limited to the one 
 34.32  such policy elected by the insured, or the insured's beneficiary 
 34.33  or estate, as the case may be, and the insurer will return all 
 34.34  premiums paid for all other such policies. 
 34.35     (4) A provision as follows: 
 34.36     INSURANCE WITH OTHER INSURERS:  If there be other valid 
 35.1   coverage, not with this insurer, providing benefits for the same 
 35.2   loss on a provision of service basis or on an expense incurred 
 35.3   basis and of which this insurer has not been given written 
 35.4   notice prior to the occurrence or commencement of loss, the only 
 35.5   liability under any expense incurred coverage of this policy 
 35.6   shall be for such proportion of the loss as the amount which 
 35.7   would otherwise have been payable hereunder plus the total of 
 35.8   the like amounts under all such other valid coverages for the 
 35.9   same loss of which this insurer had notice bears to the total 
 35.10  like amounts under all valid coverages for such loss, and for 
 35.11  the return of such portion of the premiums paid as shall exceed 
 35.12  the pro rata portion for the amount so determined.  For the 
 35.13  purpose of applying this provision when other coverage is on a 
 35.14  provision of service basis, the "like amount" of such other 
 35.15  coverage shall be taken as the amount which the services 
 35.16  rendered would have cost in the absence of such coverage. 
 35.17     If the foregoing policy provision is included in a policy 
 35.18  which also contains the next following policy provision there 
 35.19  shall be added to the caption of the foregoing provision the 
 35.20  phrase "EXPENSE INCURRED BENEFITS."  The insurer may, at its 
 35.21  option, include in this provision a definition of "other valid 
 35.22  coverage," approved as to form by the commissioner, which 
 35.23  definition shall be limited in subject matter to coverage 
 35.24  provided by organizations subject to regulation by insurance law 
 35.25  or by insurance authorities of this or any other state of the 
 35.26  United States or any province of Canada, and by hospital or 
 35.27  medical service organizations, and to any other coverage the 
 35.28  inclusion of which may be approved by the commissioner.  In the 
 35.29  absence of such definition such term shall not include group 
 35.30  insurance, automobile medical payments insurance, or coverage 
 35.31  provided by hospital or medical service organizations or by 
 35.32  union welfare plans or employer or employee benefit 
 35.33  organizations.  For the purpose of applying the foregoing policy 
 35.34  provision with respect to any insured, any amount of benefit 
 35.35  provided for such insured pursuant to any compulsory benefit 
 35.36  statute (including any workers' compensation or employer's 
 36.1   liability statute) whether provided by a governmental agency or 
 36.2   otherwise shall in all cases be deemed to be "other valid 
 36.3   coverage" of which the insurer has had notice.  In applying the 
 36.4   foregoing policy provision no third party liability coverage 
 36.5   shall be included as "other valid coverage." 
 36.6      (5) A provision as follows: 
 36.7      INSURANCE WITH OTHER INSURERS:  If there be other valid 
 36.8   coverage, not with this insurer, providing benefits for the same 
 36.9   loss on other than an expense incurred basis and of which this 
 36.10  insurer has not been given written notice prior to the 
 36.11  occurrence or commencement of loss, the only liability for such 
 36.12  benefits under this policy shall be for such proportion of the 
 36.13  indemnities otherwise provided hereunder for such loss as the 
 36.14  like indemnities of which the insurer had notice (including the 
 36.15  indemnities under this policy) bear to the total amount of all 
 36.16  like indemnities for such loss, and for the return of such 
 36.17  portion of the premium paid as shall exceed the pro rata portion 
 36.18  for the indemnities thus determined. 
 36.19     If the foregoing policy provision is included in a policy 
 36.20  which also contains the next preceding policy provision there 
 36.21  shall be added to the caption of the foregoing provision the 
 36.22  phrase -- "OTHER BENEFITS."  The insurer may, at its option, 
 36.23  include in this provision a definition of "other valid 
 36.24  coverage," approved as to form by the commissioner, which 
 36.25  definition shall be limited in subject matter to coverage 
 36.26  provided by organizations subject to regulation by insurance law 
 36.27  or by insurance authorities of this or any other state of the 
 36.28  United States or any province of Canada, and to any other 
 36.29  coverage the inclusion of which may be approved by the 
 36.30  commissioner.  In the absence of such definition such term shall 
 36.31  not include group insurance, or benefits provided by union 
 36.32  welfare plans or by employer or employee benefit organizations.  
 36.33  For the purpose of applying the foregoing policy provision with 
 36.34  respect to any insured, any amount of benefit provided for such 
 36.35  insured pursuant to any compulsory benefit statute (including 
 36.36  any workers' compensation or employer's liability statute) 
 37.1   whether provided by a governmental agency or otherwise shall in 
 37.2   all cases be deemed to be "other valid coverage" of which the 
 37.3   insurer has had notice.  In applying the foregoing policy 
 37.4   provision no third party liability coverage shall be included as 
 37.5   "other valid coverage." 
 37.6      (6) A provision as follows: 
 37.7      RELATION OF EARNINGS TO INSURANCE:  If the total monthly 
 37.8   amount of loss of time benefits promised for the same loss under 
 37.9   all valid loss of time coverage upon the insured, whether 
 37.10  payable on a weekly or monthly basis, shall exceed the monthly 
 37.11  earnings of the insured at the time disability commenced or the 
 37.12  insured's average monthly earnings for the period of two years 
 37.13  immediately preceding a disability for which claim is made, 
 37.14  whichever is the greater, the insurer will be liable only for 
 37.15  such proportionate amount of such benefits under this policy as 
 37.16  the amount of such monthly earnings or such average monthly 
 37.17  earnings of the insured bears to the total amount of monthly 
 37.18  benefits for the same loss under all such coverage upon the 
 37.19  insured at the time such disability commences and for the return 
 37.20  of such part of the premiums paid during such two years as shall 
 37.21  exceed the pro rata amount of the premiums for the benefits 
 37.22  actually paid hereunder; but this shall not operate to reduce 
 37.23  the total monthly amount of benefits payable under all such 
 37.24  coverage upon the insured below the sum of $200 or the sum of 
 37.25  the monthly benefits specified in such coverages, whichever is 
 37.26  the lesser, nor shall it operate to reduce benefits other than 
 37.27  those payable for loss of time. 
 37.28     The foregoing policy provision may be inserted only in a 
 37.29  policy which the insured has the right to continue in force 
 37.30  subject to its terms by the timely payment of premiums (1) until 
 37.31  at least age 50, or, (2) in the case of a policy issued after 
 37.32  age 44, for at least five years from its date of issue.  The 
 37.33  insurer may, at its option, include in this provision a 
 37.34  definition of "valid loss of time coverage," approved as to form 
 37.35  by the commissioner, which definition shall be limited in 
 37.36  subject matter to coverage provided by governmental agencies or 
 38.1   by organizations subject to regulation by insurance law or by 
 38.2   insurance authorities of this or any other state of the United 
 38.3   States or any province of Canada, or to any other coverage the 
 38.4   inclusion of which may be approved by the commissioner or any 
 38.5   combination of such coverages.  In the absence of such 
 38.6   definition such term shall not include any coverage provided for 
 38.7   such insured pursuant to any compulsory benefit statute 
 38.8   (including any workers' compensation or employer's liability 
 38.9   statute), or benefits provided by union welfare plans or by 
 38.10  employer or employee benefit organizations. 
 38.11     (7) A provision as follows: 
 38.12     UNPAID PREMIUM:  Upon the payment of a claim under this 
 38.13  policy, any premium then due and unpaid or covered by any note 
 38.14  or written order may be deducted therefrom. 
 38.15     (8) A provision as follows: 
 38.16     CANCELLATION:  The insurer may cancel this policy at any 
 38.17  time by written notice delivered to the insured or mailed to the 
 38.18  insured's last address as shown by the records of the insurer, 
 38.19  stating when, not less than five days thereafter, such 
 38.20  cancellation shall be effective; and after the policy has been 
 38.21  continued beyond its original term the insured may cancel this 
 38.22  policy at any time by written notice delivered or mailed to the 
 38.23  insurer, effective upon receipt or on such later date as may be 
 38.24  specified in such notice.  In the event of cancellation, the 
 38.25  insurer will return promptly the unearned portion of any premium 
 38.26  paid.  If Regardless of whether it is the insurer or the insured 
 38.27  who cancels, the earned premium shall be computed by the use of 
 38.28  the short-rate table last filed with the state official having 
 38.29  supervision of insurance in the state where the insured resided 
 38.30  when the policy was issued.  If the insurer cancels, the earned 
 38.31  premium shall be computed pro rata, unless the mode of payment 
 38.32  is monthly or less, or if the unearned amount is for less than 
 38.33  one month.  Cancellation shall be without prejudice to any claim 
 38.34  originating prior to the effective date of cancellation. 
 38.35     (9) A provision as follows: 
 38.36     CONFORMITY WITH STATE STATUTES:  Any provision of this 
 39.1   policy which, on its effective date, is in conflict with the 
 39.2   statutes of the state in which the insured resides on such date 
 39.3   is hereby amended to conform to the minimum requirements of such 
 39.4   statutes. 
 39.5      (10) A provision as follows: 
 39.6      ILLEGAL OCCUPATION:  The insurer shall not be liable for 
 39.7   any loss to which a contributing cause was the insured's 
 39.8   commission of or attempt to commit a felony or to which a 
 39.9   contributing cause was the insured's being engaged in an illegal 
 39.10  occupation. 
 39.11     (11) A provision as follows: 
 39.12     NARCOTICS:  The insurer shall not be liable for any loss 
 39.13  sustained or contracted in consequence of the insured's being 
 39.14  under the influence of any narcotic unless administered on the 
 39.15  advice of a physician. 
 39.16     Sec. 32.  Minnesota Statutes 1998, section 62A.135, 
 39.17  subdivision 5, is amended to read: 
 39.18     Subd. 5.  [SUPPLEMENT TO ANNUAL STATEMENTS SUPPLEMENTAL 
 39.19  FILINGS.] Each insurer that has fixed indemnity policies in 
 39.20  force in this state shall, as a supplement to the annual 
 39.21  statement required by section 60A.13 upon request by the 
 39.22  commissioner, submit, in a form prescribed by the 
 39.23  commissioner, the experience data for the calendar year showing 
 39.24  its incurred claims, earned premiums, incurred to earned loss 
 39.25  ratio, and the ratio of the actual loss ratio to the expected 
 39.26  loss ratio for each fixed indemnity policy form in force in 
 39.27  Minnesota.  The experience data must be provided on both a 
 39.28  Minnesota only and a national basis.  If in the opinion of the 
 39.29  company's actuary, the deviation of the actual loss ratio from 
 39.30  the expected loss ratio for a policy form is due to unusual 
 39.31  reserve fluctuations, economic conditions, or other nonrecurring 
 39.32  conditions, the insurer should also file that opinion with 
 39.33  appropriate justification.  
 39.34     If the data submitted does not confirm that the insurer has 
 39.35  satisfied the loss ratio requirements of this section, the 
 39.36  commissioner shall notify the insurer in writing of the 
 40.1   deficiency.  The insurer shall have 30 days from the date of 
 40.2   receipt of the commissioner's notice to file amended rates that 
 40.3   comply with this section or a request for an exemption with 
 40.4   appropriate justification.  If the insurer fails to file amended 
 40.5   rates within the prescribed time and the commissioner does not 
 40.6   exempt the policy form from the need for a rate revision, the 
 40.7   commissioner shall order that the insurer's filed rates for the 
 40.8   nonconforming policy be reduced to an amount that would have 
 40.9   resulted in a loss ratio that complied with this section had it 
 40.10  been in effect for the reporting period of the supplement.  The 
 40.11  insurer's failure to file amended rates within the specified 
 40.12  time of the issuance of the commissioner's order amending the 
 40.13  rates does not preclude the insurer from filing an amendment of 
 40.14  its rates at a later time. 
 40.15     Sec. 33.  Minnesota Statutes 1998, section 62A.50, 
 40.16  subdivision 3, is amended to read: 
 40.17     Subd. 3.  [DISCLOSURES.] No long-term care policy shall be 
 40.18  offered or delivered in this state, whether or not the policy is 
 40.19  issued in this state, and no certificate of coverage under a 
 40.20  group long-term care policy shall be offered or delivered in 
 40.21  this state, unless a statement containing at least the following 
 40.22  information is delivered to the applicant at the time the 
 40.23  application is made: 
 40.24     (1) a description of the benefits and coverage provided by 
 40.25  the policy and the differences between this policy, a 
 40.26  supplemental Medicare policy and the benefits to which an 
 40.27  individual is entitled under parts A and B of Medicare; 
 40.28     (2) a statement of the exceptions and limitations in the 
 40.29  policy including the following language, as applicable, in bold 
 40.30  print:  "THIS POLICY DOES NOT COVER ALL NURSING CARE FACILITIES 
 40.31  OR NURSING HOME, HOME CARE, OR ADULT DAY CARE EXPENSES AND DOES 
 40.32  NOT COVER RESIDENTIAL CARE.  READ YOUR POLICY CAREFULLY TO 
 40.33  DETERMINE WHICH FACILITIES AND EXPENSES ARE COVERED BY YOUR 
 40.34  POLICY."; 
 40.35     (3) a statement of the renewal provisions including any 
 40.36  reservation by the insurer of the right to change premiums; 
 41.1      (4) a statement that the outline of coverage is a summary 
 41.2   of the policy issued or applied for and that the policy should 
 41.3   be consulted to determine governing contractual provisions; 
 41.4      (5) an explanation of the policy's loss ratio including at 
 41.5   least the following language:  "This means that, on the average, 
 41.6   policyholders may expect that $........ of every $100 in premium 
 41.7   will be returned as benefits to policyholders over the life of 
 41.8   the contract."; 
 41.9      (6) a statement of the out-of-pocket expenses, including 
 41.10  deductibles and copayments for which the insured is responsible, 
 41.11  and an explanation of the specific out-of-pocket expenses that 
 41.12  may be accumulated toward any out-of-pocket maximum as specified 
 41.13  in the policy; 
 41.14     (7) the following language, in bold print:  "YOUR PREMIUMS 
 41.15  CAN BE INCREASED IN THE FUTURE.  THE RATE SCHEDULE THAT LISTS 
 41.16  YOUR PREMIUM NOW CAN CHANGE."; 
 41.17     (8) the following language, if applicable, in bold print:  
 41.18  "IF YOU ARE NOT HOSPITALIZED PRIOR TO ENTERING A NURSING HOME OR 
 41.19  NEEDING HOME CARE, YOU WILL NOT BE ABLE TO COLLECT ANY BENEFITS 
 41.20  UNDER THIS PARTICULAR POLICY."; 
 41.21     (9) (8) the following language in bold print, with any 
 41.22  provisions that are inapplicable to the particular policy 
 41.23  omitted or crossed out:  "THIS POLICY HAS A WAITING PERIOD OF 
 41.24  ..... (CALENDAR OR BENEFIT) DAYS FOR NURSING CARE SERVICES AND A 
 41.25  WAITING PERIOD OF ..... (CALENDAR OR BENEFIT) DAYS FOR HOME CARE 
 41.26  SERVICES.  THIS MEANS THAT THIS POLICY WILL NOT COVER YOUR CARE 
 41.27  FOR THE FIRST ..... (CALENDAR OR BENEFIT) DAYS AFTER YOU ENTER A 
 41.28  NURSING HOME, OR THE FIRST ..... (CALENDAR OR BENEFIT) DAYS 
 41.29  AFTER YOU BEGIN TO USE HOME CARE SERVICES.  YOU WOULD NEED TO 
 41.30  PAY FOR YOUR CARE FROM OTHER SOURCES FOR THOSE WAITING 
 41.31  PERIODS."; and 
 41.32     (10) (9) a signed and completed copy of the application for 
 41.33  insurance is left with the applicant at the time the application 
 41.34  is made. 
 41.35     Sec. 34.  Minnesota Statutes 1998, section 62A.61, is 
 41.36  amended to read: 
 42.1      62A.61 [DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO 
 42.2   DETERMINE USUAL AND CUSTOMARY FEES.] 
 42.3      (a) A health carrier that bases reimbursement to health 
 42.4   care providers upon a usual and customary fee must maintain in 
 42.5   its office a copy of a description of the methodology used to 
 42.6   calculate fees including at least the following: 
 42.7      (1) the frequency of the determination of usual and 
 42.8   customary fees; 
 42.9      (2) a general description of the methodology used to 
 42.10  determine usual and customary fees; and 
 42.11     (3) the percentile of usual and customary fees that 
 42.12  determines the maximum allowable reimbursement. 
 42.13     (b) A health carrier must provide a copy of the information 
 42.14  described in paragraph (a) to the commissioner of health or the 
 42.15  commissioner of commerce, upon request. 
 42.16     (c) The commissioner of health or the commissioner of 
 42.17  commerce, as appropriate, may use to enforce this section any 
 42.18  enforcement powers otherwise available to the commissioner with 
 42.19  respect to the health carrier.  The commissioner of health or 
 42.20  commerce, as appropriate, may require health carriers to provide 
 42.21  the information required under this section and may use any 
 42.22  powers granted under other laws relating to the regulation of 
 42.23  health carriers to enforce compliance. 
 42.24     (d) For purposes of this section, "health carrier" has the 
 42.25  meaning given in section 62A.011. 
 42.26     (e) "Usual and customary" means the normal charge, in the 
 42.27  absence of insurance, of the provider for a service or article, 
 42.28  but not more than the prevailing charge in the area for like 
 42.29  service or article.  A "like service" is the same nature and 
 42.30  duration, requires the same skill, and is performed by a 
 42.31  provider of similar training experience.  A "like article" is 
 42.32  one that is identically or substantially equivalent.  "Area" 
 42.33  means the municipality or, in the case of a large city, a 
 42.34  subdivision of the city, in which the service or article is 
 42.35  actually provided or a greater area as is necessary to obtain a 
 42.36  respective cross-section of charges for like service per article.
 43.1      Sec. 35.  Minnesota Statutes 1998, section 62A.65, 
 43.2   subdivision 5, is amended to read: 
 43.3      Subd. 5.  [PORTABILITY AND CONVERSION OF COVERAGE.] (a) No 
 43.4   individual health plan may be offered, sold, issued, or with 
 43.5   respect to children age 18 or under renewed, to a Minnesota 
 43.6   resident that contains a preexisting condition limitation, 
 43.7   preexisting condition exclusion, or exclusionary rider, unless 
 43.8   the limitation or exclusion is permitted under this 
 43.9   subdivision and under chapter 62L, provided that, except for 
 43.10  children age 18 or under, underwriting restrictions may be 
 43.11  retained on individual contracts that are issued without 
 43.12  evidence of insurability as a replacement for prior individual 
 43.13  coverage that was sold before May 17, 1993.  The individual may 
 43.14  be subjected to an 18-month preexisting condition limitation, 
 43.15  unless the individual has maintained continuous coverage as 
 43.16  defined in section 62L.02.  The individual must not be subjected 
 43.17  to an exclusionary rider.  An individual who has maintained 
 43.18  continuous coverage may be subjected to a one-time preexisting 
 43.19  condition limitation of up to 12 months, with credit for time 
 43.20  covered under qualifying coverage as defined in section 62L.02, 
 43.21  at the time that the individual first is covered under an 
 43.22  individual health plan by any health carrier.  Credit must be 
 43.23  given for all qualifying coverage with respect to all 
 43.24  preexisting conditions, regardless of whether the conditions 
 43.25  were preexisting with respect to any previous qualifying 
 43.26  coverage.  The individual must not be subjected to an 
 43.27  exclusionary rider.  Thereafter, the individual must not be 
 43.28  subject to any preexisting condition limitation, preexisting 
 43.29  condition exclusion, or exclusionary rider under an individual 
 43.30  health plan by any health carrier, except an unexpired portion 
 43.31  of a limitation under prior coverage, so long as the individual 
 43.32  maintains continuous coverage as defined in section 62L.02. 
 43.33     (b) A health carrier must offer an individual health plan 
 43.34  to any individual previously covered under a group health plan 
 43.35  issued by that health carrier, regardless of the size of the 
 43.36  group, so long as the individual maintained continuous coverage 
 44.1   as defined in section 62L.02.  If the individual has available 
 44.2   any continuation coverage provided under sections 62A.146; 
 44.3   62A.148; 62A.17, subdivisions 1 and 2; 62A.20; 62A.21; 62C.142; 
 44.4   62D.101; or 62D.105, or continuation coverage provided under 
 44.5   federal law, the health carrier need not offer coverage under 
 44.6   this paragraph until the individual has exhausted the 
 44.7   continuation coverage.  The offer must not be subject to 
 44.8   underwriting, except as permitted under this paragraph.  A 
 44.9   health plan issued under this paragraph must be a qualified plan 
 44.10  as defined in section 62E.02 and must not contain any 
 44.11  preexisting condition limitation, preexisting condition 
 44.12  exclusion, or exclusionary rider, except for any unexpired 
 44.13  limitation or exclusion under the previous coverage.  The 
 44.14  individual health plan must cover pregnancy on the same basis as 
 44.15  any other covered illness under the individual health plan.  The 
 44.16  initial premium rate for the individual health plan must comply 
 44.17  with subdivision 3.  The premium rate upon renewal must comply 
 44.18  with subdivision 2.  In no event shall the premium rate exceed 
 44.19  90 percent of the premium charged for comparable individual 
 44.20  coverage by the Minnesota comprehensive health association, and 
 44.21  the premium rate must be less than that amount if necessary to 
 44.22  otherwise comply with this section.  An individual health plan 
 44.23  offered under this paragraph to a person satisfies the health 
 44.24  carrier's obligation to offer conversion coverage under section 
 44.25  62E.16, with respect to that person.  Coverage issued under this 
 44.26  paragraph must provide that it cannot be canceled or nonrenewed 
 44.27  as a result of the health carrier's subsequent decision to leave 
 44.28  the individual, small employer, or other group market.  Section 
 44.29  72A.20, subdivision 28, applies to this paragraph. 
 44.30     Sec. 36.  Minnesota Statutes 1998, section 62B.04, 
 44.31  subdivision 2, is amended to read: 
 44.32     Subd. 2.  [CREDIT ACCIDENT AND HEALTH INSURANCE.] (a) The 
 44.33  total amount of periodic indemnity payable by credit accident 
 44.34  and health insurance in the event of disability, as defined in 
 44.35  the policy, shall not exceed the aggregate of the periodic 
 44.36  scheduled unpaid installments of the indebtedness; and the 
 45.1   amount of each periodic indemnity payment shall not exceed the 
 45.2   original indebtedness divided by the number of periodic 
 45.3   installments.  If the credit transaction provides for a variable 
 45.4   rate of finance charge or interest, the initial rate or the 
 45.5   scheduled rates based on the initial index must be used in 
 45.6   determining the aggregate of the periodic scheduled unpaid 
 45.7   installments of the indebtedness. 
 45.8      (b) If for any reason a policy of disability insurance will 
 45.9   not or may not provide the policyholder or certificate holder 
 45.10  with coverage for the total amount of indebtedness on the 
 45.11  related loan or debt in the event of any one instance of 
 45.12  disability, the applicant must be given a written disclosure on 
 45.13  or accompanying the application.  If the disclosure is on the 
 45.14  application, it must be immediately above the signature line, 
 45.15  within a box and the word "WARNING" must be in 14-point bold 
 45.16  face capital letters.  The rest of the text must be in capital 
 45.17  letters and bold face 10-point print.  If the disclosure is on a 
 45.18  separate sheet, it must be on an 8-1/2 inch by 11 inch sheet of 
 45.19  paper with the word "WARNING" in 14-point bold face capital 
 45.20  letters with the remaining text in 10-point bold faced capital 
 45.21  letters.  If a separate disclosure is used, it must be signed by 
 45.22  the applicant with one copy provided to the applicant and one 
 45.23  copy maintained by the insurer for at least the term of the 
 45.24  policy, if coverage is issued.  The disclosure must state: 
 45.25     WARNING:  IF YOU BECOME DISABLED AS DEFINED IN THE 
 45.26  POLICY/CERTIFICATE, THIS DISABILITY INSURANCE POLICY/CERTIFICATE 
 45.27  MAY NOT COVER YOUR ENTIRE INDEBTEDNESS.  IF YOU BECOME DISABLED 
 45.28  AT A POINT WHERE THE NUMBER OF MONTHLY INSTALLMENT PAYMENTS 
 45.29  REMAINING EXCEEDS THE PERIOD OF COVERAGE BEING PROVIDED BY THIS 
 45.30  POLICY/CERTIFICATE, THE BENEFITS AVAILABLE WILL BE LESS THAN THE 
 45.31  AMOUNT NECESSARY TO PAY OFF YOUR LOAN.  IF YOU WANT COVERAGE FOR 
 45.32  THE FULL AMOUNT OF YOUR INDEBTEDNESS OR HAVE ANY QUESTIONS ABOUT 
 45.33  THE EXTENT OR NATURE OF YOUR COVERAGE, YOU SHOULD DISCUSS THEM 
 45.34  WITH YOUR AGENT AND/OR ENROLLER BEFORE SUBMITTING YOUR 
 45.35  APPLICATION.  
 45.36     (c) Any policy or certificate of disability insurance which 
 46.1   contains a critical period must make available for any single 
 46.2   instance of disability monthly indemnity benefit payments for 
 46.3   the term of the loan, 24 months, or the term of the disability, 
 46.4   whichever is less.  For the purposes of this section, a critical 
 46.5   period is when there is a limited number of monthly benefit 
 46.6   payments that may be paid to the beneficiary or the policyholder 
 46.7   or certificate holder as a result of any one instance of 
 46.8   disability.  
 46.9      (d) Unless the policy or certificate provides for such 
 46.10  coverage, nothing in this section shall be interpreted as 
 46.11  requiring an insurer to provide coverage for the final payment 
 46.12  of a balloon loan or for a period that exceeds the age 
 46.13  limitation in the policy or certificate or for amounts that 
 46.14  exceed the insurer's maximum liability limits. 
 46.15     Sec. 37.  Minnesota Statutes 1998, section 62E.02, 
 46.16  subdivision 1, is amended to read: 
 46.17     Subdivision 1.  [APPLICATION.] For the purposes of sections 
 46.18  62E.01 to 62E.16 62E.19, the terms and phrases defined in this 
 46.19  section have the meanings given them. 
 46.20     Sec. 38.  Minnesota Statutes 1998, section 62E.05, 
 46.21  subdivision 1, is amended to read: 
 46.22     Subdivision 1.  [CERTIFICATION.] Upon application by an 
 46.23  insurer, fraternal, or employer for certification of a plan of 
 46.24  health coverage as a qualified plan or a qualified Medicare 
 46.25  supplement plan for the purposes of sections 62E.01 to 62E.16 
 46.26  62E.19, the commissioner shall make a determination within 90 
 46.27  days as to whether the plan is qualified.  All plans of health 
 46.28  coverage, except Medicare supplement policies, shall be labeled 
 46.29  as "qualified" or "nonqualified" on the front of the policy or 
 46.30  contract, or on the schedule page.  All qualified plans shall 
 46.31  indicate whether they are number one, two, or three coverage 
 46.32  plans. 
 46.33     Sec. 39.  Minnesota Statutes 1998, section 62E.09, is 
 46.34  amended to read: 
 46.35     62E.09 [DUTIES OF COMMISSIONER.] 
 46.36     The commissioner may: 
 47.1      (a) Formulate general policies to advance the purposes of 
 47.2   sections 62E.01 to 62E.16 62E.19; 
 47.3      (b) Supervise the creation of the Minnesota comprehensive 
 47.4   health association within the limits described in section 
 47.5   62E.10; 
 47.6      (c) Approve the selection of the writing carrier by the 
 47.7   association, approve the association's contract with the writing 
 47.8   carrier, and approve the state plan coverage; 
 47.9      (d) Appoint advisory committees; 
 47.10     (e) Conduct periodic audits to assure the general accuracy 
 47.11  of the financial data submitted by the writing carrier and the 
 47.12  association; 
 47.13     (f) Contract with the federal government or any other unit 
 47.14  of government to ensure coordination of the state plan with 
 47.15  other governmental assistance programs; 
 47.16     (g) Undertake directly or through contracts with other 
 47.17  persons studies or demonstration programs to develop awareness 
 47.18  of the benefits of sections 62E.01 to 62E.16, so that the 
 47.19  residents of this state may best avail themselves of the health 
 47.20  care benefits provided by these sections; 
 47.21     (h) Contract with insurers and others for administrative 
 47.22  services; and 
 47.23     (i) Adopt, amend, suspend and repeal rules as reasonably 
 47.24  necessary to carry out and make effective the provisions and 
 47.25  purposes of sections 62E.01 to 62E.16 62E.19.  
 47.26     Sec. 40.  Minnesota Statutes 1998, section 62E.13, 
 47.27  subdivision 6, is amended to read: 
 47.28     Subd. 6.  [CLAIMS PAYMENTS.] All claims shall be paid by 
 47.29  the writing carrier pursuant to the provisions of sections 
 47.30  62E.01 to 62E.16 62E.19, and shall indicate that the claim was 
 47.31  paid by the state plan.  Each claim payment shall include 
 47.32  information specifying the procedure to be followed in the event 
 47.33  of a dispute over the amount of payment. 
 47.34     Sec. 41.  Minnesota Statutes 1998, section 62E.13, 
 47.35  subdivision 8, is amended to read: 
 47.36     Subd. 8.  [WRITING CARRIER AS AGENT.] The writing carrier 
 48.1   shall at all times when carrying out its duties under sections 
 48.2   62E.01 to 62E.16 62E.19 be considered an agent of the 
 48.3   association and the commissioner with civil liability subject to 
 48.4   the provisions of section 3.751. 
 48.5      Sec. 42.  Minnesota Statutes 1998, section 62E.14, 
 48.6   subdivision 2, is amended to read: 
 48.7      Subd. 2.  [WRITING CARRIER'S RESPONSE.] Within 30 days of 
 48.8   receipt of the certificate described in subdivision 1, the 
 48.9   writing carrier shall either reject the application for failing 
 48.10  to comply with the requirements in subdivision 1 or forward the 
 48.11  eligible person a notice of acceptance and billing information.  
 48.12  Insurance shall be effective immediately upon receipt of the 
 48.13  first month's state plan premium, and shall be retroactive to 
 48.14  the date of the application, if the applicant otherwise complies 
 48.15  with the requirements of sections 62E.01 to 62E.16 62E.19. 
 48.16     Sec. 43.  Minnesota Statutes 1998, section 62E.15, 
 48.17  subdivision 2, is amended to read: 
 48.18     Subd. 2.  [ASSOCIATION'S DUTY.] The association shall 
 48.19  devise and implement means of maintaining public awareness of 
 48.20  the provisions of sections 62E.01 to 62E.17 62E.19 and shall 
 48.21  administer these sections in a manner which facilitates public 
 48.22  participation in the state plan. 
 48.23     Sec. 44.  Minnesota Statutes 1998, section 62L.02, 
 48.24  subdivision 24, is amended to read: 
 48.25     Subd. 24.  [QUALIFYING COVERAGE.] "Qualifying coverage" 
 48.26  means health benefits or health coverage provided under: 
 48.27     (1) a health benefit plan, as defined in this section, but 
 48.28  without regard to whether it is issued to a small employer and 
 48.29  including blanket accident and sickness insurance, other than 
 48.30  accident-only coverage, as defined in section 62A.11; 
 48.31     (2) part A or part B of Medicare; 
 48.32     (3) medical assistance under chapter 256B; 
 48.33     (4) general assistance medical care under chapter 256D; 
 48.34     (5) MCHA; 
 48.35     (6) a self-insured health plan; 
 48.36     (7) the MinnesotaCare program established under section 
 49.1   256L.02; 
 49.2      (8) a plan provided under section 43A.316, 43A.317, or 
 49.3   471.617; 
 49.4      (9) the Civilian Health and Medical Program of the 
 49.5   Uniformed Services (CHAMPUS) or other coverage provided under 
 49.6   United States Code, title 10, chapter 55; 
 49.7      (10) coverage provided by a health care network cooperative 
 49.8   under chapter 62R or by a health provider cooperative under 
 49.9   section 62R.17; 
 49.10     (11) a medical care program of the Indian Health Service or 
 49.11  of a tribal organization; 
 49.12     (12) the federal Employees Health Benefits Plan, or other 
 49.13  coverage provided under United States Code, title 5, chapter 89; 
 49.14     (13) a health benefit plan under section 5(e) of the Peace 
 49.15  Corps Act, codified as United States Code, title 22, section 
 49.16  2504(e); or 
 49.17     (14) a plan similar to any of the above plans provided in 
 49.18  this state or in another state as determined by the 
 49.19  commissioner; or 
 49.20     (15) a health plan. 
 49.21     Sec. 45.  Minnesota Statutes 1998, section 62L.05, 
 49.22  subdivision 5, is amended to read: 
 49.23     Subd. 5.  [PLAN VARIATIONS.] (a) No health carrier shall 
 49.24  offer to a small employer a health benefit plan that differs 
 49.25  from the two small employer plans described in subdivisions 1 to 
 49.26  4, unless the health benefit plan complies with all provisions 
 49.27  of chapters 62A, 62C, 62D, 62E, 62H, 62N, 62Q, and 64B that 
 49.28  otherwise apply to the health carrier, except as expressly 
 49.29  permitted by paragraph (b). 
 49.30     (b) As an exception to paragraph (a), a health benefit plan 
 49.31  is deemed to be a small employer plan and to be in compliance 
 49.32  with paragraph (a) if it differs from one of the two small 
 49.33  employer plans described in subdivisions 1 to 4 only by 
 49.34  providing benefits in addition to those described in subdivision 
 49.35  4, provided that the health benefit plan has an actuarial value 
 49.36  that exceeds the actuarial value of the benefits described in 
 50.1   subdivision 4 by no more than two percent.  "Benefits in 
 50.2   addition" means additional units of a benefit listed in 
 50.3   subdivision 4 or one or more benefits not listed in subdivision 
 50.4   4. 
 50.5      Sec. 46.  Minnesota Statutes 1998, section 62L.14, 
 50.6   subdivision 7, is amended to read: 
 50.7      Subd. 7.  [COMPENSATION.] Public directors may be 
 50.8   reimbursed by the association for reasonable and necessary 
 50.9   expenses incurred by them in performing their duties as 
 50.10  directors, but shall not otherwise be compensated by the 
 50.11  association for their services and may be compensated by the 
 50.12  association at a rate of up to $55 per day spent on authorized 
 50.13  association activities. 
 50.14     Sec. 47.  Minnesota Statutes 1998, section 62M.01, 
 50.15  subdivision 2, is amended to read: 
 50.16     Subd. 2.  [JURISDICTION.] Sections 62M.01 to 62M.16 apply 
 50.17  to any insurance company licensed under chapter 60A to offer, 
 50.18  sell, or issue a policy of accident and sickness insurance as 
 50.19  defined in section 62A.01; a health service plan licensed under 
 50.20  chapter 62C; a health maintenance organization licensed under 
 50.21  chapter 62D; a fraternal benefit society operating under chapter 
 50.22  64B; a plan of reparation security under chapter 65B; a joint 
 50.23  self-insurance employee health plan operating under chapter 62H; 
 50.24  a multiple employer welfare arrangement, as defined in section 3 
 50.25  of the Employee Retirement Income Security Act of 1974 (ERISA), 
 50.26  United States Code, title 29, section 1103, as amended; a third 
 50.27  party administrator licensed under section 60A.23, subdivision 
 50.28  8, that provides utilization review services for the 
 50.29  administration of benefits under a health benefit plan as 
 50.30  defined in section 62M.02; or any entity performing utilization 
 50.31  review on behalf of a business entity in this state pursuant to 
 50.32  a health benefit plan covering a Minnesota resident. 
 50.33     Sec. 48.  Minnesota Statutes 1998, section 62M.02, 
 50.34  subdivision 7, is amended to read: 
 50.35     Subd. 7.  [CLAIMANT.] "Claimant" means the enrollee or 
 50.36  covered person who files a claim for benefits or a provider of 
 51.1   services who, pursuant to a contract with a claims 
 51.2   administrator, or under a plan of reparation security, files a 
 51.3   claim on behalf of an enrollee or covered person. 
 51.4      Sec. 49.  Minnesota Statutes 1998, section 62M.02, is 
 51.5   amended by adding a subdivision to read: 
 51.6      Subd. 13a.  [INSURED.] "Insured" means an insured under a 
 51.7   plan of reparation security as provided by sections 65B.41 to 
 51.8   65B.71, including the named insured and the following persons 
 51.9   not identified by name an insured while residing in the same 
 51.10  household with the named insured, and not identified by name in 
 51.11  any other contract for a plan of reparation security complying 
 51.12  with sections 65B.41 to 65B.71 as an insured: 
 51.13     (1) a spouse; 
 51.14     (2) other relative of a named insured; or 
 51.15     (3) a minor in the custody of a named insured or of a 
 51.16  relative residing in the same household with a named insured. 
 51.17     A person resides in the same household with the named 
 51.18  insured if that person's home is usually in the same family 
 51.19  unit, even though temporarily living elsewhere. 
 51.20     Sec. 50.  Minnesota Statutes 1998, section 62M.02, is 
 51.21  amended by adding a subdivision to read: 
 51.22     Subd. 14a.  [PLAN OF REPARATION SECURITY.] "Plan of 
 51.23  reparation security" means a contract, self-insurance, or other 
 51.24  legal means under which there is an obligation to pay the 
 51.25  benefits described in section 65B.49. 
 51.26     Sec. 51.  Minnesota Statutes 1998, section 62M.15, is 
 51.27  amended to read: 
 51.28     62M.15 [APPLICABILITY OF OTHER CHAPTER REQUIREMENTS.] 
 51.29     The requirements of this chapter regarding the conduct of 
 51.30  utilization review are in addition to any specific requirements 
 51.31  contained in chapter 62A, 62C, 62D, 65B, or 72A. 
 51.32     Sec. 52.  Minnesota Statutes 1998, section 62S.01, 
 51.33  subdivision 14, is amended to read: 
 51.34     Subd. 14.  [LOSS OF FUNCTIONAL CAPACITY.] "Loss of 
 51.35  functional capacity" means requiring the substantial assistance 
 51.36  of another person to perform the prescribed activities of daily 
 52.1   living. 
 52.2      Sec. 53.  Minnesota Statutes 1998, section 62S.05, 
 52.3   subdivision 2, is amended to read: 
 52.4      Subd. 2.  [PROHIBITED EXCLUSION.] A long-term care 
 52.5   insurance policy or certificate, other than a policy or 
 52.6   certificate issued to a group as defined in section 62S.01, 
 52.7   subdivision 15, clause (1), may not exclude coverage for a loss 
 52.8   or confinement that is the result of a preexisting condition 
 52.9   unless the loss or confinement begins within more than six 
 52.10  months following the effective date of coverage of an insured 
 52.11  person. 
 52.12     Sec. 54.  Minnesota Statutes 1998, section 65A.01, 
 52.13  subdivision 1, is amended to read: 
 52.14     Subdivision 1.  [DESIGNATION AND SCOPE.] The printed form 
 52.15  of a policy of fire insurance, as set forth in subdivisions 3 
 52.16  and 3a, shall be known and designated as the "Minnesota standard 
 52.17  fire insurance policy" to be used in the state of Minnesota.  No 
 52.18  policy or contract of fire insurance shall be made, issued or 
 52.19  delivered by any insurer including reciprocals or interinsurance 
 52.20  exchanges or any agent or representative thereof, on any 
 52.21  property in this state, unless it shall provide the specified 
 52.22  coverage and conform as to all provisions, stipulations, and 
 52.23  conditions, with such form of policy, except as provided in 
 52.24  sections 60A.08, subdivision 9; 60A.31 to 60A.351 60A.352; 
 52.25  65A.06; 65A.29; 72A.20, subdivision 17; and other statutes 
 52.26  containing specific requirements that are inconsistent with the 
 52.27  form of this policy.  Any policy or contract otherwise subject 
 52.28  to the provisions of this subdivision, subdivisions 3 and 3a 
 52.29  which includes either on an unspecified basis as to coverage or 
 52.30  for a single premium, coverage against the peril of fire and 
 52.31  coverage against other perils may be issued without 
 52.32  incorporating the exact language of the Minnesota standard fire 
 52.33  insurance policy, provided:  Such policy or contract shall, with 
 52.34  respect to the peril of fire, afford the insured all the rights 
 52.35  and benefits of the Minnesota standard fire insurance policy and 
 52.36  such additional benefits as the policy provides; the provisions 
 53.1   in relation to mortgagee interests and obligations in said 
 53.2   Minnesota standard fire insurance policy shall be incorporated 
 53.3   therein without change; such policy or contract is complete as 
 53.4   to its terms of coverage; and, the commissioner is satisfied 
 53.5   that such policy or contract complies with the provisions hereof.
 53.6      Sec. 55.  Minnesota Statutes 1998, section 65A.01, 
 53.7   subdivision 3, is amended to read: 
 53.8      Subd. 3.  [POLICY PROVISIONS.] On said policy following 
 53.9   such matter as provided in subdivisions 1 and 2, printed in the 
 53.10  English language in type of such size or sizes and arranged in 
 53.11  such manner, as is approved by the commissioner of commerce, the 
 53.12  following provisions and subject matter shall be stated in the 
 53.13  following words and in the following sequence, but with the 
 53.14  convenient placing, if desired, of such matter as will act as a 
 53.15  cover or back for such policy when folded, with the blanks below 
 53.16  indicated being left to be filled in at the time of the issuing 
 53.17  of the policy, to wit: 
 53.18     (Space for listing the amounts of insurance, rates and 
 53.19  premiums for the basic coverages provided under the standard 
 53.20  form of policy and for additional coverages or perils provided 
 53.21  under endorsements attached.  The description and location of 
 53.22  the property covered and the insurable value(s) of any 
 53.23  building(s) or structure(s) covered by the policy or its 
 53.24  attached endorsements; also in the above space may be stated 
 53.25  whether other insurance is limited and if limited the total 
 53.26  amount permitted.) 
 53.27     In consideration of the provisions and stipulations herein 
 53.28  or added hereto and of the premium above specified this company, 
 53.29  for a term of ..... from ..... (At 12:01 a.m. Standard Time) to 
 53.30  ..... (At 12:01 a.m. Standard Time) at location of property 
 53.31  involved, to an amount not exceeding the amount(s) above 
 53.32  specified does insure .....  and legal representatives 
 53.33  ........................................... 
 53.34     (In above space may be stated whether other insurance is 
 53.35  limited.) (And if limited the total amount permitted.) 
 53.36     Subject to form No.(s) ..... attached hereto. 
 54.1      This policy is made and accepted subject to the foregoing 
 54.2   provisions and stipulations and those hereinafter stated, which 
 54.3   are hereby made a part of this policy, together with such 
 54.4   provisions, stipulations and agreements as may be added hereto 
 54.5   as provided in this policy. 
 54.6      The insurance effected above is granted against all loss or 
 54.7   damage by fire originating from any cause, except as hereinafter 
 54.8   provided, also any damage by lightning and by removal from 
 54.9   premises endangered by the perils insured against in this 
 54.10  policy, to the property described hereinafter while located or 
 54.11  contained as described in this policy, or pro rata for five days 
 54.12  at each proper place to which any of the property shall 
 54.13  necessarily be removed for preservation from the perils insured 
 54.14  against in this policy, but not elsewhere.  The amount of said 
 54.15  loss or damage, except in case of total loss on buildings, to be 
 54.16  estimated according to the actual value of the insured property 
 54.17  at the time when such loss or damage happens. 
 54.18     If the insured property shall be exposed to loss or damage 
 54.19  from the perils insured against, the insured shall make all 
 54.20  reasonable exertions to save and protect same. 
 54.21     This entire policy shall be void if, whether before a loss, 
 54.22  the insured has willfully, or after a loss, the insured has 
 54.23  willfully and with intent to defraud, concealed or 
 54.24  misrepresented any material fact or circumstance concerning this 
 54.25  insurance or the subject thereof, or the interests of the 
 54.26  insured therein. 
 54.27     This policy shall not cover accounts, bills, currency, 
 54.28  deeds, evidences of debt, money or securities; nor, unless 
 54.29  specifically named hereon in writing, bullion, or manuscripts. 
 54.30     This company shall not be liable for loss by fire or other 
 54.31  perils insured against in this policy caused, directly or 
 54.32  indirectly by:  (a) enemy attack by armed forces, including 
 54.33  action taken by military, naval or air forces in resisting an 
 54.34  actual or immediately impending enemy attack; (b) invasion; (c) 
 54.35  insurrection; (d) rebellion; (e) revolution; (f) civil war; (g) 
 54.36  usurped power; (h) order of any civil authority except acts of 
 55.1   destruction at the time of and for the purpose of preventing the 
 55.2   spread of fire, providing that such fire did not originate from 
 55.3   any of the perils excluded by this policy. 
 55.4      Other insurance may be prohibited or the amount of 
 55.5   insurance may be limited by so providing in the policy or an 
 55.6   endorsement, rider or form attached thereto. 
 55.7      Unless otherwise provided in writing added hereto this 
 55.8   company shall not be liable for loss occurring: 
 55.9      (a) while the hazard is increased by any means within the 
 55.10  control or knowledge of the insured; or 
 55.11     (b) while the described premises, whether intended for 
 55.12  occupancy by owner or tenant, are vacant or unoccupied beyond a 
 55.13  period of 60 consecutive days; or 
 55.14     (c) as a result of explosion or riot, unless fire ensue, 
 55.15  and in that event for loss by fire only. 
 55.16     Any other peril to be insured against or subject of 
 55.17  insurance to be covered in this policy shall be by endorsement 
 55.18  in writing hereon or added hereto. 
 55.19     The extent of the application of insurance under this 
 55.20  policy and the contributions to be made by this company in case 
 55.21  of loss, and any other provision or agreement not inconsistent 
 55.22  with the provisions of this policy, may be provided for in 
 55.23  writing added hereto, but no provision may be waived except such 
 55.24  as by the terms of this policy is subject to change. 
 55.25     No permission affecting this insurance shall exist, or 
 55.26  waiver of any provision be valid, unless granted herein or 
 55.27  expressed in writing added hereto.  No provision, stipulation or 
 55.28  forfeiture shall be held to be waived by any requirements or 
 55.29  proceeding on the part of this company relating to appraisal or 
 55.30  to any examination provided for herein. 
 55.31     This policy shall be canceled at any time at the request of 
 55.32  the insured, in which case this company shall, upon demand and 
 55.33  surrender of this policy, refund the excess of paid premium 
 55.34  above the customary short rates for the expired time.  This 
 55.35  policy may be canceled at any time by this company by giving to 
 55.36  the insured 30 days' a written notice of cancellation with or 
 56.1   without tender of the excess of paid premium above the pro rata 
 56.2   premium for the expired time, which excess, if not tendered, 
 56.3   shall be refunded on demand.  Notice of cancellation shall state 
 56.4   that said excess premium (if not tendered) will be refunded on 
 56.5   demand. 
 56.6      If loss hereunder is made payable, in whole or in part, to 
 56.7   a designated mortgagee or contract for deed vendor not named 
 56.8   herein as insured, such interest in this policy may be canceled 
 56.9   by giving to such mortgagee or vendor a ten days' written notice 
 56.10  of cancellation. 
 56.11     Notwithstanding any other provisions of this policy, if 
 56.12  this policy shall be made payable to a mortgagee or contract for 
 56.13  deed vendor of the covered real estate, no act or default of any 
 56.14  person other than such mortgagee or vendor or the mortgagee's or 
 56.15  vendor's agent or those claiming under the mortgagee or vendor, 
 56.16  whether the same occurs before or during the term of this 
 56.17  policy, shall render this policy void as to such mortgagee or 
 56.18  vendor nor affect such mortgagee's or vendor's right to recover 
 56.19  in case of loss on such real estate; provided, that the 
 56.20  mortgagee or vendor shall on demand pay according to the 
 56.21  established scale of rates for any increase of risks not paid 
 56.22  for by the insured; and whenever this company shall be liable to 
 56.23  a mortgagee or vendor for any sum for loss under this policy for 
 56.24  which no liability exists as to the mortgagor, vendee, or owner, 
 56.25  and this company shall elect by itself, or with others, to pay 
 56.26  the mortgagee or vendor the full amount secured by such mortgage 
 56.27  or contract for deed, then the mortgagee or vendor shall assign 
 56.28  and transfer to the company the mortgagee's or vendor's 
 56.29  interest, upon such payment, in the said mortgage or contract 
 56.30  for deed together with the note and debts thereby secured. 
 56.31     This company shall not be liable for a greater proportion 
 56.32  of any loss than the amount hereby insured shall bear to the 
 56.33  whole insurance covering the property against the peril involved.
 56.34     In case of any loss under this policy the insured shall 
 56.35  give immediate written notice to this company of any loss, 
 56.36  protect the property from further damage, and a statement in 
 57.1   writing, signed and sworn to by the insured, shall within 60 
 57.2   days be rendered to the company, setting forth the value of the 
 57.3   property insured, except in case of total loss on buildings the 
 57.4   value of said buildings need not be stated, the interest of the 
 57.5   insured therein, all other insurance thereon, in detail, the 
 57.6   purposes for which and the persons by whom the building insured, 
 57.7   or containing the property insured, was used, and the time at 
 57.8   which and manner in which the fire originated, so far as known 
 57.9   to the insured. 
 57.10     The insured, as often as may be reasonably required, shall 
 57.11  exhibit to any person designated by this company all that 
 57.12  remains of any property herein described, and, after being 
 57.13  informed of the right to counsel and that any answers may be 
 57.14  used against the insured in later civil or criminal proceedings, 
 57.15  the insured shall, within a reasonable period after demand by 
 57.16  this company, submit to examinations under oath by any person 
 57.17  named by this company, and subscribe the oath.  The insured, as 
 57.18  often as may be reasonably required, shall produce for 
 57.19  examination all records and documents reasonably related to the 
 57.20  loss, or certified copies thereof if originals are lost, at a 
 57.21  reasonable time and place designated by this company or its 
 57.22  representatives, and shall permit extracts and copies thereof to 
 57.23  be made.  
 57.24     In case the insured and this company, except in case of 
 57.25  total loss on buildings, shall fail to agree as to the actual 
 57.26  cash value or the amount of loss, then, on the written demand of 
 57.27  either, each shall select a competent and disinterested 
 57.28  appraiser and notify the other of the appraiser selected within 
 57.29  20 days of such demand.  In case either fails to select an 
 57.30  appraiser within the time provided, then a presiding judge of 
 57.31  the district court of the county wherein the loss occurs may 
 57.32  appoint such appraiser for such party upon application of the 
 57.33  other party in writing by giving five days' notice thereof in 
 57.34  writing to the party failing to appoint.  The appraisers shall 
 57.35  first select a competent and disinterested umpire; and failing 
 57.36  for 15 days to agree upon such umpire, then a presiding judge of 
 58.1   the above mentioned court may appoint such an umpire upon 
 58.2   application of party in writing by giving five days' notice 
 58.3   thereof in writing to the other party.  The appraisers shall 
 58.4   then appraise the loss, stating separately actual value and loss 
 58.5   to each item; and, failing to agree, shall submit their 
 58.6   differences, only, to the umpire.  An award in writing, so 
 58.7   itemized, of any two when filed with this company shall 
 58.8   determine the amount of actual value and loss.  Each appraiser 
 58.9   shall be paid by the selecting party, or the party for whom 
 58.10  selected, and the expense of the appraisal and umpire shall be 
 58.11  paid by the parties equally. 
 58.12     It shall be optional with this company to take all of the 
 58.13  property at the agreed or appraised value, and also to repair, 
 58.14  rebuild or replace the property destroyed or damaged with other 
 58.15  of like kind and quality within a reasonable time, on giving 
 58.16  notice of its intention so to do within 30 days after the 
 58.17  receipt of the proof of loss herein required. 
 58.18     There can be no abandonment to this company of any property.
 58.19     The amount of loss for which this company may be liable 
 58.20  shall be payable 60 days after proof of loss, as herein 
 58.21  provided, is received by this company and ascertainment of the 
 58.22  loss is made either by agreement between the insured and this 
 58.23  company expressed in writing or by the filing with this company 
 58.24  of an award as herein provided.  It is moreover understood that 
 58.25  there can be no abandonment of the property insured to the 
 58.26  company, and that the company will not in any case be liable for 
 58.27  more than the sum insured, with interest thereon from the time 
 58.28  when the loss shall become payable, as above provided. 
 58.29     No suit or action on this policy for the recovery of any 
 58.30  claim shall be sustainable in any court of law or equity unless 
 58.31  all the requirements of this policy have been complied with, and 
 58.32  unless commenced within two years after inception of the loss. 
 58.33     This company is subrogated to, and may require from the 
 58.34  insured an assignment of all right of recovery against any party 
 58.35  for loss to the extent that payment therefor is made by this 
 58.36  company; and the insurer may prosecute therefor in the name of 
 59.1   the insured retaining such amount as the insurer has paid. 
 59.2      Assignment of this policy shall not be valid except with 
 59.3   the written consent of this company. 
 59.4      IN WITNESS WHEREOF, this company has executed and attested 
 59.5   these presents. 
 59.6    
 59.7    ........................         ........................
 59.8         (Signature)                     (Signature)         
 59.9    ........................         ........................
 59.10       (Name of office)                (Name of office)     
 59.11     Sec. 56.  Minnesota Statutes 1998, section 65A.01, is 
 59.12  amended by adding a subdivision to read: 
 59.13     Subd. 3c.  [TIME REQUIREMENTS.] (a) In the event of a 
 59.14  policy less than 60 days old that is not being renewed, or a 
 59.15  policy that it is being canceled for nonpayment of premium, the 
 59.16  notice must be mailed to the insured so that it is received at 
 59.17  least ten days before the effective cancellation date.  If a 
 59.18  policy is being canceled for underwriting considerations, the 
 59.19  insured must be informed of the source from which the 
 59.20  information was received. 
 59.21     (b) In the event of a mid-term cancellation, for reasons 
 59.22  listed in subdivision 3a, or according to policy provisions, the 
 59.23  insured must receive a 30-day notice. 
 59.24     (c) In the event of a nonrenewal, a 60-day notice must be 
 59.25  sent to the insured, containing the specific underwriting or 
 59.26  other reason for the indicated actions. 
 59.27     This subdivision does not apply to commercial policies 
 59.28  regulated under sections 60A.36 and 60A.37. 
 59.29     Sec. 57.  Minnesota Statutes 1998, section 65A.27, 
 59.30  subdivision 4, is amended to read: 
 59.31     Subd. 4.  "Homeowner's insurance" means insurance coverage, 
 59.32  as provided in section 60A.06, subdivision 1, clause (1)(c), 
 59.33  normally written by the insurer as a standard homeowner's 
 59.34  package policy or as a standard residential renter's package 
 59.35  policy.  This definition includes, but is not limited to, 
 59.36  policies that are generally described as homeowners' policies, 
 60.1   mobile/manufactured homeowners' policies, dwelling owner 
 60.2   policies, condominium owner policies, and tenant policies. 
 60.3      Sec. 58.  Minnesota Statutes 1998, section 65A.29, 
 60.4   subdivision 4, is amended to read: 
 60.5      Subd. 4.  [FORM REQUIREMENTS.] Any notice or statement 
 60.6   required by subdivisions 1 to 3, or any other notice canceling a 
 60.7   homeowner's insurance policy must be written in language which 
 60.8   is easily readable and understandable by a person of average 
 60.9   intelligence and understanding.  The statement of reason must be 
 60.10  sufficiently specific to convey, clearly and without further 
 60.11  inquiry, the basis for the insurer's refusal to renew or to 
 60.12  write the insurance coverage. 
 60.13     The notice or statement must also inform the insured of: 
 60.14     (1) the possibility of coverage through the Minnesota 
 60.15  property insurance placement facility under sections 65A.31 to 
 60.16  65A.42; 
 60.17     (2) the right to object to the commissioner under 
 60.18  subdivision 9; and 
 60.19     (3) the right to the return of unearned premium in 
 60.20  appropriate situations under subdivision 10. 
 60.21     Sec. 59.  Minnesota Statutes 1998, section 65B.02, 
 60.22  subdivision 2, is amended to read: 
 60.23     Subd. 2.  [QUALIFIED APPLICANT.] "Qualified applicant" 
 60.24  means a person who: 
 60.25     (1) Is a resident of this state, 
 60.26     (2) Owns a motor vehicle registered in accordance with the 
 60.27  laws of this state, or has a valid driver's license, or is 
 60.28  required to file proof of financial responsibility a certificate 
 60.29  of insurance with the commissioner of public safety in 
 60.30  accordance with the provisions of this chapter, and 
 60.31     (3) Has no unpaid premiums with respect to prior automobile 
 60.32  insurance. 
 60.33     Sec. 60.  Minnesota Statutes 1998, section 65B.44, 
 60.34  subdivision 1, is amended to read: 
 60.35     Subdivision 1.  [INCLUSIONS.] Basic economic loss benefits 
 60.36  shall provide reimbursement for all loss suffered through injury 
 61.1   arising out of the maintenance or use of a motor vehicle, 
 61.2   subject to any applicable deductibles, exclusions, 
 61.3   disqualifications, and other conditions, and shall provide a 
 61.4   maximum minimum of $40,000 for loss arising out of the injury of 
 61.5   any one person, consisting of: 
 61.6      (a) $20,000 for medical expense loss arising out of injury 
 61.7   to any one person; and 
 61.8      (b) a total of $20,000 for income loss, replacement 
 61.9   services loss, funeral expense loss, survivor's economic loss, 
 61.10  and survivor's replacement services loss arising out of the 
 61.11  injury to any one person. 
 61.12     Sec. 61.  Minnesota Statutes 1998, section 65B.48, 
 61.13  subdivision 5, is amended to read: 
 61.14     Subd. 5.  (a) Every owner of a motorcycle registered or 
 61.15  required to be registered in this state or operated in this 
 61.16  state by the owner or with the owner's permission shall provide 
 61.17  and maintain security for the payment of tort liabilities 
 61.18  arising out of the maintenance or use of the motorcycle in this 
 61.19  state.  Security may be provided by a contract of liability 
 61.20  insurance complying with section 65B.49, subdivision 3, or by 
 61.21  qualifying as a self insurer in the manner provided in 
 61.22  subdivision 3. 
 61.23     (b) At the time an application for motorcycle insurance 
 61.24  without personal injury protection coverage is completed, there 
 61.25  must be attached to the application a separate form containing a 
 61.26  written notice in at least 10-point bold type, if printed, or in 
 61.27  capital letters, if typewritten that states: 
 61.28     "Under Minnesota law, a policy of motorcycle coverage 
 61.29     issued in the State of Minnesota must provide liability 
 61.30     coverage only, and there is no requirement that the policy 
 61.31     provide personal injury protection (PIP) coverage in the 
 61.32     case of injury sustained by the insured.  No PIP coverage 
 61.33     provided by an automobile insurance policy you may have in 
 61.34     force will extend to provide coverage in the event of a 
 61.35     motorcycle accident." 
 61.36     Sec. 62.  Minnesota Statutes 1998, section 72A.125, 
 62.1   subdivision 3, is amended to read: 
 62.2      Subd. 3.  [COLLISION DAMAGE WAIVER.] A "collision damage 
 62.3   waiver" is a discharge of the responsibility of the renter or 
 62.4   leasee to return the motor vehicle in the same condition as when 
 62.5   it was first rented.  The waiver is a full and complete 
 62.6   discharge of the responsibility to return the vehicle in the 
 62.7   same condition as when it was first rented.  The waiver may not 
 62.8   contain any exclusions except those approved by the commissioner 
 62.9   pursuant to the requirements contained in section 61A.02, 
 62.10  subdivisions 2 to 5. 
 62.11     Sec. 63.  Minnesota Statutes 1998, section 72A.20, 
 62.12  subdivision 29, is amended to read: 
 62.13     Subd. 29.  [HIV TESTS; CRIME VICTIMS AND EMERGENCY MEDICAL 
 62.14  SERVICE PERSONNEL.] No insurer regulated under chapter 61A or, 
 62.15  62B, or 62S, or providing health, medical, hospitalization, 
 62.16  long-term care insurance, or accident and sickness insurance 
 62.17  regulated under chapter 62A, or nonprofit health services 
 62.18  corporation regulated under chapter 62C, health maintenance 
 62.19  organization regulated under chapter 62D, or fraternal benefit 
 62.20  society regulated under chapter 64B, may: 
 62.21     (1) obtain or use the performance of or the results of a 
 62.22  test to determine the presence of the human immunodeficiency 
 62.23  virus (HIV) antibody performed on an offender under section 
 62.24  611A.19 or performed on a crime victim who was exposed to or had 
 62.25  contact with an offender's bodily fluids during commission of a 
 62.26  crime that was reported to law enforcement officials, in order 
 62.27  to make an underwriting decision, cancel, fail to renew, or take 
 62.28  any other action with respect to a policy, plan, certificate, or 
 62.29  contract; 
 62.30     (2) obtain or use the performance of or the results of a 
 62.31  test to determine the presence of the human immunodeficiency 
 62.32  virus (HIV) antibody performed on a patient pursuant to sections 
 62.33  144.761 to 144.7691, or performed on emergency medical services 
 62.34  personnel pursuant to the protocol under section 144.762, 
 62.35  subdivision 2, in order to make an underwriting decision, 
 62.36  cancel, fail to renew, or take any other action with respect to 
 63.1   a policy, plan, certificate, or contract; for purposes of this 
 63.2   clause, "patient" and "emergency medical services personnel" 
 63.3   have the meanings given in section 144.761; or 
 63.4      (3) ask an applicant for coverage or a person already 
 63.5   covered whether the person has:  (i) had a test performed for 
 63.6   the reason set forth in clause (1) or (2); or (ii) been the 
 63.7   victim of an assault or any other crime which involves bodily 
 63.8   contact with the offender. 
 63.9      A question that purports to require an answer that would 
 63.10  provide information regarding a test performed for the reason 
 63.11  set forth in clause (1) or (2) may be interpreted as excluding 
 63.12  this test.  An answer that does not mention the test is 
 63.13  considered to be a truthful answer for all purposes.  An 
 63.14  authorization for the release of medical records for insurance 
 63.15  purposes must specifically exclude any test performed for the 
 63.16  purpose set forth in clause (1) or (2) and must be read as 
 63.17  providing this exclusion regardless of whether the exclusion is 
 63.18  expressly stated.  This subdivision does not affect tests 
 63.19  conducted for purposes other than those described in clause (1) 
 63.20  or (2), including any test to determine the presence of the 
 63.21  human immunodeficiency virus (HIV) antibody if such test was 
 63.22  performed at the insurer's direction as part of the insurer's 
 63.23  normal underwriting requirements. 
 63.24     Sec. 64.  Minnesota Statutes 1998, section 72B.04, 
 63.25  subdivision 10, is amended to read: 
 63.26     Subd. 10.  [FEES.] A fee of $40 is imposed for each initial 
 63.27  license or temporary permit and $25 for each renewal thereof or 
 63.28  amendment thereto.  A fee of $20 is imposed for the registration 
 63.29  of each nonlicensed adjuster who is required to register under 
 63.30  section 72B.06.  All fees shall be transmitted to the 
 63.31  commissioner and shall be payable to the state 
 63.32  treasurer department of commerce.  If a fee is paid for an 
 63.33  examination and if within one year from the date of that payment 
 63.34  no written request for a refund is received by the commissioner 
 63.35  or the examination for which the fee was paid is not taken, the 
 63.36  fee is forfeited to the state of Minnesota. 
 64.1      Sec. 65.  Minnesota Statutes 1998, section 79A.01, 
 64.2   subdivision 10, is amended to read: 
 64.3      Subd. 10.  [COMMON CLAIMS FUND.] "Common claims fund," with 
 64.4   respect to group self-insurers, means the cash, cash 
 64.5   equivalents, or investment accounts maintained by the mutual 
 64.6   self-insurance group to pay its workers' compensation 
 64.7   liabilities.  
 64.8      Sec. 66.  Minnesota Statutes 1998, section 79A.01, is 
 64.9   amended by adding a subdivision to read: 
 64.10     Subd. 11.  [DIMINUTIVE APPLICANTS.] "Diminutive applicants" 
 64.11  to group self-insurance means applicants to existing 
 64.12  self-insurance groups whose equity and premium are both less 
 64.13  than five percent of the total group's equity and premium. 
 64.14     Sec. 67.  Minnesota Statutes 1998, section 79A.02, 
 64.15  subdivision 1, is amended to read: 
 64.16     Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
 64.17  the commissioner, there is established a workers' compensation 
 64.18  self-insurers' advisory committee of five members that are 
 64.19  employers authorized to self-insure in Minnesota.  Three of the 
 64.20  members and three alternates shall be elected by the 
 64.21  self-insurers' security fund board of trustees and two members 
 64.22  and two alternates shall be appointed by the commissioner.  
 64.23     Sec. 68.  Minnesota Statutes 1998, section 79A.02, 
 64.24  subdivision 4, is amended to read: 
 64.25     Subd. 4.  [RECOMMENDATIONS TO COMMISSIONER REGARDING 
 64.26  REVOCATION.] After each fifth anniversary from the date each 
 64.27  individual and group self-insurer becomes certified to 
 64.28  self-insure, the committee shall review all relevant financial 
 64.29  data filed with the department of commerce that is otherwise 
 64.30  available to the public and make a recommendation to the 
 64.31  commissioner about whether each self-insurer's certificate 
 64.32  should be revoked.  For group self-insurers who have been in 
 64.33  existence for five years or more and have been granted renewal 
 64.34  authority, a level of funding in the common claims fund must be 
 64.35  maintained at not less than the greater of either:  (1) one 
 64.36  year's claim losses paid in the most recent year; or (2) 
 65.1   one-third of the security deposit posted with the department of 
 65.2   commerce according to section 79A.04, subdivision 2.  This 
 65.3   provision supersedes any requirements under section 79A.03, 
 65.4   subdivision 10, and Minnesota Rules, part 2780.5000. 
 65.5      Sec. 69.  Minnesota Statutes 1998, section 79A.03, 
 65.6   subdivision 6, is amended to read: 
 65.7      Subd. 6.  [APPLICATIONS FOR GROUP SELF-INSURANCE.] (a) Two 
 65.8   or more employers may apply to the commissioner for the 
 65.9   authority to self-insure as a group, using forms available from 
 65.10  the commissioner.  This initial application shall be accompanied 
 65.11  by a copy of the bylaws or plan of operation adopted by the 
 65.12  group.  Such bylaws or plan of operation shall conform to the 
 65.13  conditions prescribed by law or rule.  The commissioner shall 
 65.14  approve or disapprove the bylaws within 60 days unless a 
 65.15  question as to the legality of a specific bylaw or plan 
 65.16  provision has been referred to the attorney general's office.  
 65.17  The commissioner shall make a determination as to the 
 65.18  application within 15 days after receipt of the requested 
 65.19  response from the attorney general's office. 
 65.20     (b) After the initial application and the bylaws or plan of 
 65.21  operation have been approved by the commissioner or at the time 
 65.22  of the initial application, the group shall submit the names of 
 65.23  employers that will be members of the group; an indemnity 
 65.24  agreement providing for joint and several liability for all 
 65.25  group members for any and all workers' compensation claims 
 65.26  incurred by any member of the group, as set forth in Minnesota 
 65.27  Rules, part 2780.9920, signed by an officer of each member; and 
 65.28  an accounting review performed by a certified public 
 65.29  accountant.  A certified financial audit may be filed in lieu of 
 65.30  an accounting review.  
 65.31     (c) When a group has obtained its authority to self-insure, 
 65.32  additional applicants who wish to join the group must apply for 
 65.33  approval by submitting:  (1) an application; (2) an indemnity 
 65.34  agreement providing for joint and several liability as set forth 
 65.35  in Minnesota Rules, part 2780.9920, signed by an officer of the 
 65.36  applicant; and (3) a certified financial audit performed by a 
 66.1   certified public accountant at least 45 days before joining the 
 66.2   group.  An accounting review performed by a certified public 
 66.3   accountant may be filed in lieu of a certified audit. 
 66.4      New diminutive applicants to the group, as defined in 
 66.5   section 79A.01, subdivision 11, applying for membership in 
 66.6   groups in existence longer than one year, who have a combined 
 66.7   equity of all group members in excess of 15 times the last 
 66.8   retention limit selected by the group with the workers' 
 66.9   compensation reinsurance association, and have posted 125 
 66.10  percent of the group's total estimated future liability, must 
 66.11  submit the items in this paragraph at least ten days before 
 66.12  joining the group. 
 66.13     If the cumulative total of premium added to the group by 
 66.14  diminutive new members is greater than 50 percent in a fiscal 
 66.15  year of the group, all subsequent new members' applications must 
 66.16  be submitted at least 45 days before joining the group. 
 66.17     In all cases of new membership, evidence that cash premiums 
 66.18  equal to not less than 20 percent of the current year's modified 
 66.19  premium of each applicant have been paid into a common claims 
 66.20  fund, maintained by the group in a designated depository must be 
 66.21  filed with the department at least ten days before joining the 
 66.22  group. 
 66.23     Sec. 70.  Minnesota Statutes 1998, section 79A.03, 
 66.24  subdivision 7, is amended to read: 
 66.25     Subd. 7.  [FINANCIAL STANDARDS.] A self-insurer group 
 66.26  proposing to self-insure shall have and maintain: 
 66.27     (a) A combined net worth of all of the members of an amount 
 66.28  at least equal to the greater of ten times the retention 
 66.29  selected with the workers' compensation reinsurance association 
 66.30  or one-third of the current annual modified premium of the 
 66.31  members.  
 66.32     (b) Sufficient assets, net worth, and liquidity to promptly 
 66.33  and completely meet all obligations of its members under chapter 
 66.34  176 or this chapter.  In determining whether a group is in sound 
 66.35  financial condition, consideration shall be given to the 
 66.36  combined net worth of the member companies; the consolidated 
 67.1   long-term and short-term debt to equity ratios of the member 
 67.2   companies; any excess insurance other than reinsurance with the 
 67.3   workers' compensation reinsurance association, purchased by the 
 67.4   group from an insurer licensed in Minnesota or from an 
 67.5   authorized surplus line carrier; other financial data requested 
 67.6   by the commissioner or submitted by the group; and the combined 
 67.7   workers' compensation experience of the group for the last four 
 67.8   years. 
 67.9      Sec. 71.  Minnesota Statutes 1998, section 79A.03, 
 67.10  subdivision 9, is amended to read: 
 67.11     Subd. 9.  [FILING REPORTS.] (a) Incurred losses, paid and 
 67.12  unpaid, specifying indemnity and medical losses by 
 67.13  classification, payroll by classification, and current estimated 
 67.14  outstanding liability for workers' compensation shall be 
 67.15  reported to the commissioner by each self-insurer on a calendar 
 67.16  year basis, in a manner and on forms available from the 
 67.17  commissioner.  Payroll information must be filed by April 1 of 
 67.18  the following year, and loss information and total workers' 
 67.19  compensation liability must be filed by August 1 of the 
 67.20  following year.  
 67.21     (b) Each self-insurer shall, under oath, attest to the 
 67.22  accuracy of each report submitted pursuant to paragraph (a).  
 67.23  Upon sufficient cause, the commissioner shall require the 
 67.24  self-insurer to submit a certified audit of payroll and claim 
 67.25  records conducted by an independent auditor approved by the 
 67.26  commissioner, based on generally accepted accounting principles 
 67.27  and generally accepted auditing standards, and supported by an 
 67.28  actuarial review and opinion of the future contingent 
 67.29  liabilities.  The basis for sufficient cause shall include the 
 67.30  following factors:  where the losses reported appear 
 67.31  significantly different from similar types of businesses; where 
 67.32  major changes in the reports exist from year to year, which are 
 67.33  not solely attributable to economic factors; or where the 
 67.34  commissioner has reason to believe that the losses and payroll 
 67.35  in the report do not accurately reflect the losses and payroll 
 67.36  of that employer.  If any discrepancy is found, the commissioner 
 68.1   shall require changes in the self-insurer's or workers' 
 68.2   compensation service company record keeping practices. 
 68.3      (c) With the An annual loss status report due August 1 by 
 68.4   each self-insurer shall report to the commissioner any workers' 
 68.5   compensation claim from the previous year where the full, 
 68.6   undiscounted value is estimated to exceed $50,000, be filed in a 
 68.7   manner and on forms prescribed by the commissioner.  
 68.8      (d) Each individual self-insurer shall, within four months 
 68.9   after the end of its fiscal year, annually file with the 
 68.10  commissioner its latest 10K report required by the Securities 
 68.11  and Exchange Commission.  If an individual self-insurer does not 
 68.12  prepare a 10K report, it shall file an annual certified 
 68.13  financial statement, together with such other financial 
 68.14  information as the commissioner may require to substantiate data 
 68.15  in the financial statement.  
 68.16     (e) Each member of the group shall, within four seven 
 68.17  months after the end of each fiscal year for that group, file 
 68.18  the most recent annual financial statement, reviewed by a 
 68.19  certified public accountant in accordance with the Statements on 
 68.20  Standards for Accounting and Review Services, Volume 2, the 
 68.21  American Institute of Certified Public Accountants Professional 
 68.22  Standards, or audited in accordance with generally accepted 
 68.23  auditing standards, together with such other financial 
 68.24  information the commissioner may require.  In addition, the 
 68.25  group shall file, within four seven months after the end of each 
 68.26  fiscal year for that group, combining financial statements of 
 68.27  the group members, compiled by a certified public accountant in 
 68.28  accordance with the Statements on Standards for Accounting and 
 68.29  Review Services, Volume 2, the American Institute of Certified 
 68.30  Public Accountants Professional Standards.  The combining 
 68.31  financial statements shall include, but not be limited to, a 
 68.32  balance sheet, income statement, statement of changes in net 
 68.33  worth, and statement of cash flow.  Each combining financial 
 68.34  statement shall include a column for each individual group 
 68.35  member along with a total column.  
 68.36     Where a group has 50 or more members, the group shall file, 
 69.1   in lieu of the combining financial statements, a combined 
 69.2   financial statement showing only the total column for the entire 
 69.3   group's balance sheet, income statement, statement of changes in 
 69.4   net worth, and statement of cash flow.  Additionally, the group 
 69.5   shall disclose, for each member, the total assets, net worth, 
 69.6   revenue, and income for the most recent fiscal year.  The 
 69.7   combining and combined financial statements may omit all 
 69.8   footnote disclosures. 
 69.9      (f) In addition to the financial statements required by 
 69.10  paragraphs (d) and (e), interim financial statements or 10Q 
 69.11  reports required by the Securities and Exchange Commission may 
 69.12  be required by the commissioner upon an indication that there 
 69.13  has been deterioration in the self-insurer's financial 
 69.14  condition, including a worsening of current ratio, lessening of 
 69.15  net worth, net loss of income, the downgrading of the company's 
 69.16  bond rating, or any other significant change that may adversely 
 69.17  affect the self-insurer's ability to pay expected losses.  Any 
 69.18  self-insurer that files an 8K report with the Securities and 
 69.19  Exchange Commission shall also file a copy of the report with 
 69.20  the commissioner within 30 days of the filing with the 
 69.21  Securities and Exchange Commission. 
 69.22     Sec. 72.  Minnesota Statutes 1998, section 79A.03, 
 69.23  subdivision 10, is amended to read: 
 69.24     Subd. 10.  [ANNUAL AUDIT AND REFUNDS.] (a) The accounts and 
 69.25  records of the group self-insurer's fund shall be audited 
 69.26  annually.  Audits shall be made by certified public accountants, 
 69.27  based on generally accepted accounting principles and generally 
 69.28  accepted auditing standards, and supported by actuarial review 
 69.29  and opinion of the future contingent liabilities, in order to 
 69.30  determine the solvency of the self-insurer's fund.  All audits 
 69.31  required by this subdivision shall be filed with the 
 69.32  commissioner 90 days after the close of the fiscal year for the 
 69.33  group self-insurer.  The commissioner may require a special 
 69.34  audit to be made at other times if the financial stability of 
 69.35  the fund or the adequacy of its monetary reserves is in question.
 69.36     (b) One hundred percent of any surplus money for a fund 
 70.1   year in excess of 125 percent of the amount necessary to fulfill 
 70.2   all obligations under chapter 176 for that fund year may be 
 70.3   declared refundable to a member at any time after 18 months 
 70.4   following the end of such fund year.  There can be no more than 
 70.5   one refund in any 12-month period.  When all claims of any one 
 70.6   fund year have been fully paid, as certified by an actuary, all 
 70.7   surplus money from that fund year may be declared refundable. 
 70.8      Sec. 73.  Minnesota Statutes 1998, section 79A.03, is 
 70.9   amended by adding a subdivision to read: 
 70.10     Subd. 13.  [ANNUAL REQUIREMENTS.] The financial 
 70.11  requirements set forth in subdivisions 3, 4, 5, and 7, must be 
 70.12  met on an annual basis. 
 70.13     Sec. 74.  Minnesota Statutes 1998, section 79A.21, 
 70.14  subdivision 2, is amended to read: 
 70.15     Subd. 2.  [REQUIRED DOCUMENTS.] All first-year applications 
 70.16  must be accompanied by the following: 
 70.17     (a) A detailed business plan including the risk profile of 
 70.18  the proposed membership, underwriting guidelines, marketing 
 70.19  plan, minimum financial criteria for each member, and financial 
 70.20  projections for the first year of operation.  
 70.21     (b) A plan describing the method in which premiums are to 
 70.22  be charged to the employer members.  The plan shall be 
 70.23  accompanied by copies of the member's workers' compensation 
 70.24  insurance policies in force at the time of application.  In 
 70.25  developing the premium for the group, the commercial 
 70.26  self-insurance group shall base its premium on the Minnesota 
 70.27  workers' compensation insurers association's manual of rules, 
 70.28  loss costs, and classifications approved for use in Minnesota by 
 70.29  the commissioner.  Each member applicant shall, on a form 
 70.30  approved by the commissioner, complete estimated payrolls for 
 70.31  the first 12-month period that the applicant will be 
 70.32  self-insured.  Premium volume discounts per the plan will be 
 70.33  permitted if they can be shown to be consistent with actuarial 
 70.34  standards.  
 70.35     (c) A schedule indicating actual or anticipated operational 
 70.36  expenses of the commercial self-insurance group.  No authority 
 71.1   to self-insure will be granted unless, over the term of the 
 71.2   policy year, at least 65 percent of total revenues from all 
 71.3   sources for the year are available for the payment of its claim 
 71.4   and assessment obligations.  For purposes of this calculation, 
 71.5   claim and assessment obligations include the cost of allocated 
 71.6   loss expenses as well as special compensation fund and 
 71.7   commercial self-insurance group security fund assessments but 
 71.8   exclude the cost of unallocated loss expenses. 
 71.9      (d) An indemnity agreement from each member who will 
 71.10  participate in the commercial self-insurance group, signed by an 
 71.11  officer of each member, providing for joint and several 
 71.12  liability for all claims and expenses of all of the members of 
 71.13  the commercial self-insurance group arising in any fund year in 
 71.14  which the member was a participant on a form approved by the 
 71.15  commissioner.  The indemnity agreement shall provide for 
 71.16  assessments according to the group's bylaws on an individual and 
 71.17  proportionate basis. 
 71.18     (e) A copy of the commercial self-insurance group bylaws. 
 71.19     (f) Evidence of the security deposit required under section 
 71.20  79A.24, accompanied by the actuarial certification study for the 
 71.21  minimum security deposit as required under section 79A.24.  
 71.22     (g) Each initial member of the commercial self-insurance 
 71.23  group shall submit to the commercial self-insurance group 
 71.24  accountant its most recent annual financial statement.  
 71.25  Financial statements for a period ending more than six months 
 71.26  prior to the date of the application must be accompanied by an 
 71.27  affidavit, signed by a company officer under oath, stating that 
 71.28  there has been no material lessening of the net worth nor other 
 71.29  adverse changes in its financial condition since the end of the 
 71.30  period.  Individual group members constituting at least 75 50 
 71.31  percent of the group's annual premium shall submit reviewed or 
 71.32  audited financial statements.  The remaining members may must 
 71.33  submit compilation level statements.  Statements for a period 
 71.34  ending more than 12 months prior to the date of application 
 71.35  cannot be accepted. 
 71.36     (h) A compiled combined financial statement of all group 
 72.1   members prepared by the commercial self-insurance group's 
 72.2   accountant and a list of members included in such 
 72.3   statements.  An "Agreed Upon Procedures" report, as determined 
 72.4   by the commissioner, indicating combined net worth, total 
 72.5   assets, cash flow, and net income of the group members may be 
 72.6   filed in lieu of the compiled combined financial statement. 
 72.7      (i) A copy of each member's accountant's report letter from 
 72.8   the reports used in compiling the combined financial statements. 
 72.9      (j) A list of all members and the percentage of premium 
 72.10  each represents to the total group's annual premium for the 
 72.11  policy year.  
 72.12     Sec. 75.  Minnesota Statutes 1998, section 79A.23, 
 72.13  subdivision 1, is amended to read: 
 72.14     Subdivision 1.  [REQUIRED REPORTS TO COMMISSIONER.] Each 
 72.15  commercial self-insurance group shall submit the following 
 72.16  documents to the commissioner.  
 72.17     (a) An annual report shall be submitted by April 1 showing 
 72.18  the incurred losses, paid and unpaid, specifying indemnity and 
 72.19  medical losses by classification, payroll by classification, and 
 72.20  current estimated outstanding liability for workers' 
 72.21  compensation on a calendar year basis, in a manner and on forms 
 72.22  available from the commissioner.  In addition each group will 
 72.23  submit a quarterly interim loss report showing incurred losses 
 72.24  for all its membership. 
 72.25     (b) Each commercial self-insurance group shall submit 
 72.26  within 45 days of the end of each quarter:  
 72.27     (1) a schedule showing all the members who participate in 
 72.28  the group, their date of inception, and date of withdrawal, if 
 72.29  applicable; 
 72.30     (2) a separate section identifying which members were added 
 72.31  or withdrawn during that quarter; and 
 72.32     (3) an internal financial statement and copies of the 
 72.33  fiscal agent's statements supporting the balances in the common 
 72.34  claims fund. 
 72.35     (c) The commercial self-insurance group shall submit an 
 72.36  annual certified financial audit report of the commercial 
 73.1   self-insurance group fund by April 1 of the following year.  The 
 73.2   report must be accompanied by an expense schedule showing the 
 73.3   commercial self-insurance group's operational costs for the same 
 73.4   year including service company charges, accounting and actuarial 
 73.5   fees, fund administration charges, reinsurance premiums, 
 73.6   commissions, and any other costs associated with the 
 73.7   administration of the group program. 
 73.8      (d) An officer of the commercial self-insurance group 
 73.9   shall, under oath, attest to the accuracy of each report 
 73.10  submitted under paragraphs (a), (b), and (c).  Upon sufficient 
 73.11  cause, the commissioner shall require the commercial 
 73.12  self-insurance group to submit a certified audit of payroll and 
 73.13  claim records conducted by an independent auditor approved by 
 73.14  the commissioner, based on generally accepted accounting 
 73.15  principles and generally accepted auditing standards, and 
 73.16  supported by an actuarial review and opinion of the future 
 73.17  contingent liabilities.  The basis for sufficient cause shall 
 73.18  include the following factors: 
 73.19     (1) where the losses reported appear significantly 
 73.20  different from similar types of groups; 
 73.21     (2) where major changes in the reports exist from year to 
 73.22  year, which are not solely attributable to economic factors; or 
 73.23     (3) where the commissioner has reason to believe that the 
 73.24  losses and payroll in the report do not accurately reflect the 
 73.25  losses and payroll of the commercial self-insurance group.  
 73.26  If any discrepancy is found, the commissioner shall require 
 73.27  changes in the commercial self-insurance group's business plan 
 73.28  or service company recordkeeping practices. 
 73.29     (e) Each commercial self-insurance group shall submit by 
 73.30  September 15 a copy of the group's annual federal and state 
 73.31  income tax returns or provide proof that it has received an 
 73.32  exemption from these filings. 
 73.33     (f) With the annual loss report each commercial 
 73.34  self-insurance group shall report to the commissioner any 
 73.35  worker's compensation claim where the full, undiscounted value 
 73.36  is estimated to exceed $50,000, in a manner and on forms 
 74.1   prescribed by the commissioner. 
 74.2      (g) Each commercial self-insurance group shall submit by 
 74.3   May 1 a list of all members and the percentage of premium each 
 74.4   represents to the total group's premium for the previous 
 74.5   calendar year.  
 74.6      (h) Each commercial self-insurance group shall submit by 
 74.7   May August 1 the following documents prepared by the group's 
 74.8   certified public accountant:  
 74.9      (1) a compiled combined financial statement of group 
 74.10  members and a list of members included in this statement;.  An 
 74.11  "Agreed Upon Procedures" report, as determined by the 
 74.12  commissioner, indicating combined net worth, total assets, cash 
 74.13  flow, and net income of the group members may be filed in lieu 
 74.14  of the compiled combined financial statement; and 
 74.15     (2) a report that the statements which were combined have 
 74.16  met the requirements of subdivision 2.  
 74.17     (i) If any group member comprises over 25 percent of total 
 74.18  group premium, that member's financial statement must be 
 74.19  reviewed or audited, and, at the commissioner's option, must be 
 74.20  filed with the department of commerce by May 1 of the following 
 74.21  year. 
 74.22     (j) Each commercial self-insurance group shall submit a 
 74.23  copy of each member's accountant's report letter from the 
 74.24  reports used in compiling the combined financial statements.  
 74.25     Sec. 76.  Minnesota Statutes 1998, section 79A.23, 
 74.26  subdivision 2, is amended to read: 
 74.27     Subd. 2.  [REQUIRED REPORTS FROM MEMBERS TO GROUP.] Each 
 74.28  member of the commercial self-insurance group shall, by 
 74.29  April July 1, submit to the group its most recent annual 
 74.30  financial statement, together with other financial information 
 74.31  the group may require.  These financial statements submitted 
 74.32  must not have a fiscal year end date older than January 15 of 
 74.33  the group's calendar year end.  Individual group members 
 74.34  constituting at least 50 percent of the group's annual premium 
 74.35  shall submit to the group reviewed or audited financial 
 74.36  statements.  The remaining members may must submit compilation 
 75.1   level statements. 
 75.2      Sec. 77.  Minnesota Statutes 1998, section 256B.0644, is 
 75.3   amended to read: 
 75.4      256B.0644 [PARTICIPATION REQUIRED FOR REIMBURSEMENT UNDER 
 75.5   OTHER STATE HEALTH CARE PROGRAMS.] 
 75.6      A vendor of medical care, as defined in section 256B.02, 
 75.7   subdivision 7, and a health maintenance organization, as defined 
 75.8   in chapter 62D, must participate as a provider or contractor in 
 75.9   the medical assistance program, general assistance medical care 
 75.10  program, and MinnesotaCare as a condition of participating as a 
 75.11  provider in health insurance plans and programs or contractor 
 75.12  for state employees established under section 43A.18, the public 
 75.13  employees insurance program under section 43A.316, for health 
 75.14  insurance plans offered to local statutory or home rule charter 
 75.15  city, county, and school district employees, the workers' 
 75.16  compensation system under section 176.135, and insurance plans 
 75.17  provided through the Minnesota comprehensive health association 
 75.18  under sections 62E.01 to 62E.16 62E.19.  The limitations on 
 75.19  insurance plans offered to local government employees shall not 
 75.20  be applicable in geographic areas where provider participation 
 75.21  is limited by managed care contracts with the department of 
 75.22  human services.  For providers other than health maintenance 
 75.23  organizations, participation in the medical assistance program 
 75.24  means that (1) the provider accepts new medical assistance, 
 75.25  general assistance medical care, and MinnesotaCare patients, (2) 
 75.26  for providers other than dental services providers, at least 20 
 75.27  percent of the provider's patients are covered by medical 
 75.28  assistance, general assistance medical care, and MinnesotaCare 
 75.29  as their primary source of coverage, or (3) for dental services 
 75.30  providers, at least ten percent of the provider's patients are 
 75.31  covered by medical assistance, general assistance medical care, 
 75.32  and MinnesotaCare as their primary source of coverage.  The 
 75.33  commissioner shall establish participation requirements for 
 75.34  health maintenance organizations.  The commissioner shall 
 75.35  provide lists of participating medical assistance providers on a 
 75.36  quarterly basis to the commissioner of employee relations, the 
 76.1   commissioner of labor and industry, and the commissioner of 
 76.2   commerce.  Each of the commissioners shall develop and implement 
 76.3   procedures to exclude as participating providers in the program 
 76.4   or programs under their jurisdiction those providers who do not 
 76.5   participate in the medical assistance program.  The commissioner 
 76.6   of employee relations shall implement this section through 
 76.7   contracts with participating health and dental carriers. 
 76.8      Sec. 78.  [APPLICATION.] 
 76.9      (a) Section 13, subdivision 2, applies to a suit based in 
 76.10  whole or in part on an alleged act, error, or omission that 
 76.11  takes place on or after the effective date of the section. 
 76.12     (b) No legal action lies against the receiver or any 
 76.13  employee based in whole or in part on any alleged act, error, or 
 76.14  omission that took place before the effective date of the 
 76.15  section, unless suit is filed and valid service of process is 
 76.16  obtained within 12 months after the effective date of the 
 76.17  section. 
 76.18     (c) Section 13, subdivisions 3 to 5, apply to a suit that 
 76.19  is pending on or filed after the effective date of the section 
 76.20  without regard to when the alleged act, error, or omission took 
 76.21  place. 
 76.22     Sec. 79.  [REPEALER.] 
 76.23     (a) Minnesota Statutes 1998, sections 60A.11, subdivision 
 76.24  24a; 60B.36; 60B.44, subdivision 3; 65A.29, subdivision 12; and 
 76.25  79A.04, subdivision 8, are repealed. 
 76.26     (b) Minnesota Rules, part 2780.0500, item C, is repealed.