SF 440

3rd Engrossment - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; regulating coverages, notice 
  1.3             provisions, enforcement provisions, and licensees; the 
  1.4             comprehensive health association; increasing the 
  1.5             lifetime benefit limit; making technical changes; 
  1.6             providing for certain breast cancer coverage; 
  1.7             prohibiting certain rate differentials within the same 
  1.8             town or city; amending Minnesota Statutes 1994, 
  1.9             sections 60A.06, subdivision 3; 60A.085; 60A.111, 
  1.10            subdivision 2; 60A.124; 60A.23, subdivision 8; 60A.26; 
  1.11            60A.951, subdivisions 2 and 5; 60A.954, subdivision 1; 
  1.12            60A.955; 60K.03, subdivision 7; 60K.14, subdivision 1; 
  1.13            61A.03, subdivision 1; 61A.071; 61A.092, subdivisions 
  1.14            3 and 6; 61B.28, subdivisions 8 and 9; 62A.042; 
  1.15            62A.10; 62A.135; 62A.136; 62A.14; 62A.141; 62A.31, 
  1.16            subdivisions 1h and 1i; 62A.46, subdivision 2, and by 
  1.17            adding a subdivision; 62A.48, subdivisions 1 and 2; 
  1.18            62A.50, subdivision 3; 62C.14, subdivisions 5 and 14; 
  1.19            62D.02, subdivision 8; 62E.02, subdivision 7; 62E.12; 
  1.20            62F.02, subdivision 2; 62I.09, subdivision 2; 62L.02, 
  1.21            subdivision 16; 62L.03, subdivision 5; 65A.01, by 
  1.22            adding a subdivision; 65B.06, subdivision 3; 65B.08, 
  1.23            subdivision 1; 65B.09, subdivision 1; 65B.10, 
  1.24            subdivision 3; 65B.61, subdivision 1; 72A.20, 
  1.25            subdivision 13, and by adding a subdivision; 72B.05; 
  1.26            79.251, subdivision 5, and by adding a subdivision; 
  1.27            79.34, subdivision 2; 79.35; 79A.01, by adding a 
  1.28            subdivision; 79A.02, subdivision 4; 79A.03, by adding 
  1.29            a subdivision; 176.181, subdivision 2; 299F.053, 
  1.30            subdivision 2; 515A.3-112; and 515B.3-113; proposing 
  1.31            coding for new law in Minnesota Statutes, chapters 
  1.32            60A; and 62A; repealing Minnesota Statutes 1994, 
  1.33            sections 61A.072, subdivision 3; and 65B.07, 
  1.34            subdivision 5. 
  1.35  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.36     Section 1.  Minnesota Statutes 1994, section 60A.06, 
  1.37  subdivision 3, is amended to read: 
  1.38     Subd. 3.  [LIMITATION ON COMBINATION POLICIES.] (a) Unless 
  1.39  specifically authorized by subdivision 1, clause (4), it is 
  1.40  unlawful to combine in one policy coverage permitted by 
  2.1   subdivision 1, clauses (4) and (5)(a).  This subdivision does 
  2.2   not prohibit the simultaneous sale of these products, but the 
  2.3   sale must involve two separate and distinct policies.  
  2.4      (b) This subdivision does not apply to group policies.  
  2.5      (c) This subdivision does not apply to policies permitted 
  2.6   by subdivision 1, clause (4), that contain benefits providing 
  2.7   acceleration of life, endowment, or annuity benefits in advance 
  2.8   of the time they would otherwise be payable, or to long-term 
  2.9   care policies as defined in section 62A.46, subdivision 2.  
  2.10     Sec. 2.  Minnesota Statutes 1994, section 60A.085, is 
  2.11  amended to read: 
  2.12     60A.085 [CANCELLATION OF GROUP COVERAGE; NOTIFICATION TO 
  2.13  COVERED PERSONS.] 
  2.14     (a) No cancellation of any group life, group accidental 
  2.15  death and dismemberment, group disability income, or group 
  2.16  medical expense policy, plan, or contract regulated under 
  2.17  chapter 62A or 62C is effective unless the insurer has made a 
  2.18  good faith effort to notify all covered persons of the 
  2.19  cancellation at least 30 days before the effective cancellation 
  2.20  date.  For purposes of this section, an insurer has made a good 
  2.21  faith effort to notify all covered persons if the insurer has 
  2.22  notified all the persons included on the list required by 
  2.23  paragraph (b) at the home address given and only if the list has 
  2.24  been updated within the last 12 months. 
  2.25     (b) At the time of the application for coverage subject to 
  2.26  paragraph (a), the insurer shall obtain an accurate list of the 
  2.27  names and home addresses of all persons to be covered.  
  2.28     (c) Paragraph (a) does not apply if the group policy, plan, 
  2.29  or contract is replaced, or if the insurer has reasonable 
  2.30  evidence to indicate that it will be replaced, by a 
  2.31  substantially similar policy, plan, or contract. 
  2.32     (d) In no event shall this section extend coverage under a 
  2.33  group policy, plan, or contract more than 120 days beyond the 
  2.34  date coverage would otherwise cancel based on the terms of the 
  2.35  group policy, plan, or contract.  
  2.36     (e) If coverage under the group policy, plan, or contract 
  3.1   is extended by this section, then the time period during which 
  3.2   affected members may exercise any conversion privilege provided 
  3.3   for in the group policy, plan, or contract is extended for the 
  3.4   same length of time, plus 30 days. 
  3.5      Sec. 3.  Minnesota Statutes 1994, section 60A.111, 
  3.6   subdivision 2, is amended to read: 
  3.7      Subd. 2.  [PLAN.] If the commissioner determines that the 
  3.8   required liabilities of any company are greater than its 
  3.9   qualified assets and that the combined financial resources of 
  3.10  the insurance company members of any insurance holding company 
  3.11  system of which the company is a member are not adequate to 
  3.12  counterbalance that fact, the commissioner may require the 
  3.13  company to submit to the commissioner for approval a plan by 
  3.14  which the company undertakes to bring the ratio of its required 
  3.15  liabilities to its qualified assets to its required liabilities, 
  3.16  expressed as a percentage, up to at least 110 percent within a 
  3.17  reasonable period, usually not exceeding five years.  
  3.18     Sec. 4.  Minnesota Statutes 1994, section 60A.124, is 
  3.19  amended to read: 
  3.20     60A.124 [INDEPENDENT AUDIT.] 
  3.21     The audit report of the independent certified public 
  3.22  accountant that performs the audit of an insurer's annual 
  3.23  statement as required under section 60A.13 60A.129, 
  3.24  subdivision 3a 3, paragraph (a), should contain a statement as 
  3.25  to whether anything, in connection with their audit, came to 
  3.26  their attention that caused them to believe that the insurer 
  3.27  failed to adopt and consistently apply the valuation procedure 
  3.28  as required by sections 60A.122 and 60A.123. 
  3.29     Sec. 5.  Minnesota Statutes 1994, section 60A.23, 
  3.30  subdivision 8, is amended to read: 
  3.31     Subd. 8.  [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS 
  3.32  WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1)  [SCOPE.] This 
  3.33  subdivision applies to any vendor of risk management services 
  3.34  and to any entity which administers, for compensation, a 
  3.35  self-insurance or insurance plan.  This subdivision does not 
  3.36  apply (a) to an insurance company authorized to transact 
  4.1   insurance in this state, as defined by section 60A.06, 
  4.2   subdivision 1, clauses (4) and (5); (b) to a service plan 
  4.3   corporation, as defined by section 62C.02, subdivision 6; (c) to 
  4.4   a health maintenance organization, as defined by section 62D.02, 
  4.5   subdivision 4; (d) to an employer directly operating a 
  4.6   self-insurance plan for its employees' benefits; or (e) to an 
  4.7   entity which administers a program of health benefits 
  4.8   established pursuant to a collective bargaining agreement 
  4.9   between an employer, or group or association of employers, and a 
  4.10  union or unions; or (f) to an entity which administers a 
  4.11  self-insurance or insurance plan if a licensed Minnesota insurer 
  4.12  is providing insurance to the plan and if the licensed insurer 
  4.13  has appointed the entity administering the plan as one of its 
  4.14  licensed agents within this state. 
  4.15     (2)  [DEFINITIONS.] For purposes of this subdivision the 
  4.16  following terms have the meanings given them. 
  4.17     (a) "Administering a self-insurance or insurance plan" 
  4.18  means (i) processing, reviewing or paying claims, (ii) 
  4.19  establishing or operating funds and accounts, or (iii) otherwise 
  4.20  providing necessary administrative services in connection with 
  4.21  the operation of a self-insurance or insurance plan. 
  4.22     (b) "Employer" means an employer, as defined by section 
  4.23  62E.02, subdivision 2. 
  4.24     (c) "Entity" means any association, corporation, 
  4.25  partnership, sole proprietorship, trust, or other business 
  4.26  entity engaged in or transacting business in this state. 
  4.27     (d) "Self-insurance or insurance plan" means a plan 
  4.28  providing life, medical or hospital care, accident, sickness or 
  4.29  disability insurance, as an employee fringe benefit for the 
  4.30  benefit of employees or members of an association, or a plan 
  4.31  providing liability coverage for any other risk or hazard, which 
  4.32  is or is not directly insured or provided by a licensed insurer, 
  4.33  service plan corporation, or health maintenance organization. 
  4.34     (e) "Vendor of risk management services" means an entity 
  4.35  providing for compensation actuarial, financial management, 
  4.36  accounting, legal or other services for the purpose of designing 
  5.1   and establishing a self-insurance or insurance plan for an 
  5.2   employer. 
  5.3      (3)  [LICENSE.] No vendor of risk management services or 
  5.4   entity administering a self-insurance or insurance plan may 
  5.5   transact this business in this state unless it is licensed to do 
  5.6   so by the commissioner.  An applicant for a license shall state 
  5.7   in writing the type of activities it seeks authorization to 
  5.8   engage in and the type of services it seeks authorization to 
  5.9   provide.  The license may be granted only when the commissioner 
  5.10  is satisfied that the entity possesses the necessary 
  5.11  organization, background, expertise, and financial integrity to 
  5.12  supply the services sought to be offered.  The commissioner may 
  5.13  issue a license subject to restrictions or limitations upon the 
  5.14  authorization, including the type of services which may be 
  5.15  supplied or the activities which may be engaged in.  The license 
  5.16  fee is $100.  All licenses are for a period of two years. 
  5.17     (4)  [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.] 
  5.18  To assure that self-insurance or insurance plans are financially 
  5.19  solvent, are administered in a fair and equitable fashion, and 
  5.20  are processing claims and paying benefits in a prompt, fair, and 
  5.21  honest manner, vendors of risk management services and entities 
  5.22  administering insurance or self-insurance plans are subject to 
  5.23  the supervision and examination by the commissioner.  Vendors of 
  5.24  risk management services, entities administering insurance or 
  5.25  self-insurance plans, and insurance or self-insurance plans 
  5.26  established or operated by them are subject to the trade 
  5.27  practice requirements of sections 72A.19 to 72A.30.  In lieu of 
  5.28  an unlimited guarantee from a parent corporation for a vendor of 
  5.29  risk management services or an entity administering insurance or 
  5.30  self-insurance plans, the commissioner may accept a fidelity 
  5.31  surety bond in a form satisfactory to the commissioner in an 
  5.32  amount equal to 120 percent of the total amount of claims 
  5.33  handled by the applicant in the prior year.  If at any time the 
  5.34  total amount of claims handled during a year exceeds the amount 
  5.35  upon which the bond was calculated, the administrator shall 
  5.36  immediately notify the commissioner.  The commissioner may 
  6.1   require that the bond be increased accordingly. 
  6.2      (5)  [RULEMAKING AUTHORITY.] To carry out the purposes of 
  6.3   this subdivision, the commissioner may adopt rules, including 
  6.4   emergency rules, pursuant to sections 14.001 to 14.69.  These 
  6.5   rules may: 
  6.6      (a) establish reporting requirements for administrators of 
  6.7   insurance or self-insurance plans; 
  6.8      (b) establish standards and guidelines to assure the 
  6.9   adequacy of financing, reinsuring, and administration of 
  6.10  insurance or self-insurance plans; 
  6.11     (c) establish bonding requirements or other provisions 
  6.12  assuring the financial integrity of entities administering 
  6.13  insurance or self-insurance plans; or 
  6.14     (d) establish other reasonable requirements to further the 
  6.15  purposes of this subdivision. 
  6.16     Sec. 6.  [60A.235] [STANDARDS FOR DETERMINING WHETHER 
  6.17  CONTRACTS ARE HEALTH PLAN CONTRACTS OR STOP LOSS CONTRACTS.] 
  6.18     Subdivision 1.  [FINDINGS AND PURPOSE.] The purpose of this 
  6.19  section is to establish a standard for the determination of 
  6.20  whether an insurance policy or other evidence or coverage should 
  6.21  be treated as a policy of accident and sickness insurance or a 
  6.22  stop loss policy for the purpose of the regulation of the 
  6.23  business of insurance.  The laws regulating the business of 
  6.24  insurance in Minnesota impose distinctly different requirements 
  6.25  upon accident and sickness insurance policies and stop loss 
  6.26  policies.  In particular, the regulation of accident and 
  6.27  sickness insurance in Minnesota includes measures designed to 
  6.28  reform the health insurance market, to minimize or prohibit 
  6.29  selective rating or rejection of employee groups or individual 
  6.30  group members based upon health conditions, and to provide 
  6.31  access to affordable health insurance coverage regardless of 
  6.32  preexisting health conditions.  The health care reform 
  6.33  provisions enacted in Minnesota will only be effective if they 
  6.34  are applied to all insurers and health carriers who in 
  6.35  substance, regardless of purported form, engage in the business 
  6.36  of issuing health insurance coverage to employees of an employee 
  7.1   group.  This section applies to insurance companies and health 
  7.2   carriers and the policies or other evidence of coverage that 
  7.3   they issue.  This section does not apply to employers or the 
  7.4   benefit plans they establish for their employees. 
  7.5      Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
  7.6   terms defined in this subdivision have the meanings given. 
  7.7      (a) "Attachment point" means the claims amount beyond which 
  7.8   the insurance company or health carrier incurs a liability for 
  7.9   payment. 
  7.10     (b) "Direct coverage" means coverage under which an 
  7.11  insurance company or health carrier assumes a direct obligation 
  7.12  to an individual, under the policy or evidence of coverage, with 
  7.13  respect to health care expenses incurred by the individual or a 
  7.14  member of the individual's family. 
  7.15     (c) "Expected claims" means the amount of claims that, in 
  7.16  the absence of a stop loss policy or other insurance or evidence 
  7.17  of coverage, are projected to be incurred under an 
  7.18  employer-sponsored plan covering health care expenses. 
  7.19     (d) "Expected plan claims" means the expected claims less 
  7.20  the projected claims in excess of the specific attachment point, 
  7.21  adjusted to be consistent with the employer's aggregate contract 
  7.22  period. 
  7.23     (e) "Health plan" means a health plan as defined in section 
  7.24  62A.011 and includes group coverage regardless of the size of 
  7.25  the group. 
  7.26     (f) "Health carrier" means a health carrier as defined in 
  7.27  section 62A.011. 
  7.28     Subd. 3.  [HEALTH PLAN POLICIES ISSUED AS STOP LOSS 
  7.29  COVERAGE.] (a) An insurance company or health carrier issuing or 
  7.30  renewing an insurance policy or other evidence of coverage, that 
  7.31  provides coverage to an employer for health care expenses 
  7.32  incurred under an employer-sponsored plan provided to the 
  7.33  employer's employees, retired employees, or their dependents, 
  7.34  shall issue the policy or evidence of coverage as a health plan 
  7.35  if the policy or evidence of coverage: 
  7.36     (1) has a specific attachment point for claims incurred per 
  8.1   individual that is lower than $10,000; or 
  8.2      (2) has an aggregate attachment point that is lower than 
  8.3   the sum of: 
  8.4      (i) 140 percent of the first $50,000 of expected plan 
  8.5   claims; 
  8.6      (ii) 120 percent of the next $450,000 of expected plan 
  8.7   claims; and 
  8.8      (iii) 110 percent of the remaining expected plan claims. 
  8.9      (b) Where the insurance policy or evidence of coverage 
  8.10  applies to a contract period of more than one year, the dollar 
  8.11  amounts set forth in paragraph (a), clauses (1) and (2), must be 
  8.12  multiplied by the length of the contract period expressed in 
  8.13  years. 
  8.14     (c) The commissioner may adjust the constant dollar amounts 
  8.15  provided in paragraph (a), clauses (1) and (2), on January 1 of 
  8.16  any year, based upon changes in the medical component of the 
  8.17  Consumer Price Index (CPI).  Adjustments must be in increments 
  8.18  of $100 and must not be made unless at least that amount of 
  8.19  adjustment is required.  The commissioner shall publish any 
  8.20  change in these dollar amounts at least three months before 
  8.21  their effective date. 
  8.22     (d) A policy or evidence of coverage issued by an insurance 
  8.23  company or health carrier that provides direct coverage of 
  8.24  health care expenses of an individual including a policy or 
  8.25  evidence of coverage administered on a group basis is a health 
  8.26  plan regardless of whether the policy or evidence of coverage is 
  8.27  denominated as stop loss coverage. 
  8.28     Subd. 4.  [COMPLIANCE.] (a) An insurance company or health 
  8.29  carrier that is required to issue a policy or evidence of 
  8.30  coverage as a health plan under this section shall, even if the 
  8.31  policy or evidence of coverage is denominated as stop loss 
  8.32  coverage, comply with all the laws of this state that apply to 
  8.33  the health plan, including, but not limited to, chapters 62A, 
  8.34  62C, 62D, 62E, 62L, and 62Q. 
  8.35     (b) With respect to an employer who had been issued a 
  8.36  policy or evidence of coverage denominated as stop loss coverage 
  9.1   before the effective date of this section, compliance with this 
  9.2   section is required as of the first renewal date occurring on or 
  9.3   after the effective date of this section. 
  9.4      Sec. 7.  [60A.236] [STOP LOSS REGULATION.] 
  9.5      A contract providing stop loss coverage, issued or renewed 
  9.6   to a small employer, as defined in section 62L.02, subdivision 
  9.7   26, or to a plan sponsored by a small employer, must include a 
  9.8   claim settlement period no less favorable to the small employer 
  9.9   or plan than coverage of all claims incurred during the contract 
  9.10  period regardless of when the claims are paid. 
  9.11     Sec. 8.  Minnesota Statutes 1994, section 60A.26, is 
  9.12  amended to read: 
  9.13     60A.26 [SUSPENSION OF INSURERS, NOTICE TO OTHER STATES; 
  9.14  NOTIFICATIONS AND REPORTS.] 
  9.15     Subdivision 1.  [OTHER STATES.] The commissioner of 
  9.16  commerce shall notify the insurance departments of all other 
  9.17  states whenever, under any law then in effect, the commissioner 
  9.18  suspends the right of a foreign or domestic insurer to transact 
  9.19  business in this state.  
  9.20     Subd. 2.  [NAIC.] The commissioner of commerce shall report 
  9.21  public regulatory actions, investigative information, and 
  9.22  complaints to the appropriate reporting system or database of 
  9.23  the National Association of Insurance Commissioners. 
  9.24     Sec. 9.  Minnesota Statutes 1994, section 60A.951, 
  9.25  subdivision 2, is amended to read: 
  9.26     Subd. 2.  [AUTHORIZED PERSON.] "Authorized person" means 
  9.27  the county attorney, sheriff, or chief of police responsible for 
  9.28  investigations in the county where the suspected insurance fraud 
  9.29  occurred; the superintendent of the bureau of criminal 
  9.30  apprehension; the commissioner of commerce; the commissioner of 
  9.31  labor and industry; the attorney general; or any duly 
  9.32  constituted criminal investigative department or agency of the 
  9.33  United States. 
  9.34     Sec. 10.  Minnesota Statutes 1994, section 60A.951, 
  9.35  subdivision 5, is amended to read: 
  9.36     Subd. 5.  [INSURER.] "Insurer" means insurance company, 
 10.1   risk retention group as defined in section 60E.02, service plan 
 10.2   corporation as defined in section 62C.02, health maintenance 
 10.3   organization as defined in section 62D.02, integrated service 
 10.4   network as defined in section 62N.02, fraternal benefit society 
 10.5   regulated under chapter 64B, township mutual company regulated 
 10.6   under chapter 67A, joint self-insurance plan or multiple 
 10.7   employer trust regulated under chapter 60F, 62H, or section 
 10.8   471.617, subdivision 2, and persons administering a 
 10.9   self-insurance plan as defined in section 60A.23, subdivision 8, 
 10.10  clause (2), paragraphs (a) and (d), and the workers' 
 10.11  compensation reinsurance association established in section 
 10.12  79.34. 
 10.13     Sec. 11.  Minnesota Statutes 1994, section 60A.954, 
 10.14  subdivision 1, is amended to read: 
 10.15     Subdivision 1.  [ESTABLISHMENT.] An insurer shall 
 10.16  institute, implement, and maintain an antifraud plan.  For the 
 10.17  purpose of this section, the term insurer does not include 
 10.18  reinsurers, the workers' compensation reinsurance association, 
 10.19  self-insurers, and excess insurers.  Within 30 days after 
 10.20  instituting or modifying an antifraud plan, the insurer shall 
 10.21  notify the commissioner in writing.  The notice must include the 
 10.22  name of the person responsible for administering the plan.  An 
 10.23  antifraud plan shall establish procedures to: 
 10.24     (1) prevent insurance fraud, including:  internal fraud 
 10.25  involving the insurer's officers, employees, or agents; fraud 
 10.26  resulting from misrepresentations on applications for insurance; 
 10.27  and claims fraud; 
 10.28     (2) report insurance fraud to appropriate law enforcement 
 10.29  authorities; and 
 10.30     (3) cooperate with the prosecution of insurance fraud cases.
 10.31     Sec. 12.  Minnesota Statutes 1994, section 60A.955, is 
 10.32  amended to read: 
 10.33     60A.955 [CLAIM FORMS TO CONTAIN FRAUD WARNING.] 
 10.34     All insurance claim forms issued by an insurer for use in 
 10.35  submitting a claim for payment or a claim for any other benefit 
 10.36  pursuant to a policy shall clearly contain a warning 
 11.1   substantially as follows:  "A person who submits an application 
 11.2   or files a claim with intent to defraud or helps commit a fraud 
 11.3   against an insurer is guilty of a crime."  An insurer may comply 
 11.4   with this section by including the warning on an addendum 
 11.5   attached to the application or claim form.  The absence of the 
 11.6   required warning does not constitute a defense in a prosecution 
 11.7   for a violation of chapter 609 or any other chapter of Minnesota 
 11.8   Statutes. 
 11.9      Sec. 13.  Minnesota Statutes 1994, section 60K.03, 
 11.10  subdivision 7, is amended to read: 
 11.11     Subd. 7.  [EXCEPTIONS.] The following are exempt from the 
 11.12  general licensing requirements prescribed by this section:  
 11.13     (1) agents of township mutuals who are exempted pursuant to 
 11.14  section 60K.04; 
 11.15     (2) fraternal benefit society representatives exempted 
 11.16  pursuant to section 60K.05; 
 11.17     (3) any regular salaried officer or employee of a licensed 
 11.18  insurer, without license or other qualification, may act on 
 11.19  behalf of that licensed insurer in the negotiation of insurance 
 11.20  for that insurer, provided that a licensed agent must 
 11.21  participate in the sale of the insurance; 
 11.22     (4) employers and their officers or employees, and the 
 11.23  trustees or employees of any trust plan, to the extent that the 
 11.24  employers, officers, employees, or trustees are engaged in the 
 11.25  administration or operation of any program of employee benefits 
 11.26  for the employees of the employers or employees of their 
 11.27  subsidiaries or affiliates involving the use of insurance issued 
 11.28  by a licensed insurance company; provided that the activities of 
 11.29  the officers, employees and trustees are incidental to clerical 
 11.30  or administrative duties and their compensation does not vary 
 11.31  with the volume of insurance or applications for insurance; 
 11.32     (5) employees of a creditor who enroll debtors for credit 
 11.33  life, credit accident and health, or credit involuntary 
 11.34  unemployment insurance; provided the employees receive no 
 11.35  commission or fee for it; 
 11.36     (6) clerical or administrative employees of an insurance 
 12.1   agent who take insurance applications or receive premiums in the 
 12.2   office of their employer, if the activities are incidental to 
 12.3   clerical or administrative duties and the employee's 
 12.4   compensation does not vary with the volume of the applications 
 12.5   or premiums; and 
 12.6      (7) rental vehicle companies and their employees in 
 12.7   connection with the offer of rental vehicle personal accident 
 12.8   insurance under section 72A.125; and 
 12.9      (8) employees of a retailer who enroll purchasers for 
 12.10  credit insurance associated with a retail purchase; provided the 
 12.11  employees receive no commission, fee, bonus, or other form of 
 12.12  compensation for it. 
 12.13     Sec. 14.  Minnesota Statutes 1994, section 60K.14, 
 12.14  subdivision 1, is amended to read: 
 12.15     Subdivision 1.  [PERSONAL SOLICITATION OF INSURANCE SALES.] 
 12.16  (a)  [DEFINITIONS.] For the purposes of this section, the 
 12.17  following terms have the meanings given them:  
 12.18     (1) "agent" means a person, copartnership, or corporation 
 12.19  required to be licensed pursuant to section 60K.02; and 
 12.20     (2) "personal solicitation" means any contact by an agent, 
 12.21  or any person acting on behalf of an agent, made for the purpose 
 12.22  of selling or attempting to sell insurance, when either the 
 12.23  agent or a person acting for the agent contacts the buyer by 
 12.24  telephone or in person, except:  (i) an attempted sale in which 
 12.25  the buyer personally knows the identity of the agent, the name 
 12.26  of the general agency, if any, which the agent represents, and 
 12.27  the fact that the agent is an insurance agent; (ii) an attempted 
 12.28  sale in which the prospective purchaser of insurance initiated 
 12.29  the contact; or (iii) a personal contact which takes place at 
 12.30  the agent's place of business.  
 12.31     (b)  [DISCLOSURE REQUIREMENT.] Before a personal 
 12.32  solicitation, the agent or person acting for an agent shall, at 
 12.33  the time of initial personal contact or communication with the 
 12.34  potential buyer, clearly and expressly disclose in writing:  
 12.35     (1) the name and state insurance agent license number of 
 12.36  the person making the contact or communication; 
 13.1      (2) the name of the agent, general agency, or insurer that 
 13.2   person represents; and 
 13.3      (3) the fact that the agent, agency, or insurer is in the 
 13.4   business of selling insurance.  
 13.5      If the initial personal contact is made by telephone, the 
 13.6   disclosures required by this subdivision need not be made in 
 13.7   writing. 
 13.8      (c)  [FALSE REPRESENTATION OF GOVERNMENT AFFILIATION.] No 
 13.9   agent or person acting for an agent shall make any communication 
 13.10  to a potential buyer that indicates or gives the impression that 
 13.11  the agent is acting on behalf of a government agency.  
 13.12     Sec. 15.  Minnesota Statutes 1994, section 61A.03, 
 13.13  subdivision 1, is amended to read: 
 13.14     Subdivision 1.  [GENERALLY.] No policy of life insurance 
 13.15  may be issued in this state or by a life insurance company 
 13.16  organized under the laws of this state unless it contains the 
 13.17  following provisions: 
 13.18     (a) [PREMIUM.] A provision that all premiums are payable in 
 13.19  advance either at the home office of the company, or to an agent 
 13.20  of the company, upon delivery of a receipt signed by one or more 
 13.21  officers named in the policy and countersigned by the agent, but 
 13.22  a policy may contain a provision that the policy itself is a 
 13.23  receipt for the first premium; 
 13.24     (b) [GRACE PERIOD.] A provision for a one month grace 
 13.25  period for the payment of every premium after the first, during 
 13.26  which the insurance will continue in force.  The provision may 
 13.27  subject the late payment to a finance charge and contain a 
 13.28  stipulation that if the insured dies during the grace period, 
 13.29  the overdue premium will be deducted in any settlement under the 
 13.30  policy; 
 13.31     (c) [ENTIRE CONTRACT.] A provision that the policy 
 13.32  constitutes the entire contract between the parties and is 
 13.33  incontestable after it has been in force during the lifetime of 
 13.34  the insured for two years from its date, except for nonpayment 
 13.35  of premiums and except for violations of the conditions of the 
 13.36  policy relating to naval and military services in time of war; 
 14.1   that at the option of the company, provisions relative to 
 14.2   benefits in the event of total and permanent disability and 
 14.3   provisions which grant additional insurance specifically against 
 14.4   death by accident, may be excepted; and that a special form of 
 14.5   policy may be issued on the life of a person employed in an 
 14.6   occupation classified by the company as extra hazardous or as 
 14.7   leading to hazardous employment, which provides that service in 
 14.8   certain designated occupations may reduce the company's 
 14.9   liability under the policy to a certain designated amount not 
 14.10  less than the full policy reserve; 
 14.11     (d) [REPRESENTATIONS AND WARRANTIES.] A provision that, in 
 14.12  the absence of fraud, all statements made by the insured are 
 14.13  representations and not warranties, and that no statement voids 
 14.14  the policy unless it is contained in a written application and a 
 14.15  copy of the application is endorsed upon or attached to the 
 14.16  policy when issued; 
 14.17     (e) [MISSTATEMENT OF AGE.] A provision that if the age of 
 14.18  the insured is understated the amount payable under the policy 
 14.19  will be the amount the premium would have purchased at the 
 14.20  correct age; 
 14.21     (f) [DIVIDENDS ON PARTICIPATING POLICIES.] A provision that 
 14.22  the policy will participate in the surplus of the company and 
 14.23  that, beginning not later than the end of the third policy year, 
 14.24  the company will annually determine and account for the portion 
 14.25  of the divisible surplus accruing on the policy, and that the 
 14.26  owner of the policy has the right, each year after the fifth, to 
 14.27  have the current dividend arising from the participation paid in 
 14.28  cash.  If the policy provides other dividend options, it must 
 14.29  specify which option is effective if the owner of the policy 
 14.30  does not elect an option.  The provision may condition any 
 14.31  dividends payable during the first five years of the policy upon 
 14.32  the payment of the next ensuing annual premium.  This provision 
 14.33  is not required in nonparticipating policies, in policies issued 
 14.34  on under-average lives, or in insurance in exchange for lapsed 
 14.35  or surrendered policies; 
 14.36     (g) [POLICY LOANS.] A provision (1) that after three full 
 15.1   years' premiums have been paid, the company at any time while 
 15.2   the policy is in force, will advance, on proper assignment of 
 15.3   the policy, and on the sole security thereof, at a specified 
 15.4   rate of interest, not to exceed eight percent per annum, or at 
 15.5   an adjustable rate of interest as otherwise provided for in this 
 15.6   section, a sum equal to, or, at the option of the owner of the 
 15.7   policy, less than the loan value thereof; (2) that the loan 
 15.8   value is the cash surrender value thereof at the end of the 
 15.9   current policy year; (3) that the loan, unless made to pay 
 15.10  premiums, may be deferred for not more than six months after the 
 15.11  application for it is made; (4) that the company will deduct 
 15.12  from the loan value any existing indebtedness on the policy and 
 15.13  any unpaid balance of the premium for current policy year, and 
 15.14  may collect interest in advance on the loan to the end of the 
 15.15  current policy year; (5) that the failure to repay an advance or 
 15.16  to pay interest does not void the policy unless the total 
 15.17  indebtedness thereon to the company equals or exceeds the loan 
 15.18  value at the time of the failure, nor until one month after 
 15.19  notice has been mailed by the company to the last known address 
 15.20  of the insured and of the assignee of record at the home office 
 15.21  of the company; and (6) that no condition other than those 
 15.22  provided in this section will be exacted as a prerequisite to an 
 15.23  advance.  This provision is not required in term insurance; 
 15.24     (h) [REINSTATEMENT.] A provision that if, in event of 
 15.25  default in premium payments, the nonforfeiture value of the 
 15.26  policy is applied to the purchase of other insurance, and if 
 15.27  that insurance is in force and the original policy has not been 
 15.28  surrendered to the company and canceled, the policy may be 
 15.29  reinstated within three years after the default upon evidence of 
 15.30  insurability satisfactory to the company and payment of arrears 
 15.31  of premiums with interest; 
 15.32     (i) [PAYMENT OF CLAIMS.] A provision that, when a policy 
 15.33  becomes a claim by the death of the insured, settlement will be 
 15.34  made within two months after receipt of due proof of death; 
 15.35     (j) [SETTLEMENT OPTION.] A table showing the amount of 
 15.36  installments in which the policy may provide its proceeds may be 
 16.1   payable; 
 16.2      (k) [DESCRIPTION OF POLICY.] A title on the face and on the 
 16.3   back of the policy briefly and correctly describing the policy 
 16.4   in bold letters stating its general character, dividend periods, 
 16.5   and other particulars, so that the holder will not be able to 
 16.6   mistake the nature and scope of the contract; 
 16.7      (l) [FORM NUMBER.] A form number in the lower left-hand 
 16.8   corner of the first page of each form, including riders and 
 16.9   endorsements. 
 16.10     Any of the foregoing provisions or portions thereof 
 16.11  relating to premiums not applicable to single premium policies 
 16.12  must not be incorporated therein.  
 16.13     Sec. 16.  Minnesota Statutes 1994, section 61A.071, is 
 16.14  amended to read: 
 16.15     61A.071 [APPLICATIONS.] 
 16.16     No individual life insurance policy, except life insurance 
 16.17  marketed on a direct response basis, shall be issued or 
 16.18  delivered in this state to a person age 65 or older unless a 
 16.19  signed and completed copy of the application for insurance is 
 16.20  left with the applicant at the time application is made.  This 
 16.21  requirement will not apply to life insurers who mail a copy of 
 16.22  the signed, completed application to the applicant within 24 
 16.23  hours of receiving the application.  However, where an 
 16.24  individual life policy is marketed on a direct response basis, a 
 16.25  copy of any application signed by the applicant shall be 
 16.26  delivered to the insured along with, or as part of, the policy. 
 16.27     Sec. 17.  Minnesota Statutes 1994, section 61A.092, 
 16.28  subdivision 3, is amended to read: 
 16.29     Subd. 3.  [NOTICE OF OPTIONS.] Upon termination of or 
 16.30  layoff from employment of a covered employee, the employer shall 
 16.31  inform the employee of: 
 16.32     (1) the employee's right to elect to continue the coverage; 
 16.33     (2) the amount the employee must pay monthly to the 
 16.34  employer to retain the coverage; 
 16.35     (3) the manner in which and the office of the employer to 
 16.36  which the payment to the employer must be made; and 
 17.1      (4) the time by which the payments to the employer must be 
 17.2   made to retain coverage. 
 17.3      The employee has 60 days within which to elect coverage.  
 17.4   The 60-day period shall begin to run on the date coverage would 
 17.5   otherwise terminate or on the date upon which notice of the 
 17.6   right to coverage is received, whichever is later. 
 17.7      If the covered employee or covered dependent dies during 
 17.8   the 60-day election period and before the covered employee makes 
 17.9   an election to continue or reject continuation, then the covered 
 17.10  employee will be considered to have elected continuation of 
 17.11  coverage.  The estate of the former employee or covered 
 17.12  dependent would then be entitled to a death benefit equal to the 
 17.13  amount of insurance that could have been continued less any 
 17.14  unpaid premium owing as of the date of death.  
 17.15     Notice must be in writing and sent by first class mail to 
 17.16  the employee's last known address which the employee has 
 17.17  provided to the employer. 
 17.18     A notice in substantially the following form is 
 17.19  sufficient:  "As a terminated or laid off employee, the law 
 17.20  authorizes you to maintain your group insurance benefits, in an 
 17.21  amount equal to the amount of insurance in effect on the date 
 17.22  you terminated or were laid off from employment, for a period of 
 17.23  up to 18 months.  To do so, you must notify your former employer 
 17.24  within 60 days of your receipt of this notice that you intend to 
 17.25  retain this coverage and must make a monthly payment of 
 17.26  $............ at ............. by the ............. of each 
 17.27  month." 
 17.28     Sec. 18.  Minnesota Statutes 1994, section 61A.092, 
 17.29  subdivision 6, is amended to read: 
 17.30     Subd. 6.  [APPLICATION.] This section applies to a policy, 
 17.31  certificate of insurance, or similar evidence of coverage issued 
 17.32  to a Minnesota resident or issued to provide coverage to a 
 17.33  Minnesota resident.  This section does not apply to:  (1) a 
 17.34  certificate of insurance or similar evidence of coverage that 
 17.35  meets the conditions of section 61A.093, subdivision 2; or (2) a 
 17.36  group life insurance policy that contains a provision permitting 
 18.1   the certificate holder, upon termination or layoff from 
 18.2   employment, to retain the coverage provided under the group 
 18.3   policy by paying premiums directly to the insurer, provided that 
 18.4   the employer shall give the employee notice of the employee's 
 18.5   and each related certificate holder's right to continue the 
 18.6   insurance by paying premiums directly to the insurer.  A related 
 18.7   certificate holder is an insured spouse of the employee. 
 18.8      Sec. 19.  Minnesota Statutes 1994, section 61B.28, 
 18.9   subdivision 8, is amended to read: 
 18.10     Subd. 8.  [FORM.] The form of notice referred to in 
 18.11  subdivision 7, paragraph (a), is as follows: 
 18.12                      ".................... 
 18.13                        .................... 
 18.14                       .................... 
 18.15               (insert name, current address, and 
 18.16                   telephone number of insurer) 
 18.17            NOTICE CONCERNING POLICYHOLDER RIGHTS IN AN 
 18.18           INSOLVENCY UNDER THE MINNESOTA LIFE AND HEALTH 
 18.19                 INSURANCE GUARANTY ASSOCIATION LAW
 18.20     If the insurer that issued your life, annuity, or health 
 18.21  insurance policy becomes impaired or insolvent, you are entitled 
 18.22  to compensation for your policy from the assets of that insurer. 
 18.23  The amount you recover will depend on the financial condition of 
 18.24  the insurer. 
 18.25     In addition, residents of Minnesota who purchase life 
 18.26  insurance, annuities, or health insurance from insurance 
 18.27  companies authorized to do business in Minnesota are protected, 
 18.28  SUBJECT TO LIMITS AND EXCLUSIONS, in the event the insurer 
 18.29  becomes financially impaired or insolvent.  This protection is 
 18.30  provided by the Minnesota Life and Health Insurance Guaranty 
 18.31  Association. 
 18.32      Minnesota Life and Health Insurance Guaranty Association
 18.33                          (insert current
 18.34                   address and telephone number)
 18.35     The maximum amount the guaranty association will pay for 
 18.36  all policies issued on one life by the same insurer is limited 
 19.1   to $300,000.  Subject to this $300,000 limit, the guaranty 
 19.2   association will pay up to $300,000 in life insurance death 
 19.3   benefits, $100,000 in net cash surrender and net cash withdrawal 
 19.4   values for life insurance, $300,000 in health insurance 
 19.5   benefits, including any net cash surrender and net cash 
 19.6   withdrawal values, $100,000 in annuity net cash surrender and 
 19.7   net cash withdrawal values, $300,000 in present value of annuity 
 19.8   benefits for annuities which are part of a structured settlement 
 19.9   or for annuities in regard to which periodic annuity benefits, 
 19.10  for a period of not less than the annuitant's lifetime or for a 
 19.11  period certain of not less than ten years, have begun to be paid 
 19.12  on or before the date of impairment or insolvency, or if no 
 19.13  coverage limit has been specified for a covered policy or 
 19.14  benefit, the coverage limit shall be $300,000 in present value.  
 19.15  Unallocated annuity contracts issued to retirement plans, other 
 19.16  than defined benefit plans, established under section 401, 
 19.17  403(b), or 457 of the Internal Revenue Code of 1986, as amended 
 19.18  through December 31, 1992, are covered up to $100,000 in net 
 19.19  cash surrender and net cash withdrawal values, for Minnesota 
 19.20  residents covered by the plan provided, however, that the 
 19.21  association shall not be responsible for more than $7,500,000 in 
 19.22  claims from all Minnesota residents covered by the plan.  If 
 19.23  total claims exceed $7,500,000, the $7,500,000 shall be prorated 
 19.24  among all claimants.  These are the maximum claim amounts.  
 19.25  Coverage by the guaranty association is also subject to other 
 19.26  substantial limitations and exclusions and requires continued 
 19.27  residency in Minnesota.  If your claim exceeds the guaranty 
 19.28  association's limits, you may still recover a part or all of 
 19.29  that amount from the proceeds of the liquidation of the 
 19.30  insolvent insurer, if any exist.  Funds to pay claims may not be 
 19.31  immediately available.  The guaranty association assesses 
 19.32  insurers licensed to sell life and health insurance in Minnesota 
 19.33  after the insolvency occurs.  Claims are paid from this 
 19.34  assessment. 
 19.35     THE COVERAGE PROVIDED BY THE GUARANTY ASSOCIATION IS NOT A 
 19.36  SUBSTITUTE FOR USING CARE IN SELECTING INSURANCE COMPANIES THAT 
 20.1   ARE WELL MANAGED AND FINANCIALLY STABLE.  IN SELECTING AN 
 20.2   INSURANCE COMPANY OR POLICY, YOU SHOULD NOT RELY ON COVERAGE BY 
 20.3   THE GUARANTY ASSOCIATION. 
 20.4      THIS NOTICE IS REQUIRED BY MINNESOTA STATE LAW TO ADVISE 
 20.5   POLICYHOLDERS OF LIFE, ANNUITY, OR HEALTH INSURANCE POLICIES OF 
 20.6   THEIR RIGHTS IN THE EVENT THEIR INSURANCE CARRIER BECOMES 
 20.7   FINANCIALLY INSOLVENT.  THIS NOTICE IN NO WAY IMPLIES THAT THE 
 20.8   COMPANY CURRENTLY HAS ANY TYPE OF FINANCIAL PROBLEMS.  ALL LIFE, 
 20.9   ANNUITY, AND HEALTH INSURANCE POLICIES ARE REQUIRED TO PROVIDE 
 20.10  THIS NOTICE." 
 20.11     Additional language may be added to the notice if approved 
 20.12  by the commissioner prior to its use in the form.  This section 
 20.13  does not apply to fraternal benefit societies regulated under 
 20.14  chapter 64B. 
 20.15     Sec. 20.  Minnesota Statutes 1994, section 61B.28, 
 20.16  subdivision 9, is amended to read: 
 20.17     Subd. 9.  [COMBINATION FIXED-VARIABLE POLICY.] The notice 
 20.18  required in subdivision 8 must clearly describe what portions of 
 20.19  a combination fixed-variable policy are not covered by the 
 20.20  Minnesota life and health insurance guaranty association.  The 
 20.21  notice requirements specified in subdivision 8 7, paragraph (c), 
 20.22  do not apply to a combination fixed-variable policy. 
 20.23     Sec. 21.  [62A.023] [NOTICE OF RATE CHANGE.] 
 20.24     A health insurer or service plan corporation must send 
 20.25  written notice to its policyholders and contract holders at 
 20.26  their last known address at least 30 days in advance of the 
 20.27  effective date of a proposed rate change.  This notice 
 20.28  requirement does not apply to individual certificate holders 
 20.29  covered by group insurance policies or group subscriber 
 20.30  contracts.  
 20.31     Sec. 22.  Minnesota Statutes 1994, section 62A.042, is 
 20.32  amended to read: 
 20.33     62A.042 [FAMILY COVERAGE; COVERAGE OF NEWBORN INFANTS.] 
 20.34     Subdivision 1.  [INDIVIDUAL FAMILY POLICIES; RENEWALS.] (a) 
 20.35  No policy of individual accident and sickness insurance which 
 20.36  provides for insurance for more than one person under section 
 21.1   62A.03, subdivision 1, clause (3), and no individual health 
 21.2   maintenance contract which provides for coverage for more than 
 21.3   one person under chapter 62D, shall be renewed to insure or 
 21.4   cover any person in this state or be delivered or issued for 
 21.5   delivery to any person in this state unless the policy or 
 21.6   contract includes as insured or covered members of the family 
 21.7   any newborn infants, including dependent grandchildren who 
 21.8   reside with a covered grandparent, immediately from the moment 
 21.9   of birth and thereafter which insurance or contract shall 
 21.10  provide coverage for illness, injury, congenital malformation, 
 21.11  or premature birth. 
 21.12     (b) The coverage under paragraph (a) includes benefits for 
 21.13  inpatient or outpatient expenses arising from medical and dental 
 21.14  treatment up to age 18, including orthodontic and oral surgery 
 21.15  treatment, involved in the management of birth defects known as 
 21.16  cleft lip and cleft palate.  If orthodontic services are 
 21.17  eligible for coverage under a dental insurance plan and another 
 21.18  policy or contract, the dental plan shall be primary and the 
 21.19  other policy or contract shall be secondary in regard to the 
 21.20  coverage required under paragraph (a).  Payment for dental or 
 21.21  orthodontic treatment not related to the management of the 
 21.22  congenital condition of cleft lip and cleft palate shall not be 
 21.23  covered under this provision.  
 21.24     Subd. 2.  [GROUP POLICIES; RENEWALS.] (a) No group accident 
 21.25  and sickness insurance policy and no group health maintenance 
 21.26  contract which provide for coverage of family members or other 
 21.27  dependents of an employee or other member of the covered group 
 21.28  shall be renewed to cover members of a group located in this 
 21.29  state or delivered or issued for delivery to any person in this 
 21.30  state unless the policy or contract includes as insured or 
 21.31  covered family members or dependents any newborn infants, 
 21.32  including dependent grandchildren who reside with a covered 
 21.33  grandparent, immediately from the moment of birth and thereafter 
 21.34  which insurance or contract shall provide coverage for illness, 
 21.35  injury, congenital malformation, or premature birth.  
 21.36     (b) The coverage under paragraph (a) includes benefits for 
 22.1   inpatient or outpatient expenses arising from medical and dental 
 22.2   treatment up to age 18, including orthodontic and oral surgery 
 22.3   treatment, involved in the management of birth defects known as 
 22.4   cleft lip and cleft palate.  If orthodontic services are 
 22.5   eligible for coverage under a dental insurance plan and another 
 22.6   policy or contract, the dental plan shall be primary and the 
 22.7   other policy or contract shall be secondary in regard to the 
 22.8   coverage required under paragraph (a).  Payment for dental or 
 22.9   orthodontic treatment not related to the management of the 
 22.10  congenital condition of cleft lip and cleft palate shall not be 
 22.11  covered under this provision. 
 22.12     Sec. 23.  Minnesota Statutes 1994, section 62A.10, is 
 22.13  amended to read: 
 22.14     62A.10 [GROUP INSURANCE.] 
 22.15     Subdivision 1.  [REQUIREMENTS.] Group accident and health 
 22.16  insurance is hereby declared to be that form of accident and 
 22.17  health insurance covering may be issued to cover groups of not 
 22.18  less than two employees nor less than ten members, and which may 
 22.19  include the employee's or member's dependents, consisting of 
 22.20  husband, wife, children, and actual dependents residing in the 
 22.21  household, written under a.  The master policy may be issued to 
 22.22  any governmental corporation, unit, agency, or department 
 22.23  thereof, or to any corporation, copartnership, individual, 
 22.24  employer, or to any association as defined by section 60A.02, 
 22.25  subdivision 1a, where officers, members, employees, or classes 
 22.26  or divisions thereof, may be insured for their individual 
 22.27  benefit. 
 22.28     Subd. 2.  [GROUP ACCIDENTAL DEATH AND GROUP DISABILITY 
 22.29  INCOME POLICIES.] Group accidental death insurance and group 
 22.30  disability income insurance policies may be issued in connection 
 22.31  with first real estate mortgage loans to cover groups of not 
 22.32  less than ten debtors of a creditor written under a master 
 22.33  policy issued to a creditor to insure its debtors in connection 
 22.34  with first real estate mortgage loans, in amounts not to exceed 
 22.35  the actual or scheduled amount of their indebtedness.  No other 
 22.36  accident and health coverages may be issued in connection with 
 23.1   first real estate mortgage loans on a group basis to a 
 23.2   debtor-creditor group. 
 23.3      Subd. 3.  [AUTHORITY TO ISSUE.] Any insurer authorized to 
 23.4   write accident and health insurance in this state shall have 
 23.5   power to issue group accident and health policies. 
 23.6      Subd. 2 4.  [POLICY FORMS.] No policy of group accident and 
 23.7   health insurance may be issued or delivered in this state unless 
 23.8   the same has been approved by the commissioner in accordance 
 23.9   with section 62A.02, subdivisions 1 to 6.  These forms shall 
 23.10  contain the standard provisions relating and applicable to 
 23.11  health and accident insurance and shall conform with the other 
 23.12  requirements of law relating to the contents and terms of 
 23.13  policies of accident and sickness insurance in so far as they 
 23.14  may be applicable to group accident and health insurance, and 
 23.15  also the following provisions: 
 23.16     (1) [ENTIRE CONTRACT.] A provision that the policy and the 
 23.17  application of the creditor, employer, or executive officer or 
 23.18  trustee of any association, and the individual applications, if 
 23.19  any, of the debtors, employees, or members, insured, shall 
 23.20  constitute the entire contract between the parties, and that all 
 23.21  statements made by the creditor, employer, or any executive 
 23.22  officer or trustee in on behalf of the group to be insured, 
 23.23  shall, in the absence of fraud, be deemed representations and 
 23.24  not warranties, and that no such statement shall be used in 
 23.25  defense to a claim under the policy, unless it is contained in 
 23.26  the written application; 
 23.27     (2) [MASTER POLICY-CERTIFICATES.] A provision that the 
 23.28  insurer will issue a master policy to the creditor, employer, or 
 23.29  to the executive officer or trustee of the association; and the 
 23.30  insurer shall also issue to the creditor, the employer, or to 
 23.31  the executive officer or trustee of the association, for 
 23.32  delivery to the debtor, employee, or member, who is insured 
 23.33  under the policy, an individual certificate setting forth a 
 23.34  statement as to the insurance protection to which the debtor, 
 23.35  employee, or member is entitled and to whom payable, together 
 23.36  with a statement as to when and where the master policy, or a 
 24.1   copy thereof, may be seen for inspection by the individual 
 24.2   insured; this.  The individual certificate may contain the names 
 24.3   of, and insure the dependents of, the employee, or member, as 
 24.4   provided for herein; 
 24.5      (3) [NEW INSUREDS.] A provision that to the group or class 
 24.6   thereof originally insured may be added, from time to time, all 
 24.7   new employees of the employer or, members of the association, or 
 24.8   debtors of the creditor eligible to and applying for insurance 
 24.9   in that group or class and covered or to be covered by the 
 24.10  master policy. 
 24.11     (4) [CONVERSION PRIVILEGE.] In the case of accidental death 
 24.12  insurance and disability income insurance issued to debtors of a 
 24.13  creditor, the policy must contain a conversion privilege 
 24.14  permitting an insured debtor to convert, without evidence of 
 24.15  insurability, to an individual policy within 30 days of the date 
 24.16  the insured debtor's group coverage is terminated, and not 
 24.17  replaced with other group coverage, for any reason other than 
 24.18  nonpayment of premiums.  The individual policy must provide the 
 24.19  same amount of insurance and be subject to the same terms and 
 24.20  conditions as the group policy and the initial premium for the 
 24.21  individual policy must be the same premium the insured debtor 
 24.22  was paying under the group policy.  This provision does not 
 24.23  apply to a group policy which provides that the certificate 
 24.24  holder may, upon termination of coverage under the group policy 
 24.25  for any reason other than nonpayment of premium, retain coverage 
 24.26  provided under the group policy by paying premiums directly to 
 24.27  the insurer. 
 24.28     Sec. 24.  Minnesota Statutes 1994, section 62A.135, is 
 24.29  amended to read: 
 24.30     62A.135 [NONCOMPREHENSIVE FIXED INDEMNITY POLICIES; MINIMUM 
 24.31  LOSS RATIOS.] 
 24.32     (a) This section applies to individual or group policies, 
 24.33  certificates, or other evidence of coverage designed primarily 
 24.34  to provide coverage for hospital or medical expenses on a per 
 24.35  diem, fixed indemnity, or nonexpense incurred basis offered, 
 24.36  issued, or renewed, to provide coverage to a Minnesota resident. 
 25.1      (b) Notwithstanding section 62A.02, subdivision 3, relating 
 25.2   to loss ratios, policies must return to Minnesota policyholders 
 25.3   in the form of aggregate benefits under the policy, for each 
 25.4   year, on the basis of incurred claims experience and earned 
 25.5   premiums in Minnesota and in accordance with accepted actuarial 
 25.6   principles and practices:  
 25.7      (1) at least 75 percent of the aggregate amount of premiums 
 25.8   earned in the case of group policies; and 
 25.9      (2) at least 65 percent of the aggregate amount of premiums 
 25.10  earned in the case of individual policies.  
 25.11     (c) An insurer may only issue or renew an individual policy 
 25.12  on a guaranteed renewable or noncancelable basis. 
 25.13     (d) Noncomprehensive policies, certificates, or other 
 25.14  evidence of coverage subject to the provisions of this section 
 25.15  are also subject to the requirements, penalties, and remedies 
 25.16  applicable to medicare supplement policies, as set forth in 
 25.17  section 62A.36, subdivisions 1a, 1b, and 2. 
 25.18     The first supplement to the annual statement required to be 
 25.19  filed pursuant to this paragraph must be for the annual 
 25.20  statement required to be submitted on or after January 1, 1993. 
 25.21     Subdivision 1.  [DEFINITIONS.] For purposes of this 
 25.22  section, the following terms have the meanings given them: 
 25.23     (a) "fixed indemnity policy" is a policy form, other than a 
 25.24  long-term care policy as defined in section 62A.46, subdivision 
 25.25  2, that pays a predetermined, specified, fixed benefit for 
 25.26  services provided.  Claim costs under these forms are generally 
 25.27  not subject to inflation, although they may be subject to 
 25.28  changes in the utilization of health care services.  For policy 
 25.29  forms providing both expense-incurred and fixed benefits, the 
 25.30  policy form is a fixed indemnity policy if 50 percent or more of 
 25.31  the total claims are for predetermined, specified, fixed 
 25.32  benefits; 
 25.33     (b) "guaranteed renewable" means that, during the renewal 
 25.34  period (to a specified age) renewal cannot be declined nor 
 25.35  coverage changed by the insurer for any reason other than 
 25.36  nonpayment of premiums, fraud, or misrepresentation, but the 
 26.1   insurer can revise rates on a class basis upon approval by the 
 26.2   commissioner; 
 26.3      (c) "noncancelable" means that, during the renewal period 
 26.4   (to a specified age) renewal cannot be declined nor coverage 
 26.5   changed by the insurer for any reason other than nonpayment of 
 26.6   premiums, fraud, or misrepresentation and that rates cannot be 
 26.7   revised by the insurer.  This includes policies that are 
 26.8   guaranteed renewable to a specified age, such as 60 or 65, at 
 26.9   guaranteed rates; and 
 26.10     (d) "average annualized premium" means the average of the 
 26.11  estimated annualized premium per covered person based on the 
 26.12  anticipated distribution of business using all significant 
 26.13  criteria having a price difference, such as age, sex, amount, 
 26.14  dependent status, mode of payment, and rider frequency.  For 
 26.15  filing of rate revisions, the amount is the anticipated average 
 26.16  assuming the revised rates have fully taken effect. 
 26.17     Subd. 2.  [APPLICABILITY.] This section applies to 
 26.18  individual or group policies, certificates, or other evidence of 
 26.19  coverage meeting the definition of a fixed indemnity policy, 
 26.20  offered, issued, or renewed, to provide coverage to a Minnesota 
 26.21  resident. 
 26.22     Subd. 3.  [MINIMUM LOSS RATIO STANDARDS.] Notwithstanding 
 26.23  section 62A.02, subdivision 3, relating to loss ratios, the 
 26.24  minimum loss ratios for fixed indemnity policies are: 
 26.25     (1) as shown in the following table: 
 26.26     Type of Coverage               Renewal Provision
 26.27                            Guaranteed Renewable   Noncancelable
 26.28         Group                      75%                 70%
 26.29       Individual                   65%                 60%
 26.30  or 
 26.31     (2) for policies or certificates where the average 
 26.32  annualized premium is less than $1,000, the average annualized 
 26.33  premium less $30, multiplied by the required loss ratio in 
 26.34  clause (1), divided by the average annualized premium.  However, 
 26.35  in no event may the minimum loss ratio be less than the required 
 26.36  loss ratio from clause (1) minus ten percent. 
 27.1      The commissioner of commerce may adjust the constant dollar 
 27.2   amounts provided in clause (2) on January 1 of any year, based 
 27.3   upon changes in the CPI-U, the consumer price index for all 
 27.4   urban consumers, published by the United States Department of 
 27.5   Labor, Bureau of Labor Statistics.  Adjustments must be in 
 27.6   increments of $5 and must not be made unless at least that 
 27.7   amount of adjustment is required to each amount. 
 27.8      All rate filings must include a demonstration that the 
 27.9   rates are not excessive.  Rates are not excessive if the 
 27.10  anticipated loss ratio and the lifetime anticipated loss ratio 
 27.11  meet or exceed the minimum loss ratio standard in this 
 27.12  subdivision. 
 27.13     Subd. 4.  [RENEWAL PROVISION.] An insurer may only issue or 
 27.14  renew an individual policy on a guaranteed renewable or 
 27.15  noncancelable basis. 
 27.16     Subd. 5.  [SUPPLEMENT TO ANNUAL STATEMENTS.] Each insurer 
 27.17  that has fixed indemnity policies in force in this state shall, 
 27.18  as a supplement to the annual statement required by section 
 27.19  60A.13, submit, in a form prescribed by the commissioner, the 
 27.20  experience data for the calendar year showing its incurred 
 27.21  claims, earned premiums, incurred to earned loss ratio, and the 
 27.22  ratio of the actual loss ratio to the expected loss ratio for 
 27.23  each fixed indemnity policy form in force in Minnesota.  The 
 27.24  experience data must be provided on both a Minnesota only and a 
 27.25  national basis.  If in the opinion of the company's actuary, the 
 27.26  deviation of the actual loss ratio from the expected loss ratio 
 27.27  for a policy form is due to unusual reserve fluctuations, 
 27.28  economic conditions, or other nonrecurring conditions, the 
 27.29  insurer should also file that opinion with appropriate 
 27.30  justification.  
 27.31     If the data submitted does not confirm that the insurer has 
 27.32  satisfied the loss ratio requirements of this section, the 
 27.33  commissioner shall notify the insurer in writing of the 
 27.34  deficiency.  The insurer shall have 30 days from the date of 
 27.35  receipt of the commissioner's notice to file amended rates that 
 27.36  comply with this section or a request for an exemption with 
 28.1   appropriate justification.  If the insurer fails to file amended 
 28.2   rates within the prescribed time and the commissioner does not 
 28.3   exempt the policy form from the need for a rate revision, the 
 28.4   commissioner shall order that the insurer's filed rates for the 
 28.5   nonconforming policy be reduced to an amount that would have 
 28.6   resulted in a loss ratio that complied with this section had it 
 28.7   been in effect for the reporting period of the supplement.  The 
 28.8   insurer's failure to file amended rates within the specified 
 28.9   time of the issuance of the commissioner's order amending the 
 28.10  rates does not preclude the insurer from filing an amendment of 
 28.11  its rates at a later time. 
 28.12     Subd. 6.  [PENALTIES.] Each sale of a policy that does not 
 28.13  comply with the loss ratio requirements of this section is 
 28.14  subject to the penalties in sections 72A.17 to 72A.32. 
 28.15     Subd. 7.  [SOLICITATIONS BY MAIL OR MEDIA ADVERTISEMENT.] 
 28.16  For purposes of this section, fixed indemnity policies issued 
 28.17  without the use of an agent as a result of solicitations of 
 28.18  individuals through the mail or mass media advertising, 
 28.19  including both print and broadcast advertising, must be treated 
 28.20  as group policies. 
 28.21     Sec. 25.  Minnesota Statutes 1994, section 62A.136, is 
 28.22  amended to read: 
 28.23     62A.136 [DENTAL AND VISION PLANS PLAN COVERAGE.] 
 28.24     The following provisions do not apply to health plans 
 28.25  providing dental or vision coverage only:  sections 62A.041,; 
 28.26  62A.047,; 62A.149,; 62A.151,; 62A.152,; 62A.154,; 
 28.27  62A.155,; 62A.21, subdivision 2b; 62A.26,; 62A.28,; and 
 28.28  62A.30. 
 28.29     Sec. 26.  Minnesota Statutes 1994, section 62A.14, is 
 28.30  amended to read: 
 28.31     62A.14 [HANDICAPPED CHILDREN.] 
 28.32     Subdivision 1.  [INDIVIDUAL FAMILY POLICIES.] An individual 
 28.33  hospital or medical expense insurance policy delivered or issued 
 28.34  for delivery in this state more than 120 days after May 16, 
 28.35  1969, or an individual health maintenance contract delivered or 
 28.36  issued for delivery in this state after August 1, 1984, which 
 29.1   provides that coverage of a dependent child shall terminate upon 
 29.2   attainment of the limiting age for dependent children specified 
 29.3   in the policy or contract shall also provide in substance that 
 29.4   attainment of such limiting age shall not operate to terminate 
 29.5   the coverage of such child while the child is and continues to 
 29.6   be both (a) incapable of self-sustaining employment by reason of 
 29.7   mental retardation, mental illness or disorder, or physical 
 29.8   handicap and (b) chiefly dependent upon the policyholder for 
 29.9   support and maintenance, provided proof of such incapacity and 
 29.10  dependency is furnished to the insurer or health maintenance 
 29.11  organization by the policyholder or enrollee within 31 days of 
 29.12  the child's attainment of the limiting age and subsequently as 
 29.13  may be required by the insurer or organization but not more 
 29.14  frequently than annually after the two-year period following the 
 29.15  child's attainment of the limiting age.  
 29.16     Subd. 2.  [GROUP POLICIES.] A group hospital or medical 
 29.17  expense insurance policy delivered or issued for delivery in 
 29.18  this state more than 120 days after May 16, 1969, or a group 
 29.19  health maintenance contract delivered or issued for delivery in 
 29.20  this state after August 1, 1984, which provides that coverage of 
 29.21  a dependent child of an employee or other member of the covered 
 29.22  group shall terminate upon attainment of the limiting age for 
 29.23  dependent children specified in the policy or contract shall 
 29.24  also provide in substance that attainment of such limiting age 
 29.25  shall not operate to terminate the coverage of such child while 
 29.26  the child is and continues to be both (a) incapable of 
 29.27  self-sustaining employment by reason of mental retardation, 
 29.28  mental illness or disorder, or physical handicap and (b) chiefly 
 29.29  dependent upon the employee or member for support and 
 29.30  maintenance, provided proof of such incapacity and dependency is 
 29.31  furnished to the insurer or organization by the employee or 
 29.32  member within 31 days of the child's attainment of the limiting 
 29.33  age and subsequently as may be required by the insurer or 
 29.34  organization but not more frequently than annually after the 
 29.35  two-year period following the child's attainment of the limiting 
 29.36  age. 
 30.1      Sec. 27.  Minnesota Statutes 1994, section 62A.141, is 
 30.2   amended to read: 
 30.3      62A.141 [COVERAGE FOR HANDICAPPED DEPENDENTS.] 
 30.4      No group policy or group plan of health and accident 
 30.5   insurance regulated under this chapter, chapter 62C, or 62D, 
 30.6   which provides for dependent coverage may be issued or renewed 
 30.7   in this state after August 1, 1983, unless it covers the 
 30.8   handicapped dependents of the insured, subscriber, or enrollee 
 30.9   of the policy or plan.  For purposes of this section, a 
 30.10  handicapped dependent is a person that is and continues to be 
 30.11  both:  (1) incapable of self-sustaining employment by reason of 
 30.12  mental retardation, mental illness or disorder, or physical 
 30.13  handicap; and (2) chiefly dependent upon the policyholder for 
 30.14  support and maintenance.  Consequently, the policy or plan shall 
 30.15  not contain any provision concerning preexisting condition 
 30.16  limitations, insurability, eligibility, or health underwriting 
 30.17  approval concerning handicapped dependents. 
 30.18     If ordered by the commissioner of commerce, the insurer of 
 30.19  a Minnesota-domiciled nonprofit association which is composed 
 30.20  solely of agricultural members may restrict coverage under this 
 30.21  section to apply only to Minnesota residents. 
 30.22     Sec. 28.  [62A.307] [BREAST CANCER COVERAGE.] 
 30.23     Subdivision 1.  [SCOPE OF COVERAGE.] This section applies 
 30.24  to all health plans as defined in section 62A.011. 
 30.25     Subd. 2.  [REQUIRED COVERAGE.] Every health plan included 
 30.26  in subdivision 1 must provide to each covered person who is a 
 30.27  resident of Minnesota coverage for the treatment of breast 
 30.28  cancer by high-dose chemotherapy with autologous bone marrow 
 30.29  transplantation and for expenses arising from the treatment.  
 30.30     Subd. 3.  [GREATER COINSURANCE OR COPAYMENT PROHIBITED.] 
 30.31  Coverage under this section shall not be subject to any greater 
 30.32  coinsurance or copayment than that applicable to any other 
 30.33  coverage provided by the health plan. 
 30.34     Subd. 4.  [GREATER DEDUCTIBLE PROHIBITED.] Coverage under 
 30.35  this section shall not be subject to any greater deductible than 
 30.36  that applicable to any other coverage provided by the health 
 31.1   plan. 
 31.2      Sec. 29.  Minnesota Statutes 1994, section 62A.31, 
 31.3   subdivision 1h, is amended to read: 
 31.4      Subd. 1h.  [LIMITATIONS ON DENIALS, CONDITIONS, AND PRICING 
 31.5   OF COVERAGE.] No issuer of Medicare supplement policies, 
 31.6   including policies that supplement Medicare issued by health 
 31.7   maintenance organizations or those policies governed by section 
 31.8   1833 or 1876 of the federal Social Security Act, United States 
 31.9   Code, title 42, section 1395, et seq., in this state may impose 
 31.10  preexisting condition limitations or otherwise deny or condition 
 31.11  the issuance or effectiveness of any Medicare supplement 
 31.12  insurance policy form available for sale in this state, nor may 
 31.13  it discriminate in the pricing of such a policy, because of the 
 31.14  health status, claims experience, receipt of health care, or 
 31.15  medical condition, or age of an applicant where an application 
 31.16  for such insurance is submitted during the six-month period 
 31.17  beginning with the first month in which an individual first 
 31.18  enrolled for benefits under Medicare Part B.  This paragraph 
 31.19  applies regardless of whether the individual has attained the 
 31.20  age of 65 years.  If an individual who is enrolled in Medicare 
 31.21  Part B due to disability status is involuntarily disenrolled due 
 31.22  to loss of disability status, the individual is eligible for the 
 31.23  six-month enrollment period provided under this subdivision if 
 31.24  the individual later becomes eligible for and enrolls again in 
 31.25  Medicare Part B. 
 31.26     Sec. 30.  Minnesota Statutes 1994, section 62A.31, 
 31.27  subdivision 1i, is amended to read: 
 31.28     Subd. 1i.  [REPLACEMENT COVERAGE.] If a Medicare supplement 
 31.29  policy or certificate replaces another Medicare supplement 
 31.30  policy or certificate, the issuer of the replacing policy or 
 31.31  certificate shall waive any time periods applicable to 
 31.32  preexisting conditions, waiting periods, elimination periods, 
 31.33  and probationary periods in the new Medicare supplement 
 31.34  policy or certificate for benefits to the extent the time was 
 31.35  spent under the original policy or certificate.  For purposes of 
 31.36  this subdivision, "Medicare supplement policy or certificate" 
 32.1   means all coverage described in section 62A.011, subdivision 4, 
 32.2   clause (10). 
 32.3      Sec. 31.  Minnesota Statutes 1994, section 62A.46, 
 32.4   subdivision 2, is amended to read: 
 32.5      Subd. 2.  [LONG-TERM CARE POLICY.] "Long-term care policy" 
 32.6   means an individual or group policy, certificate, subscriber 
 32.7   contract, or other evidence of coverage that provides benefits 
 32.8   for prescribed long-term care, including nursing facility 
 32.9   services and home care services, pursuant to the requirements of 
 32.10  sections 62A.46 to 62A.56.  A long-term care policy must contain 
 32.11  a designation specifying whether the policy is a long-term care 
 32.12  policy AA or A and a caption stating that the commissioner has 
 32.13  established two categories of long-term care insurance and the 
 32.14  minimum standards for each. 
 32.15     Sections 62A.46, 62A.48, and 62A.52 to 62A.56 do not apply 
 32.16  to a long-term care policy issued to (a) an employer or 
 32.17  employers or to the trustee of a fund established by an employer 
 32.18  where only employees or retirees, and dependents of employees or 
 32.19  retirees, are eligible for coverage or (b) to a labor union or 
 32.20  similar employee organization.  The associations exempted from 
 32.21  the requirements of sections 62A.31 to 62A.44 under 62A.31, 
 32.22  subdivision 1, clause (c) shall not be subject to the provisions 
 32.23  of sections 62A.46 to 62A.56 until July 1, 1988. 
 32.24     Sec. 32.  Minnesota Statutes 1994, section 62A.46, is 
 32.25  amended by adding a subdivision to read: 
 32.26     Subd. 13.  [BENEFIT DAY.] "Benefit day" means each day of 
 32.27  confinement in a nursing facility or each visit for home care 
 32.28  services.  For purposes of section 62A.48, subdivision 1, if the 
 32.29  policyholder receives more than one home care service visit 
 32.30  within a 24-hour period, each visit constitutes one benefit day. 
 32.31     Sec. 33.  Minnesota Statutes 1994, section 62A.48, 
 32.32  subdivision 1, is amended to read: 
 32.33     Subdivision 1.  [POLICY REQUIREMENTS.] No individual or 
 32.34  group policy, certificate, subscriber contract, or other 
 32.35  evidence of coverage of nursing home care or other long-term 
 32.36  care services shall be offered, issued, delivered, or renewed in 
 33.1   this state, whether or not the policy is issued in this state, 
 33.2   unless the policy is offered, issued, delivered, or renewed by a 
 33.3   qualified insurer and the policy satisfies the requirements of 
 33.4   sections 62A.46 to 62A.56.  A long-term care policy must cover 
 33.5   prescribed long-term care in nursing facilities and at least the 
 33.6   prescribed long-term home care services in section 62A.46, 
 33.7   subdivision 4, clauses (1) to (5), provided by a home health 
 33.8   agency.  Coverage under a long-term care policy AA must 
 33.9   include:  a maximum lifetime benefit limit of at least $100,000 
 33.10  for services, and nursing facility and home care coverages must 
 33.11  not be subject to separate lifetime maximums.  Coverage under a 
 33.12  long-term care policy A must include:  a maximum minimum 
 33.13  lifetime benefit limit of at least $50,000 $25,000 for services, 
 33.14  and nursing facility and home care coverages must not be subject 
 33.15  to separate lifetime maximums.  Prior hospitalization may not be 
 33.16  required under a long-term care policy. 
 33.17     Coverage under either The policy designation must cover 
 33.18  preexisting conditions during the first six months of coverage 
 33.19  if the insured was not diagnosed or treated for the particular 
 33.20  condition during the 90 days immediately preceding the effective 
 33.21  date of coverage.  Coverage under either the policy designation 
 33.22  may include a waiting period of up to 90 days before benefits 
 33.23  are paid, but there must be no more than one waiting period per 
 33.24  benefit period; for purposes of this sentence, "days" means can 
 33.25  mean calendar or benefit days.  If benefit days are used, an 
 33.26  appropriate premium reduction and disclosure must be made.  No 
 33.27  policy may exclude coverage for mental or nervous disorders 
 33.28  which have a demonstrable organic cause, such as Alzheimer's and 
 33.29  related dementias.  No policy may require the insured to be 
 33.30  homebound or house confined to receive home care services.  The 
 33.31  policy must include a provision that the plan will not be 
 33.32  canceled or renewal refused except on the grounds of nonpayment 
 33.33  of the premium, provided that the insurer may change the premium 
 33.34  rate on a class basis on any policy anniversary date.  A 
 33.35  provision that the policyholder may elect to have the premium 
 33.36  paid in full at age 65 by payment of a higher premium up to age 
 34.1   65 may be offered.  A provision that the premium would be waived 
 34.2   during any period in which benefits are being paid to the 
 34.3   insured during confinement in a nursing facility must be 
 34.4   included.  A nongroup policyholder may return a policy within 30 
 34.5   days of its delivery and have the premium refunded in full, less 
 34.6   any benefits paid under the policy, if the policyholder is not 
 34.7   satisfied for any reason. 
 34.8      No individual long-term care policy shall be offered or 
 34.9   delivered in this state until the insurer has received from the 
 34.10  insured a written designation of at least one person, in 
 34.11  addition to the insured, who is to receive notice of 
 34.12  cancellation of the policy for nonpayment of premium.  The 
 34.13  insured has the right to designate up to a total of three 
 34.14  persons who are to receive the notice of cancellation, in 
 34.15  addition to the insured.  The form used for the written 
 34.16  designation must inform the insured that designation of one 
 34.17  person is required and that designation of up to two additional 
 34.18  persons is optional and must provide space clearly designated 
 34.19  for listing between one and three persons.  The designation 
 34.20  shall include each person's full name, home address, and 
 34.21  telephone number.  Each time an individual policy is renewed or 
 34.22  continued, the insurer shall notify the insured of the right to 
 34.23  change this written designation. 
 34.24     The insurer may file a policy form that utilizes a plan of 
 34.25  care prepared as provided under section 62A.46, subdivision 5, 
 34.26  clause (1) or (2). 
 34.27     Sec. 34.  Minnesota Statutes 1994, section 62A.48, 
 34.28  subdivision 2, is amended to read: 
 34.29     Subd. 2.  [PER DIEM COVERAGE.] If benefits are provided on 
 34.30  a per diem basis, the minimum daily benefit for care in a 
 34.31  nursing facility must be the lesser of $60 or actual charges 
 34.32  under a long-term care policy AA or the lesser of $40 or actual 
 34.33  charges under a long-term care policy A and the minimum benefit 
 34.34  per visit for home care under a long-term care policy AA or A 
 34.35  must be the lesser of $25 or actual charges.  The home care 
 34.36  services benefit must cover at least seven paid visits per week. 
 35.1      Sec. 35.  Minnesota Statutes 1994, section 62A.50, 
 35.2   subdivision 3, is amended to read: 
 35.3      Subd. 3.  [DISCLOSURES.] No long-term care policy shall be 
 35.4   offered or delivered in this state, whether or not the policy is 
 35.5   issued in this state, and no certificate of coverage under a 
 35.6   group long-term care policy shall be offered or delivered in 
 35.7   this state, unless a statement containing at least the following 
 35.8   information is delivered to the applicant at the time the 
 35.9   application is made: 
 35.10     (1) a description of the benefits and coverage provided by 
 35.11  the policy and the differences between this policy, a 
 35.12  supplemental Medicare policy and the benefits to which an 
 35.13  individual is entitled under parts A and B of Medicare and the 
 35.14  differences between policy designations A and AA; 
 35.15     (2) a statement of the exceptions and limitations in the 
 35.16  policy including the following language, as applicable, in bold 
 35.17  print:  "THIS POLICY DOES NOT COVER ALL NURSING CARE FACILITIES 
 35.18  OR NURSING HOME, HOME CARE, OR ADULT DAY CARE EXPENSES AND DOES 
 35.19  NOT COVER RESIDENTIAL CARE.  READ YOUR POLICY CAREFULLY TO 
 35.20  DETERMINE WHICH FACILITIES AND EXPENSES ARE COVERED BY YOUR 
 35.21  POLICY."; 
 35.22     (3) a statement of the renewal provisions including any 
 35.23  reservation by the insurer of the right to change premiums; 
 35.24     (4) a statement that the outline of coverage is a summary 
 35.25  of the policy issued or applied for and that the policy should 
 35.26  be consulted to determine governing contractual provisions; 
 35.27     (5) an explanation of the policy's loss ratio including at 
 35.28  least the following language:  "This means that, on the average, 
 35.29  policyholders may expect that $........ of every $100 in premium 
 35.30  will be returned as benefits to policyholders over the life of 
 35.31  the contract."; 
 35.32     (6) a statement of the out-of-pocket expenses, including 
 35.33  deductibles and copayments for which the insured is responsible, 
 35.34  and an explanation of the specific out-of-pocket expenses that 
 35.35  may be accumulated toward any out-of-pocket maximum as specified 
 35.36  in the policy; 
 36.1      (7) the following language, in bold print:  "YOUR PREMIUMS 
 36.2   CAN BE INCREASED IN THE FUTURE.  THE RATE SCHEDULE THAT LISTS 
 36.3   YOUR PREMIUM NOW CAN CHANGE."; 
 36.4      (8) the following language, if applicable, in bold print:  
 36.5   "IF YOU ARE NOT HOSPITALIZED PRIOR TO ENTERING A NURSING HOME OR 
 36.6   NEEDING HOME CARE, YOU WILL NOT BE ABLE TO COLLECT ANY BENEFITS 
 36.7   UNDER THIS PARTICULAR POLICY."; and 
 36.8      (9) a signed and completed copy of the application for 
 36.9   insurance is left with the applicant at the time the application 
 36.10  is made. 
 36.11     Sec. 36.  [62A.616] [COVERAGE FOR NURSING HOME CARE FOR 
 36.12  TERMINALLY ILL AND OTHER SERVICES.] 
 36.13     An insurer may offer a health plan that covers nursing home 
 36.14  care for the terminally ill, personal care attendants, and 
 36.15  hospice care.  For the purposes of this section, "terminally 
 36.16  ill" means a diagnosis certified by a physician that a person 
 36.17  has less than six months to live. 
 36.18     Sec. 37.  Minnesota Statutes 1994, section 62C.14, 
 36.19  subdivision 5, is amended to read: 
 36.20     Subd. 5.  [HANDICAPPED DEPENDENTS.] A subscriber's 
 36.21  individual contract or any group contract delivered or issued 
 36.22  for delivery in this state and providing that coverage of a 
 36.23  dependent child of the subscriber or a dependent child of a 
 36.24  covered group member shall terminate upon attainment of a 
 36.25  specified age shall also provide in substance that attainment of 
 36.26  that age shall not terminate coverage while the child is (a) 
 36.27  incapable of self-sustaining employment by reason of mental 
 36.28  retardation, mental illness or disorder, or physical handicap, 
 36.29  and (b) chiefly dependent upon the subscriber or employee for 
 36.30  support and maintenance, provided proof of incapacity and 
 36.31  dependency is furnished by the subscriber within 31 days of 
 36.32  attainment of the age, and subsequently as required by the 
 36.33  corporation, but not more frequently than annually after a two 
 36.34  year period following attainment of the age. 
 36.35     Sec. 38.  Minnesota Statutes 1994, section 62C.14, 
 36.36  subdivision 14, is amended to read: 
 37.1      Subd. 14.  No subscriber's individual contract or any group 
 37.2   contract which provides for coverage of family members or other 
 37.3   dependents of a subscriber or of an employee or other group 
 37.4   member of a group subscriber, shall be renewed, delivered, or 
 37.5   issued for delivery in this state unless such contract includes 
 37.6   as covered family members or dependents any newborn infants, 
 37.7   including dependent grandchildren, immediately from the moment 
 37.8   of birth and thereafter which insurance shall provide coverage 
 37.9   for illness, injury, congenital malformation or premature birth. 
 37.10     Sec. 39.  Minnesota Statutes 1994, section 62D.02, 
 37.11  subdivision 8, is amended to read: 
 37.12     Subd. 8.  "Health maintenance contract" means any contract 
 37.13  whereby a health maintenance organization agrees to provide 
 37.14  comprehensive health maintenance services to enrollees, provided 
 37.15  that the contract may contain reasonable enrollee copayment 
 37.16  provisions.  An individual or group health maintenance contract 
 37.17  may contain the copayment and deductible provisions specified in 
 37.18  this subdivision.  Copayment and deductible provisions in group 
 37.19  contracts shall not discriminate on the basis of age, sex, race, 
 37.20  length of enrollment in the plan, or economic status; and during 
 37.21  every open enrollment period in which all offered health benefit 
 37.22  plans, including those subject to the jurisdiction of the 
 37.23  commissioners of commerce or health, fully participate without 
 37.24  any underwriting restrictions, copayment and deductible 
 37.25  provisions shall not discriminate on the basis of preexisting 
 37.26  health status.  In no event shall the sum of the annual 
 37.27  copayment copayments and deductible exceed the maximum 
 37.28  out-of-pocket expenses allowable for a number three 
 37.29  qualified insurance policy plan under section 62E.06, nor shall 
 37.30  that sum exceed $5,000 per family.  The annual deductible must 
 37.31  not exceed $1,000 per person.  The annual deductible must not 
 37.32  apply to preventive health services as described in Minnesota 
 37.33  Rules, part 4685.0801, subpart 8.  Where sections 62D.01 to 
 37.34  62D.30 permit a health maintenance organization to contain 
 37.35  reasonable copayment provisions for preexisting health status, 
 37.36  these provisions may vary with respect to length of enrollment 
 38.1   in the plan.  Any contract may provide for health care services 
 38.2   in addition to those set forth in subdivision 7. 
 38.3      Sec. 40.  Minnesota Statutes 1994, section 62E.02, 
 38.4   subdivision 7, is amended to read: 
 38.5      Subd. 7.  [DEPENDENT.] "Dependent" means a spouse or 
 38.6   unmarried child under the age of 19 years, a dependent child who 
 38.7   is a student under the age of 25 and financially dependent upon 
 38.8   the parent, or a dependent child of any age who is disabled. 
 38.9      Sec. 41.  Minnesota Statutes 1994, section 62E.12, is 
 38.10  amended to read: 
 38.11     62E.12 [MINIMUM BENEFITS OF COMPREHENSIVE HEALTH INSURANCE 
 38.12  PLAN.] 
 38.13     The association through its comprehensive health insurance 
 38.14  plan shall offer policies which provide the benefits of a number 
 38.15  one qualified plan and a number two qualified plan, except that 
 38.16  the maximum lifetime benefit on these plans shall be 
 38.17  $1,000,000 $1,500,000, and an extended basic plan and a basic 
 38.18  Medicare plan as described in sections 62A.31 to 62A.44 and 
 38.19  62E.07.  The requirement that a policy issued by the association 
 38.20  must be a qualified plan is satisfied if the association 
 38.21  contracts with a preferred provider network and the level of 
 38.22  benefits for services provided within the network satisfies the 
 38.23  requirements of a qualified plan.  If the association uses a 
 38.24  preferred provider network, payments to nonparticipating 
 38.25  providers must meet the minimum requirements of section 72A.20, 
 38.26  subdivision 15.  They shall offer health maintenance 
 38.27  organization contracts in those areas of the state where a 
 38.28  health maintenance organization has agreed to make the coverage 
 38.29  available and has been selected as a writing carrier.  
 38.30  Notwithstanding the provisions of section 62E.06 the state plan 
 38.31  shall exclude coverage of services of a private duty nurse other 
 38.32  than on an inpatient basis and any charges for treatment in a 
 38.33  hospital located outside of the state of Minnesota in which the 
 38.34  covered person is receiving treatment for a mental or nervous 
 38.35  disorder, unless similar treatment for the mental or nervous 
 38.36  disorder is medically necessary, unavailable in Minnesota and 
 39.1   provided upon referral by a licensed Minnesota medical 
 39.2   practitioner. 
 39.3      Sec. 42.  Minnesota Statutes 1994, section 62F.02, 
 39.4   subdivision 2, is amended to read: 
 39.5      Subd. 2.  [DIRECTORS.] The association shall have a board 
 39.6   of directors composed of 11 persons chosen annually for a term 
 39.7   of four years as follows:  five persons elected by members of 
 39.8   the association at a meeting called by the commissioner; three 
 39.9   members who are health care providers appointed by the 
 39.10  commissioner prior to the election by the association; and three 
 39.11  public members, as defined in section 214.02, appointed by the 
 39.12  governor prior to the election by the association. 
 39.13     Sec. 43.  Minnesota Statutes 1994, section 62I.09, 
 39.14  subdivision 2, is amended to read: 
 39.15     Subd. 2.  [TERMS AND VACANCIES.] In the event of a member's 
 39.16  inability to continue to serve, the commissioner shall appoint a 
 39.17  replacement.  The committee shall elect a chair and vice-chair 
 39.18  from among the members.  The term of each member is one year 
 39.19  commencing four years beginning on June 1, except that the first 
 39.20  members to be appointed to the committee shall serve from the 
 39.21  date of their appointment until June 1 immediately following 
 39.22  their appointment. 
 39.23     Sec. 44.  Minnesota Statutes 1994, section 62L.02, 
 39.24  subdivision 16, is amended to read: 
 39.25     Subd. 16.  [HEALTH CARRIER.] "Health carrier" means an 
 39.26  insurance company licensed under chapter 60A to offer, sell, or 
 39.27  issue a policy of accident and sickness insurance as defined in 
 39.28  section 62A.01; a health service plan licensed under chapter 
 39.29  62C; a health maintenance organization licensed under chapter 
 39.30  62D; a community integrated services network and an integrated 
 39.31  service network operating under chapter 62N; a fraternal benefit 
 39.32  society operating under chapter 64B; a joint self-insurance 
 39.33  employee health plan operating under chapter 62H; and a multiple 
 39.34  employer welfare arrangement, as defined in United States Code, 
 39.35  title 29, section 1002(40), as amended.  For purposes of 
 39.36  sections 62L.01 to 62L.12, but not for purposes of sections 
 40.1   62L.13 to 62L.22, "health carrier" includes a community 
 40.2   integrated service network or integrated service network 
 40.3   licensed under chapter 62N.  Any use of this definition in 
 40.4   another chapter by reference does not include a community 
 40.5   integrated service network or integrated service network, unless 
 40.6   otherwise specified.  For the purpose of this chapter, companies 
 40.7   that are affiliated companies or that are eligible to file a 
 40.8   consolidated tax return must be treated as one health carrier, 
 40.9   except that any insurance company or health service plan 
 40.10  corporation that is an affiliate of a health maintenance 
 40.11  organization located in Minnesota, or any health maintenance 
 40.12  organization located in Minnesota that is an affiliate of an 
 40.13  insurance company or health service plan corporation, or any 
 40.14  health maintenance organization that is an affiliate of another 
 40.15  health maintenance organization in Minnesota, may treat the 
 40.16  health maintenance organization as a separate health carrier. 
 40.17     Sec. 45.  Minnesota Statutes 1994, section 62L.03, 
 40.18  subdivision 5, is amended to read: 
 40.19     Subd. 5.  [CANCELLATIONS AND FAILURES TO RENEW.] (a) No 
 40.20  health carrier shall cancel, decline to issue, or fail to renew 
 40.21  a health benefit plan as a result of the claim experience or 
 40.22  health status of the persons covered or to be covered by the 
 40.23  health benefit plan.  A health carrier may cancel or fail to 
 40.24  renew a health benefit plan: 
 40.25     (1) for nonpayment of the required premium; 
 40.26     (2) for fraud or misrepresentation by the small employer, 
 40.27  or, with respect to coverage of an individual eligible employee 
 40.28  or dependent, fraud or misrepresentation by the eligible 
 40.29  employee or dependent, with respect to eligibility for coverage 
 40.30  or any other material fact; 
 40.31     (3) if eligible employee participation during the preceding 
 40.32  calendar year declines to less than 75 percent, subject to the 
 40.33  waiver of coverage provision in subdivision 3; 
 40.34     (4) if the employer fails to comply with the minimum 
 40.35  contribution percentage required under subdivision 3; 
 40.36     (5) if the health carrier ceases to do business in the 
 41.1   small employer market under section 62L.09; 
 41.2      (6) if a failure to renew is based upon the health 
 41.3   carrier's decision to discontinue the health benefit plan form 
 41.4   previously issued to the small employer, but only if the health 
 41.5   carrier permits each small employer covered under the prior form 
 41.6   to switch to its choice of any other health benefit plan offered 
 41.7   by the health carrier, without any underwriting restrictions 
 41.8   that would not have been permitted for renewal purposes; or 
 41.9      (7) for any other reasons or grounds expressly permitted by 
 41.10  the respective licensing laws and regulations governing a health 
 41.11  carrier, including, but not limited to, service area 
 41.12  restrictions imposed on health maintenance organizations under 
 41.13  section 62D.03, subdivision 4, paragraph (m), to the extent that 
 41.14  these grounds are not expressly inconsistent with this chapter. 
 41.15     (b) A health carrier need not renew a health benefit plan, 
 41.16  and shall not renew a small employer plan, if an employer ceases 
 41.17  to qualify as a small employer as defined in section 62L.02.  If 
 41.18  a health benefit plan, other than a small employer plan, 
 41.19  provides terms of renewal that do not exclude an employer that 
 41.20  is no longer a small employer, the health benefit plan may be 
 41.21  renewed according to its own terms.  If a health carrier issues 
 41.22  or renews a health plan to an employer that is no longer a small 
 41.23  employer, without interruption of coverage, the health plan is 
 41.24  subject to section 60A.082.  Between July 1, 1994, and June 30, 
 41.25  1995, a health benefit plan in force during this time may be 
 41.26  renewed, if the number of employees exceeds two, but does not 
 41.27  exceed 49 employees. 
 41.28     Sec. 46.  Minnesota Statutes 1994, section 65A.01, is 
 41.29  amended by adding a subdivision to read: 
 41.30     Subd. 3b.  [RESCISSION AND VOIDABILITY.] This policy must 
 41.31  not be rescinded or voided except where the insured has 
 41.32  willfully and with intent to defraud concealed or misrepresented 
 41.33  a material fact or circumstance concerning this insurance or the 
 41.34  subject of this insurance or the interests of the insured in 
 41.35  this insurance.  This provision must not operate to defeat a 
 41.36  claim by a third party or a minor child of the named insured for 
 42.1   damage or loss for which the policy provides coverage. 
 42.2      Sec. 47.  Minnesota Statutes 1994, section 65B.06, 
 42.3   subdivision 3, is amended to read: 
 42.4      Subd. 3.  With respect to all automobiles not included in 
 42.5   subdivisions 1 and 2, the facility shall provide: 
 42.6      (1) Only the insurance the minimum limits of coverage 
 42.7   required by law section 65B.49, subdivisions 2, 3, 3a, and 4a, 
 42.8   or higher limits of liability coverage as recommended by the 
 42.9   governing committee and approved by the commissioner; 
 42.10     (2) for the equitable distribution of qualified applicants 
 42.11  for this coverage among the members in accord with the 
 42.12  applicable participation ratio, or among these insurance 
 42.13  companies as selected under the provisions of the plan of 
 42.14  operation; and 
 42.15     (3) for a school district or contractor transporting school 
 42.16  children under contract with a school district, that amount of 
 42.17  automobile liability insurance coverage, not to exceed 
 42.18  $1,000,000, required by the school district by resolution or 
 42.19  contract, or that portion of such $1,000,000 of coverage for 
 42.20  which the school district or contractor applies and for which it 
 42.21  is eligible under section 65B.10. 
 42.22     Sec. 48.  Minnesota Statutes 1994, section 65B.08, 
 42.23  subdivision 1, is amended to read: 
 42.24     Subdivision 1.  [FILING.] As agent for members, the 
 42.25  facility shall file with the commissioner all manuals of 
 42.26  classification, all manuals of rules and rates, all rating 
 42.27  plans, and any modifications of same, proposed for use for 
 42.28  private passenger nonfleet automobile insurance placed through 
 42.29  the facility.  The classifications, rules and rates and any 
 42.30  amendments thereto shall be subject to prior written approval by 
 42.31  the commissioner.  Rates, surcharge points, and increased limits 
 42.32  factors filed by the facility shall not be excessive, 
 42.33  inadequate, or unfairly discriminatory.  No other entity, 
 42.34  service or organization shall make filings for the facility or 
 42.35  the members to apply to insurance placed through the facility. 
 42.36     Sec. 49.  Minnesota Statutes 1994, section 65B.09, 
 43.1   subdivision 1, is amended to read: 
 43.2      Subdivision 1.  [AGENTS' RESPONSIBILITY.] Every person 
 43.3   licensed under chapter 60K sections 60K.02 and 60K.03 who is 
 43.4   authorized to solicit, negotiate or effect automobile insurance 
 43.5   on behalf of any member shall: 
 43.6      (1) offer to place coverage through the facility for any 
 43.7   qualified applicant who is ineligible or unacceptable for 
 43.8   coverage in the insurer or insurers for whom the agent is 
 43.9   authorized to solicit, negotiate or effect automobile 
 43.10  insurance.  Provided, that the failure of an agent to make such 
 43.11  an offer to a qualified applicant shall not subject the agent to 
 43.12  any liability to the applicant; 
 43.13     (2) forward to the facility all applications and any 
 43.14  deposit premiums which are required by the plan of operation, 
 43.15  rules and procedures of the facility, if the qualified applicant 
 43.16  accepts the offer to have coverage placed through the facility; 
 43.17     (3) be entitled to receive compensation for placing 
 43.18  insurance through the facility at the uniform rates of 
 43.19  compensation as provided in the plan of operation, and all 
 43.20  members shall pay such compensation. 
 43.21     Sec. 50.  Minnesota Statutes 1994, section 65B.10, 
 43.22  subdivision 3, is amended to read: 
 43.23     Subd. 3.  [REVIEW OF INSUREDS.] At least annually, every 
 43.24  member shall review every private passenger nonfleet applicant 
 43.25  which it insures through the facility and determine whether or 
 43.26  not such applicant is acceptable for voluntary insurance at a 
 43.27  rate lower than the facility rate.  If such applicant is 
 43.28  acceptable, the member shall make an offer to insure the 
 43.29  applicant under voluntary coverage at such lower rate.  
 43.30     Sec. 51.  Minnesota Statutes 1994, section 65B.61, 
 43.31  subdivision 1, is amended to read: 
 43.32     Subdivision 1.  Basic economic loss benefits shall be 
 43.33  primary with respect to benefits, except for those paid or 
 43.34  payable under a workers' compensation law, which any person 
 43.35  receives or is entitled to receive from any other source as a 
 43.36  result of injury arising out of the maintenance or use of a 
 44.1   motor vehicle.  Where workers' compensation benefits paid or 
 44.2   payable are primary, the reparation obligor shall make an 
 44.3   appropriate rebate or reduction in the premiums of the plan of 
 44.4   reparation security.  The amount of the rebate or rate reduction 
 44.5   shall be not less than the amount of the projected reduction in 
 44.6   benefits and claims for which the reparation obligor will be 
 44.7   liable on that class of risks.  The projected reduction or 
 44.8   rebate in benefits and claims shall be based upon sound 
 44.9   actuarial principles.  
 44.10     Sec. 52.  Minnesota Statutes 1994, section 72A.20, 
 44.11  subdivision 13, is amended to read: 
 44.12     Subd. 13.  [REFUSAL TO RENEW.] Refusing to renew, declining 
 44.13  to offer or write, or charging differential rates for an 
 44.14  equivalent amount of homeowner's insurance coverage, as defined 
 44.15  by section 65A.27, for property located in a town or statutory 
 44.16  or home rule charter city, in which the insurer offers to sell 
 44.17  or writes homeowner's insurance, solely because:  
 44.18     (a) of the geographic area in which the property is 
 44.19  located; 
 44.20     (b) of the age of the primary structure sought to be 
 44.21  insured; 
 44.22     (c) the insured or prospective insured was denied coverage 
 44.23  of the property by another insurer, whether by cancellation, 
 44.24  nonrenewal or declination to offer coverage, for a reason other 
 44.25  than those specified in section 65A.01, subdivision 3a, clauses 
 44.26  (a) to (e); or 
 44.27     (d) the property of the insured or prospective insured has 
 44.28  been insured under the Minnesota FAIR plan act, shall constitute 
 44.29  an unfair method of competition and an unfair and deceptive act 
 44.30  or practice.  
 44.31     This subdivision prohibits an insurer from filing or 
 44.32  charging different rates for different zip code areas within the 
 44.33  same town or statutory or home rule charter city. 
 44.34     This subdivision shall not prohibit the insurer from 
 44.35  applying underwriting or rating standards which the insurer 
 44.36  applies generally in all other locations in the state and which 
 45.1   are not specifically prohibited by clauses (a) to (d).  Such 
 45.2   underwriting or rating standards shall specifically include but 
 45.3   not be limited to standards based upon the proximity of the 
 45.4   insured property to an extraordinary hazard or based upon the 
 45.5   quality or availability of fire protection services or based 
 45.6   upon the density or concentration of the insurer's risks.  
 45.7   Clause (b) shall not prohibit the use of rating standards based 
 45.8   upon the age of the insured structure's plumbing, electrical, 
 45.9   heating or cooling system or other part of the structure, the 
 45.10  age of which affects the risk of loss.  Any insurer's failure to 
 45.11  comply with section 65A.29, subdivisions 2 to 4, either (1) by 
 45.12  failing to give an insured or applicant the required notice or 
 45.13  statement or (2) by failing to state specifically a bona fide 
 45.14  underwriting or other reason for the refusal to write shall 
 45.15  create a presumption that the insurer has violated this 
 45.16  subdivision.  
 45.17     Sec. 53.  Minnesota Statutes 1994, section 72A.20, is 
 45.18  amended by adding a subdivision to read: 
 45.19     Subd. 32.  [SUITABILITY OF INSURANCE FOR CUSTOMER.] In 
 45.20  recommending or issuing life, endowment, individual accident and 
 45.21  sickness, long-term care, annuity, life-endowment, or Medicare 
 45.22  supplement insurance to a customer, an insurer, either directly 
 45.23  or through its agent, must have reasonable grounds for believing 
 45.24  that the recommendation is suitable for the customer.  
 45.25     In the case of group insurance marketed on a direct 
 45.26  response basis without the use of direct agent contact, this 
 45.27  subdivision is satisfied if the insurer has reasonable grounds 
 45.28  to believe that the insurance offered is generally suitable for 
 45.29  the group to whom the offer is made. 
 45.30     Sec. 54.  Minnesota Statutes 1994, section 72B.05, is 
 45.31  amended to read: 
 45.32     72B.05 [NONRESIDENTS.] 
 45.33     A nonresident person may become licensed under sections 
 45.34  72B.01 to 72B.14, provided that the person meets all of the 
 45.35  requirements of sections 72B.01 to 72B.14, and complies with 
 45.36  their provisions, and, on a form prescribed by the commissioner, 
 46.1   appoints the commissioner as the attorney upon whom may be 
 46.2   served all legal process issued in connection with any action or 
 46.3   proceeding brought or pending in this state against or involving 
 46.4   the licensee and relating to transactions under the license; the 
 46.5   appointment shall be irrevocable and shall continue so long as 
 46.6   any such action or proceeding could arise or exist.  
 46.7      Duplicate copies Service of process shall be served upon 
 46.8   the commissioner, accompanied by payment of the fee specified in 
 46.9   section 60A.14, subdivision 1(3)(d).  Upon receiving such 
 46.10  service, the commissioner shall promptly forward a copy thereof 
 46.11  by registered or certified mail, with return receipt requested, 
 46.12  to the nonresident licensee at that person's last known 
 46.13  address.  Process served upon the commissioner in this manner 
 46.14  shall for all purposes constitute personal service thereof upon 
 46.15  the licensee must be made in compliance with section 45.028, 
 46.16  subdivision 2.  
 46.17     Sec. 55.  Minnesota Statutes 1994, section 79.251, 
 46.18  subdivision 5, is amended to read: 
 46.19     Subd. 5.  [ASSESSMENTS.] The commissioner shall assess all 
 46.20  insurers licensed pursuant to section 60A.06, subdivision 1, 
 46.21  clause (5), paragraph (b) an amount sufficient to fully fund the 
 46.22  obligations of the assigned risk plan, if the commissioner 
 46.23  determines that the assets of the assigned risk plan are 
 46.24  insufficient to meet its obligations.  The assessment of each 
 46.25  insurer shall be in a proportion equal to the proportion which 
 46.26  the amount of compensation insurance written in this state 
 46.27  during the preceding calendar year by that insurer bears to the 
 46.28  total compensation insurance written in this state during the 
 46.29  preceding calendar year by all licensed insurers.  
 46.30     Amounts assessed under this subdivision are considered a 
 46.31  liability of the assigned risk plan, to be repaid upon 
 46.32  dissolution of the plan. 
 46.33     Sec. 56.  Minnesota Statutes 1994, section 79.251, is 
 46.34  amended by adding a subdivision to read: 
 46.35     Subd. 8.  [DISSOLUTION.] Upon the dissolution of the 
 46.36  assigned risk plan, the commissioner shall proceed to wind up 
 47.1   the affairs of the plan, settle its accounts, and dispose of its 
 47.2   assets.  The assets and property of the assigned risk plan must 
 47.3   be applied and distributed in the following order of priority: 
 47.4      (1) to the establishment of reserves for claims under 
 47.5   policies and contracts of coverage issued by the assigned risk 
 47.6   plan before termination; 
 47.7      (2) to the payment of all debts and liabilities of the 
 47.8   assigned risk plan, including the repayment of loans and 
 47.9   assessments; 
 47.10     (3) to the establishment of reserves considered necessary 
 47.11  by the commissioner for contingent liabilities or obligations of 
 47.12  the assigned risk plan other than claims arising under policies 
 47.13  and contracts of coverage; and 
 47.14     (4) to the state of Minnesota. 
 47.15     If the commissioner determines that the assets of the 
 47.16  assigned risk plan are insufficient to meet its obligations 
 47.17  under clauses (1), (2), and (3), excluding the repayment of 
 47.18  assessments, the commissioner shall assess all insurers licensed 
 47.19  pursuant to section 60A.06, subdivision 1, clause (5), paragraph 
 47.20  (b), an amount sufficient to fully fund these obligations. 
 47.21     Sec. 57.  Minnesota Statutes 1994, section 79.34, 
 47.22  subdivision 2, is amended to read: 
 47.23     Subd. 2.  [LOSSES; RETENTION LIMITS.] The reinsurance 
 47.24  association shall provide and each member shall accept 
 47.25  indemnification for 100 percent of the amount of ultimate loss 
 47.26  sustained in each loss occurrence relating to one or more claims 
 47.27  arising out of a single compensable event, including aggregate 
 47.28  losses related to a single event or occurrence which constitutes 
 47.29  a single loss occurrence, under chapter 176 on and after October 
 47.30  1, 1979, in excess of $300,000 or $100,000 a low, a high, or a 
 47.31  super retention limit, at the option of the member.  In case of 
 47.32  occupational disease causing disablement on and after October 1, 
 47.33  1979, each person suffering disablement due to occupational 
 47.34  disease is considered to be involved in a separate loss 
 47.35  occurrence.  The lower retention limit shall be increased to the 
 47.36  nearest $10,000, on January 1, 1982 and on each January 1 
 48.1   thereafter by the percentage increase in the statewide average 
 48.2   weekly wage, as determined in accordance with section 176.011, 
 48.3   subdivision 20.  On January 1, 1982 and on each January 1 
 48.4   thereafter, the higher retention limit shall be increased by the 
 48.5   amount necessary to retain a $200,000 difference between the two 
 48.6   retention limits.  On January 1, 1995, the lower retention limit 
 48.7   is $250,000, which shall also be known as the 1995 base 
 48.8   retention limit.  On each January 1 thereafter, the cumulative 
 48.9   annual percentage changes in the statewide average weekly wage 
 48.10  after October 1, 1994, as determined in accordance with section 
 48.11  176.011, subdivision 20, shall first be multiplied by the 1995 
 48.12  base retention limit, the result of which shall then be added to 
 48.13  the 1995 base retention limit.  The resulting figure shall be 
 48.14  rounded to the nearest $10,000, yielding the low retention limit 
 48.15  for that year, provided that the low retention limit shall not 
 48.16  be reduced in any year.  The high retention limit shall be two 
 48.17  times the low retention limit and shall be adjusted when the low 
 48.18  retention limit is adjusted.  The super retention period shall 
 48.19  be four times the low retention period and shall be adjusted 
 48.20  when the low retention limit is adjusted.  Ultimate loss as used 
 48.21  in this section means the actual loss amount which a member is 
 48.22  obligated to pay and which is paid by the member for workers' 
 48.23  compensation benefits payable under chapter 176 and shall not 
 48.24  include claim expenses, assessments, damages or penalties.  For 
 48.25  losses incurred on or after January 1, 1979, any amounts paid by 
 48.26  a member pursuant to sections 176.183, 176.221, 176.225, and 
 48.27  176.82 shall not be included in ultimate loss and shall not be 
 48.28  indemnified by the reinsurance association.  A loss is incurred 
 48.29  by the reinsurance association on the date on which the accident 
 48.30  or other compensable event giving rise to the loss occurs, and a 
 48.31  member is liable for a loss up to its retention limit in effect 
 48.32  at the time that the loss was incurred, except that members 
 48.33  which are determined by the reinsurance association to be 
 48.34  controlled by or under common control with another member, and 
 48.35  which are liable for claims from one or more employees entitled 
 48.36  to compensation for a single compensable event, including 
 49.1   aggregate losses relating to a single loss occurrence, may 
 49.2   aggregate their losses and obtain indemnification from the 
 49.3   reinsurance association for the aggregate losses in excess of 
 49.4   the higher highest retention limit selected by any of the 
 49.5   members in effect at the time the loss was incurred.  Each 
 49.6   member is liable for payment of its ultimate loss and shall be 
 49.7   entitled to indemnification from the reinsurance association for 
 49.8   the ultimate loss in excess of the member's retention limit in 
 49.9   effect at the time of the loss occurrence. 
 49.10     A member that chooses the higher high or super retention 
 49.11  limit shall retain the liability for all losses below the higher 
 49.12  chosen retention limit itself and shall not transfer the 
 49.13  liability to any other entity or reinsure or otherwise contract 
 49.14  for reimbursement or indemnification for losses below its 
 49.15  retention limit, except in the following cases:  (a) when the 
 49.16  reinsurance or contract is with another member which, directly 
 49.17  or indirectly, through one or more intermediaries, control or 
 49.18  are controlled by or are under common control with the member; 
 49.19  (b) when the reinsurance or contract provides for reimbursement 
 49.20  or indemnification of a member if and only if the total of all 
 49.21  claims which the member pays or incurs, but which are not 
 49.22  reimbursable or subject to indemnification by the reinsurance 
 49.23  association for a given period of time, exceeds a dollar value 
 49.24  or percentage of premium written or earned and stated in the 
 49.25  reinsurance agreement or contract; (c) when the reinsurance or 
 49.26  contract is a pooling arrangement with other insurers where 
 49.27  liability of the member to pay claims pursuant to chapter 176 is 
 49.28  incidental to participation in the pool and not as a result of 
 49.29  providing workers' compensation insurance to employers on a 
 49.30  direct basis under chapter 176; (d) when the reinsurance or 
 49.31  contract is limited to all the claims of a specific insured of a 
 49.32  member which are reimbursed or indemnified by a reinsurer which, 
 49.33  directly or indirectly, through one or more intermediaries, 
 49.34  controls or is controlled by or is under common control with the 
 49.35  insured of the member so long as any subsequent contract or 
 49.36  reinsurance of the reinsurer relating to the claims of the 
 50.1   insured of a member is not inconsistent with the bases of 
 50.2   exception provided under clauses (a), (b) and (c); or (e) when 
 50.3   the reinsurance or contract is limited to all claims of a 
 50.4   specific self-insurer member which are reimbursed or indemnified 
 50.5   by a reinsurer which, directly or indirectly, through one or 
 50.6   more intermediaries, controls or is controlled by or is under 
 50.7   common control with the self-insurer member so long as any 
 50.8   subsequent contract or reinsurance of the reinsurer relating to 
 50.9   the claims of the self-insurer member are not inconsistent with 
 50.10  the bases for exception provided under clauses (a), (b) and (c). 
 50.11     Whenever it appears to the commissioner of labor and 
 50.12  industry that any member that chooses the higher high or super 
 50.13  retention limit has participated in the transfer of liability to 
 50.14  any other entity or reinsured or otherwise contracted for 
 50.15  reimbursement or indemnification of losses below its retention 
 50.16  limit in a manner inconsistent with the bases for exception 
 50.17  provided under clauses (a), (b), (c), (d), and (e), the 
 50.18  commissioner may, after giving notice and an opportunity to be 
 50.19  heard, order the member to pay to the state of Minnesota an 
 50.20  amount not to exceed twice the difference between the 
 50.21  reinsurance premium for the higher and lower high or super 
 50.22  retention limit, as appropriate, and the low retention limit 
 50.23  applicable to the member for each year in which the prohibited 
 50.24  reinsurance or contract was in effect.  Any member subject to 
 50.25  this penalty provision shall continue to be bound by its 
 50.26  selection of the higher high or super retention limit for 
 50.27  purposes of membership in the reinsurance association.  
 50.28     Sec. 58.  Minnesota Statutes 1994, section 79.35, is 
 50.29  amended to read: 
 50.30     79.35 [DUTIES; RESPONSIBILITIES; POWERS.] 
 50.31     The reinsurance association shall do the following on 
 50.32  behalf of its members: 
 50.33     (a) Assume 100 percent of the liability as provided in 
 50.34  section 79.34; 
 50.35     (b) Establish procedures by which members shall promptly 
 50.36  report to the reinsurance association each claim which, on the 
 51.1   basis of the injury sustained, may reasonably be anticipated to 
 51.2   involve liability to the reinsurance association if the member 
 51.3   is held liable under chapter 176.  Solely for the purpose of 
 51.4   reporting claims, the member shall in all instances consider 
 51.5   itself legally liable for the injury.  The member shall advise 
 51.6   the reinsurance association of subsequent developments likely to 
 51.7   materially affect the interest of the reinsurance association in 
 51.8   the claim; 
 51.9      (c) Maintain relevant loss and expense data relative to all 
 51.10  liabilities of the reinsurance association and require each 
 51.11  member to furnish statistics in connection with liabilities of 
 51.12  the reinsurance association at the times and in the form and 
 51.13  detail as may be required by the plan of operation; 
 51.14     (d) Calculate and charge to members a total premium 
 51.15  sufficient to cover the expected liability which the reinsurance 
 51.16  association will incur in excess of the higher retention limit 
 51.17  but less than the prefunded limit, together with incurred or 
 51.18  estimated to be incurred operating and administrative expenses 
 51.19  for the period to which this premium applies and actual claim 
 51.20  payments to be made by members, during the period to which this 
 51.21  premium applies, for claims in excess of the prefunded limit in 
 51.22  effect at the time the loss was incurred.  Each member shall be 
 51.23  charged a premium established by the board as sufficient to 
 51.24  cover the reinsurance association's incurred liabilities and 
 51.25  expenses between the member's selected retention limit and the 
 51.26  prefunded limit.  The prefunded limit shall be $2,500,000 on and 
 51.27  after October 1, 1979, provided that the prefunded limit shall 
 51.28  be increased on January 1, 1983 and on each January 1 thereafter 
 51.29  by the percentage increase in the statewide average weekly wage, 
 51.30  to the nearest $100,000, as determined in accordance with 
 51.31  section 176.011, subdivision 20 times the lower retention limit 
 51.32  established in section 79.34, subdivision 2.  Each member shall 
 51.33  be charged a proportion of the total premium calculated for its 
 51.34  selected retention limit in an amount equal to its proportion of 
 51.35  the exposure base of all members during the period to which the 
 51.36  reinsurance association premium will apply.  The exposure base 
 52.1   shall be determined by the board and is subject to the approval 
 52.2   of the commissioner of labor and industry.  In determining the 
 52.3   exposure base, the board shall consider, among other things, 
 52.4   equity, administrative convenience, records maintained by 
 52.5   members, amenability to audit, and degree of risk 
 52.6   refinement.  Each member exercising the lower retention option 
 52.7   shall also be charged a premium established by the board as 
 52.8   sufficient to cover incurred or estimated to be incurred claims 
 52.9   for the liability the reinsurance association is likely to incur 
 52.10  between the lower and higher retention limits for the period to 
 52.11  which the premium applies.  Each member shall also be charged a 
 52.12  premium determined by the board to equitably distribute excess 
 52.13  or deficient premiums from previous periods including any excess 
 52.14  or deficient premiums resulting from a retroactive change in the 
 52.15  prefunded limit.  The premiums charged to members shall not be 
 52.16  unfairly discriminatory as defined in section 79.074.  All 
 52.17  premiums shall be approved by the commissioner of labor and 
 52.18  industry; 
 52.19     (e) Require and accept the payment of premiums from members 
 52.20  of the reinsurance association; 
 52.21     (f) Receive and distribute all sums required by the 
 52.22  operation of the reinsurance association; 
 52.23     (g) Establish procedures for reviewing claims procedures 
 52.24  and practices of members of the reinsurance association.  If the 
 52.25  claims procedures or practices of a member are considered 
 52.26  inadequate to properly service the liabilities of the 
 52.27  reinsurance association, the reinsurance association may 
 52.28  undertake, or may contract with another person, including 
 52.29  another member, to adjust or assist in the adjustment of claims 
 52.30  which create a potential liability to the association.  The 
 52.31  reinsurance association may charge the cost of the adjustment 
 52.32  under this paragraph to the member, except that any penalties or 
 52.33  interest incurred under sections 176.183, 176.221, 176.225, and 
 52.34  176.82 as a result of actions by the reinsurance association 
 52.35  after it has undertaken adjustment of the claim shall not be 
 52.36  charged to the member but shall be included in the ultimate loss 
 53.1   and listed as a separate item; and 
 53.2      (h) Provide each member of the reinsurance association with 
 53.3   an annual report of the operations of the reinsurance 
 53.4   association in a form the board of directors may specify. 
 53.5      Sec. 59.  Minnesota Statutes 1994, section 79A.01, is 
 53.6   amended by adding a subdivision to read: 
 53.7      Subd. 10.  [COMMON CLAIMS FUND.] "Common claims fund," with 
 53.8   respect to group self-insurers, are the cash, cash equivalents, 
 53.9   or investment accounts maintained by the group to pay its 
 53.10  workers' compensation liabilities.  
 53.11     Sec. 60.  Minnesota Statutes 1994, section 79A.02, 
 53.12  subdivision 4, is amended to read: 
 53.13     Subd. 4.  [RECOMMENDATIONS TO COMMISSIONER REGARDING 
 53.14  REVOCATION.] After each fifth anniversary from the date each 
 53.15  individual and group self-insurer becomes certified to 
 53.16  self-insure, the committee shall review all relevant financial 
 53.17  data filed with the department of commerce that is otherwise 
 53.18  available to the public and make a recommendation to the 
 53.19  commissioner about whether each self-insurer's certificate 
 53.20  should be revoked.  For group self-insurers who have been in 
 53.21  existence for five years or more and have been granted renewal 
 53.22  authority, a level of funding in the common claims fund must be 
 53.23  maintained at not less than the greater of either:  (1) one 
 53.24  year's claim losses paid in the most recent year; or (2) 
 53.25  one-third of the security deposit posted with the department of 
 53.26  commerce according to section 79A.04, subdivision 2.  
 53.27     Sec. 61.  Minnesota Statutes 1994, section 79A.03, is 
 53.28  amended by adding a subdivision to read: 
 53.29     Subd. 4a.  [EXCEPTIONS.] Notwithstanding the requirements 
 53.30  of subdivisions 3 and 4, the commissioner, pursuant to a review 
 53.31  of an existing self-insurer's financial data, may continue a 
 53.32  self-insurer's authority to self-insure for one year if, in the 
 53.33  commissioner's judgment based on all factors relevant to the 
 53.34  self-insurer's financial status, the self-insurer will be able 
 53.35  to meet its obligations under this chapter for the following 
 53.36  year.  The relevant factors to be considered must include, but 
 54.1   must not be limited to, the liquidity ratios, leverage ratios, 
 54.2   and profitability ratios of the self-insurer.  Where a 
 54.3   self-insurer's authority to self-insure is continued under this 
 54.4   subdivision, the self-insurer may be required to post security 
 54.5   in the amount equal to two times the amount of security required 
 54.6   under section 79A.04, subdivision 2. 
 54.7      Sec. 62.  Minnesota Statutes 1994, section 176.181, 
 54.8   subdivision 2, is amended to read: 
 54.9      Subd. 2.  [COMPULSORY INSURANCE; SELF-INSURERS.] (1) Every 
 54.10  employer, except the state and its municipal subdivisions, 
 54.11  liable under this chapter to pay compensation shall insure 
 54.12  payment of compensation with some insurance carrier authorized 
 54.13  to insure workers' compensation liability in this state, or 
 54.14  obtain a written order from the commissioner of commerce 
 54.15  exempting the employer from insuring liability for compensation 
 54.16  and permitting self-insurance of the liability.  The terms, 
 54.17  conditions and requirements governing self-insurance shall be 
 54.18  established by the commissioner pursuant to chapter 14.  The 
 54.19  commissioner of commerce shall also adopt, pursuant to clause 
 54.20  (2)(c), rules permitting two or more employers, whether or not 
 54.21  they are in the same industry, to enter into agreements to pool 
 54.22  their liabilities under this chapter for the purpose of 
 54.23  qualifying as group self-insurers.  With the approval of the 
 54.24  commissioner of commerce, any employer may exclude medical, 
 54.25  chiropractic and hospital benefits as required by this chapter.  
 54.26  An employer conducting distinct operations at different 
 54.27  locations may either insure or self-insure the other portion of 
 54.28  operations as a distinct and separate risk.  An employer 
 54.29  desiring to be exempted from insuring liability for compensation 
 54.30  shall make application to the commissioner of commerce, showing 
 54.31  financial ability to pay the compensation, whereupon by written 
 54.32  order the commissioner of commerce, on deeming it proper, may 
 54.33  make an exemption.  An employer may establish financial ability 
 54.34  to pay compensation by providing financial statements of the 
 54.35  employer to the commissioner of commerce.  Upon ten days' 
 54.36  written notice the commissioner of commerce may revoke the order 
 55.1   granting an exemption, in which event the employer shall 
 55.2   immediately insure the liability.  As a condition for the 
 55.3   granting of an exemption the commissioner of commerce may 
 55.4   require the employer to furnish security the commissioner of 
 55.5   commerce considers sufficient to insure payment of all claims 
 55.6   under this chapter, consistent with subdivision 2b.  If the 
 55.7   required security is in the form of currency or negotiable 
 55.8   bonds, the commissioner of commerce shall deposit it with the 
 55.9   state treasurer.  In the event of any default upon the part of a 
 55.10  self-insurer to abide by any final order or decision of the 
 55.11  commissioner of labor and industry directing and awarding 
 55.12  payment of compensation and benefits to any employee or the 
 55.13  dependents of any deceased employee, then upon at least ten days 
 55.14  notice to the self-insurer, the commissioner of commerce may by 
 55.15  written order to the state treasurer require the treasurer to 
 55.16  sell the pledged and assigned securities or a part thereof 
 55.17  necessary to pay the full amount of any such claim or award with 
 55.18  interest thereon.  This authority to sell may be exercised from 
 55.19  time to time to satisfy any order or award of the commissioner 
 55.20  of labor and industry or any judgment obtained thereon.  When 
 55.21  securities are sold the money obtained shall be deposited in the 
 55.22  state treasury to the credit of the commissioner of commerce and 
 55.23  awards made against any such self-insurer by the commissioner of 
 55.24  commerce shall be paid to the persons entitled thereto by the 
 55.25  state treasurer upon warrants prepared by the commissioner of 
 55.26  commerce and approved by the commissioner of finance out of the 
 55.27  proceeds of the sale of securities.  Where the security is in 
 55.28  the form of a surety bond or personal guaranty the commissioner 
 55.29  of commerce, at any time, upon at least ten days notice and 
 55.30  opportunity to be heard, may require the surety to pay the 
 55.31  amount of the award, the payments to be enforced in like manner 
 55.32  as the award may be enforced. 
 55.33     (2)(a) No association, corporation, partnership, sole 
 55.34  proprietorship, trust or other business entity shall provide 
 55.35  services in the design, establishment or administration of a 
 55.36  group self-insurance plan under rules adopted pursuant to this 
 56.1   subdivision unless it is licensed, or exempt from licensure, 
 56.2   pursuant to section 60A.23, subdivision 8, to do so by the 
 56.3   commissioner of commerce.  An applicant for a license shall 
 56.4   state in writing the type of activities it seeks authorization 
 56.5   to engage in and the type of services it seeks authorization to 
 56.6   provide.  The license shall be granted only when the 
 56.7   commissioner of commerce is satisfied that the entity possesses 
 56.8   the necessary organization, background, expertise, and financial 
 56.9   integrity to supply the services sought to be offered.  The 
 56.10  commissioner of commerce may issue a license subject to 
 56.11  restrictions or limitations, including restrictions or 
 56.12  limitations on the type of services which may be supplied or the 
 56.13  activities which may be engaged in.  The license is for a 
 56.14  two-year period. 
 56.15     (b) To assure that group self-insurance plans are 
 56.16  financially solvent, administered in a fair and capable fashion, 
 56.17  and able to process claims and pay benefits in a prompt, fair 
 56.18  and equitable manner, entities licensed to engage in such 
 56.19  business are subject to supervision and examination by the 
 56.20  commissioner of commerce. 
 56.21     (c) To carry out the purposes of this subdivision, the 
 56.22  commissioner of commerce may promulgate administrative rules, 
 56.23  including emergency rules, pursuant to sections 14.001 to 14.69. 
 56.24  These rules may: 
 56.25     (i) establish reporting requirements for administrators of 
 56.26  group self-insurance plans; 
 56.27     (ii) establish standards and guidelines consistent with 
 56.28  subdivision 2b to assure the adequacy of the financing and 
 56.29  administration of group self-insurance plans; 
 56.30     (iii) establish bonding requirements or other provisions 
 56.31  assuring the financial integrity of entities administering group 
 56.32  self-insurance plans; 
 56.33     (iv) establish standards, including but not limited to 
 56.34  minimum terms of membership in self-insurance plans, as 
 56.35  necessary to provide stability for those plans; 
 56.36     (v) establish standards or guidelines governing the 
 57.1   formation, operation, administration, and dissolution of 
 57.2   self-insurance plans; and 
 57.3      (vi) establish other reasonable requirements to further the 
 57.4   purposes of this subdivision.  The rules may not require 
 57.5   excessive cash payments to a common claims fund by group 
 57.6   self-insurers.  However, a level of funding in the common claims 
 57.7   fund must always be maintained at not less than one year's claim 
 57.8   losses paid in the most recent year. 
 57.9      Sec. 63.  Minnesota Statutes 1994, section 299F.053, 
 57.10  subdivision 2, is amended to read: 
 57.11     Subd. 2.  [AUTHORIZED PERSON.] "Authorized person" means:  
 57.12     (a) the state fire marshal when authorized or charged with 
 57.13  the investigation of fires at the place where the fire actually 
 57.14  took place; 
 57.15     (b) superintendent of the bureau of criminal apprehension; 
 57.16     (c) the prosecuting attorney responsible for prosecutions 
 57.17  in the county where the fire occurred; 
 57.18     (d) the sheriff or chief of police responsible for 
 57.19  investigation in the county where the fire occurred; 
 57.20     (e) the county attorney responsible for the prosecution in 
 57.21  the county where the fire occurred; 
 57.22     (f) the Federal Bureau of Investigation or any other 
 57.23  federal agency; 
 57.24     (g) the United States attorney's office when authorized or 
 57.25  charged with investigation or prosecution of a case involving a 
 57.26  fire loss; or 
 57.27     (h) the chief administrative officer of the municipal arson 
 57.28  squad; or 
 57.29     (i) the commissioner of commerce. 
 57.30     Sec. 64.  Minnesota Statutes 1994, section 515A.3-112, is 
 57.31  amended to read: 
 57.32     515A.3-112 [INSURANCE.] 
 57.33     (a) Commencing not later than the time of the first 
 57.34  conveyance of a unit to a unit owner other than a declarant, the 
 57.35  association shall maintain, to the extent reasonably available: 
 57.36     (1) Property insurance on the common elements and units, 
 58.1   exclusive of land, excavations, foundations, and other items 
 58.2   normally excluded from property policies, insuring against all 
 58.3   risks of direct physical loss.  The total amount of insurance 
 58.4   after application of any deductibles shall be not less than 80 
 58.5   percent of the full insurable replacement cost of the insured 
 58.6   property.  The association or its authorized agent may enter a 
 58.7   unit at reasonable times upon reasonable notice for the purpose 
 58.8   of making appraisals for insurance purposes.  
 58.9      (2) Comprehensive general liability insurance, in an amount 
 58.10  determined by the board of directors but not less than any 
 58.11  amount specified in the declaration, covering all occurrences 
 58.12  commonly insured against for death, bodily injury, and property 
 58.13  damage arising out of or in connection with the use, ownership, 
 58.14  or maintenance of the common elements. 
 58.15     (b) If the insurance described in subsection (a) is not 
 58.16  maintained, the association shall immediately cause notice of 
 58.17  that fact to be sent postage prepaid by United States mail to 
 58.18  all unit owners at their respective units and other addresses 
 58.19  provided to the association.  The declaration may require the 
 58.20  association to carry any other insurance, and the association in 
 58.21  any event may carry any other insurance it deems appropriate to 
 58.22  protect the association or the unit owners. 
 58.23     (c) Insurance policies carried pursuant to subsection (a) 
 58.24  shall provide that: 
 58.25     (1) Each unit owner and holder of a vendor's interest in a 
 58.26  contract for deed is an insured person under the policy with 
 58.27  respect to liability arising out of ownership of an undivided 
 58.28  interest in the common elements; 
 58.29     (2) The insurer waives its right to subrogation under the 
 58.30  policy against any unit owner of the condominium or members of 
 58.31  the unit owner's household and against the association and 
 58.32  members of the board of directors; 
 58.33     (3) No act or omission by any unit owner or holder of an 
 58.34  interest as security for an obligation, unless acting within the 
 58.35  scope of authority on behalf of the association, shall void the 
 58.36  policy or be a condition to recovery under the policy; and 
 59.1      (4) If, at the time of a loss under the policy, there is 
 59.2   other insurance in the name of a unit owner covering the same 
 59.3   property covered by the policy, the policy is primary insurance 
 59.4   not contributing with the other insurance. 
 59.5      (d) Any loss covered by the property policy under 
 59.6   subsection (a)(1) shall be adjusted with the association, but 
 59.7   the insurance proceeds for that loss shall be payable to any 
 59.8   insurance trustee designated for that purpose, or otherwise to 
 59.9   the association.  The insurance trustee or the association shall 
 59.10  hold any insurance proceeds in trust for unit owners and holders 
 59.11  of an interest as security for an obligation as their interests 
 59.12  may appear.  The proceeds shall be disbursed first for the 
 59.13  repair or restoration of the damaged common elements and units, 
 59.14  and unit owners and holders of an interest as security for an 
 59.15  obligation are not entitled to receive payment of any portion of 
 59.16  the proceeds unless there is a surplus of proceeds after the 
 59.17  common elements and units have been completely repaired or 
 59.18  restored, or the condominium is terminated. 
 59.19     (e) An insurance policy issued to the association does not 
 59.20  prevent a unit owner from obtaining insurance for personal 
 59.21  benefit. 
 59.22     (f) An insurer that has issued an insurance policy under 
 59.23  this section shall issue certificates or memoranda of insurance, 
 59.24  upon request, to any unit owner, or holder of an interest as 
 59.25  security for an obligation.  The insurance may not be canceled 
 59.26  until 30 60 days after notice of the proposed cancellation has 
 59.27  been mailed to the association and to each unit owner and holder 
 59.28  of an interest as security for an obligation to whom 
 59.29  certificates of insurance have been issued. 
 59.30     (g) Any portion of the condominium damaged or destroyed 
 59.31  shall be promptly repaired or replaced by the association unless 
 59.32  (1) the condominium is terminated and the association votes not 
 59.33  to repair or replace all or part thereof, (2) repair or 
 59.34  replacement would be illegal under any state or local health or 
 59.35  safety statute or ordinance, or (3) 80 percent of the unit 
 59.36  owners, including every owner and first mortgagee of a unit or 
 60.1   assigned limited common element which will not be rebuilt, vote 
 60.2   not to rebuild.  The cost of repair or replacement of a unit or 
 60.3   the common area in excess of insurance proceeds and reserves 
 60.4   shall be a common expense.  If less than the entire condominium 
 60.5   is repaired or replaced, (1) the insurance proceeds attributable 
 60.6   to the damaged common elements shall be used to restore the 
 60.7   damaged area to a condition compatible with the remainder of the 
 60.8   condominium, (2) the insurance proceeds attributable to units 
 60.9   and limited common elements which are not rebuilt shall be 
 60.10  distributed to the owners of those units and the holders of an 
 60.11  interest as security for an obligation of those units and the 
 60.12  owners and holders of an interest as security for an obligation 
 60.13  of the units to which those limited common elements were 
 60.14  assigned, as their interests may appear, and (3) the remainder 
 60.15  of the proceeds shall be distributed to all the unit owners and 
 60.16  holders of an interest as security for an obligation as their 
 60.17  interests may appear in proportion to their common element 
 60.18  interest.  In the event the unit owners vote not to rebuild a 
 60.19  unit, that unit's entire common element interest, votes in the 
 60.20  association, and common expense liability are automatically 
 60.21  reallocated upon the vote as if the unit had been condemned 
 60.22  under section 515A.1-107(a), and the association shall promptly 
 60.23  prepare, execute and record an amendment to the declaration 
 60.24  reflecting the reallocations.  Notwithstanding the provisions of 
 60.25  this subsection, if the condominium is terminated, insurance 
 60.26  proceeds not used for repair or replacement shall be distributed 
 60.27  in the same manner as sales proceeds pursuant to section 
 60.28  515A.2-120.  
 60.29     (h) The provisions of this section may be varied or waived 
 60.30  in the case of a condominium all of the units of which are 
 60.31  restricted to nonresidential use. 
 60.32     Sec. 65.  Minnesota Statutes 1994, section 515B.3-113, is 
 60.33  amended to read: 
 60.34     515B.3-113 [INSURANCE.] 
 60.35     (a) Commencing not later than the time of the first 
 60.36  conveyance of a unit to a unit owner other than a declarant, the 
 61.1   association shall maintain, to the extent reasonably available: 
 61.2      (1) subject to subsection (b), property insurance (i) on 
 61.3   the common elements and, in a planned community, also on 
 61.4   property that must become common elements, (ii) for broad form 
 61.5   covered causes of loss, and (iii) in a total amount of not less 
 61.6   than the full insurable replacement cost of the insured 
 61.7   property, less deductibles, at the time the insurance is 
 61.8   purchased and at each renewal date, exclusive of items normally 
 61.9   excluded from property policies; and 
 61.10     (2) commercial general liability insurance against claims 
 61.11  and liabilities arising in connection with the ownership, 
 61.12  existence, use or management of the property in an amount, if 
 61.13  any, specified by the common interest community instruments or 
 61.14  otherwise deemed sufficient in the judgment of the board, 
 61.15  insuring the board, the association, the management agent, and 
 61.16  their respective employees, agents and all persons acting as 
 61.17  agents.  The declarant shall be included as an additional 
 61.18  insured in its capacity as a unit owner or board member.  The 
 61.19  unit owners shall be included as additional insureds but only 
 61.20  for claims and liabilities arising in connection with the 
 61.21  ownership, existence, use or management of the common elements.  
 61.22  The insurance shall cover claims of one or more insured parties 
 61.23  against other insured parties. 
 61.24     (b) In the case of a common interest community that 
 61.25  contains units sharing or having contiguous walls, siding or 
 61.26  roofs, the insurance maintained under subsection (a)(1) shall 
 61.27  include the units and the common elements.  The insurance need 
 61.28  not cover improvements and betterments to the units installed by 
 61.29  unit owners, but if improvements and betterments are covered, 
 61.30  any increased cost may be assessed by the association against 
 61.31  the units affected.  The association may, in the case of a claim 
 61.32  for damage to a unit or units, (i) pay the deductible amount as 
 61.33  a common expense, (ii) assess the deductible amount against the 
 61.34  units affected in any reasonable manner, or (iii) require the 
 61.35  unit owners of the units affected to pay the deductible amount 
 61.36  directly. 
 62.1      (c) If the insurance described in subsections (a) and (b) 
 62.2   is not reasonably available, the association shall promptly 
 62.3   cause notice of that fact to be hand delivered or sent prepaid 
 62.4   by United States mail to all unit owners.  The declaration may 
 62.5   require the association to carry any other insurance, and the 
 62.6   association in any event may carry any other insurance it 
 62.7   considers appropriate to protect the association, the unit 
 62.8   owners or officers, directors or agents of the association. 
 62.9      (d) Insurance policies carried pursuant to subsections (a) 
 62.10  and (b) shall provide that: 
 62.11     (1) each unit owner and secured party is an insured person 
 62.12  under the policy with respect to liability arising out of the 
 62.13  unit owner's interest in the common elements or membership in 
 62.14  the association; 
 62.15     (2) the insurer waives its right to subrogation under the 
 62.16  policy against any unit owner of the condominium or members of 
 62.17  the unit owner's household and against the association and 
 62.18  members of the board of directors; 
 62.19     (3) no act or omission by any unit owner or secured party, 
 62.20  unless acting within the scope of authority on behalf of the 
 62.21  association, shall void the policy or be a condition to recovery 
 62.22  under the policy; and 
 62.23     (4) if at the time of a loss under the policy there is 
 62.24  other insurance in the name of a unit owner covering the same 
 62.25  property covered by the policy, the association's policy is 
 62.26  primary insurance. 
 62.27     (e) Any loss covered by the property policy under 
 62.28  subsection (a)(1) shall be adjusted by and with the association. 
 62.29  The insurance proceeds for that loss shall be payable to the 
 62.30  association, or to an insurance trustee designated by the 
 62.31  association for that purpose.  The insurance trustee or the 
 62.32  association shall hold any insurance proceeds in trust for unit 
 62.33  owners and secured parties as their interests may appear.  The 
 62.34  proceeds shall be disbursed first for the repair or restoration 
 62.35  of the damaged common elements and units.  Unit owners and 
 62.36  secured parties are not entitled to receive any portion of the 
 63.1   proceeds unless there is a surplus of proceeds after the common 
 63.2   elements and units have been completely repaired or restored or 
 63.3   the common interest community is terminated. 
 63.4      (f) Unit owners may obtain insurance for personal benefit 
 63.5   in addition to insurance carried by the association. 
 63.6      (g) An insurer that has issued an insurance policy under 
 63.7   this section shall issue certificates or memoranda of insurance, 
 63.8   upon request, to any unit owner or secured party.  The insurance 
 63.9   may not be canceled until 30 60 days after notice of the 
 63.10  proposed cancellation has been mailed to the association, each 
 63.11  unit owner and each secured party for an obligation to whom 
 63.12  certificates of insurance have been issued. 
 63.13     (h) Any portion of the common interest community which is 
 63.14  damaged or destroyed as the result of a loss covered by the 
 63.15  association's insurance shall be promptly repaired or replaced 
 63.16  by the association unless (i) the common interest community is 
 63.17  terminated and the association votes not to repair or replace 
 63.18  all or part thereof, (ii) repair or replacement would be illegal 
 63.19  under any state or local health or safety statute or ordinance, 
 63.20  or (iii) 80 percent of the unit owners, including every owner 
 63.21  and holder of a first mortgage on a unit or assigned limited 
 63.22  common element which will not be rebuilt, vote not to rebuild.  
 63.23  The cost of repair or replacement of the common elements in 
 63.24  excess of insurance proceeds and reserves shall be paid as a 
 63.25  common expense, and the cost of repair of a unit in excess of 
 63.26  insurance proceeds shall be paid by the respective unit owner. 
 63.27     (i) If less than the entire common interest community is 
 63.28  repaired or replaced, (i) the insurance proceeds attributable to 
 63.29  the damaged common elements shall be used to restore the damaged 
 63.30  area to a condition compatible with the remainder of the common 
 63.31  interest community, (ii) the insurance proceeds attributable to 
 63.32  units and limited common elements which are not rebuilt shall be 
 63.33  distributed to the owners of those units, including units to 
 63.34  which the limited common elements were assigned, and the secured 
 63.35  parties of those units, as their interests may appear, and (iii) 
 63.36  the remainder of the proceeds shall be distributed to all the 
 64.1   unit owners and secured parties as their interests may appear in 
 64.2   proportion to their common element interest in the case of a 
 64.3   condominium or in proportion to their common expense liability 
 64.4   in the case of a planned community or cooperative. 
 64.5      (j) If the unit owners and holders of first mortgages vote 
 64.6   not to rebuild a unit, that unit's entire common element 
 64.7   interest, votes in the association, and common expense liability 
 64.8   are automatically reallocated upon the vote as if the unit had 
 64.9   been condemned under section 515B.1-107, and the association 
 64.10  shall promptly prepare, execute and record an amendment to the 
 64.11  declaration reflecting the reallocations.  Notwithstanding the 
 64.12  provisions of this subsection, if the common interest community 
 64.13  is terminated, insurance proceeds not used for repair or 
 64.14  replacement shall be distributed in the same manner as sales 
 64.15  proceeds pursuant to section 515B.2-119. 
 64.16     (k) The provisions of this section may be varied or waived 
 64.17  in the case of a common interest community in which all units 
 64.18  are restricted to nonresidential use. 
 64.19     Sec. 66.  [REPORT ON MANDATED INSURANCE DISCLOSURES AND 
 64.20  NOTICES.] 
 64.21     The commissioner of commerce shall report to the 
 64.22  legislature by February 1, 1996, on the status of insurance 
 64.23  disclosures and notices that are required by law to be 
 64.24  distributed with insurance applications, marketing materials, or 
 64.25  claim forms.  The report shall include recommendations on the 
 64.26  disclosures or notices that are no longer necessary and a 
 64.27  recommendation for consolidation of all legally required 
 64.28  disclosures or notices on a single disclosure form. 
 64.29     Sec. 67.  [REPEALER.] 
 64.30     Minnesota Statutes 1994, sections 61A.072, subdivision 3; 
 64.31  and 65B.07, subdivision 5, are repealed. 
 64.32     Sec. 68.  [EFFECTIVE DATES.] 
 64.33     Sections 1 to 4, 6 to 13, 16 to 18, 20, 22 to 25, 29, 31 to 
 64.34  35, 38, 40, 42, 43, 46, 53, 54, 56, 59 to 63, and 67 are 
 64.35  effective the day following final enactment. 
 64.36     Section 14 is effective January 1, 1997. 
 65.1      Section 39 is effective July 1, 1995. 
 65.2      Section 44 is effective retroactive to January 1, 1995. 
 65.3      Sections 57 and 58 are effective January 1, 1996. 
 65.4      Sections 26, 27, and 37 are effective January 1, 1996, and 
 65.5   apply to coverage issued or renewed on or after that date. 
 65.6      Section 28 is effective the day following final enactment 
 65.7   and applies to health plans offered, issued, sold, or renewed to 
 65.8   provide coverage to a Minnesota resident on or after that date. 
 65.9      Section 41 is effective July 1, 1995, and applies to 
 65.10  coverage issued or renewed on or after that date. 
 65.11     Section 45 is effective retroactive to July 1, 1994.