SF 1054

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; regulating insurers, agents, 
  1.3             coverages and benefits, costs, claims, investments, 
  1.4             and notifications and disclosures; prescribing powers 
  1.5             and duties of the commissioner; eliminating the 
  1.6             regulation of nonprofit legal services plans; amending 
  1.7             Minnesota Statutes 2000, sections 60A.06, subdivision 
  1.8             3; 60A.08, subdivision 13; 60A.11, subdivision 10; 
  1.9             60A.129, subdivision 2; 60A.14, subdivision 1; 60A.16, 
  1.10            subdivision 1; 60A.23, subdivision 8; 60K.14, 
  1.11            subdivision 2; 61A.072, by adding subdivisions; 
  1.12            61A.08; 61A.09, subdivision 1; 62A.021, subdivision 3; 
  1.13            62A.023; 62A.04, subdivision 2; 62A.105, subdivision 
  1.14            2; 62A.17, subdivision 1; 62A.20, subdivision 1; 
  1.15            62A.21, subdivision 2a; 62A.30, subdivision 2; 
  1.16            62A.302; 62A.3093; 62A.31, subdivisions 1a, 1i, and 3; 
  1.17            62A.65, subdivision 8; 62E.04, subdivision 4; 62E.06, 
  1.18            subdivision 1; 62J.60, subdivision 3; 62L.05, 
  1.19            subdivisions 1 and 2; 62M.01, subdivision 2; 62M.02, 
  1.20            subdivisions 6, 12, 21, and by adding a subdivision; 
  1.21            62M.05, subdivision 5; 62Q.01, subdivision 6; 62Q.68, 
  1.22            subdivision 1; 62Q.72, subdivision 1; 62Q.73, 
  1.23            subdivision 3; 65A.01, subdivision 3b; 65A.29, 
  1.24            subdivision 7; 65A.30; 65B.04, subdivision 3; 65B.06, 
  1.25            subdivisions 1 and 4; 65B.16; 65B.19, subdivision 2; 
  1.26            65B.44, subdivision 3; 65B.49, subdivision 5a; 67A.20, 
  1.27            by adding a subdivision; 70A.07; 72A.125, subdivision 
  1.28            3; 72A.201, subdivision 3; 72C.06, subdivision 2; 
  1.29            79A.02, subdivision 1; 79A.03, subdivision 7; and 
  1.30            471.617, subdivision 1; proposing coding for new law 
  1.31            in Minnesota Statutes, chapter 62Q; repealing 
  1.32            Minnesota Statutes 2000, sections 13.7191, subdivision 
  1.33            11; 60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05; 
  1.34            62G.06; 62G.07; 62G.08; 62G.09; 62G.10; 62G.11; 
  1.35            62G.12; 62G.13; 62G.14; 62G.15; 62G.16; 62G.17; 
  1.36            62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23; 
  1.37            62G.24; and 62G.25. 
  1.38  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.39     Section 1.  Minnesota Statutes 2000, section 60A.06, 
  1.40  subdivision 3, is amended to read: 
  1.41     Subd. 3.  [LIMITATION ON COMBINATION POLICIES.] (a) Unless 
  2.1   specifically authorized by subdivision 1, clause (4), it is 
  2.2   unlawful to combine in one policy coverage permitted by 
  2.3   subdivision 1, clauses (4) and (5)(a).  This subdivision does 
  2.4   not prohibit the simultaneous sale of these products, but the 
  2.5   sale must involve two separate and distinct policies.  
  2.6      (b) This subdivision does not apply to group policies.  
  2.7      (c) This subdivision does not apply to policies permitted 
  2.8   by subdivision 1, clause (4), that contain benefits providing 
  2.9   acceleration of life, endowment, or annuity benefits in advance 
  2.10  of the time they would otherwise be payable, or to long-term 
  2.11  care policies as defined in section 62A.46, subdivision 2, or 
  2.12  chapter 62S.  
  2.13     [EFFECTIVE DATE.] This section is effective the day 
  2.14  following final enactment. 
  2.15     Sec. 2.  Minnesota Statutes 2000, section 60A.08, 
  2.16  subdivision 13, is amended to read: 
  2.17     Subd. 13.  [REDUCTION OF LIMITS BY COSTS OF DEFENSE 
  2.18  PROHIBITED.] (a) No insurer shall issue or renew a policy of 
  2.19  liability insurance in this state that reduces the limits of 
  2.20  liability stated in the policy by the costs of legal defense. 
  2.21     (b) This subdivision does not apply to:  
  2.22     (1) professional liability insurance with annual aggregate 
  2.23  limits of liability greater than $100,000, including directors' 
  2.24  and officers' and errors and omissions liability insurance; 
  2.25     (2) environmental impairment liability insurance; 
  2.26     (3) insurance policies issued to large commercial risks; or 
  2.27     (4) coverages that the commissioner determines to be 
  2.28  appropriate which will be published in the manner prescribed for 
  2.29  surplus lines insurance in section 60A.201, subdivision 4.  
  2.30     (c) For purposes of this subdivision, "large commercial 
  2.31  risks" means an insured whose gross annual revenues in the 
  2.32  fiscal year preceding issuance of the policy were at least 
  2.33  $10,000,000. 
  2.34     [EFFECTIVE DATE.] This section is effective the day 
  2.35  following final enactment. 
  2.36     Sec. 3.  Minnesota Statutes 2000, section 60A.11, 
  3.1   subdivision 10, is amended to read: 
  3.2      Subd. 10.  [DEFINITIONS.] The following terms have the 
  3.3   meaning assigned in this subdivision for purposes of this 
  3.4   section and section 60A.111: 
  3.5      (a) "Adequate evidence" means a written confirmation, 
  3.6   advice, or other verification issued by a depository, issuer, or 
  3.7   custodian bank which shows that the investment is held for the 
  3.8   company; 
  3.9      (b) "Adequate security" means a letter of credit qualifying 
  3.10  under subdivision 11, paragraph (f), cash, or the pledge of an 
  3.11  investment authorized by any subdivision of this section; 
  3.12     (c) "Admitted assets," for purposes of computing percentage 
  3.13  limitations on particular types of investments, means the assets 
  3.14  as shown by the company's annual statement, required by section 
  3.15  60A.13, as of the December 31 immediately preceding the date the 
  3.16  company acquires the investment; 
  3.17     (d) "Clearing corporation" means The Depository Trust 
  3.18  Company or any other clearing agency registered with the 
  3.19  securities and exchange commission pursuant to the Securities 
  3.20  Exchange Act of 1934, section 17A, Euro-clear Clearance System 
  3.21  Limited and CEDEL S.A., and, with the approval of the 
  3.22  commissioner, any other clearing corporation as defined in 
  3.23  section 336.8-102; 
  3.24     (e) "Control" has the meaning assigned to that term in, and 
  3.25  must be determined in accordance with, section 60D.15, 
  3.26  subdivision 4; 
  3.27     (f) "Custodian bank" means a bank or trust company or a 
  3.28  branch of a bank or trust company that is acting as custodian 
  3.29  and is supervised and examined by state or federal authority 
  3.30  having supervision over the bank or trust company or with 
  3.31  respect to a company's foreign investments only by the 
  3.32  regulatory authority having supervision over banks or trust 
  3.33  companies in the jurisdiction in which the bank, trust company, 
  3.34  or branch is located, and any banking institutions qualifying as 
  3.35  an "Eligible Foreign Custodian" under the Code of Federal 
  3.36  Regulations, section 270.17f-5, adopted under section 17(f) of 
  4.1   the Investment Company Act of 1940, and specifically including 
  4.2   Euro-clear Clearance System Limited and CEDEL S.A., acting as 
  4.3   custodians; 
  4.4      (g) "Evergreen clause" means a provision that automatically 
  4.5   renews a letter of credit for a time certain if the issuer of 
  4.6   the letter of credit fails to affirmatively signify its 
  4.7   intention to nonrenew upon expiration; 
  4.8      (h) "Government obligations" means direct obligations for 
  4.9   the payment of money, or obligations for the payment of money to 
  4.10  the extent guaranteed as to the payment of principal and 
  4.11  interest by any governmental issuer where the obligations are 
  4.12  payable from ad valorem taxes or guaranteed by the full faith, 
  4.13  credit, and taxing power of the issuer and are not secured 
  4.14  solely by special assessments for local improvements; 
  4.15     (i) "Noninvestment grade obligations" means obligations 
  4.16  which, at the time of acquisition, were rated below Baa/BBB or 
  4.17  the equivalent by a securities rating agency or which, at the 
  4.18  time of acquisition, were not in one of the two highest 
  4.19  categories established by the securities valuation office of the 
  4.20  National Association of Insurance Commissioners; 
  4.21     (j) "Issuer" means the corporation, business trust, 
  4.22  governmental unit, partnership, association, individual, or 
  4.23  other entity which issues or on behalf of which is issued any 
  4.24  form of obligation; 
  4.25     (k) "Licensed real estate appraiser" means a person who 
  4.26  develops and communicates real estate appraisals and who holds a 
  4.27  current, valid license under chapter 82B or a substantially 
  4.28  similar licensing requirement in another jurisdiction; 
  4.29     (l) "Member bank" means a national bank, state bank or 
  4.30  trust company which is a member of the Federal Reserve System; 
  4.31     (m) "National securities exchange" means an exchange 
  4.32  registered under section 6 of the Securities Exchange Act of 
  4.33  1934 or an exchange regulated under the laws of the Dominion of 
  4.34  Canada; 
  4.35     (n) "NASDAQ" means the reporting system for securities 
  4.36  meeting the definition of National Market System security as 
  5.1   provided under Part I to Schedule D of the National Association 
  5.2   of Securities Dealers Incorporated bylaws; 
  5.3      (o) "Obligations" include bonds, notes, debentures, 
  5.4   transportation equipment certificates, repurchase agreements, 
  5.5   bank certificates of deposit, time deposits, bankers' 
  5.6   acceptances, and other obligations for the payment of money not 
  5.7   in default as to payments of principal and interest on the date 
  5.8   of investment, whether constituting general obligations of the 
  5.9   issuer or payable only out of certain revenues or certain funds 
  5.10  pledged or otherwise dedicated for payment.  Leases are 
  5.11  considered obligations if the lease is assigned for the benefit 
  5.12  of the company and is nonterminable by the lessee or lessees 
  5.13  thereunder upon foreclosure of any lien upon the leased 
  5.14  property, and rental payments are sufficient to amortize the 
  5.15  investment over the primary lease term; 
  5.16     (p) "Qualified assets" means the sum of (1) all investments 
  5.17  qualified in accordance with this section other than investments 
  5.18  in affiliates and subsidiaries, (2) investments in obligations 
  5.19  of affiliates as defined in section 60D.15, subdivision 2, 
  5.20  secured by real or personal property sufficient to qualify the 
  5.21  investment under subdivision 19 or 23, (3) qualified investments 
  5.22  in subsidiaries, as defined in section 60D.15, subdivision 9, on 
  5.23  a consolidated basis with the insurance company without 
  5.24  allowance for goodwill or other intangible value, and (4) cash 
  5.25  on hand and on deposit, agent's balances or uncollected premiums 
  5.26  not due more than 90 days, assets held pursuant to section 
  5.27  60A.12, subdivision 2, investment income due and accrued, funds 
  5.28  due or on deposit or recoverable on loss payments under 
  5.29  contracts of reinsurance entered into pursuant to section 
  5.30  60A.09, premium bills and notes receivable, federal income taxes 
  5.31  recoverable, and equities and deposits in pools and 
  5.32  associations; 
  5.33     (q) "Qualified net earnings" means that the net earnings of 
  5.34  the issuer after elimination of extraordinary nonrecurring items 
  5.35  of income and expense and before income taxes and fixed charges 
  5.36  over the five immediately preceding completed fiscal years, or 
  6.1   its period of existence if less than five years, has averaged 
  6.2   not less than 1-1/4 times its average annual fixed charges 
  6.3   applicable to the period; 
  6.4      (r) "Required liabilities" means the sum of (1) total 
  6.5   liabilities as required to be reported in the company's most 
  6.6   recent annual report to the commissioner of commerce of this 
  6.7   state, (2) for companies operating under the stock plan, the 
  6.8   minimum paid-up capital and surplus required to be maintained 
  6.9   pursuant to section 60A.07, subdivision 5a, (3) for companies 
  6.10  operating under the mutual or reciprocal plan, the minimum 
  6.11  amount of surplus required to be maintained pursuant to section 
  6.12  60A.07, subdivision 5b, and (4) the amount, if any, by which the 
  6.13  company's loss and loss adjustment expense reserves exceed 350 
  6.14  percent of its surplus as it pertains to policyholders as of the 
  6.15  same date.  The commissioner may waive the requirement in clause 
  6.16  (4) unless the company's written premiums exceed 300 percent of 
  6.17  its surplus as it pertains to policyholders as of the same 
  6.18  date.  In addition to the required amounts pursuant to clauses 
  6.19  (1) to (4), the commissioner may require that the amount of any 
  6.20  apparent reserve deficiency that may be revealed by one to five 
  6.21  year loss and loss adjustment expense development analysis for 
  6.22  the five years reported in the company's most recent annual 
  6.23  statement to the commissioner be added to required liabilities; 
  6.24     (s) "Revenue obligations" means obligations for the payment 
  6.25  of money by a governmental issuer where the obligations are 
  6.26  payable from revenues, earnings, or special assessments on 
  6.27  properties benefited by local improvements of the issuer which 
  6.28  are specifically pledged therefor; 
  6.29     (t) "Security" has the meaning given in section 5 of the 
  6.30  Security Act of 1933 and specifically includes, but is not 
  6.31  limited to, stocks, stock equivalents, warrants, rights, 
  6.32  options, obligations, American Depository Receipts (ADR's), 
  6.33  repurchase agreements, and reverse repurchase agreements; and 
  6.34     (u) "Unrestricted surplus" means the amount by which 
  6.35  qualified assets exceed 110 percent of required liabilities.  
  6.36     [EFFECTIVE DATE.] This section is effective the day 
  7.1   following final enactment. 
  7.2      Sec. 4.  Minnesota Statutes 2000, section 60A.129, 
  7.3   subdivision 2, is amended to read: 
  7.4      Subd. 2.  [LOSS RESERVE CERTIFICATION.] (a) Each domestic 
  7.5   company engaged in providing the types of coverage described in 
  7.6   section 60A.06, subdivision 1, clause (1), (2), (3), (5)(b), 
  7.7   (6), (8), (9), (10), (11), (12), (13), or (14), must have its 
  7.8   loss reserves certified by a qualified actuary.  The company 
  7.9   must file the certification with the commissioner within 30 days 
  7.10  of completion of the certification, but not later than June 1.  
  7.11  The actuary providing the certification must not may be an 
  7.12  employee of the company but the commissioner may still require 
  7.13  an independent actuarial certification as described in 
  7.14  subdivision 1.  This subdivision does not apply to township 
  7.15  mutual companies, or to other domestic insurers having less than 
  7.16  $1,000,000 of premiums written in any year and fewer than 1,000 
  7.17  policyholders.  The commissioner may allow an exception to the 
  7.18  stand alone certification where it can be demonstrated that a 
  7.19  company in a group has a pooling or 100 percent reinsurance 
  7.20  agreement used in a group which substantially affects the 
  7.21  solvency and integrity of the reserves of the company, or where 
  7.22  it is only the parent company of a group which is licensed to do 
  7.23  business in Minnesota.  If these circumstances exist, the 
  7.24  company may file a written request with the commissioner for an 
  7.25  exception.  Companies writing reinsurance alone are not exempt 
  7.26  from this requirement.  The certification must contain the 
  7.27  following statement:  "The loss reserves and loss expense 
  7.28  reserves have been examined and found to be calculated in 
  7.29  accordance with generally accepted actuarial principles and 
  7.30  practices In my opinion, the reserves described in this 
  7.31  certification are consistent with reserves computed in 
  7.32  accordance with standards and principles established by the 
  7.33  Actuarial Standards Board and are fairly stated."  
  7.34     (b) Each foreign company engaged in providing the types of 
  7.35  coverage described in section 60A.06, subdivision 1, clause (1), 
  7.36  (2), (3), (5)(b), (6), (8), (9), (10), (11), (12), (13), or 
  8.1   (14), required by this section to file an annual audited 
  8.2   financial report, whose total net earned premium for Schedule P, 
  8.3   Part 1A to Part 1H plus Part 1R, (Schedule P, Part 1A to Part 1H 
  8.4   plus Part 1R, Column 4, current year premiums earned, from the 
  8.5   company's most currently filed annual statement) is equal to 
  8.6   one-third or more of the company's total net earned premium 
  8.7   (Underwriting and Investment Exhibit, Part 2, Column 4, total 
  8.8   line, of the annual statement) must have a reserve certification 
  8.9   by a qualified actuary at least every three years.  In the year 
  8.10  that the certification is due, the company must file the 
  8.11  certification with the commissioner within 30 days of completion 
  8.12  of the certification, but not later than June 1.  The actuary 
  8.13  providing the certification must not be an employee of the 
  8.14  company.  Companies writing reinsurance alone are not exempt 
  8.15  from this requirement.  The certification must contain the 
  8.16  following statement:  "The loss reserves and loss expense 
  8.17  reserves have been examined and found to be calculated in 
  8.18  accordance with generally accepted actuarial principles and 
  8.19  practices and are fairly stated."  
  8.20     (c) Each company providing life and/or health insurance 
  8.21  coverages described in section 60A.06, subdivision 1, clause (4) 
  8.22  or (5)(a), required by this section to file an audited annual 
  8.23  financial report, whose premiums and annuity considerations (net 
  8.24  of reinsurance) from accident and health equal one-third or more 
  8.25  of the company's total premiums and annuity considerations (net 
  8.26  of reinsurance), as reported in the summary of operations, must 
  8.27  have its aggregate reserve for accident and health policies and 
  8.28  liability for policy and contract claims for accident and health 
  8.29  certified by a qualified actuary at least once every three 
  8.30  years.  The actuary providing the certification must not be an 
  8.31  employee of the company.  Companies writing reinsurance alone 
  8.32  are not exempt from this requirement.  The certification must 
  8.33  contain the following statement:  "The policy and contract 
  8.34  claims reserves for accident and health have been examined and 
  8.35  found to be calculated in accordance with generally accepted 
  8.36  actuarial principles and practices and are fairly stated." 
  9.1      [EFFECTIVE DATE.] This section is effective the day 
  9.2   following final enactment. 
  9.3      Sec. 5.  Minnesota Statutes 2000, section 60A.14, 
  9.4   subdivision 1, is amended to read: 
  9.5      Subdivision 1.  [FEES OTHER THAN EXAMINATION FEES.] In 
  9.6   addition to the fees and charges provided for examinations, the 
  9.7   following fees must be paid to the commissioner for deposit in 
  9.8   the general fund: 
  9.9      (a) by township mutual fire insurance companies: 
  9.10     (1) for filing certificate of incorporation $25 and 
  9.11  amendments thereto, $10; 
  9.12     (2) for filing annual statements, $15; 
  9.13     (3) for each annual certificate of authority, $15; 
  9.14     (4) for filing bylaws $25 and amendments thereto, $10. 
  9.15     (b) by other domestic and foreign companies including 
  9.16  fraternals and reciprocal exchanges: 
  9.17     (1) for filing certified copy of certificate of articles of 
  9.18  incorporation, $100; 
  9.19     (2) for filing annual statement, $225; 
  9.20     (3) for filing certified copy of amendment to certificate 
  9.21  or articles of incorporation, $100; 
  9.22     (4) for filing bylaws, $75 or amendments thereto, $75; 
  9.23     (5) for each company's certificate of authority, $575, 
  9.24  annually. 
  9.25     (c) the following general fees apply: 
  9.26     (1) for each certificate, including certified copy of 
  9.27  certificate of authority, renewal, valuation of life policies, 
  9.28  corporate condition or qualification, $25; 
  9.29     (2) for each copy of paper on file in the commissioner's 
  9.30  office 50 cents per page, and $2.50 for certifying the same; 
  9.31     (3) for license to procure insurance in unadmitted foreign 
  9.32  companies, $575; 
  9.33     (4) for valuing the policies of life insurance companies, 
  9.34  one cent per $1,000 of insurance so valued, provided that the 
  9.35  fee shall not exceed $13,000 per year for any company.  The 
  9.36  commissioner may, in lieu of a valuation of the policies of any 
 10.1   foreign life insurance company admitted, or applying for 
 10.2   admission, to do business in this state, accept a certificate of 
 10.3   valuation from the company's own actuary or from the 
 10.4   commissioner of insurance of the state or territory in which the 
 10.5   company is domiciled; 
 10.6      (5) for receiving and filing certificates of policies by 
 10.7   the company's actuary, or by the commissioner of insurance of 
 10.8   any other state or territory, $50; 
 10.9      (6) for each appointment of an agent filed with the 
 10.10  commissioner, a domestic insurer shall remit $5 and all other 
 10.11  insurers shall remit $3; 
 10.12     (7) for filing forms and rates, $75 per filing, to be paid 
 10.13  on a quarterly basis in response to an invoice.  Billing and 
 10.14  payment may be made electronically; 
 10.15     (8) for annual renewal of surplus lines insurer license, 
 10.16  $300. 
 10.17     The commissioner shall adopt rules to define filings that 
 10.18  are subject to a fee. 
 10.19     [EFFECTIVE DATE.] This section is effective July 1, 2001. 
 10.20     Sec. 6.  Minnesota Statutes 2000, section 60A.16, 
 10.21  subdivision 1, is amended to read: 
 10.22     Subdivision 1.  [SCOPE.] (1) [DOMESTIC INSURANCE 
 10.23  CORPORATIONS.] Any two or more domestic insurance corporations, 
 10.24  formed for any of the purposes for which stock, mutual, or stock 
 10.25  and mutual insurance corporations, or reciprocal or 
 10.26  interinsurance contract exchanges might be formed under the laws 
 10.27  of this state, may be 
 10.28     (a) merged into one of such domestic insurance 
 10.29  corporations, or 
 10.30     (b) consolidated into a new insurance corporation to be 
 10.31  formed under the laws of this state. 
 10.32     (2) [DOMESTIC AND FOREIGN INSURANCE CORPORATIONS.] Any such 
 10.33  domestic insurance corporations and any foreign insurance 
 10.34  corporations formed to carry on any insurance business for the 
 10.35  conduct of which an insurance corporation might be organized 
 10.36  under the laws of this state, may be 
 11.1      (a) merged into one of such domestic insurance 
 11.2   corporations, or 
 11.3      (b) merged into one of such foreign insurance corporations, 
 11.4   or 
 11.5      (c) consolidated into a new insurance corporation to be 
 11.6   formed under the laws of this state, or 
 11.7      (d) consolidated into a new insurance corporation to be 
 11.8   formed under the laws of the government under which one of such 
 11.9   foreign insurance corporations was formed, provided that each of 
 11.10  such foreign insurance corporations is authorized by the laws of 
 11.11  the government under which it was formed to effect such merger 
 11.12  or consolidation. 
 11.13     [EFFECTIVE DATE.] This section is effective the day 
 11.14  following final enactment. 
 11.15     Sec. 7.  Minnesota Statutes 2000, section 60A.23, 
 11.16  subdivision 8, is amended to read: 
 11.17     Subd. 8.  [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS 
 11.18  WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1)  [SCOPE.] This 
 11.19  subdivision applies to any vendor of risk management services 
 11.20  and to any entity which administers, for compensation, a 
 11.21  self-insurance or insurance plan.  This subdivision does not 
 11.22  apply (a) to an insurance company authorized to transact 
 11.23  insurance in this state, as defined by section 60A.06, 
 11.24  subdivision 1, clauses (4) and (5); (b) to a service plan 
 11.25  corporation, as defined by section 62C.02, subdivision 6; (c) to 
 11.26  a health maintenance organization, as defined by section 62D.02, 
 11.27  subdivision 4; (d) to an employer directly operating a 
 11.28  self-insurance plan for its employees' benefits; (e) to an 
 11.29  entity which administers a program of health benefits 
 11.30  established pursuant to a collective bargaining agreement 
 11.31  between an employer, or group or association of employers, and a 
 11.32  union or unions; or (f) to an entity which administers a 
 11.33  self-insurance or insurance plan if a licensed Minnesota insurer 
 11.34  is providing insurance to the plan and if the licensed insurer 
 11.35  has appointed the entity administering the plan as one of its 
 11.36  licensed agents within this state. 
 12.1      (2)  [DEFINITIONS.] For purposes of this subdivision the 
 12.2   following terms have the meanings given them. 
 12.3      (a) "Administering a self-insurance or insurance plan" 
 12.4   means (i) processing, reviewing or paying claims, (ii) 
 12.5   establishing or operating funds and accounts, or (iii) otherwise 
 12.6   providing necessary administrative services in connection with 
 12.7   the operation of a self-insurance or insurance plan. 
 12.8      (b) "Employer" means an employer, as defined by section 
 12.9   62E.02, subdivision 2. 
 12.10     (c) "Entity" means any association, corporation, 
 12.11  partnership, sole proprietorship, trust, or other business 
 12.12  entity engaged in or transacting business in this state. 
 12.13     (d) "Self-insurance or insurance plan" means a plan 
 12.14  providing life, medical or hospital care, accident, sickness or 
 12.15  disability insurance for the benefit of employees or members of 
 12.16  an association, or a plan providing liability coverage for any 
 12.17  other risk or hazard, which is or is not directly insured or 
 12.18  provided by a licensed insurer, service plan corporation, or 
 12.19  health maintenance organization. 
 12.20     (e) "Vendor of risk management services" means an entity 
 12.21  providing for compensation actuarial, financial management, 
 12.22  accounting, legal or other services for the purpose of designing 
 12.23  and establishing a self-insurance or insurance plan for an 
 12.24  employer. 
 12.25     (3)  [LICENSE.] No vendor of risk management services or 
 12.26  entity administering a self-insurance or insurance plan may 
 12.27  transact this business in this state unless it is licensed to do 
 12.28  so by the commissioner.  An applicant for a license shall state 
 12.29  in writing the type of activities it seeks authorization to 
 12.30  engage in and the type of services it seeks authorization to 
 12.31  provide.  The license may be granted only when the commissioner 
 12.32  is satisfied that the entity possesses the necessary 
 12.33  organization, background, expertise, and financial integrity to 
 12.34  supply the services sought to be offered.  The commissioner may 
 12.35  issue a license subject to restrictions or limitations upon the 
 12.36  authorization, including the type of services which may be 
 13.1   supplied or the activities which may be engaged in.  The license 
 13.2   fee is $1,000 for the initial application and $1,000 for each 
 13.3   two-year renewal.  All licenses are for a period of two years. 
 13.4      (4)  [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.] 
 13.5   To assure that self-insurance or insurance plans are financially 
 13.6   solvent, are administered in a fair and equitable fashion, and 
 13.7   are processing claims and paying benefits in a prompt, fair, and 
 13.8   honest manner, vendors of risk management services and entities 
 13.9   administering insurance or self-insurance plans are subject to 
 13.10  the supervision and examination by the commissioner.  Vendors of 
 13.11  risk management services, entities administering insurance or 
 13.12  self-insurance plans, and insurance or self-insurance plans 
 13.13  established or operated by them are subject to the trade 
 13.14  practice requirements of sections 72A.19 to 72A.30.  In lieu of 
 13.15  an unlimited guarantee from a parent corporation for a vendor of 
 13.16  risk management services or an entity administering insurance or 
 13.17  self-insurance plans, the commissioner may accept a surety bond 
 13.18  in a form satisfactory to the commissioner in an amount equal to 
 13.19  120 percent of the total amount of claims handled by the 
 13.20  applicant in the prior year.  If at any time the total amount of 
 13.21  claims handled during a year exceeds the amount upon which the 
 13.22  bond was calculated, the administrator shall immediately notify 
 13.23  the commissioner.  The commissioner may require that the bond be 
 13.24  increased accordingly.  
 13.25     No contract entered into after July 1, 2001, between a 
 13.26  licensed vendor of risk management services and a group 
 13.27  authorized to self-insure for workers' compensation liabilities 
 13.28  under section 79A.03, subdivision 6, may take effect until it 
 13.29  has been filed with the commissioner, and either (1) the 
 13.30  commissioner has approved it or (2) 60 days have elapsed and the 
 13.31  commissioner has not disapproved it as misleading or violative 
 13.32  of public policy. 
 13.33     (5)  [RULEMAKING AUTHORITY.] To carry out the purposes of 
 13.34  this subdivision, the commissioner may adopt rules pursuant to 
 13.35  sections 14.001 to 14.69.  These rules may: 
 13.36     (a) establish reporting requirements for administrators of 
 14.1   insurance or self-insurance plans; 
 14.2      (b) establish standards and guidelines to assure the 
 14.3   adequacy of financing, reinsuring, and administration of 
 14.4   insurance or self-insurance plans; 
 14.5      (c) establish bonding requirements or other provisions 
 14.6   assuring the financial integrity of entities administering 
 14.7   insurance or self-insurance plans; or 
 14.8      (d) establish other reasonable requirements to further the 
 14.9   purposes of this subdivision. 
 14.10     [EFFECTIVE DATE.] This section is effective July 1, 2001. 
 14.11     Sec. 8.  Minnesota Statutes 2000, section 60K.14, 
 14.12  subdivision 2, is amended to read: 
 14.13     Subd. 2.  [FEES FOR SERVICES.] No person shall charge a fee 
 14.14  for any services rendered in connection with the solicitation, 
 14.15  negotiation, or servicing of any insurance contract unless: 
 14.16     (1) before rendering the services, a written statement is 
 14.17  provided disclosing: 
 14.18     (i) the services for which fees are charged; 
 14.19     (ii) the amount of the fees; 
 14.20     (iii) that the fees are charged in addition to premiums; 
 14.21  and 
 14.22     (iv) that premiums include a commission; and 
 14.23     (2) all fees charged are reasonable in relation to the 
 14.24  services rendered. 
 14.25     No person shall charge a fee in connection with the 
 14.26  submitting of a FAIR plan application. 
 14.27     [EFFECTIVE DATE.] This section is effective the day 
 14.28  following final enactment. 
 14.29     Sec. 9.  Minnesota Statutes 2000, section 61A.072, is 
 14.30  amended by adding a subdivision to read: 
 14.31     Subd. 6.  [ACCELERATED BENEFITS.] (a) "Accelerated benefits"
 14.32  covered under this section are benefits payable under the life 
 14.33  insurance contract: 
 14.34     (1) to a policyholder or certificate holder, during the 
 14.35  lifetime of the insured, in anticipation of death upon the 
 14.36  occurrence of a specified life-threatening or catastrophic 
 15.1   condition as defined by the policy or rider; 
 15.2      (2) that reduce the death benefit otherwise payable under 
 15.3   the life insurance contract; and 
 15.4      (3) that are payable upon the occurrence of a single 
 15.5   qualifying event that results in the payment of a benefit amount 
 15.6   fixed at the time of acceleration. 
 15.7      (b) "Qualifying event" means one or more of the following: 
 15.8      (1) a medical condition that would result in a drastically 
 15.9   limited life span as specified in the contract; 
 15.10     (2) a medical condition that has required or requires 
 15.11  extraordinary medical intervention, such as, but not limited to, 
 15.12  major organ transplant or continuous artificial life support 
 15.13  without which the insured would die; or 
 15.14     (3) a condition that requires continuous confinement in an 
 15.15  eligible institution as defined in the contract if the insured 
 15.16  is expected to remain there for the rest of the insured's life. 
 15.17     [EFFECTIVE DATE.] This section is effective July 1, 2001. 
 15.18     Sec. 10.  Minnesota Statutes 2000, section 61A.072, is 
 15.19  amended by adding a subdivision to read: 
 15.20     Subd. 7.  [ADMINISTRATIVE COSTS.] Administrative costs must 
 15.21  be reasonable and not exceed $300.  The insurer may charge 
 15.22  interest during the acceleration period, not to exceed the 
 15.23  policy's loan rate. 
 15.24     [EFFECTIVE DATE.] This section is effective July 1, 2001. 
 15.25     Sec. 11.  Minnesota Statutes 2000, section 61A.08, is 
 15.26  amended to read: 
 15.27     61A.08 [EXCEPTIONS.] 
 15.28     Sections 61A.02, 61A.03, 61A.07, 61A.23, and 61A.25 shall 
 15.29  not, except as expressly provided in this chapter, apply to 
 15.30  industrial or group term policies, or to corporations or 
 15.31  associations operating on the assessment or fraternal plan, but 
 15.32  every contract issued prior to the operative date specified in 
 15.33  section 61A.245 containing a provision for a deferred annuity on 
 15.34  the life of the insured only, unless paid for by a single 
 15.35  premium, shall provide that, in event of the nonpayment of any 
 15.36  premium after three full years' premium shall have been paid, 
 16.1   the annuity shall automatically become converted into a paid-up 
 16.2   annuity for that proportion of the original annuity as the 
 16.3   number of completed years' premiums paid bears to the total 
 16.4   number of premiums required under the contract. 
 16.5      [EFFECTIVE DATE.] This section is effective the day 
 16.6   following final enactment. 
 16.7      Sec. 12.  Minnesota Statutes 2000, section 61A.09, 
 16.8   subdivision 1, is amended to read: 
 16.9      Subdivision 1.  No group life insurance policy or group 
 16.10  annuity shall be issued for delivery in this state until the 
 16.11  form thereof and the form of any certificates issued thereunder 
 16.12  have been filed in accordance with and subject to the provisions 
 16.13  of section 61A.02.  Each person insured under such a group life 
 16.14  insurance policy (excepting policies which insure the lives of 
 16.15  debtors of a creditor or vendor to secure payment of 
 16.16  indebtedness) shall be furnished a certificate of insurance 
 16.17  issued by the insurer and containing the following: 
 16.18     (a) Name and location of the insurance company; 
 16.19     (b) A statement as to the insurance protection to which the 
 16.20  certificate holder is entitled, including any changes in such 
 16.21  protection depending on the age of the person whose life is 
 16.22  insured; 
 16.23     (c) Any and all provisions regarding the termination or 
 16.24  reduction of the certificate holder's insurance protection; 
 16.25     (d) A statement that the master group policy may be 
 16.26  examined at a reasonably accessible place; 
 16.27     (e) The maximum rate of contribution to be paid by the 
 16.28  certificate holder; 
 16.29     (f) Beneficiary and method required to change such 
 16.30  beneficiary; 
 16.31     (g) A statement that alternative methods for the payment of 
 16.32  group life policy proceeds of $15,000 or more must be offered to 
 16.33  beneficiaries in lieu of a lump sum distribution, at their 
 16.34  request.  Alternative payment methods which must be offered at 
 16.35  the request of the beneficiaries must include, but are not 
 16.36  limited to, a life income option, an income option for fixed 
 17.1   amounts or fixed time periods, and the option to select an 
 17.2   interest-bearing account with the company with the right to 
 17.3   select another option at a later date; 
 17.4      (h) In the case of a group term insurance policy if the 
 17.5   policy provides that insurance of the certificate holder will 
 17.6   terminate, in case of a policy issued to an employer, by reason 
 17.7   of termination of the certificate holder's employment, or in 
 17.8   case of a policy issued to an organization of which the 
 17.9   certificate holder is a member, by reason of termination of 
 17.10  membership, a provision to the effect that in case of 
 17.11  termination of employment or membership, or in case of 
 17.12  termination of the group policy, the certificate holder shall be 
 17.13  entitled to have issued by the insurer, without evidence of 
 17.14  insurability, upon application made to the insurer within 31 
 17.15  days after the termination, and upon payment of the premium 
 17.16  applicable to the class of risk to which that person belongs and 
 17.17  to the form and amount of the policy at that person's then 
 17.18  attained age, a policy of life insurance only, in any one of the 
 17.19  forms customarily issued by the insurer except term insurance, 
 17.20  in an amount equal to the amount of the life insurance 
 17.21  protection under such group insurance policy at the time of such 
 17.22  termination; and shall contain a further provision to the effect 
 17.23  that upon the death of the certificate holder during such 31-day 
 17.24  period and before any such individual policy has become 
 17.25  effective, the amount of insurance for which the certificate 
 17.26  holder was entitled to make application shall be payable as a 
 17.27  death benefit by the insurer.  Any policy offered in compliance 
 17.28  with the requirements of this paragraph must be guaranteed 
 17.29  renewable.  
 17.30     This section applies to a policy, certificate of insurance, 
 17.31  or similar evidence of coverage issued to a Minnesota resident 
 17.32  or issued to provide coverage to a Minnesota resident.  This 
 17.33  section does not apply to a certificate of insurance or similar 
 17.34  evidence of coverage that meets the conditions of section 
 17.35  61A.093, subdivision 2. 
 17.36     [EFFECTIVE DATE.] This section is effective the day 
 18.1   following final enactment. 
 18.2      Sec. 13.  Minnesota Statutes 2000, section 62A.021, 
 18.3   subdivision 3, is amended to read: 
 18.4      Subd. 3.  [LOSS RATIO DISCLOSURE.] (a) Each health care 
 18.5   policy form or health care certificate form for which 
 18.6   subdivision 1 requires compliance with a loss ratio requirement 
 18.7   shall prominently display the disclosure provided in paragraph 
 18.8   (b) on its declarations sheet if it has one and, if not, on its 
 18.9   front page.  The disclosure must also be prominently displayed 
 18.10  in any marketing materials used in connection with it. 
 18.11     (b) The disclosure must be in the following format:  
 18.12     Notice:  This disclosure is required by Minnesota law.  
 18.13  This policy or certificate is expected to return on average 
 18.14  (fill in anticipated loss ratio approved by the commissioner) 
 18.15  percent of your premium dollar for health care.  The lowest 
 18.16  percentage permitted by state law for this policy or certificate 
 18.17  is (fill in applicable minimum loss ratio).  This means that, on 
 18.18  the average, policyholders may expect that $....... of each $100 
 18.19  in premiums will be returned as benefits to the policyholder. 
 18.20     (c) This subdivision applies to policies and certificates 
 18.21  issued on or after January 1, 1998. 
 18.22     [EFFECTIVE DATE.] This section is effective January 1, 2002.
 18.23     Sec. 14.  Minnesota Statutes 2000, section 62A.023, is 
 18.24  amended to read: 
 18.25     62A.023 [NOTICE OF RATE CHANGE.] 
 18.26     A health insurer or service plan corporation carrier must 
 18.27  send written notice to its policyholders and contract holders at 
 18.28  their last known address at least 30 days in advance of the 
 18.29  effective date of a proposed rate change.  The notice must 
 18.30  disclose the specific reasons for the rate change, including 
 18.31  medical cost inflation, statutory changes, losses, or other 
 18.32  reasons.  This notice requirement does not apply to individual 
 18.33  certificate holders covered by group insurance policies or group 
 18.34  subscriber contracts.  
 18.35     [EFFECTIVE DATE.] This section is effective January 1, 2002.
 18.36     Sec. 15.  Minnesota Statutes 2000, section 62A.04, 
 19.1   subdivision 2, is amended to read: 
 19.2      Subd. 2.  [REQUIRED PROVISIONS.] Except as provided in 
 19.3   subdivision 4 each such policy delivered or issued for delivery 
 19.4   to any person in this state shall contain the provisions 
 19.5   specified in this subdivision in the words in which the same 
 19.6   appear in this section.  The insurer may, at its option, 
 19.7   substitute for one or more of such provisions corresponding 
 19.8   provisions of different wording approved by the commissioner 
 19.9   which are in each instance not less favorable in any respect to 
 19.10  the insured or the beneficiary.  Such provisions shall be 
 19.11  preceded individually by the caption appearing in this 
 19.12  subdivision or, at the option of the insurer, by such 
 19.13  appropriate individual or group captions or subcaptions as the 
 19.14  commissioner may approve. 
 19.15     (1) A provision as follows: 
 19.16     ENTIRE CONTRACT; CHANGES:  This policy, including the 
 19.17  endorsements and the attached papers, if any, constitutes the 
 19.18  entire contract of insurance.  No change in this policy shall be 
 19.19  valid until approved by an executive officer of the insurer and 
 19.20  unless such approval be endorsed hereon or attached hereto.  No 
 19.21  agent has authority to change this policy or to waive any of its 
 19.22  provisions. 
 19.23     (2) A provision as follows: 
 19.24     TIME LIMIT ON CERTAIN DEFENSES:  (a) After two years from 
 19.25  the date of issue of this policy no misstatements, except 
 19.26  fraudulent misstatements, made by the applicant in the 
 19.27  application for such policy shall be used to void the policy or 
 19.28  to deny a claim for loss incurred or disability (as defined in 
 19.29  the policy) commencing after the expiration of such two year 
 19.30  period. 
 19.31     The foregoing policy provision shall not be so construed as 
 19.32  to affect any legal requirement for avoidance of a policy or 
 19.33  denial of a claim during such initial two year period, nor to 
 19.34  limit the application of clauses (1), (2), (3), (4) and (5), in 
 19.35  the event of misstatement with respect to age or occupation or 
 19.36  other insurance.  A policy which the insured has the right to 
 20.1   continue in force subject to its terms by the timely payment of 
 20.2   premium (1) until at least age 50 or, (2) in the case of a 
 20.3   policy issued after age 44, for at least five years from its 
 20.4   date of issue, may contain in lieu of the foregoing the 
 20.5   following provisions (from which the clause in parentheses may 
 20.6   be omitted at the insurer's option) under the caption 
 20.7   "INCONTESTABLE": 
 20.8      After this policy has been in force for a period of two 
 20.9   years during the lifetime of the insured (excluding any period 
 20.10  during which the insured is disabled), it shall become 
 20.11  incontestable as to the statements contained in the application. 
 20.12     (b) No claim for loss incurred or disability (as defined in 
 20.13  the policy) commencing after two years from the date of issue of 
 20.14  this policy shall be reduced or denied on the ground that a 
 20.15  disease or physical condition not excluded from coverage by name 
 20.16  or specific description effective on the date of loss had 
 20.17  existed prior to the effective date of coverage of this policy. 
 20.18     All claims for loss incurred or disability beginning after 
 20.19  two years from the date of issue of the policy must be paid 
 20.20  unless excluded from coverage by name or specific description. 
 20.21     (3) A provision as follows: 
 20.22     GRACE PERIOD:  A grace period of ..... (insert a number not 
 20.23  less than "7" for weekly premium policies, "10" for monthly 
 20.24  premium policies and "31" for all other policies) days will be 
 20.25  granted for the payment of each premium falling due after the 
 20.26  first premium, during which grace period the policy shall 
 20.27  continue in force. 
 20.28     A policy which contains a cancellation provision may add, 
 20.29  at the end of the above provision, 
 20.30     subject to the right of the insurer to cancel in accordance 
 20.31  with the cancellation provision hereof. 
 20.32     A policy in which the insurer reserves the right to refuse 
 20.33  any renewal shall have, at the beginning of the above provision, 
 20.34     Unless not less than five days prior to the premium due 
 20.35  date the insurer has delivered to the insured or has mailed to 
 20.36  the insured's last address as shown by the records of the 
 21.1   insurer written notice of its intention not to renew this policy 
 21.2   beyond the period for which the premium has been accepted. 
 21.3      (4) A provision as follows: 
 21.4      REINSTATEMENT:  If any renewal premium be not paid within 
 21.5   the time granted the insured for payment, a subsequent 
 21.6   acceptance of premium by the insurer or by any agent duly 
 21.7   authorized by the insurer to accept such premium, without 
 21.8   requiring in connection therewith an application for 
 21.9   reinstatement, shall reinstate the policy.  If the insurer or 
 21.10  such agent requires an application for reinstatement and issues 
 21.11  a conditional receipt for the premium tendered, the policy will 
 21.12  be reinstated upon approval of such application by the insurer 
 21.13  or, lacking such approval, upon the forty-fifth day following 
 21.14  the date of such conditional receipt unless the insurer has 
 21.15  previously notified the insured in writing of its disapproval of 
 21.16  such application.  For health plans described in section 
 21.17  62A.011, subdivision 3, clause (10), an insurer must accept 
 21.18  payment of a renewal premium and reinstate the policy, if the 
 21.19  insured applies for reinstatement no later than 60 days after 
 21.20  the due date for the premium payment, unless: 
 21.21     (1) the insured has in the interim left the state or the 
 21.22  insurer's service area; or 
 21.23     (2) the insured has applied for reinstatement on two or 
 21.24  more prior occasions. 
 21.25     The reinstated policy shall cover only loss resulting from 
 21.26  such accidental injury as may be sustained after the date of 
 21.27  reinstatement and loss due to such sickness as may begin more 
 21.28  than ten days after such date.  In all other respects the 
 21.29  insured and insurer shall have the same rights thereunder as 
 21.30  they had under the policy immediately before the due date of the 
 21.31  defaulted premium, subject to any provisions endorsed hereon or 
 21.32  attached hereto in connection with the reinstatement.  Any 
 21.33  premium accepted in connection with a reinstatement shall be 
 21.34  applied to a period for which premium has not been previously 
 21.35  paid, but not to any period more than 60 days prior to the date 
 21.36  of reinstatement.  The last sentence of the above provision may 
 22.1   be omitted from any policy which the insured has the right to 
 22.2   continue in force subject to its terms by the timely payment of 
 22.3   premiums (1) until at least age 50, or, (2) in the case of a 
 22.4   policy issued after age 44, for at least five years from its 
 22.5   date of issue. 
 22.6      (5) A provision as follows: 
 22.7      NOTICE OF CLAIM:  Written notice of claim must be given to 
 22.8   the insurer within 20 days after the occurrence or commencement 
 22.9   of any loss covered by the policy, or as soon thereafter as is 
 22.10  reasonably possible.  Notice given by or on behalf of the 
 22.11  insured or the beneficiary to the insurer at ..... (insert the 
 22.12  location of such office as the insurer may designate for the 
 22.13  purpose), or to any authorized agent of the insurer, with 
 22.14  information sufficient to identify the insured, shall be deemed 
 22.15  notice to the insurer. 
 22.16     In a policy providing a loss-of-time benefit which may be 
 22.17  payable for at least two years, an insurer may at its option 
 22.18  insert the following between the first and second sentences of 
 22.19  the above provision: 
 22.20     Subject to the qualifications set forth below, if the 
 22.21  insured suffers loss of time on account of disability for which 
 22.22  indemnity may be payable for at least two years, the insured 
 22.23  shall, at least once in every six months after having given 
 22.24  notice of claim, give to the insurer notice of continuance of 
 22.25  said disability, except in the event of legal incapacity.  The 
 22.26  period of six months following any filing of proof by the 
 22.27  insured or any payment by the insurer on account of such claim 
 22.28  or any denial of liability in whole or in part by the insurer 
 22.29  shall be excluded in applying this provision.  Delay in the 
 22.30  giving of such notice shall not impair the insured's right to 
 22.31  any indemnity which would otherwise have accrued during the 
 22.32  period of six months preceding the date on which such notice is 
 22.33  actually given. 
 22.34     (6) A provision as follows: 
 22.35     CLAIM FORMS:  The insurer, upon receipt of a notice of 
 22.36  claim, will furnish to the claimant such forms as are usually 
 23.1   furnished by it for filing proofs of loss.  If such forms are 
 23.2   not furnished within 15 days after the giving of such notice the 
 23.3   claimant shall be deemed to have complied with the requirements 
 23.4   of this policy as to proof of loss upon submitting, within the 
 23.5   time fixed in the policy for filing proofs of loss, written 
 23.6   proof covering the occurrence, the character and the extent of 
 23.7   the loss for which claim is made. 
 23.8      (7) A provision as follows: 
 23.9      PROOFS OF LOSS:  Written proof of loss must be furnished to 
 23.10  the insurer at its said office in case of claim for loss for 
 23.11  which this policy provides any periodic payment contingent upon 
 23.12  continuing loss within 90 days after the termination of the 
 23.13  period for which the insurer is liable and in case of claim for 
 23.14  any other loss within 90 days after the date of such loss.  
 23.15  Failure to furnish such proof within the time required shall not 
 23.16  invalidate nor reduce any claim if it was not reasonably 
 23.17  possible to give proof within such time, provided such proof is 
 23.18  furnished as soon as reasonably possible and in no event, except 
 23.19  in the absence of legal capacity, later than one year from the 
 23.20  time proof is otherwise required. 
 23.21     (8) A provision as follows: 
 23.22     TIME OF PAYMENT OF CLAIMS:  Indemnities payable under this 
 23.23  policy for any loss other than loss for which this policy 
 23.24  provides periodic payment will be paid immediately upon receipt 
 23.25  of due written proof of such loss.  Subject to due written proof 
 23.26  of loss, all accrued indemnities for loss for which this policy 
 23.27  provides periodic payment will be paid ..... (insert period for 
 23.28  payment which must not be less frequently than monthly) and any 
 23.29  balance remaining unpaid upon the termination of liability will 
 23.30  be paid immediately upon receipt of due written proof. 
 23.31     (9) A provision as follows: 
 23.32     PAYMENT OF CLAIMS:  Indemnity for loss of life will be 
 23.33  payable in accordance with the beneficiary designation and the 
 23.34  provisions respecting such payment which may be prescribed 
 23.35  herein and effective at the time of payment.  If no such 
 23.36  designation or provision is then effective, such indemnity shall 
 24.1   be payable to the estate of the insured. Any other accrued 
 24.2   indemnities unpaid at the insured's death may, at the option of 
 24.3   the insurer, be paid either to such beneficiary or to such 
 24.4   estate.  All other indemnities will be payable to the insured. 
 24.5      The following provisions, or either of them, may be 
 24.6   included with the foregoing provision at the option of the 
 24.7   insurer: 
 24.8      If any indemnity of this policy shall be payable to the 
 24.9   estate of the insured, or to an insured or beneficiary who is a 
 24.10  minor or otherwise not competent to give a valid release, the 
 24.11  insurer may pay such indemnity, up to an amount not exceeding 
 24.12  $..... (insert an amount which shall not exceed $1,000), to any 
 24.13  relative by blood or connection by marriage of the insured or 
 24.14  beneficiary who is deemed by the insurer to be equitably 
 24.15  entitled thereto.  Any payment made by the insurer in good faith 
 24.16  pursuant to this provision shall fully discharge the insurer to 
 24.17  the extent of such payment. 
 24.18     Subject to any written direction of the insured in the 
 24.19  application or otherwise all or a portion of any indemnities 
 24.20  provided by this policy on account of hospital, nursing, 
 24.21  medical, or surgical services may, at the insurer's option and 
 24.22  unless the insured requests otherwise in writing not later than 
 24.23  the time of filing proofs of such loss, be paid directly to the 
 24.24  hospital or person rendering such services; but it is not 
 24.25  required that the service be rendered by a particular hospital 
 24.26  or person. 
 24.27     (10) A provision as follows: 
 24.28     PHYSICAL EXAMINATIONS AND AUTOPSY:  The insurer at its own 
 24.29  expense shall have the right and opportunity to examine the 
 24.30  person of the insured when and as often as it may reasonably 
 24.31  require during the pendency of a claim hereunder and to make an 
 24.32  autopsy in case of death where it is not forbidden by law. 
 24.33     (11) A provision as follows: 
 24.34     LEGAL ACTIONS:  No action at law or in equity shall be 
 24.35  brought to recover on this policy prior to the expiration of 60 
 24.36  days after written proof of loss has been furnished in 
 25.1   accordance with the requirements of this policy.  No such action 
 25.2   shall be brought after the expiration of three years after the 
 25.3   time written proof of loss is required to be furnished. 
 25.4      (12) A provision as follows: 
 25.5      CHANGE OF BENEFICIARY:  Unless the insured makes an 
 25.6   irrevocable designation of beneficiary, the right to change of 
 25.7   beneficiary is reserved to the insured and the consent of the 
 25.8   beneficiary or beneficiaries shall not be requisite to surrender 
 25.9   or assignment of this policy or to any change of beneficiary or 
 25.10  beneficiaries, or to any other changes in this policy.  The 
 25.11  first clause of this provision, relating to the irrevocable 
 25.12  designation of beneficiary, may be omitted at the insurer's 
 25.13  option. 
 25.14     [EFFECTIVE DATE.] This section is effective the day 
 25.15  following final enactment. 
 25.16     Sec. 16.  Minnesota Statutes 2000, section 62A.105, 
 25.17  subdivision 2, is amended to read: 
 25.18     Subd. 2.  [REQUIREMENT.] If an issuer of policies or plans 
 25.19  referred to in subdivision 1 ceases to offer a particular policy 
 25.20  or subscriber contract to the general public or otherwise stops 
 25.21  adding new insureds to the group of covered persons, the issuer 
 25.22  shall allow any covered person to transfer to another 
 25.23  substantially similar policy or contract currently being sold by 
 25.24  the issuer.  The issuer shall notify each covered person when 
 25.25  the issuer stops adding new insureds to the group of covered 
 25.26  persons, and explain how any covered person can transfer to a 
 25.27  similar policy or contract.  The issuer shall permit the 
 25.28  transfer without any preexisting condition limitation, waiting 
 25.29  period, or other restriction of any type other than those which 
 25.30  applied to the insured under the prior policy or contract.  This 
 25.31  section does not apply to persons who were covered under an 
 25.32  individual policy or contract prior to July 1, 1994. 
 25.33     Sec. 17.  Minnesota Statutes 2000, section 62A.17, 
 25.34  subdivision 1, is amended to read: 
 25.35     Subdivision 1.  [CONTINUATION OF COVERAGE.] Every group 
 25.36  insurance policy, group subscriber contract, and health care 
 26.1   plan included within the provisions of section 62A.16, except 
 26.2   policies, contracts, or health care plans covering employees of 
 26.3   an agency of the federal government, shall contain a provision 
 26.4   which permits every covered employee who is voluntarily or 
 26.5   involuntarily terminated or laid off from employment, if the 
 26.6   policy, contract, or health care plan remains in force for 
 26.7   active employees of the employer, to elect to continue the 
 26.8   coverage for the employee and dependents. 
 26.9      An employee shall be considered to be laid off from 
 26.10  employment if there is a reduction in hours to the point where 
 26.11  the employee is no longer eligible under the policy, contract, 
 26.12  or health care plan.  Termination shall not include discharge 
 26.13  for gross misconduct.  
 26.14     Upon request by the terminated or laid off employee, a 
 26.15  health carrier must provide the forms and instructions necessary 
 26.16  to enable the employee to elect continuation of coverage. 
 26.17     [EFFECTIVE DATE.] This section is effective the day 
 26.18  following final enactment. 
 26.19     Sec. 18.  Minnesota Statutes 2000, section 62A.20, 
 26.20  subdivision 1, is amended to read: 
 26.21     Subdivision 1.  [REQUIREMENT.] Every policy of accident and 
 26.22  health insurance providing coverage of hospital or medical 
 26.23  expense on either an expense-incurred basis or other than an 
 26.24  expense-incurred basis, which in addition to covering the 
 26.25  insured also provides coverage to the spouse and dependent 
 26.26  children of the insured shall contain: 
 26.27     (1) a provision which permits allows the spouse and 
 26.28  dependent children to elect to continue coverage when the 
 26.29  insured becomes enrolled for benefits under Title XVIII of the 
 26.30  Social Security Act (Medicare); and 
 26.31     (2) a provision which permits allows the dependent children 
 26.32  to continue coverage when they cease to be dependent children 
 26.33  under the generally applicable requirement of the plan. 
 26.34     Upon request by the insured or the insured's spouse or 
 26.35  dependent child, a health carrier must provide the forms and 
 26.36  instructions necessary to enable the spouse or child to elect 
 27.1   continuation of coverage. 
 27.2      [EFFECTIVE DATE.] This section is effective the day 
 27.3   following final enactment. 
 27.4      Sec. 19.  Minnesota Statutes 2000, section 62A.21, 
 27.5   subdivision 2a, is amended to read: 
 27.6      Subd. 2a.  [CONTINUATION PRIVILEGE.] Every policy described 
 27.7   in subdivision 1 shall contain a provision which permits 
 27.8   continuation of coverage under the policy for the insured's 
 27.9   former spouse and dependent children upon entry of a valid 
 27.10  decree of dissolution of marriage.  The coverage shall be 
 27.11  continued until the earlier of the following dates: 
 27.12     (a) the date the insured's former spouse becomes covered 
 27.13  under any other group health plan; or 
 27.14     (b) the date coverage would otherwise terminate under the 
 27.15  policy. 
 27.16     If the coverage is provided under a group policy, any 
 27.17  required premium contributions for the coverage shall be paid by 
 27.18  the insured on a monthly basis to the group policyholder for 
 27.19  remittance to the insurer.  The policy must require the group 
 27.20  policyholder to, upon request, provide the insured with written 
 27.21  verification from the insurer of the cost of this coverage 
 27.22  promptly at the time of eligibility for this coverage and at any 
 27.23  time during the continuation period.  In no event shall the 
 27.24  amount of premium charged exceed 102 percent of the cost to the 
 27.25  plan for such period of coverage for other similarly situated 
 27.26  spouses and dependent children with respect to whom the marital 
 27.27  relationship has not dissolved, without regard to whether such 
 27.28  cost is paid by the employer or employee. 
 27.29     Upon request by the insured's former spouse or dependent 
 27.30  child, a health carrier must provide the forms and instructions 
 27.31  necessary to enable the child or former spouse to elect 
 27.32  continuation of coverage. 
 27.33     [EFFECTIVE DATE.] This section is effective the day 
 27.34  following final enactment. 
 27.35     Sec. 20.  Minnesota Statutes 2000, section 62A.30, 
 27.36  subdivision 2, is amended to read: 
 28.1      Subd. 2.  [REQUIRED COVERAGE.] Every policy, plan, 
 28.2   certificate, or contract referred to in subdivision 1 issued or 
 28.3   renewed after August 1, 1988, that provides coverage to a 
 28.4   Minnesota resident must provide coverage for routine screening 
 28.5   procedures for cancer, including mammograms and pap smears, when 
 28.6   ordered or provided by a physician in accordance with the 
 28.7   standard practice of medicine.  This coverage includes the cost 
 28.8   of the office visit during which the screening procedures are 
 28.9   performed. 
 28.10     [EFFECTIVE DATE.] This section is effective the day 
 28.11  following final enactment. 
 28.12     Sec. 21.  Minnesota Statutes 2000, section 62A.302, is 
 28.13  amended to read: 
 28.14     62A.302 [COVERAGE OF DEPENDENTS.] 
 28.15     Subdivision 1.  [SCOPE OF COVERAGE.] This section applies 
 28.16  to all health plans as defined in section 62A.011: 
 28.17     (1) a health plan as defined in section 62A.011; 
 28.18     (2) coverage described in section 62A.011, subdivision 3, 
 28.19  clauses (4), (6), (7), (8), (9), and (10); and 
 28.20     (3) a policy, contract, or certificate issued by a 
 28.21  community integrated service network licensed under chapter 62N. 
 28.22     Subd. 2.  [REQUIRED COVERAGE.] Every health plan included 
 28.23  in subdivision 1 that provides dependent coverage must define 
 28.24  "dependent" no more restrictively than the definition provided 
 28.25  in section 62L.02. 
 28.26     Sec. 22.  Minnesota Statutes 2000, section 62A.3093, is 
 28.27  amended to read: 
 28.28     62A.3093 [COVERAGE FOR DIABETES.] 
 28.29     A health plan, including a plan providing the coverage 
 28.30  specified in section 62A.011, subdivision 3, clause (10), must 
 28.31  provide coverage for:  (1) all physician prescribed medically 
 28.32  appropriate and necessary equipment and supplies used in the 
 28.33  management and treatment of diabetes; (2) insulin and any and 
 28.34  all prescription drugs used in the treatment of diabetes; and 
 28.35  (2) (3) diabetes outpatient self-management training and 
 28.36  education, including medical nutrition therapy, that is provided 
 29.1   by a certified, registered, or licensed health care professional 
 29.2   working in a program consistent with the national standards of 
 29.3   diabetes self-management education as established by the 
 29.4   American Diabetes Association.  Coverage must include persons 
 29.5   with gestational, type I or type II diabetes.  Coverage required 
 29.6   under this section is subject to the same deductible or 
 29.7   coinsurance provisions applicable to the plan's hospital, 
 29.8   medical expense, medical equipment, or prescription drug 
 29.9   benefits.  A health carrier may not reduce or eliminate coverage 
 29.10  due to this requirement. 
 29.11     [EFFECTIVE DATE.] This section is effective the day 
 29.12  following final enactment. 
 29.13     Sec. 23.  Minnesota Statutes 2000, section 62A.31, 
 29.14  subdivision 1a, is amended to read: 
 29.15     Subd. 1a.  [MINIMUM COVERAGE.] The policy must provide a 
 29.16  minimum of the coverage set out in subdivision 2 and for an 
 29.17  extended basic plan, the additional requirements of section 
 29.18  62E.07. 
 29.19     [EFFECTIVE DATE.] This section is effective the day 
 29.20  following final enactment. 
 29.21     Sec. 24.  Minnesota Statutes 2000, section 62A.31, 
 29.22  subdivision 1i, is amended to read: 
 29.23     Subd. 1i.  [REPLACEMENT COVERAGE.] If a Medicare supplement 
 29.24  policy or certificate replaces another Medicare supplement 
 29.25  policy or certificate, the issuer of the replacing policy or 
 29.26  certificate shall waive any time periods applicable to 
 29.27  preexisting conditions, waiting periods, elimination periods, 
 29.28  and probationary periods in the new Medicare supplement policy 
 29.29  or certificate for benefits to the extent the time was spent 
 29.30  under the original policy or certificate.  For purposes of this 
 29.31  subdivision, "Medicare supplement policy or certificate" means 
 29.32  all coverage described in section 62A.011, subdivision 4 3, 
 29.33  clause (10). 
 29.34     [EFFECTIVE DATE.] This section is effective the day 
 29.35  following final enactment. 
 29.36     Sec. 25.  Minnesota Statutes 2000, section 62A.31, 
 30.1   subdivision 3, is amended to read: 
 30.2      Subd. 3.  [DEFINITIONS.] (a) The definitions provided in 
 30.3   this subdivision apply to sections 62A.31 to 62A.44. 
 30.4      (b) "Accident," "accidental injury," or "accidental means" 
 30.5   means to employ "result" language and does not include words 
 30.6   that establish an accidental means test or use words such as 
 30.7   "external," "violent," "visible wounds," or similar words of 
 30.8   description or characterization. 
 30.9      (1) The definition shall not be more restrictive than the 
 30.10  following:  "Injury or injuries for which benefits are provided 
 30.11  means accidental bodily injury sustained by the insured person 
 30.12  which is the direct result of an accident, independent of 
 30.13  disease or bodily infirmity or any other cause, and occurs while 
 30.14  insurance coverage is in force." 
 30.15     (2) The definition may provide that injuries shall not 
 30.16  include injuries for which benefits are provided or available 
 30.17  under a workers' compensation, employer's liability or similar 
 30.18  law, or motor vehicle no-fault plan, unless prohibited by law. 
 30.19     (c) "Applicant" means: 
 30.20     (1) in the case of an individual Medicare supplement policy 
 30.21  or certificate, the person who seeks to contract for insurance 
 30.22  benefits; and 
 30.23     (2) in the case of a group Medicare supplement policy or 
 30.24  certificate, the proposed certificate holder. 
 30.25     (d) "Bankruptcy" means a situation in which a 
 30.26  Medicare+Choice organization that is not an issuer has filed, or 
 30.27  has had filed against it, a petition for declaration of 
 30.28  bankruptcy and has ceased doing business in the state. 
 30.29     (e) "Benefit period" or "Medicare benefit period" shall not 
 30.30  be defined more restrictively than as defined in the Medicare 
 30.31  program. 
 30.32     (f) "Certificate" means a certificate delivered or issued 
 30.33  for delivery in this state or offered to a resident of this 
 30.34  state under a group Medicare supplement policy or certificate. 
 30.35     (g) "Certificate form" means the form on which the 
 30.36  certificate is delivered or issued for delivery by the issuer. 
 31.1      (h) "Convalescent nursing home," "extended care facility," 
 31.2   or "skilled nursing facility" shall not be defined more 
 31.3   restrictively than as defined in the Medicare program. 
 31.4      (i) "Employee welfare benefit plan" means a plan, fund, or 
 31.5   program of employee benefits as defined in United States Code, 
 31.6   title 29, section 1002 (Employee Retirement Income Security Act).
 31.7      (j) "Health care expenses" means expenses of health 
 31.8   maintenance organizations associated with the delivery of health 
 31.9   care services which are analogous to incurred losses of 
 31.10  insurers.  The expenses shall not include: 
 31.11     (1) home office and overhead costs; 
 31.12     (2) advertising costs; 
 31.13     (3) commissions and other acquisition costs; 
 31.14     (4) taxes; 
 31.15     (5) capital costs; 
 31.16     (6) administrative costs; and 
 31.17     (7) claims processing costs. 
 31.18     (k) "Hospital" may be defined in relation to its status, 
 31.19  facilities, and available services or to reflect its 
 31.20  accreditation by the joint commission on accreditation of 
 31.21  hospitals, but not more restrictively than as defined in the 
 31.22  Medicare program. 
 31.23     (l) "Insolvency" means a situation in which an issuer, 
 31.24  licensed to transact the business of insurance in this state, 
 31.25  including the right to transact business as any type of issuer, 
 31.26  has had a final order of liquidation entered against it with a 
 31.27  finding of insolvency by a court of competent jurisdiction in 
 31.28  the issuer's state of domicile. 
 31.29     (m) "Issuer" includes insurance companies, fraternal 
 31.30  benefit societies, health service plan corporations, health 
 31.31  maintenance organizations, and any other entity delivering or 
 31.32  issuing for delivery Medicare supplement policies or 
 31.33  certificates in this state or offering these policies or 
 31.34  certificates to residents of this state. 
 31.35     (n) "Medicare" shall be defined in the policy and 
 31.36  certificate.  Medicare may be defined as the Health Insurance 
 32.1   for the Aged Act, title XVIII of the Social Security Amendments 
 32.2   of 1965, as amended, or title I, part I, of Public Law Number 
 32.3   89-97, as enacted by the 89th Congress of the United States of 
 32.4   America and popularly known as the Health Insurance for the Aged 
 32.5   Act, as amended. 
 32.6      (o) "Medicare eligible expenses" means health care expenses 
 32.7   covered by Medicare, to the extent recognized as reasonable and 
 32.8   medically necessary by Medicare. 
 32.9      (p) "Medicare+Choice plan" means a plan of coverage for 
 32.10  health benefits under Medicare part C as defined in section 1859 
 32.11  of the federal Social Security Act, United States Code, title 
 32.12  42, section 1395w-28, and includes: 
 32.13     (1) coordinated care plans which provide health care 
 32.14  services, including, but not limited to, health maintenance 
 32.15  organization plans, with or without a point-of-service option, 
 32.16  plans offered by provider-sponsored organizations, and preferred 
 32.17  provider organization plans; 
 32.18     (2) medical savings account plans coupled with a 
 32.19  contribution into a Medicare+Choice medical savings account; and 
 32.20     (3) Medicare+Choice private fee-for-service plans. 
 32.21     (q) "Medicare-related coverage" means a policy, contract, 
 32.22  or certificate issued as a supplement to Medicare, regulated 
 32.23  under sections 62A.31 to 62A.44, including Medicare select 
 32.24  coverage; policies, contracts, or certificates that supplement 
 32.25  Medicare issued by health maintenance organizations; or 
 32.26  policies, contracts, or certificates governed by section 1833 
 32.27  (known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA" 
 32.28  or "risk" contracts) of the federal Social Security Act, United 
 32.29  States Code, title 42, section 1395, et seq., as amended.; or 
 32.30  Section 4001 of the Balanced Budget Act of 1997 (BBA)(Public Law 
 32.31  105-33), Sections 1851 to 1859 of the Social Security Act 
 32.32  establishing Part C of the Medicare program, known as the 
 32.33  "Medicare+Choice program." 
 32.34     (r) "Medicare supplement policy or certificate" means a 
 32.35  group or individual policy of accident and sickness insurance or 
 32.36  a subscriber contract of hospital and medical service 
 33.1   associations or health maintenance organizations, or those 
 33.2   policies or certificates covered by section 1833 of the federal 
 33.3   Social Security Act, United States Code, title 42, section 1395, 
 33.4   et seq., or an issued policy under a demonstration project 
 33.5   specified under amendments to the federal Social Security Act, 
 33.6   which is advertised, marketed, or designed primarily as a 
 33.7   supplement to reimbursements under Medicare for the hospital, 
 33.8   medical, or surgical expenses of persons eligible for Medicare. 
 33.9      (s) "Physician" shall not be defined more restrictively 
 33.10  than as defined in the Medicare program or section 62A.04, 
 33.11  subdivision 1, or 62A.15, subdivision 3a. 
 33.12     (t) "Policy form" means the form on which the policy is 
 33.13  delivered or issued for delivery by the issuer. 
 33.14     (u) "Secretary" means the Secretary of the United States 
 33.15  Department of Health and Human Services. 
 33.16     (v) "Sickness" shall not be defined more restrictively than 
 33.17  the following: 
 33.18     "Sickness means illness or disease of an insured person 
 33.19     which first manifests itself after the effective date of 
 33.20     insurance and while the insurance is in force." 
 33.21     The definition may be further modified to exclude 
 33.22  sicknesses or diseases for which benefits are provided under a 
 33.23  workers' compensation, occupational disease, employer's 
 33.24  liability, or similar law. 
 33.25     [EFFECTIVE DATE.] This section is effective the day 
 33.26  following final enactment. 
 33.27     Sec. 26.  Minnesota Statutes 2000, section 62A.65, 
 33.28  subdivision 8, is amended to read: 
 33.29     Subd. 8.  [CESSATION OF INDIVIDUAL BUSINESS.] 
 33.30  Notwithstanding the provisions of subdivisions 1 to 7, a health 
 33.31  carrier may elect to cease doing business in the individual 
 33.32  health plan market in this state if it complies with the 
 33.33  requirements of this subdivision.  For purposes of this section, 
 33.34  "cease doing business" means to discontinue issuing new 
 33.35  individual health plans and to refuse to renew all of the health 
 33.36  carrier's existing individual health plans issued in this state 
 34.1   whose terms permit refusal to renew under the circumstances 
 34.2   specified in this subdivision.  This subdivision does not permit 
 34.3   cancellation of an individual health plan, unless the terms of 
 34.4   the health plan permit cancellation under the circumstances 
 34.5   specified in this subdivision.  A health carrier electing to 
 34.6   cease doing business in the individual health plan market in 
 34.7   this state shall notify the commissioner 180 days prior to the 
 34.8   effective date of the cessation.  Within 30 days after the 
 34.9   termination, the health carrier shall submit to the commissioner 
 34.10  a complete list of policyholders that have been terminated.  The 
 34.11  cessation of business does not include the failure of a health 
 34.12  carrier to offer or issue new business in the individual health 
 34.13  plan market or continue an existing product line in that market, 
 34.14  provided that a health carrier does not terminate, cancel, or 
 34.15  fail to renew its current individual health plan business.  A 
 34.16  health carrier electing to cease doing business in the 
 34.17  individual health plan market shall provide 120 days' written 
 34.18  notice to each policyholder covered by an individual health plan 
 34.19  issued by the health carrier.  This notice must also inform each 
 34.20  policyholder of the existence of the Minnesota Comprehensive 
 34.21  Health Association, the requirements for being accepted, the 
 34.22  procedures for applying for coverage, and the telephone numbers 
 34.23  at the department of health and the department of commerce for 
 34.24  information about private individual or family health coverage.  
 34.25  A health carrier that ceases to write new business in the 
 34.26  individual health plan market shall continue to be governed by 
 34.27  this section with respect to continuing individual health plan 
 34.28  business conducted by the health carrier.  A health carrier that 
 34.29  ceases to do business in the individual health plan market after 
 34.30  July 1, 1994, is prohibited from writing new business in the 
 34.31  individual health plan market in this state for a period of five 
 34.32  years from the date of notice to the commissioner.  This 
 34.33  subdivision applies to any health maintenance organization that 
 34.34  ceases to do business in the individual health plan market in 
 34.35  one service area with respect to that service area only.  
 34.36  Nothing in this subdivision prohibits an affiliated health 
 35.1   maintenance organization from continuing to do business in the 
 35.2   individual health plan market in that same service area.  The 
 35.3   right to refuse to renew an individual health plan under this 
 35.4   subdivision does not apply to individual health plans issued on 
 35.5   a guaranteed renewable basis that does not permit refusal to 
 35.6   renew under the circumstances specified in this subdivision.  
 35.7      Sec. 27.  Minnesota Statutes 2000, section 62E.04, 
 35.8   subdivision 4, is amended to read: 
 35.9      Subd. 4.  [MAJOR MEDICAL COVERAGE.] Each insurer and 
 35.10  fraternal shall affirmatively offer coverage of major medical 
 35.11  expenses to every applicant who applies to the insurer or 
 35.12  fraternal for a new unqualified policy, which has a lifetime 
 35.13  benefit limit of less than $1,000,000, at the time of 
 35.14  application and annually to every holder of such an unqualified 
 35.15  policy of accident and health insurance renewed by the insurer 
 35.16  or fraternal.  The coverage shall provide that when a covered 
 35.17  individual incurs out-of-pocket expenses of $5,000 or more 
 35.18  within a calendar year for services covered in section 62E.06, 
 35.19  subdivision 1, benefits shall be payable, subject to any 
 35.20  copayment authorized by the commissioner, up to a maximum 
 35.21  lifetime limit of $500,000 not less than $1,000,000.  The offer 
 35.22  of coverage of major medical expenses may consist of the offer 
 35.23  of a rider on an existing unqualified policy or a new policy 
 35.24  which is a qualified plan. 
 35.25     Sec. 28.  Minnesota Statutes 2000, section 62E.06, 
 35.26  subdivision 1, is amended to read: 
 35.27     Subdivision 1.  [NUMBER THREE PLAN.] A plan of health 
 35.28  coverage shall be certified as a number three qualified plan if 
 35.29  it otherwise meets the requirements established by chapters 62A 
 35.30  and, 62C, and 62Q, and the other laws of this state, whether or 
 35.31  not the policy is issued in Minnesota, and meets or exceeds the 
 35.32  following minimum standards: 
 35.33     (a) The minimum benefits for a covered individual shall, 
 35.34  subject to the other provisions of this subdivision, be equal to 
 35.35  at least 80 percent of the cost of covered services in excess of 
 35.36  an annual deductible which does not exceed $150 per person.  The 
 36.1   coverage shall include a limitation of $3,000 per person on 
 36.2   total annual out-of-pocket expenses for services covered under 
 36.3   this subdivision.  The coverage shall be subject to a maximum 
 36.4   lifetime benefit of not less than $500,000 $1,000,000. 
 36.5      The $3,000 limitation on total annual out-of-pocket 
 36.6   expenses and the $500,000 $1,000,000 maximum lifetime benefit 
 36.7   shall not be subject to change or substitution by use of an 
 36.8   actuarially equivalent benefit. 
 36.9      (b) Covered expenses shall be the usual and customary 
 36.10  charges for the following services and articles when prescribed 
 36.11  by a physician: 
 36.12     (1) hospital services; 
 36.13     (2) professional services for the diagnosis or treatment of 
 36.14  injuries, illnesses, or conditions, other than dental, which are 
 36.15  rendered by a physician or at the physician's direction; 
 36.16     (3) drugs requiring a physician's prescription; 
 36.17     (4) services of a nursing home for not more than 120 days 
 36.18  in a year if the services would qualify as reimbursable services 
 36.19  under Medicare; 
 36.20     (5) services of a home health agency if the services would 
 36.21  qualify as reimbursable services under Medicare; 
 36.22     (6) use of radium or other radioactive materials; 
 36.23     (7) oxygen; 
 36.24     (8) anesthetics; 
 36.25     (9) prostheses other than dental but including scalp hair 
 36.26  prostheses worn for hair loss suffered as a result of alopecia 
 36.27  areata; 
 36.28     (10) rental or purchase, as appropriate, of durable medical 
 36.29  equipment other than eyeglasses and hearing aids; 
 36.30     (11) diagnostic X-rays and laboratory tests; 
 36.31     (12) oral surgery for partially or completely unerupted 
 36.32  impacted teeth, a tooth root without the extraction of the 
 36.33  entire tooth, or the gums and tissues of the mouth when not 
 36.34  performed in connection with the extraction or repair of teeth; 
 36.35     (13) services of a physical therapist; 
 36.36     (14) transportation provided by licensed ambulance service 
 37.1   to the nearest facility qualified to treat the condition; or a 
 37.2   reasonable mileage rate for transportation to a kidney dialysis 
 37.3   center for treatment; and 
 37.4      (15) services of an occupational therapist. 
 37.5      (c) Covered expenses for the services and articles 
 37.6   specified in this subdivision do not include the following: 
 37.7      (1) any charge for care for injury or disease either (i) 
 37.8   arising out of an injury in the course of employment and subject 
 37.9   to a workers' compensation or similar law, (ii) for which 
 37.10  benefits are payable without regard to fault under coverage 
 37.11  statutorily required to be contained in any motor vehicle, or 
 37.12  other liability insurance policy or equivalent self-insurance, 
 37.13  or (iii) for which benefits are payable under another policy of 
 37.14  accident and health insurance, Medicare, or any other 
 37.15  governmental program except as otherwise provided by section 
 37.16  62A.04, subdivision 3, clause (4); 
 37.17     (2) any charge for treatment for cosmetic purposes other 
 37.18  than for reconstructive surgery when such service is incidental 
 37.19  to or follows surgery resulting from injury, sickness, or other 
 37.20  diseases of the involved part or when such service is performed 
 37.21  on a covered dependent child because of congenital disease or 
 37.22  anomaly which has resulted in a functional defect as determined 
 37.23  by the attending physician; 
 37.24     (3) care which is primarily for custodial or domiciliary 
 37.25  purposes which would not qualify as eligible services under 
 37.26  Medicare; 
 37.27     (4) any charge for confinement in a private room to the 
 37.28  extent it is in excess of the institution's charge for its most 
 37.29  common semiprivate room, unless a private room is prescribed as 
 37.30  medically necessary by a physician, provided, however, that if 
 37.31  the institution does not have semiprivate rooms, its most common 
 37.32  semiprivate room charge shall be considered to be 90 percent of 
 37.33  its lowest private room charge; 
 37.34     (5) that part of any charge for services or articles 
 37.35  rendered or prescribed by a physician, dentist, or other health 
 37.36  care personnel which exceeds the prevailing charge in the 
 38.1   locality where the service is provided; and 
 38.2      (6) any charge for services or articles the provision of 
 38.3   which is not within the scope of authorized practice of the 
 38.4   institution or individual rendering the services or articles. 
 38.5      (d) The minimum benefits for a qualified plan shall 
 38.6   include, in addition to those benefits specified in clauses (a) 
 38.7   and (e), benefits for well baby care, effective July 1, 1980, 
 38.8   subject to applicable deductibles, coinsurance provisions, and 
 38.9   maximum lifetime benefit limitations. 
 38.10     (e) Effective July 1, 1979, the minimum benefits of a 
 38.11  qualified plan shall include, in addition to those benefits 
 38.12  specified in clause (a), a second opinion from a physician on 
 38.13  all surgical procedures expected to cost a total of $500 or more 
 38.14  in physician, laboratory, and hospital fees, provided that the 
 38.15  coverage need not include the repetition of any diagnostic tests.
 38.16     (f) Effective August 1, 1985, the minimum benefits of a 
 38.17  qualified plan must include, in addition to the benefits 
 38.18  specified in clauses (a), (d), and (e), coverage for special 
 38.19  dietary treatment for phenylketonuria when recommended by a 
 38.20  physician. 
 38.21     (g) Outpatient mental health coverage is subject to section 
 38.22  62A.152, subdivision 2. 
 38.23     Sec. 29.  Minnesota Statutes 2000, section 62J.60, 
 38.24  subdivision 3, is amended to read: 
 38.25     Subd. 3.  [HUMAN READABLE DATA ELEMENTS.] (a) The following 
 38.26  are the minimum human readable data elements that must be 
 38.27  present on the front side of the Minnesota health care 
 38.28  identification card: 
 38.29     (1) card issuer name or logo, which is the name or logo 
 38.30  that identifies the card issuer.  The card issuer name or logo 
 38.31  may be the card's front background.  No standard label is 
 38.32  required for this data element; 
 38.33     (2) claim submission number.  The standardized label for 
 38.34  this element is "Clm Subm #"; 
 38.35     (3) identification number, which is the unique 
 38.36  identification number of the individual card holder established 
 39.1   and defined under this section.  The standardized label for the 
 39.2   data element is "ID"; 
 39.3      (4) identification name, which is the name of the 
 39.4   individual card holder.  The identification name must be 
 39.5   formatted as follows:  first name, space, optional middle 
 39.6   initial, space, last name, optional space and name suffix.  The 
 39.7   standardized label for this data element is "Name"; 
 39.8      (5) account number(s), which is any other number, such as a 
 39.9   group number, if required for part of the identification or 
 39.10  claims process.  The standardized label for this data element is 
 39.11  "Account"; 
 39.12     (6) care type, which is the description of the group 
 39.13  purchaser's plan product under which the beneficiary is 
 39.14  covered.  The description shall include the health plan company 
 39.15  name and the plan or product name.  The standardized label for 
 39.16  this data element is "Care Type"; 
 39.17     (7) service type, which is the description of coverage 
 39.18  provided such as hospital, dental, vision, prescription, or 
 39.19  mental health.  The standard label for this data element is "Svc 
 39.20  Type"; and 
 39.21     (8) provider/clinic name, which is the name of the primary 
 39.22  care clinic the card holder is assigned to by the health plan 
 39.23  company.  The standard label for this field is "PCP."  This 
 39.24  information is mandatory only if the health plan company assigns 
 39.25  a specific primary care provider to the card holder. 
 39.26     (b) The following human readable data elements shall be 
 39.27  present on the back side of the Minnesota health identification 
 39.28  card.  These elements must be left justified, and no optional 
 39.29  data elements may be interspersed between them:  
 39.30     (1) claims submission name(s) and address(es), which are 
 39.31  the name(s) and address(es) of the entity or entities to which 
 39.32  claims should be submitted.  If different destinations are 
 39.33  required for different types of claims, this must be labeled; 
 39.34  and 
 39.35     (2) telephone number(s) and name(s); which are the 
 39.36  telephone number(s) and name(s) of the following contact(s) with 
 40.1   a standardized label describing the service function as 
 40.2   applicable:  
 40.3      (i) eligibility and benefit information; 
 40.4      (ii) utilization review; 
 40.5      (iii) precertification; or 
 40.6      (iv) customer services. 
 40.7      (c) The following human readable data elements are 
 40.8   mandatory on the back side of the card for health maintenance 
 40.9   organizations plan companies: 
 40.10     (1) emergency care authorization telephone number or 
 40.11  instruction on how to receive authorization for emergency care.  
 40.12  There is no standard label required for this information; and 
 40.13     (2) one of the following: 
 40.14     (i) telephone number to call to appeal to or file a 
 40.15  complaint with the commissioner of commerce or health; or 
 40.16     (ii) for persons enrolled under section 256B.69, 256D.03, 
 40.17  or 256L.12, the telephone number to call to file a complaint 
 40.18  with the ombudsperson designated by the commissioner of human 
 40.19  services under section 256B.69 and the address to appeal to the 
 40.20  commissioner of human services.  There is no standard label 
 40.21  required for this information. 
 40.22     (d) All human readable data elements not required under 
 40.23  paragraphs (a) to (c) are optional and may be used at the 
 40.24  issuer's discretion. 
 40.25     Sec. 30.  Minnesota Statutes 2000, section 62L.05, 
 40.26  subdivision 1, is amended to read: 
 40.27     Subdivision 1.  [TWO SMALL EMPLOYER PLANS.] Each health 
 40.28  carrier in the small employer market must make available, on a 
 40.29  guaranteed issue basis, to any small employer that satisfies the 
 40.30  contribution and participation requirements of section 62L.03, 
 40.31  subdivision 3, both of the small employer plans described in 
 40.32  subdivisions 2 and 3.  Under subdivisions 2 and 3, coinsurance 
 40.33  and deductibles do not apply to child health supervision 
 40.34  services and prenatal services, as defined by section 62A.047.  
 40.35  The maximum out-of-pocket costs for covered services must be 
 40.36  $3,000 per individual and $6,000 per family per year.  The 
 41.1   maximum lifetime benefit must be $500,000 not less than 
 41.2   $1,000,000.  
 41.3      Sec. 31.  Minnesota Statutes 2000, section 62L.05, 
 41.4   subdivision 2, is amended to read: 
 41.5      Subd. 2.  [DEDUCTIBLE-TYPE SMALL EMPLOYER PLAN.] The 
 41.6   benefits of the deductible-type small employer plan offered by a 
 41.7   health carrier must be equal to 80 percent of the charges, as 
 41.8   specified in subdivision 10, for health care services, supplies, 
 41.9   or other articles covered under the small employer plan, in 
 41.10  excess of an annual deductible which must be $500 $2,250 per 
 41.11  individual and $1,000 $4,500 per family. 
 41.12     Sec. 32.  Minnesota Statutes 2000, section 62M.01, 
 41.13  subdivision 2, is amended to read: 
 41.14     Subd. 2.  [JURISDICTION.] Sections 62M.01 to 62M.16 apply 
 41.15  to:  (1) any insurance company licensed under chapter 60A to 
 41.16  offer, sell, or issue a policy of accident and sickness 
 41.17  insurance as defined in section 62A.01, or a policy of 
 41.18  automobile insurance providing personal injury protection as 
 41.19  defined in section 65B.43, subdivision 15; (2) a health service 
 41.20  plan licensed under chapter 62C; (3) a health maintenance 
 41.21  organization licensed under chapter 62D; (4) a community 
 41.22  integrated service network licensed under chapter 62N; (5) an 
 41.23  accountable provider network operating under chapter 62T; (6) a 
 41.24  fraternal benefit society operating under chapter 64B; (7) a 
 41.25  joint self-insurance employee health plan operating under 
 41.26  chapter 62H; (8) a multiple employer welfare arrangement, as 
 41.27  defined in section 3 of the Employee Retirement Income Security 
 41.28  Act of 1974 (ERISA), United States Code, title 29, section 1103, 
 41.29  as amended; (9) a third party administrator licensed under 
 41.30  section 60A.23, subdivision 8, that provides utilization review 
 41.31  services for the administration of benefits under a health 
 41.32  benefit plan as defined in section 62M.02; or (10) any entity 
 41.33  performing utilization review on behalf of a business entity in 
 41.34  this state pursuant to a health benefit plan covering a 
 41.35  Minnesota resident. 
 41.36     Sec. 33.  Minnesota Statutes 2000, section 62M.02, 
 42.1   subdivision 6, is amended to read: 
 42.2      Subd. 6.  [CLAIMS ADMINISTRATOR.] "Claims administrator" 
 42.3   means an entity that reviews and determines whether to pay 
 42.4   claims to enrollees or providers based on the contract 
 42.5   provisions of the health plan contract.  Claims administrators 
 42.6   may include insurance companies licensed under chapter 60A to 
 42.7   offer, sell, or issue a policy of accident and sickness 
 42.8   insurance as defined in section 62A.01 or a policy of automobile 
 42.9   insurance providing personal injury protection as defined in 
 42.10  section 65B.43, subdivision 15; a health service plan licensed 
 42.11  under chapter 62C; a health maintenance organization licensed 
 42.12  under chapter 62D; a community integrated service network 
 42.13  licensed under chapter 62N; an accountable provider network 
 42.14  operating under chapter 62T; a fraternal benefit society 
 42.15  operating under chapter 64B; a multiple employer welfare 
 42.16  arrangement, as defined in section 3 of the Employee Retirement 
 42.17  Income Security Act of 1974 (ERISA), United States Code, title 
 42.18  29, section 1103, as amended. 
 42.19     Sec. 34.  Minnesota Statutes 2000, section 62M.02, 
 42.20  subdivision 12, is amended to read: 
 42.21     Subd. 12.  [HEALTH BENEFIT PLAN.] "Health benefit plan" 
 42.22  means a policy, contract, or certificate issued by a health plan 
 42.23  company for the coverage of medical, dental, or hospital 
 42.24  benefits.  A health benefit plan does not include coverage that 
 42.25  is: 
 42.26     (1) limited to disability or income protection coverage; 
 42.27     (2) automobile medical payment coverage; 
 42.28     (3) supplemental to liability insurance; 
 42.29     (4) (3) designed solely to provide payments on a per diem, 
 42.30  fixed indemnity, or nonexpense incurred basis; 
 42.31     (5) (4) credit accident and health insurance issued under 
 42.32  chapter 62B; 
 42.33     (6) (5) blanket accident and sickness insurance as defined 
 42.34  in section 62A.11; 
 42.35     (7) (6) accident only coverage issued by a licensed and 
 42.36  tested insurance agent; or 
 43.1      (8) (7) workers' compensation. 
 43.2      Sec. 35.  Minnesota Statutes 2000, section 62M.02, is 
 43.3   amended by adding a subdivision to read: 
 43.4      Subd. 12b.  [HEALTH CARE SERVICES.] "Health care services" 
 43.5   means services for the diagnosis, prevention, treatment, cure, 
 43.6   or relief of a health condition, illness, injury, or disease. 
 43.7      [EFFECTIVE DATE.] This section is effective the day 
 43.8   following final enactment. 
 43.9      Sec. 36.  Minnesota Statutes 2000, section 62M.02, 
 43.10  subdivision 21, is amended to read: 
 43.11     Subd. 21.  [UTILIZATION REVIEW ORGANIZATION.] "Utilization 
 43.12  review organization" means an entity including but not limited 
 43.13  to an insurance company licensed under chapter 60A to offer, 
 43.14  sell, or issue a policy of accident and sickness insurance as 
 43.15  defined in section 62A.01 or a policy of automobile insurance 
 43.16  providing personal injury protection as defined in section 
 43.17  65B.43, subdivision 15; a health service plan licensed under 
 43.18  chapter 62C; a health maintenance organization licensed under 
 43.19  chapter 62D; a community integrated service network licensed 
 43.20  under chapter 62N; an accountable provider network operating 
 43.21  under chapter 62T; a fraternal benefit society operating under 
 43.22  chapter 64B; a joint self-insurance employee health plan 
 43.23  operating under chapter 62H; a multiple employer welfare 
 43.24  arrangement, as defined in section 3 of the Employee Retirement 
 43.25  Income Security Act of 1974 (ERISA), United States Code, title 
 43.26  29, section 1103, as amended; a third party administrator 
 43.27  licensed under section 60A.23, subdivision 8, which conducts 
 43.28  utilization review and determines certification of an admission, 
 43.29  extension of stay, or other health care services for a Minnesota 
 43.30  resident; or any entity performing utilization review that is 
 43.31  affiliated with, under contract with, or conducting utilization 
 43.32  review on behalf of, a business entity in this state. 
 43.33     Sec. 37.  Minnesota Statutes 2000, section 62M.05, 
 43.34  subdivision 5, is amended to read: 
 43.35     Subd. 5.  [NOTIFICATION TO CLAIMS ADMINISTRATOR.] If the 
 43.36  utilization review organization and the claims administrator are 
 44.1   separate entities, the utilization review organization must 
 44.2   forward, electronically or in writing, a notification of 
 44.3   certification or determination not to certify to the appropriate 
 44.4   claims administrator for the health benefit plan.  If it is 
 44.5   determined by the claims administrator that the certified health 
 44.6   care service is not covered by the health benefit plan, the 
 44.7   claims administrator must immediately notify the claimant and 
 44.8   provider of this information. 
 44.9      Sec. 38.  Minnesota Statutes 2000, section 62Q.01, 
 44.10  subdivision 6, is amended to read: 
 44.11     Subd. 6.  [MEDICARE-RELATED COVERAGE.] "Medicare-related 
 44.12  coverage" means a policy, contract, or certificate issued as a 
 44.13  supplement to Medicare, regulated under sections 62A.31 to 
 44.14  62A.44, including Medicare select coverage; policies, contracts, 
 44.15  or certificates that supplement Medicare issued by health 
 44.16  maintenance organizations; or policies, contracts, or 
 44.17  certificates governed by section 1833 (known as "cost" or "HCPP" 
 44.18  contracts) or 1876 (known as "TEFRA" or "risk" contracts) of the 
 44.19  federal Social Security Act, United States Code, title 42, 
 44.20  section 1395, et seq., as amended.; or Section 4001 of the 
 44.21  Balanced Budget Act of 1997 (BBA)(Public Law 105-33), Sections 
 44.22  1851 to 1859 of the Social Security Act establishing Part C of 
 44.23  the Medicare program, known as the "Medicare+Choice program." 
 44.24     [EFFECTIVE DATE.] This section is effective the day 
 44.25  following final enactment. 
 44.26     Sec. 39.  [62Q.526] [MINIMUM STANDARDS FOR MEDICALLY 
 44.27  NECESSARY CARE.] 
 44.28     Subdivision 1.  [REQUIREMENT.] No policy of accident and 
 44.29  sickness insurance or health plan that covers medical services 
 44.30  and supplies may be offered, sold, issued, or renewed in this 
 44.31  state unless it satisfies the definition of "medically necessary 
 44.32  care" provided in subdivision 2. 
 44.33     Subd. 2.  [MEDICALLY NECESSARY CARE.] "Medically necessary 
 44.34  care" means health care services appropriate in terms of type, 
 44.35  frequency, level, setting, and duration to the enrollee's 
 44.36  diagnosis or condition, diagnostic testing, and preventive 
 45.1   services.  Medically necessary care must be consistent with 
 45.2   generally accepted practice parameters as determined by health 
 45.3   care providers in the same or similar general specialty as 
 45.4   typically manages the condition, procedure, or treatment at 
 45.5   issue, and: 
 45.6      (1) help restore or maintain the enrollee's health; 
 45.7      (2) prevent deterioration of the enrollee's condition; or 
 45.8      (3) prevent the reasonable likely onset of a health problem 
 45.9   or detect an incipient problem. 
 45.10     Subd. 3.  [POLICY OF ACCIDENT AND SICKNESS INSURANCE AND 
 45.11  HEALTH PLAN; DEFINITION.] For purposes of this section, "policy 
 45.12  of accident and sickness insurance" has the meaning given in 
 45.13  section 60A.06, subdivision 1, paragraph (5), clause (a), and 
 45.14  for the purpose of this section, "health plan" has the meaning 
 45.15  given in section 62Q.01, subdivision 3, but includes the 
 45.16  coverage listed in section 62A.011, subdivision 3, clauses (4), 
 45.17  (6), (7), (8), (9), and (10). 
 45.18     [EFFECTIVE DATE.] This section is effective the day 
 45.19  following final enactment. 
 45.20     Sec. 40.  Minnesota Statutes 2000, section 62Q.68, 
 45.21  subdivision 1, is amended to read: 
 45.22     Subdivision 1.  [APPLICATION.] For purposes of sections 
 45.23  62Q.68 to 62Q.72, the terms defined in this section have the 
 45.24  meanings given them.  For purposes of sections 62Q.69 and 
 45.25  62Q.70, the term "health plan company" does not include an 
 45.26  insurance company licensed under chapter 60A to offer, sell, or 
 45.27  issue a policy of accident and sickness insurance as defined in 
 45.28  section 62A.01 or a nonprofit health service plan corporation 
 45.29  regulated under chapter 62C that only provides dental coverage 
 45.30  or vision coverage includes the Minnesota Comprehensive Health 
 45.31  Association. 
 45.32     Sec. 41.  Minnesota Statutes 2000, section 62Q.72, 
 45.33  subdivision 1, is amended to read: 
 45.34     Subdivision 1.  [RECORDKEEPING.] Each health plan company 
 45.35  shall maintain records of all enrollee complaints and their 
 45.36  resolutions.  These records shall be retained for five years and 
 46.1   shall be made available to the appropriate commissioner upon 
 46.2   request.  An insurance company licensed under chapter 60A may 
 46.3   instead comply with section 72A.20, subdivision 30. 
 46.4      Sec. 42.  Minnesota Statutes 2000, section 62Q.73, 
 46.5   subdivision 3, is amended to read: 
 46.6      Subd. 3.  [RIGHT TO EXTERNAL REVIEW.] (a) Any enrollee or 
 46.7   anyone acting on behalf of an enrollee who has received an 
 46.8   adverse determination may submit a written request for an 
 46.9   external review of the adverse determination, if applicable 
 46.10  under section 62Q.68, subdivision 1, or 62M.06, to the 
 46.11  commissioner of health if the request involves a health plan 
 46.12  company regulated by that commissioner or to the commissioner of 
 46.13  commerce if the request involves a health plan company regulated 
 46.14  by that commissioner.  Notification of the enrollee's right to 
 46.15  external review must accompany the denial issued by the insurer 
 46.16  on forms acceptable to the appropriate commissioner.  The 
 46.17  written request must be accompanied by a filing fee of $25.  The 
 46.18  fee may be waived by the commissioner of health or commerce in 
 46.19  cases of financial hardship. 
 46.20     (b) Nothing in this section requires the commissioner of 
 46.21  health or commerce to independently investigate an adverse 
 46.22  determination referred for independent external review. 
 46.23     (c) If an enrollee requests an external review, the health 
 46.24  plan company must participate in the external review.  The cost 
 46.25  of the external review in excess of the filing fee described in 
 46.26  paragraph (a) shall be borne by the health plan company.  
 46.27     Sec. 43.  Minnesota Statutes 2000, section 65A.01, 
 46.28  subdivision 3b, is amended to read: 
 46.29     Subd. 3b.  [RESCISSION AND VOIDABILITY.] This policy must 
 46.30  not be rescinded or voided except where the insured has 
 46.31  willfully and with intent to defraud concealed or misrepresented 
 46.32  a material fact or circumstance concerning this insurance or the 
 46.33  subject of this insurance or the interests of the insured in 
 46.34  this insurance.  This provision must not operate to defeat a 
 46.35  claim by a third party or a minor child of the named insured or 
 46.36  an innocent coinsured for damage or loss for which the policy 
 47.1   provides coverage. 
 47.2      [EFFECTIVE DATE.] This section is effective the day 
 47.3   following final enactment. 
 47.4      Sec. 44.  Minnesota Statutes 2000, section 65A.29, 
 47.5   subdivision 7, is amended to read: 
 47.6      Subd. 7.  [RENEWAL; NOTICE REQUIREMENT.] No insurer shall 
 47.7   refuse to renew, or reduce limits of coverage, or eliminate any 
 47.8   coverage in a homeowner's insurance policy unless it mails or 
 47.9   delivers to the insured, at the address shown in the policy, at 
 47.10  least 60 days' advance notice of its intention.  The notice must 
 47.11  contain the specific underwriting or other reason or reasons for 
 47.12  the indicated action and must clearly state the name of the 
 47.13  insurer and the date the notice is issued.  
 47.14     Proof of mailing this notice to the insured at the address 
 47.15  shown in the policy is sufficient proof that the notice required 
 47.16  by this section has been given. 
 47.17     [EFFECTIVE DATE.] This section is effective the day 
 47.18  following final enactment. 
 47.19     Sec. 45.  Minnesota Statutes 2000, section 65A.30, is 
 47.20  amended to read: 
 47.21     65A.30 [DAY CARE SERVICES; COVERAGE.] 
 47.22     There shall be no coverage under the liability coverage 
 47.23  provisions of a day care provider's homeowner's insurance for 
 47.24  losses or damages arising out of the operation of day care 
 47.25  services unless: 
 47.26     (1) specifically covered in a policy; or 
 47.27     (2) covered by a rider for business coverage attached to a 
 47.28  policy. 
 47.29     For purposes of this section, "day care" means "family day 
 47.30  care" and "group family day care" as defined in Minnesota Rules, 
 47.31  part 9502.0315.  "Day care" does not include care provided by an 
 47.32  individual who is related, as defined in Minnesota Rules, part 
 47.33  9502.0315, to the person being cared for or care provided by an 
 47.34  unrelated individual to persons from a single family of persons 
 47.35  related to each other. 
 47.36     [EFFECTIVE DATE.] This section is effective the day 
 48.1   following final enactment. 
 48.2      Sec. 46.  Minnesota Statutes 2000, section 65B.04, 
 48.3   subdivision 3, is amended to read: 
 48.4      Subd. 3.  [AMENDMENTS.] The plan of operation may be 
 48.5   amended by a majority vote of the governing committee, and the 
 48.6   approval of the commissioner and ratification by a majority of 
 48.7   the members.  An order by the commissioner disapproving an 
 48.8   amendment to the plan of operation must be issued within 30 days 
 48.9   of receipt by the commissioner of the proposed amendment, 
 48.10  certified by the governing committee as having been adopted by 
 48.11  that committee by a majority vote, or the amendment shall be 
 48.12  deemed approved by the commissioner.  An order of disapproval 
 48.13  may be appealed as provided in chapter 14.  
 48.14     [EFFECTIVE DATE.] This section is effective the day 
 48.15  following final enactment. 
 48.16     Sec. 47.  Minnesota Statutes 2000, section 65B.06, 
 48.17  subdivision 1, is amended to read: 
 48.18     Subdivision 1.  With respect to private passenger, nonfleet 
 48.19  automobiles, the facility shall provide for the equitable 
 48.20  distribution of qualified applicants to members in accordance 
 48.21  with the participation ratio or among these insurance companies 
 48.22  as selected under the provisions of the plan of operation. 
 48.23     [EFFECTIVE DATE.] This section is effective the day 
 48.24  following final enactment. 
 48.25     Sec. 48.  Minnesota Statutes 2000, section 65B.06, 
 48.26  subdivision 4, is amended to read: 
 48.27     Subd. 4.  Coverage made available under this section shall 
 48.28  be the standard automobile policy and endorsement forms, as 
 48.29  approved by the commissioner, with such changes, additions and 
 48.30  amendments as are adopted by the governing committee and 
 48.31  approved by the commissioner. 
 48.32     [EFFECTIVE DATE.] This section is effective the day 
 48.33  following final enactment. 
 48.34     Sec. 49.  Minnesota Statutes 2000, section 65B.16, is 
 48.35  amended to read: 
 48.36     65B.16 [STATEMENT OF REASONS FOR CANCELLATION OR 
 49.1   REDUCTION.] 
 49.2      No notice of cancellation or reduction in the limits of 
 49.3   liability of coverage of an automobile insurance policy under 
 49.4   section 65B.15 shall be effective unless the specific 
 49.5   underwriting or other reason or reasons for such cancellation or 
 49.6   reduction in the limits of liability of coverage are stated in 
 49.7   such notice and the notice is mailed or delivered by the insurer 
 49.8   to the named insured at least 30 35 days prior to the effective 
 49.9   date of cancellation; provided, however, that when nonpayment of 
 49.10  premium is the reason for cancellation or when the company is 
 49.11  exercising its right to cancel insurance which has been in 
 49.12  effect for less than 60 days at least ten days' notice of 
 49.13  cancellation, and the reasons for the cancellation, shall be 
 49.14  given.  Information regarding moving traffic violations or motor 
 49.15  vehicle accidents must be specifically requested on the 
 49.16  application in order for a company to use those incidents to 
 49.17  exercise its right to cancel within the first 59 days of 
 49.18  coverage.  When nonpayment of premiums is the reason for 
 49.19  cancellation, the reason must be given to the insured with the 
 49.20  notice of cancellation; and if the company is exercising its 
 49.21  right to cancel within the first 59 days of coverage and notice 
 49.22  is given with less than ten days remaining in the 59-day period, 
 49.23  the coverage must be extended, to expire ten days after notice 
 49.24  was mailed.  
 49.25     Sec. 50.  Minnesota Statutes 2000, section 65B.19, 
 49.26  subdivision 2, is amended to read: 
 49.27     Subd. 2.  [NOTICE OF RIGHT TO COMPLAIN.] When the insurer 
 49.28  notifies the policyholder of nonrenewal, cancellation or 
 49.29  reduction in the limits of liability of coverage under section 
 49.30  65B.16 or 65B.17, the insurer shall also notify the named 
 49.31  insured of the right to complain within 30 days of receipt by 
 49.32  the named insured of notice of nonrenewal, cancellation or 
 49.33  reduction in the limits of liability to the commissioner of such 
 49.34  action and of the nature of and possible eligibility for 
 49.35  insurance through the Minnesota automobile insurance plan.  Such 
 49.36  notice shall be included in the notice of nonrenewal, 
 50.1   cancellation or reduction in the limits of liability of 
 50.2   coverage, and shall state that such notice of the insured's 
 50.3   right of complaint to the commissioner and of the availability 
 50.4   of insurance through the Minnesota automobile insurance plan is 
 50.5   given pursuant to sections 65B.14 to 65B.21.  The notice must 
 50.6   clearly state the name of the insurer and the date the notice is 
 50.7   issued. 
 50.8      Sec. 51.  Minnesota Statutes 2000, section 65B.44, 
 50.9   subdivision 3, is amended to read: 
 50.10     Subd. 3.  [DISABILITY AND INCOME LOSS BENEFITS.] Disability 
 50.11  and income loss benefits shall provide compensation for 85 
 50.12  percent of the injured person's loss of present and future gross 
 50.13  income from inability to work proximately caused by the nonfatal 
 50.14  injury subject to a maximum of $250 $500 per week.  Loss of 
 50.15  income includes the costs incurred by a self-employed person to 
 50.16  hire substitute employees to perform tasks which are necessary 
 50.17  to maintain the income of the injured person, which are normally 
 50.18  performed by the injured person, and which cannot be performed 
 50.19  because of the injury.  
 50.20     If the injured person is unemployed at the time of injury 
 50.21  and is receiving or is eligible to receive unemployment benefits 
 50.22  under chapter 268, but the injured person loses eligibility for 
 50.23  those benefits because of inability to work caused by the 
 50.24  injury, disability and income loss benefits shall provide 
 50.25  compensation for the lost benefits in an amount equal to the 
 50.26  unemployment benefits which otherwise would have been payable, 
 50.27  subject to a maximum of $250 $500 per week.  
 50.28     Compensation under this subdivision shall be reduced by any 
 50.29  income from substitute work actually performed by the injured 
 50.30  person or by income the injured person would have earned in 
 50.31  available appropriate substitute work which the injured person 
 50.32  was capable of performing but unreasonably failed to undertake. 
 50.33     For the purposes of this section "inability to work" means 
 50.34  disability which prevents the injured person from engaging in 
 50.35  any substantial gainful occupation or employment on a regular 
 50.36  basis, for wage or profit, for which the injured person is or 
 51.1   may by training become reasonably qualified.  If the injured 
 51.2   person returns to employment and is unable by reason of the 
 51.3   injury to work continuously, compensation for lost income shall 
 51.4   be reduced by the income received while the injured person is 
 51.5   actually able to work.  The weekly maximums may not be prorated 
 51.6   to arrive at a daily maximum, even if the injured person does 
 51.7   not incur loss of income for a full week.  
 51.8      For the purposes of this section, an injured person who is 
 51.9   "unable by reason of the injury to work continuously" includes, 
 51.10  but is not limited to, a person who misses time from work, 
 51.11  including reasonable travel time, and loses income, vacation, or 
 51.12  sick leave benefits, to obtain medical treatment for an injury 
 51.13  arising out of the maintenance or use of a motor vehicle. 
 51.14     Sec. 52.  Minnesota Statutes 2000, section 65B.49, 
 51.15  subdivision 5a, is amended to read: 
 51.16     Subd. 5a.  [RENTAL VEHICLES.] (a) Every plan of reparation 
 51.17  security insuring a natural person as named insured, covering 
 51.18  private passenger vehicles as defined under section 65B.001, 
 51.19  subdivision 3, motor homes as defined in section 168.011, 
 51.20  subdivision 25, paragraphs (b) and (c), and pickup trucks and 
 51.21  vans as defined under section 168.011 must provide that all of 
 51.22  the obligation for damage and loss of use to a rented private 
 51.23  passenger vehicle, including pickup trucks and vans as defined 
 51.24  under section 168.011, and rented trucks with a registered gross 
 51.25  vehicle weight of 26,000 pounds or less would be covered by the 
 51.26  property damage liability portion of the plan.  This subdivision 
 51.27  does not apply to plans of reparation security covering only 
 51.28  motor vehicles registered under section 168.10, subdivision 1a, 
 51.29  1b, 1c, or 1d, or recreational equipment as defined under 
 51.30  section 168.011 except for motor homes as defined in section 
 51.31  168.011, subdivision 25, paragraphs (b) and (c).  The obligation 
 51.32  of the plan must not be contingent on fault or negligence.  In 
 51.33  all cases where the plan's property damage liability coverage is 
 51.34  less than $35,000, the coverage available under the subdivision 
 51.35  must be $35,000.  Other than as described in this paragraph or 
 51.36  in paragraph (j), nothing in this section amends or alters the 
 52.1   provisions of the plan of reparation security as to primacy of 
 52.2   the coverages in this section. 
 52.3      (b) A vehicle is rented for purposes of this subdivision: 
 52.4      (1) if the rate for the use of the vehicle is determined on 
 52.5   a monthly, weekly, or daily basis; or 
 52.6      (2) during the time that a vehicle is loaned as a 
 52.7   replacement for a vehicle being serviced or repaired regardless 
 52.8   of whether the customer is charged a fee for the use of the 
 52.9   vehicle. 
 52.10     A vehicle is not rented for the purposes of this 
 52.11  subdivision if the rate for the vehicle's use is determined on a 
 52.12  period longer than one month or if the term of the rental 
 52.13  agreement is longer than one month.  A vehicle is not rented for 
 52.14  purposes of this subdivision if the rental agreement has a 
 52.15  purchase or buyout option or otherwise functions as a substitute 
 52.16  for purchase of the vehicle.  
 52.17     (c) The policy or certificate issued by the plan must 
 52.18  inform the insured of the application of the plan to private 
 52.19  passenger rental vehicles, including pickup trucks and vans as 
 52.20  defined under section 168.011, and that the insured may not need 
 52.21  to purchase additional coverage from the rental company. 
 52.22     (d) Where an insured has two or more vehicles covered by a 
 52.23  plan or plans of reparation security containing the rented motor 
 52.24  vehicle coverage required under paragraph (a), the insured may 
 52.25  select the plan the insured wishes to collect from and that plan 
 52.26  is entitled to a pro rata contribution from the other plan or 
 52.27  plans based upon the property damage limits of liability.  If 
 52.28  the person renting the motor vehicle is also covered by the 
 52.29  person's employer's insurance policy or the employer's 
 52.30  automobile self-insurance plan, the reparation obligor under the 
 52.31  employer's policy or self-insurance plan has primary 
 52.32  responsibility to pay claims arising from use of the rented 
 52.33  vehicle. 
 52.34     (e) A notice advising the insured of rental vehicle 
 52.35  coverage must be given by the reparation obligor to each current 
 52.36  insured with the first renewal notice after January 1, 1989.  
 53.1   The notice must be approved by the commissioner of commerce.  
 53.2   The commissioner may specify the form of the notice.  
 53.3      (f) When a motor vehicle is rented in this state, there 
 53.4   must be attached to the rental contract a separate form 
 53.5   containing a written notice in at least 10-point bold type, if 
 53.6   printed, or in capital letters, if typewritten, which states: 
 53.7      Under Minnesota law, a personal automobile insurance policy 
 53.8      issued in Minnesota must cover the rental of this motor 
 53.9      vehicle against damage to the vehicle and against loss of 
 53.10     use of the vehicle.  Therefore, purchase of any collision 
 53.11     damage waiver or similar insurance affected in this rental 
 53.12     contract is not necessary if your policy was issued in 
 53.13     Minnesota. 
 53.14  No collision damage waiver or other insurance offered as part of 
 53.15  or in conjunction with a rental of a motor vehicle may be sold 
 53.16  unless the person renting the vehicle provides a written 
 53.17  acknowledgment that the above consumer protection notice has 
 53.18  been read and understood. 
 53.19     (g) When damage to a rented vehicle is covered by a plan of 
 53.20  reparation security as provided under paragraph (a), the rental 
 53.21  contract must state that payment by the reparation obligor 
 53.22  within the time limits of section 72A.201 is acceptable, and 
 53.23  prior payment by the renter is not required. 
 53.24     (h) Compensation for the loss of use of a damaged rented 
 53.25  motor vehicle is limited to a period no longer than 14 days. 
 53.26     (i)(1) For purposes of this paragraph, "rented motor 
 53.27  vehicle" means a rented vehicle described in paragraph (a), 
 53.28  using the definition of "rented" provided in paragraph (b). 
 53.29     (2) Notwithstanding section 170.54, an owner of a rented 
 53.30  motor vehicle is not vicariously liable for legal damages 
 53.31  resulting from the operation of the rented motor vehicle in an 
 53.32  amount greater than $100,000 because of bodily injury to one 
 53.33  person in any one accident and, subject to the limit for one 
 53.34  person, $300,000 because of injury to two or more persons in any 
 53.35  one accident, and $50,000 because of injury to or destruction of 
 53.36  property of others in any one accident, if the owner of the 
 54.1   rented motor vehicle has in effect, at the time of the accident, 
 54.2   a policy of insurance or self-insurance, as provided in section 
 54.3   65B.48, subdivision 3, covering losses up to at least the 
 54.4   amounts set forth in this paragraph.  Nothing in this paragraph 
 54.5   alters or affects the obligations of an owner of a rented motor 
 54.6   vehicle to comply with the requirements of compulsory insurance 
 54.7   through a policy of insurance as provided in section 65B.48, 
 54.8   subdivision 2, or through self-insurance as provided in section 
 54.9   65B.48, subdivision 3; or with the obligations arising from 
 54.10  section 72A.125 for products sold in conjunction with the rental 
 54.11  of a motor vehicle.  Nothing in this paragraph alters or affects 
 54.12  liability, other than vicarious liability, of an owner of a 
 54.13  rented motor vehicle. 
 54.14     (3) The dollar amounts stated in this paragraph shall be 
 54.15  adjusted for inflation based upon the consumer price index for 
 54.16  all urban consumers, known as the CPI-U, published by the United 
 54.17  States Bureau of Labor Statistics.  The dollar amounts stated in 
 54.18  this paragraph are based upon the value of that index for July 
 54.19  1995, which is the reference base index for purposes of this 
 54.20  paragraph.  The dollar amounts in this paragraph shall change 
 54.21  effective January 1 of each odd-numbered year based upon the 
 54.22  percentage difference between the index for July of the 
 54.23  preceding year and the reference base index, calculated to the 
 54.24  nearest whole percentage point.  The commissioner shall announce 
 54.25  and publish, on or before September 30 of the preceding year, 
 54.26  the changes in the dollar amounts required by this paragraph to 
 54.27  take effect on January 1 of each odd-numbered year.  The 
 54.28  commissioner shall use the most recent revision of the July 
 54.29  index available as of September 1.  Changes in the dollar 
 54.30  amounts must be in increments of $5,000, and no change shall be 
 54.31  made in a dollar amount until the change in the index requires 
 54.32  at least a $5,000 change.  If the United States Bureau of Labor 
 54.33  Statistics changes the base year upon which the CPI-U is based, 
 54.34  the commissioner shall make the calculations necessary to 
 54.35  convert from the old base year to the new base year.  If the 
 54.36  CPI-U is discontinued, the commissioner shall use the available 
 55.1   index that is most similar to the CPI-U. 
 55.2      (j) The plan of reparation security covering the owner of a 
 55.3   rented motor vehicle is excess of any residual liability 
 55.4   coverage insuring an operator of a rented motor vehicle if the 
 55.5   vehicle is loaned as a replacement for a vehicle being serviced 
 55.6   or repaired, regardless of whether a fee is charged for use of 
 55.7   the vehicle, provided that the vehicle so loaned is owned by the 
 55.8   service or repair business. 
 55.9      [EFFECTIVE DATE.] This section is effective the day 
 55.10  following final enactment. 
 55.11     Sec. 53.  Minnesota Statutes 2000, section 67A.20, is 
 55.12  amended by adding a subdivision to read: 
 55.13     Subd. 3.  [WITH LICENSED INSURERS.] Township mutual fire 
 55.14  insurance companies may enter into reinsurance agreements with 
 55.15  any Minnesota licensed insurer authorized to write the same 
 55.16  lines of business. 
 55.17     [EFFECTIVE DATE.] This section is effective the day 
 55.18  following final enactment. 
 55.19     Sec. 54.  Minnesota Statutes 2000, section 70A.07, is 
 55.20  amended to read: 
 55.21     70A.07 [RATES AND FORMS OPEN TO INSPECTION.] 
 55.22     All rates and, supplementary rate information, and forms, 
 55.23  furnished to the commissioner under this chapter shall, as soon 
 55.24  as the rates and forms are reviewed by the commissioner, be open 
 55.25  to public inspection at any reasonable time.  
 55.26     [EFFECTIVE DATE.] This section is effective the day 
 55.27  following final enactment. 
 55.28     Sec. 55.  Minnesota Statutes 2000, section 72A.125, 
 55.29  subdivision 3, is amended to read: 
 55.30     Subd. 3.  [COLLISION DAMAGE WAIVER.] A "collision damage 
 55.31  waiver" is a discharge of the responsibility of the renter or 
 55.32  leasee to return the motor vehicle in the same condition as when 
 55.33  it was first rented.  The waiver is a full and complete 
 55.34  discharge of the responsibility to return the vehicle in the 
 55.35  same condition as when it was first rented.  The waiver may not 
 55.36  contain any exclusions except those approved by the 
 56.1   commissioner.  The filing and approval provisions of section 
 56.2   70A.06 and the fee provisions in section 60A.14, subdivision 1, 
 56.3   paragraph (c), clause (7), apply to a waiver containing 
 56.4   exclusions. 
 56.5      [EFFECTIVE DATE.] This section is effective the day 
 56.6   following final enactment. 
 56.7      Sec. 56.  Minnesota Statutes 2000, section 72A.201, 
 56.8   subdivision 3, is amended to read: 
 56.9      Subd. 3.  [DEFINITIONS.] For the purposes of this section, 
 56.10  the following terms have the meanings given them.  
 56.11     (1) [ADJUSTER OR ADJUSTERS.] "Adjuster" or "adjusters" is 
 56.12  as defined in section 72B.02.  
 56.13     (2) [AGENT.] "Agent" means insurance agents or insurance 
 56.14  agencies licensed pursuant to sections 60K.01 to 60K.18, and 
 56.15  representatives of these agents or agencies.  
 56.16     (3) [CLAIM.] "Claim" means a request or demand made with an 
 56.17  insurer for the payment of funds or the provision of services 
 56.18  under the terms of any policy, certificate, contract of 
 56.19  insurance, binder, or other contracts of temporary insurance. 
 56.20  The term does not include includes a claim under a health 
 56.21  insurance policy made by a participating provider with an 
 56.22  insurer in accordance with the participating provider's service 
 56.23  agreement with the insurer which has been filed with the 
 56.24  commissioner of commerce prior to its use.  
 56.25     (4) [CLAIM SETTLEMENT.] "Claim settlement" means all 
 56.26  activities of an insurer related directly or indirectly to the 
 56.27  determination of the extent of liabilities due or potentially 
 56.28  due under coverages afforded by the policy, and which result in 
 56.29  claim payment, claim acceptance, compromise, or other 
 56.30  disposition.  
 56.31     (5) [CLAIMANT.] "Claimant" means any individual, 
 56.32  corporation, association, partnership, or other legal entity 
 56.33  asserting a claim against any individual, corporation, 
 56.34  association, partnership, or other legal entity which is insured 
 56.35  under an insurance policy or insurance contract of an insurer.  
 56.36     (6) [COMPLAINT.] "Complaint" means a communication 
 57.1   primarily expressing a grievance.  
 57.2      (7) [INSURANCE POLICY.] "Insurance policy" means any 
 57.3   evidence of coverage issued by an insurer including all 
 57.4   policies, contracts, certificates, riders, binders, and 
 57.5   endorsements which provide or describe coverage.  The term 
 57.6   includes any contract issuing coverage under a self-insurance 
 57.7   plan, group self-insurance plan, or joint self-insurance 
 57.8   employee health plans.  
 57.9      (8) [INSURED.] "Insured" means an individual, corporation, 
 57.10  association, partnership, or other legal entity asserting a 
 57.11  right to payment under their insurance policy or insurance 
 57.12  contract arising out of the occurrence of the contingency or 
 57.13  loss covered by the policy or contract.  The term does not apply 
 57.14  to a person who acquires rights under a mortgage. 
 57.15     (9) [INSURER.] "Insurer" includes any individual, 
 57.16  corporation, association, partnership, reciprocal exchange, 
 57.17  Lloyds, fraternal benefits society, self-insurer, surplus line 
 57.18  insurer, self-insurance administrator, and nonprofit service 
 57.19  plans under the jurisdiction of the department of commerce.  
 57.20     (10) [INVESTIGATION.] "Investigation" means a reasonable 
 57.21  procedure adopted by an insurer to determine whether to accept 
 57.22  or reject a claim.  
 57.23     (11) [NOTIFICATION OF CLAIM.] "Notification of claim" means 
 57.24  any communication to an insurer by a claimant or an insured 
 57.25  which reasonably apprises the insurer of a claim brought under 
 57.26  an insurance contract or policy issued by the insurer. 
 57.27  Notification of claim to an agent of the insurer is notice to 
 57.28  the insurer.  
 57.29     (12) [PROOF OF LOSS.] "Proof of loss" means the necessary 
 57.30  documentation required from the insured to establish entitlement 
 57.31  to payment under a policy.  
 57.32     (13) [SELF-INSURANCE ADMINISTRATOR.] "Self-insurance 
 57.33  administrator" means any vendor of risk management services or 
 57.34  entities administering self-insurance plans, licensed pursuant 
 57.35  to section 60A.23, subdivision 8.  
 57.36     (14) [SELF-INSURED OR SELF-INSURER.] "Self-insured" or 
 58.1   "self-insurer" means any entity authorized pursuant to section 
 58.2   65B.48, subdivision 3; chapter 62H; section 176.181, subdivision 
 58.3   2; Laws of Minnesota 1983, chapter 290, section 171; section 
 58.4   471.617; or section 471.981 and includes any entity which, for a 
 58.5   fee, employs the services of vendors of risk management services 
 58.6   in the administration of a self-insurance plan as defined by 
 58.7   section 60A.23, subdivision 8, clause (2), subclauses (a) and 
 58.8   (d). 
 58.9      [EFFECTIVE DATE.] This section is effective the day 
 58.10  following final enactment. 
 58.11     Sec. 57.  Minnesota Statutes 2000, section 72C.06, 
 58.12  subdivision 2, is amended to read: 
 58.13     Subd. 2.  In determining whether a policy or contract is 
 58.14  readable within the meaning of this section the commissioner 
 58.15  shall consider, at least, the following factors: 
 58.16     (a) the simplicity of the sentence structure and the 
 58.17  shortness of the sentences used; 
 58.18     (b) the extent to which commonly used and understood words 
 58.19  are employed; 
 58.20     (c) the extent to which legal terms are avoided; 
 58.21     (d) the extent to which references to other sections or 
 58.22  provisions of the contract are minimized; 
 58.23     (e) the extent to which definitional provisions are 
 58.24  incorporated in the text of the policy or contract; and 
 58.25     (f) whether the specific requirements of Minnesota law are 
 58.26  incorporated into the policy or contract; and 
 58.27     (g) any additional factors relevant to the readability or 
 58.28  understandability of an insurance policy or contract which the 
 58.29  commissioner may prescribe by rule. 
 58.30     Sec. 58.  Minnesota Statutes 2000, section 79A.02, 
 58.31  subdivision 1, is amended to read: 
 58.32     Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
 58.33  the commissioner, there is established a workers' compensation 
 58.34  self-insurers' advisory committee of five members that are 
 58.35  employers authorized to self-insure in Minnesota.  Three of the 
 58.36  members and three alternates shall be elected by the 
 59.1   self-insurers' security fund board of trustees and two members 
 59.2   and two alternates shall be appointed by the 
 59.3   commissioner.  Notwithstanding section 15.059, subdivision 5a, 
 59.4   the advisory committee does not expire June 30, 2001. 
 59.5      [EFFECTIVE DATE.] This section is effective the day 
 59.6   following final enactment. 
 59.7      Sec. 59.  Minnesota Statutes 2000, section 79A.03, 
 59.8   subdivision 7, is amended to read: 
 59.9      Subd. 7.  [FINANCIAL STANDARDS.] A self-insurer group shall 
 59.10  have and maintain: 
 59.11     (a) A combined net worth of all of the members of an amount 
 59.12  at least equal to the greater of ten times the retention 
 59.13  selected with the workers' compensation reinsurance association 
 59.14  or one-third of the current annual modified premium of the 
 59.15  members.  
 59.16     (b) Sufficient assets, net worth, and liquidity to promptly 
 59.17  and completely meet all obligations of its members under chapter 
 59.18  176 or this chapter.  In determining whether a group is in sound 
 59.19  financial condition, consideration shall be given to the 
 59.20  combined net worth of the member companies; the consolidated 
 59.21  long-term and short-term debt to equity ratios of the member 
 59.22  companies; any excess insurance other than reinsurance with the 
 59.23  workers' compensation reinsurance association, purchased by the 
 59.24  group from an insurer licensed in Minnesota or from an 
 59.25  authorized surplus line carrier; other financial data requested 
 59.26  by the commissioner or submitted by the group; and the combined 
 59.27  workers' compensation experience of the group for the last four 
 59.28  years. 
 59.29     No authority to self-insure will be granted unless, over 
 59.30  the term of the policy year, at least 65 percent of total 
 59.31  revenues from all sources for the year are available for the 
 59.32  payment of its claim and assessment obligations, and insurance 
 59.33  premiums for stop loss coverage.  For purposes of this 
 59.34  calculation, claim and assessment obligations include the cost 
 59.35  of allocated loss expenses as well as special compensation fund 
 59.36  and self-insurers' security fund assessments but exclude the 
 60.1   cost of unallocated loss expenses. 
 60.2      [EFFECTIVE DATE.] This section is effective July 1, 2001. 
 60.3      Sec. 60.  Minnesota Statutes 2000, section 471.617, 
 60.4   subdivision 1, is amended to read: 
 60.5      Subdivision 1.  [IF MORE THAN 100 EMPLOYEES; CONDITIONS.] A 
 60.6   statutory or home rule charter city, county, school district, or 
 60.7   instrumentality thereof which has more than 100 employees, may 
 60.8   by ordinance or resolution self-insure for any employee health 
 60.9   benefits including long-term disability, but not for employee 
 60.10  life benefits.  Any self-insurance plan shall provide all 
 60.11  benefits which are required by law to be provided by group 
 60.12  health insurance policies.  Self-insurance plans shall must be 
 60.13  certified as provided by section 62E.05 and must be filed and 
 60.14  certified by the department of commerce before they are issued 
 60.15  or delivered to any person in this state.  
 60.16     [EFFECTIVE DATE.] This section is effective the day 
 60.17  following final enactment. 
 60.18     Sec. 61.  [REPEALER.] 
 60.19     Minnesota Statutes 2000, sections 13.7191, subdivision 11; 
 60.20  60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05; 62G.06; 62G.07; 
 60.21  62G.08; 62G.09; 62G.10; 62G.11; 62G.12; 62G.13; 62G.14; 62G.15; 
 60.22  62G.16; 62G.17; 62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23; 
 60.23  62G.24; and 62G.25, are repealed. 
 60.24     [EFFECTIVE DATE.] This section is effective the day 
 60.25  following final enactment.