SF 2262

1st Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; regulating reinsurance 
  1.3             intermediary-brokers; providing for the investment of 
  1.4             funds held or collected; clarifying immunity from 
  1.5             liability under the Minnesota FAIR plan act; amending 
  1.6             Minnesota Statutes 1996, sections 60A.715; and 65A.42. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1996, section 60A.715, is 
  1.9   amended to read: 
  1.10     60A.715 [REQUIRED CONTRACT PROVISIONS; REINSURANCE 
  1.11  INTERMEDIARY-BROKERS.] 
  1.12     Transactions between a RB and the insurer it represents in 
  1.13  this capacity shall only be entered into pursuant to a written 
  1.14  authorization, specifying the responsibilities of each party.  
  1.15  The authorization must, at a minimum, provide that: 
  1.16     (1) the insurer may terminate the RB's authority at any 
  1.17  time; 
  1.18     (2) the RB will render accounts to the insurer accurately 
  1.19  detailing all material transactions, including information 
  1.20  necessary to support all commissions, charges, and other fees 
  1.21  received by, or owing to the RB, and remit all funds due to the 
  1.22  insurer within 30 days of receipt; 
  1.23     (3) all funds collected for the insurer's account will be 
  1.24  held by the RB in a fiduciary capacity: 
  1.25     (i) in a bank that is a qualified United States financial 
  1.26  institution and may be; or 
  2.1      (ii) if authorized in writing by the insurer in whose 
  2.2   account the funds are held, invested in direct obligations of, 
  2.3   or obligations guaranteed or insured by, the United States, its 
  2.4   agencies, or its instrumentalities, excluding mortgage-backed 
  2.5   securities, or in obligations described in section 60A.11, 
  2.6   subdivision 17, paragraphs (a) and (b).  Investments made under 
  2.7   clause (3), item (ii), shall be restricted to obligations rated 
  2.8   in the highest category established by the securities valuation 
  2.9   office of the National Association of Insurance Commissioners.  
  2.10  The RB shall be responsible for any losses on investments made 
  2.11  pursuant to item (ii). 
  2.12     These funds may not be invested in obligations whose 
  2.13  maturities exceed 90 days; At least 50 percent of the funds 
  2.14  invested under clause (3), based on the prior 30 days' average 
  2.15  balance, must be invested in instruments that mature in no more 
  2.16  than 120 days.  In no case shall an investment mature in greater 
  2.17  than three years from the date of purchase.  Investments made 
  2.18  pursuant to clause (3) should emphasize safety and liquidity.  
  2.19  The RB is required to structure those investments so that funds 
  2.20  are available to remit on a timely basis to the insurer; 
  2.21     (4) the RB will comply with section 60A.72; 
  2.22     (5) the RB will comply with the written standards 
  2.23  established by the insurer for the cession or retrocession of 
  2.24  all risks; and 
  2.25     (6) the RB will disclose to the insurer any relationship 
  2.26  with any reinsurer to which business will be ceded or retroceded.
  2.27     Sec. 2.  Minnesota Statutes 1996, section 65A.42, is 
  2.28  amended to read: 
  2.29     65A.42 [IMMUNITY FROM LIABILITY.] 
  2.30     There shall be no civil or criminal liability on the part 
  2.31  of, and no cause of action of any nature shall arise against 
  2.32  insurers, the inspection bureau, the facility, or their agents 
  2.33  or employees or the commissioner or the commissioner's 
  2.34  authorized representatives, for any statements made in good 
  2.35  faith acts or omissions by them in any reports or communications 
  2.36  concerning the property to be insured, or at the time of any 
  3.1   hearings conducted in connection therewith, or in the findings 
  3.2   required by the provisions of if the acts or omissions were in 
  3.3   good faith and within the scope of their responsibilities under 
  3.4   sections 65A.31 to 65A.42.  The inspection reports and 
  3.5   communications of the inspection bureau and the facility are not 
  3.6   public documents.