SF 3569

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to insurance; regulating nonrenewals of homeowner's insurance;
prohibiting various discriminatory practices in automobile and homeowner's
insurance; amending Minnesota Statutes 2004, sections 65A.29, subdivision
8; 65B.28, subdivision 1; 72A.20, subdivision 23; Minnesota Statutes 2005
Supplement, section 72A.20, subdivision 13.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 65A.29, subdivision 8, is amended to read:

Subd. 8.

Rules.

(a) The commissioner may adopt rules pursuant to chapter 14, to
specify the grounds for nonrenewal, reduction in limits of coverage, or elimination of
coverage of a homeowner's policy. The rules must limit the grounds to the following
factors:

(1) reasons stated for cancellation in section 65A.01, subdivision 3a;

(2) reasons stated in section 72A.20, subdivision 13;

(3) insured's loss experience, deleted text begin not to include natural causes deleted text end new text begin as limited by paragraphs
(b) and (c) new text end ; and

(4) other factors deemed reasonable by the commissioner.

new text begin (b) An insurer may not take the action specified in paragraph (a) because of losses
caused by natural causes.
new text end

new text begin (c) If two or fewer claims are submitted during the experience period, the insurer
may not take the action specified in paragraph (a) on the grounds of a number of claims,
but the insurer may take the action specified in paragraph (a) on the basis of two claims
submitted during the experience period, the aggregate of which exceeds $5,000.
new text end

new text begin (d) new text end The rules may give consideration to the form and content of the termination
notice to the insured, a statement as to what constitutes receipt of the termination notice,
and the procedure by which the insured may appeal a termination notice.

new text begin (e) new text end The rules adopted under this subdivision may provide for imposition of a
monetary penalty not greater than $500 per occurrence upon insurers who are found
to be in violation of the law or the rules.

deleted text begin (b) deleted text end new text begin (f) new text end In addition to any rules adopted under this subdivision, an insured may appeal
any nonrenewal under this section to the commissioner of commerce. If the commissioner
finds that the nonrenewal is unjustified, arbitrary, or capricious, the commissioner shall
order the insurer to reinstate the insured's policy. The commissioner's order may be
appealed pursuant to chapter 14. The insured's policy shall continue in force pending the
conclusion of the appeal to the commissioner. The insurer must notify the insured of the
insured's right to appeal the nonrenewal to the commissioner in the notice of nonrenewal
required under subdivision 7.

new text begin (g) The dollar amount stated in paragraph (c) shall be adjusted for inflation based
on the Consumer Price Index for all urban consumers, CPI-U, published by the United
States Bureau of Labor Statistics. The value of the index for July 2006 is the reference
based index for purposes of this paragraph. The dollar amounts in this paragraph shall
change effective January 1 of each odd-numbered year based on the percentage difference
between the index for July of the preceding year and the reference base index, calculated to
the nearest whole percentage point. The commissioner shall announce and publish, on or
before August 30 of the preceding year, the changes in the dollar amounts required by this
paragraph to take effect on January 1 of each odd-numbered year. The commissioner shall
use the most recent revision of the July index available as of August 1. The commissioner,
on or before the August 30 announcement, shall notify the revisor of statutes in writing of
the change in the dollar amount and the revisor shall publish the change in the next edition
of Minnesota Statutes. If the United States Bureau of Labor Statistics changes the base
year on which the CPI-U is based, the commissioner shall make the calculations necessary
to convert from the old base year to the new base year. If the CPI-U is discontinued, the
commissioner shall use the available index that is most similar to the CPI-U.
new text end

Sec. 2.

Minnesota Statutes 2004, section 65B.28, subdivision 1, is amended to read:

Subdivision 1.

Required reduction.

An insurer must provide an appropriate
premium reduction of at least ten percent on its policies of private passenger vehicle
insurance, as defined in section 65B.001, subdivision 2, issued, delivered, or renewed
in this state, to insureds 55 years old and older who successfully complete an accident
prevention course or refresher course established under subdivisions 2 and 3. new text begin An insurer
must not exclude from eligibility for this premium reduction any person who is eligible for
it under this section and must not use any offsetting premium surcharge, offsetting loss of
a premium discount, or any other offsetting premium rate adjustment that applies only to
persons eligible for the premium reduction under this section. new text end

Sec. 3.

Minnesota Statutes 2005 Supplement, section 72A.20, subdivision 13, is
amended to read:

Subd. 13.

deleted text begin Refusal to renew deleted text end new text begin Prohibited underwriting practices; homeowner's
insurance new text end .

deleted text begin Refusing deleted text end new text begin It is an unfair method of competition and an unfair and deceptive act
or practice to refuse new text end to renew, deleted text begin declining deleted text end new text begin to decline new text end to offer or write, or deleted text begin charging deleted text end new text begin to charge new text end
differential rates for an equivalent amount of homeowner's insurance coverage, as defined
by section 65A.27, for property located in a town or statutory or home rule charter city, in
which the insurer offers to sell or writes homeowner's insurance, solely because:

(a) of the geographic area in which the property is located;

(b) of the age of the primary structure sought to be insured;

(c) the insured or prospective insured was denied coverage of the property by
another insurer, whether by cancellation, nonrenewal or declination to offer coverage, for
a reason other than those specified in section 65A.01, subdivision 3a, clauses (a) to (e);

(d) the property of the insured or prospective insured has been insured under the
Minnesota FAIR Plan Act deleted text begin , shall constitute an unfair method of competition and an unfair
and deceptive act or practice deleted text end ; deleted text begin or
deleted text end

(e) the insured has inquired about coverage for a hypothetical claim or has made an
inquiry to the insured's agent regarding a potential claim deleted text begin . deleted text end new text begin ; or
new text end

new text begin (f) the employment status or residential stability of the insured or prospective insured.
new text end

This subdivision prohibits an insurer from filing or charging different rates for
different zip code areas within the same town or statutory or home rule charter city.

This subdivision shall not prohibit the insurer from applying underwriting or
rating standards which the insurer applies generally in all other locations in the state
and which are not specifically prohibited by clauses (a) to deleted text begin (e) deleted text end new text begin (f) new text end . Such underwriting or
rating standards shall specifically include but not be limited to standards based upon the
proximity of the insured property to an extraordinary hazard or based upon the quality
or availability of fire protection services or based upon the density or concentration of
the insurer's risks. Clause (b) shall not prohibit the use of rating standards based upon
the age of the insured structure's plumbing, electrical, heating or cooling system or other
part of the structure, the age of which affects the risk of loss. Any insurer's failure to
comply with section 65A.29, subdivisions 2 to 4, either (1) by failing to give an insured
or applicant the required notice or statement or (2) by failing to state specifically a bona
fide underwriting or other reason for the refusal to write shall create a presumption that
the insurer has violated this subdivision.

Sec. 4.

Minnesota Statutes 2004, section 72A.20, subdivision 23, is amended to read:

Subd. 23.

Discrimination in automobile insurance policies.

(a) No insurer that
offers an automobile insurance policy in this state shall:

(1) use the employment status of the applicant as an underwriting standard or
guideline; or

(2) deny coverage to a policyholder for the same reason.

(b) No insurer that offers an automobile insurance policy in this state shall:

(1) use the applicant's status as a residential tenant, as the term is defined in section
504B.001, subdivision 12, as an underwriting standard or guideline; or

(2) deny coverage to a policyholder for the same reason; or

(3) make any discrimination in offering or establishing rates, premiums, dividends,
or benefits of any kind, or by way of rebate, for the same reason.

(c) No insurer that offers an automobile insurance policy in this state shall:

(1) use the failure of the new text begin insured or new text end applicant to have an automobile policy in force
during any period of time before the application is made as an underwriting standard or
guideline new text begin , including eligibility for premium rates or premium discounts new text end ; or

(2) deny coverage to a policyholder for the same reason.

Paragraph (c) does not apply if the new text begin insured or new text end applicant was required by law to
maintain automobile insurance coverage and failed to do so.

An insurer may require reasonable proof that the new text begin insured or new text end applicant did not fail to
maintain this coverage. The insurer is not required to accept the mere lack of a conviction
or citation for failure to maintain this coverage as proof of failure to maintain coverage.
The insurer must provide the new text begin insured or new text end applicant with information identifying the
documentation that is required to establish reasonable proof that the new text begin insured or new text end applicant
did not fail to maintain the coverage.

(d) No insurer that offers an automobile insurance policy in this state shall use
an new text begin insured's or new text end applicant's prior claims for benefits paid under section 65B.44 new text begin or prior
claims for collision or comprehensive losses new text end as an underwriting standard or guideline if
the new text begin insured or new text end applicant was 50 percent or less negligent in the accident or accidents
causing the claims.

(e) No insurer shall refuse to issue any standard or preferred policy of motor vehicle
insurance or make any discrimination in the acceptance of risks, in rates, premiums,
dividends, or benefits of any kind, or by way of rebate:

(1) between persons of the same class, or

(2) on account of race, or

(3) on account of physical handicap if the handicap is compensated for by special
training, equipment, prosthetic device, corrective lenses, or medication and if the
physically handicapped person:

(i) is licensed by the Department of Public Safety to operate a motor vehicle in
this state, and

(ii) operates only vehicles that are equipped with auxiliary devices and equipment
necessary for safe and effective operation by the handicapped person, or

(4) on account of marital dissolution.

Sec. 5. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 2 to 4 are effective January 1, 2007, and apply to coverage applied for,
issued, or renewed on or after that date. Section 1 is effective January 1, 2007, and applies
to losses occurring on or after that date, regardless of whether the commissioner has as of
that date amended Minnesota Rules to comply with that section.
new text end