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Minnesota Legislature

Office of the Revisor of Statutes

SF 2313

2nd Engrossment - 91st Legislature (2019 - 2020) Posted on 05/21/2019 08:29am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 2nd Engrossment

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A bill for an act
relating to insurance; making changes to conform with certain model regulations;
authorizing rulemaking; amending Minnesota Statutes 2018, sections 60A.1291,
subdivisions 1, 15, 18, by adding a subdivision; 60A.51, by adding a subdivision;
60A.52, subdivision 1; 60D.15, by adding subdivisions; 62A.3099, by adding a
subdivision; 62A.31, subdivision 1, by adding a subdivision; 62A.315; 62A.316;
62A.3161; 62A.3162; 62A.3163; 62A.3164; 62A.3165; 62A.318, subdivision 17;
62E.07; proposing coding for new law in Minnesota Statutes, chapters 60A; 60D.

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

ARTICLE 1

ANNUAL FINANCIAL REPORTING AND AUDIT

Section 1.

Minnesota Statutes 2018, section 60A.1291, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

The definitions in this subdivision apply to this section.

(a) "Accountant" and "independent public accountant" mean an independent certified
public accountant or accounting firm in good standing with the American Institute of Certified
Public Accountants and in all states in which the accountant or firm is licensed or is required
to be licensed to practice. For Canadian and British companies, the term means a
Canadian-chartered or British-chartered accountant.

new text begin (b) "Affiliate" or "affiliated" means a person that directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control with a person.
new text end

deleted text begin (b)deleted text endnew text begin (c)new text end "Audit committee" means a committee or equivalent body established by the
board of directors of an entity for the purpose of overseeing the accounting and financial
reporting processes of an insurer or group of insurers, deleted text beginanddeleted text endnew text begin the internal audit function of an
insurer or group of insurers, if applicable, and external
new text end audits of financial statements of the
insurer or group of insurers. The audit committee of any entity that controls a group of
insurers may be deemed to be the audit committee for one or more of these controlled
insurers solely for the purposes of this section at the election of the controlling person under
subdivision 15, paragraph (e). If an audit committee is not designated by the insurer, the
insurer's entire board of directors constitutes the audit committee.

new text begin (d) "Audited financial report" means the report described in subdivision 4.
new text end

deleted text begin (c)deleted text endnew text begin (e)new text end "Indemnification" means an agreement of indemnity or a release from liability
where the intent or effect is to shift or limit in any manner the potential liability of the person
or firm for failure to adhere to applicable auditing or professional standards, whether or not
resulting in part from knowing of other misrepresentations made by the insurer or its
representatives.

deleted text begin (d)deleted text endnew text begin (f)new text end "Independent board member" has the same meaning as described in subdivision
15, paragraph (c).

new text begin (g) "Internal audit function" means a person or persons that provide independent, objective
and reasonable assurance designed to add value and improve an organization's operations
and accomplish its objectives by bringing a systematic, disciplined approach to evaluate
and improve the effectiveness of risk management, control, and governance processes.
new text end

deleted text begin (e)deleted text end new text begin(h) new text end"Internal control over financial reporting" means a process effected by an entity's
board of directors, management, and other personnel designed to provide reasonable
assurance regarding the reliability of the financial statements, for example, those items
specified in subdivision 4, paragraphs (a), clauses (2) to (6), (b), and (c), and includes those
policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of assets;

(2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of the financial statements, for example, those items specified in subdivision 4,
paragraphs (a), clauses (2) to (6), (b), and (c), and that receipts and expenditures are being
made only in accordance with authorizations of management and directors; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of assets that could have a material effect on the financial
statements, for example, those items specified in subdivision 4, paragraphs (a), clauses (2)
to (6), (b), and (c).

deleted text begin (f)deleted text endnew text begin (i)new text end "SEC" means the United States Securities and Exchange Commission.

deleted text begin (g)deleted text endnew text begin (j)new text end "Section 404" means Section 404 of the Sarbanes-Oxley Act of 2002 and the
SEC's rules and regulations promulgated under it.

deleted text begin (h)deleted text endnew text begin (k)new text end "Section 404 report" means management's report on "internal control over financial
reporting" as defined by the SEC and the related attestation report of the independent certified
public accountant as described in paragraph (a).

deleted text begin (i)deleted text endnew text begin (l)new text end "SOX compliant entity" means an entity that either is required to be compliant
with, or voluntarily is compliant with, all of the following provisions of the Sarbanes-Oxley
Act of 2002: (i) the preapproval requirements of Section 201 (section 10A(i) of the Securities
Exchange Act of 1934); (ii) the audit committee independence requirements of Section 301
(section 10A(m)(3) of the Securities Exchange Act of 1934); and (iii) the internal control
over financial reporting requirements of Section 404 (Item 308 of SEC Regulation S-K).

Sec. 2.

Minnesota Statutes 2018, section 60A.1291, subdivision 15, is amended to read:


Subd. 15.

Requirements for audit committee.

(a) The audit committee must be directly
responsible for the appointment, compensation, and oversight of the work of any accountant
including resolution of disagreements between management and the accountant regarding
financial reporting for the purpose of preparing or issuing the audited financial report or
related work pursuant to this section. Each accountant shall report directly to the audit
committee.

new text begin (b) The audit committee of an insurer or group of insurers is responsible for overseeing
the insurer's internal audit function and granting the person or persons performing the
function suitable authority and resources to fulfill their responsibilities if required by
subdivision 15a.
new text end

deleted text begin (b)deleted text endnew text begin (c)new text end Each member of the audit committee must be a member of the board of directors
of the insurer or a member of the board of directors of an entity elected pursuant to paragraph
deleted text begin (e)deleted text endnew text begin (f)new text end and subdivision 1, paragraph deleted text begin(b)deleted text endnew text begin (c)new text end.

deleted text begin (c)deleted text endnew text begin (d)new text end In order to be considered independent for purposes of this section, a member of
the audit committee may not, other than in his or her capacity as a member of the audit
committee, the board of directors, or any other board committee, accept any consulting,
advisory, or other compensatory fee from the entity or be an affiliated person of the entity
or any subsidiary of the entity. However, if law requires board participation by otherwise
nonindependent members, that law shall prevail and such members may participate in the
audit committee and be designated as independent for audit committee purposes, unless
they are an officer or employee of the insurer or one of its affiliates.

deleted text begin (d)deleted text endnew text begin (e)new text end If a member of the audit committee ceases to be independent for reasons outside
the member's reasonable control, that person, with notice by the responsible entity to the
state, may remain an audit committee member of the responsible entity until the earlier of
the next annual meeting of the responsible entity or one year from the occurrence of the
event that caused the member to be no longer independent.

deleted text begin (e)deleted text endnew text begin (f)new text end To exercise the election of the controlling person to designate the audit committee
for purposes of this section, the ultimate controlling person shall provide written notice to
the commissioners of the affected insurers. Notification must be made timely before the
issuance of the statutory audit report and include a description of the basis for the election.
The election can be changed through notice to the commissioner by the insurer, which shall
include a description of the basis for the change. The election remains in effect for perpetuity,
until rescinded.

deleted text begin (f)deleted text endnew text begin (g)new text end The audit committee shall require the accountant that performs for an insurer any
audit required by this section to timely report to the audit committee in accordance with the
requirements of SAS No. 114, The Auditor's Communication with Those Charged with
Governance, or its replacement, including:

(1) all significant accounting policies and material permitted practices;

(2) all material alternative treatments of financial information within statutory accounting
principles that have been discussed with management officials of the insurer, ramifications
of the use of the alternative disclosures and treatments, and the treatment preferred by the
accountant; and

(3) other material written communications between the accountant and the management
of the insurer, such as any management letter or schedule of unadjusted differences.

deleted text begin (g)deleted text endnew text begin (h)new text end If an insurer is a member of an insurance holding company system, the reports
required by paragraph deleted text begin(f)deleted text endnew text begin (g)new text end may be provided to the audit committee on an aggregate basis
for insurers in the holding company system, provided that any substantial differences among
insurers in the system are identified to the audit committee.

deleted text begin (h)deleted text endnew text begin (i)new text end The proportion of independent audit committee members shall meet or exceed
the following criteria:

(1) for companies with prior calendar year direct written and assumed premiums $0 to
$300,000,000, no minimum requirements;

(2) for companies with prior calendar year direct written and assumed premiums over
$300,000,000 to $500,000,000, majority of members must be independent; and

(3) for companies with prior calendar year direct written and assumed premiums over
$500,000,000, 75 percent or more must be independent.

deleted text begin (i)deleted text endnew text begin (j)new text end An insurer with direct written and assumed premium, excluding premiums reinsured
with the Federal Crop Insurance Corporation and Federal Flood Program, less than
$500,000,000 may make application to the commissioner for a waiver from the requirements
of this subdivision based upon hardship. The insurer shall file, with its annual statement
filing, the approval for relief from this subdivision with the states that it is licensed in or
doing business in and the NAIC. If the nondomestic state accepts electronic filing with the
NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.

This subdivision does not apply to foreign or alien insurers licensed in this state or an
insurer that is a SOX compliant entity or a direct or indirect wholly owned subsidiary of a
SOX compliant entity.

Sec. 3.

Minnesota Statutes 2018, section 60A.1291, is amended by adding a subdivision
to read:


new text begin Subd. 15a. new text end

new text begin Internal audit function requirements. new text end

new text begin (a) An insurer is exempt from the
requirements of this subdivision if:
new text end

new text begin (1) the insurer has annual direct written and unaffiliated assumed premium, including
international direct and assumed premium but excluding premiums reinsured with the Federal
Crop Insurance Corporation and Federal Flood Program, less than $500,000,000; and
new text end

new text begin (2) if the insurer is a member of a group of insurers, the group has annual direct written
and unaffiliated assumed premium including international direct and assumed premium,
but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal
Flood Program, less than $1,000,000,000.
new text end

new text begin (b) The insurer or group of insurers shall establish an internal audit function providing
independent, objective, and reasonable assurance to the audit committee and insurer
management regarding the insurer's governance, risk management, and internal controls.
This assurance shall be provided by performing general and specific audits, reviews, and
tests and by employing other techniques deemed necessary to protect assets, evaluate control
effectiveness and efficiency, and evaluate compliance with policies and regulations.
new text end

new text begin (c) In order to ensure that internal auditors remain objective, the internal audit function
must be organizationally independent. Specifically, the internal audit function will not defer
ultimate judgment on audit matters to others, and shall appoint an individual to head the
internal audit function who will have direct and unrestricted access to the board of directors.
Organizational independence does not preclude dual-reporting relationships.
new text end

new text begin (d) The head of the internal audit function shall report to the audit committee regularly,
but no less than annually, on the periodic audit plan, factors that may adversely impact the
internal audit function's independence or effectiveness, material findings from completed
audits and the appropriateness of corrective actions implemented by management as a result
of audit findings.
new text end

new text begin (e) If an insurer is a member of an insurance holding company system or included in a
group of insurers, the insurer may satisfy the internal audit function requirements set forth
in this section at the ultimate controlling parent level, an intermediate holding company
level or the individual legal entity level.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin The requirements of this subdivision are effective January 1,
2020.
new text end

Sec. 4.

Minnesota Statutes 2018, section 60A.1291, subdivision 18, is amended to read:


Subd. 18.

Exemptions.

(a) Upon written application of any insurer, the commissioner
may grant an exemption from compliance with the provisions of this section. In order to
receive an exemption, an insurer must demonstrate to the satisfaction of the commissioner
that compliance would constitute a financial or organizational hardship upon the insurer.
An exemption may be granted at any time and from time to time for specified periods.
Within ten days from the denial of an insurer's written request for an exemption, the insurer
may request in writing a hearing on its application for an exemption. This hearing must be
held in accordance with chapter 14. Upon written application of any insurer, the
commissioner may permit an insurer to file annual audited financial reports on some basis
other than a calendar year basis for a specified period. An exemption may not be granted
until the insurer presents an alternative method satisfying the purposes of this section. Within
ten days from a denial of a written request for an exemption, the insurer may request in
writing a hearing on its application. The hearing must be held in accordance with chapter
14.

(b) This section applies to all insurers, unless otherwise indicated, required to file an
annual audit by subdivision 2, except insurers having less than $1,000,000 of direct written
premiums in this state in any calendar year and fewer than 1,000 policyholders or certificate
holders of directly written policies nationwide at the end of the calendar year, are exempt
from this section for that year, unless the commissioner makes a specific finding that
compliance is necessary for the commissioner to carry out statutory responsibilities, except
that insurers having assumed premiums from reinsurance contracts or treaties of $1,000,000
or more are not exempt.

new text begin (c) If an insurer or group of insurers that is exempt from the subdivision 15a requirements
no longer qualifies for that exemption, it shall have one year after the year the threshold is
exceeded to comply with the requirements.
new text end

ARTICLE 2

INSURANCE HOLDING COMPANY SYSTEMS

Section 1.

Minnesota Statutes 2018, section 60D.15, is amended by adding a subdivision
to read:


new text begin Subd. 4b. new text end

new text begin Groupwide supervisor. new text end

new text begin "Groupwide supervisor" means the regulatory official
authorized to engage in conducting and coordinating groupwide supervision activities who
is determined or acknowledged by the commissioner under section 60D.217 to have sufficient
significant contacts with the internationally active insurance group.
new text end

Sec. 2.

Minnesota Statutes 2018, section 60D.15, is amended by adding a subdivision to
read:


new text begin Subd. 6a. new text end

new text begin Internationally active insurance group. new text end

new text begin "Internationally active insurance
group" means an insurance holding company system that (1) includes an insurer registered
under section 60D.19; and (2) meets the following criteria: (i) premiums written in at least
three countries, (ii) the percentage of gross premiums written outside the United States is
at least ten percent of the insurance holding company system's total gross written premiums,
and (iii) based on a three-year rolling average, the total assets of the insurance holding
company system are at least $50,000,000,000 or the total gross written premiums of the
insurance holding company system are at least $10,000,000,000.
new text end

Sec. 3.

new text begin [60D.217] GROUPWIDE SUPERVISION OF INTERNATIONALLY ACTIVE
INSURANCE GROUPS.
new text end

new text begin (a) The commissioner is authorized to act as the groupwide supervisor for any
internationally active insurance group in accordance with the provisions of this section.
However, the commissioner may otherwise acknowledge another regulatory official as the
groupwide supervisor where the internationally active insurance group:
new text end

new text begin (1) does not have substantial insurance operations in the United States;
new text end

new text begin (2) has substantial insurance operations in the United States, but not in this state; or
new text end

new text begin (3) has substantial insurance operations in the United States and this state, but the
commissioner has determined pursuant to the factors set forth in subsections (b) and (f) that
the other regulatory official is the appropriate groupwide supervisor.
new text end

new text begin An insurance holding company system that does not otherwise qualify as an internationally
active insurance group may request that the commissioner make a determination or
acknowledgment as to a groupwide supervisor pursuant to this section.
new text end

new text begin (b) In cooperation with other state, federal, and international regulatory agencies, the
commissioner will identify a single groupwide supervisor for an internationally active
insurance group. The commissioner may determine that the commissioner is the appropriate
groupwide supervisor for an internationally active insurance group that conducts substantial
insurance operations concentrated in this state. However, the commissioner may acknowledge
that a regulatory official from another jurisdiction is the appropriate groupwide supervisor
for the internationally active insurance group. The commissioner shall consider the following
factors when making a determination or acknowledgment under this subsection:
new text end

new text begin (1) the place of domicile of the insurers within the internationally active insurance group
that hold the largest share of the group's written premiums, assets, or liabilities;
new text end

new text begin (2) the place of domicile of the top-tiered insurer(s) in the insurance holding company
system of the internationally active insurance group;
new text end

new text begin (3) the location of the executive offices or largest operational offices of the internationally
active insurance group;
new text end

new text begin (4) whether another regulatory official is acting or is seeking to act as the groupwide
supervisor under a regulatory system that the commissioner determines to be:
new text end

new text begin (i) substantially similar to the system of regulation provided under the laws of this state;
or
new text end

new text begin (ii) otherwise sufficient in terms of providing for groupwide supervision, enterprise risk
analysis, and cooperation with other regulatory officials; and
new text end

new text begin (5) whether another regulatory official acting or seeking to act as the groupwide
supervisor provides the commissioner with reasonably reciprocal recognition and cooperation.
new text end

new text begin However, a commissioner identified under this section as the groupwide supervisor may
determine that it is appropriate to acknowledge another supervisor to serve as the groupwide
supervisor. The acknowledgment of the groupwide supervisor shall be made after
consideration of the factors listed in clauses (1) to (5), and shall be made in cooperation
with and subject to the acknowledgment of other regulatory officials involved with
supervision of members of the internationally active insurance group, and in consultation
with the internationally active insurance group.
new text end

new text begin (c) Notwithstanding any other provision of law, when another regulatory official is acting
as the groupwide supervisor of an internationally active insurance group, the commissioner
shall acknowledge that regulatory official as the groupwide supervisor. However, in the
event of a material change in the internationally active insurance group that results in:
new text end

new text begin (1) the internationally active insurance group's insurers domiciled in this state holding
the largest share of the group's premiums, assets, or liabilities; or
new text end

new text begin (2) this state being the place of domicile of the top-tiered insurer(s) in the insurance
holding company system of the internationally active insurance group,
new text end

new text begin the commissioner shall make a determination or acknowledgment as to the appropriate
groupwide supervisor for such an internationally active insurance group pursuant to
subsection (b).
new text end

new text begin (d) Pursuant to section 60D.21, the commissioner is authorized to collect from any
insurer registered pursuant to section 60D.19 all information necessary to determine whether
the commissioner may act as the groupwide supervisor of an internationally active insurance
group or if the commissioner may acknowledge another regulatory official to act as the
groupwide supervisor. Prior to issuing a determination that an internationally active insurance
group is subject to groupwide supervision by the commissioner, the commissioner shall
notify the insurer registered pursuant to section 60D.19 and the ultimate controlling person
within the internationally active insurance group. The internationally active insurance group
shall have not less than 30 days to provide the commissioner with additional information
pertinent to the pending determination. The commissioner shall publish in the State Register
and on the department's website the identity of internationally active insurance groups that
the commissioner has determined are subject to groupwide supervision by the commissioner.
new text end

new text begin (e) If the commissioner is the groupwide supervisor for an internationally active insurance
group, the commissioner is authorized to engage in any of the following groupwide
supervision activities:
new text end

new text begin (1) assess the enterprise risks within the internationally active insurance group to ensure
that:
new text end

new text begin (i) the material financial condition and liquidity risks to the members of the internationally
active insurance group that are engaged in the business of insurance are identified by
management; and
new text end

new text begin (ii) reasonable and effective mitigation measures are in place; or
new text end

new text begin (2) request, from any member of an internationally active insurance group subject to the
commissioner's supervision, information necessary and appropriate to assess enterprise risk,
including but not limited to information about the members of the internationally active
insurance group regarding:
new text end

new text begin (i) governance, risk assessment, and management;
new text end

new text begin (ii) capital adequacy; and
new text end

new text begin (iii) material intercompany transactions;
new text end

new text begin (3) coordinate and, through the authority of the regulatory officials of the jurisdictions
where members of the internationally active insurance group are domiciled, compel
development and implementation of reasonable measures designed to ensure that the
internationally active insurance group is able to timely recognize and mitigate enterprise
risks to members of such internationally active insurance group that are engaged in the
business of insurance;
new text end

new text begin (4) communicate with other state, federal and international regulatory agencies for
members within the internationally active insurance group and share relevant information
subject to the confidentiality provisions of section 60D.22, through supervisory colleges as
set forth in section 60D.215 or otherwise;
new text end

new text begin (5) enter into agreements with or obtain documentation from any insurer registered under
section 60D.19, any member of the internationally active insurance group, and any other
state, federal, and international regulatory agencies for members of the internationally active
insurance group, providing the basis for or otherwise clarifying the commissioner's role as
groupwide supervisor, including provisions for resolving disputes with other regulatory
officials. Such agreements or documentation shall not serve as evidence in any proceeding
that any insurer or person within an insurance holding company system not domiciled or
incorporated in this state is doing business in this state or is otherwise subject to jurisdiction
in this state; and
new text end

new text begin (6) other groupwide supervision activities, consistent with the authorities and purposes
enumerated above, as considered necessary by the commissioner.
new text end

new text begin (f) If the commissioner acknowledges that another regulatory official from a jurisdiction
that is not accredited by the NAIC is the groupwide supervisor, the commissioner is
authorized to reasonably cooperate, through supervisory colleges or otherwise, with
groupwide supervision undertaken by the groupwide supervisor, provided that:
new text end

new text begin (1) the commissioner's cooperation is in compliance with the laws of this state; and
new text end

new text begin (2) the regulatory official acknowledged as the groupwide supervisor also recognizes
and cooperates with the commissioner's activities as a groupwide supervisor for other
internationally active insurance groups where applicable. Where such recognition and
cooperation is not reasonably reciprocal, the commissioner is authorized to refuse recognition
and cooperation.
new text end

new text begin (g) The commissioner is authorized to enter into agreements with or obtain documentation
from any insurer registered under section 60D.19, any affiliate of the insurer, and other
state, federal, and international regulatory agencies for members of the internationally active
insurance group, that provide the basis for or otherwise clarify a regulatory official's role
as groupwide supervisor.
new text end

new text begin (h) A registered insurer subject to this section shall be liable for and shall pay the
reasonable expenses of the commissioner's participation in the administration of this section,
including the engagement of attorneys, actuaries, and any other professionals and all
reasonable travel expenses.
new text end

ARTICLE 3

RISK-BASED CAPITAL TREND TEST FOR HEALTH ORGANIZATIONS

Section 1.

Minnesota Statutes 2018, section 60A.51, is amended by adding a subdivision
to read:


new text begin Subd. 2a. new text end

new text begin Excess of capital. new text end

new text begin An excess of capital (net worth) over the amount produced
by the risk-based capital requirements contained in sections 60A.50 to 60A.592 and the
formulas, schedules, and instructions referenced in sections 60A.50 to 60A.592 is desirable
in the business of health insurance.
new text end

Sec. 2.

Minnesota Statutes 2018, section 60A.52, subdivision 1, is amended to read:


Subdivision 1.

Definition.

"Company action level event" means the following events:

(1) the filing of an RBC report by a health organization that indicates that the health
organization's total adjusted capital is greater than or equal to its regulatory action level
RBC but less than its company action level RBCnew text begin. If a health organization has total adjusted
capital greater than or equal to its company action level RBC but less than the product of
its authorized control level RBC multiplied by three, and triggers the trend test determined
in accordance with the trend test calculation included in the health RBC instructions
new text end;

(2) notification by the commissioner to the health organization of an adjusted RBC report
that indicates an event in clause (1), provided the health organization does not challenge
the adjusted RBC report under section 60A.56; or

(3) if, pursuant to section 60A.56, a health organization challenges an adjusted RBC
report that indicates the event in clause (1), the notification by the commissioner to the
health organization that the commissioner has, after a hearing, rejected the health
organization's challenge.

ARTICLE 4

CORPORATE GOVERNANCE ANNUAL DISCLOSURE

Section 1.

new text begin [60A.1391] CORPORATE GOVERNANCE ANNUAL DISCLOSURE.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin (a) Nothing in this section shall be construed to prescribe or
impose corporate governance standards and internal procedure beyond that which is required
under applicable state corporate law. Nothing in this section shall be construed to limit the
commissioner's authority, or the rights or obligations of third parties.
new text end

new text begin (b) The requirements of this section apply to all insurers domiciled in this state.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the terms defined in this subdivision
have the meanings given them.
new text end

new text begin (b) "Commissioner" means the commissioner of commerce.
new text end

new text begin (c) "Corporate Governance Annual Disclosure (CGAD)" means a confidential report
filed by the insurer or insurance group according to this section.
new text end

new text begin (d) "Insurance group" means those insurers and affiliates included within an insurance
holding company system as defined in section 60D.15, subdivision 5.
new text end

new text begin (e) "Insurer" has the meaning given in section 60A.705, subdivision 4, except that it
does not include agencies, authorities, or instrumentalities of the United States, its possessions
and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or
political subdivision of a state.
new text end

new text begin (f) "ORSA summary report" means the report filed under section 60D.54.
new text end

new text begin (g) "Senior management" means any corporate officer responsible for reporting
information to the board of directors at regular intervals or providing this information to
shareholders or regulators and shall include, for example and without limitation, the Chief
Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operations Officer (COO),
Chief Procurement Officer (CPO), Chief Legal Officer (CLO), Chief Information Officer
(CIO), Chief Technology Officer (CTO), Chief Revenue Officer (CRO), Chief Visionary
Officer (CVO), or any other "C" level executive.
new text end

new text begin Subd. 3. new text end

new text begin Disclosure and filing requirements. new text end

new text begin (a) An insurer, or the insurance group of
which the insurer is a member, shall, no later than June 1 of each calendar year, submit to
the commissioner a Corporate Governance Annual Disclosure (CGAD) that contains the
information described in subdivision 4. Notwithstanding any request from the commissioner
made pursuant to paragraph (c), if the insurer is a member of an insurance group, the insurer
shall submit the report required by this section to the commissioner of the lead state for the
insurance group, in accordance with the laws of the lead state, as determined by the
procedures outlined in the most recent Financial Analysis Handbook adopted by the NAIC.
new text end

new text begin (b) The CGAD must include a signature of the insurer or insurance group's chief executive
officer or corporate secretary attesting to the best of that individual's belief and knowledge
that the insurer has implemented the corporate governance practices and that a copy of the
disclosure has been provided to the insurer's or the insurance group's board of directors or
the appropriate committee thereof.
new text end

new text begin (c) An insurer not required to submit a CGAD under this section shall do so upon the
commissioner's request.
new text end

new text begin (d) For purposes of completing the CGAD, the insurer or insurance group may provide
information regarding corporate governance at the ultimate controlling parent level, an
intermediate holding company level, or the individual legal entity level, depending upon
how the insurer or insurance group has structured its system of corporate governance. The
insurer or insurance group is encouraged to make the CGAD disclosures at the level at
which the insurer's or insurance group's risk appetite is determined, or at which the earnings,
capital, liquidity, operations, and reputation of the insurer are overseen collectively and at
which the supervision of those factors are coordinated and exercised, or the level at which
legal liability for failure of general corporate governance duties would be placed. If the
insurer or insurance group determines the level of reporting based on these criteria, it shall
indicate which of the three criteria was used to determine the level of reporting and explain
any subsequent changes in level of reporting.
new text end

new text begin (e) The review of the CGAD and any additional requests for information shall be made
through the lead state as determined by the procedures within the most recent Financial
Analysis Handbook referenced in paragraph (a). If the CGAD is completed at the insurance
group level, then it must be filed with the lead state of the group as determined by the
procedures outlined in the most recent Financial Analysis Handbook adopted by the NAIC.
In these instances, a copy of the CGAD must also be provided to the chief regulatory official
of any state in which the insurance group has a domestic insurer, upon request.
new text end

new text begin (f) Insurers providing information substantially similar to the information required under
this section in other documents provided to the commissioner, including proxy statements
filed in conjunction with Form B requirements, or other state or federal filings provided to
this department shall not be required to duplicate that information in the CGAD, but shall
be required to clearly cross-reference the location of the relevant information within the
CGAD and attach the referenced document in which the information is included if not
already filed with or available to the regulator.
new text end

new text begin (g) Each year following the initial filing of the CGAD, the insurer or insurance group
shall file an amended version of the previously filed CGAD indicating where changes have
been made. If no changes were made in the information or activities reported by the insurer
or insurance group, the filing should so state.
new text end

new text begin Subd. 4. new text end

new text begin Contents of Corporate Governance Annual Disclosure. new text end

new text begin (a) The insurer or
insurance group shall have discretion regarding the appropriate format for providing the
information required by this section, provided the CGAD shall contain the material
information necessary to permit the commissioner to gain an understanding of the insurer's
or group's corporate governance structure, policies, and practices. The commissioner may
request additional information deemed material and necessary to provide the commissioner
with a clear understanding of the corporate governance policies, the reporting or information
system, or controls implementing those policies. Documentation and supporting information
shall be maintained and made available upon examination or upon request of the
commissioner.
new text end

new text begin (b) The insurer or insurance group shall be as descriptive as possible in completing the
CGAD, with inclusion of attachments or example documents that are used in the governance
process, as these may provide a means to demonstrate the strengths of their governance
framework and practices.
new text end

new text begin (c) The CGAD shall describe the insurer's or insurance group's corporate governance
framework and structure including consideration of the following:
new text end

new text begin (1) the board and various committees thereof ultimately responsible for overseeing the
insurer or insurance group and the level(s) at which that oversight occurs (e.g., ultimate
control level, intermediate holding company, legal entity, etc.). The insurer or insurance
group shall describe and discuss the rationale for the current board size and structure; and
new text end

new text begin (2) the duties of the board and each of its significant committees and how they are
governed (e.g., bylaws, charters, informal mandates, etc.), as well as how the board's
leadership is structured, including a discussion of the roles of Chief Executive Officer and
Chairman of the Board within the organization.
new text end

new text begin (d) The insurer or insurance group shall describe the policies and practices of the most
senior governing entity and significant committees thereof, including a discussion of the
following factors:
new text end

new text begin (1) how the qualifications, expertise, and experience of each board member meet the
needs of the insurer or insurance group;
new text end

new text begin (2) how an appropriate amount of independence is maintained on the board and its
significant committees;
new text end

new text begin (3) the number of meetings held by the board and its significant committees over the
past year as well as the information on director attendance;
new text end

new text begin (4) how the insurer or insurance group identifies, nominates, and elects members to the
board and its committees. The discussion should include, for example:
new text end

new text begin (i) whether the nomination committee is in place to identify and select individuals for
consideration;
new text end

new text begin (ii) whether term limits are placed on directors;
new text end

new text begin (iii) how the election and reelection processes function; and
new text end

new text begin (iv) whether a board diversity policy is in place and if so, how it functions; and
new text end

new text begin (5) the processes in place for the board to evaluate its performance and the performance
of its committees, as well as any recent measures taken to improve performance, including
any board or committee training programs that have been put in place.
new text end

new text begin (e) The insurer or insurance group shall describe the policies and practices for directing
senior management, including a description of the following factors:
new text end

new text begin (1) any processes or practices (i.e., sustainability standards) to determine whether officers
and key persons in control functions have the appropriate background, experience, and
integrity to fulfill their prospective roles, including:
new text end

new text begin (i) identification of the specific positions for which suitability standards have been
developed and a description of the standards employed; and
new text end

new text begin (ii) any changes in an officer's or key person's suitability as outlined by the insurer's or
insurance group's standards and procedures to monitor and evaluate such changes;
new text end

new text begin (2) the insurer's or insurance group's code of business conduct and ethics, the discussion
of which considers, for example:
new text end

new text begin (i) compliance with laws, rules, and regulations; and
new text end

new text begin (ii) proactive reporting of any illegal or unethical behavior;
new text end

new text begin (3) the insurer's or insurance group's processes for performance evaluation, compensation,
and corrective action to ensure effective senior management throughout the organization,
including a description of the general objectives of significant compensation programs and
what the programs are designed to reward. The description shall include sufficient detail to
allow the commissioner to understand how the organization ensures that compensation
programs do not encourage or reward excessive risk taking. Elements to be discussed may
include, for example:
new text end

new text begin (i) the board's role in overseeing management compensation programs and practices;
new text end

new text begin (ii) the various elements of compensation awarded in the insurer's or insurance group's
compensation programs and how the insurer or insurance group determines and calculates
the amount of each element of compensation paid;
new text end

new text begin (iii) how compensation programs are related to both company and individual performance
over time;
new text end

new text begin (iv) whether compensation programs include risk adjustments and how those adjustments
are incorporated into the programs for employees at different levels;
new text end

new text begin (v) any clawback provisions built into the programs to recover awards or payments if
the performance measures upon which they are based are restated or otherwise adjusted;
and
new text end

new text begin (vi) any other factors relevant in understanding how the insurer or insurance group
monitors its compensation policies to determine whether its risk management objectives
are met by incentivizing its employees; and
new text end

new text begin (4) the insurer's or insurance group's plans for CEO and senior management succession.
new text end

new text begin (f) The insurer or insurance group shall describe the processes by which the board, its
committees, and senior management ensure an appropriate amount of oversight to the critical
risk areas impacting the insurer's business activities, including a discussion of:
new text end

new text begin (1) how oversight and management responsibilities are delegated between the board, its
committees, and senior management;
new text end

new text begin (2) how the board is kept informed of the insurer's strategic plans, the associated risks,
and steps that senior management is taking to monitor and manage those risks; and
new text end

new text begin (3) how reporting responsibilities are organized for each critical risk area. The description
should allow the commissioner to understand the frequency at which information on each
critical risk area is reported to and reviewed by senior management and the board. This
description may include, for example, the following critical risk areas of the insurer:
new text end

new text begin (i) risk management processes (an ORSA Summary Report filer may refer to its ORSA
Summary Report pursuant to the Risk Management and Own Risk and Solvency Assessment
Model Act);
new text end

new text begin (ii) actuarial function;
new text end

new text begin (iii) investment decision-making processes;
new text end

new text begin (iv) reinsurance decision-making processes;
new text end

new text begin (v) business strategy and finance decision-making processes;
new text end

new text begin (vi) compliance function;
new text end

new text begin (vii) financial reporting and internal auditing; and
new text end

new text begin (viii) market conduct decision-making processes.
new text end

new text begin Subd. 5. new text end

new text begin Confidentiality. new text end

new text begin (a) Documents, materials, or other information, including the
CGAD, in the possession or control of the department that are obtained by, created by, or
disclosed to the commissioner or any other person under this section are recognized by this
state as being confidential, protected nonpublic, and containing trade secrets. Those
documents, materials, or other information are classified as confidential, protected nonpublic,
or both, are not subject to subpoena, and are not subject to discovery or admissible in
evidence in any private civil action. However, the commissioner may use the documents,
materials, or other information in the furtherance of a regulatory or legal action brought as
a part of the commissioner's official duties. The commissioner shall not otherwise make the
documents, materials, or other information public without the prior written consent of the
insurer. Nothing in this section shall be construed to require written consent of the insurer
before the commissioner may share or receive confidential documents, materials, or other
CGAD-related information pursuant to paragraph (c) below to assist in the performance of
the commissioner's regular duties.
new text end

new text begin (b) Neither the commissioner nor any person who received documents, materials, or
other CGAD-related information, through examination or otherwise, while acting under the
authority of the commissioner, or with whom the documents, materials, or other information
are shared pursuant to this section are permitted or required to testify in any private civil
action concerning documents, materials, or information subject to this subdivision that are
classified as confidential, protected nonpublic, or both.
new text end

new text begin (c) In order to assist in the performance of the commissioner's regulatory duties, the
commissioner:
new text end

new text begin (1) may, upon request, share documents, materials, or other CGAD-related information,
including the confidential, protected nonpublic, and privileged documents, materials, or
information subject to this subdivision including trade secret information or documents,
with other state, federal, and international financial regulatory agencies, including members
of any supervisory college as defined in section 60D.215, with the NAIC, and with third-party
consultants pursuant to subdivision 7, provided that the recipient agrees in writing to maintain
the confidentiality and privileged status of the CGAD-related documents, material, or other
information and has verified in writing the legal authority to maintain confidentiality; and
new text end

new text begin (2) may receive documents, materials, or other CGAD-related information, including
otherwise confidential, protected nonpublic, and privileged documents, materials, or
information including trade secret information or documents, from regulatory officials of
other state, federal, and international financial regulatory agencies, including members of
any supervisory college as defined in section 60D.215 and from the NAIC, and shall maintain
as confidential, protected nonpublic, or privileged any documents, materials, or information
received with notice or the understanding that it is confidential, protected nonpublic, or
privileged under the laws of the jurisdiction that is the source of the document, material, or
information.
new text end

new text begin (d) The sharing of information and documents by the commissioner pursuant to this
section shall not constitute a delegation of regulatory authority or rulemaking, and the
commissioner is solely responsible for the administration, execution, and enforcement of
the provisions of this section.
new text end

new text begin (e) No waiver of any applicable privilege or claim of confidentiality in the documents,
trade-secret materials, or other CGAD-related information shall occur as a result of disclosure
of such CGAD-related information or documents to the commissioner under this subdivision
or as a result of sharing as authorized under this section.
new text end

new text begin Subd. 6. new text end

new text begin NAIC and third-party consultants. new text end

new text begin (a) The commissioner may retain, at the
insurer's expense, third-party consultants, including attorneys, actuaries, accountants, and
other experts not otherwise a part of the commissioner's staff as may be reasonably necessary
to assist the commissioner in reviewing the CGAD and related information or the insurer's
compliance with this section.
new text end

new text begin (b) Any person retained under paragraph (a) shall be under the direction and control of
the commissioner and shall act in a purely advisory capacity.
new text end

new text begin (c) The NAIC and third-party consultants shall be subject to the same confidentiality
standards and requirements as the commissioner.
new text end

new text begin (d) As part of the retention process, a third-party consultant shall verify to the
commissioner, with notice to the insurer, that it is free of a conflict of interest and that it
has internal procedures in place to monitor compliance with a conflict and to comply with
the confidentiality standards and requirements of this section.
new text end

new text begin (e) A written agreement with the NAIC or a third-party consultant governing sharing
and use of information provided pursuant to this section shall contain the following provisions
and expressly require the written consent of the insurer prior to making public information
provided under this section:
new text end

new text begin (1) specific procedures and protocols for maintaining the confidentiality and security of
CGAD-related information shared with the NAIC or a third-party consultant pursuant to
this section;
new text end

new text begin (2) procedures and protocols for sharing by the NAIC only with other state regulators
from states in which the insurance group has domiciled insurers. The agreement shall provide
that the recipient agrees in writing to maintain the confidentiality and privileged status of
the CGAD-related documents, materials, or other information and has verified in writing
the legal authority to maintain confidentiality;
new text end

new text begin (3) a provision specifying that ownership of the CGAD-related information shared with
the NAIC or a third-party consultant remains with the department and the NAIC's or
third-party consultant's use of the information is subject to the direction of the commissioner;
new text end

new text begin (4) a provision that prohibits the NAIC or a third-party consultant from storing the
information shared pursuant to this section in a permanent database after the underlying
analysis is completed;
new text end

new text begin (5) a provision requiring the NAIC or third-party consultant to provide prompt notice
to the commissioner and to the insurer or insurance group regarding any subpoena, request
for disclosure, or request for production of the insurer's CGAD-related information; and
new text end

new text begin (6) a requirement that the NAIC or a third-party consultant to consent to intervention
by an insurer in any judicial or administrative action in which the NAIC or a third-party
consultant may be required to disclose confidential information about the insurer shared
with the NAIC or a third-party consultant pursuant to this section.
new text end

new text begin Subd. 7. new text end

new text begin Sanctions. new text end

new text begin Any insurer failing, without just cause, to timely file the CGAD as
required in this section shall be required to pay a penalty of $1,000 for each day's delay, to
be recovered by the commissioner and to be paid into the general fund of this state. The
commissioner may reduce the penalty if the insurer demonstrates to the commissioner that
the imposition of the penalty would constitute a financial hardship to the insurer.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective on January 1, 2020. The first filing of
the CGAD shall be in 2020.
new text end

ARTICLE 5

MEDICARE SUPPLEMENT INSURANCE

Section 1.

Minnesota Statutes 2018, section 62A.3099, is amended by adding a subdivision
to read:


new text begin Subd. 18a. new text end

new text begin Newly eligible individual. new text end

new text begin "Newly eligible individual" means an individual
who is eligible for Medicare on or after January 1, 2020, because the individual:
new text end

new text begin (1) has attained age 65 on or after January 2020; or
new text end

new text begin (2) although under age 65, is entitled to or deemed eligible for benefits under Medicare
Part A by reason of disability or otherwise.
new text end

Sec. 2.

Minnesota Statutes 2018, section 62A.31, subdivision 1, is amended to read:


Subdivision 1.

Policy requirements.

No individual or group policy, certificate, subscriber
contract issued by a health service plan corporation regulated under chapter 62C, or other
evidence of accident and health insurance the effect or purpose of which is to supplement
Medicare coverage, including to supplement coverage under Medicare Advantage plans
established under Medicare Part C, issued or delivered in this state or offered to a resident
of this state shall be sold or issued to an individual covered by Medicare unless the
requirements in subdivisions 1a to deleted text begin1udeleted text endnew text begin 1vnew text end are met.

Sec. 3.

Minnesota Statutes 2018, section 62A.31, is amended by adding a subdivision to
read:


new text begin Subd. 1v. new text end

new text begin Medicare Part B deductible. new text end

new text begin A Medicare supplemental policy or certificate
must not provide coverage for 100 percent or any portion of the Medicare Part B deductible
to a newly eligible individual.
new text end

Sec. 4.

Minnesota Statutes 2018, section 62A.315, is amended to read:


62A.315 EXTENDED BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.

new text begin (a) new text endThe extended basic Medicare supplement plan must have a level of coverage so that
it will be certified as a qualified plan pursuant to section 62E.07, and will provide:

(1) coverage for all of the Medicare Part A inpatient hospital deductible and coinsurance
amounts, and 100 percent of all Medicare Part A eligible expenses for hospitalization not
covered by Medicare;

(2) coverage for the daily co-payment amount of Medicare Part A eligible expenses for
the calendar year incurred for skilled nursing facility care;

(3) coverage for the coinsurance amount or in the case of hospital outpatient department
services paid under a prospective payment system, the co-payment amount, of Medicare
eligible expenses under Medicare Part B regardless of hospital confinement, and the Medicare
Part B deductible amount;

(4) 80 percent of the usual and customary hospital and medical expenses and supplies
described in section 62E.06, subdivision 1, not to exceed any charge limitation established
by the Medicare program or state law, the usual and customary hospital and medical expenses
and supplies, described in section 62E.06, subdivision 1, while in a foreign country; and
prescription drug expenses, not covered by Medicare. An outpatient prescription drug benefit
must not be included for sale or issuance in a Medicare supplement policy or certificate
issued on or after January 1, 2006;

(5) coverage for the reasonable cost of the first three pints of blood, or equivalent
quantities of packed red blood cells as defined under federal regulations under Medicare
Parts A and B, unless replaced in accordance with federal regulations;

(6) 100 percent of the cost of immunizations not otherwise covered under Part D of the
Medicare program and routine screening procedures for cancer, including mammograms
and pap smears;

(7) preventive medical care benefit: coverage for the following preventive health services
not covered by Medicare:

(i) an annual clinical preventive medical history and physical examination that may
include tests and services from clause (ii) and patient education to address preventive health
care measures;

(ii) preventive screening tests or preventive services, the selection and frequency of
which is determined to be medically appropriate by the attending physician.

Reimbursement shall be for the actual charges up to 100 percent of the Medicare-approved
amount for each service as if Medicare were to cover the service as identified in American
Medical Association current procedural terminology (AMA CPT) codes to a maximum of
$120 annually under this benefit. This benefit shall not include payment for any procedure
covered by Medicare;

(8) coverage of cost sharing for all Medicare Part A eligible hospice care and respite
care expenses; and

(9) coverage for cost sharing for Medicare Part A or B home health care services and
medical supplies.

new text begin (b) An extended basic Medicare supplement plan must provide the benefits contained
in this section, but must not provide coverage for 100 percent or any portion of the Medicare
Part B deductible to a newly eligible individual.
new text end

Sec. 5.

Minnesota Statutes 2018, section 62A.316, is amended to read:


62A.316 BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.

(a) The basic Medicare supplement plan must have a level of coverage that will provide:

(1) coverage for all of the Medicare Part A inpatient hospital coinsurance amounts, and
100 percent of all Medicare part A eligible expenses for hospitalization not covered by
Medicare, after satisfying the Medicare Part A deductible;

(2) coverage for the daily co-payment amount of Medicare Part A eligible expenses for
the calendar year incurred for skilled nursing facility care;

(3) coverage for the coinsurance amount, or in the case of outpatient department services
paid under a prospective payment system, the co-payment amount, of Medicare eligible
expenses under Medicare Part B regardless of hospital confinement, subject to the Medicare
Part B deductible amount;

(4) 80 percent of the hospital and medical expenses and supplies incurred during travel
outside the United States as a result of a medical emergency;

(5) coverage for the reasonable cost of the first three pints of blood, or equivalent
quantities of packed red blood cells as defined under federal regulations under Medicare
Parts A and B, unless replaced in accordance with federal regulations;

(6) 100 percent of the cost of immunizations not otherwise covered under Part D of the
Medicare program and routine screening procedures for cancer screening including
mammograms and pap smears;

(7) 80 percent of coverage for all physician prescribed medically appropriate and
necessary equipment and supplies used in the management and treatment of diabetes not
otherwise covered under Part D of the Medicare program. Coverage must include persons
with gestational, type I, or type II diabetes. Coverage under this clause is subject to section
62A.3093, subdivision 2;

(8) coverage of cost sharing for all Medicare Part A eligible hospice care and respite
care expenses; and

(9) coverage for cost sharing for Medicare Part A or B home health care services and
medical supplies subject to the Medicare Part B deductible amount.

(b) The following benefit riders must be offered with this plan:

(1) coverage for all of the Medicare Part A inpatient hospital deductible amount;

(2) 100 percent of the Medicare Part B excess charges coverage for all of the difference
between the actual Medicare Part B charges as billed, not to exceed any charge limitation
established by the Medicare program or state law, and the Medicare-approved Part B charge;

(3) coverage for all of the Medicare Part B annual deductible; and

(4) preventive medical care benefit coverage for the following preventative health services
not covered by Medicare:

(i) an annual clinical preventive medical history and physical examination that may
include tests and services from item (ii) and patient education to address preventive health
care measures;

(ii) preventive screening tests or preventive services, the selection and frequency of
which is determined to be medically appropriate by the attending physician.

Reimbursement shall be for the actual charges up to 100 percent of the Medicare-approved
amount for each service, as if Medicare were to cover the service as identified in American
Medical Association current procedural terminology (AMA CPT) codes, to a maximum of
$120 annually under this benefit. This benefit shall not include payment for a procedure
covered by Medicare.

new text begin (c) A basic Medicare supplement plan must provide the benefits contained in this section,
but must not provide coverage for 100 percent or any portion of the Medicare Part B
deductible to a newly eligible individual.
new text end

Sec. 6.

Minnesota Statutes 2018, section 62A.3161, is amended to read:


62A.3161 MEDICARE SUPPLEMENT PLAN WITH 50 PERCENT COVERAGE.

new text begin (a) new text endThe Medicare supplement plan with 50 percent coverage must have a level of coverage
that will provide:

(1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for 365
days after Medicare benefits end;

(2) coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount
per benefit period until the out-of-pocket limitation is met as described in clause (8);

(3) coverage for 50 percent of the coinsurance amount for each day used from the 21st
through the 100th day in a Medicare benefit period for posthospital skilled nursing care
eligible under Medicare Part A until the out-of-pocket limitation is met as described in
clause (8);

(4) coverage for 50 percent of cost sharing for all Medicare Part A eligible expenses and
respite care until the out-of-pocket limitation is met as described in clause (8);

(5) coverage for 50 percent, under Medicare Part A or B, of the reasonable cost of the
first three pints of blood, or equivalent quantities of packed red blood cells, as defined under
federal regulations, unless replaced according to federal regulations, until the out-of-pocket
limitation is met as described in clause (8);

(6) except for coverage provided in this clause, coverage for 50 percent of the cost
sharing otherwise applicable under Medicare Part B, after the policyholder pays the Medicare
Part B deductible, until the out-of-pocket limitation is met as described in clause (8);

(7) coverage of 100 percent of the cost sharing for Medicare Part B preventive services
and diagnostic procedures for cancer screening described in section 62A.30 after the
policyholder pays the Medicare Part B deductible; and

(8) coverage of 100 percent of all cost sharing under Medicare Parts A and B for the
balance of the calendar year after the individual has reached the out-of-pocket limitation
on annual expenditures under Medicare Parts A and B of $4,000 in 2006, indexed each year
by the appropriate inflation adjustment by the secretary of the United States Department of
Health and Human Services.

new text begin (b) A Medicare supplement plan with 50 percent coverage must provide the benefits
contained in this section, but must not provide coverage for 100 percent or any portion of
the Medicare Part B deductible to a newly eligible individual.
new text end

Sec. 7.

Minnesota Statutes 2018, section 62A.3162, is amended to read:


62A.3162 MEDICARE SUPPLEMENT PLAN WITH 75 PERCENT COVERAGE.

new text begin (a) new text endThe basic Medicare supplement plan with 75 percent coverage must have a level of
coverage that will provide:

(1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for 365
days after Medicare benefits end;

(2) coverage for 75 percent of the Medicare Part A inpatient hospital deductible amount
per benefit period until the out-of-pocket limitation is met as described in clause (8);

(3) coverage for 75 percent of the coinsurance amount for each day used from the 21st
through the 100th day in a Medicare benefit period for posthospital skilled nursing care
eligible under Medicare Part A until the out-of-pocket limitation is met as described in
clause (8);

(4) coverage for 75 percent of cost sharing for all Medicare Part A eligible expenses and
respite care until the out-of-pocket limitation is met as described in clause (8);

(5) coverage for 75 percent, under Medicare Part A or B, of the reasonable cost of the
first three pints of blood, or equivalent quantities of packed red blood cells, as defined under
federal regulations, unless replaced according to federal regulations until the out-of-pocket
limitation is met as described in clause (8);

(6) except for coverage provided in this clause, coverage for 75 percent of the cost
sharing otherwise applicable under Medicare Part B after the policyholder pays the Medicare
Part B deductible until the out-of-pocket limitation is met as described in clause (8);

(7) coverage of 100 percent of the cost sharing for Medicare Part B preventive services
and diagnostic procedures for cancer screening described in section 62A.30 after the
policyholder pays the Medicare Part B deductible; and

(8) coverage of 100 percent of all cost sharing under Medicare Parts A and B for the
balance of the calendar year after the individual has reached the out-of-pocket limitation
on annual expenditures under Medicare Parts A and B of $2,000 in 2006, indexed each year
by the appropriate inflation adjustment by the Secretary of the United States Department
of Health and Human Services.

new text begin (b) A Medicare supplement plan with 75 percent coverage must provide the benefits
contained in this section, but must not provide coverage for 100 percent or any portion of
the Medicare Part B deductible to a newly eligible individual.
new text end

Sec. 8.

Minnesota Statutes 2018, section 62A.3163, is amended to read:


62A.3163 MEDICARE SUPPLEMENT PLAN WITH 50 PERCENT PART A
DEDUCTIBLE COVERAGE.

new text begin (a) new text endThe Medicare supplement plan with 50 percent Medicare Part A deductible coverage
must have a level of coverage that will provide:

(1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for 365
days after Medicare benefits end;

(2) coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount
per benefit period;

(3) coverage for the coinsurance amount for each day used from the 21st through the
100th day in a Medicare benefit period for posthospital skilled nursing care eligible under
Medicare Part A;

(4) coverage for cost sharing for all Medicare Part A eligible hospice and respite care
expenses;

(5) coverage under Medicare Part A or B for the reasonable cost of the first three pints
of blood, or equivalent quantities of packed red blood cells, as defined under federal
regulations;

(6) coverage for 100 percent of the cost sharing otherwise applicable under Medicare
Part B, after the policyholder pays the Medicare Part B deductible;

(7) coverage of 100 percent of the cost sharing for Medicare Part B preventive services
and diagnostic procedures for cancer screening described in section 62A.30 after the
policyholder pays the Medicare Part B deductible;

(8) coverage of 80 percent of the hospital and medical expenses and supplies incurred
during travel outside of the United States as a result of a medical emergency; and

(9) coverage for 100 percent of the Medicare Part A or B home health care services and
medical supplies after the policyholder pays the Medicare Part B deductible.

new text begin (b) A Medicare supplement plan with 50 percent Part A deductible coverage must provide
the benefits contained in this section, but must not provide coverage for 100 percent or any
portion of the Medicare Part B deductible to a newly eligible individual.
new text end

Sec. 9.

Minnesota Statutes 2018, section 62A.3164, is amended to read:


62A.3164 MEDICARE SUPPLEMENT PLAN WITH $20 AND $50 CO-PAYMENT
MEDICARE PART B COVERAGE.

new text begin (a) new text endThe Medicare supplement plan with $20 and $50 co-payment Medicare Part B
coverage must have a level of coverage that will provide:

(1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for 365
days after Medicare benefits end;

(2) coverage for the Medicare Part A inpatient hospital deductible amount per benefit
period;

(3) coverage for the coinsurance amount for each day used from the 21st through the
100th day in a Medicare benefit period for posthospital skilled nursing care eligible under
Medicare Part A;

(4) coverage for the cost sharing for all Medicare Part A eligible hospice and respite
care expenses;

(5) coverage for Medicare Part A or B of the reasonable cost of the first three pints of
blood, or equivalent quantities of packed red blood cells, as defined under federal regulations,
unless replaced according to federal regulations;

(6) coverage for 100 percent of the cost sharing otherwise applicable under Medicare
Part B except for the lesser of $20 or the Medicare Part B coinsurance or co-payment for
each covered health care provider office visit and the lesser of $50 or the Medicare Part B
coinsurance or co-payment for each covered emergency room visit; however, this co-payment
shall be waived if the insured is admitted to any hospital and the emergency visit is
subsequently covered as a Medicare Part A expense;

(7) coverage of 100 percent of the cost sharing for Medicare Part B preventive services
and diagnostic procedures for cancer screening described in section 62A.30 after the
policyholder pays the Medicare Part B deductible;

(8) coverage of 80 percent of the hospital and medical expenses and supplies incurred
during travel outside of the United States as a result of a medical emergency; and

(9) coverage for Medicare Part A or B home health care services and medical supplies
after the policyholder pays the Medicare Part B deductible.

new text begin (b) A Medicare supplement plan with $20 and $50 co-payment Medicare Part B coverage
must provide the benefits contained in this section, but must not provide coverage for 100
percent or any portion of the Medicare Part B deductible to a newly eligible individual. No
portion of the co-payment referenced in this paragraph may be applied to a Medicare Part
B deductible.
new text end

Sec. 10.

Minnesota Statutes 2018, section 62A.3165, is amended to read:


62A.3165 MEDICARE SUPPLEMENT PLAN WITH HIGH DEDUCTIBLE
COVERAGE.

new text begin (a) new text endThe Medicare supplement plan will pay 100 percent coverage upon payment of the
annual high deductible. The annual deductible shall consist of out-of-pocket expenses, other
than premiums, for services covered. This plan must have a level of coverage that will
provide:

(1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for 365
days after Medicare benefits end;

(2) coverage for 100 percent of the Medicare Part A inpatient hospital deductible amount
per benefit period;

(3) coverage for 100 percent of the coinsurance amount for each day used from the 21st
through the 100th day in a Medicare benefit period for posthospital skilled nursing care
eligible under Medicare Part A;

(4) coverage for 100 percent of cost sharing for all Medicare Part A eligible expenses
and respite care;

(5) coverage for 100 percent, under Medicare Part A or B, of the reasonable cost of the
first three pints of blood, or equivalent quantities of packed red blood cells, as defined under
federal regulations, unless replaced according to federal regulations;

(6) except for coverage provided in this clause, coverage for 100 percent of the cost
sharing otherwise applicable under Medicare Part B;

(7) coverage of 100 percent of the cost sharing for Medicare Part B preventive services
and diagnostic procedures for cancer screening described in section 62A.30 after the
policyholder pays the Medicare Part B deductible;

(8) coverage of 100 percent of the hospital and medical expenses and supplies incurred
during travel outside of the United States as a result of a medical emergency;

(9) coverage for 100 percent of Medicare Part A and B home health care services and
medical supplies; and

(10) the basis for the deductible shall be $1,860 and shall be adjusted annually from
2010 by the secretary of the United States Department of Health and Human Services to
reflect the change in the Consumer Price Index for all urban consumers for the 12-month
period ending with August of the preceding year, and rounded to the nearest multiple of
$10.

new text begin (b) A Medicare supplement plan with high deductible coverage must provide the benefits
contained in this section, but must not provide coverage for 100 percent or any portion of
the Medicare Part B deductible to a newly eligible individual.
new text end

Sec. 11.

Minnesota Statutes 2018, section 62A.318, subdivision 17, is amended to read:


Subd. 17.

Types of plans.

new text begin(a) new text endMedicare select policies and certificates offered by the
issuer must provide the coverages specified in sections 62A.315 to 62A.3165. Before a
Medicare select policy or certificate is sold or issued in this state, the applicant must be
provided with an explanation of coverage for each of the coverages specified in sections
62A.315 to 62A.3165 and must be provided with the opportunity of purchasing such coverage
if offered by the issuer. The basic plan may also include any of the optional benefit riders
authorized by section 62A.316. Preventive care provided by Medicare select policies or
certificates must be provided as set forth in section 62A.315 or 62A.316, except that the
benefits are as defined in chapter 62D.

new text begin (b) Medicare select policies and certificates must provide the benefits contained in this
section, but must not provide coverage for 100 percent or any portion of the Medicare Part
B deductible to a newly eligible individual.
new text end

Sec. 12.

Minnesota Statutes 2018, section 62E.07, is amended to read:


62E.07 QUALIFIED MEDICARE SUPPLEMENT PLAN.

new text begin (a) new text endAny plan which provides benefits may be certified as a qualified Medicare supplement
plan if the plan is designed to supplement Medicare and provides coverage of 100 percent
of the deductibles required under Medicarenew text begin, with exclusion under paragraph (b) for any part
of the Medicare Part B deductible,
new text end and 80 percent of the charges for covered services
described in section 62E.06, subdivision 1, which charges are not paid by Medicare. The
coverage shall include a limitation of $1,000 per person on total annual out-of-pocket
expenses for the covered services.

new text begin (b) Any plan sold or issued to a newly eligible individual, as defined in section 62A.3099,
subdivision 18a, that provides benefits may be certified as a qualified Medicare supplemental
plan if the plan is designed to supplement Medicare and provides coverage of 100 percent
of the deductibles, with the exception of coverage of:
new text end

new text begin (1) 100 percent or any portion of the Medicare Part B deductible; and
new text end

new text begin (2) 80 percent of the charges for covered services, as provided under section 62E.06,
subdivision 6, that are charges not paid by Medicare.
new text end

new text begin The coverage must include a $1,000 per person limitation on total annual out-of-pocket
expenses for the covered services.
new text end

Sec. 13. new text beginEFFECTIVE DATE.
new text end

new text begin Sections 1 to 12 are effective the day following final enactment. The coverage
requirements provided by this act in sections 1 to 12 apply to Medicare supplemental policies
or certificates sold or issued on or after January 1, 2020, to a newly eligible individual.
new text end