Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

SF 4273

as introduced - 91st Legislature (2019 - 2020) Posted on 03/11/2020 04:26pm

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

Current Version - as introduced

Line numbers 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11
1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22
2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20 2.21 2.22 2.23 2.24 2.25 2.26 2.27 2.28 2.29 2.30 2.31 2.32 2.33 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27 3.28 3.29 3.30 3.31 3.32 3.33 4.1 4.2 4.3 4.4 4.5 4.6
4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 4.31 4.32 4.33 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 5.31 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 6.18 6.19 6.20 6.21 6.22 6.23 6.24 6.25 6.26 6.27 6.28 6.29 6.30 6.31 6.32 6.33 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 7.13 7.14 7.15 7.16 7.17 7.18
7.19 7.20 7.21 7.22 7.23 7.24 7.25 7.26 7.27 7.28 7.29 7.30 7.31 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 8.15 8.16 8.17 8.18 8.19 8.20 8.21 8.22 8.23 8.24 8.25 8.26 8.27 8.28 8.29 8.30 8.31 8.32 8.33 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 9.12
9.13 9.14 9.15 9.16 9.17 9.18 9.19 9.20 9.21 9.22 9.23 9.24 9.25 9.26 9.27 9.28 9.29 9.30
10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11
10.12 10.13 10.14 10.15 10.16 10.17
10.18 10.19 10.20 10.21
10.22 10.23 10.24 10.25 10.26 10.27 10.28
11.1 11.2 11.3 11.4
11.5 11.6 11.7 11.8 11.9
11.10 11.11 11.12 11.13 11.14 11.15 11.16 11.17 11.18 11.19 11.20 11.21 11.22 11.23 11.24 11.25 11.26
11.27 11.28 11.29 12.1 12.2 12.3 12.4 12.5 12.6
12.7 12.8 12.9 12.10 12.11
12.12 12.13 12.14 12.15 12.16 12.17 12.18 12.19 12.20 12.21 12.22 12.23 12.24 12.25 12.26 12.27
13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9
13.10 13.11 13.12
13.13 13.14 13.15 13.16 13.17 13.18 13.19 13.20 13.21 13.22 13.23
13.24 13.25 13.26 13.27 13.28 13.29 13.30 13.31 14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9 14.10 14.11 14.12 14.13 14.14 14.15
14.16 14.17 14.18 14.19 14.20 14.21 14.22 14.23 14.24 14.25 14.26 14.27 14.28 14.29 14.30 14.31 14.32 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 15.10 15.11 15.12 15.13
15.14 15.15 15.16 15.17 15.18
15.19 15.20 15.21 15.22 15.23 15.24 15.25 15.26 15.27 15.28 15.29 15.30 15.31 15.32
16.1 16.2 16.3 16.4
16.5 16.6 16.7 16.8 16.9
16.10 16.11 16.12 16.13 16.14 16.15 16.16 16.17 16.18 16.19 16.20 16.21 16.22 16.23 16.24 16.25 16.26 16.27 16.28
16.29 16.30 16.31 17.1 17.2 17.3 17.4 17.5 17.6 17.7 17.8 17.9 17.10 17.11 17.12 17.13 17.14 17.15 17.16 17.17
17.18 17.19 17.20 17.21 17.22 17.23 17.24 17.25 17.26 17.27 17.28 17.29
18.1 18.2 18.3 18.4 18.5 18.6 18.7 18.8 18.9 18.10 18.11 18.12
18.13 18.14 18.15 18.16 18.17 18.18 18.19 18.20 18.21 18.22 18.23 18.24 18.25 18.26 18.27 18.28 18.29 18.30 18.31 19.1 19.2 19.3 19.4 19.5 19.6 19.7 19.8 19.9 19.10 19.11 19.12 19.13 19.14 19.15 19.16 19.17 19.18 19.19 19.20 19.21 19.22 19.23 19.24 19.25 19.26 19.27 19.28 19.29 19.30 19.31 19.32 20.1 20.2 20.3 20.4 20.5 20.6 20.7 20.8 20.9 20.10 20.11 20.12 20.13 20.14
20.15 20.16 20.17 20.18 20.19 20.20 20.21 20.22 20.23
20.24 20.25 20.26 20.27 20.28 20.29 20.30
21.1 21.2 21.3 21.4 21.5 21.6 21.7 21.8 21.9 21.10 21.11 21.12 21.13 21.14 21.15 21.16 21.17 21.18
21.19 21.20 21.21 21.22 21.23 21.24 21.25 21.26 21.27 21.28 21.29 21.30 21.31 21.32 21.33 21.34 22.1 22.2 22.3 22.4 22.5 22.6 22.7 22.8 22.9 22.10 22.11 22.12 22.13 22.14 22.15 22.16 22.17 22.18 22.19 22.20 22.21 22.22 22.23 22.24 22.25 22.26 22.27 22.28 22.29 22.30 22.31 22.32 22.33 22.34 23.1 23.2 23.3 23.4 23.5 23.6
23.7 23.8 23.9 23.10 23.11 23.12 23.13 23.14 23.15 23.16 23.17 23.18 23.19 23.20
23.21 23.22 23.23 23.24 23.25 23.26 23.27 23.28 23.29 23.30 23.31 23.32 23.33 23.34 24.1 24.2 24.3 24.4 24.5 24.6 24.7 24.8 24.9 24.10 24.11 24.12 24.13 24.14 24.15 24.16 24.17 24.18 24.19 24.20 24.21
24.22 24.23 24.24 24.25 24.26 24.27 24.28 24.29 24.30 24.31 24.32 24.33 25.1 25.2 25.3 25.4 25.5 25.6 25.7 25.8 25.9 25.10 25.11 25.12 25.13 25.14 25.15 25.16 25.17 25.18 25.19 25.20 25.21 25.22 25.23 25.24
25.25 25.26 25.27 25.28 25.29 25.30 25.31 25.32 26.1 26.2 26.3 26.4 26.5 26.6 26.7 26.8 26.9 26.10 26.11 26.12 26.13 26.14 26.15 26.16 26.17 26.18 26.19 26.20 26.21 26.22 26.23 26.24 26.25 26.26 26.27 26.28 26.29 26.30 26.31 26.32 26.33 27.1 27.2 27.3 27.4 27.5 27.6 27.7 27.8 27.9 27.10 27.11 27.12 27.13 27.14 27.15 27.16 27.17 27.18 27.19 27.20 27.21 27.22 27.23 27.24 27.25 27.26 27.27 27.28 27.29 27.30 27.31 27.32 27.33 28.1 28.2 28.3 28.4 28.5 28.6 28.7 28.8 28.9 28.10 28.11 28.12 28.13 28.14 28.15 28.16 28.17 28.18 28.19 28.20 28.21 28.22 28.23 28.24 28.25 28.26 28.27 28.28 28.29 28.30 28.31 28.32 29.1 29.2 29.3 29.4 29.5 29.6 29.7 29.8 29.9 29.10
29.11 29.12 29.13 29.14 29.15 29.16 29.17 29.18 29.19
29.20 29.21 29.22 29.23 29.24 29.25 29.26 29.27 29.28 29.29 29.30 29.31 29.32 30.1 30.2 30.3 30.4 30.5 30.6 30.7 30.8 30.9 30.10 30.11 30.12 30.13 30.14 30.15 30.16 30.17 30.18 30.19 30.20 30.21 30.22
30.23 30.24 30.25 30.26 30.27 30.28 30.29 30.30 30.31 30.32 30.33 30.34 31.1 31.2 31.3 31.4 31.5 31.6 31.7 31.8 31.9 31.10 31.11 31.12 31.13 31.14 31.15 31.16 31.17 31.18 31.19 31.20 31.21
31.22 31.23 31.24 31.25 31.26
31.27 31.28 31.29 31.30 31.31 31.32 32.1 32.2 32.3 32.4 32.5 32.6 32.7
32.8 32.9 32.10 32.11 32.12 32.13 32.14 32.15 32.16 32.17 32.18 32.19 32.20 32.21 32.22 32.23 32.24 32.25
32.26 32.27 32.28 32.29 33.1 33.2 33.3 33.4 33.5 33.6 33.7 33.8 33.9 33.10 33.11 33.12 33.13 33.14 33.15 33.16 33.17 33.18 33.19 33.20 33.21 33.22 33.23 33.24 33.25 33.26 33.27 33.28 33.29 33.30 33.31 33.32
34.1 34.2 34.3 34.4 34.5 34.6 34.7 34.8 34.9 34.10 34.11 34.12 34.13 34.14 34.15 34.16 34.17 34.18 34.19
34.20 34.21 34.22 34.23 34.24 34.25 34.26 34.27 34.28 34.29 34.30 34.31 34.32 35.1 35.2 35.3 35.4 35.5 35.6 35.7 35.8 35.9 35.10 35.11 35.12 35.13 35.14 35.15 35.16 35.17 35.18 35.19 35.20 35.21 35.22 35.23 35.24 35.25 35.26 35.27 35.28 35.29 35.30 35.31 35.32 35.33 36.1 36.2 36.3 36.4 36.5 36.6 36.7 36.8 36.9 36.10 36.11
36.12 36.13 36.14 36.15 36.16 36.17 36.18 36.19 36.20 36.21 36.22 36.23 36.24 36.25 36.26
36.27 36.28 36.29 36.30 36.31 36.32 36.33 37.1 37.2 37.3 37.4 37.5 37.6
37.7 37.8 37.9 37.10 37.11 37.12 37.13 37.14 37.15 37.16 37.17 37.18 37.19 37.20 37.21 37.22 37.23 37.24 37.25 37.26 37.27 37.28 37.29 37.30 37.31 37.32 37.33 38.1 38.2 38.3 38.4 38.5 38.6 38.7 38.8 38.9 38.10 38.11 38.12 38.13 38.14 38.15 38.16 38.17 38.18 38.19 38.20 38.21 38.22 38.23 38.24 38.25 38.26 38.27
38.28 38.29 38.30 38.31 38.32 39.1 39.2 39.3
39.4 39.5 39.6
39.7 39.8 39.9

A bill for an act
relating to insurance; modifying the Minnesota Life and Health Insurance Guaranty
Association Act; amending Minnesota Statutes 2018, sections 61B.19, subdivisions
1, 2, 3, 5, 7, by adding a subdivision; 61B.20, subdivisions 7, 11, 12, 13, 14, 15,
16, 17, 18, by adding subdivisions; 61B.21, subdivision 1; 61B.22, subdivision 1;
61B.23, subdivisions 1, 3, 4, 5, 6, 7, 8, 8a, 12, 13, 14; 61B.24, subdivisions 2, 3,
5, 7; 61B.25, subdivisions 1, 3; 61B.26; 61B.27; 61B.28, subdivisions 3, 5, 7;
61B.32; proposing coding for new law in Minnesota Statutes, chapter 61B;
repealing Minnesota Statutes 2018, sections 61B.19, subdivision 4; 61B.20,
subdivisions 3, 8, 10; 61B.23, subdivision 2.

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

Section 1.

Minnesota Statutes 2018, section 61B.19, subdivision 1, is amended to read:


Subdivision 1.

Purpose.

(a) The purpose of sections 61B.18 to 61B.32 is to protect,
subject to certain limitations, the persons specified in subdivision 2 against failure in the
performance of contractual obligations, under life deleted text begininsurance policiesdeleted text end, health deleted text begininsurance
policies
deleted text end, new text beginand new text endannuity new text beginpolicies, plans, or new text endcontractsdeleted text begin, and supplemental contractsdeleted text end specified in
subdivision 2, because of the impairment or insolvency of the member insurer that issued
the policiesnew text begin, plans,new text end or contracts.

(b) To provide this protection, an association of new text beginmember new text endinsurers deleted text beginhas beendeleted text endnew text begin isnew text end created
deleted text begin and existsdeleted text end to pay benefits and to continue coverages, as limited in sections 61B.18 to 61B.32.
Members of the association are subject to assessment to provide funds to carry out the
purpose of sections 61B.18 to 61B.32.

Sec. 2.

Minnesota Statutes 2018, section 61B.19, subdivision 2, is amended to read:


Subd. 2.

Scope.

(a) Sections 61B.18 to 61B.32 provide coverage for the policies and
contracts specified in new text beginsubdivision 3, new text endparagraph deleted text begin(b)deleted text endnew text begin (a),new text end to:

(1) persons who are owners of or certificate holdersnew text begin or enrolleesnew text end under deleted text beginthesedeleted text endnew text begin thenew text end policies
or contractsdeleted text begin, or, (i) in the case ofdeleted text endnew text begin, other thannew text end unallocated annuity contractsdeleted text begin, to the persons
who are participants in a covered retirement plan, or (ii) in the case of
deleted text endnew text begin andnew text end structured
settlement annuities, deleted text beginto persons who are payees in respect of their liability claims (or
beneficiaries of such payees who are deceased)
deleted text end and new text beginin each case new text endwho:

(A) are residents; or

(B) are not residents, but only under all of the following conditions: the deleted text begininsurersdeleted text endnew text begin member
insurer
new text end that issued the policies or contracts deleted text beginaredeleted text endnew text begin isnew text end domiciled in the state of Minnesota; deleted text beginthose
insurers never held a license or certificate of authority in the states in which those persons
reside; those
deleted text endnew text begin thenew text end states new text beginin which the persons reside new text endhave associations similar to the association
created by sections 61B.18 to 61B.32; and deleted text beginthosedeleted text endnew text begin thenew text end persons are not eligible for coverage
by deleted text beginthose associationsdeleted text endnew text begin an association in any other state due to the fact that the insurer or
health maintenance organization was not licensed in the state at the time specified in the
state's guaranty association law
new text end; deleted text beginand
deleted text end

(2) persons who, regardless of where they reside, except for nonresident certificate
holders under group policies or contracts, are the beneficiaries, assigneesdeleted text begin,deleted text end or payeesnew text begin, including
health care providers rendering services covered under health insurance policies or
certificates,
new text end of the persons covered under clause (1)deleted text begin.deleted text endnew text begin;
new text end

new text begin (3) for unallocated annuity contracts specified in paragraph (b), clauses (1) and (2), shall
not apply, and sections 61B.18 to 61B.32 shall, except as provided in clauses (5) and (6),
provide coverage to:
new text end

new text begin (A) persons who are the owners of the unallocated annuity contracts if the contracts are
issued to or in connection with a specific benefit plan whose plan sponsor has its principal
place of business in Minnesota; and
new text end

new text begin (B) persons who are owners of unallocated annuity contracts issued to or in connection
with government lotteries if the owners are residents;
new text end

new text begin (4) For structured settlement annuities specified in subdivision 3, paragraphs (a) and
(b), shall not apply, and sections 61B.18 to 61B.32 shall, except as provided in paragraphs
(b) and (c), provide coverage to a person who is a payee under a structured settlement annuity
(or beneficiary of a payee if the payee is deceased), if the payee:
new text end

new text begin (A) is a resident, regardless of where the contract owner resides; or
new text end

new text begin (B) is not a resident, but only under both of the following conditions:
new text end

new text begin (i) the contract owner of the structured settlement annuity is a resident, or the contract
owner of the structured settlement annuity is not a resident but the insurer that issued the
structured settlement annuity is domiciled in Minnesota and the state in which the contract
owner resides has an association similar to the association created by sections 61B.18 to
61B.32; and
new text end

new text begin (ii) neither the payee or beneficiary, nor the contract owner, is eligible for coverage by
the association of the state in which the payee or contract owner resides.
new text end

deleted text begin (b) Sections 61B.18 to 61B.32 provide coverage to the persons specified in paragraph
(a) for direct, nongroup life, health, annuity, and supplemental policies or contracts, for
subscriber contracts issued by a nonprofit health service plan corporation operating under
chapter 62C, for certificates under direct group policies and contracts, and for unallocated
annuity contracts issued by member insurers, except as limited by sections 61B.18 to 61B.32.
Except as expressly excluded under subdivision 3, annuity contracts and certificates under
group annuity contracts include, but are not limited to, guaranteed investment contracts,
deposit administration contracts, unallocated funding agreements, allocated funding
agreements, structured settlement annuities, annuities issued to or in connection with
government lotteries, and any immediate or deferred annuity contracts. Covered unallocated
annuity contracts include those that fund a qualified defined contribution retirement plan
under sections 401, 403(b), and 457 of the Internal Revenue Code of 1986, as amended
through December 31, 1992.
deleted text end

new text begin (b) Sections 61B.18 to 61B.32 shall not provide coverage to:
new text end

new text begin (1) a person who is a payee or beneficiary of a contract owner resident of Minnesota, if
the payee or beneficiary is afforded any coverage by the association of another state;
new text end

new text begin (2) a person covered under paragraph (a), clause (3), if any coverage is provided by the
association of another state to the person; or
new text end

new text begin (3) a person who acquires rights to receive payments through a structured settlement
factoring transaction, as defined in United State Code, title 26, section 5891(c)(3)(A),
regardless of whether the transaction occurred before or after such section became effective.
new text end

new text begin (c) Sections 61B.18 to 61B.32 are intended to provide coverage to a person who is a
resident of Minnesota and, in special circumstances, to a nonresident. In order to avoid
duplicate coverage, if a person who would otherwise receive coverage under sections 61B.18
to 61B.32 is provided coverage under the laws of any other state, the person shall not be
provided coverage under sections 61B.18 to 61B.32. In determining the application of the
provisions of this paragraph in situations where a person could be covered by the association
of more than one state, whether as an owner, payee, enrollee, beneficiary or assignee, sections
61B.18 to 61B.32 shall be construed in conjunction with other state laws to result in coverage
by only one association.
new text end

Sec. 3.

Minnesota Statutes 2018, section 61B.19, subdivision 3, is amended to read:


Subd. 3.

Limitation of coverage.

new text begin (a) Sections 61B.18 to 61B.32 shall provide coverage
to the persons specified in subdivision 2 for policies or contracts of direct, non-group life
insurance, health insurance, which for the purposes of sections 61B.18 to 61B.32 includes
health maintenance organization subscriber contracts and certificates, or annuities, and
supplemental contracts to any of these, for certificates under direct group policies and
contracts, and for unallocated annuity contracts issued by member insurers, except as limited
by sections 61B.18 to 61B.32. Annuity contracts and certificates under group annuity
contracts include but are not limited to guaranteed investment contracts, deposit
administration contracts, unallocated funding agreements, allocated funding agreements,
structured settlement annuities, annuities issued to or in connection with government lotteries
and any immediate or deferred annuity contracts.
new text end

new text begin (b) Except as provided in paragraph (c), new text endsections 61B.18 to 61B.32 do not provide
coverage for:

(1) a portion of a policy or contract not guaranteed by thenew text begin membernew text end insurer, or under
which the deleted text begininvestmentdeleted text end risk is borne by the policy or contract holder;

(2) a policy or contract of reinsurance, unless assumption certificates have been issued
deleted text begin and the insured has consented to the assumption as provided under section 60A.09,
subdivision 4a
deleted text endnew text begin pursuant to the reinsurance policy or contractnew text end;

deleted text begin (3) a policy or contract issued by an assessment benefit association operating under
section 61A.39, or a fraternal benefit society operating under chapter 64B;
deleted text end

deleted text begin (4) any obligation to nonresident participants of a covered retirement plan or to the plan
sponsor, employer, trustee, or other party who owns the contract; in these cases, the
association is obligated under this chapter only to participants in a covered plan who are
residents of the state of Minnesota on the date of impairment or insolvency;
deleted text end

deleted text begin (5)deleted text endnew text begin (3)new text end a structured settlement annuity deleted text beginin situations where a liability insurer remains
liable
deleted text end to deleted text beginthedeleted text endnew text begin which anew text end payeenew text begin or beneficiary has transferred his or her rights in a structured
settlement factoring transaction, as defined in United States Code, title 26, section
5891(c)(3)(A), regardless of whether the transaction occurred before or after such section
became effective
new text end;

deleted text begin (6)deleted text endnew text begin (4)new text end a portion of an unallocated annuity contract which is not issued to or in connection
with a specific employee, union, or association of natural persons benefit plan or a
governmental lotterydeleted text begin, including but not limited to, a contract issued to, or purchased at the
direction of, any governmental bonding authority, such as a municipal guaranteed investment
contract
deleted text end;

deleted text begin (7)deleted text endnew text begin (5)new text end a portion of a policy or contract issued to a plan or program of an employer,
association, or similar entity to provide life, health, or annuity benefits to its employees deleted text beginordeleted text endnew text begin,new text end
membersnew text begin, or othersnew text end to the extent that the plan or program is self-funded or uninsured,
including benefits payable by an employer, association, or similar entity under:

(i) a multiple employer welfare arrangement as defined in deleted text beginthe Employee Retirement
Income Security Act of 1974,
deleted text end United States Code, title 29, section deleted text begin1002(40)(A)deleted text endnew text begin 1144new text end, as
amended;

(ii) a minimum premium group insurance plan;

(iii) a stop-loss group insurance plan; or

(iv) an administrative services only contract;

deleted text begin (8)deleted text endnew text begin (6)new text end any policy or contract issued by deleted text beginandeleted text endnew text begin a membernew text end insurer at a time when it was not
licensed or did not have a certificate of authority to issue the policy or contract in this state;

deleted text begin (9)deleted text endnew text begin (7)new text end an unallocated annuity contract issued to or in connection with a benefit plan
protected under the federal Pension Benefit Guaranty Corporation, regardless of whether
the federal Pension Benefit Guaranty Corporation has yet become liable to make any
payments with respect to the benefit plan;

deleted text begin (10)deleted text endnew text begin (8)new text end a portion of a policy or contract to the extent that it provides fornew text begin:
new text end

(i) dividends or experience rating credits deleted text beginexcept to the extent the dividends or experience
rating credits have actually become due and payable or have been credited to the policy or
contract before the date of impairment or insolvency,
deleted text endnew text begin;
new text end

(ii) voting rightsdeleted text begin,deleted text endnew text begin;new text end or

(iii) payment of any fees or allowances to any person, including the policy or contract
holder, in connection with the service to, or administration of, the policy or contract;

deleted text begin (11)deleted text endnew text begin (9)new text end a contractual agreement that establishes the member insurer's obligations to
provide a book value accounting guaranty for defined contribution benefit plan participants
by reference to a portfolio of assets that is owned by the benefit plan or its trustee, which
in each case is not an affiliate of the member insurer;

deleted text begin (12)deleted text endnew text begin (10)new text end a portion of a policy or contract to the extent that the rate of interest on which
it is based, or the interest rate, crediting rate, or similar factor determined by use of an index
or other external reference stated in the policy or contract, employed in calculating returns
or changes in value:

(i) averaged over the period of four years prior to the date on which the member insurer
becomes an impaired or insolvent insurer under sections 61B.18 to 61B.32, whichever is
earlier, exceeds the rate of interest determined by subtracting two percentage points from
Moody's Corporate Bond Yield Average averaged for that same four-year period or for the
lesser period if the policy or contract was issued less than four years before the member
insurer becomes an impaired or insolvent insurer under sections 61B.18 to 61B.32, whichever
is earlier; and

(ii) on and after the date on which the member insurer becomes an impaired or insolvent
insurer under this chapter, whichever is earlier, exceeds the rate of interest determined by
subtracting three percentage points from Moody's Corporate Bond Yield Average as most
recently available;

deleted text begin (13)deleted text endnew text begin (11)new text end a portion of a policy or contract to the extent it provides for interest or other
changes in value to be determined by the use of an index or other external reference stated
in the policy or contract, but which have not been credited to the policy or contract, or as
to which the policy or contract owner's rights are subject to forfeiture, as of the date the
member insurer becomes an impaired or insolvent insurer under sections 61B.18 to 61B.32,
whichever is earlier. If a policy's or contract's interest or changes in value are credited less
frequently than annually, then for purposes of determining the values that have been credited
and not subject to forfeiture under this clause, the interest or changes in value determined
by using the procedures defined in the policy or contract will be credited as if the contractual
date of crediting interest or changing values was the date of impairment or insolvency,
whichever is earlier, and will not be subject to forfeiture;

deleted text begin (14)deleted text endnew text begin (12)new text end a portion of a policy or contract to the extent that the assessments required by
section 61B.24 with respect to the policy or contract are preempted by federal or state law;
deleted text begin and
deleted text end

deleted text begin (15)deleted text endnew text begin (13)new text end a policy or contract providing any hospital, medical, prescription drug, or other
health care benefits pursuant to United States Code, title 42, chapter 7, subchapter XVIII,
Part C or Part D, commonly known as Medicare Part C & Ddeleted text begin,deleted text endnew text begin; United States Code, title 42,
chapter 7, subchapter XIX, commonly known as Medicaid;
new text end or any regulations issued under
those provisionsdeleted text begin.deleted text endnew text begin; and
new text end

new text begin (14) an obligation that does not arise under the express written terms of the policy or
contract issued by the member insurer to the enrollee, certificate holder, contract owner or
policy owner, including without limitation:
new text end

new text begin (i) claims based on marketing materials;
new text end

new text begin (ii) claims based on side letters, riders, or other documents that were issued by the
member insurer without meeting applicable policy or contract form filing or approval
requirements;
new text end

new text begin (iii) misrepresentations of or regarding policy or contract benefits;
new text end

new text begin (iv) extra-contractual claims; or
new text end

new text begin (v) a claim for penalties or consequential or incidental damages.
new text end

new text begin (c) The exclusion from coverage referenced in paragraph (b), clause (10), shall not apply
to any portion of a policy or contract, including a rider, that provides long-term care or any
other health insurance benefits.
new text end

Sec. 4.

Minnesota Statutes 2018, section 61B.19, is amended by adding a subdivision to
read:


new text begin Subd. 4a. new text end

new text begin Limitation of benefits. new text end

new text begin (a) The benefits that the association may become
obligated to cover shall in no event exceed the lesser of:
new text end

new text begin (1) the contractual obligations for which the member insurer is liable or would have
been liable if it were not an impaired or insolvent insurer; or
new text end

new text begin (2) any of the following:
new text end

new text begin (i) with respect to one life, regardless of the number of policies or contracts:
new text end

new text begin (A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash
surrender and net cash withdrawal values for life insurance;
new text end

new text begin (B) for health insurance benefits: $100,000 for coverages not defined as disability income
insurance or health benefit plans or long-term care insurance as defined in sections 62A.011,
subdivision 3, and 62S.01, subdivision 18, including any net cash surrender and net cash
withdrawal values; $100,000 for coverages not defined as disability income insurance or
health benefit plans or long-term care insurance as defined in sections 62A.011, subdivision
3, and 62S.01, subdivision 18, including any net cash surrender and net cash withdrawal
values; and $500,000 for health benefit plans; and
new text end

new text begin (C) $250,000 in the present value of annuity benefits, including net cash surrender and
net cash withdrawal values;
new text end

new text begin (ii) with respect to each individual participating in a governmental retirement benefit
plan established under Section 401, 403(b), or 457 of the Internal Revenue Code covered
by an unallocated annuity contract or the beneficiaries of each such individual if deceased,
in the aggregate, $250,000 in present value annuity benefits, including net cash surrender
and net cash withdrawal values;
new text end

new text begin (iii) with respect to each payee of a structured settlement annuity, or beneficiary or
beneficiaries of the payee if deceased, $250,000 in present value annuity benefits, in the
aggregate, including net cash surrender and net cash withdrawal values, if any;
new text end

new text begin (iv) however, in no event shall the association be obligated to cover more than:
new text end

new text begin (A) an aggregate of $300,000 in benefits with respect to any one life under items (i) to
(iii) except with respect to benefits for health benefit plans under item (i), subitem (B), in
which case the aggregate liability of the association shall not exceed $500,000 with respect
to any one individual; or
new text end

new text begin (B) with respect to one owner of multiple non-group policies of life insurance, whether
the policy or contract owner is an individual, firm, corporation or other person, and whether
the persons insured are officers, managers, employees, or other persons, more than $5,000,000
in benefits, regardless of the number of policies and contracts held by the owner;
new text end

new text begin (v) with respect to either:
new text end

new text begin (A) one contract owner provided coverage under subdivision 2, paragraph (a), clause
(3), subitem (B); or
new text end

new text begin (B) one plan sponsor whose plans own directly or in trust one or more unallocated annuity
contracts not included in item (ii), $5,000,000 in benefits, irrespective of the number of
contracts with respect to the contract owner or plan sponsor.
new text end

new text begin However, in the case where one or more unallocated annuity contracts are covered contracts
under sections 61B.18 to 61B.32 and are owned by a trust or other entity for the benefit of
two or more plan sponsors, coverage shall be afforded by the association if the largest
interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose
principal place of business is in Minnesota and in no event shall the association be obligated
to cover more than $5,000,000 in benefits with respect to all these unallocated contracts;
and
new text end

new text begin (vi) the limitations set forth in this subdivision are limitations on the benefits for which
the association is obligated before taking into account either its subrogation and assignment
rights or the extent to which those benefits could be provided out of the assets of the impaired
or insolvent insurer attributable to covered policies. The costs of the association's obligations
under sections 61B.18 to 61B.32 may be met by the use of assets attributable to covered
policies or reimbursed to the association pursuant to its subrogation and assignment rights.
new text end

new text begin (b) For purposes of sections 61B.18 to 61B.32, benefits provided by a long-term care
rider to a life insurance policy or annuity contract shall be considered the same type of
benefits as the base life insurance policy or annuity contract to which it relates.
new text end

Sec. 5.

Minnesota Statutes 2018, section 61B.19, subdivision 5, is amended to read:


Subd. 5.

Limited liability.

deleted text begin The liability of the association is strictly limited by the express
terms of the covered policies and contracts and by the provisions of sections 61B.18 to
61B.32 and is not affected by the contents of any brochures, illustrations, advertisements,
or oral statements by agents, brokers, or others used or made in connection with their sale.
This limitation on liability does not prevent an insured from proving liability that is greater
than the express terms of the covered policy or contract. The insured must bring an action
to claim the greater liability no later than one year after entry of an order of rehabilitation,
conservation, or liquidation. The association is not liable for any extra-contractual claims,
such as claims relating to bad faith in payment of claims and claims relating to marketing
practices, exemplary, or punitive damages. The association is not liable for attorney fees or
interest other than as provided for by the terms of the policies or contracts, subject to the
other limits of sections 61B.18 to 61B.32.
deleted text end new text begin In performing its obligations to provide coverage
under section 61B.23, the association shall not be required to guarantee, assume, reinsure,
reissue or perform, or cause to be guaranteed, assumed, reinsured, reissued or performed,
the contractual obligations of the insolvent or impaired insurer under a covered policy or
contract that do not materially affect the economic values or economic benefits of the covered
policy or contract.
new text end

Sec. 6.

Minnesota Statutes 2018, section 61B.19, subdivision 7, is amended to read:


Subd. 7.

Construction.

deleted text begin(a)deleted text end Sections 61B.18 to 61B.32 shall be liberally construed to
effect the purpose of sections 61B.18 to 61B.32. deleted text beginSubdivision 1 is an aid and guide to
interpretation.
deleted text end

deleted text begin (b) Participants in an employer-sponsored plan, which is funded in whole or in part by
a covered policy, as specified in subdivision 4, clause (3), shall only be required to verify
their status as residents and the amount of money in the unallocated annuity that represents
their funds. Both these matters may be verified by the employer sponsoring the plan from
plan records. Payments made to a plan shall be deemed to be made on behalf of the resident
participant and are not the funds of the plan, the plan trustee, or any nonresident plan
participant, and to the extent of such payments, discharge the association's obligation.
deleted text end

Sec. 7.

Minnesota Statutes 2018, section 61B.20, is amended by adding a subdivision to
read:


new text begin Subd. 4a. new text end

new text begin Authorized assessment. new text end

new text begin "Authorized assessment" or "authorized" when used
in the context of assessments means a resolution by the board of directors that has been
passed whereby an assessment will be called immediately or in the future from member
insurers for a specified amount. An assessment is authorized when the resolution is passed.
new text end

Sec. 8.

Minnesota Statutes 2018, section 61B.20, is amended by adding a subdivision to
read:


new text begin Subd. 4b. new text end

new text begin Benefit plan. new text end

new text begin "Benefit plan" means a specific employee, union, or association
of natural persons benefit plan.
new text end

Sec. 9.

Minnesota Statutes 2018, section 61B.20, is amended by adding a subdivision to
read:


new text begin Subd. 4c. new text end

new text begin Called assessment. new text end

new text begin "Called assessment" or "called" when used in the context
of assessments means that a notice has been issued by the association to member insurers
requiring that an authorized assessment be paid within the time frame set forth within the
notice. An authorized assessment becomes a called assessment when the notice is mailed
by the association to member insurers.
new text end

Sec. 10.

Minnesota Statutes 2018, section 61B.20, subdivision 7, is amended to read:


Subd. 7.

Covered deleted text beginpolicydeleted text endnew text begin contractnew text end.

new text begin"Covered contract" or new text end"covered policy" means a
policy or contract deleted text begintodeleted text endnew text begin, or a portion of a policy or contract, fornew text end which deleted text beginsections 61B.18 to
61B.32 apply, as provided in
deleted text endnew text begin coverage is provided undernew text end section 61B.19, subdivision 2.

Sec. 11.

Minnesota Statutes 2018, section 61B.20, is amended by adding a subdivision to
read:


new text begin Subd. 9a. new text end

new text begin Extra-contractual claims. new text end

new text begin "Extra-contractual claims" means, for example,
claims relating to bad faith in the payment of claims, punitive or exemplary damages or
attorney fees and costs.
new text end

Sec. 12.

Minnesota Statutes 2018, section 61B.20, is amended by adding a subdivision to
read:


new text begin Subd. 9b. new text end

new text begin Health benefit plan. new text end

new text begin "Health benefit plan" means any hospital or medical
expense policy or certificate, or health maintenance organization subscriber contract or any
other similar health contract. "Health benefit plan" does not include:
new text end

new text begin (1) accident only insurance;
new text end

new text begin (2) credit insurance;
new text end

new text begin (3) dental only insurance;
new text end

new text begin (4) vision only insurance;
new text end

new text begin (5) Medicare Supplement insurance;
new text end

new text begin (6) benefits for long-term care, home health care, community-based care, or any
combination thereof;
new text end

new text begin (7) disability income insurance;
new text end

new text begin (8) coverage for on-site medical clinics; or
new text end

new text begin (9) specified disease, hospital confinement indemnity, or limited benefit health insurance
if the types of coverage do not provide coordination of benefits and are provided under
separate policies or certificates.
new text end

Sec. 13.

Minnesota Statutes 2018, section 61B.20, subdivision 11, is amended to read:


Subd. 11.

Impaired insurer.

"Impaired insurer" means a member insurer that is not an
insolvent insurer, anddeleted text begin:
deleted text end

deleted text begin (1)deleted text end is placed under an order of rehabilitation or conservation by a court of competent
jurisdiction. deleted text beginThe order of rehabilitation or conservation referred to in this subdivision is the
initial order granting a petition, application, or other request to begin a rehabilitation or
conservatorship; or
deleted text end

deleted text begin (2) is determined by the commissioner to be potentially unable to fulfill its contractual
obligations and the commissioner has notified the association of the determination.
deleted text end

Sec. 14.

Minnesota Statutes 2018, section 61B.20, subdivision 12, is amended to read:


Subd. 12.

Insolvent insurer.

"Insolvent insurer" means a member insurer that is placed
under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.
deleted text begin The order of liquidation referred to in this subdivision is the initial order granting a petition,
application, or other request to begin a liquidation.
deleted text end

Sec. 15.

Minnesota Statutes 2018, section 61B.20, subdivision 13, is amended to read:


Subd. 13.

Member insurer.

"Member insurer" means an insurernew text begin or health maintenance
organization
new text end licensed or holding a certificate of authority to transact in this state any kind
of insurancenew text begin or health maintenance organization businessnew text end for which coverage is provided
under section 61B.19, subdivision 2, and includes an insurernew text begin or health maintenance
organization
new text end whose license or certificate of authority in this state may have been suspended,
revoked, not renewed, or voluntarily withdrawn. The term does not include:

(1) a deleted text beginnonprofitdeleted text end hospital or medical service organization, deleted text beginother than adeleted text endnew text begin whether for-profit
or
new text end nonprofit deleted text beginhealth service plan corporation that operates under chapter 62Cdeleted text end;

deleted text begin (2) a health maintenance organization;
deleted text end

deleted text begin (3)deleted text endnew text begin (2)new text end a fraternal benefit society;

deleted text begin (4)deleted text endnew text begin (3)new text end a mandatory state pooling plan;

deleted text begin (5)deleted text endnew text begin (4)new text end a mutual assessment company or an entity that operates on an assessment basis;

deleted text begin (6)deleted text endnew text begin (5)new text end an insurance exchange;

deleted text begin (7)deleted text endnew text begin (6)new text end a community integrated service network; or

deleted text begin (8)deleted text endnew text begin (7)new text end an entity similar to those listed in clauses (1) to deleted text begin(7)deleted text endnew text begin (6)new text end.

Sec. 16.

Minnesota Statutes 2018, section 61B.20, is amended by adding a subdivision to
read:


new text begin Subd. 13b. new text end

new text begin Owner. new text end

new text begin "Owner" of a policy or contract and "policyholder," "policy owner"
and "contract owner" mean the person who is identified as the legal owner under the terms
of the policy or contract or who is otherwise vested with legal title to the policy or contract
through a valid assignment completed in accordance with the terms of the policy or contract
and properly recorded as the owner on the books of the member insurer. The terms owner,
contract owner, policyholder, and policy owner do not include persons with a mere beneficial
interest in a policy or contract.
new text end

Sec. 17.

Minnesota Statutes 2018, section 61B.20, subdivision 14, is amended to read:


Subd. 14.

Person.

"Person" means an individual, corporation, partnership, deleted text beginunincorporateddeleted text end
association, limited liability company, governmental body or entity, or voluntary organization.

Sec. 18.

Minnesota Statutes 2018, section 61B.20, is amended by adding a subdivision to
read:


new text begin Subd. 14a. new text end

new text begin Plan sponsor. new text end

new text begin "Plan sponsor" means:
new text end

new text begin (1) the employer in the case of a benefit plan established or maintained by a single
employer;
new text end

new text begin (2) the employee organization in the case of a benefit plan established or maintained by
an employee organization; or
new text end

new text begin (3) in a case of a benefit plan established or maintained by two or more employers or
jointly by one or more employers and one or more employee organizations, the association,
committee, joint board of trustees, or other similar group of representatives of the parties
who establish or maintain the benefit plan.
new text end

Sec. 19.

Minnesota Statutes 2018, section 61B.20, subdivision 15, is amended to read:


Subd. 15.

Premiums.

"Premiums" means amounts or considerations by whatever name
called received on covered policies or contracts lessnew text begin returnednew text end premiums, considerationsdeleted text begin,deleted text end
and deposits deleted text beginreturned,deleted text end and less dividends and experience credits deleted text beginon those covered policies
or contracts to the extent not guaranteed in advance
deleted text end. deleted text beginThe termdeleted text endnew text begin Premiumsnew text end does not include
amounts received for policies or contracts or for the portions of policies or contracts for
which coverage is not provided under section 61B.19, subdivision 3, except that assessable
premium shall not be reduced on account of section 61B.19, subdivision 4, relating to
limitations with respect to deleted text beginany one life,deleted text end any one individual, new text beginone participant new text endand deleted text beginanydeleted text endnew text begin one
policy, or
new text end one contract deleted text beginholderdeleted text endnew text begin ownernew text end. Premiums deleted text beginsubject to assessment under section 61B.24,
include all amounts received on any unallocated annuity contract issued to a contract holder
resident in this state if the contract is not otherwise excluded from coverage under section
61B.19, subdivision 3; provided that "premiums"
deleted text end shall not include deleted text beginany premiums in excess
of the liability limit on any unallocated annuity contract specified in section 61B.19,
subdivision 4
.
deleted text endnew text begin:
new text end

new text begin (1) premiums in excess of $5,000,000 on an unallocated annuity contract not issued
under a governmental retirement benefit plan or its trustee established under section 401,
403(b), or 457 of the Internal Revenue Code; or
new text end

new text begin (2) with respect to multiple non-group policies of life insurance owned by one owner,
whether the policy or contract owner is an individual, firm, corporation, or other person,
and whether the persons insured are officers, managers, employees, or other persons,
premiums in excess of $5,000,000 with respect to these policies or contracts, regardless of
the number of policies or contracts held by the owner.
new text end

Sec. 20.

Minnesota Statutes 2018, section 61B.20, is amended by adding a subdivision to
read:


new text begin Subd. 15a. new text end

new text begin Principal place of business. new text end

new text begin (a) "Principal place of business" of a plan
sponsor or a person other than a natural person means the single state in which the natural
persons who establish policy for the direction, control, and coordination of the operations
of the entity as a whole primarily exercise that function, determined by the association in
its reasonable judgment by considering the following factors:
new text end

new text begin (1) the state in which the primary executive and administrative headquarters of the entity
is located;
new text end

new text begin (2) the state in which the principal office of the chief executive officer of the entity is
located;
new text end

new text begin (3) the state in which the board of directors (or similar governing person or persons) of
the entity conducts the majority of its meetings;
new text end

new text begin (4) the state in which the executive or management committee of the board of directors
(or similar governing person or persons) of the entity conducts the majority of its meetings;
new text end

new text begin (5) the state from which the management of the overall operations of the entity is directed;
and
new text end

new text begin (6) in the case of a benefit plan sponsored by affiliated companies comprising a
consolidated corporation, the state in which the holding company or controlling affiliate
has its principal place of business as determined using the above factors.
new text end

new text begin However, in the case of a plan sponsor, if more than 50 percent of the participants in the
benefit plan are employed in a single state, that state shall be deemed to be the principal
place of business of the plan sponsor.
new text end

new text begin (b) The principal place of business of a plan sponsor of a benefit plan described in
subdivision 14a shall be deemed to be the principal place of business of the association,
committee, joint board of trustees, or other similar group of representatives of the parties
who establish or maintain the benefit plan that, in lieu of a specific or clear designation of
a principal place of business, shall be deemed to be the principal place of business of the
employer or employee organization that has the largest investment in the benefit plan in
question.
new text end

Sec. 21.

Minnesota Statutes 2018, section 61B.20, is amended by adding a subdivision to
read:


new text begin Subd. 15b. new text end

new text begin Receivership court. new text end

new text begin "Receivership court" means the court in the insolvent
or impaired insurer's state having jurisdiction over the conservation, rehabilitation, or
liquidation of the member insurer.
new text end

Sec. 22.

Minnesota Statutes 2018, section 61B.20, subdivision 16, is amended to read:


Subd. 16.

Resident.

"Resident" means a personnew text begin to whom a contractual obligation is
owed and
new text end who resides in Minnesota deleted text beginat the time a member insurer is initially determined by
the commissioner or a court to be an impaired or insolvent insurer and to whom a contractual
obligation is owed
deleted text endnew text begin on the date of entry of a court order that determines a member insurer
to be an impaired insurer or a court order that determines a member insurer to be an insolvent
insurer, whichever occurs first
new text end. A person may be a resident of only one state, which in the
case of a person other than a natural person is its principal place of businessdeleted text begin, and which, in
the case of a trust, is the principal place of business of the settlor or entity which established
the trust
deleted text end. Citizens of the United States who are either (i) residents of foreign countries, or
(ii) residents of United States possessions, territories, or protectorates that do not have an
association similar to the association created by sections 61B.19 to 61B.32, are considered
residents of deleted text beginthisdeleted text endnew text begin thenew text end state deleted text beginifdeleted text endnew text begin of domicile ofnew text end thenew text begin membernew text end insurer that issued the deleted text begincovereddeleted text end policies
or contracts deleted text beginwas domiciled in this statedeleted text end.

Sec. 23.

Minnesota Statutes 2018, section 61B.20, subdivision 17, is amended to read:


Subd. 17.

Supplemental contract.

"Supplemental contract" means a written agreement
entered into for the distribution of deleted text beginpolicy or contractdeleted text end proceedsnew text begin under a life, health, or annuity
policy or contract
new text end.

Sec. 24.

Minnesota Statutes 2018, section 61B.20, subdivision 18, is amended to read:


Subd. 18.

Unallocated annuity contract.

"Unallocated annuity contract" means an
annuity contractdeleted text begin, funding agreement,deleted text end or group annuity certificate that is not issued to and
owned by an individual, except to the extent of annuity benefits guaranteed to an individual
by an insurer under the contract or certificate.

Sec. 25.

Minnesota Statutes 2018, section 61B.21, subdivision 1, is amended to read:


Subdivision 1.

Functions.

new text beginThere is created a nonprofit legal entity known as new text endthe
Minnesota Life and Health Insurance Guaranty Associationnew text begin. All member insurers shall be
and remain members of the association as a condition of being granted authority to transact
insurance or a health maintenance organization business in Minnesota. The association
new text end shall
perform its functions under the plan of operation established and approved under section
61B.25, and shall exercise its powers through a board of directorsnew text begin established under section
61B.22
new text end. The association is not a state agency for purposes of chapter 16A, 16B, 16C, or
43A. For purposes of administration and assessment, the association shall establish and
maintain two accounts:

(1) the life insurance and annuity account which includes the following subaccounts:

(i) the life insurance account;

(ii) the annuity accountnew text begin, which shall include annuity contracts owned by a governmental
retirement plan or its trustee established under section 401, 403(b), or 457 of the Internal
Revenue Code, but shall otherwise exclude unallocated annuities
new text end; and

(iii) the unallocated annuity accountnew text begin, new text endnew text beginwhich shall exclude contracts owned by a
governmental retirement benefit plan or its trustee established under section 401, 403(b),
or 457 of the Internal Revenue Code
new text end; and

(2) the health deleted text begininsurancedeleted text end account.

Sec. 26.

Minnesota Statutes 2018, section 61B.22, subdivision 1, is amended to read:


Subdivision 1.

Members.

new text begin(a) new text endThe board of directors of the association consists of deleted text beginnine
members
deleted text endnew text begin not less than seven nor more than 11 member insurersnew text end serving terms as established
in the plan of operation under section 61B.25. new text beginThe insurer new text endmembers of the board must be
elected by member insurers, subject to the approval of the commissionerdeleted text begin, for the terms of
office specified in their nominations
deleted text end.new text begin new text endnew text beginIn addition, two persons who must be public
representatives shall be appointed by the commissioner to the board of directors. A public
representative may not be an officer, director, or employee of an insurance company or a
health maintenance organization or any person engaged in the business of insurance.
new text end

new text begin (b) new text endVacancies on the board shall be filled for the remaining period of the term by a
majority vote of the remaining board members, new text beginfor member insurers new text endsubject to approval of
the commissionernew text begin, and by the commissioner for public representativesnew text end.new text begin To select the initial
board of directors, and initially organize the association, the commissioner shall give notice
to all member insurers of the time and place of the organizational meeting. In determining
voting rights at the organizational meeting each member insurer shall be entitled to one vote
in person or by proxy. If the board of directors is not selected within 60 days after notice
of the organizational meeting, the commissioner may appoint the initial insurer members
in addition to the public representatives.
new text end

new text begin (c) new text endIn approving selections or in appointing members to the board, the commissioner
shall consider whether all member insurers are fairly represented.

Sec. 27.

Minnesota Statutes 2018, section 61B.23, subdivision 1, is amended to read:


Subdivision 1.

Impaired domestic insurer.

If a member insurer is an impaired deleted text begindomesticdeleted text end
insurer, the association may, in its discretion, and subject to any conditions imposed by the
association that do not impair the contractual obligations of the impaired insurer and that
are approved by the commissionerdeleted text begin, and that are, except in cases of court ordered conservation
or rehabilitation, also approved by the impaired insurer
deleted text end:

(1) guarantee, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured,
any or all of the policies or contracts of the impaired insurer;new text begin or
new text end

(2) provide money, pledges, notes, guarantees, or other means as are proper to exercise
the power granted in clause (1) and assure payment of the contractual obligations of the
impaired insurer pending action under clause (1)deleted text begin; ordeleted text endnew text begin.
new text end

deleted text begin (3) loan money to the impaired insurer.
deleted text end

Sec. 28.

Minnesota Statutes 2018, section 61B.23, subdivision 3, is amended to read:


Subd. 3.

Insolvent insurer.

If a member insurer is an insolvent insurer deleted text beginthen, subject to
any conditions imposed by the association and approved by the commissioner
deleted text end, the association
shall, in its discretion:

(1) new text beginboth:
new text end

new text begin (i) new text endguaranty, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured, the
policies or contracts of the insolvent insurerdeleted text begin;deleted text endnew text begin or
new text end

deleted text begin (2)deleted text end assure payment of the contractual obligations of the insolvent insurer which are due
and owing;new text begin and
new text end

deleted text begin (3)deleted text endnew text begin (ii)new text end provide money, pledges, guarantees, or other means as are reasonably necessary
to discharge its duties; or

deleted text begin (4)deleted text endnew text begin (2)new text end provide benefits and coverages in accordance with subdivision 4.

Sec. 29.

Minnesota Statutes 2018, section 61B.23, subdivision 4, is amended to read:


Subd. 4.

Payments; alternative policies.

When proceeding under deleted text beginsubdivision 2,
paragraph (a), clause (2), or
deleted text end subdivision 3, clause deleted text begin(4)deleted text endnew text begin (2)new text end, the association shalldeleted text begin, with respect
to life and health insurance policies and annuities
deleted text endnew text begin provide the following benefits and
coverages
new text end:

(a)new text begin with respect to policies and contracts,new text end assure payment of benefits deleted text beginfor premiums
identical to the premiums and benefits, except for terms of conversion and renewability,
deleted text end
that would have been payable under the policies of the impaired or insolvent insurer, for
claims incurred:

(1) with respect to group policiesnew text begin and contractsnew text end, not later than the earlier of the next
renewal date under those policies or contracts or 45 days, but in no event less than 30 days,
after the date on which the association becomes obligated with respect to those policiesnew text begin and
contracts
new text end; or

(2) with respect to deleted text beginindividualdeleted text endnew text begin non-groupnew text end policies,new text begin contracts, and annuities,new text end not later than
the earlier of the next renewal date, if any, under those policiesnew text begin or contractsnew text end or one year, but
in no event less than 30 days, from the date on which the association becomes obligated
with respect to those policies.

(b) new text beginThe association shall new text endmake diligent efforts to provide all known insuredsnew text begin, enrollees,new text end
or annuitants for deleted text beginindividualdeleted text endnew text begin non-groupnew text end policiesnew text begin or contracts,new text end or group policynew text begin or contractnew text end
owners with respect to group policiesnew text begin and contracts,new text end 30 days' notice of the termination
pursuant to paragraph (a) of the benefits provided.

(c) With respect to deleted text beginindividualdeleted text endnew text begin non-groupnew text end policiesnew text begin and contracts covered by the associationnew text end,
new text begin the association shall new text endmake available to each known insurednew text begin, enrollee,new text end or annuitant, or owner
if other than the insured or annuitant, and with respect to an individual formerlynew text begin annew text end insurednew text begin,new text endnew text begin
enrollee,
new text end or deleted text beginformerly andeleted text end annuitant under a group policynew text begin or contractnew text end who is not eligible for
replacement group coverage, make available substitute coverage on an individual basis in
accordance with paragraph (d), if the insuredsnew text begin, enrollees,new text end or annuitants had a right under
law or the terminated policynew text begin, contract,new text end or annuity to convert coverage to individual coverage
or to continue an individual policynew text begin, contract,new text end or annuity in force until a specified age or for
a specified time, during which the insurernew text begin or health maintenance organizationnew text end had no right
unilaterally to make changes in any provision of the policynew text begin, contract,new text end or annuity or had a
right only to make changes in premium by class.

(d)(1) In providing the substitute coverage required under paragraph (c), the association
may offer either to reissue the terminated coverage or to issue an alternative policynew text begin or
contract at actuarially justified rates
new text end.

(2) Alternative or reissued policiesnew text begin or contractsnew text end must be offered without requiring evidence
of insurability, and must not provide for any waiting period or exclusion that would not
have applied under the terminated policynew text begin or contractnew text end.

(3) The association may reinsure any alternative or reissued policynew text begin or contractnew text end.

(e)(1) Alternative policiesnew text begin or contractsnew text end adopted by the association are subject to the
approval of the commissioner. The association may adopt alternative policiesnew text begin or contractsnew text end
of various types for future issuance without regard to any particular impairment or insolvency.

(2) Alternative policiesnew text begin or contractsnew text end must contain at least the minimum statutory
provisions required in this state and provide benefits that are not unreasonable in relation
to the premium charged. The association shall set the premium in accordance with a table
of rates which it shall adopt. The premium must reflect the amount of insurance to be
provided and the age and class of risk of each insured, but must not reflect any changes in
the health of the insured after the original policy was last underwritten.

(3) Any alternative policynew text begin or contractnew text end issued by the association must provide coverage
of a type similar to that of the policynew text begin or contractnew text end issued by the impaired or insolvent insurer,
as determined by the association.

(f) If the association elects to reissue terminated coverage at a premium rate different
from that charged under the terminated policynew text begin or contractnew text end, the premium must be set by the
association in accordance with the amount of insurancenew text begin or coveragenew text end provided and the age
and class of risk, subject to approval of the commissioner deleted text beginor by a court of competent
jurisdiction
deleted text end.

(g) The association's obligations with respect to coverage under any policynew text begin or contractnew text end
of the impaired or insolvent insurer or under any reissued or alternative policynew text begin or contractnew text end
ceases on the date the coverage deleted text beginordeleted text endnew text begin,new text end policynew text begin, or contractnew text end is replaced by another similar policynew text begin
or contract
new text end by the policyholder,new text begin contract holder,new text end the deleted text begininsurerdeleted text endnew text begin insurednew text end,new text begin enrollee,new text end or the
association deleted text beginand the preexisting condition limitations have been satisfieddeleted text end.

(h) When proceeding under this subdivision with respect to any policynew text begin or contractnew text end carrying
guaranteed minimum interest rates, the association shall assure the payment or crediting of
a rate of interest consistent with section 61B.19, subdivision 3, new text beginparagraph (b), new text endclause deleted text begin(12)deleted text endnew text begin
(10)
new text end.

Sec. 30.

Minnesota Statutes 2018, section 61B.23, subdivision 5, is amended to read:


Subd. 5.

Obligations terminated.

Nonpayment of all unpaid premiums within 31 days
after the date required under the terms of a guaranteed, assumed, alternative, or reissued
policy or contract or substitute coverage terminates the association's obligations under the
policy, contract, or coverage under sections 61B.18 to 61B.32 with respect to the policy,
contract, or coverage, except with respect to claims incurred or net cash surrender value
that may be due in accordance with sections 61B.18 to 61B.32. deleted text beginThe association will not
terminate the policy or contract for nonpayment of premium until 31 days after the association
sends a written cancellation notice by first class mail to the insured's last known address.
deleted text end

Sec. 31.

Minnesota Statutes 2018, section 61B.23, subdivision 6, is amended to read:


Subd. 6.

Postliquidation premiums.

Premiums due for coverage after entry of any order
of liquidation of an insolvent insurer belong to and are payable at the direction of the
associationdeleted text begin, anddeleted text endnew text begin. If the liquidator of an insolvent insurer requests, the association shall
provide a report to the liquidator regarding such premium collected by the association.
new text end The
association is liable for unearned premiums due new text beginto new text endpolicy or contract owners arising after
the entry of the order.

Sec. 32.

Minnesota Statutes 2018, section 61B.23, subdivision 7, is amended to read:


Subd. 7.

Coverage by another state.

deleted text begin The association has no liability under this section
for a covered policy of a foreign or alien insurer whose domiciliary jurisdiction or state of
entry provides protection, by statutes or rule, for residents of this state, which protection is
substantially similar to that provided by sections 61B.18 to 61B.32, for residents of other
states. Recovery provided for under sections 61B.18 to 61B.32 is reduced by the amount
of recovery under the coverage provided by another state or jurisdiction. If another state or
jurisdiction providing substantially similar coverage as provided by sections 61B.18 to
61B.32 denies coverage, the association shall provide coverage if the policyholder or contract
holder is otherwise eligible, and the association is then subrogated to the rights of the person
receiving benefits with respect to the other state or jurisdiction. If a person receiving benefits
from the association has a claim remaining against another state or jurisdiction, whether or
not such state or jurisdiction provides substantially similar protection within the meaning
of this section, then such person's remaining claim has priority over any subrogation rights
of the association with respect to that other state or jurisdiction.
deleted text end new text begin The protection provided
by sections 61B.18 to 61B.32 shall not apply where any guaranty protection is provided to
residents of Minnesota by the laws of the domiciliary state or jurisdiction of the impaired
or insolvent insurer other than Minnesota.
new text end

Sec. 33.

Minnesota Statutes 2018, section 61B.23, subdivision 8, is amended to read:


Subd. 8.

Liens and moratoriums.

deleted text begin(a)deleted text end In carrying out its duties under subdivision 2 or
3, the association may deleted text beginrequest that there be imposed policy liens, contract liens, moratoriums
on payments, or other similar means. The liens, moratoriums, or similar means may be
imposed if the commissioner
deleted text end:

deleted text begin (1) finds: (i) that the amounts that can be assessed under sections 61B.18 to 61B.32 are
less than the amounts necessary to assure full and prompt performance of the impaired
insurer's contractual obligations; (ii) that economic or financial conditions as they affect
member insurers are sufficiently adverse to cause the imposition of policy or contract liens,
moratoriums, or similar means to be in the public interest; (iii) that there is a reasonable
likelihood that a plan of rehabilitation will be developed or other appropriate arrangements
made for the orderly provision for covered contractual obligations of the impaired or insolvent
insurer, and that the imposition of policy or contract liens, moratoriums, or similar means
is necessary and appropriate to support the development of the plan of rehabilitation or other
appropriate arrangements; (iv) that the imposition of policy or contract liens, moratoriums,
or similar means is necessary and appropriate to ensure the equitable treatment of all
policyholders of impaired or insolvent insurers protected by the guaranty association; (v)
that the imposition of policy or contract liens, moratoriums, or similar means is necessary
and appropriate to encourage recovery of the maximum possible amount from the remaining
assets of the impaired or insolvent insurer's estate; or (vi) that the imposition of policy or
contract liens, moratoriums, or similar means is necessary and appropriate in order for the
association to participate in any multistate plan of rehabilitation, conservation, or liquidation
of the impaired or insolvent insurer, and the commissioner considers the plan to be in the
best interests of the impaired or insolvent insurer's policyholders or the association's member
insurers;
deleted text end

deleted text begin (2) finds, in the case of a moratorium, that current contractual obligations are being, and
will continue to be, promptly paid; and
deleted text end

deleted text begin (3) approves the specific policy liens, contract liens, moratoriums, or similar means to
be used.
deleted text end

deleted text begin (b) Before being obligated under subdivision 2 or 3, the association may request that
there be imposed temporary moratoriums or liens on payments of cash values and policy
loans. The temporary moratoriums and liens may be imposed if approved by the
commissioner.
deleted text end

deleted text begin (c) A moratorium, lien, or other means imposed pursuant to this subdivision may be for:
(i) a specific term; or (ii) an indefinite term which shall continue in effect until the
commissioner, at the request of the association or, on the commissioner's own motion after
notice to the association, finds that the reason or reasons for the moratorium, lien, or other
means no longer exists.
deleted text end

new text begin (1) subject to approval by a court in Minnesota, impose permanent policy or contract
liens in connection with a guarantee, assumption, or reinsurance agreement, if the association
finds that the amounts which can be assessed under sections 61B.18 to 61B.32 are less than
the amounts needed to assure full and prompt performance of the association's duties under
sections 61B.18 to 61B.32, or that the economic or financial conditions as they affect member
insurers are sufficiently adverse to render the imposition of such permanent policy or contract
liens to be in the public interest; or
new text end

new text begin (2) subject to approval by a court in Minnesota, impose temporary moratoriums or liens
on payments of cash values and policy loans, or any other right to withdraw funds held in
conjunction with policies or contracts, in addition to any contractual provisions for deferral
of cash or policy loan value. In addition, in the event of a temporary moratorium or
moratorium charge imposed by the receivership court on payment of cash values or policy
loans, or on any other right to withdraw funds held in conjunction with policies or contracts,
out of the assets of the impaired or insolvent insurer, the association may defer the payment
of cash values, policy loans, or other rights for the period of the moratorium or moratorium
charge imposed by the receivership court, except for claims covered by the association to
be paid in accordance with a hardship procedure established by the liquidator or rehabilitator
and approved by the receivership court.
new text end

Sec. 34.

Minnesota Statutes 2018, section 61B.23, subdivision 8a, is amended to read:


Subd. 8a.

Deposits in this state for insolvent or impaired insurer.

A deposit in this
state, held pursuant to law or required by the commissioner for the benefit of creditors,
including policynew text begin or contractnew text end owners, not turned over to the domiciliary liquidator upon the
entry of a final order of liquidation or order approving a rehabilitation plan of deleted text beginandeleted text endnew text begin a membernew text end
insurer domiciled in deleted text beginthis statedeleted text endnew text begin Minnesotanew text end or in a reciprocal state, pursuant to section 60B.54,
shall be promptly paid to the association. The association is entitled to retain a portion of
any amount so paid to it equal to the percentage determined by dividing the aggregate
amount of policy owners claims related to that insolvency for which the association has
provided statutory benefits by the aggregate amount of all policy owners' claims in this state
related to that insolvency. The association shall remit to the domiciliary receiver the amount
so paid to the association and not retained pursuant to this subdivision. Any amount retained
by the association shall be treated as a distribution of estate assets pursuant to section 60B.46
or similar provision of the state of domicile of the impaired or insolvent insurer.

Sec. 35.

Minnesota Statutes 2018, section 61B.23, subdivision 12, is amended to read:


Subd. 12.

Assignments; subrogation rights.

(a) A person receiving benefits under
sections 61B.18 to 61B.32 shall be considered to have assigned the rights under, and any
causes of action against any person for losses arising under, resulting from or otherwise
relating to, the covered policy or contract to the association to the extent of the benefits
received because of sections 61B.18 to 61B.32, whether the benefits are payments of or on
account of contractual obligations, continuation of coverage, or provision of substitute or
alternative coverages. The association may require an assignment to it of those rights and
causes of action by a payee, policy or contract owner, beneficiary, insured, or annuitant as
a condition precedent to the receipt of rights or benefits conferred by sections 61B.18 to
61B.32 upon that person. deleted text beginThe assignment and subrogation rights of the association include
any rights that a person may have as a beneficiary of a plan covered under the Employee
Retirement Income Security Act of 1974, United States Code, title 29, section 1003, as
amended.
deleted text end

(b) The subrogation rights of the association under this subdivision against the assets of
the impaired or insolvent insurer have the same priority as those of a person entitled to
receive benefits under sections 61B.18 to 61B.32.

(c) In addition to paragraphs (a) and (b), the association has all common law rights of
subrogation and other equitable or legal remedies that would have been available to the
impaired or insolvent insurer or person receiving benefits under sections 61B.18 to 61B.32
including without limitation, in the case of a structured settlement annuity, any rights of the
owner, beneficiary or payee of the annuity, to the extent of benefits received pursuant to
sections 61B.18 to 61B.32, against a person originally or by succession responsible for the
losses arising from the personal injury relating to the annuity or payment thereof, excepting
any such person responsible solely by reason of serving as an assignee in respect of a
qualified assignment under section 130 of the Internal Revenue Code of 1986, as amended.

(d) If the preceding provisions of this subdivision are invalid or ineffective with respect
to any person or claim for any reason, the amount payable by the association with respect
to the related covered obligations shall be reduced by the amount realized by any other
person with respect to the person or claim that is attributable to the policies or portion thereof
covered by the association.

(e) If the association has provided benefits with respect to a covered obligation and a
person recovers amounts as to which the association has rights as described in the preceding
paragraphs of this subdivision, the person shall pay to the association the portion of the
recovery attributable to the policies or portion thereof covered by the association.

Sec. 36.

Minnesota Statutes 2018, section 61B.23, subdivision 13, is amended to read:


Subd. 13.

Permissive powers.

The association may:

(1) enter into contracts as are necessary or proper to carry out the provisions and purposes
of sections 61B.18 to 61B.32;

(2) sue or be sued, including taking any legal actions necessary or proper to recover any
unpaid assessments under section 61B.26 to settle claims or potential claims against it;

(3) borrow money to effect the purposes of sections 61B.18 to 61B.32 and any notes or
other evidence of indebtedness of the association not in default are legal investments for
domestic insurers and may be carried as admitted assets;

(4) employ or retain persons as are necessary or appropriate to handle the financial
transactions of the association, and to perform other functions as the association considers
necessary or proper under sections 61B.18 to 61B.32;

(5) enter into arbitration or take legal action as may be necessary or appropriate to avoid
or recover payment of improper claims;

(6) exercise, for the purposes of sections 61B.18 to 61B.32 and to the extent approved
by the commissioner, the powers of a domestic life deleted text beginordeleted text endnew text begin insurer,new text end health insurer,new text begin or health
maintenance organization,
new text end but in no case may the association issue insurance policies or
annuity contracts other than those issued to perform its obligations under sections 61B.18
to 61B.32;

(7) join an organization of one or more other state associations of similar purposes, to
further the purposes and administer the powers and duties of the association;

deleted text begin (8) negotiate and contract with any liquidator, rehabilitator, conservator, or ancillary
receiver to carry out the powers and duties of the association;
deleted text end

deleted text begin (9) participate in the organization of and/or own stock in an entity which exists or was
formed for the purpose of assuming liability for contracts or policies issued by impaired or
insolvent insurers; and
deleted text end

new text begin (8) organize itself as a corporation or in other legal form permitted by the laws of
Minnesota;
new text end

deleted text begin (10)deleted text endnew text begin (9)new text end request information from a person seeking coverage from the association in
order to aid the association in determining its obligations under sections 61B.18 to 61B.32
with respect to the person, and the person shall promptly comply with the requestdeleted text begin.deleted text endnew text begin;
new text end

new text begin (10) unless prohibited by law, in accordance with the terms and conditions of the policy
or contract, file for actuarially justified rate or premium increases for any policy or contract
for which it provides coverage under sections 61B.18 to 61B.32; and
new text end

new text begin (11) take other necessary or appropriate action to discharge its duties and obligations
under sections 61B.18 to 61B.32 or to exercise its powers under sections 61B.18 to 61B.32.
new text end

Sec. 37.

Minnesota Statutes 2018, section 61B.23, subdivision 14, is amended to read:


Subd. 14.

Association election to succeed to rights of insolvent or impaired insurer
under indemnity reinsurance contracts.

(a) At any time within deleted text beginone yeardeleted text endnew text begin 180 daysnew text end after
the date deleted text beginon which the association becomes responsible for the obligations of a member
insurer the coverage date
deleted text endnew text begin of the order of liquidationnew text end, the association may elect to succeed
to the rights and obligations of thenew text begin cedingnew text end member insurer, that accrue on or after the coverage
date and that relate to contracts covered in whole or in part by the association, deleted text beginunder any
one or more indemnity reinsurance agreements entered into by the member insurer as a
ceding insurer and selected by the association. However, the association may not exercise
an election with respect to a reinsurance agreement if the receiver, rehabilitator, or liquidator
of the member insurer has previously and expressly disaffirmed the reinsurance agreement
deleted text endnew text begin
in each case under any one or more reinsurance contracts entered into by the insolvent
insurer and its reinsurers and selected by the association. Any such assumption shall be
effective as of the date of the order of liquidation
new text end. The election shall be effected by deleted text begina notice
to the receiver, rehabilitator, or liquidator, and
deleted text endnew text begin the association or the National Organization
of Life and Health Insurance Guaranty Associations (NOLHGA) on its behalf sending
written notice, return receipt requested,
new text end to the affected reinsurers.

new text begin (b) To facilitate the earliest practicable decision about whether to assume any of the
contracts of reinsurance, and in order to protect the financial position of the estate, the
receiver and each reinsurer of the ceding member insurer shall make available upon request
to the association or to NOLHGA on its behalf as soon as possible after commencement of
formal delinquency proceedings:
new text end

new text begin (i) copies of in-force contracts of reinsurance and all related files and records relevant
to the determination of whether such contracts should be assumed; and
new text end

new text begin (ii) notices of any defaults under the reinsurance contacts or any known event or condition
which with the passage of time could become a default under the reinsurance contracts.
new text end

new text begin (c) new text endIf the association makes an election, clauses (1) through (4) apply with respect to
the agreements selected by the association:

(1) the association is responsible for all unpaid premiums due under the deleted text beginagreementsdeleted text endnew text begin
reinsurance contacts
new text end for periods both before and after the deleted text begincoveragedeleted text end datenew text begin of the order of
liquidation
new text end, and is responsible for the performance of all other obligations to be performed
after the deleted text begincoveragedeleted text end datenew text begin of the order of liquidationnew text end, in each case that relates to new text beginthe policies,
new text end contractsnew text begin, or annuitiesnew text end covered in whole or in part by the association and the association
may charge new text beginthe policies, new text endcontractsnew text begin, or annuitiesnew text end covered in part by the association, through
reasonable allocation methods, the costs for reinsurance in excess of the obligations of the
associationnew text begin and shall provide notice and an accounting of these charges to the liquidatornew text end;

(2) the association is entitled to any amounts payable by the reinsurer under the
deleted text begin agreementsdeleted text endnew text begin reinsurance contractsnew text end with respect to losses or events that occur in periods after
the deleted text begincoveragedeleted text end datenew text begin of the order of liquidationnew text end and that relate to new text beginpolicies, new text endcontractsnew text begin, or annuitiesnew text end
covered by the association in whole or in part, provided that, upon receipt of any such
amounts, the association is obliged to pay to the beneficiary under the policy deleted text beginordeleted text endnew text begin,new text end contractnew text begin,
or annuity
new text end on account of which the amounts were paid a portion of the amount equal to the
deleted text begin excessdeleted text endnew text begin lessernew text end of:

(i) the amount received by the associationdeleted text begin, overdeleted text endnew text begin; and
new text end

(ii) new text beginthe excess of the amount received by the association over the amount equal to new text endthe
benefits paid by the association on account of the policy deleted text beginordeleted text endnew text begin,new text end contractnew text begin, or annuitynew text end less the
retention of the impaired or insolvent member insurer applicable to the loss or event;

(3) within 30 days following the association's election, the association and each indemnity
reinsurernew text begin under contracts assumed by the associationnew text end shall calculate the net balance due to
or from the association under each reinsurance agreement as of the date of the association's
election,new text begin with respect to policies, contracts, or annuities covered in whole or in part by the
association,
new text end giving full credit to all items paid by either the member insurer or its receiverdeleted text begin,
rehabilitator, or liquidator or the indemnity reinsurer during the period between the coverage
date and
deleted text endnew text begin prior tonew text end the date of the association's electionnew text begin. The reinsurer shall pay the receiver
any amounts due for losses or events prior to the date of the order of liquidation, subject to
any set-off for premiums unpaid for periods prior to the date,
new text end and deleted text begin(i) eitherdeleted text end the association
or indemnity reinsurer shall pay the net balance due the other within five days of the
completion of the aforementioned calculation deleted text beginand (ii)deleted text endnew text begin. new text endnew text beginAny disputes over the amounts due
to either the association or the reinsurer shall be resolved by arbitration pursuant to the terms
of the affected reinsurance contracts or, if the contract contains no arbitration clause, as
otherwise provided by law.
new text end If the receiverdeleted text begin, rehabilitator, or liquidatordeleted text end has received any
amounts due the association pursuant to paragraph (a), the receiverdeleted text begin, rehabilitator, or liquidatordeleted text end
shall remit the same to the association as promptly as practicable; and

(4) if the association, within 60 days of the election, pays the premiums due for periods
both before and after the coverage date that relate to new text beginpolicies, new text endcontractsnew text begin, or annuitiesnew text end covered
by the association in whole or in part, the reinsurer shall not be entitled to terminate the
reinsurance agreements insofar as the agreements relate to new text beginpolicies, new text endcontractsnew text begin, or annuitiesnew text end
covered by the association in whole or in part and shall not be entitled to set off any unpaid
premium due for periods prior to the coverage date against amounts due the association.

new text begin (d) During the period from the date of the order of liquidation until the election date, or,
if the election date does not occur, until 180 days after the date of the order of liquidation:
new text end

new text begin (1) neither the association nor the reinsurer shall have any rights or obligations under
reinsurance contracts that the association has the right to assume under paragraph (a),
whether for periods prior to or after the date of the order of liquidation, and the reinsurer,
the receiver, and the association shall, to the extent practicable, provide each other data and
records reasonably requested; and
new text end

new text begin (2) provided that once the association has elected to assume a reinsurance contract, the
parties' rights and obligations shall be governed by paragraph (a).
new text end

new text begin (e) If the association does not elect to assume a reinsurance contract by the election date
pursuant to paragraph (a), the association shall have no rights or obligations, in each case
for periods both before and after the date of the order of liquidation, with respect to the
reinsurance contract.
new text end

deleted text begin (b)deleted text endnew text begin (f)new text end In the event the association transfers its obligations to another insurer, and if the
association and the other insurer agree, the other insurer shall succeed to the rights and
obligations of the association under paragraph (a) effective as of the date agreed upon by
the association and the other insurer and regardless of whether the association has made the
election referred to in paragraph (a) provided that:

(1) deleted text beginthe indemnitydeleted text endnew text begin unless the reinsurer and the assuming insurer agree otherwise, thenew text end
reinsurance agreements shall deleted text beginautomatically terminate for new reinsurance unless the
indemnity reinsurer and the other insurer agree to the contrary
deleted text endnew text begin not cover any new policies
of insurance, contracts, or annuities in addition to those transferred
new text end;

(2) the obligations described in the proviso to paragraph deleted text begin(a)deleted text endnew text begin (c)new text end, clause (2), shall no
longer apply deleted text beginon and after the date the indemnity reinsurance agreement is transferred to the
third-party insurer
deleted text endnew text begin with respect to matters arising after the effective date of the transfernew text end; and

(3) deleted text beginparagraph (b) does not apply if the association has previously expressly determined
in writing that it will not exercise the election referred to in paragraph (a)
deleted text endnew text begin notice shall be
given in writing, return receipt requested, by the transferring party to the affected reinsurer
not less than 30 days prior to the effective date of the transfer
new text end.

deleted text begin (c)deleted text endnew text begin (g)new text end The provisions of this subdivision shall supersede the provisions of any law of
deleted text begin this statedeleted text endnew text begin Minnesotanew text end or of any affected reinsurance agreement that provides for or requires
any payment of reinsurance proceeds, on account of losses or events that occur in periods
after the deleted text begincoveragedeleted text end datenew text begin of the order of liquidationnew text end, to the receiverdeleted text begin, liquidator, or rehabilitatordeleted text end
of the insolvent member insurernew text begin or any other personnew text end. The receiverdeleted text begin, rehabilitator, or liquidatordeleted text end
shall remain entitled to any amounts payable by the reinsurer under the reinsurance agreement
with respect to losses or events that occur in periods prior to the deleted text begincoveragedeleted text end datenew text begin of the order
of liquidation,
new text end subject to applicable setoff provisions.

deleted text begin (d)deleted text endnew text begin (h)new text end Except as otherwise expressly provided in this subdivision, nothing in this
subdivision alters or modifies the terms and conditions of the deleted text beginindemnitydeleted text end reinsurance
agreements deleted text beginof the insolvent member insurerdeleted text end. Nothing in this subdivision abrogates or limits
any rights of any reinsurer to claim that it is entitled to rescind a reinsurance agreement.
Nothing in this subdivision gives a policy ownernew text begin, contract owner, enrollee, certificate holder,new text end
or beneficiary an independent cause of action against an indemnity reinsurer that is not
otherwise set forth in the indemnity reinsurance agreement.new text begin Nothing in this subdivision
limits or affects the association's rights as a creditor of the estate against the assets of the
estate. Nothing in this subdivision applies to reinsurance agreements covering property or
casualty risks.
new text end

Sec. 38.

Minnesota Statutes 2018, section 61B.24, subdivision 2, is amended to read:


Subd. 2.

Classes of assessments.

There are two classes of assessments, as follows:

(1) class A assessments must be deleted text beginmadedeleted text endnew text begin authorized and callednew text end for the purpose of meeting
administrative and legal costs and other expenses deleted text beginand examinationsdeleted text end conducted under the
authority of section 61B.27. Class A assessments may be deleted text beginmadedeleted text endnew text begin authorized and callednew text end whether
or not related to a particular impaired or insolvent insurer; and

(2) class B assessments must be deleted text beginmadedeleted text endnew text begin authorized and callednew text end to the extent necessary to
carry out the powers and duties of the association under section 61B.23 with regard to an
impaired or an insolvent insurer.

Sec. 39.

Minnesota Statutes 2018, section 61B.24, subdivision 3, is amended to read:


Subd. 3.

Formula for determination.

(a) The amount of a class A assessment shall be
determined by the board and may be deleted text beginmadedeleted text endnew text begin authorized and callednew text end on a pro rata or nonpro
rata basis. If pro rata, the board may provide that it be credited against future class B
assessments. deleted text beginA nonpro rata assessment shall not exceed $500 per member insurer in any
one calendar year.
deleted text end

(b) The amount of deleted text beginanydeleted text endnew text begin anew text end class B assessmentnew text begin, except for assessments related to long-term
care insurance,
new text end must be allocated for assessment purposes among the accounts or subaccounts
pursuant to an allocation formula which may be based on the premiums or reserves of the
impaired or insolvent insurer or any other standard considered by the board in its sole
discretion as being fair and reasonable under the circumstances.

new text begin (c) The amount of the class B assessment for long-term care insurance written by the
impaired or insolvent insurer shall be allocated according to a methodology included in the
Plan of Operation and approved by the Commissioner. The methodology shall provide for
50 percent of the assessment to be allocated to accident and health member insurers and 50
percent to be allocated to life and annuity member insurers.
new text end

deleted text begin (c)deleted text endnew text begin (d)new text end Class B assessments against member insurers for each subaccount or account
must be in the proportion that the average annual premiums received on business in deleted text beginthis
state
deleted text endnew text begin Minnesotanew text end by each assessed member insurer on policies or contracts covered by each
subaccount or account for the three most recent calendar years for which information is
available preceding the calendar year in which the insurer became impaired or insolvent,
as the case may be, bears to the deleted text beginaverage annualdeleted text end premiums received on business in deleted text beginthis statedeleted text endnew text begin
Minnesota
new text end by all assessed member insurers on policies or contracts covered by that
subaccount or account for those same calendar years. deleted text beginIf the impaired insurer becomes
insolvent, the date of impairment must be used to determine the assessment. Premiums for
purposes of calculating average annual premium for calendar years prior to 1993 shall be
determined in accordance with Minnesota Statutes 1992, sections 61B.01 to 61B.16.
deleted text end

deleted text begin (d)deleted text endnew text begin (e)new text end Assessments for funds to meet the requirements of the association with respect
to an impaired or insolvent insurer must not be deleted text beginmadedeleted text endnew text begin authorized or callednew text end until necessary
to implement the purposes of sections 61B.18 to 61B.32. Classification of assessments
under subdivision 2 and computation of assessments under this subdivision must be made
with a reasonable degree of accuracy, recognizing that exact determinations may not always
be possible.new text begin The association shall notify each member insurer of its anticipated pro rata
share of an authorized assessment not yet called within 180 days after the assessment is
authorized.
new text end

Sec. 40.

Minnesota Statutes 2018, section 61B.24, subdivision 5, is amended to read:


Subd. 5.

Maximum assessment.

(a) The total of all assessments upon a member insurer
for each subaccount of the life and annuity account and for the health account shall not in
any one calendar year exceed two percent of that member insurer's average annual premiums
as calculated in subdivision 3, paragraph deleted text begin(c)deleted text endnew text begin (d)new text end,new text begin received in Minnesotanew text end on policies or
contracts covered by that account or subaccountnew text begin during the three calendar years preceding
the year in which the member insurer became an impaired or insolvent insurer
new text end. If two or
more assessments are deleted text beginmadedeleted text endnew text begin authorized or callednew text end with respect to insurers that become impaired
or insolvent in different calendar years, average annual premiums for purposes of thenew text begin
aggregate
new text end assessment percentage limitation deleted text beginare based upondeleted text endnew text begin shall be equal and limited tonew text end the
higher of the three-year averages calculated under subdivision 3, paragraph deleted text begin(c)deleted text endnew text begin (d)new text end. deleted text beginIf an
impaired insurer becomes insolvent, the date of impairment must be used to determine the
assessment.
deleted text end If the maximum assessment for any subaccount of the life and annuity account
in any one calendar year will not provide an amount sufficient to carry out the responsibilities
of the association, then pursuant to subdivision 3, the board of directors shall assess based
on the other subaccounts of the life and annuity account for the necessary additional amount,
subject to the maximum of two percent stated above for each subaccount.

(b) If the maximum assessment for an account, together with the other assets of the
association in that account, does not provide in any one calendar year in that account an
amount sufficient to carry out the responsibilities of the association, the necessary additional
funds must be assessed as soon as permitted by sections 61B.18 to 61B.32.

(c) The board may adopt general principles in the plan of operation for allocating funds
among claims, whether relating to one or more impaired or insolvent insurers, when the
maximum assessment will be insufficient to cover anticipated claims.

deleted text begin (d) If assessments under this section are inadequate to pay all obligations of the impaired
insurer that are or become due and owing, then the association shall prepare a plan approved
by the commissioner for prioritization of payments. If the association adopts general
principles in the plan of operations, the association shall use the general principles in
preparing the plan required under this paragraph. No formerly impaired or insolvent insurer
may be reinstated until all payments of or on account of the insurer's contractual obligations
by the guaranty association, along with all expenses thereof and interest on all such payments
and expenses, shall have been repaid to the guaranty association or a plan of repayment by
the insurer shall have been approved by the commissioner.
deleted text end

Sec. 41.

Minnesota Statutes 2018, section 61B.24, subdivision 7, is amended to read:


Subd. 7.

Premium rates and dividends.

A member insurer may, in determining its
premium rates and policy owner dividends as to any kind of insurancenew text begin or health maintenance
organization business
new text end within the scope of sections 61B.18 to 61B.32, consider the amount
reasonably necessary to meet its assessment obligations under sections 61B.18 to 61B.32.

Sec. 42.

Minnesota Statutes 2018, section 61B.25, subdivision 1, is amended to read:


Subdivision 1.

Adoption and amendment.

new text begin(a) new text endThe deleted text beginpurpose of thedeleted text endnew text begin association shall
submit to the commissioner a
new text end plan of operation deleted text beginisdeleted text endnew text begin and any amendments to the plan necessary
or suitable
new text end to assure the fair, reasonable, and equitable administration of the association
under sections 61B.18 to 61B.32. new text beginThe plan of operation and any new text endamendments to the plan
of operation deleted text beginmust be submitted to the commissioner anddeleted text end become effective upon the
commissioner's written approval or 30 days after submission if the commissioner has not
disapproved.

new text begin (b) new text endIf the association fails to submit new text begina new text endsuitable new text beginplan or if the association fails to submit
suitable
new text endamendments to the plan, the commissioner shall, after notice and hearing, adopt
reasonable rules necessary or advisable to implement sections 61B.18 to 61B.32. The rules
shall continue in force until modified by the commissioner or superseded by amendments
submitted by the association and approved by the commissioner.

Sec. 43.

Minnesota Statutes 2018, section 61B.25, subdivision 3, is amended to read:


Subd. 3.

Contents.

The plan of operation must, in addition to requirements specified in
sections 61B.18 to 61B.32:

(1) establish procedures for handling the assets of the association;

(2) establish the amount and method of reimbursing members of the board of directors
under section 61B.22;

(3) establish regular places and times for meetings including telephone conference calls
of the board of directors or of the executive committee;

(4) establish procedures for records to be kept of all financial transactions of the
association, its agents, and the board of directors;

(5) establish procedures for selecting the board of directors;

(6) establish any additional procedures for assessments under section 61B.24; deleted text beginand
deleted text end

(7) contain additional provisions necessary or proper for the execution of the powers
and duties of the associationdeleted text begin.deleted text endnew text begin;
new text end

new text begin (8) establish procedures whereby a director may be removed for cause, including in the
case where a member insurer director becomes an impaired or insolvent insurer; and
new text end

new text begin (9) require the board of directors to establish a policy and procedures for addressing
conflicts of interests.
new text end

Sec. 44.

Minnesota Statutes 2018, section 61B.26, is amended to read:


61B.26 DUTIES AND POWERS OF COMMISSIONER.

(a) In addition to other duties and powers in sections 61B.18 to 61B.32, the commissioner
shall:

deleted text begin (1) notify the board of directors of the existence of an impaired or insolvent insurer
within three days after a determination of impairment or insolvency is made or the
commissioner receives notice of impairment or insolvency;
deleted text end

deleted text begin (2)deleted text endnew text begin (1)new text end upon request of the board of directors, provide the association with a statement
of the premiums in this and any other appropriate states for each member insurer;new text begin and
new text end

deleted text begin (3)deleted text endnew text begin (2)new text end when an impairment is declared and the amount of the impairment is determined,
serve a demand upon the impaired insurer to make good the impairment within a reasonable
time; notice to the impaired insurer shall constitute notice to its shareholders, if any; the
failure of the insurer to promptly comply with the commissioner's demand shall not excuse
the association from the performance of its powers and duties under sections 61B.18 to
61B.32deleted text begin; anddeleted text endnew text begin.
new text end

deleted text begin (4) in a liquidation, conservation, or rehabilitation proceeding involving a domestic
insurer, be appointed as the liquidator, conservator, or rehabilitator.
deleted text end

(b) The commissioner may suspend or revoke, after notice and hearing, the certificate
of authority to transact insurance in deleted text beginthis statedeleted text endnew text begin Minnesotanew text end of any member insurer which fails
to pay an assessment when due or fails to comply with the plan of operation. As an
alternative, the commissioner may levy a forfeiture on any member insurer which fails to
pay an assessment when due. A forfeiture shall not exceed five percent of the unpaid
assessment per month, but no forfeiture shall be less than $100 per month.

(c) A final action of the board of directors or the association may be appealed to the
commissioner if the appeal is taken within 60 days of the aggrieved party's receipt of notice
of the final action being appealed. Any final action or order of the commissioner is subject
to judicial review in a court of competent jurisdiction, in the manner provided by chapter
14. A determination or decision by the commissioner under sections 61B.18 to 61B.32 is
not subject to the contested case or rulemaking provisions of chapter 14.

(d) The liquidator, rehabilitator, or conservator of an impaired insurer may notify all
interested persons of the effect of sections 61B.18 to 61B.32.

deleted text begin (e) For the purposes of sections 61B.18 to 61B.32, the commissioner may delegate any
of the powers conferred by law.
deleted text end

deleted text begin (f) Nonperformance of any of the acts specified in this section or failure to meet the
specific time limits does not affect the association, its members, or any other person as to
the person's duties and obligations.
deleted text end

Sec. 45.

new text begin [61B.265] CREDITS FOR ASSESSMENTS PAID.
new text end

new text begin (a) A member insurer may offset against its premium, franchise or income tax liability
to Minnesota an assessment described in section 61B.24, subdivision 8, to the extent of 20
percent of the amount of the assessment for each of the five calendar years following the
year in which the assessment was paid. In the event a member insurer should cease doing
business, all uncredited assessments may be credited against its premium, franchise, or
income tax liability for the year it ceases doing business.
new text end

new text begin (b) A member insurer that is exempt from taxes referenced in paragraph (a) may recoup
its assessments by a surcharge on its premiums in a sum reasonably calculated to recoup
the assessments over a reasonable period of time, as approved by the commissioner. Amounts
recouped shall not be considered premiums for any other purpose, including the computation
of gross premium tax, the medical loss ratio, or agent commission. If a member insurer
collects excess surcharges, the insurer shall remit the excess amount to the association, and
the excess amount shall be applied to reduce future assessments in the appropriate account.
new text end

new text begin (c) Any sums that are acquired by refund, pursuant to section 61B.24, subdivision 6,
from the association by member insurers, and that have been offset against premium,
franchise, or income taxes as provided in paragraph (a), shall be paid by the member insurers
to Minnesota in such manner as the tax authorities may require. The association shall notify
the commissioner that refunds have been made.
new text end

Sec. 46.

Minnesota Statutes 2018, section 61B.27, is amended to read:


61B.27 PREVENTION OF INSOLVENCIES.

(a) To aid in the detection and prevention of insurer insolvencies or impairments the
commissioner shall notify the commissioners of insurance of all the other states, territories
of the United States, and the District of Columbia when the commissioner takes one of the
following actions against a member insurer:

(i) revocation of license; deleted text beginor
deleted text end

(ii) suspension of licensedeleted text begin.deleted text endnew text begin; or
new text end

new text begin (iii) makes a formal order that the member insurer restrict its premium writing, obtain
additional contributions to surplus, withdraw from Minnesota, reinsure all or any part of its
business, or increase capital, surplus, or any other account for the security of policy owners,
contract owners, certificate holders, or creditors.
new text end

The notice must be mailed to all commissioners within 30 days following the action.

(b) deleted text beginIfdeleted text end The commissioner deleted text begindeems it appropriate, the commissioner maydeleted text endnew text begin shall alsonew text end:

(1) report to the board of directors when the commissioner has taken any of the actions
specified in paragraph (a) or has received a report from another commissioner indicating
that an action specified in paragraph (a) has been taken in another state. The report to the
board of directors must contain all significant details of the action taken or the report received
from another commissionerdeleted text begin.deleted text endnew text begin;
new text end

(2) report to the board of directors when the commissioner has reasonable cause to
believe from an examination, whether completed or in process, of a member deleted text begincompanydeleted text endnew text begin
insurer
new text end that the deleted text begincompanydeleted text endnew text begin member insurernew text end may be an impaired or insolvent insurerdeleted text begin.deleted text endnew text begin; and
new text end

(3) furnish to the board of directors the National Association of Insurance Commissioners
insurance regulatory information system ratios and listings of companies not included in
the ratios developed by the National Association of Insurance Commissioners, and the board
may use the information in carrying out its duties and responsibilities under this section.
The report and the information contained in it must be kept confidential by the board of
directors until it has been made public by the commissioner or other lawful authority.
Nothing in this provision supersedes other requirements of law.

deleted text begin (4) Notify the board if the commissioner makes a formal order requiring the company
to restrict its premium writing, obtain additional contributions to surplus, withdraw from
this state, reinsure all or any part of its business, or increase capital, surplus, or any other
account for the security of policyholders or creditors.
deleted text end

(c) The commissioner may seek the advice and recommendations of the board of directors
concerning any matter affecting the commissioner's duties and responsibilities regarding
the financial condition of member insurers and of deleted text begincompaniesdeleted text endnew text begin insurers or health maintenance
organizations
new text end seeking admission to transact insurance business in deleted text beginthis statedeleted text endnew text begin Minnesotanew text end.

(d) The board of directors may, upon majority vote, make reports and recommendations
to the commissioner upon matters germane to the solvency, liquidation, rehabilitation, or
conservation of any member insurer or germane to the solvency of a deleted text begincompanydeleted text endnew text begin health
maintenance organization
new text end seeking to do an insurance business in deleted text beginthis statedeleted text endnew text begin Minnesotanew text end. Those
reports and recommendations shall not be considered public documents.

(e) The board of directors, upon majority vote, may notify the commissioner of
information indicating that a member insurer may be an impaired or insolvent insurer.

(f) The board of directors may, upon majority vote, make recommendations to the
commissioner for the detection and prevention of insurer insolvencies.

deleted text begin (g) The board of directors may, at the conclusion of an insurer insolvency in which the
association was obligated to pay covered claims, prepare a report to the commissioner
containing the information it may have in its possession bearing on the history and causes
of the insolvency. The board shall cooperate with the boards of directors of guaranty
associations in other states in preparing a report on the history and causes of insolvency of
a particular insurer, and may adopt by reference any report prepared by those other
associations.
deleted text end

deleted text begin (h) Nonperformance by the commissioner of any of the acts specified in this section or
failure to meet the specified time limits does not affect the association, its members, or any
other person as to the person's duties and obligations.
deleted text end

deleted text begin Nothing in this section supersedes other requirements of law.
deleted text end

Sec. 47.

Minnesota Statutes 2018, section 61B.28, subdivision 3, is amended to read:


Subd. 3.

Association as creditor.

For the purpose of carrying out its obligations under
sections 61B.18 to 61B.32, the association is considered to be a creditor of the impaired or
insolvent insurer to the extent of assets attributable to covered policies, reduced by amounts
which the association recovers from the assets of the impaired or insolvent insurer as subrogee
under section 61B.23, subdivision 12. deleted text beginRecoveries by the association as subrogee under
section 61B.23, subdivision 12, from assets other than from assets of the impaired or insolvent
insurer shall not reduce or act as an offset to the association's claim as creditor of the impaired
or insolvent insurer.
deleted text end Assets of the impaired or insolvent insurer attributable to covered
policies must be used to continue all covered policies and pay all contractual obligations of
the impaired or insolvent insurer as required by sections 61B.18 to 61B.32. Assets attributable
to covered policiesnew text begin or contractsnew text end, as used in this subdivision, are that proportion of the assets
which the reserves that should have been established for those policiesnew text begin or contractsnew text end bear to
the reserves that should have been established for all policies of insurance written by the
impaired or insolvent insurer.

Sec. 48.

Minnesota Statutes 2018, section 61B.28, subdivision 5, is amended to read:


Subd. 5.

Distribution to stockholders.

new text begin (a) Prior to the termination of any liquidation,
rehabilitation, or conservation proceeding, the court may take into consideration the
contributions of the respective parties, including the association, the shareholders, contract
owners, certificate holders, enrollees and policy owners of the insolvent insurer, and any
other party with a bona fide interest, in making an equitable distribution of the ownership
rights of the insolvent insurer. In such a determination, consideration shall be given to the
welfare of the policy owners, contract owners, certificate holders, and enrollees of the
continuing or successor member insurer.
new text end

new text begin (b) new text endNo distribution to stockholders of an impaired domiciliary insurer shall be made
until the total amount of assessments levied by the association withnew text begin interest thereon for
funds expended in carrying out its powers and duties under section 61B.23 with
new text end respect to
the insurer have been fully recovered by the association.

Sec. 49.

Minnesota Statutes 2018, section 61B.28, subdivision 7, is amended to read:


Subd. 7.

Notice concerning limitations and exclusions.

(a) No person, including an
insurer, agent, or affiliate of an insurer or agent, shall offer for sale in deleted text beginthis statedeleted text endnew text begin Minnesotanew text end
a covered life insurance, annuity, or health insurance policy or contract without delivering,
either at the time of application for that policy or contract or at the time of delivery of the
policy or contract, a notice in the form specified in subdivision 8, or in a form approved by
the commissioner under paragraph (b), relating to coverage provided by the Minnesota Life
and Health Insurance Guaranty Association. The notice may be part of the application. A
copy of the notice must be given to the applicant or the policyholder.new text begin new text endnew text beginThe document shall
also be available upon request by a policy owner, contract owner, certificate holder, or
enrollee
new text endnew text begin.new text end The person offering the policy or contract shall document the fact that the notice
was given at the time of application or the fact that the notice was delivered at the time the
policy or contract was delivered. This does not require that the receipt of the notice be
acknowledged by the applicant.new text begin The distribution, delivery, or contents or interpretation of
this document does not guarantee that either the policy or the contract or the policy owner,
contract owner, certificate holder, or enrollee is covered in the event of the impairment or
insolvency of a member insurer. The description document shall be revised by the association
as amendments to sections 61B.18 to 61B.32 may require. Failure to receive this document
does not give the policy owner, contract owner, certificate holder, enrollee, or insured any
greater rights than those stated in sections 61B.18 to 61B.32.
new text end

(b) The association may prepare, and file with the commissioner for approval, a form
of notice as an alternative to the form of notice specified in subdivision 8 describing the
general purposes and limitations of this chapter. The form of notice shall:

(1) state the name, address, and telephone number of the Minnesota Life and Health
Insurance Guaranty Association;

(2) prominently warn the policy or contract holder that the Minnesota Life and Health
Insurance Guaranty Association may not cover the policy or, if coverage is available, it will
be subject to substantial limitations and exclusions and conditioned on continued residence
in the state;

new text begin (3) state the types of policies or contracts for which guaranty funds will provide coverage;
new text end

deleted text begin (3)deleted text endnew text begin (4)new text end state that the insurer and its agents are prohibited by law from using the existence
of the Minnesota Life and Health Insurance Guaranty Association for the purpose of sales,
solicitation, or inducement to purchase any form of insurancenew text begin or health maintenance
organization coverage
new text end;

deleted text begin (4)deleted text endnew text begin (5)new text end emphasize that the policy or contract holder should not rely on coverage under
the Minnesota Life and Health Insurance Guaranty Association when selecting an insurernew text begin
or health maintenance organization
new text end;

new text begin (6) explain rights available and procedures for filing a complaint to allege a violation
of any provisions of sections 61B.18 to 61B.32; and
new text end

deleted text begin (5)deleted text endnew text begin (7)new text end provide other information as directed by the commissioner. The commissioner
may approve any form of notice proposed by the association and, as to the approved form
of notice, the association may notify all member insurers by mail that the form of notice is
available as an alternative to the notice specified in subdivision 8.

(c) A policy or contract not covered by the Minnesota Life and Health Insurance Guaranty
Association or the Minnesota Insurance Guaranty Association must contain the following
notice in ten-point type, stamped in red ink or contrasting type on the policy or contract and
the application:

"THIS POLICY OR CONTRACT IS NOT PROTECTED BY THE MINNESOTA LIFE
AND HEALTH INSURANCE GUARANTY ASSOCIATION OR THE MINNESOTA
INSURANCE GUARANTY ASSOCIATION. IN THE CASE OF INSOLVENCY,
PAYMENT OF CLAIMS IS NOT GUARANTEED. ONLY THE ASSETS OF THIS
INSURERnew text begin OR HEALTH MAINTENANCE ORGANIZATIONnew text end WILL BE AVAILABLE
TO PAY YOUR CLAIM."

This section does not apply to fraternal benefit societies regulated under chapter 64B.

Sec. 50.

Minnesota Statutes 2018, section 61B.32, is amended to read:


61B.32 STAY OF PROCEEDINGS; REOPENING DEFAULT JUDGMENTS.

All proceedings in which the insolvent insurer is a party in a court in this state must be
stayed deleted text begin60deleted text endnew text begin 180new text end days from the date an order of liquidation, rehabilitation, or conservation is
final to permit proper legal action by the association on matters germane to its powers or
duties. As to judgment under a decision, order, verdict, or finding based on default, the
association may apply to have the judgment set aside by the same court that made the
judgment and may defend against the suit on the merits.

Sec. 51.

new text begin [61B.33] PROSPECTIVE APPLICATION.
new text end

new text begin Sections 61B.18 to 61B.32 shall not apply to any member insurer that is insolvent or
unable to fulfill its contractual obligations on the effective date of sections 61B.18 to 61B.32.
new text end

Sec. 52. new text beginREPEALER.
new text end

new text begin Minnesota Statutes 2018, sections 61B.19, subdivision 4; 61B.20, subdivisions 3, 8, and
10; and 61B.23, subdivision 2,
new text end new text begin are repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: 20-5726

61B.19 PURPOSE; SCOPE; LIMITATION OF COVERAGE; LIMITATION OF BENEFITS; CONSTRUCTION.

Subd. 4.

Limitation of benefits.

The benefits for which the association may become liable shall in no event exceed the lesser of:

(1) the contractual obligations for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer; or

(2) subject to the limitation in clause (5), with respect to any one life, regardless of the number of policies or contracts:

(i) $500,000 in life insurance death benefits, but not more than $130,000 in net cash surrender and net cash withdrawal values for life insurance;

(ii) $500,000 in health insurance benefits, including any net cash surrender and net cash withdrawal values;

(iii) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values;

(iv) $410,000 in present value of annuity benefits for structured settlement annuities or for annuities in regard to which periodic annuity benefits, for a period of not less than the annuitant's lifetime or for a period certain of not less than ten years, have begun to be paid, on or before the date of impairment or insolvency; or

(3) subject to the limitations in clauses (5) and (6), with respect to each individual resident participating in a retirement plan, except a defined benefit plan, established under section 401, 403(b), or 457 of the Internal Revenue Code of 1986, as amended through December 31, 1992, covered by an unallocated annuity contract, or the beneficiaries of each such individual if deceased, in the aggregate, $250,000 in net cash surrender and net cash withdrawal values;

(4) where no coverage limit has been specified for a covered policy or benefit, the coverage limit shall be $500,000 in present value;

(5) in no event shall the association be liable to expend more than $500,000 in the aggregate with respect to any one life under clause (2), items (i), (ii), (iii), (iv), and clause (4), and any one individual under clause (3);

(6) in no event shall the association be liable to expend more than $10,000,000 with respect to all unallocated annuities of a retirement plan, except a defined benefit plan, established under section 401, 403(b), or 457 of the Internal Revenue Code of 1986, as amended through December 31, 1992. If total claims from a plan exceed $10,000,000, the $10,000,000 shall be prorated among the claimants;

(7) for purposes of applying clause (2)(ii) and clause (5), with respect only to health insurance benefits, the term "any one life" applies to each individual covered by a health insurance policy;

(8) where covered contractual obligations are equal to or less than the limits stated in this subdivision, the association will pay the difference between the covered contractual obligations and the amount credited by the estate of the insolvent or impaired insurer, if that amount has been determined or, if it has not, the covered contractual limit, subject to the association's right of subrogation;

(9) where covered contractual obligations exceed the limits stated in this subdivision, the amount payable by the association will be determined as though the covered contractual obligations were equal to those limits. In making the determination, the estate shall be deemed to have credited the covered person the same amount as the estate would credit a covered person with contractual obligations equal to those limits; or

(10) the following illustrates how the principles stated in clauses (8) and (9) apply. The example illustrated concerns hypothetical claims subject to the limit stated in clause (2)(iii). The principles stated in clauses (8) and (9), and illustrated in this clause, apply to claims subject to any limits stated in this subdivision.

CONTRACTUAL OBLIGATIONS OF:

$100,000
Estate Guaranty Association
0% recovery from estate $ 0 $100,000
25% recovery from estate $25,000 $75,000
50% recovery from estate $50,000 $50,000
75% recovery from estate $75,000 $25,000
$250,000
Estate Guaranty Association
0% recovery from estate $ 0 $250,000
25% recovery from estate $62,500 $187,500
50% recovery from estate $125,000 $125,000
75% recovery from estate $187,500 $62,500
$300,000
Estate Guaranty Association
0% recovery from estate $ 0 $250,000
25% recovery from estate $75,000 $187,500
50% recovery from estate $150,000 $125,000
75% recovery from estate $225,000 $62,500

61B.20 DEFINITIONS.

Subd. 3.

Annuity contracts.

"Annuity contracts" means annuity contracts as described in section 60A.06, subdivision 1, clause (4).

Subd. 8.

Current contractual obligation.

"Current contractual obligation" means a contractual obligation which has become due and owing for: (1) death benefits; (2) health insurance benefits; (3) periodic annuity benefit or supplemental contract payments, provided the annuitant or payee elected the commencement of the periodic annuity benefit or supplemental contract payments before the date of impairment or insolvency, or if the annuitant or payee elected the commencement of the periodic annuity benefit or supplemental contract payments after the date of impairment or insolvency, (i) the election was made pursuant to a written plan, such as a retirement plan, which existed before the impairment or insolvency, or (ii) commencement of the periodic annuity benefit or supplemental contract payments was elected at or after the annuitant's attainment of age 65 and, in either case, was for a payment period of not less than the annuitant's lifetime or a period certain of not less than ten years; or (4) cash surrender or loan values or endowment proceeds or any portion thereof, but only if, and to the extent that, an emergency or hardship such as, but not limited to, the funds being reasonably necessary to pay education, medical, home purchase, or essential living expenses, is established in accordance with standards proposed by the association and approved by the commissioner. The hardship standards must also provide for an individual appeal to the board of directors in those circumstances which, while not meeting the standards approved by the commissioner, may truly be a hardship.

Subd. 10.

Health insurance.

"Health insurance" means accident and health insurance as described in section 60A.06, subdivision 1, clause (5)(a), long-term care insurance, credit accident and health insurance regulated under chapter 62B, and subscriber contracts issued by a nonprofit health service plan corporation operating under chapter 62C.

61B.23 POWERS AND DUTIES OF ASSOCIATION.

Subd. 2.

Impaired insurer not paying claims.

(a) If a member insurer is an impaired insurer, whether domestic, foreign, or alien, and the insurer is not paying claims in a timely manner as required under section 72A.201, based in whole or in part on the insurer's financial inability to pay claims then subject to the preconditions specified in paragraph (b), the association shall, in its discretion, either:

(1) take any of the actions specified in subdivision 1, subject to the conditions in that subdivision; or

(2) provide for prompt payment of current contractual obligations.

(b) The association is subject to the requirements of paragraph (a) only if the commissioner has begun a formal administrative or judicial proceeding which seeks to suspend the authority of the impaired insurer to write new business in this state and to require the impaired insurer to cooperate with the association in the administration of claims. The suspension of the impaired insurer's authority to write new business in this state shall continue until all payments of or on account of the impaired insurer's contractual obligations paid by the association, along with all expenses thereof and interest on these payments and expenses, shall have been repaid to the association or a plan of repayment of the payments, expenses, and interest by the impaired insurer shall have been approved by the association. If the commissioner ceases to seek an administrative or judicial order suspending the impaired insurer's authority to write new business in this state within 90 days, or is denied the order, the association shall not be required to proceed under this subdivision unless:

(1) the impaired insurer has been placed under an order of rehabilitation or conservation by a court of competent jurisdiction; and

(2) the court has approved and entered an order providing that the rehabilitation or conservation proceedings shall not be dismissed, and neither the impaired insurer nor its assets shall be returned to the control of its shareholders or private management, and the impaired insurer is prohibited from soliciting or accepting new business or having a suspended or revoked license restored until at least one of the following events has occurred:

(i) all payments of or on account of the impaired insurer's contractual obligations paid by all the affected guaranty associations, along with expenses thereof and interest on all of those payments and expenses incurred by those guaranty associations, have been repaid to them; or

(ii) a plan of repayment by the impaired insurer has been approved by all the affected guaranty associations.

(c) The association shall endeavor to obtain access to those records of the impaired insured as are needed for the association to discharge its obligations and, if requested by the association, the commissioner will assist the association in obtaining access to those records. If the association is not given access to the necessary records, the association shall be relieved of its responsibility to make benefit payments until the time it is given access to those records.

(d) If the impaired insurer is subsequently determined to be insolvent by a court of competent jurisdiction in its state of domicile and is placed in liquidation, the association shall then proceed as provided in subdivision 3.