Minnesota Session Laws - 1985, Regular Session

  

                         Laws of Minnesota 1985 

                         CHAPTER 43-H.F.No. 517 
           An act relating to insurance; authorizing the use of 
          funding agreements; prescribing powers of the 
          commissioner; proposing coding for new law in 
          Minnesota Statutes, chapter 61A. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [61A.276] [FUNDING AGREEMENTS.] 
     Subdivision 1.  [AUTHORIZATION.] An insurer authorized to 
deliver or issue for delivery annuity contracts in this state 
may deliver or issue for delivery one or more funding 
agreements.  The issuance or delivery of these funding 
agreements shall not be deemed to be doing a kind of business 
specifically authorized by section 60A.06.  Notwithstanding the 
definition of contracts of life and endowment insurance or of 
annuities under section 60A.06, subdivision 1, clause (4) or the 
definition of life insurance company under section 61A.01, the 
issuance or delivery of a funding agreement by an insurer in 
this state constitutes doing an insurance business in the state. 
    Subd. 2.  [ISSUANCE.] The funding agreements may be issued 
to:  (1) individuals; or (2) persons authorized by a state or 
foreign country to engage in an insurance business or 
subsidiaries or affiliates of these persons; or (3) entities 
other than individuals and other than persons authorized to 
engage in an insurance business, and subsidiaries and affiliates 
of these persons, for the following purposes:  (i) to fund 
benefits under any employee benefit plan as defined in the 
Employee Retirement Income Security Act of 1974, as now or 
hereafter amended, maintained in the United States or in a 
foreign country; (ii) to fund the activities of any organization 
exempt from taxation under section 501(c) of the Internal 
Revenue Code of 1954, as now or hereafter amended, or of any 
similar organization in any foreign country; (iii) to fund any 
program of any state, foreign country or political subdivision 
thereof, or any agency or instrumentality thereof; or (iv) to 
fund any agreement providing for periodic payments in 
satisfaction of a claim.  No funding agreement shall be issued 
in an amount less than $1,000,000.  
    Subd. 3.  [GENERAL OPERATION.] No amounts shall be 
guaranteed or credited under a funding agreement except upon 
reasonable assumptions as to investment income and expenses and 
on a basis equitable to all holders of funding agreements of a 
given class.  The funding agreements shall not provide for 
payments to or by the insurer based on mortality or morbidity 
contingencies. 
     Subd. 4.  [ALLOCATION TO SEPARATE ACCOUNTS.] Amounts paid 
to the insurer, and proceeds applied under optional modes of 
settlement, under the funding agreements may be allocated by the 
insurer to one or more separate accounts pursuant to section 
61A.275 or 61A.14.  Notwithstanding the provisions of section 
61A.275, subdivision 1, a separate account for funding agreement 
proceeds may include funds from any source authorized to 
purchase a funding agreement pursuant to this section. 
    Subd. 5.  [RULES.] The commissioner may adopt rules 
relating to (1) the standards to be followed in the approval of 
forms of the funding agreements, (2) the reserves to be 
maintained by insurers issuing the funding agreements, (3) the 
accounting and reporting of funds credited under the funding 
agreements, (4) the disclosure of information to be given to 
holders and prospective holders of the funding agreements, and 
(5) the qualification and compensation of persons selling the 
funding agreements on behalf of insurers.  Notwithstanding any 
other provision of law, the commissioner has sole authority to 
regulate the issuance and sale of the funding agreements, 
including the persons selling the funding agreements on behalf 
of insurers. 
    Approved April 29, 1985