Minnesota Session Laws - 1987, Regular Session

  

                         Laws of Minnesota 1987 

                         CHAPTER 92-S.F.No. 482 
           An act relating to insurance; regulating terminations 
          of certain agency contracts; requiring companies to 
          attempt to rehabilitate agents before terminating 
          their appointment; regulating these rehabilitation 
          agreements; amending Minnesota Statutes 1986, section 
          60A.171, subdivisions 1, 3, and by adding a 
          subdivision. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 60A.171, 
subdivision 1, is amended to read:  
    Subdivision 1.  After an agency contractual relationship 
has been in effect for a period of three years an insurance 
company writing fire or casualty loss insurance in this state 
may not terminate the agency contractual relationship with any 
appointed agent unless the company has attempted to rehabilitate 
the agent as provided in subdivision 3a and gives the agent 
notice in writing of the termination at least three months in 
advance. 
    Sec. 2.  Minnesota Statutes 1986, section 60A.171, 
subdivision 3, is amended to read:  
    Subd. 3.  No new business or increases in liability on 
renewal or in force business shall be written by the agent for 
the company after notice of the effective date of the 
termination without the written approval of the company, or a 
limited contract.  The agent may increase liability on renewal 
or in force business for not more than one year for the insured 
after the effective date of the termination if the increased 
liability meets the current underwriting standards of the 
company. 
     Sec. 3.  Minnesota Statutes 1986, section 60A.171, is 
amended by adding a subdivision to read: 
    Subd. 3a.  (a) Following proper notice as required under 
subdivision 1, and prior to the effective date of termination of 
the agency contract, in an effort to avoid termination, the 
company shall negotiate in good faith in an effort to reach 
mutual agreement with the agent on a written plan for 
rehabilitation. 
    (b)  The rehabilitation plan must be in writing and must 
contain the following elements: 
    (1) identification by the company of the problem areas 
which need rehabilitation; 
    (2) what the agent must do to avoid termination; 
    (3) how the company intends to assist the agent to avoid 
termination; 
    (4) the mutually agreed upon corrective action to be 
undertaken by the agent and the specific target dates for 
accomplishment; 
    (5) periodic meeting dates at which the status of 
rehabilitation will be reviewed; and 
    (6) the term of the written plan which must extend for at 
least one year after the notice of termination. 
    (c) All agency contracts in existence at the time of the 
effective date of this section are subject to the rehabilitation 
requirement under subdivision 1.  The rehabilitation plan need 
not be incorporated into the agency contract. 
     Sec. 4.  [EFFECTIVE DATE.] 
    Sections 1, 2, and 3 are effective the day following 
enactment. 
    Approved May 12, 1987