Minnesota Session Laws - 1990, Regular Session

  

                         Laws of Minnesota 1990 

                        CHAPTER 457-S.F.No. 1995 
           An act relating to insurance; property and casualty; 
          regulating terminations of agents; prescribing a 
          penalty; proposing coding for new law in Minnesota 
          Statutes, chapter 60A. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  [60A.176] [DEFINITIONS.] 
    Subdivision 1.  [APPLICATION.] The definitions in this 
section apply to sections 1 and 2. 
    Subd. 2.  [AGENCY.] "Agency" means an agency contractual 
relationship that has been in effect five years or more. 
    Subd. 3.  [AGENT.] "Agent" means an agent who is not an 
employee of the insurer and who writes 80 percent or more of the 
agent's business through one insurer or its subsidiaries. 
    Subd. 4.  [INSURER.] "Insurer" means an insurance company 
writing property or casualty loss insurance in this state 
through agents. 
   Sec. 2.  [60A.177] [INVOLUNTARY TERMINATION OF AN AGENT BY 
THE INSURER.] 
    Subdivision 1.  [TERMINATION REVIEW PROCESS.] An insurer 
shall establish a termination review process for an agent 
involuntarily terminated by the insurer.  The review process is 
available for use at the option of the agent.  The review 
process must be completed within 15 days of the request or 
before the date of termination, whichever is later. 
    Subd. 2.  [NOTICE; HEARING.] If an agent is terminated by 
an insurer, the agent may request a hearing before the board of 
review.  If an insurer initiates the termination of an agent's 
agreement, the written notice of termination must advise the 
agent of the agent's right to a hearing before the board of 
review.  Upon receipt of an agent's request for a hearing, the 
commissioner shall establish a hearing date within 30 days of 
the request or longer with the approval of the agent and the 
insurer.  The agent and the insurer shall be notified in writing 
of the date, time, and place of the hearing. 
    Subd. 3.  [BOARD OF REVIEW.] A three-member board of review 
shall be selected from a list of ten agents and ten insurer 
representatives compiled by the commissioner.  One member shall 
be selected by the agent, one by the insurer, and one by the 
commissioner.  The board member selected by the agent may not be 
a relative of the agent.  The board members selected by the 
agent and insurer may not be presently or formerly associated 
with an insurer represented by the agent.  An insurer is immune 
from civil liability to the agent for disclosures made at the 
hearing.  This immunity does not extend to disclosures made in 
bad faith or with knowledge of their falseness. 
    Subd. 4.  [BOARD'S DETERMINATION.] Upon completion of the 
hearing, the board of review shall determine if the termination 
of the agent's agreement is justified.  If in the opinion of the 
board of review an involuntary termination is not justified, and 
in the absence of a reasonable contractual financial provision 
for termination as determined by the commissioner, the 
commissioner shall order the insurer to pay an amount of 
compensation that the commissioner considers appropriate to the 
agent. 
    If in the opinion of the board of review a voluntary 
termination was not voluntary and the insurer is not justified 
in terminating the agent's agreement, and in the absence of a 
reasonable contractual financial provision for termination as 
determined by the commissioner, the commissioner shall order the 
insurer to pay an amount of compensation that the commissioner 
considers appropriate to the agent. 
    Subd. 5.  [APPEAL.] An order of the commissioner or a 
determination of the board of review under subdivision 4 may be 
appealed to district court by either party for a trial de novo.  
If the insurer appeals and the agent prevails, the insurer is 
responsible for the agent's legal fees as approved by the court. 
    Subd. 6.  [CIVIL PENALTY.] A person who intimidates or 
coerces a member of the board of review is subject to a civil 
penalty imposed by the commissioner in an amount not to exceed 
$25,000. 
    Subd. 7.  [EXEMPTION.] This section does not apply to an 
agent whose license has expired, is revoked, or is currently 
under suspension. 
    Sec. 3.  [EFFECTIVE DATE.] 
    Sections 1 and 2 are effective the day following final 
enactment. 
    Presented to the governor April 12, 1990 
    Signed by the governor April 16, 1990, 4:21 p.m.