Minnesota Session Laws - 1992, Regular Session

  

                         Laws of Minnesota 1992 

                        CHAPTER 520-H.F.No. 1980 
           An act relating to insurance; clarifying interest on 
          accidental death benefits; regulating the structure 
          and functions of the Minnesota automobile insurance 
          plan; amending Minnesota Statutes 1990, sections 
          61A.011, by adding a subdivision; 65B.01; 65B.02, 
          subdivisions 1, 4, and 7; 65B.03, subdivision 1; 
          65B.04, subdivisions 3, 4, and by adding a 
          subdivision; 65B.05; 65B.06; 65B.07, subdivision 4; 
          65B.08, subdivisions 1 and 2; 65B.09; 65B.10; and 
          65B.12, subdivision 1; repealing Minnesota Statutes 
          1990, sections 65B.04, subdivisions 1 and 2; and 
          65B.07, subdivision 2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, section 61A.011, is 
amended by adding a subdivision to read: 
    Subd. 7.  [ACCIDENTAL DEATH BENEFITS.] Payments of 
accidental death benefits under an individual or group policy, 
whether payable in connection with a separate policy issued 
solely to provide that type of coverage or otherwise, are 
subject to this section.  If the applicable rate of interest 
cannot be determined as provided in this section, the rate of 
interest for purposes of subdivision 1 is the rate provided in 
section 549.09, subdivision 1, paragraph (c). 
    Sec. 2.  Minnesota Statutes 1990, section 65B.01, is 
amended to read: 
    65B.01 [PURPOSES, CONSTRUCTION AND SCOPE.] 
    Subdivision 1.  [PURPOSE.] The purposes of Laws 1971, 
chapter 813 sections 65B.01 to 65B.12 are to provide the 
guarantee that automobile insurance coverage will be available 
to any person who is unable to procure such insurance through 
ordinary methods by providing a facility for the placement of 
automobile insurance risks with insurers, and to preserve to the 
public the benefits of price competition by encouraging maximum 
use of the normal private insurance system.  Laws 1971, chapter 
813 Sections 65B.01 to 65B.12 shall be liberally construed to 
effect the purposes stated.  
    Subd. 2.  [SCOPE AND MEMBERSHIP.] Every insurer authorized 
to write and writing automobile bodily injury liability, 
property damage liability or physical damage insurance in this 
state, as a condition precedent to being licensed or to retain 
such license to write such insurance in this state, shall be a 
member of the facility and shall participate therein under the 
terms and provisions of Laws 1971, chapter 813.  Every such 
insurer shall be a member of such a facility on a date specified 
by the commissioner of commerce sections 65B.01 to 65B.12. 
    Sec. 3.  Minnesota Statutes 1990, section 65B.02, 
subdivision 1, is amended to read: 
    Subdivision 1.  Unless the language or context clearly 
indicates a different meaning is intended, the following terms 
shall, for the purposes of Laws 1971, chapter 813 sections 
65B.01 to 65B.12, have the meanings ascribed to them. 
    Sec. 4.  Minnesota Statutes 1990, section 65B.02, 
subdivision 4, is amended to read: 
    Subd. 4.  "Participating Member" means an insurer who is 
required by Laws 1971, chapter 813 sections 65B.01 to 65B.12, to 
be a member of the facility and who in the second preceding 
calendar year, has written automobile insurance in this state. 
    Sec. 5.  Minnesota Statutes 1990, section 65B.02, 
subdivision 7, is amended to read: 
    Subd. 7.  "Participation ratio" means the ratio of the 
participating member's Minnesota premiums, or other measure of 
business written approved by the commissioner, in relation to 
the comparable statewide totals for all participating members. 
    (1) For private passenger nonfleet automobile insurance 
coverages the participation ratio shall be based on voluntary 
car years written in this state for the calendar year ending 
December 31 of the second prior year, as reported by the 
statistical agent of each participating member as private 
passenger nonfleet exposures. 
    (2) For insurance coverages on all other automobiles, 
including insurance for fleets, commercial vehicles, public 
vehicles and garages, the ratio shall be based on the total 
Minnesota gross, direct automobile insurance premiums written, 
including both policy and membership fees less return premiums 
and premiums on policies not taken, without including 
reinsurance assumed and without deducting reinsurance ceded, and 
less the amount of such premiums reported as received for 
insurance on private passenger nonfleet vehicles, for the 
calendar year ending December 31 of the second prior year. 
    (3) For the purpose of determining each participating 
member's responsibility for expenses and assessments, the ratio 
shall be based on each participating member's total Minnesota 
car years and gross, direct premiums written, including both 
policy and membership fees less return premiums and premiums on 
policies not taken, without including reinsurance assumed and 
without deducting reinsurance ceded, for the calendar year 
ending December 31 of the second prior year, provided, however, 
that the preliminary determination of each participating 
member's responsibility for expenses and assessments may use the 
calendar year ending December 31 of the third prior year. 
    Sec. 6.  Minnesota Statutes 1990, section 65B.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MEMBERSHIP.] The commissioner shall direct 
that An election must be held among every insurer subject to 
this chapter sections 65B.01 to 65B.12, for the election of 
insurer representatives on the facility governing committee.  
The governing committee shall be made up of nine individuals, 
five of whom shall be elected by participating members of the 
facility and four who shall be public members.  Public members 
may include licensed insurance agents.  The public members shall 
be appointed by the commissioner.  Each insurer member of the 
governing committee shall be a participating member.  The term 
of office for members of the governing committee is two years. 
    Each participating member serving on the governing 
committee shall be represented by a salaried employee of that 
participating member, and not more than one participating member 
in a group under the same management shall serve on the 
governing committee at the same time.  
     Sec. 7.  Minnesota Statutes 1990, section 65B.04, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [PLAN.] The plan of operation consists of the 
operation procedures of the facility. 
    Sec. 8.  Minnesota Statutes 1990, section 65B.04, 
subdivision 3, is amended to read: 
    Subd. 3.  [AMENDMENTS.] The plan of operation may be 
amended by a majority vote of the governing committee, the 
approval of the commissioner and ratification by a majority of 
the participating members.  An order by the commissioner 
disapproving an amendment to the plan of operation must be 
issued within 30 days of receipt by the commissioner of the 
proposed amendment, certified by the governing committee as 
having been adopted by that committee by a majority vote, or the 
amendment shall be deemed approved by the commissioner.  An 
order of disapproval may be reviewed as provided in subdivision 
1 appealed as provided in chapter 14.  
    Sec. 9.  Minnesota Statutes 1990, section 65B.04, 
subdivision 4, is amended to read: 
    Subd. 4.  [ADHERENCE TO PLAN.] Every insurer authorized to 
write and writing automobile bodily injury liability, property 
damage liability or physical damage insurance in this state, as 
a condition to maintaining its authorization to transact the 
business of insurance in this state, shall adhere to the plan of 
operation.  
    Sec. 10.  Minnesota Statutes 1990, section 65B.05, is 
amended to read: 
    65B.05 [POWER OF FACILITY, GOVERNING COMMITTEE.] 
    The governing committee shall have the power to direct the 
operation of the facility in all pursuits consistent with the 
purposes and terms of Laws 1971, chapter 813 sections 65B.01 to 
65B.12, including but not limited to the following: 
    (1) To sue and be sued in the name of the facility and to 
assess each participating member in accord with its 
participation ratio to pay any judgment against the facility as 
an entity, provided, however, that no judgment against the 
facility shall create any liabilities in one or more 
participating members disproportionate to their participation 
ratio or an individual representing participating members on the 
governing committee. 
    (2) To delegate ministerial duties, to hire a manager and 
to contract for goods and services from others. 
    (3) To assess participating members on the basis of 
participation ratios to cover anticipated costs of operation and 
administration of the facility. 
    (4) To impose limitations on cancellation or nonrenewal by 
participating members of insureds covered pursuant to placement 
through the facility in addition to the limitations imposed by 
chapter 72A and sections 65B.13 to 65B.21. 
    Sec. 11.  Minnesota Statutes 1990, section 65B.06, is 
amended to read: 
    65B.06 [DISTRIBUTION OF RISKS; COVERAGE.] 
    Subdivision 1.  With respect to private passenger, nonfleet 
automobiles, the facility shall provide for the equitable 
distribution of qualified applicants to participating members in 
accordance with the participation ratio. 
    Subd. 2.  With respect to private passenger, nonfleet 
automobiles, the facility shall provide for the issuance of 
policies of automobile insurance by participating members with 
coverage as follows: 
    (1) Bodily injury liability and property damage liability 
coverage in the minimum amounts specified in section 65B.49, 
subdivision 3; 
    (2) Uninsured motorists coverage and underinsured motorist 
coverages as required by section 65B.49, subdivision 4 
subdivisions 3a and 4a; 
    (3) A reasonable selection of higher limits of liability 
coverage up to $50,000 because of bodily injury to or death of 
one person in any one accident and, subject to such limit for 
one person, up to $100,000 because of bodily injury to or death 
of two or more persons in any one accident, and up to $25,000 
because of injury to or destruction of property of others in any 
one accident, or higher limits of liability coverage as 
recommended by the governing committee and approved by the 
commissioner; 
    (4) Basic economic loss benefits, as required by section 
65B.44, and other optional coverages as recommended by the 
governing committee and approved by the commissioner; and 
    (5) Automobile physical damage coverage, including coverage 
of loss by collision, subject to optional deductibles deductible 
options. 
    No coverage available under clause (5) shall be provided by 
a carrier that has been licensed to provide the coverage made 
available under clause (1) or (2), unless the qualified 
applicant has requested coverage pursuant to clause (1) or (2) 
as well as physical damage coverage.  If a qualified applicant 
requests only physical damage coverage, the coverage shall be 
provided by an insurer not writing the coverage specified in 
clauses (1) and (2). 
    Subd. 3.  With respect to all automobiles not included in 
subdivisions 1 and 2, the facility shall provide: 
    (1) Only the insurance coverage required by law; 
    (2) For the equitable distribution of qualified applicants 
for this coverage among the participating members in accord with 
the applicable participation ratio; and 
    (3) For a school district or contractor transporting school 
children under contract with a school district, that amount of 
automobile liability insurance coverage, not to exceed 
$1,000,000, required by the school district by resolution or 
contract, or that portion of such $1,000,000 of coverage for 
which the school district or contractor applies and for which it 
is eligible under section 65B.10. 
    Subd. 4.  Coverage made available under this section shall 
be the standard automobile policy and endorsement forms, as 
approved by the commissioner, with such changes, additions and 
amendments as are adopted by the governing committee and 
approved by the commissioner. 
    Sec. 12.  Minnesota Statutes 1990, section 65B.07, 
subdivision 4, is amended to read: 
    Subd. 4.  The facility shall provide an annual financial 
statements statement on the facility's operation to the 
commissioner, and shall provide an annual report of operations 
to the commissioner and to all participating members and to the 
commissioner so requesting.  
    Sec. 13.  Minnesota Statutes 1990, section 65B.08, 
subdivision 1, is amended to read: 
    Subdivision 1.  [FILING.] As agent for participating 
members, the facility shall file with the commissioner all 
manuals of classification, all manuals of rules and rates, all 
rating plans, and any modifications of same, proposed for use 
for private passenger nonfleet automobile insurance placed 
through the facility.  The classifications, rules and rates and 
any amendments thereto shall be subject to prior written 
approval by the commissioner.  Rates, surcharge points, and 
increased limits factors filed by the facility shall not be 
excessive, inadequate, or unfairly discriminatory.  No other 
entity, service or organization shall make filings for the 
facility or the participating members to apply to insurance 
placed through the facility. 
    Sec. 14.  Minnesota Statutes 1990, section 65B.08, 
subdivision 2, is amended to read: 
    Subd. 2.  [USE OF RATES.] Every participating member shall 
be authorized to use the rates and rules approved by the 
commissioner for use by the facility on business placed through 
the facility, and shall use no other rates on private passenger 
nonfleet automobiles placed through the facility.  
    Sec. 15.  Minnesota Statutes 1990, section 65B.09, is 
amended to read: 
    65B.09 [AGENTS.] 
    Subdivision 1.  [AGENTS' RESPONSIBILITY.] Every agent 
person licensed under section 60A.17 who is authorized to 
solicit, negotiate or effect automobile insurance on behalf of 
any participating member shall: 
    (1) Offer to place coverage through the facility for any 
qualified applicant who is ineligible or unacceptable for 
coverage in the insurer or insurers for whom the agent is 
authorized to solicit, negotiate or effect automobile 
insurance.  Provided, that the failure of an agent to make such 
an offer to a qualified applicant shall not subject the agent to 
any liability to the applicant; 
    (2) Forward to the facility all applications and any 
deposit premiums which are required by the plan of operation, 
rules and procedures of the facility, if the qualified applicant 
accepts the offer to have coverage placed through the facility; 
    (3) Be entitled to receive a commission compensation for 
placing insurance through the facility at the uniform rates of 
commission compensation as provided in the plan of operation, 
and all participating members shall be entitled to pay 
commissions to such agents compensation.  
    Subd. 2.  [AGENTS' CONTRACTS.] A participating member may 
not include the premiums and losses incurred from risks insured 
through the facility in determining the loss ratio of any of its 
agents, or otherwise use the experience from such risks as cause 
for altering the relationship between the participating member 
and its agent.  
    Sec. 16.  Minnesota Statutes 1990, section 65B.10, is 
amended to read: 
    65B.10 [ELIGIBILITY.] 
    Subdivision 1.  [ELIGIBILITY FOR COVERAGE.] To be eligible 
for coverage through the facility an otherwise qualified 
applicant must have been rejected, canceled or refused renewal 
with respect to automobile insurance by a participating member.  
    Subd. 2.  [TERMINATION OF ELIGIBILITY.] Eligibility for 
placement through the facility will terminate if an insured is 
offered equivalent coverage in the voluntary market at a rate 
lower than the facility rate.  If the participating member that 
is required to provide coverage by the facility makes such an 
offer after giving 30 days' advance written notice to the agent 
of record before making the offer, the participating member 
shall have no further obligation to the agent of record.  
    Subd. 3.  [REVIEW OF INSUREDS.] At least annually, 
every participating member shall review every applicant which it 
insures through the facility and determine whether or not such 
applicant is acceptable for voluntary insurance at a rate lower 
than the facility rate.  If such applicant is acceptable, the 
participating member shall make an offer to insure the applicant 
under voluntary coverage at such lower rate.  
    Sec. 17.  Minnesota Statutes 1990, section 65B.12, 
subdivision 1, is amended to read: 
    Subdivision 1.  Any participating member, applicant or 
person insured under a policy placed through the facility may 
request a formal hearing and ruling by the governing committee 
on any alleged violation of the plan of operation or any alleged 
improper act or ruling of the facility.  The request for hearing 
must be filed within 30 days after the date of the alleged act 
or decision.  
     Sec. 18.  [REPEALER.] 
     Minnesota Statutes 1990, sections 65B.04, subdivisions 1 
and 2; and 65B.07, subdivision 2, are repealed. 
     Sec. 19.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment 
for accidental death benefits payable on deaths that occur on or 
after that date. 
    Presented to the governor April 17, 1992 
    Signed by the governor April 27, 1992, 1:49 p.m.