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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1992 

                        CHAPTER 564-H.F.No. 1681 
           An act relating to commerce; regulating data 
          collection, enforcement powers, premium finance 
          agreements, temporary capital stock of mutual life 
          companies, surplus lines insurance, conversion 
          privileges, coverages, rehabilitations and 
          liquidations, the comprehensive health insurance plan, 
          and claims practices; requiring insurers to notify all 
          covered persons of cancellations of group coverage; 
          regulating continuation privileges and automobile 
          premium surcharges; regulating unfair or deceptive 
          practices; regulating insurance agent licensing and 
          education; carrying out the intent of the legislature 
          to make uniform the statutory service of process 
          provisions under the jurisdiction of the department of 
          commerce; regulating annual reports on credit 
          insurance; making various technical changes; amending 
          Minnesota Statutes 1990, sections 45.012; 45.027, by 
          adding subdivisions; 45.028, subdivision 1; 46.03; 
          48.185, subdivision 7; 59A.08, subdivisions 1 and 4; 
          59A.11, subdivision 4; 59A.12, subdivision 1; 60A.02, 
          subdivision 7, and by adding a subdivision; 60A.03, 
          subdivision 2; 60A.07, subdivisions 1 and 10; 60A.12, 
          subdivision 4; 60A.1701, subdivisions 3 and 7; 60A.19, 
          subdivision 4; 60A.201, subdivision 4; 60A.203; 
          60A.206, subdivision 3; 60A.21, subdivision 2; 60A.23, 
          subdivision 8; 60B.03, by adding a subdivision; 
          60B.15; 60B.17, subdivision 1; 61A.011, by adding a 
          subdivision; 62A.10, subdivision 1; 62A.146; 62A.17, 
          subdivision 2; 62A.21, subdivisions 2a and 2b; 62A.30, 
          subdivision 1; 62A.41, subdivision 4; 62A.54; 62B.07, 
          by adding a subdivision; 62C.142, subdivision 2a; 
          62C.17, subdivision 5; 62D.101, subdivision 2a; 
          62D.22, subdivision 8; 62E.02, subdivision 23; 62E.10, 
          subdivision 1; 62E.11, subdivision 9; 62E.14, by 
          adding a subdivision; 62E.15, subdivision 4, and by 
          adding subdivisions; 62E.16; 62H.01; 64B.33; 64B.35, 
          subdivision 2; 65A.29, subdivision 11; 65B.133, 
          subdivision 4; 71A.02, subdivision 3; 72A.07; 72A.125, 
          subdivision 2; 72A.20, subdivisions 23, and by adding 
          a subdivision; 72A.201, subdivision 3; 72A.22, 
          subdivision 5; 72A.37, subdivision 2; 72A.43, 
          subdivision 2; 72B.02, by adding a subdivision; 
          72B.03, subdivision 2; 72B.04, subdivision 6; 80A.27, 
          subdivisions 7 and 8; 80C.20; 82.31, subdivision 3; 
          82A.22, subdivisions 1 and 2; 83.39, subdivisions 1 
          and 2; 270B.07, subdivision 1; 332.15, subdivision 4; 
          and 543.08; Minnesota Statutes 1991 Supplement, 
          sections 45.027, subdivisions 1, 2, 5, 6, and 7; 
          60A.13, subdivision 3a; 60D.15, subdivision 4; 60D.17, 
          subdivision 4; 62E.10, subdivision 9; 62E.12; 72A.201, 
          subdivision 8; 82B.15, subdivision 3; 332.55; and 
          345.485; Laws 1991, chapter 233, section 111; 
          proposing coding for new law in Minnesota Statutes, 
          chapters 45; 60A; 62A; and 62I; proposing coding for 
          new law as Minnesota Statutes, chapter 60K; repealing 
          Minnesota Statutes 1990, sections 60A.05; 60A.051; 
          60A.17, subdivisions 1, 1a, 1b, 1c, 2c, 2d, 3, 5, 5b, 
          6, 6b, 6c, 6d, 7a, 8, 8a, 9a, 10, 11, 12, 13, 14, 15, 
          16, 17, 18, 19, 20, and 21; 65B.70; and 72A.13, 
          subdivision 3; Minnesota Statutes 1991 Supplement, 
          section 60A.17, subdivision 1d. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1
    Section 1.  Minnesota Statutes 1990, section 45.012, is 
amended to read: 
    45.012 [COMMISSIONER.] 
    (a) The department of commerce is under the supervision and 
control of the commissioner of commerce.  The commissioner is 
appointed by the governor in the manner provided by section 
15.06.  
    (b) Data that is received by the commissioner or the 
commissioner's designee by virtue of membership or participation 
in an association, group, or organization that is not otherwise 
subject to chapter 13 is confidential or protected nonpublic 
data but may be shared with the department employees as the 
commissioner considers appropriate.  The commissioner may 
release the data to any person, agency, or the public if the 
commissioner determines that the access will aid the law 
enforcement process, promote public health or safety, or dispel 
widespread rumor or unrest.  
    Sec. 2.  Minnesota Statutes 1991 Supplement, section 
45.027, subdivision 1, is amended to read: 
    Subdivision 1.  [GENERAL POWERS.] In connection with the 
administration of chapters 45 to 83, 309, and 332, and sections 
326.83 to 326.98, the commissioner of commerce may:  
    (1) make public or private investigations within or without 
this state as the commissioner considers necessary to determine 
whether any person has violated or is about to violate chapters 
45 to 83, 309, and 332, sections 326.83 to 326.98, or any 
rule adopted or order issued under those chapters, or to aid in 
the enforcement of chapters 45 to 83, 309, and 332, sections 
326.83 to 326.98, or in the prescribing of rules or forms under 
those chapters; 
    (2) require or permit any person to file a statement in 
writing, under oath or otherwise as the commissioner determines, 
as to all the facts and circumstances concerning the matter 
being investigated; 
    (3) hold hearings, upon reasonable notice, in respect to 
any matter arising out of the administration of chapters 45 to 
83, 309, and 332, and sections 326.83 to 326.98; 
    (4) conduct investigations and hold hearings for the 
purpose of compiling information with a view to recommending 
changes in chapters 45 to 83, 309, and 332, and sections 326.83 
to 326.98, to the legislature; 
    (5) examine the books, accounts, records, and files of 
every licensee under chapters 45 to 83, 309, and 332, and 
sections 326.83 to 326.98, and of every person who is engaged in 
any activity regulated under chapters 45 to 83, 309, and 332, 
and sections 326.83 to 326.98; the commissioner or a designated 
representative shall have free access during normal business 
hours to the offices and places of business of the person, and 
to all books, accounts, papers, records, files, safes, and 
vaults maintained in the place of business; 
     (6) publish information which is contained in any order 
issued by the commissioner; and 
     (7) require any person subject to chapters 45 to 83, 309, 
and 332, and sections 326.83 to 326.98, to report all sales or 
transactions that are regulated under chapters 45 to 83, 309, 
and 332, and sections 326.83 to 326.98.  The reports must be 
made within ten days after the commissioner has ordered the 
report.  The report is accessible only to the respondent and 
other governmental agencies unless otherwise ordered by a court 
of competent jurisdiction.  
    Sec. 3.  Minnesota Statutes 1990, section 45.027, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [RESPONSE TO DEPARTMENT REQUESTS.] An applicant, 
registrant, certificate holder, licensee, or other person 
subject to the jurisdiction of the commissioner shall comply 
with requests for information, documents, or other requests from 
the department within the time specified in the request, or, if 
no time is specified, within 30 days of the mailing of the 
request by the department.  Applicants, registrants, certificate 
holders, licensees, or other persons subject to the jurisdiction 
of the commissioner shall appear before the commissioner or the 
commissioner's representative when requested to do so and shall 
bring all documents or materials that the commissioner or the 
commissioner's representative has requested. 
    Sec. 4.  Minnesota Statutes 1991 Supplement, section 
45.027, subdivision 2, is amended to read: 
    Subd. 2.  [POWER TO COMPEL PRODUCTION OF EVIDENCE.] For the 
purpose of any investigation, hearing, or proceeding, or inquiry 
under chapters 45 to 83, 309, and 332, and sections 326.83 to 
326.98, the commissioner or a designated representative may 
administer oaths and affirmations, subpoena witnesses, compel 
their attendance, take evidence, and require the production of 
books, papers, correspondence, memoranda, agreements, or other 
documents or records that the commissioner considers relevant or 
material to the inquiry.  
    Sec. 5.  Minnesota Statutes 1991 Supplement, section 
45.027, subdivision 5, is amended to read: 
    Subd. 5.  [LEGAL ACTIONS; INJUNCTIONS; CEASE AND DESIST 
ORDERS.] Whenever it appears to the commissioner that any person 
has engaged or is about to engage in any act or practice 
constituting a violation of chapters 45 to 83, 309, and 332, 
sections 326.83 to 326.98, or any rule or order adopted or order 
issued under those chapters, the commissioner has the following 
powers:  (1) the commissioner may bring an action in the name of 
the state in the district court of the appropriate county to 
enjoin the acts or practices and to enforce compliance with 
chapters 45 to 83, 309, and 332, sections 326.83 to 326.98, or 
any rule or order adopted or issued under those chapters, or the 
commissioner may refer the matter to the attorney general or the 
county attorney of the appropriate county.  Upon a proper 
showing, a permanent or temporary injunction, restraining order, 
or other appropriate relief must be granted; (2) the 
commissioner may issue and cause to be served upon the person an 
order requiring the person to cease and desist from violations 
of chapters 45 to 83, 309, and 332, sections 326.83 to 326.98, 
or any rule or order adopted or issued under those chapters.  
The order must be calculated to give reasonable notice of the 
rights of the person to request a hearing and must state the 
reasons for the entry of the order.  A hearing must be held not 
later than seven days after the request for the hearing is 
received by the commissioner, unless the person requesting the 
hearing and the department of commerce agree the hearing be 
scheduled after the seven-day period.  After the hearing and 
within 20 days after receiving the administrative law judge's 
report, the commissioner shall issue a further order vacating 
the cease and desist order or making it permanent as the facts 
require.  If no hearing is requested within 30 days of service 
of the order, the order will become final and will remain in 
effect until it is modified or vacated by the commissioner.  
Unless otherwise provided, all hearings must be conducted in 
accordance with chapter 14.  If the person to whom a cease and 
desist order is issued fails to appear at the hearing after 
being duly notified, the person is in default, and the 
proceeding may be determined against that person upon 
consideration of the cease and desist order, the allegations of 
which may be considered to be true.  The commissioner may adopt 
rules of procedure concerning all proceedings conducted under 
this subdivision.  
    Sec. 6.  Minnesota Statutes 1991 Supplement, section 
45.027, subdivision 6, is amended to read: 
    Subd. 6.  [VIOLATIONS AND PENALTIES.] The commissioner may 
impose a civil penalty not to exceed $2,000 per violation upon a 
person who violates chapters 45 to 83, 309, and 332, and 
sections 326.83 to 326.98, or any rule adopted or order issued 
under those chapters unless a different penalty is specified.  
    Sec. 7.  Minnesota Statutes 1991 Supplement, section 
45.027, subdivision 7, is amended to read: 
    Subd. 7.  [ACTIONS AGAINST LICENSEES.] In addition to any 
other actions authorized by this section, the commissioner may, 
by order, deny, suspend, or revoke the authority or license of a 
person subject to chapters 45 to 83, 155A, 309, or 332, or 
sections 326.83 to 326.98, or censure that person if the 
commissioner finds that: 
    (1) the order is in the public interest; and 
    (2) the person has violated chapters 45 to 83, 155A, 309, 
or 332, or sections 326.83 to 326.98 or any rule adopted or 
order issued under those chapters. 
    Except for information classified as confidential under 
sections 60A.03, subdivision 9; 60A.031; 60A.93; and 60D.22, the 
commissioner may make any data otherwise classified as private 
or confidential pursuant to this section accessible to an 
appropriate person or agency if the commissioner determines that 
the access will aid the law enforcement process, promote public 
health or safety, or dispel widespread rumor or unrest.  If the 
commissioner determines that private or confidential information 
should be disclosed, the commissioner shall notify the attorney 
general as to the information to be disclosed, the purpose of 
the disclosure, and the need for the disclosure.  The attorney 
general shall review the commissioner's determination.  If the 
attorney general believes that the commissioner's determination 
does not satisfy the purpose and intent of this provision, the 
attorney general shall advise the commissioner in writing that 
the information may not be disclosed.  If the attorney general 
believes the commissioner's determination satisfies the purpose 
and intent of this provision, the attorney general shall advise 
the commissioner in writing, accordingly. 
    After disclosing information pursuant to this provision, 
the commissioner shall advise the chairs of the senate and house 
of representatives judiciary committees of the disclosure and 
the basis for it. 
    Sec. 8.  Minnesota Statutes 1990, section 45.027, is 
amended by adding a subdivision to read: 
    Subd. 10.  [REHABILITATION OF CRIMINAL OFFENDERS.] Chapter 
364 does not apply to an applicant for a license or to a 
licensee where the underlying conduct on which the conviction is 
based would be grounds for denial, censure, suspension, or 
revocation of the license. 
    Sec. 9.  Minnesota Statutes 1990, section 59A.08, 
subdivision 1, is amended to read: 
    Subdivision 1.  A premium finance agreement shall: 
    (a) Be dated and signed by or on behalf of the insured, and 
the printed portion thereof shall be in at least eight point 
type; 
    (b) Contain the name and place of business of the insurance 
agent or insurance broker negotiating the related insurance 
contract, the name and residence or the place of business of the 
insured as specified, the name and place of business of the 
premium finance company to which installments or other payments 
are to be made, the name of the insurer issuing the related 
insurance contract, a description of the insurance contracts 
including the term and type of policy, the premiums for which 
are advanced or are to be advanced under the agreement and the 
amount of the premiums therefor; and 
    (c) Set forth the following items where applicable: 
    (1) The total amount of the premiums, 
    (2) The amount of the down payment, 
    (3) The balance of premiums due, the amount financed (the 
difference between items (1) and (2)), 
    (4) The amount of the finance charge, 
    (5) The amount of the flat service fee, 
    (6) The total of payments (sum of items (3), (4) and (5)).  
    Sec. 10.  Minnesota Statutes 1990, section 59A.08, 
subdivision 4, is amended to read: 
    Subd. 4.  The premium finance company or the insurance 
agent shall deliver to the insured, or mail to the insured at 
the address shown in the agreement, a completed copy of that 
agreement.  Within 15 days of receiving the policy number of the 
policy being financed, the premium finance company shall mail to 
the insurer a notice of financed premium, which contains the 
term, amount of premium, and type of policy being financed.  
     Sec. 11.  Minnesota Statutes 1990, section 59A.11, 
subdivision 4, is amended to read: 
    Subd. 4.  Where statutory, regulatory or contractual 
restrictions provide that the insurance contract may not be 
canceled unless notice is given to a governmental agency, 
mortgagee, or other third party, the insurer shall give the 
prescribed notice on behalf of itself or the insured to the 
governmental agency, mortgagee or other third party within a 
reasonable time ten days after the day it receives the notice of 
cancellation from the premium finance company.  When the above 
restrictions require the continuation of insurance beyond the 
effective date of cancellation specified by the premium finance 
company, the insurance shall be limited to the coverage to which 
the restrictions relate and to the persons they are designed to 
protect. 
    Sec. 12.  Minnesota Statutes 1990, section 59A.12, 
subdivision 1, is amended to read: 
    Subdivision 1.  Whenever a financed insurance contract is 
canceled, within 30 days of the effective date of cancellation, 
if the premium finance company has notified the insurer that the 
premiums are financed, the insurer shall return whatever gross 
unearned premiums, computed pro rata, are due under the 
insurance contract to the premium finance company for the 
account of the insured or insureds.  This action by the insurer 
satisfies the insurer's obligations under the insurance contract 
which relate to the return of the unearned premiums.  
    Sec. 13.  Minnesota Statutes 1990, section 60A.02, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [ASSOCIATION OR ASSOCIATIONS.] (a) "Association" 
or "associations" means an organized body of people who have 
some interest in common and that has at the onset a minimum of 
100 persons; is organized and maintained in good faith for 
purposes other than that of obtaining insurance; and has a 
constitution and bylaws which provide that:  (1) the association 
or associations hold regular meetings not less frequently than 
annually to further purposes of the members; (2) except for 
credit unions, the association or associations collect dues or 
solicit contributions from members; (3) the members have voting 
privileges and representation on the governing board and 
committees, which provide the members with control of the 
association including the purchase and administration of 
insurance products offered to members; and (4) the members are 
not, within the first 30 days of membership, directly solicited, 
offered, or sold an insurance policy if the policy is available 
as an association benefit. 
     (b) An association may apply to the commissioner for a 
waiver of the 30-day waiting period to that association.  The 
commissioner may grant the waiver upon a finding of all of the 
following:  (1) the association is in full compliance with this 
subdivision; (2) sanctions have not been imposed against the 
association as a result of significant disciplinary action by 
the commissioner; and (3) at least 80 percent of the 
association's income comes from dues, contributions, or sources 
other than income from the sale of insurance. 
    Sec. 14.  Minnesota Statutes 1990, section 60A.03, 
subdivision 2, is amended to read: 
    Subd. 2.  [POWERS OF COMMISSIONER.] (1) [ENFORCEMENT.] The 
commissioner shall have and exercise the power to enforce all 
the laws of this state relating to insurance, and shall enforce 
all the provisions of the laws of this state relating to 
insurance. 
    (2) [DEPARTMENT OF COMMERCE.] The commissioner shall have 
and possess all the rights and powers and perform all the duties 
heretofore vested by law in the commissioner of commerce, except 
that applications for registrations of securities and brokers' 
licenses under sections 80A.01 to 80A.31, and all matters 
pertaining to such registrations and licenses, application for 
the organization and establishment of new financial institutions 
under sections 46.041, 46.043, and 46.044, applications by 
insuring companies for licenses to carry on business within the 
state, and all matters pertaining to such licenses, and 
applications for the consolidation of insuring companies 
transacting business within the state, shall be determined by 
the commissioner in the manner provided by the laws defining the 
powers and duties of the commissioner of commerce, and the state 
securities commission, respectively, or, in the absence of any 
law prescribing the procedure, by such any reasonable procedure 
as the commission, as defined in chapter 45, may 
prescribe commissioner prescribes. 
    Sec. 15.  Minnesota Statutes 1990, section 60A.07, 
subdivision 1, is amended to read: 
    Subdivision 1.  [INCORPORATION.] Except when the manner of 
organization is specifically otherwise provided in sections 
dealing with these insurers, domestic insurance corporations 
shall be organized under and governed by chapter 300.  The 
articles or certificate of incorporation must meet the 
requirements of section 300.025, except other than:  
    (1) the requirement that a majority of board members shall 
always be residents of this state; and 
    (2) the requirements of section 300.025, clause (7). 
    Sec. 16.  Minnesota Statutes 1990, section 60A.07, 
subdivision 10, is amended to read: 
    Subd. 10.  [SPECIAL PROVISIONS AS TO LIFE COMPANIES.] (1) 
[PREREQUISITES OF LIFE COMPANIES.] No mutual life company shall 
be qualified to issue any policy until applications for at least 
$200,000 of insurance, upon lives of at least 200 separate 
residents, have been actually and in good faith made, accepted, 
and entered upon its books and at least one full annual premium 
thereunder, based upon the authorized table of mortality, 
received in cash or in absolutely payable and collectible 
notes.  A duplicate receipt for each premium, conditioned for 
the return thereof unless the policy be issued within one year 
thereafter, shall be issued, and one copy delivered to the 
applicant and the other filed with the commissioner, together 
with the certificate of a solvent authorized bank in the state, 
of the deposit therein of such cash and notes, aggregating the 
amount aforesaid, specifying the maker, payee, date, maturity, 
and amount of each.  Such cash and notes shall be held by it not 
longer than one year, and at or before the expiration thereof to 
be by it paid or delivered, upon the written order of the 
commissioner, to such company or applicants, respectively. 
    (2) [FOREIGN COMPANIES MAY BECOME DOMESTIC.] Any company 
organized under the laws of any other state or country, which 
might have been originally incorporated under the laws of this 
state, and which has been admitted to do business therein for 
either or both the purpose of life or accident insurance, upon 
complying with all the requirements of law relative to the 
execution, filing, recording and publishing of original 
certificates and payment of incorporation fees by like domestic 
corporations, therein designating its principal place of 
business at a place in this state, may become a domestic 
corporation, and be entitled to like certificates of its 
corporate existence and license to transact business in this 
state, and be subject in all respects to the authority and 
jurisdiction thereof. 
    (3) [TEMPORARY CAPITAL STOCK OF MUTUAL LIFE COMPANIES.] A 
new mutual life insurance company which has complied with the 
provisions of clause (1) or an existing mutual life insurance 
company may establish, a temporary capital of, such amount not 
less than $100,000, as may be approved by the commissioner.  
Such temporary capital shall be invested by the company in the 
same manner as is provided for the investment of its other 
funds.  Out of the net surplus of the company the holders of the 
temporary capital stock may receive a dividend of not more than 
eight percent per annum, which may be cumulative. This capital 
stock shall not be a liability of the company except that it but 
shall be retired as soon as, but not before, the surplus of the 
company remaining after its retirement shall be not less than 
the temporary capital so established within a reasonable time 
and according to terms approved by the commissioner.  At the 
time for the retirement of this capital stock, the holders shall 
be entitled to receive from the company the par value thereof 
and any dividends thereon due and unpaid, and thereupon the 
stock shall be surrendered and canceled, and the right to vote 
thereon shall cease.  In the event of the liquidation of the 
company, the holders of temporary capital stock shall have the 
same preference in the assets of the company as shareholders 
have in a stock insurance company.  
    Temporary capital stock may be issued with or without 
voting rights.  If issued with voting rights, the holders shall, 
at all meetings, be entitled to one vote for each $10 of 
temporary capital stock held.  
    Sec. 17.  Minnesota Statutes 1990, section 60A.12, 
subdivision 4, is amended to read: 
    Subd. 4.  [UNEARNED PREMIUMS RESERVE.] (1) [FOR COMPANIES 
OTHER THAN LIFE OR TITLE.] To determine the policy liability of 
any company other than life or title insurance, and the amount 
the company shall hold as reserve, the commissioner shall take 
50 percent of the aggregate premiums, on policies running one 
year or less from date of policy, and a pro rata rate amount on 
policies running more than one year from date of policy, except 
upon inland and marine risks, which the commissioner shall 
compute by charging 50 percent of the amount of premium written 
in its policies upon yearly risks and upon risks covering more 
than one passage not terminated, and the full amount of premiums 
written in policies upon all other inland and marine risks not 
terminated.  In case of any fire and marine company with less 
than $200,000 capital admitted to transact in this state fire 
business only, the full amount of premiums written in its marine 
and inland navigation and transportation policies shall be 
charged as liability. 
    (2) [SPECIAL PROVISIONS FOR MUTUAL FIRE COMPANIES WITH A 
CONTINGENT LIABILITY.] In case of a mutual fire insurance 
company with a policyholders' contingent liability fixed by its 
bylaws and in its policies as provided by law, to determine the 
amount of this reinsurance reserve, the commissioner shall take 
25 percent of the aggregate premiums running one year or less 
from date of policy, and 50 percent of the pro rata amount on 
policies running more than one year from date of policy. 
    (3) [CASUALTY COMPANIES WRITING LIABILITY OR WORKERS' 
COMPENSATION.] In case of a casualty insurance company writing 
insurance against loss or damage resulting from accident to or 
injuries suffered by an employee or other person and for which 
the insured is liable, and under insurance against loss from 
liability on account of the death of or injury to an employee 
not caused by the negligence of an employer, the commissioner 
shall charge as a liability, in addition to the capital stock 
and all other outstanding indebtedness of the corporation: 
    The premium reserve on policies in force, equal to 50 
percent of the gross premiums charged for covering the risks; 
provided, that the commissioner may charge a premium reserve 
equal to the unearned portions of the gross premiums charged, 
computed on each respective risk from the date of the issuance 
of the policy.  Notwithstanding any other provision of this 
subdivision, an unearned premium reserve shall be required based 
only on the timing and the amount of the recorded written 
premium.  
    (4) [PROVISION FOR ANNUAL PAYMENT TERM POLICIES.] A policy 
for a term of years on which the premium is payable annually 
shall be considered a policy for one year. 
    Sec. 18.  Minnesota Statutes 1991 Supplement, section 
60A.13, subdivision 3a, is amended to read: 
    Subd. 3a.  [ANNUAL AUDIT.] Every insurance company doing 
business in this state, including fraternal beneficiary 
associations benefit societies, reciprocal exchanges, service 
plan corporations licensed pursuant to chapter 62C, and legal 
service plans licensed pursuant to chapter 62G, unless exempted 
by the commissioner pursuant to subdivision 4a or by subdivision 
7 shall have an annual audit of the financial activities of the 
most recently completed fiscal year performed by an independent 
certified public accountant as prescribed by the commissioner, 
and shall file the report of this audit with the commissioner 
not more that six months following the close of the company's 
fiscal year.  Any insurer required by this subdivision to file 
an annual audit which does not currently have its financial 
statement audited shall file its first audit with the 
commissioner not later than June 30, 1983.  All other insurers 
shall file their annual audits beginning June 30, 1982.  
    Sec. 19.  Minnesota Statutes 1990, section 60A.1701, 
subdivision 3, is amended to read: 
    Subd. 3.  [EXEMPTIONS.] This section does not apply to: 
    (a) persons soliciting or selling solely on behalf of 
companies organized and operating according to chapter 67A; or 
    (b) persons holding life and health, or property and 
casualty licenses who, by February 28 of each year at the time 
of license renewal, certify to the commissioner in writing that 
they will sell only credit life, credit health, and credit 
property insurance, during that year and do in fact so limit 
their sale of insurance.  
    Sec. 20.  Minnesota Statutes 1990, section 60A.1701, 
subdivision 7, is amended to read: 
    Subd. 7.  [CRITERIA FOR COURSE ACCREDITATION.] (a) The 
commissioner may accredit a course only to the extent it is 
designed to impart substantive and procedural knowledge of the 
insurance field.  The burden of demonstrating that the course 
satisfies this requirement is on the individual or organization 
seeking accreditation.  The commissioner shall approve any 
educational program approved by Minnesota Continuing Legal 
Education relating to the insurance field.  
     (b) The commissioner shall approve or disapprove 
professional designation examinations that are recommended for 
approval by the advisory task force.  In order for an agent to 
receive full continuing education credit for a professional 
designation examination, the agent must pass the examination.  
An agent may not receive credit for classroom instruction 
preparing for the professional designation examination and also 
receive continuing education credit for passing the professional 
designation examination. 
     (c) The commissioner may not accredit a course:  
     (1) that is designed to prepare students for a license 
examination; 
     (2) in mechanical office or business skills, including 
typing, speedreading, use of calculators, or other machines or 
equipment; 
     (3) in sales promotion, including meetings held in 
conjunction with the general business of the licensed agent; 
    (4) in motivation, the art of selling, psychology, or time 
management; 
    (5) unless the student attends classroom instruction 
conducted by an instructor approved by the department of 
commerce; or 
    (6) (5) which can be completed by the student at home or 
outside the classroom without the supervision of an instructor 
approved by the department of commerce, except that home-study 
courses may be accredited by the commissioner if the student is 
a nonresident agent residing in a state which is not contiguous 
to Minnesota.  
    Sec. 21.  Minnesota Statutes 1990, section 60A.201, 
subdivision 4, is amended to read: 
    Subd. 4.  [LISTS OF UNAVAILABLE LINES OF INSURANCE; 
MAINTENANCE.] The commissioner shall maintain on a current basis 
a list of those lines of insurance for which coverages are 
believed by the commissioner to be generally unavailable from 
licensed insurers.  The commissioner shall republish a list and 
make it available to all licensees the list every six months at 
least annually.  Any person may request in writing that the 
commissioner add or remove coverage from the current list at the 
next publication of the list.  The commissioner's determinations 
of coverages to be added to or removed from the list shall not 
be subject to the administrative procedure act but prior to 
making determinations the commissioner shall provide opportunity 
for comment from interested parties.  
    Sec. 22.  Minnesota Statutes 1990, section 60A.203, is 
amended to read: 
    60A.203 [LICENSEES TO FILE EVIDENCE OF TRANSACTIONS FILING 
REQUIREMENTS.] 
    Each surplus lines licensee shall keep a separate account 
of each transaction entered into pursuant to sections 60A.195 to 
60A.209.  Evidence of these transactions shall be filed with the 
commissioner documented in the form, and manner, and time 
designated by the commissioner or if designated by the 
commissioner, with an association and retained by the licensee 
for a minimum of five years.  The forms must be readily 
available for review and audit by the commissioner.  
    Sec. 23.  Minnesota Statutes 1990, section 60A.206, 
subdivision 3, is amended to read: 
    Subd. 3.  [STANDARDS TO BE MET BY INSURERS.] (a) The 
commissioner shall recognize the insurer as an eligible surplus 
lines insurer when satisfied that the insurer is in a stable, 
unimpaired financial condition and that the insurer is qualified 
to provide coverage in compliance with sections 60A.195 to 
60A.209.  If filed with full supporting documentation before 
July 1 of any year, applications submitted under subdivision 2 
shall be acted upon by the commissioner before December 31 of 
the year of submission.  
    (b) The commissioner shall not authorize an insurer as an 
eligible surplus lines insurer unless the insurer continuously 
maintains capital and surplus of at least $3,000,000 and 
transaction of business by the insurer is not hazardous, 
financially or otherwise, to its policyholders, its creditors, 
or the public.  Each alien surplus lines insurer shall have 
current financial data filed with the National Association of 
Insurance Commissioners Nonadmitted Insurers Information Office. 
    (c) Eligible surplus lines insurers domiciled within the 
United States shall file an annual statement and an annual 
financial audit, under the terms and conditions of section 
60A.13, subdivisions 1, 3a, and 6, and are subject to the 
penalties of section 72A.061 in regard to those requirements.  
The commissioner also has the powers provided in section 60A.13, 
subdivision 2, in regard to eligible surplus lines insurers.  
    (d) Eligible surplus lines insurers domiciled outside the 
United States shall file an annual statement on the standard 
nonadmitted insurers information office financial reporting 
format as prescribed by the National Association of Insurance 
Commissioners and an annual financial audit performed by an 
independent accounting firm. 
    Sec. 24.  Minnesota Statutes 1990, section 60B.03, is 
amended by adding a subdivision to read: 
    Subd. 20.  [AFFILIATE OR AFFILIATED.] An "affiliate" of, or 
a person "affiliated" with, a specific person is a person that 
directly, or indirectly through one or more intermediaries, 
controls, or is controlled by, or is under common control with, 
the person specified.  
    Sec. 25.  Minnesota Statutes 1990, section 60B.15, is 
amended to read: 
    60B.15 [GROUNDS FOR REHABILITATION.] 
    The commissioner may apply by verified petition to the 
district court for Ramsey county or for the county in which the 
principal office of the insurer is located for an order 
directing the commissioner to rehabilitate a domestic insurer or 
an alien insurer domiciled in this state on any one or more of 
the following grounds: 
    (1) Any ground on which the commissioner may apply for an 
order of liquidation under section 60B.20, whenever the 
commissioner believes that the insurer may be successfully 
rehabilitated without substantial increase in the risk of loss 
to creditors of the insurer, its policyholders or to the public; 
    (2) That the commissioner has reasonable cause to believe 
that there has been theft from the insurer, wrongful 
sequestration or diversion of the insurer's assets, forgery or 
fraud affecting the insurer or other illegal conduct in, by or 
with respect to the insurer, which endanger assets in an amount 
threatening insolvency of the insurer; 
     (3) That substantial and unexplained discrepancies exist 
between the insurer's records and the most recent annual report 
or other official company reports; 
     (4) That the insurer, after written demand by the 
commissioner, has failed to remove any person who in fact has 
executive authority in the insurer, whether an officer, manager, 
general agent, employee, or other person, if the person has been 
found by the commissioner after notice and hearing to be 
dishonest or untrustworthy in a way affecting the insurer's 
business such as is the basis for action under section 60A.051; 
     (5) That control of the insurer, whether by stock ownership 
or otherwise, and whether direct or indirect, is in one or more 
persons found by the commissioner after notice and hearing to be 
dishonest or untrustworthy such as is the basis for action under 
section 60A.051; 
     (6) That the insurer, after written demand by the 
commissioner, has failed within a reasonable period of time to 
terminate the employment and status and all influences on 
management of any person who in fact has executive authority in 
the insurer, whether an officer, manager, general agent, 
employee or other person if the person has refused to submit to 
lawful examination under oath by the commissioner concerning the 
affairs of the insurer, whether in this state or elsewhere; 
     (7) That after lawful written demand by the commissioner 
the insurer has failed to submit promptly any of its own 
property, books, accounts, documents, or other records, or those 
of any subsidiary or related company within the control of the 
insurer, or those of any person having executive authority in 
the insurer so far as they pertain to the insurer, to reasonable 
inspection or examination by the commissioner or an authorized 
representative.  If the insurer is unable to submit the 
property, books, accounts, documents, or other records of a 
person having executive authority in the insurer, it shall be 
excused from doing so if it promptly and effectively terminates 
the relationship of the person to the insurer; 
     (8) That without first obtaining the written consent of the 
commissioner, or if required by law, the written consent of the 
attorney general, the insurer has transferred, or attempted to 
transfer, substantially its entire property or business, or has 
entered into any transaction the effect of which is to merge, 
consolidate, or reinsure substantially its entire property or 
business of any other person; 
     (9) That the insurer or its property has been or is the 
subject of an application for the appointment of a receiver, 
trustee, custodian, conservator or sequestrator or similar 
fiduciary of the insurer or its property otherwise than as 
authorized under sections 60B.01 to 60B.61, and that such 
appointment has been made or is imminent, and that such 
appointment might divest the courts of this state of 
jurisdiction or prejudice orderly delinquency proceedings under 
sections 60B.01 to 60B.61; 
     (10) That within the previous year the insurer has 
willfully violated its charter or articles of incorporation or 
its bylaws or any applicable insurance law or regulation of any 
state, or of the federal government, or any valid order of the 
commissioner under section 60B.11 in any manner or as to any 
matter which threatens substantial injury to the insurer, its 
creditors, it policyholders or the public, or having become 
aware within the previous year of an unintentional or willful 
violation has failed to take all reasonable steps to remedy the 
situation resulting from the violation and to prevent the same 
violations in the future; 
     (11) That the directors of the insurer are deadlocked in 
the management of the insurer's affairs and that the members or 
shareholders are unable to break the deadlock and that 
irreparable injury to the insurer, its creditors, its 
policyholders, or the public is threatened by reason thereof; 
     (12) That the insurer has failed to pay for 60 days after 
due date any obligation to this state or any political 
subdivision thereof or any judgment entered in this state, 
except that such nonpayment shall not be a ground until 60 days 
after any good faith effort by the insurer to contest the 
obligation or judgment has been terminated, whether it is before 
the commissioner or in the courts; 
     (13) That the insurer has failed to file its annual report 
or other report within the time allowed by law, and after 
written demand by the commissioner has failed to give an 
adequate explanation immediately; 
     (14) That two-thirds of the board of directors, or the 
holders of a majority of the shares entitled to vote, or a 
majority of members or policyholders of an insurer subject to 
control by its members or policyholders, consent to 
rehabilitation under sections 60B.01 to 60B.61; 
     (15) That the insurer is engaging in a systematic practice 
of reaching settlements with and obtaining releases from 
policyholders or third party claimants and then unreasonably 
delaying payment of or failing to pay the agreed upon 
settlements; 
     (16) That the insurer is in such condition that the further 
transaction of business would be hazardous, financially or 
otherwise, to its policyholders, its creditors, or the public; 
     (17) That within the previous 12 months the insurer has 
systematically attempted to compromise with its creditors on the 
ground that it is financially unable to pay its claims in full; 
     (18) In the context of a health maintenance organization, 
"insurer" when used in clauses (1) to (17) means "health 
maintenance organization."  In addition to the grounds in 
clauses (1) to (17), any one of the following constitutes 
grounds for rehabilitation of a health maintenance organization: 
     (a) the health maintenance organization is unable or is 
expected to be unable to meet its debts as they become due; 
     (b) grounds exist under section 62D.042, subdivision 7; 
     (c) the health maintenance organization's liabilities 
exceed the current value of its assets, exclusive of intangibles 
and, where the guaranteeing organization's financial condition 
no longer meets the requirements of sections 62D.041 and 
62D.042, exclusive of any deposits, letters of credit, or 
guarantees provided by any guaranteeing organization under 
chapter 62D; 
    (d) in addition to grounds under clause (16), within the 
last year the health maintenance organization has failed, and 
the commissioner of health expects such failure to continue in 
the future, to make comprehensive medical care adequately 
available and accessible to its enrollees and the health 
maintenance organization has not successfully implemented a plan 
of corrective action pursuant to section 62D.121, subdivision 7; 
and 
    (e) in addition to grounds under clause (16), within the 
last year the directors or officers of the health maintenance 
organization willfully violated the requirements of section 
317A.251, or having become aware within the previous year of an 
unintentional or willful violation of section 317A.251, have 
failed to take all reasonable steps to remedy the situation 
resulting from the violation and to prevent the same violation 
in the future; 
    (19) An affiliate of the insurer has been placed in 
conservatorship, rehabilitation, liquidation, or other court 
supervision such that the insurer's financial condition may be 
jeopardized.  
    Sec. 26.  Minnesota Statutes 1990, section 60B.17, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SPECIAL DEPUTY COMMISSIONER.] The 
commissioner as rehabilitator shall make every reasonable effort 
to employ an active or retired senior executive from a 
successful insurer to serve as employ a special deputy 
commissioner to rehabilitate the insurer.  The special deputy 
shall have all of the powers of the rehabilitator granted under 
this section.  To obtain a suitable special deputy, the 
commissioner may consult with and obtain the assistance and 
advice of executives of insurers doing business in this state.  
Subject to court approval, the commissioner shall make such 
arrangements for compensation as are necessary to obtain a 
special deputy of proven ability.  The special deputy shall 
serve at the pleasure of the commissioner. 
    Sec. 27.  Minnesota Statutes 1991 Supplement, section 
60D.15, subdivision 4, is amended to read: 
    Subd. 4.  [CONTROL.] The term "control," including the 
terms "controlling," "controlled by," and "under common control 
with," means the possession, direct or indirect, of the power to 
direct or cause the direction of the management and policies of 
a person, whether through the ownership of voting securities, by 
contract other than a commercial contract for goods or 
nonmanagement services, or otherwise, unless the power is the 
result of an official position with or, corporate office held 
by, or court appointment of, the person.  Control is presumed to 
exist if any person, directly or indirectly, owns, controls, 
holds with the power to vote, or holds proxies representing, ten 
percent or more of the voting securities of any other person.  
This presumption may be rebutted by a showing made in the manner 
provided by section 60D.19, subdivision 11, that control does 
not exist in fact.  The commissioner may determine, after 
furnishing all persons in interest notice and opportunity to be 
heard and making specific findings of fact to support such 
determination, that control exists in fact, notwithstanding the 
absence of a presumption to that effect. 
    Sec. 28.  Minnesota Statutes 1991 Supplement, section 
60D.17, subdivision 4, is amended to read: 
    Subd. 4.  [APPROVAL BY COMMISSIONER; HEARINGS.] (a) The 
commissioner shall approve any merger or other acquisition of 
control referred to in subdivision 1 unless, after a public 
hearing, the commissioner finds that: 
    (1) After the change of control, the domestic insurer 
referred to in subdivision 1 would not be able to satisfy the 
requirements for the issuance of a license to write the line or 
lines of insurance for which it is presently licensed, unless 
the domestic insurer is in rehabilitation or other court-ordered 
supervision and the acquiring party commits to a plan that would 
enable the domestic insurer to satisfy the requirements for the 
issuance of a license within a reasonable amount of time; 
    (2) The effect of the merger or other acquisition of 
control would be substantially to lessen competition in 
insurance in this state or tend to create a monopoly therein in 
applying the competitive standard in this subdivision: 
    (i) the informational requirements of section 60D.18, 
subdivision 3, paragraph (b), and the standards of section 
60D.18, subdivision 4, paragraph (c), shall apply; 
     (ii) the merger or other acquisition shall not be 
disapproved if the commissioner finds that any of the situations 
meeting the criteria provided by section 60D.18, subdivision 4, 
paragraph (c), exist; and 
     (iii) the commissioner may condition the approval of the 
merger or other acquisition on the removal of the basis of 
disapproval within a specified period of time; 
     (3) The financial condition of any acquiring party is such 
as might jeopardize the financial stability of the insurer, or 
prejudice the interest of its policyholders; 
     (4) The plans or proposals that the acquiring party has to 
liquidate the insurer, sell its assets, or consolidate or merge 
it with any person, or to make any other material change in its 
business or corporate structure or management, are unfair and 
unreasonable to policyholders of the insurer and not in the 
public interest; 
     (5) The competence, experience, and integrity of those 
persons who would control the operation of the insurer are such 
that it would not be in the interest of policyholders of the 
insurer and of the public to permit the merger or other 
acquisition of control; or 
     (6) The acquisition is likely to be hazardous or 
prejudicial to the insurance buying public. 
     (b) The public hearing referred to in paragraph (a) must be 
held 30 days after the statement required by subdivision 1 is 
filed, and at least 20 days notice of it shall be given by the 
commissioner to the person filing the statement.  Not less than 
seven days notice of the public hearing shall be given by the 
person filing the statement to the insurer and to other persons 
designated by the commissioner.  The commissioner shall make a 
determination within 30 days after the conclusion of the 
hearing.  At the hearing, the person filing the statement, the 
insurer, any person to whom notice of hearing was sent, and any 
other person whose interest may be affected by it may present 
evidence, examine and cross-examine witnesses, and offer oral 
and written arguments and may conduct discovery proceedings in 
the same manner as is presently allowed in the district courts 
of this state.  All discovery proceedings must be concluded not 
later than three days before the start of the public hearing. 
    (c) The commissioner may retain at the acquiring person's 
expense any attorneys, actuaries, accountants, and other experts 
not otherwise a part of the commissioner's staff as may be 
reasonably necessary to assist the commissioner in reviewing the 
proposed acquisition of control. 
     Sec. 29.  Minnesota Statutes 1990, section 61A.011, is 
amended by adding a subdivision to read: 
    Subd. 8.  [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. 30.  Minnesota Statutes 1990, section 62A.10, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REQUIREMENTS.] Group accident and health 
insurance is hereby declared to be that form of accident and 
health insurance covering not less than two employees nor less 
than ten members, and which may include the employee's or 
member's dependents, consisting of husband, wife, children, and 
actual dependents residing in the household, written under a 
master policy issued to any governmental corporation, unit, 
agency, or department thereof, or to any corporation, 
copartnership, individual, employer, or to any association 
having a constitution or bylaws and formed in good faith for 
purposes other than that of obtaining insurance under the 
provisions of this chapter as defined by section 60A.02, 
subdivision 1a, where officers, members, employees, or classes 
or divisions thereof, may be insured for their individual 
benefit. 
    Any insurer authorized to write accident and health 
insurance in this state shall have power to issue group accident 
and health policies. 
    Sec. 31.  Minnesota Statutes 1990, section 62A.21, 
subdivision 2b, is amended to read: 
    Subd. 2b.  [CONVERSION PRIVILEGE.] Every policy described 
in subdivision 1 shall contain a provision allowing a former 
spouse and dependent children of an insured, without providing 
evidence of insurability, to obtain from the insurer at the 
expiration of any continuation of coverage required under 
subdivision 2a or sections 62A.146 and 62A.20, conversion 
coverage providing at least the minimum benefits of a qualified 
plan as prescribed by section 62E.06 and the option of a number 
three qualified plan, a number two qualified plan, a number one 
qualified plan as provided by section 62E.06, subdivisions 1 to 
3, provided application is made to the insurer within 30 days 
following notice of the expiration of the continued coverage and 
upon payment of the appropriate premium.  A policy providing 
reduced benefits at a reduced premium rate may be accepted by 
the former spouse and dependent children in lieu of the optional 
coverage otherwise required by this subdivision.  The individual 
policy shall be renewable at the option of the former spouse 
covered person as long as the former spouse covered person is 
not covered under another qualified plan as defined in section 
62E.02, subdivision 4.  Any revisions in the table of rate for 
the individual policy shall apply to the former spouse's covered 
person's original age at entry and shall apply equally to all 
similar policies issued by the insurer. 
    A policy providing reduced benefits at a reduced premium 
rate may be accepted by the covered person in lieu of the 
optional coverage otherwise required by this subdivision. 
    Sec. 32.  Minnesota Statutes 1990, section 62A.30, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SCOPE OF COVERAGE.] This section applies 
to all policies of accident and health insurance, health 
maintenance contracts regulated under chapter 62D, health 
benefit certificates offered through a fraternal beneficiary 
association regulated under chapter 64B, and group subscriber 
contracts offered by nonprofit health service plan corporations 
regulated under chapter 62C, but does not apply to policies 
designed primarily to provide coverage payable on a per diem, 
fixed indemnity or nonexpense incurred basis, or policies that 
provide only accident coverage. 
    Sec. 33.  Minnesota Statutes 1990, section 62A.54, is 
amended to read: 
    62A.54 [PROHIBITED PRACTICES.] 
    Unless otherwise provided for in Laws 1986, chapter 397, 
sections 2 to 8 62A.46 to 62A.56, the solicitation or sale of 
long-term care policies is subject to the requirements and 
penalties applicable to the sale of Medicare supplement 
insurance policies as set forth in sections 62A.31 to 62A.44. 
    It is misconduct for any agent or company to make any 
misstatements concerning eligibility or coverage under the 
medical assistance program, or about how long-term care costs 
will or will not be financed if a person does not have long-term 
care insurance.  Any agent or company providing information on 
the medical assistance program shall also provide information 
about how to contact the county human services department or the 
state department of human services. 
    Sec. 34.  Minnesota Statutes 1990, section 62E.02, 
subdivision 23, is amended to read: 
    Subd. 23.  "Contributing member" means those companies 
operating pursuant to regulated under chapter 62A and offering, 
selling, issuing, or renewing policies or contracts of accident 
and health insurance or, health maintenance organizations and 
regulated under chapter 62D, nonprofit health service plan 
corporations incorporated regulated under chapter 62C or, 
fraternal benefit society operating societies regulated under 
chapter 64B, and joint self-insurance plans regulated under 
chapter 62H.  For the purposes of determining liability of 
contributing members pursuant to section 62E.11 payments 
received from or on behalf of Minnesota residents for coverage 
by a health maintenance organization shall be considered to be 
accident and health insurance premiums. 
    Sec. 35.  Minnesota Statutes 1990, section 62E.10, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CREATION; TAX EXEMPTION.] There is 
established a comprehensive health association to promote the 
public health and welfare of the state of Minnesota with 
membership consisting of all insurers, self-insurers, 
fraternals, joint self-insurance plans regulated under chapter 
62H, and health maintenance organizations licensed or authorized 
to do business in this state.  The comprehensive health 
association shall be exempt from taxation under the laws of this 
state and all property owned by the association shall be exempt 
from taxation. 
    Sec. 36.  Minnesota Statutes 1990, section 62E.11, 
subdivision 9, is amended to read: 
    Subd. 9.  Each contributing member that terminates 
individual health coverage regulated under chapter 62A, 62C, 
62D, or 64B for reasons other than (a) nonpayment of premium; (b)
failure to make copayments; (c) enrollee moving out of the area 
served; or (d) a materially false statement or misrepresentation 
by the enrollee in the application for membership; and does not 
provide or arrange for replacement coverage that meets the 
requirements of section 62D.121; shall pay a special assessment 
to the state plan based upon the number of terminated 
individuals who join the comprehensive health insurance plan as 
authorized under section 62E.14, subdivisions 1, paragraph (d), 
and 6.  Such a contributing member shall pay the association an 
amount equal to the average cost of an enrollee in the state 
plan in the year in which the member terminated enrollees 
multiplied by the total number of terminated enrollees who 
enroll in the state plan. 
    The average cost of an enrollee in the state comprehensive 
health insurance plan shall be determined by dividing the state 
plan's total annual losses by the total number of enrollees from 
that year.  This cost will be assessed to the contributing 
member who has terminated health coverage before the association 
makes the annual determination of each contributing member's 
liability as required under this section. 
    In the event that the contributing member is terminating 
health coverage because of a loss of health care providers, the 
commissioner may review whether or not the special assessment 
established under this subdivision will have an adverse impact 
on the contributing member or its enrollees or insureds, 
including but not limited to causing the contributing member to 
fall below statutory net worth requirements.  If the 
commissioner determines that the special assessment would have 
an adverse impact on the contributing member or its enrollees or 
insureds, the commissioner may adjust the amount of the special 
assessment, or establish alternative payment arrangements to the 
state plan.  For health maintenance organizations regulated 
under chapter 62D, the commissioner of health shall make the 
determination regarding any adjustment in the special assessment 
and shall transmit that determination to the commissioner of 
commerce. 
    Sec. 37.  Minnesota Statutes 1990, section 62E.14, is 
amended by adding a subdivision to read: 
    Subd. 7.  [TERMINATIONS OF CONVERSION POLICIES.] (a) A 
Minnesota resident who is covered by a conversion policy or 
contract of health coverage may enroll in the comprehensive 
health plan with a waiver of the preexisting condition 
limitation in subdivision 3 and a waiver of the evidence of 
rejection in subdivision 1, paragraph (c), at any time for any 
reason during the term of coverage. 
    (b) A Minnesota resident who was covered by a conversion 
policy or contract of health coverage may enroll in the 
comprehensive health plan with a waiver of the preexisting 
condition limitation in subdivision 3 and a waiver of the 
evidence of rejection in subdivision 1, paragraph (c), if that 
person applies for coverage within 90 days after termination of 
the conversion policy or contract coverage regardless of:  (1) 
the reasons for the termination; or (2) the party terminating 
coverage.  
    (c) Coverage under this subdivision is effective upon 
termination of prior coverage if the enrollee has submitted a 
completed application and paid the required premium or fee. 
    Sec. 38.  Minnesota Statutes 1990, section 62E.15, 
subdivision 4, is amended to read: 
    Subd. 4.  Every insurer and health maintenance organization 
which rejects or applies underwriting restrictions to an 
applicant for accident and a plan of health insurance coverage 
shall:  (1) provide the applicant with a written notice of 
rejection or the underwriting restrictions applied to the 
applicant in a manner consistent with the requirements in 
section 72A.499; (2) notify the applicant of the existence of 
the state plan, the requirements for being accepted in it, and 
the procedure for applying to it; and (3) provide the applicant 
with written materials explaining the state plan in greater 
detail.  This written material shall be provided by the 
association to every insurer at no charge. 
    Sec. 39.  Minnesota Statutes 1990, section 62E.15, is 
amended by adding a subdivision to read: 
    Subd. 5.  [INITIAL NOTIFICATION.] Every insurer and health 
maintenance organization before issuing a conversion policy or 
contract of health insurance shall: 
    (1) notify the applicant of the existence of the state 
plan, the requirements for being accepted in it, the procedure 
for applying to it, and the plan rates; and 
    (2) provide the applicant with written materials explaining 
the state plan in greater detail.  This written material shall 
be provided by the association to every insurer and health 
maintenance organization at no charge.  
    Sec. 40.  Minnesota Statutes 1990, section 62E.15, is 
amended by adding a subdivision to read: 
    Subd. 6.  [ANNUAL NOTIFICATION.] Every insurer and health 
maintenance organization which provides health coverage to an 
insured through a conversion plan shall annually: 
    (1) notify the insured of the existence of the state plan, 
the requirements for being accepted in it, the procedure for 
applying to it, and the plan rates; and 
    (2) provide the applicant with written materials explaining 
the state plan in greater detail.  This written material shall 
be provided by the association to every insurer and health 
maintenance organization at no charge. 
     Sec. 41.  Minnesota Statutes 1990, section 62E.15, is 
amended by adding a subdivision to read: 
    Subd. 7.  [CONVERSION RATES.] For Medicare supplement 
conversion policies issued prior to the effective date of this 
section, the requirements of subdivisions 5 and 6 apply only 
when the conversion rates offered to the applicant by the 
insurer or health maintenance organization exceed the 
association rates. 
    Sec. 42.  Minnesota Statutes 1990, section 62E.16, is 
amended to read: 
    62E.16 [POLICY CONVERSION PRIVILEGES RIGHTS.] 
    Every program of self-insurance, policy of group accident 
and health insurance or contract of coverage by a health 
maintenance organization written or renewed in this state, shall 
include, in addition to the provisions required by section 
62A.17, the right to convert to an individual coverage qualified 
plan without the addition of underwriting restrictions if the 
individual insured leaves the group regardless of the reason for 
leaving the group or if an employer member of a group ceases to 
remit payment so as to terminate coverage for its employees, or 
upon cancellation or termination of the coverage for the group 
except where uninterrupted and continuous group coverage is 
otherwise provided to the group.  If the health maintenance 
organization has canceled coverage for the group because of a 
loss of providers in a service area, the health maintenance 
organization shall arrange for other health maintenance or 
indemnity conversion options that shall be offered to enrollees 
without the addition of underwriting restrictions.  The required 
conversion contract must treat pregnancy the same as any other 
covered illness under the conversion contract.  The person may 
exercise this right to conversion within 30 days of leaving the 
group or within 30 days following receipt of due notice of 
cancellation or termination of coverage of the group or of the 
employer member of the group and upon payment of premiums from 
the date of termination or cancellation.  Due notice of 
cancellation or termination of coverage for a group or of the 
employer member of the group shall be provided to each employee 
having coverage in the group by the insurer, self-insurer or 
health maintenance organization canceling or terminating the 
coverage except where reasonable evidence indicates that 
uninterrupted and continuous group coverage is otherwise 
provided to the group.  Every employer having a policy of group 
accident and health insurance, group subscriber or contract of 
coverage by a health maintenance organization shall, upon 
request, provide the insurer or health maintenance organization 
a list of the names and addresses of covered employees.  Plans 
of health coverage shall also include a provision which, upon 
the death of the individual in whose name the contract was 
issued, permits every other individual then covered under the 
contract to elect, within the period specified in the contract, 
to continue coverage under the same or a different contract 
without the addition of underwriting restrictions until the 
individual would have ceased to have been entitled to coverage 
had the individual in whose name the contract was issued lived.  
An individual conversion contract issued by a health maintenance 
organization shall not be deemed to be an individual enrollment 
contract for the purposes of section 62D.10. 
    Sec. 43.  Minnesota Statutes 1990, section 62H.01, is 
amended to read: 
    62H.01 [JOINT SELF-INSURANCE EMPLOYEE HEALTH PLAN.] 
    Any three two or more employers, excluding the state and 
its political subdivisions as described in section 471.617, 
subdivision 1, who are authorized to transact business in 
Minnesota may jointly self-insure employee health, dental, or 
short-term disability benefits.  Joint plans must have a minimum 
of 250 100 covered employees and meet all conditions and terms 
of sections 62H.01 to 62H.08.  Joint plans covering employers 
not resident in Minnesota must meet the requirements of sections 
62H.01 to 62H.08 as if the portion of the plan covering 
Minnesota resident employees was treated as a separate plan.  A 
plan may cover employees resident in other states only if the 
plan complies with the applicable laws of that state. 
    A multiple employer welfare arrangement as defined in 
United States Code, title 29, section 1002(40)(a), is subject to 
this chapter to the extent authorized by the Employee Retirement 
Income Security Act of 1974, United States Code, title 29, 
sections 1001 et seq.  
    Sec. 44.  [62I.121] [BENEFITS FOR EMPLOYEES.] 
    At the option of the board, employees may participate in 
the state retirement plan and the state deferred compensation 
plan for employees in the unclassified service, and an insurance 
plan administered by the commissioner of employee relations 
under chapter 43A. 
    Sec. 45.  Minnesota Statutes 1990, section 65B.133, 
subdivision 4, is amended to read: 
    Subd. 4.  [NOTIFICATION OF CHANGE.] No insurer may change 
its surcharge plan unless a surcharge disclosure statement is 
mailed or delivered to the named insured before the change is 
made.  A surcharge disclosure statement disclosing a change 
applicable on the renewal of a policy, may be mailed with an 
offer to renew the policy.  No Surcharges cannot be applied to 
accidents or traffic violations that occurred prior to a change 
in a surcharge plan may be applied retroactively except to the 
extent provided under the prior plan.  
     Sec. 46.  Minnesota Statutes 1990, section 72A.20, 
subdivision 23, is amended to read: 
    Subd. 23.  [DISCRIMINATION IN AUTOMOBILE INSURANCE 
POLICIES.] (a) No insurer that offers an automobile insurance 
policy in this state shall: 
    (1) use the employment status of the applicant as an 
underwriting standard or guideline; or 
    (2) deny coverage to a policyholder for the same reason. 
    (b) No insurer that offers an automobile insurance policy 
in this state shall: 
    (1) use the applicant's status as a tenant, as the term is 
defined in section 566.18, subdivision 2, as an underwriting 
standard or guideline; or 
    (2) deny coverage to a policyholder for the same reason; or 
    (3) make any discrimination in offering or establishing 
rates, premiums, dividends, or benefits of any kind, or by way 
of rebate, for the same reason.  
    (c) No insurer that offers an automobile insurance policy 
in this state shall: 
    (1) use the failure of the applicant to have an automobile 
policy in force during any period of time before the application 
is made as an underwriting standard or guideline; or 
    (2) deny coverage to a policyholder for the same reason. 
    This provision does not apply if the applicant was required 
by law to maintain automobile insurance coverage and failed to 
do so. 
    An insurer may require reasonable proof that the applicant 
did not fail to maintain this coverage.  The insurer is not 
required to accept the mere lack of a conviction or citation for 
failure to maintain this coverage as proof of failure to 
maintain coverage. 
    Sec. 47.  Minnesota Statutes 1991 Supplement, section 
72A.201, subdivision 8, is amended to read: 
    Subd. 8.  [STANDARDS FOR CLAIM DENIAL.] The following acts 
by an insurer, adjuster, or self-insured, or self-insurance 
administrator constitute unfair settlement practices:  
    (1) denying a claim or any element of a claim on the 
grounds of a specific policy provision, condition, or exclusion, 
without informing the insured of the policy provision, 
condition, or exclusion on which the denial is based; 
    (2) denying a claim without having made a reasonable 
investigation of the claim; 
    (3) denying a liability claim because the insured has 
requested that the claim be denied; 
    (4) denying a liability claim because the insured has 
failed or refused to report the claim, unless an independent 
evaluation of available information indicates there is no 
liability; 
    (5) denying a claim without including the following 
information:  
    (i) the basis for the denial; 
    (ii) the name, address, and telephone number of the 
insurer's claim service office or the claim representative of 
the insurer to whom the insured or claimant may take any 
questions or complaints about the denial; and 
    (iii) the claim number and the policy number of the 
insured; 
    (6) denying a claim because the insured or claimant failed 
to exhibit the damaged property unless:  
    (i) the insurer, within a reasonable time period, made a 
written demand upon the insured or claimant to exhibit the 
property; and 
    (ii) the demand was reasonable under the circumstances in 
which it was made; 
    (7) denying a claim by an insured or claimant based on the 
evaluation of a chemical dependency claim reviewer selected by 
the insurer unless the reviewer meets the qualifications 
specified under subdivision 8a.  An insurer that selects 
chemical dependency reviewers to conduct claim evaluations must 
annually file with the commissioner of commerce a report 
containing the specific evaluation standards and criteria used 
in these evaluations.  The report must be filed at the same time 
its annual statement is submitted under section 60A.13.  The 
report must also include the number of evaluations performed on 
behalf of the insurer during the reporting period, the types of 
evaluations performed, the results, the number of appeals of 
denials based on these evaluations, the results of these 
appeals, and the number of complaints filed in a court of 
competent jurisdiction. 
    Sec. 48.  Minnesota Statutes 1990, section 72B.02, is 
amended by adding a subdivision to read: 
    Subd. 14.  [CROP HAIL ADJUSTER.] "Crop hail adjuster" means 
a person who for money, commission, or other thing of value acts 
as an adjuster in regard to insurance policies against crop 
damage by hail. 
    Sec. 49.  Minnesota Statutes 1990, section 72B.03, 
subdivision 2, is amended to read: 
    Subd. 2.  [CLASSES OF LICENSES.] (a) There shall be three 
four classes of licenses, as follows: 
    (a) (1) independent adjuster's license.; 
    (b) (2) public adjuster's license.; 
    (c) (3) public adjuster solicitor's license; and 
    (4) crop hail adjuster's license. 
    (b) The independent adjuster and public adjuster licenses 
shall be issued in at least three fields each, as follows: 
    (a) (1) fire and allied lines, inland marine lines and 
including all perils under homeowners policies.; 
    (b) (2) all lines written as casualty insurance under 
section 60A.06, and including workers' compensation.; and 
    (c) (3) a combination of the fields described in 
(a) clauses (1) and (b), above (2).  Separate licenses shall be 
required for each field, but the same person may obtain licenses 
in more than one field.  No person shall be licensed as both a 
public and independent adjuster.  The license shall state the 
class for which the person is licensed and, where applicable, 
the field in which the person is licensed, and shall state the 
licensee's name and residence address, the date of issuance and 
the date of expiration of the license and any other information 
prescribed by the commissioner which is consistent with the 
purpose of the license. 
    Sec. 50.  Minnesota Statutes 1990, section 72B.04, 
subdivision 6, is amended to read: 
    Subd. 6.  [EXCEPTIONS.] A person who on January 1, 1972, 
meets all of the qualifications specified in subdivision 2 with 
regard to the class of license applied for and, if experience is 
one of the requisites, has gained the experience within the 
three years next preceding January 1, 1972, shall be eligible 
for the issuance of a license without taking an examination. 
    A person who has held a license of any given class or in 
any field or fields within three years prior to the application 
shall be entitled to a renewal of the license in the same class 
or in the same fields without taking an examination. 
    A person applying for a license as a crop hail adjuster 
shall not be required to comply with the requirements of 
subdivision 5. 
    The commissioner may issue a license under sections 72B.01 
to 72B.14 without an examination, if the applicant presents 
sufficient and satisfactory evidence of having passed a similar 
examination in another state and if the commissioner, with the 
advice of the advisory board, has determined that the standards 
of such other state are equivalent to those in Minnesota for the 
class of license applied for.  Any applicant who presents 
sufficient and satisfactory evidence of having successfully 
completed all six parts of the insurance institute of America 
program in adjusting shall be entitled to an adjuster's license 
without taking the examination prescribed in subdivision 5. 
    Sec. 51.  Laws 1991, chapter 233, section 111, is amended 
to read: 
    Sec. 111.  [EFFECTIVE DATE.] 
    (a) Sections 33 and 110, paragraph (a), are effective the 
day following final enactment. 
    (b) Sections 63; 64; 65; 66; 67; 68; 69; 70; 71; 72; 73; 
74; 75; 76; 77; 78; 79; 80; 81; 82; 83; and 110, paragraph (b), 
are effective August 1, 1991. 
    (c) Sections 43 and Section 44 are is effective July 
for the licensing year beginning June 1, 1992. 
    Sec. 52.  [REQUIRED PROPERTY AND CASUALTY COVERAGES 
INCLUDING BONDS; STUDY.] 
    The commissioner of commerce shall conduct a study of all 
property and casualty insurance coverages including bonds 
required by state law and report to the legislature by February 
1, 1993.  The report shall include, but is not limited to, the 
following: 
    (1) identification of all required insurance coverages and 
bonds; 
    (2) the purpose of the requirement, for example, if it is 
to protect third parties, to protect government, or to protect 
the purchaser; 
    (3) the availability of the insurance and bonds from 
admitted insurers; 
    (4) the likely effect, including cost implications, of 
requiring that only admitted carriers may offer the coverage; 
and 
    (5) other information the commissioner considers 
appropriate. 
    The commissioner may request an extension of the date of 
submission of the report from the chairs of the senate commerce 
committee and the house financial institutions and insurance 
committee. 
    Sec. 53.  [APPLICATION.] 
    Section 13 does not apply to policies in force on the 
effective date of that section and does not preclude renewals of 
those policies. 
    Section 20 applies to reports required to be filed in 1993 
and subsequent years. 
    Sec. 54.  [REVISOR INSTRUCTION.] 
    The revisor of statutes shall change the terms "fraternal 
beneficiary association," "association," or similar terms to 
"fraternal benefit society," "society," or similar terms 
wherever they appear in Minnesota Statutes and Minnesota Rules 
in connection with those entities regulated under Minnesota 
Statutes, chapter 64B. 
    Sec. 55.  [REPEALER.] 
    Minnesota Statutes 1990, sections 65B.70; and 72A.13, 
subdivision 3, are repealed. 
    Sec. 56.  [EFFECTIVE DATE.] 
    Section 44 is effective retroactive to the effective date 
of Laws 1989, chapter 260, section 25.  The prohibition against 
solicitation of members within the first 30 days of membership 
in section 13 is effective August 1, 1993. 

                                ARTICLE 2
    Section 1.  Minnesota Statutes 1990, section 45.028, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REQUIREMENT.] (a) When a person, including 
any nonresident of this state, engages in conduct prohibited or 
made actionable by chapters 45 to 83, 155A, 309, and 332, or any 
rule or order under those chapters, and the person has not filed 
a consent to service of process under chapters 45 to 83, 155A, 
309, and 332, that conduct is equivalent to an appointment of 
the commissioner as the person's attorney to receive service of 
process in any noncriminal suit, action, or proceeding against 
the person which is based on that conduct and is brought under 
chapters 45 to 83, 155A, 309, and 332, or any rule or order 
under those chapters.  
    (b) Subdivision 2 also applies in all other cases under 
chapters 45 to 83, 155A, 309, and 332, or any rule or order 
under those chapters, in which a person, including a nonresident 
of this state, has filed a consent to service of process.  This 
paragraph supersedes any inconsistent provision of law.  
    (c) Subdivision 2 applies in all cases in which service of 
process is allowed to be made on the commissioner of commerce. 
    Sec. 2.  Minnesota Statutes 1990, section 48.185, 
subdivision 7, is amended to read: 
    Subd. 7.  Any bank or savings bank extending credit in 
compliance with the provisions of this section, which is injured 
competitively by violations of this section by another bank or 
savings bank, may institute a civil action in the district court 
of this state against that bank or savings bank for an 
injunction prohibiting any violation of this section.  The 
court, upon proper proof that the defendant has engaged in any 
practice in violation of this section, may enjoin the future 
commission of that practice.  Proof of monetary damage or loss 
of profits shall not be required.  Costs and attorneys' fees may 
be allowed to the plaintiff, unless the court directs 
otherwise.  The relief provided in this subdivision is in 
addition to remedies otherwise available against the same 
conduct under the common law or statutes of this state. 
    Service of process shall be as in any other civil suit, 
except that if a defendant in the action is a foreign 
corporation or a national banking association with its principal 
place of business in another state, service of process may also 
be made by personal service outside the state, or in the manner 
provided by section 303.13, subdivision 1, clause (3), or in 
such manner as the court may direct, or in accordance with 
section 45.028, subdivision 2.  Process is valid if it satisfies 
the requirements of due process of law, whether or not defendant 
is doing business in Minnesota regularly or habitually. 
    Sec. 3.  Minnesota Statutes 1990, section 60A.19, 
subdivision 4, is amended to read: 
    Subd. 4.  [FEES.] The commissioner shall be entitled to 
charge and receive a fee prescribed by section 60A.14, 
subdivision 1, paragraph (c), clause (4), for each notice, proof 
of loss, summons, or other process served under the provisions 
of this subdivision and subdivision 3, to be paid by the persons 
serving the same.  The service of process is authorized by this 
section shall be made by delivering to and leaving with the 
commissioner two copies thereof for each company being served in 
compliance with section 45.028, subdivision 2.  
    Sec. 4.  Minnesota Statutes 1990, section 60A.21, 
subdivision 2, is amended to read: 
    Subd. 2.  [SERVICE OF PROCESS UPON UNAUTHORIZED INSURER.] 
(1) Any of the following acts in this state effected by mail or 
otherwise by an unauthorized foreign or alien insurer:  (a) the 
issuance or delivery of contracts of insurance to residents of 
this state or to corporations authorized to do business therein; 
(b) the solicitation of applications for such contracts; (c) the 
collection of premiums, membership fees, assessments, or other 
considerations for such contracts; or (d) any other transaction 
of insurance business, is equivalent to and shall constitute an 
appointment by such insurer of the commissioner of commerce and 
the commissioner's successor or successors in office to be its 
true and lawful attorney upon whom may be served all lawful 
process in any action, suit, or proceeding instituted by or on 
behalf of an insured or beneficiary arising out of any such 
contract of insurance and any such act shall be signification of 
its agreement that such service of process is of the same legal 
force and validity as personal service of process in this state 
upon such insurer. 
    (2) Such service of process shall be made by delivering to 
and leaving with the commissioner of commerce or some person in 
apparent charge of that office two copies thereof in compliance 
with section 45.028, subdivision 2 and the payment to that 
person of a filing fee as prescribed by section 60A.14, 
subdivision 1, paragraph (c), clause (4).  The commissioner of 
commerce shall forthwith mail by certified mail one of the 
copies of such process to the defendant at its last known 
principal place of business and shall keep a record of all 
process so served upon the commissioner.  Such service of 
process is sufficient provided notice of such service and a copy 
of the process are sent within ten days thereafter by certified 
mail by plaintiff or plaintiff's attorney to the defendant at 
its last known principal place of business and the defendant's 
receipt, or receipt issued by the post office with which the 
letter is certified showing the name of the sender of the letter 
and the name and address of the person to whom the letter is 
addressed, and the affidavit of the plaintiff or plaintiff's 
attorney showing a compliance herewith are filed with the court 
administrator of the court in which such action is pending on or 
before the date the defendant is required to appear or within 
such further time as the court may allow. 
    (3) Service of process in any such action, suit, or 
proceeding shall in addition to the manner provided in clause 
(2) of this subdivision be valid if served upon any person 
within this state who, in this state on behalf of such insurer, 
is:  (a) soliciting insurance, or (b) making, issuing, or 
delivering any contract of insurance, or (c) collecting or 
receiving any premium, membership fee, assessment, or other 
consideration for insurance; and if a copy of such process is 
sent within ten days thereafter by certified mail by the 
plaintiff or plaintiff's attorney to the defendant at the last 
known principal place of business of the defendant and the 
defendant's receipt, or the receipt issued by the post office 
with which the letter is certified showing the name of the 
sender of the letter and the name and address of the person to 
whom the letter is addressed, and the affidavit of the plaintiff 
or plaintiff's attorney showing a compliance herewith are filed 
with the administrator of the court in which such action is 
pending on or before the date the defendant is required to 
appear or within such further time as the court may allow. 
     (4) No plaintiff or complainant shall be entitled to a 
judgment by default under this subdivision until the expiration 
of 30 days from the date of the filing of the affidavit of 
compliance. 
     (5) Nothing in this subdivision contained shall limit or 
abridge the right to serve any process, notice, or demand upon 
any insurer in any other manner now or hereafter permitted by 
law. 
     (6) The provisions of this section shall not apply to 
surplus line insurance lawfully effectuated under Minnesota law, 
or to reinsurance, nor to any action or proceeding against an 
unauthorized insurer arising out of: 
     (a) Wet marine and transportation insurance; 
     (b) Insurance on or with respect to subjects located, 
resident, or to be performed wholly outside this state, or on or 
with respect to vehicles or aircraft owned and principally 
garaged outside this state; 
     (c) Insurance on property or operations of railroads 
engaged in interstate commerce; or 
     (d) Insurance on aircraft or cargo of such aircraft, or 
against liability, other than employer's liability, arising out 
of the ownership, maintenance, or use of such aircraft, where 
the policy or contract contains a provision designating the 
commissioner as its attorney for the acceptance of service of 
lawful process in any action or proceeding instituted by or on 
behalf of an insured or beneficiary arising out of any such 
policy, or where the insurer enters a general appearance in any 
such action. 
    Sec. 5.  Minnesota Statutes 1990, section 64B.35, 
subdivision 2, is amended to read: 
    Subd. 2.  [SERVICE.] Service under this section shall only 
be made upon the commissioner, or if absent, upon the person in 
charge of the commissioner's office.  It shall be made in 
duplicate and shall constitute sufficient service upon the 
society.  When legal process against a society is served upon 
the commissioner, the commissioner shall immediately forward one 
of the duplicate copies by registered mail, prepaid, directed to 
the secretary or corresponding officer in compliance with 
section 45.028, subdivision 2.  No service shall require a 
society to file its answer, pleading, or defense in less than 30 
days from the date of mailing the copy of the service to a 
society.  Legal process shall not be served upon a society 
except in the manner herein provided.  At the time of serving 
any process upon the commissioner, the plaintiff or complainant 
in the action shall pay to the commissioner a fee as prescribed 
in section 60A.14. 
    Sec. 6.  Minnesota Statutes 1990, section 71A.02, 
subdivision 3, is amended to read: 
    Subd. 3.  [COMMISSIONER AS AGENT FOR SERVICE.] Concurrently 
with the filing of the declaration provided for by the terms of 
subdivision 2, the attorney shall execute and file with the 
commissioner an instrument in writing for the subscribers, 
conditioned that upon the issuance of the certificate of 
authority provided for in subdivision 1, service of process in 
compliance with section 45.028, subdivision 2, may be had upon 
the commissioner in all suits in this state arising out of these 
policies, contracts, or agreements, which service shall be valid 
and binding upon all subscribers exchanging at any time 
reciprocal or interinsurance contracts through such 
attorney.  Three copies of the process shall be served and the 
commissioner shall file one copy, forward one copy to the 
attorney, and return one copy with an admission of service.  
    Sec. 7.  Minnesota Statutes 1990, section 72A.22, 
subdivision 5, is amended to read: 
    Subd. 5.  [SERVICE.] Statements of charges, notices, 
orders, and other processes of the commissioner under sections 
72A.17 to 72A.32 may be served by anyone duly authorized by the 
commissioner, either in the manner provided by law for service 
of process in civil actions or by registering and mailing a copy 
thereof to the person affected by the statement, notice, order, 
or other process at the person's residence or principal office 
or place of business.  A verified return by the person serving 
the statement, notice, order, or other process, setting forth 
the manner of such service, or the return postcard receipt for a 
copy of the statement, notice, order, or other process, 
registered and mailed as aforesaid, shall be proof of the 
service of the same in compliance with section 45.028, 
subdivision 2.  
    Sec. 8.  Minnesota Statutes 1990, section 72A.37, 
subdivision 2, is amended to read: 
    Subd. 2.  [METHOD OF SERVICE.] Service of a statement of 
charges and notices under said unfair trade practice act shall 
be made by any deputy or employee of the department of 
commerce delivering to and leaving with upon the commissioner or 
some person in apparent charge of the office, two copies thereof 
in compliance with section 45.028.  Service of process issued by 
any court in any action, suit or proceeding to collect any 
penalty under said act provided, shall be made by delivering and 
leaving with the commissioner, or some person in apparent charge 
of the office, two copies thereof.  The commissioner shall 
forthwith cause to be mailed by certified mail one of the copies 
of such statement of charges, notices or process to the 
defendant at its last known principal place of business, and 
shall keep a record of all statements of charges, notices and 
process so served.  Such service of statement of charges, 
notices or process shall be sufficient provided they shall have 
been so mailed and the defendant's receipt or receipt issued by 
the post office with which the letter is certified, showing the 
name of the sender of the letter and the name and address of the 
person to whom the letter is addressed, and the affidavit of the 
person mailing such letter showing a compliance herewith are 
filed with the commissioner in the case of any statement of 
charges or notices, or with the court administrator of the court 
in which such action is pending in the case of any process, on 
or before the date the defendant is required to appear or within 
such further time as may be allowed in compliance with section 
45.028, subdivision 2. 
    Sec. 9.  Minnesota Statutes 1990, section 72A.43, 
subdivision 2, is amended to read: 
    Subd. 2.  Service of such process shall be made by 
delivering and leaving with the commissioner two copies thereof 
and the payment to the commissioner of a $15 filing fee.  The 
commissioner shall forthwith mail by certified mail one of the 
copies of such process to such company at its last known 
registered office, and shall keep a record of all process so 
served.  The company's receipt, or receipt issued by the post 
office with which the letter is certified, and an affidavit of 
compliance herewith by or on behalf of the commissioner, shall 
be filed with the court administrator of the court in which such 
action or proceeding is pending on or before the return date of 
such process or within such further time as the court may 
allow in compliance with section 45.028, subdivision 2. 
    Sec. 10.  Minnesota Statutes 1990, section 80A.27, 
subdivision 7, is amended to read: 
    Subd. 7.  Every applicant for registration under sections 
80A.01 to 80A.31 and every issuer who proposes to offer a 
security in this state through any person acting on an agency 
basis in the common law sense shall file with the commissioner, 
in such form as the commissioner by rule prescribes, an 
irrevocable consent appointing the commissioner or a successor 
in office to be the attorney to receive service of any lawful 
process in any noncriminal suit, action, or proceeding against 
that person or a successor, executor, or administrator which 
arises under sections 80A.01 to 80A.31 or any rule or order 
hereunder after the consent has been filed, with the same force 
and validity as if served personally on the person filing the 
consent.  The consent need not be filed by a person who has 
filed a consent in connection with a previous registration or 
license which is then in effect.  Service may be made by leaving 
a copy of the process in the office of the commissioner, but it 
is not effective unless (a) the plaintiff, who may be 
commissioner in a suit, action, or proceeding instituted by the 
commissioner, forthwith sends notice of the service and a copy 
of the process by certified mail to the defendant or respondent 
at the last address on file with the commissioner, and (b) the 
plaintiff's affidavit of compliance with this subsection is 
filed in the case on or before the return day of the process, if 
any, or within such further time as the court allows in 
compliance with section 45.028, subdivision 2. 
    Sec. 11.  Minnesota Statutes 1990, section 80A.27, 
subdivision 8, is amended to read: 
    Subd. 8.  When any person, including any nonresident of 
this state, engages in conduct prohibited or made actionable by 
sections 80A.01 to 80A.31 or any rule or order hereunder, and 
has not filed a consent to service of process under subdivision 
7 and personal jurisdiction cannot otherwise be obtained in this 
state, that conduct shall be considered equivalent to an 
appointment of the commissioner or a successor in office to be 
the attorney to receive service of any lawful process in any 
noncriminal suit, action, or proceeding against that person or a 
successor executor or administrator which grows out of that 
conduct and which is brought under sections 80A.01 to 80A.31 or 
any rule or order hereunder, with the same force and validity as 
if served personally.  Service may under this section shall be 
made by leaving a copy of the process in the office of the 
commissioner, and it is not effective unless (a) the plaintiff, 
who may be the commissioner in a suit, action, or proceeding 
instituted by the commissioner, forthwith sends notice of the 
service and a copy of the process by certified mail to the 
defendant or respondent at the last known address or takes other 
steps which are reasonably calculated to give actual notice, and 
(b) the plaintiff's affidavit of compliance with this subsection 
is filed in the case on or before the return day of the process, 
if any, or within such further time as the court allows in 
compliance with section 45.028, subdivision 2. 
    Sec. 12.  Minnesota Statutes 1990, section 80C.20, is 
amended to read: 
    80C.20 [SERVICE OF PROCESS.] 
    Every applicant for registration under sections 80C.01 to 
80C.22 and every franchisor on whose behalf an application for 
registration is filed, except applicants and franchisors which 
are Minnesota corporations, shall file with the commissioner, in 
such form as the commissioner may prescribe, an irrevocable 
consent appointing the commissioner and successors in office to 
be the applicant's or franchisor's attorney to receive service 
of any lawful process in any civil action against the applicant 
or franchisor or a successor, executor or administrator, which 
arises under sections 80C.01 to 80C.22 or any rule or order 
thereunder after the consent has been filed, with the same force 
and validity as if served personally on the applicant or 
franchisor or a successor, executor or administrator.  Service 
may under this section shall be made by leaving a copy of the 
process in the office of the commissioner, but it is not 
effective unless the plaintiff, who may be the commissioner in 
an action instituted by the commissioner, forthwith sends notice 
of the service and a copy of the process by certified mail to 
the defendant or respondent at the last address on file with the 
commissioner, and the plaintiff's affidavit of compliance with 
this subsection is filed with the court at the time of the 
filing of the complaint in compliance with section 45.028, 
subdivision 2. 
    When any person, including any nonresident of this state 
and any foreign corporation, engages in conduct prohibited or 
made actionable by sections 80C.01 to 80C.22, whether or not the 
person has filed a consent to service of process, and personal 
jurisdiction over the person cannot otherwise be obtained in 
this state, that conduct shall be considered equivalent to 
appointment of the commissioner and successors in office to be 
the person's agent to receive service of any lawful process in 
any suit against the person or a successor, executor or 
administrator which grows out of that conduct and which is 
brought under sections 80C.01 to 80C.22, with the same force and 
validity as if served personally.  Service may under this 
section shall be made by leaving a copy of the process in the 
office of the commissioner but it is not effective unless the 
plaintiff, who may be the commissioner in an action instituted 
by the commissioner, forthwith sends notice of the service and a 
copy of the process by certified mail to the defendant or 
respondent at the last known address on file with the 
commissioner and the plaintiff's affidavit of compliance with 
this section is filed with the court at the time of the filing 
of the complaint in compliance with section 45.028, subdivision 
2.  
    Sec. 13.  Minnesota Statutes 1990, section 82.31, 
subdivision 3, is amended to read: 
    Subd. 3.  Service of process under this section may shall 
be made by filing a copy of the process with the commissioner or 
a representative, but is not effective unless:  
    (a) The plaintiff, who may be the commissioner in an action 
or proceeding instituted by the commissioner, sends notice of 
the service and a copy of the process by certified mail to the 
defendant or respondent at the address as shown by the records 
at the office of the commissioner in the case of service made on 
the commissioner as attorney pursuant to appointment in 
compliance with subdivision 1, and at the defendant's or 
respondent's last known address in the case of service on the 
commissioner as attorney pursuant to appointment by virtue of 
subdivision 2; and 
    (b) The plaintiff's affidavit of compliance with this 
subdivision is filed in the action or proceeding on or before 
the return day of the process, if any, or within such further 
time as the court or administrative law judge allows in 
compliance with section 45.028, subdivision 2. 
    Sec. 14.  Minnesota Statutes 1990, section 82A.22, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CONSENT TO SERVICE.] Every membership 
camping operator or broker, on whose behalf an application for 
registration or exemption is filed, shall file with the 
commissioner, in such form as the commissioner may prescribe, an 
irrevocable consent appointing the commissioner and the 
commissioner's successors in office to be the membership camping 
operator's or broker's attorney to receive service of any lawful 
process in any noncriminal suit, action, or proceeding against 
the membership camping operator or broker or a successor, 
executor, or administrator which arises under this chapter or 
any rule or order thereunder after the consent has been filed, 
with the same force and validity as if served personally on the 
membership camping operator or the operator's successor, 
executor, or administrator.  Service may under this section 
shall be made by leaving a copy of the process in the office of 
the commissioner, but it is not effective unless:  
    (1) the plaintiff, who may be the commissioner in a suit, 
action, or proceeding instituted by the commissioner, sends 
notice of the service and a copy of the process by certified 
mail to the defendant or respondent at that person's last 
address on file with the commissioner; and 
    (2) the plaintiff's affidavit of compliance with this 
section is filed in the case on or before the return day of the 
process, if any, or within such further time as the court allows 
in compliance with section 45.028, subdivision 2. 
    Sec. 15.  Minnesota Statutes 1990, section 82A.22, 
subdivision 2, is amended to read: 
    Subd. 2.  [APPOINTMENT OF COMMISSIONER.] When any person, 
including any nonresident of this state, engages in conduct 
prohibited or made actionable by this chapter, or any rule or 
order thereunder, and the person has not filed a consent to 
service of process under subdivision 1 and personal jurisdiction 
over this person cannot otherwise be obtained in this state, 
that conduct shall be considered equivalent to the person's 
appointment of the commissioner or the commissioner's successor 
to be the person's attorney to receive service of any lawful 
process in any noncriminal suit, action, or proceeding against 
the person which grows out of that conduct and which is brought 
under this chapter or any rule or order thereunder, with the 
same force and validity as if served on the person personally.  
Service may under this section shall be made by leaving a copy 
of the process in the office of the commissioner, and it is not 
effective unless:  
    (1) the plaintiff, who may be the commissioner in a suit, 
action, or proceeding instituted by the commissioner, forthwith 
sends notice of the service and a copy of the process by 
certified mail to the defendant or respondent at that person's 
last known address or takes other steps which are reasonably 
calculated to give actual notice; and 
    (2) the plaintiff's affidavit of compliance with this 
subdivision is filed in the case on or before the return day of 
the process, if any, or within such further time as the court 
allows in compliance with section 45.028, subdivision 2.  
    Sec. 16.  Minnesota Statutes 1991 Supplement, section 
82B.15, subdivision 3, is amended to read: 
    Subd. 3.  [PROCEDURE.] Service of process under this 
section may shall be made under the provisions of in compliance 
with section 45.028, subdivision 2.  
    Sec. 17.  Minnesota Statutes 1990, section 83.39, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PROCEDURE.] Every applicant for 
registration under sections 83.20 to 83.42, 83.43 and 83.44 
shall file with the commissioner, in a format as by rule may be 
prescribed, an irrevocable consent appointing the commissioner 
or commissioner's successor to be the applicant's attorney to 
receive service of any lawful process in any noncriminal suit, 
action, or proceeding against the applicant or a successor, 
executor, or administrator which arises under sections 83.20 to 
83.42, 83.43 and 83.44 or any rule or order thereunder after the 
consent has been filed, with the same force and validity as if 
served personally on the person filing the consent.  Service may 
under this section shall be made by leaving a copy of the 
process in the office of the commissioner, but it is not 
effective unless (a) the plaintiff, who may be commissioner in a 
suit, action, or proceeding instituted by the commissioner, 
forthwith sends notice of the service and a copy of the process 
by registered mail to the defendant or respondent at that 
person's last address on file with the commissioner, and (b) the 
plaintiff's affidavit of compliance with this subdivision is 
filed in the case on or before the return day of the process, if 
any, or within such further time as the court allows in 
compliance with section 45.028, subdivision 2.  
    The rulemaking authority in this subdivision does not 
include emergency rulemaking authority pursuant to chapter 14.  
    Sec. 18.  Minnesota Statutes 1990, section 83.39, 
subdivision 2, is amended to read: 
    Subd. 2.  [SERVICE ON COMMISSIONER.] When any person, 
including any nonresident of this state, engages in conduct 
prohibited or made actionable by sections 83.20 to 83.42, 83.43 
and 83.44, or any rule or order thereunder, and the person has 
not filed a consent to service of process under subdivision 1 
and personal jurisdiction over this person cannot otherwise be 
obtained in this state, that conduct shall be considered 
equivalent to the person's appointment of the commissioner or 
the commissioner's successor to be the person's attorney to 
receive service of any lawful process in any noncriminal suit, 
action, or proceeding against the commissioner or the 
commissioner's successor, executor, or administrator which grows 
out of that conduct and which is brought under sections 83.20 to 
83.42, 83.43 and 83.44 or any rule or order thereunder, with the 
same force and validity as if served on the person personally.  
Service may under this section shall be made by leaving a copy 
of the process in the office of the commissioner, and it is not 
effective unless (a) the plaintiff, who may be the commissioner 
in a suit, action, or proceeding instituted by the commissioner, 
forthwith sends notice of the service and a copy of the process 
by registered mail to the defendant or respondent at that 
person's last known address or takes other steps which are 
reasonably calculated to give actual notice, and (b) the 
plaintiff's affidavit of compliance with this subdivision is 
filed in the case on or before the return day of the process, if 
any, or within such further time as the court allows in 
compliance with section 45.028, subdivision 2.  
    Sec. 19.  Minnesota Statutes 1990, section 543.08, is 
amended to read: 
    543.08 [SUMMONS, SERVICE UPON CERTAIN CORPORATIONS.] 
    If a private domestic corporation has no officer at the 
registered office of the corporation within the state upon whom 
service can be made, of which fact the return of the sheriff of 
the county in which that office is located, or the affidavit of 
a private person not a party, that none can be found in that 
county shall be conclusive evidence, service of the summons upon 
it may be made by depositing two copies, together with a fee of 
$35 with the secretary of state, which shall be deemed personal 
service upon the corporation.  One of the copies shall be filed 
by the secretary, and the other forthwith mailed by the 
secretary to the corporation by certified mail, if the place of 
its main office is known to the secretary or is disclosed by the 
files in the office. 
    If the defendant is a foreign insurance corporation, the 
summons may be served by two copies delivered to the 
commissioner of commerce, who shall file one in the 
commissioner's office and forthwith mail the other postage 
prepaid to the defendant at its home office in compliance with 
section 45.028, subdivision 2. 

                                ARTICLE 3

                            INSURANCE AGENTS
    Section 1.  Minnesota Statutes 1990, section 60A.02, 
subdivision 7, is amended to read: 
    Subd. 7.  [INSURANCE AGENT OR INSURANCE AGENCY.] An 
"insurance agent" or "insurance agency" is a person acting under 
express authority from, and an appointment pursuant to section 
60A.17 60K.02 by, an insurer and on its behalf to solicit 
insurance, or to appoint other agents to solicit insurance, or 
to write and countersign policies of insurance, or to collect 
premiums therefor within this state, or to exercise any or all 
these powers when so authorized by the insurer.  The term 
"person" includes a natural person, a partnership, a 
corporation, or other entity, including an insurance agency.  
    Sec. 2.  [60A.052] [DENIAL, REVOCATION, SUSPENSION OF 
CERTIFICATE OF AUTHORITY.] 
    Subdivision 1.  [GROUNDS.] The commissioner may by order 
take any or all of the following actions:  (1) deny, suspend, or 
revoke a certificate of authority; (2) censure the insurance 
company; or (3) impose a civil penalty as provided for in 
section 45.027, subdivision 6.  In order to take this action the 
commissioner must find that the order is in the public interest, 
and the insurance company: 
    (1) has a board of directors or principal management that 
is incompetent, untrustworthy, or so lacking in insurance 
company managerial experience as to make its operation hazardous 
to policyholders, its stockholders, or to the insurance buying 
public; 
    (2) is controlled directly or indirectly through ownership, 
management, reinsurance transactions, or other business 
relations by any person or persons whose business operations are 
or have been marked by manipulation of any assets, reinsurance, 
or accounts as to create a hazard to the company's 
policyholders, stockholders, or the insurance buying public; 
    (3) is in an unsound or unsafe condition; 
    (4) has the actual liabilities that exceed the actual funds 
of the company; 
    (5) has filed an application for a license which is 
incomplete in any material respect or contains any statement 
which, in light of the circumstances under which it was made, 
contained any misrepresentation or was false, misleading, or 
fraudulent; 
    (6) has pled guilty, with or without explicitly admitting 
guilt, pled nolo contendere, or been convicted of a felony, 
gross misdemeanor, or misdemeanor involving moral turpitude, or 
similar conduct; 
    (7) is permanently or temporarily enjoined by any court of 
competent jurisdiction from engaging in or continuing any 
conduct or practice involving any aspect of the insurance 
business; 
    (8) has violated or failed to comply with any order of the 
insurance regulator of any other state or jurisdiction; 
    (9) has had a certificate of authority denied, suspended, 
or revoked, has been censured or reprimanded, has been the 
subject of any other discipline imposed by, or has paid or has 
been required to pay a monetary penalty or fine to, another 
state; 
    (10) agents, officers, or directors refuse to submit to 
examination or perform any related legal obligation; or 
     (11) has violated or failed to comply with, any of the 
provisions of the insurance laws including chapter 45 or 
chapters 60A to 72A or any rule or order under those chapters. 
    Subd. 2.  [SUMMARY SUSPENSION OR REVOCATION OF AUTHORITY OR 
CENSURE.] If the commissioner determines that one of the 
conditions listed in subdivision 1 exists, the commissioner may 
issue an order requiring the insurance company to show cause why 
any or all of the following should not occur:  (1) revocation or 
suspension of any or all certificates of authority granted to 
the foreign or domestic insurance company or its agent; (2) 
censuring of the insurance company; or (3) the imposition of a 
civil penalty.  The order shall be calculated to give reasonable 
notice of the time and place for hearing thereon, and shall 
state the reasons for the entry of the order.  The commissioner 
may by order summarily suspend or revoke a certificate pending 
final determination of any order to show cause.  If a 
certificate is suspended or revoked pending final determination 
of an order to show cause, a hearing on the merits shall be held 
within 30 days of the issuance of the summary order.  All 
hearings shall be conducted in accordance with chapter 14.  
After the hearing, the commissioner shall enter an order 
disposing of the matter as the facts require.  If the insurance 
company fails to appear at a hearing after having been duly 
notified of it, the company shall be considered in default, and 
the proceeding may be determined against the company upon 
consideration of the order to show cause, the allegations of 
which may be considered to be true. 
    Subd. 3.  [APPLICANTS.] Whenever it appears to the 
commissioner that an application for a certificate of authority 
should be denied pursuant to subdivision 1, the commissioner 
shall promptly give a written notice to the applicant of the 
denial.  The notice must state the grounds for the denial and 
give reasonable notice of the rights of the applicant to request 
a hearing.  A hearing must be held not later than 30 days after 
the request for hearing is received by the commissioner unless 
the applicant and the department of commerce agree that the 
hearing may be held at a later date.  If no hearing is requested 
within 30 days of service of the notice, the denial will become 
final.  All hearings shall be conducted in accordance with 
chapter 14.  After the hearing, the commissioner shall enter an 
order disposing of the matter as the facts require.  If the 
applicant fails to appear at a hearing after having been duly 
notified of it, the applicant shall be considered in default, 
and the proceeding may be determined against the applicant upon 
consideration of the notice denying the application, the 
allegations of which may be considered to be true. 
    Subd. 4.  [ACTIONS AGAINST LAPSED CERTIFICATE OF 
AUTHORITY.] If a certificate of authority lapses, is 
surrendered, withdrawn, terminated, or otherwise becomes 
ineffective, the commissioner may institute a proceeding under 
this subdivision within two years after the certificate of 
authority was last effective and enter a revocation or 
suspension order as of the last date on which the certificate of 
authority was in effect, or impose a civil penalty as provided 
for in section 45.027, subdivision 6. 
    Sec. 3.  [60K.01] [DEFINITIONS.] 
    Unless the language or context clearly indicates that a 
different meaning is intended, the definitions in section 60A.01 
are applicable to this chapter. 
    Sec. 4.  [60K.02] [INSURANCE AGENTS; SOLICITORS LICENSE.] 
    Subdivision 1.  [REQUIREMENT.] No person shall act or 
assume to act as an insurance agent in the solicitation or 
procurement of applications for insurance, nor in the sale of 
insurance or policies of insurance, nor in any manner aid as an 
insurance agent in the negotiation of insurance by or with an 
insurer, including resident agents or reciprocal or 
interinsurance exchanges and fraternal benefit societies, until 
that person obtains from the commissioner a license for that 
purpose.  The license must specifically set forth the name of 
the person authorized to act as an agent and the class or 
classes of insurance for which that person is authorized to 
solicit or countersign policies.  An insurance agent may qualify 
for a license in the following classes:  (1) life and health; 
and (2) property and casualty.  
    No insurer shall appoint or reappoint a natural person, 
partnership, or corporation to act as an insurance agent on its 
behalf until that natural person, partnership, or corporation 
obtains a license as an insurance agent.  
    Subd. 2.  [PARTNERSHIPS AND CORPORATIONS.] A license issued 
to a partnership or corporation must be solely in the name of 
the entity to which it is issued; provided that each partner, 
director, officer, stockholder, or employee of the licensed 
entity who is personally engaged in the solicitation or 
negotiation of a policy of insurance on behalf of the licensed 
entity shall be personally licensed as an insurance agent.  
    Upon request by the commissioner, each partnership and 
corporation licensed as an insurance agent shall provide the 
commissioner with a list of the names of each partner, director, 
officer, stockholder, and employee who is required to hold a 
valid insurance agent's license.  
    Subd. 3.  [TRANSITION.] (a) Any agent who is qualified for 
life or accident and health as of June 1, 1981, is qualified for 
a life and health license under Laws 1981, chapter 307, and is 
appointed by an insurer which has submitted a written 
requisition for a license for that agent as of June 1, 1981.  
    (b) Any agent who is qualified for one or more lines of 
insurance, excluding life or accident and health and farm 
property liability as of June 1, 1981, is qualified for a 
property and casualty license under Laws 1981, chapter 307, and 
is appointed by any insurer which has submitted a written 
requisition for a license for that agent as of June 1, 1981.  
    Subd. 4.  [CRIMINAL PENALTIES.] A person who acts or 
assumes to act as an insurance agent without a valid license 
issued by the commissioner is guilty of a gross misdemeanor.  
    Sec. 5.  [60K.03] [LICENSE APPLICATION.] 
    Subdivision 1.  [PROCEDURE.] An application for a license 
to act as an insurance agent shall be made to the commissioner 
by the person who seeks to be licensed.  The application for 
license shall be accompanied by a written appointment from an 
admitted insurer authorizing the applicant to act as its agent 
under one or both classes of license.  The insurer must also 
submit its check payable to the state treasurer for the amount 
of the appointment fee prescribed by section 60A.14, subdivision 
1, paragraph (c), clause (9), at the time the agent becomes 
licensed.  The application and appointment must be on forms 
prescribed by the commissioner.  
    If the applicant is a natural person, no license shall be 
issued until that natural person has become qualified.  
    If the applicant is a partnership or corporation, no 
license shall be issued until at least one natural person who is 
a partner, director, officer, stockholder, or employee shall be 
licensed as an insurance agent.  
    Subd. 2.  [RESIDENT AGENT.] The commissioner shall issue a 
resident insurance agent's license to a qualified resident of 
this state as follows:  
    (a) A person may qualify as a resident of this state if 
that person resides in this state or the principal place of 
business of that person is maintained in this state.  
Application for a license claiming residency in this state for 
licensing purposes constitutes an election of residency in this 
state.  A license issued upon an application claiming residency 
in this state is void if the licensee, while holding a resident 
license in this state, also holds, or makes application for, a 
resident license in, or thereafter claims to be a resident of, 
any other state or jurisdiction or if the licensee ceases to be 
a resident of this state; provided, however, if the applicant is 
a resident of a community or trade area, the border of which is 
contiguous with the state line of this state, the applicant may 
qualify for a resident license in this state and at the same 
time hold a resident license from the contiguous state. 
    (b) The commissioner shall subject each applicant who is a 
natural person to a written examination as to the applicant's 
competence to act as an insurance agent.  The examination must 
be held at a reasonable time and place designated by the 
commissioner. 
    (c) The examination shall be approved for use by the 
commissioner and shall test the applicant's knowledge of the 
lines of insurance, policies, and transactions to be handled 
under the class of license applied for, of the duties and 
responsibilities of the licensee, and pertinent insurance laws 
of this state. 
    (d) The examination shall be given only after the applicant 
has completed a program of classroom studies in a school, which 
shall not include a school sponsored by, offered by, or 
affiliated with an insurance company or its agents; except that 
this limitation does not preclude a bona fide professional 
association of agents, not acting on behalf of an insurer, from 
offering courses.  The course of study shall consist of 30 hours 
of classroom study devoted to the basic fundamentals of 
insurance for those seeking a Minnesota license for the first 
time, 15 hours devoted to specific life and health topics for 
those seeking a life and health license, and 15 hours devoted to 
specific property and casualty topics for those seeking a 
property and casualty license.  The program of studies or study 
course shall have been approved by the commissioner in order to 
qualify under this clause.  If the applicant has been previously 
licensed for the particular line of insurance in the state of 
Minnesota, the requirement of a program of studies or a study 
course shall be waived.  A certification of compliance by the 
organization offering the course shall accompany the applicant's 
license application.  This program of studies in a school or a 
study course shall not apply to farm property perils and farm 
liability applicants, or to agents writing such other lines of 
insurance as the commissioner may exempt from examination by 
order. 
    (e) The applicant must pass the examination with a grade 
determined by the commissioner to indicate satisfactory 
knowledge and understanding of the class or classes of insurance 
for which the applicant seeks qualification.  The commissioner 
shall inform the applicant as to whether or not the applicant 
has passed. 
    (f) An applicant who has failed to pass an examination may 
take subsequent examinations.  Examination fees for subsequent 
examinations shall not be waived. 
    (g) Any applicant for a license covering the same class or 
classes of insurance for which the applicant was licensed under 
a similar license in this state, other than a temporary license, 
within the three years preceding the date of the application 
shall be exempt from the requirement of a written examination, 
unless the previous license was revoked or suspended by the 
commissioner.  An applicant whose license is not renewed under 
section 60K.12 is exempt from the requirement of a written 
examination.  
    Subd. 3.  [NONRESIDENT AGENT.] The commissioner shall issue 
a nonresident insurance agent's license to a qualified person 
who is a resident of another state or country as follows:  
    (a) A person may qualify for a license under this section 
as a nonresident only if that person holds a license in another 
state, province of Canada, or other foreign country which, in 
the opinion of the commissioner, qualifies that person for the 
same activity as that for which a license is sought. 
    (b) The commissioner shall not issue a license to a 
nonresident applicant until that person files with the 
commissioner a designation of the commissioner and the 
commissioner's successors in office as the applicant's true and 
lawful attorney upon whom may be served all lawful process in an 
action, suit, or proceeding instituted by or on behalf of an 
interested person arising out of the applicant's insurance 
business in this state.  This designation constitutes an 
agreement that this service of process is of the same legal 
force and validity as personal service of process in this state 
upon that applicant.  
    Service of process upon a licensee in an action or 
proceeding begun in a court of competent jurisdiction of this 
state may be made in compliance with section 45.028, subdivision 
2.  
    (c) A nonresident license terminates automatically when the 
resident license for that class of license in the state, 
province, or foreign country in which the licensee is a resident 
is terminated for any reason.  
    Subd. 4.  [TERM.] All licenses issued pursuant to this 
section remain in force until voluntarily terminated by the 
licensee, not renewed as prescribed in section 60K.06, or until 
suspended or revoked by the commissioner.  A voluntary 
termination occurs when the license is surrendered to the 
commissioner with the request that it be terminated or when the 
licensee dies, or when the licensee is dissolved or its 
existence is terminated.  In the case of a nonresident license, 
a voluntary termination also occurs upon the happening of the 
event described in subdivision 3, paragraph (c).  
    Every licensed agent shall notify the commissioner within 
30 days of a change of name, address, or information contained 
in the application. 
    Subd. 5.  [SUBSEQUENT APPOINTMENTS.] A person who holds a 
valid agent's license from this state may solicit applications 
for insurance on behalf of an admitted insurer with which the 
licensee does not have a valid appointment on file with the 
commissioner; provided that the licensee has permission from the 
insurer to solicit insurance on its behalf and, provided 
further, that the insurer upon receipt of the application for 
insurance submits a written notice of appointment to the 
commissioner accompanied by its check payable to the state 
treasurer in the amount of the appointment fee prescribed by 
section 60A.14, subdivision 1, paragraph (c), clause (9).  The 
notice of appointment must be on a form prescribed by the 
commissioner.  
    Subd. 6.  [AMENDMENT OF LICENSE.] An application to the 
commissioner to amend a license to reflect a change of name, or 
to include an additional class of license, or for any other 
reason, shall be on forms provided by the commissioner and shall 
be accompanied by the applicant's surrendered license and a 
check payable to the state treasurer for the amount of fee 
specified in section 60A.14, subdivision 1, paragraph (c).  
    An applicant who surrenders an insurance license pursuant 
to this subdivision retains licensed status until an amended 
license is received.  
    Subd. 7.  [EXCEPTIONS.] The following are exempt from the 
general licensing requirements prescribed by this section:  
    (1) agents of township mutuals who are exempted pursuant to 
section 60K.04; 
    (2) fraternal benefit society representatives exempted 
pursuant to section 60K.05; 
    (3) any regular salaried officer or employee of a licensed 
insurer, without license or other qualification, may act on 
behalf of that licensed insurer in the negotiation of insurance 
for that insurer, provided that a licensed agent must 
participate in the sale of the insurance; 
    (4) employers and their officers or employees, and the 
trustees or employees of any trust plan, to the extent that the 
employers, officers, employees, or trustees are engaged in the 
administration or operation of any program of employee benefits 
for the employees of the employers or employees of their 
subsidiaries or affiliates involving the use of insurance issued 
by a licensed insurance company; provided that the activities of 
the officers, employees and trustees are incidental to clerical 
or administrative duties and their compensation does not vary 
with the volume of insurance or applications for insurance; 
    (5) employees of a creditor who enroll debtors for life or 
accident and health insurance; provided the employees receive no 
commission or fee for it; 
    (6) clerical or administrative employees of an insurance 
agent who take insurance applications or receive premiums in the 
office of their employer, if the activities are incidental to 
clerical or administrative duties and the employee's 
compensation does not vary with the volume of the applications 
or premiums; and 
    (7) rental vehicle companies and their employees in 
connection with the offer of rental vehicle personal accident 
insurance under section 72A.125. 
    Sec. 6.  [60K.04] [TOWNSHIP MUTUAL AGENTS.] 
    No agent for a township mutual shall be required to take an 
examination to become eligible for an agent's license in farm 
property perils and farm liability if it is certified by one or 
more township mutual companies that the agent has been acting in 
the capacity of an agent at least since January 1, 1971, and no 
new examination shall be required for eligibility for a license 
in farm property perils and farm liability for a licensed agent 
in farm windstorm and hail insurance who was licensed prior to 
January 1, 1971.  
    Sec. 7.  [60K.05] [FRATERNAL BENEFIT SOCIETY 
REPRESENTATIVES.] 
    Representatives of fraternal benefit societies who solicit 
and negotiate insurance contracts shall be deemed to be 
insurance agents and subject to the licensing requirements as 
set forth in section 60K.03 subdivision 1; provided, that no 
insurance agent's license shall be required of:  
    (1) any officer, employee, or secretary of a fraternal 
benefit society or of any subordinate lodge or branch who 
devotes substantially all of that person's time to activities 
other than the solicitation or negotiation of insurance 
contracts and who receives no commission or other compensation 
directly dependent upon the number or amount of contracts 
solicited or negotiated; or 
    (2) any agent or representative of a fraternal benefit 
society who devotes, or intends to devote, less than 50 percent 
of that person's time to the solicitation and procurement of 
insurance contracts for that society.  Any person who in the 
preceding calendar year has solicited and procured life 
insurance in excess of $50,000 face amount, or, in the case of 
any other kinds of insurance which the society may write, on the 
persons of more than 25 individuals, and who has received or 
will receive a commission or other compensation in the total 
amount of $1,000 or more, shall be presumed to be devoting, or 
intending to devote, 50 percent of that person's time to the 
solicitation or procurement of insurance contracts for that 
society.  
    Sec. 8.  [60K.06] [RENEWAL FEE.] 
    (a) Each agent licensed pursuant to section 60K.03 shall 
annually pay in accordance with the procedure adopted by the 
commissioner a renewal fee as prescribed by section 60A.14, 
subdivision 1, paragraph (c), clause (10).  
    (b) Every agent, corporation, and partnership license 
expires on October 31 of the year for which period a license is 
issued.  
    (c) Persons whose applications have been properly and 
timely filed who have not received notice of denial of renewal 
are approved for renewal and may continue to transact business 
whether or not the renewed license has been received on or 
before November 1.  Applications for renewal of a license are 
timely filed if received by the commissioner on or before 
October 15 of the year due, on forms duly executed and 
accompanied by appropriate fees.  An application mailed is 
considered timely filed if addressed to the commissioner, with 
proper postage, and postmarked by October 15.  
    (d) The commissioner may issue licenses for agents, 
corporations, or partnerships for a three-year period.  If 
three-year licenses are issued, the fee is three times the 
annual license fee.  
    Sec. 9.  [60K.07] [TEMPORARY LICENSES.] 
    Subdivision 1.  [EXAMINATION.] The commissioner may grant a 
temporary insurance agent's license to a person who has 
successfully completed the examination, if any, required by the 
commissioner.  The temporary license may be granted as of the 
date upon which the applicant receives written notice from the 
commissioner that the person has passed any required 
examination.  A temporary license will permit the applicant to 
act as an insurance agent for the original appointing insurer 
for the class of business specified therein until the earlier of 
(1) receipt by the applicant of the resident license, or (2) the 
expiration of 90 days from the date on which the temporary 
license was granted.  
    Subd. 2.  [PERMISSIVE TEMPORARY LICENSE.] The commissioner 
may issue a temporary license to a person to act as an insurance 
agent for a period not to exceed 90 days, which may be extended 
as determined by the commissioner, without requiring an 
examination if the commissioner considers a temporary license 
necessary for the servicing of an insurance business in the 
following cases:  
    (1) to an agent licensed as a resident agent in another 
state where the commissioner determines that the foreign license 
is substantially the equivalent of that being applied for from 
the state of Minnesota and where the agent has been transferred 
into this state with the intention of becoming a resident, 
working as an insurance agent, and obtaining a resident license 
from the state of Minnesota; 
    (2) to the surviving spouse or next of kin, or to the 
administrator or executor, or to an employee of a deceased 
licensed insurance agent, or to the spouse, next of kin, an 
employee, or legal guardian of a disabled licensed insurance 
agent; 
    (3) to the designee of a licensed insurance agent entering 
upon active service in the armed forces of the United States; or 
    (4) in any other circumstance where the commissioner 
considers that the public interest will best be served by the 
issuance of a temporary license.  
    Sec. 10.  [60K.08] [BROKERAGE BUSINESS.] 
    Every insurance agent duly licensed to transact business in 
this state shall have the right to procure the insurance of 
risks, or parts of risks, in the class or classes of insurance 
for which the agent is licensed in other insurers duly 
authorized to transact business in this state, but the insurance 
shall only be consummated through a duly appointed resident 
agent of the insurer taking the risk.  If the law of another 
state requires a nonresident agent who is a resident agent of 
Minnesota to pay a portion of the premium to or share 
commissions with a licensed resident agent of that state, then 
the licensed resident agent of Minnesota when consummating and 
countersigning for a licensed nonresident agent of that state 
shall receive five percent of the total premium or 25 percent of 
the commission, whichever is less. 
    Sec. 11.  [60K.09] [UNFIT PERSON NOT TO BE EMPLOYED BY 
INSURER.] 
    No insurer, its officers, agents, or managers shall 
knowingly make application to the commissioner for appointment 
of a person as its agent where that person is known to the 
insurer, its officers, agents, or managers making the 
application, to be unfit or disqualified to be licensed as an 
insurance agent, and immediately upon the discovery by the 
insurer, its officers, agents, or managers having supervision of 
the agent, of the unfitness or disqualification, the insurer, or 
the officers agents, or managers shall forthwith inform the 
commissioner in writing of their decision to terminate their 
appointment of this agent; nor shall any insurer retain in its 
employ any agent known by it to be disqualified or unfit to be 
licensed as an insurance agent. 
    Sec. 12.  [60K.10] [TERM OF APPOINTMENTS.] 
    All appointments of agents by insurers pursuant to this 
section shall remain in force until terminated voluntarily by 
the appointing insurer or the license of the agent has for any 
reason been terminated during the appointment.  The original 
appointing insurer, as well as any subsequent appointing 
insurer, may terminate the appointment of an agent at any time 
by giving written notice thereof to the commissioner and by 
sending a copy thereof to the last known address of the agent.  
The effective date of the termination shall be the date of 
receipt of the notice by the commissioner unless another date is 
specified by the insurer in the notice.  Within 30 days after 
the insurer gives notice of termination to the commissioner, the 
insurer shall furnish the agent with a current statement of the 
agent's commission account. 
    Accompanying the notice of a termination given to the 
commissioner by the insurer shall be a statement of the specific 
reasons constituting the cause of termination.  Any document, 
record, or statement relating to the agent which is disclosed or 
furnished to the commissioner contemporaneously with, or 
subsequent to, the notice of termination shall be deemed 
confidential by the commissioner and a privileged 
communication.  The document, record, or statement furnished to 
the commissioner shall not be admissible in whole or in part for 
any purpose in any action or proceeding against (1) the insurer 
or any of its officers, employees, or representatives submitting 
or providing the document, record, or statement, or (2) any 
person, firm, or corporation furnishing in good faith to the 
insurer the information upon which the reasons for termination 
are based.  
    Sec. 13.  [60K.11] [DENIAL, REVOCATION, SUSPENSION, AND 
CENSURE OF LICENSES.] 
    Subdivision 1.  [GROUNDS.] The commissioner may by order 
take any or all of the following actions: 
    (1) deny, suspend, or revoke an insurance agent or agency 
license; 
    (2) censure the licensee; or 
    (3) impose a civil penalty as provided for in section 
45.027, subdivision 6. 
    In order to take this action the commissioner must find 
that the order is in the public interest and that the applicant, 
licensee, or in the case of an insurance agency, partner, 
director, shareholder, officer, or agent of that insurance 
agency: 
    (i) does not intend to or is not in good faith carrying on 
the business of an insurance agent; 
    (ii) has filed an application for a license which is 
incomplete in any material respect or contains any statement 
which, in light of the circumstances under which it is made, 
contains any misrepresentation, or is false, misleading, or 
fraudulent; 
    (iii) has engaged in an act or practice, whether or not 
such act or practice involves the business of insurance, which 
demonstrates that the applicant or licensee is untrustworthy, 
financially irresponsible, or otherwise incompetent or 
unqualified to act as an insurance agent or agency; 
    (iv) has pled guilty, with or without explicitly admitting 
guilt, pled nolo contendere, or been convicted of a felony, 
gross misdemeanor, or misdemeanor involving moral turpitude, 
including, but not limited to, assault or similar conduct; 
    (v) has violated or failed to comply with any of the 
provisions of the insurance laws including chapter 45 or 
chapters 60A to 72A or any rule or order under those chapters; 
    (vi) is permanently or temporarily enjoined by any court of 
competent jurisdiction from engaging in or continuing any 
conduct or practice involving any aspect of the insurance 
business; 
    (vii) has violated or failed to comply with any order of 
the insurance regulator of any other state or jurisdiction; 
    (viii) has had an insurance agent or agency license denied, 
suspended, or revoked, has been censured or reprimanded, has 
been the subject of any other discipline imposed by, or has paid 
or has been required to pay a monetary penalty or fine to, 
another state or jurisdiction; 
    (ix) has misrepresented the terms of any actual or proposed 
insurance contract; 
    (x) has engaged in any fraudulent, coercive, deceptive, or 
dishonest act or practice whether or not such act or practice 
involves the business of insurance; 
    (xi) has improperly withheld, misappropriated, or converted 
to the licensee's or applicant's own use any money belonging to 
a policyholder, insurer, beneficiary, or other person; or 
    (xii) has forged another's name to any document whether or 
not the document relates to an application for insurance or a 
policy of insurance. 
    Subd. 2.  [LICENSEES.] If the commissioner determines that 
one of the conditions listed in subdivision 1 exists, the 
commissioner may issue an order requiring a licensee to show 
cause why any or all of the following should not occur:  (1) the 
license revocation or suspension; (2) censuring of the licensee; 
or (3) the imposition of a civil penalty.  The order shall be 
calculated to give reasonable notice of the time and place for 
hearing on the matter, and shall state the reasons for the entry 
of the order.  The commissioner may by order summarily suspend a 
license pending final determination of any order to show cause.  
If a license is suspended pending final determination of an 
order to show cause, a hearing on the merits shall be held 
within 30 days of the issuance of the order of suspension.  All 
hearings shall be conducted in accordance with the provisions of 
chapter 14.  After the hearing, the commissioner shall enter an 
order disposing of the matter as the facts require.  If the 
licensee fails to appear at a hearing after having been duly 
notified of it, the licensee shall be considered in default, and 
the proceeding may be determined against the licensee upon 
consideration of the order to show cause, the allegations of 
which may be considered to be true. 
    Subd. 3.  [APPLICANTS.] Whenever it appears to the 
commissioner that a license application should be denied 
pursuant to subdivision 1, the commissioner shall promptly give 
a written notice to the applicant of the denial.  The notice 
must state the grounds for the denial and give reasonable notice 
of the rights of the applicant to request a hearing.  A hearing 
must be held not later than 30 days after the request for the 
hearing is received by the commissioner unless the applicant and 
the department of commerce agree that the hearing may be held at 
a later date.  If no hearing is requested within 30 days of 
service of the notice, the denial will become final.  All 
hearings shall be conducted in accordance with the provisions of 
chapter 14.  After the hearing, the commissioner shall enter an 
order making such disposition as the facts require.  If the 
applicant fails to appear at a hearing after having been duly 
notified of it, the person shall be considered in default, and 
the proceeding may be determined against the applicant upon 
consideration of the notice denying application, the allegations 
of which may be considered to be true.  All fees accompanying 
the application and appointment are considered earned and are 
not refundable. 
    Subd. 4.  [ACTIONS AGAINST LAPSED LICENSE.] If a license 
lapses, is surrendered, withdrawn, terminated, or otherwise 
becomes ineffective, the commissioner may institute a proceeding 
under this subdivision within two years after the license was 
last effective and enter a revocation or suspension order as of 
the last date on which the license was in effect, or impose a 
civil penalty as provided for in section 45.027, subdivision 6. 
    Subd. 5.  [NOTIFICATION OF ACTION TAKEN BY OTHER STATE.] An 
insurance agent shall notify the commissioner within 30 days of 
any fine imposed on that agent by another state or of a 
suspension or revocation of license by the commissioner of 
commerce of this state or the commissioner of insurance of any 
other state.  
    Subd. 6.  [CONDITIONS FOR RELICENSURE.] A revocation of a 
license shall prohibit the licensee from making a new 
application for a license for at least two years from the 
effective date of the revocation.  Further, the commissioner 
shall, as a condition of reapplication, require the applicant to 
obtain a performance bond issued by an insurer authorized to 
transact business in this state in the amount of $20,000 or a 
greater amount the commissioner considers appropriate for the 
protection of citizens of this state in the event the 
commissioner grants the application.  The bond shall be filed 
with the commissioner, with the state of Minnesota as obligee, 
conditioned for the prompt payment to any aggrieved person 
entitled to payment of any amounts received by the licensee or 
to protect any aggrieved person from loss resulting from 
fraudulent, deceptive, dishonest, or other prohibited practices 
arising out of any transaction when the licensee was licensed or 
performed acts for which a license is required under this 
chapter.  The bond shall remain operative for as long as that 
licensee is licensed.  The bond required by this subdivision 
must provide coverage for all matters arising during the period 
of licensure. 
    Sec. 14.  [60K.12] [TAX CLEARANCE CERTIFICATE.] 
    Subdivision 1.  [REQUIREMENT FOR ISSUANCE OR RENEWAL OF 
LICENSE.] In addition to the provisions of section 60K.11, the 
commissioner may not issue or renew a license if the 
commissioner of revenue notifies the commissioner and the 
licensee or applicant for a license that the licensee or 
applicant owes the state delinquent taxes in the amount of $500 
or more.  The commissioner may issue or renew the license only 
if:  (1) the commissioner of revenue issues a tax clearance 
certificate; and (2) the commissioner of revenue or the licensee 
or applicant forwards a copy of the clearance certificate to the 
commissioner.  The commissioner of revenue may issue a clearance 
certificate only if the licensee or applicant does not owe the 
state any uncontested delinquent taxes. 
    Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
following terms have the meanings given them:  
    (1) "taxes" are all taxes payable to the commissioner of 
revenue, including penalties and interest due on those taxes; 
and 
    (2) "delinquent taxes" do not include a tax liability if 
(i) an administrative or court action that contests the amount 
or validity of the liability has been filed or served, (ii) the 
appeal period to contest the tax liability has not expired, or 
(iii) the licensee or applicant has entered into a payment 
agreement to pay the liability and is current with the payments. 
    Subd. 3.  [CONTESTED CASE HEARING.] In lieu of the notice 
and hearing requirements of section 60K.11, when a licensee or 
applicant is required to obtain a clearance certificate under 
this section, a contested case hearing must be held if the 
licensee or applicant requests a hearing in writing to the 
commissioner of revenue within 30 days of the date of the notice 
provided in subdivision 1.  The hearing must be held within 45 
days of the date the commissioner of revenue refers the case to 
the office of administrative hearings.  Notwithstanding any law 
to the contrary, the licensee or applicant must be served with 
20 days' notice in writing specifying the time and place of the 
hearing and the allegations against the licensee or applicant.  
The notice may be served personally or by mail. 
    Subd. 4.  [IDENTIFICATION REQUIRED.] The commissioner shall 
require all licensees or applicants to provide their social 
security number and Minnesota business identification number on 
all license applications.  Upon request of the commissioner of 
revenue, the commissioner must provide to the commissioner of 
revenue a list of all licensees and applicants, including the 
name and address, social security number, and business 
identification number.  The commissioner of revenue may request 
a list of the licensees and applicants no more than once each 
calendar year. 
    Sec. 15.  [60K.13] [SURRENDER, LOSS, OR DESTRUCTION OF 
LICENSE.] 
    Subdivision 1.  [NOTIFICATION.] The commissioner shall 
promptly notify the licensee and all appointing insurers, where 
applicable, of any suspension, revocation, or termination of the 
licensee's agent's license by the commissioner.  Upon receipt of 
the notice of suspension or revocation of a license, the 
licensee shall immediately deliver it to the commissioner.  
    Subd. 2.  [RETURN OF LICENSE.] An agent whose resident or 
nonresident license is terminated, as provided in section 
60K.11, shall deliver the terminated license to the commissioner 
by personal delivery or by mail within 30 days after the date of 
termination.  
    Subd. 3.  [DUPLICATE LICENSE.] The commissioner may issue a 
duplicate license for any lost, stolen, or destroyed license 
issued pursuant to this section upon an affidavit of the 
licensee concerning the facts of the loss, theft, or 
destruction, and the payment of a fee of $3 by money order or 
cashier's check payable to the state treasurer.  
    Sec. 16.  [60K.14] [PROHIBITED ACTS.] 
    Subdivision 1.  [PERSONAL SOLICITATION OF INSURANCE SALES.] 
(a) [DEFINITIONS.] For the purposes of this section, the 
following terms have the meanings given them:  
    (1) "agent" means a person, copartnership, or corporation 
required to be licensed pursuant to section 60K.02; and 
    (2) "personal solicitation" means any contact by an agent, 
or any person acting on behalf of an agent, made for the purpose 
of selling or attempting to sell insurance, when either the 
agent or a person acting for the agent contacts the buyer by 
telephone or in person, except:  (i) an attempted sale in which 
the buyer personally knows the identity of the agent, the name 
of the general agency, if any, which the agent represents, and 
the fact that the agent is an insurance agent; (ii) an attempted 
sale in which the prospective purchaser of insurance initiated 
the contact; or (iii) a personal contact which takes place at 
the agent's place of business.  
    (b) [DISCLOSURE REQUIREMENT.] Before a personal 
solicitation, the agent or person acting for an agent shall, at 
the time of initial personal contact or communication with the 
potential buyer, clearly and expressly disclose:  
    (1) the name of the person making the contact or 
communication; 
    (2) the name of the agent, general agency, or insurer that 
person represents; and 
    (3) the fact that the agent, agency, or insurer is in the 
business of selling insurance.  
    (c) [FALSE REPRESENTATION OF GOVERNMENT AFFILIATION.] No 
agent or person acting for an agent shall make any communication 
to a potential buyer that indicates or gives the impression that 
the agent is acting on behalf of a government agency.  
    Subd. 2.  [FEES FOR SERVICES.] No person shall charge a fee 
for any services rendered in connection with the solicitation, 
negotiation, or servicing of any insurance contract unless: 
    (1) before rendering the services, a written statement is 
provided disclosing: 
    (i) the services for which fees are charged; 
    (ii) the amount of the fees; 
    (iii) that the fees are charged in addition to premiums; 
and 
    (iv) that premiums include a commission; and 
    (2) all fees charged are reasonable in relation to the 
services rendered. 
    Subd. 3.  [COMMISSIONS OR COMPENSATION.] No commission or 
other compensation shall be paid or allowed by any person, firm, 
or corporation to any other person, firm, or corporation acting, 
or assuming to act, as an insurance agent without a license 
therefor.  A duly licensed agent may pay commissions or assign 
or direct that commissions be paid to a partnership of which the 
agent is a member, employee, or agent, or to a corporation of 
which the agent is an officer, employee, or agent.  This 
subdivision does not prevent the payment or receipt of renewal 
or other deferred commissions to or by any person solely because 
the person has ceased to hold a license to act as an insurance 
agent. 
    Subd. 4.  [SUITABILITY OF INSURANCE.] In recommending the 
purchase of any life, endowment, long-term care, annuity, 
life-endowment, or Medicare supplement insurance to a customer, 
an agent must have reasonable grounds for believing that the 
recommendation is suitable for the customer and must make 
reasonable inquiries to determine suitability.  The suitability 
of a recommended purchase of insurance will be determined by 
reference to the totality of the particular customer's 
circumstances, including, but not limited to, the customer's 
income, the customer's need for insurance, and the values, 
benefits, and costs of the customer's existing insurance 
program, if any, when compared to the values, benefits, and 
costs of the recommended policy or policies. 
    Subd. 5.  [PREMIUMS.] All premiums or other money received 
by an agent from an insured or applicant for insurance must be 
forthwith deposited directly in a business checking, savings, or 
other similar account maintained by the agent or agency, unless 
the money is forwarded directly to the designated insurer. 
    Subd. 6.  [PRIVACY OF CLIENT.] Except as otherwise provided 
by law, no insurance agent may disclose nor cause to be 
disclosed to any other person the identity of a person insured 
through the agent without the consent of the insured.  
    Sec. 17.  [60K.15] [INSURER'S AGENT.] 
    Any person who solicits insurance is the agent of the 
insurer and not the agent of the insured. 
    Sec. 18.  [60K.16] [LIABILITY FOR PLACING INSURANCE IN 
UNAUTHORIZED COMPANY.] 
    Any person, regardless of whether that person is required 
to be licensed as an insurance agent, who participates in any 
manner in the sale of any insurance policy or certificate, or 
any other contract providing benefits, for or on behalf of any 
company which is required to be, but which is not authorized to 
engage in the business of insurance in this state, other than 
pursuant to sections 60A.195 to 60A.209, shall be personally 
liable for all premiums, whether earned or unearned, paid by the 
insured, and the premiums may be recovered by the insured.  In 
addition, that person shall be personally liable for any loss 
the insured has sustained or may sustain if the loss is one 
resulting from a risk or hazard covered in the issued policy, 
certificate, or contract or which would have been covered if the 
policy, certificate, or contract had been issued to the 
purchaser of the insurance. 
    Sec. 19.  [60K.17] [AGENTS; VARIABLE CONTRACTS.] 
    Subdivision 1.  [LICENSE REQUIRED.] No person shall sell or 
offer for sale a contract on a variable basis unless prior to 
making any solicitation or sale the person has obtained from the 
commissioner a license therefor.  The license shall only be 
granted, upon the written requisition of an insurer, to a 
qualified person who holds a current license authorizing the 
person to solicit and sell life insurance and annuity contracts 
in this state.  To become qualified, a person shall complete a 
written application on a form prescribed by the commissioner and 
shall take and pass an examination prescribed by the 
commissioner.  
    Subd. 2.  [EXCEPTIONS.] (a) Any regularly salaried officer 
or employee of a licensed insurer may, without license or other 
qualification, act on behalf of that licensed insurer in the 
negotiation of a contract on a variable basis, provided that a 
licensed agent must participate in the sale of any contract. 
    (b) Any person who holds a valid license to solicit and 
sell life insurance and annuity contracts may solicit and sell 
contracts on a variable basis without acquiring a license under 
this subdivision if the contract is based on an account which is 
excluded from the definition of investment company under the 
Investment Company Act of 1940, United States Code, title 15, 
section 80a-3(11). 
    Subd. 3.  [RULES.] The commissioner may by rule waive or 
modify any of the requirements in this section or prescribe 
additional requirements considered necessary for the proper sale 
and solicitation of contracts on a variable basis. 
    Sec. 20.  [60K.18] [ALTERING EXISTING POLICIES; WRITTEN 
BINDERS REQUIRED.] 
    An insurance agent having express authority to bind 
coverage, who orally agrees on behalf of an insurer to provide 
insurance coverage, or to alter an existing insurance agreement, 
shall execute and deliver a written memorandum or binder 
containing the terms of the oral agreement to the insured within 
three business days from the time the oral agreement is entered. 
    Sec. 21.  Minnesota Statutes 1990, section 62A.41, 
subdivision 4, is amended to read: 
    Subd. 4.  [UNLICENSED SALES.] Notwithstanding section 
60A.17 60K.02, subdivision 1, paragraph (d), a person who acts 
or assumes to act as an insurance agent without a valid license 
for the purpose of selling or attempting to sell Medicare 
supplement insurance, and the person who aids or abets the 
actor, is guilty of a felony and is subject to a civil penalty 
of not more than $5,000 per violation. 
    Sec. 22.  Minnesota Statutes 1990, section 62C.17, 
subdivision 5, is amended to read: 
    Subd. 5.  A person shall not be qualified for a license if 
upon examination or reexamination it is determined that the 
person is incompetent to act as an agent or solicitor, if the 
person has acted in any manner which would disqualify a person 
to hold a license as an insurance agent or solicitor under 
section 60A.17, subdivision 6 sections 60K.01 to 60K.18, or if 
the person fails to produce documents subpoenaed by the 
commissioner, or fails to appear at a hearing to which the 
person is a party or has been subpoenaed, if the production of 
documents or appearance is lawfully required.  
    Sec. 23.  Minnesota Statutes 1990, section 62D.22, 
subdivision 8, is amended to read: 
    Subd. 8.  All agents, solicitors, and brokers engaged in 
soliciting or dealing with enrollees or prospective enrollees of 
a health maintenance organization, whether employees or under 
contract to the health maintenance organization, shall be 
subject to the provisions of section 60A.17 sections 60K.01 to 
60K.18, concerning the licensure of health insurance agents, 
solicitors, and brokers, and lawful rules thereunder.  Medical 
doctors and others who merely explain the operation of health 
maintenance organizations shall be exempt from the provisions of 
section 60A.17 sections 60K.01 to 60K.18.  Section 60A.17 
60K.03, subdivision 1a 2, paragraph (b) shall not apply except 
as to provide for an examination of an applicant in the 
applicant's knowledge concerning the operations and benefits of 
health maintenance organizations and related insurance matters. 
    Sec. 24.  Minnesota Statutes 1990, section 64B.33, is 
amended to read: 
    64B.33 [LICENSING OF AGENTS.] 
    Agents of societies shall be licensed in accordance with 
the provisions of chapter chapters 60A and 60K regulating the 
licensing, revocation, suspension, or termination of license of 
resident and nonresident agents, except as otherwise provided in 
section 60A.17, subdivision 1c 60K.05. 
    Sec. 25.  Minnesota Statutes 1990, section 72A.07, is 
amended to read: 
    72A.07 [VIOLATIONS OF LAWS RELATING TO AGENTS, PENALTIES.] 
    Any person, firm, or corporation violating, or failing to 
comply with, any of the provisions of section 60A.17 sections 
60K.01 to 60K.18 and any person who acts in any manner in the 
negotiation or transaction of unlawful insurance with an 
insurance company not licensed to do business in the state, or 
who, as principal or agent, violates any provision of law 
relating to the negotiation or effecting of contracts of 
insurance, shall be guilty of a misdemeanor.  Upon the filing of 
a complaint by the commissioner of commerce in a court of 
competent jurisdiction against any person violating any 
provisions of this section, the county attorney of the county in 
which the violation occurred shall prosecute the person.  Upon 
the conviction of any agent of any violation of the provisions 
of section 60A.17 sections 60K.01 to 60K.18, the commissioner 
shall suspend the authority of the agent to transact any 
insurance business within the state for a period of not less 
than three months.  Any insurer employing an agent and failing 
to procure an appointment, as required by section 60A.17 
sections 60K.01 to 60K.18, or allowing the agent to transact 
business for it within the state before an appointment has been 
procured, shall pay the commissioner, for the use of the state, 
a penalty of $25 for each offense.  Each sale of an insurance 
policy by an agent who is not appointed by an insurance company 
shall constitute a separate offense, but no insurer shall be 
required to pay more than $300 in penalties as a result of the 
activities of a single unappointed agent.  In the event of 
failure to pay a penalty within ten days after notice from the 
commissioner, the authority of the insurer to do business in 
this state shall be revoked by the commissioner until the 
penalty is paid.  No insurer whose authority is revoked shall be 
readmitted until it shall have complied with all the terms and 
conditions imposed for admission in the first instance.  Any 
action taken by the commissioner under this section shall be 
subject to review by the district court of the county in which 
the office of the commissioner is located. 
    Sec. 26.  Minnesota Statutes 1990, section 72A.125, 
subdivision 2, is amended to read: 
    Subd. 2.  [SALE BY AUTO RENTAL COMPANIES.] An auto rental 
company that offers or sells rental vehicle personal accident 
insurance in this state in conjunction with the rental of a 
vehicle shall only sell these products if the forms and rates 
have met the relevant requirements of section 62A.02, taking 
into account the possible infrequency and severity of loss that 
may be incurred.  Sections 60A.17 and 60A.1701 and 60K.01 to 
60K.18 do not apply if the persons engaged in the sale of these 
products are employees of the auto rental company who do not 
receive commissions or other remuneration for selling the 
product in addition to their regular compensation.  Compensation 
may not be determined in any part by the sale of insurance 
products.  The auto rental company before engaging in the sale 
of the product must file with the commissioner the following 
documents:  
    (1) an appointment of the commissioner as agent for service 
of process; 
    (2) an agreement that the auto rental company assumes all 
responsibility for the authorized actions of all unlicensed 
employees who sell the insurance product on its behalf in 
conjunction with the rental of its vehicles; 
    (3) an agreement that the auto rental company with respect 
to itself and its employees will be subject to this chapter 
regarding the marketing of the insurance products and the 
conduct of those persons involved in the sale of insurance 
products in the same manner as if it were a licensed agent. 
    An auto rental company failing to file the documents in 
clauses (1) to (3) is guilty of an individual violation as to 
the unlicensed sale of insurance for each sale that occurs after 
August 1, 1987, until they make the required filings.  Each 
individual sale after August 1, 1987, and prior to the filing 
required by this section is subject to, in addition to any other 
penalties allowable by law, up to a $200 per violation fine.  
Further, the sale of the insurance product by an auto rental 
company or any employee or agent of the company after August 1, 
1987, without having complied with this section shall be deemed 
to be in acceptance of the provisions of this section. 
    Insurance sold pursuant to this subdivision must be limited 
in availability to rental vehicle customers though coverage may 
extend to the customer, other drivers, and passengers using or 
riding in the rented vehicles; and limited in duration to a 
period equal to and concurrent with that of the vehicle rental.  
    Persons purchasing rental vehicle personal accident 
insurance may be provided a certificate summarizing the policy 
provisions in lieu of a copy of the policy if a copy of the 
policy is available for inspection at the place of sale and a 
free copy of the policy may be obtained from the auto rental 
company's home office.  
    The commissioner may, after a hearing, revoke an auto 
rental company's right to operate under this section if the 
company has repeatedly violated the insurance laws of this state 
and the revocation is in the public interest. 
    Sec. 27.  Minnesota Statutes 1990, section 72A.201, 
subdivision 3, is amended to read: 
    Subd. 3.  [DEFINITIONS.] For the purposes of this section, 
the following terms have the meanings given them.  
    (1) Adjuster or adjusters.  "Adjuster" or "adjusters" is as 
defined in section 72B.02.  
    (2) Agent.  "Agent" means insurance agents or insurance 
agencies licensed pursuant to section 60A.17 sections 60K.01 to 
60K.18, and representatives of these agents or agencies.  
    (3) Claim.  "Claim" means a request or demand made with an 
insurer for the payment of funds or the provision of services 
under the terms of any policy, certificate, contract of 
insurance, binder, or other contracts of temporary insurance. 
The term does not include a claim under a health insurance 
policy made by a participating provider with an insurer in 
accordance with the participating provider's service agreement 
with the insurer which has been filed with the commissioner of 
commerce prior to its use.  
    (4) Claim settlement.  "Claim settlement" means all 
activities of an insurer related directly or indirectly to the 
determination of the extent of liabilities due or potentially 
due under coverages afforded by the policy, and which result in 
claim payment, claim acceptance, compromise, or other 
disposition.  
    (5) Claimant.  "Claimant" means any individual, 
corporation, association, partnership, or other legal entity 
asserting a claim against any individual, corporation, 
association, partnership, or other legal entity which is insured 
under an insurance policy or insurance contract of an insurer.  
      (6) Complaint.  "Complaint" means a communication primarily 
expressing a grievance.  
      (7) Insurance policy.  "Insurance policy" means any 
evidence of coverage issued by an insurer including all 
policies, contracts, certificates, riders, binders, and 
endorsements which provide or describe coverage.  The term 
includes any contract issuing coverage under a self-insurance 
plan, group self-insurance plan, or joint self-insurance 
employee health plans.  
      (8) Insured.  "Insured" means an individual, corporation, 
association, partnership, or other legal entity asserting a 
right to payment under their insurance policy or insurance 
contract arising out of the occurrence of the contingency or 
loss covered by the policy or contract.  The term does not apply 
to a person who acquires rights under a mortgage.  
      (9) Insurer.  "Insurer" includes any individual, 
corporation, association, partnership, reciprocal exchange, 
Lloyds, fraternal benefits society, self-insurer, surplus line 
insurer, self-insurance administrator, and nonprofit service 
plans under the jurisdiction of the department of commerce.  
      (10) Investigation.  "Investigation" means a reasonable 
procedure adopted by an insurer to determine whether to accept 
or reject a claim.  
    (11) Notification of claim.  "Notification of claim" means 
any communication to an insurer by a claimant or an insured 
which reasonably apprises the insurer of a claim brought under 
an insurance contract or policy issued by the insurer. 
Notification of claim to an agent of the insurer is notice to 
the insurer.  
    (12) Proof of loss.  "Proof of loss" means the necessary 
documentation required from the insured to establish entitlement 
to payment under a policy.  
    (13) Self-insurance administrator.  "Self-insurance 
administrator" means any vendor of risk management services or 
entities administering self-insurance plans, licensed pursuant 
to section 60A.23, subdivision 8.  
    (14) Self-insured or self-insurer.  "Self-insured" or 
"self-insurer" means any entity authorized pursuant to section 
65B.48, subdivision 3; chapter 62H; section 176.181, subdivision 
2; Laws of Minnesota 1983, chapter 290, section 171; section 
471.617; or section 471.981 and includes any entity which, for a 
fee, employs the services of vendors of risk management services 
in the administration of a self-insurance plan as defined by 
section 60A.23, subdivision 8, clause (2), subclauses (a) and 
(d). 
    Sec. 28.  Minnesota Statutes 1990, section 270B.07, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DISCLOSURE TO LICENSING AUTHORITIES.] The 
commissioner may disclose return information with respect to 
returns filed under Minnesota tax laws to licensing authorities 
of the state or political subdivisions of the state to the 
extent necessary to enforce the license clearance programs under 
sections 60A.17 60K.12, 82.27, 147.091, 148.10, 150A.08, and 
270.72. 
    Sec. 29.  [REVISOR INSTRUCTION.] 
    (a) The revisor shall recodify Minnesota Statutes, section 
60A.1701, as Minnesota Statutes, section 60K.19, and shall make 
the necessary cross-reference changes in Minnesota Statutes and 
Minnesota Rules.  
    (b) If a provision of Minnesota Statutes, chapter 60A, 
repealed by this article is also amended in the 1992 regular 
legislative session by other law, the revisor shall recodify the 
amendment to be part of the recodification, notwithstanding 
Minnesota Statutes, section 645.30.  
    Sec. 30.  [REPEALER.] 
    Minnesota Statutes 1990, sections 60A.05; 60A.051; 60A.17, 
subdivisions 1, 1a, 1b, 1c, 2c, 2d, 3, 5, 5b, 6, 6b, 6c, 6d, 7a, 
8, 8a, 9a, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, and 21; 
and Minnesota Statutes 1991 Supplement, section 60A.17, 
subdivision 1d, are repealed. 
     Sec. 31.  [EFFECTIVE DATE.] 
     Section 8 is effective for the licensing year beginning 
June 1, 1992. 

                                ARTICLE 4

                              MISCELLANEOUS
    Section 1.  [45.0291] 
    Bonds issued under chapters 45 to 83, 309, 332, and 
sections 326.83 to 326.98, are not state bonds or contracts for 
purposes of sections 8.05 and 16B.06, subdivision 2. 
    Sec. 2.  Minnesota Statutes 1990, section 46.03, is amended 
to read: 
    46.03 [SEAL OF DEPARTMENT OF COMMERCE.] 
    The commissioner of commerce, in chapters 46 to 59, called 
the commissioner, shall devise a seal for official use, which 
shall continue to be the seal of the department of 
commerce.  The seal must be capable of being legibly reproduced 
under photographic methods.  A description of the seal; with an 
impression thereof, and a copy of it, shall be filed in the 
office of the secretary of state. 
    Sec. 3.  [60A.085] [CANCELLATION OF GROUP COVERAGE; 
NOTIFICATION TO COVERED PERSONS.] 
    (a) No cancellation of any group life, group accidental 
death and dismemberment, group disability income, or group 
medical expense policy, plan, or contract is effective unless 
the insurer has made a good faith effort to notify all covered 
persons of the cancellation at least 30 days before the 
effective cancellation date.  For purposes of this section, an 
insurer has made a good faith effort to notify all covered 
persons if the insurer has notified all the persons included on 
the list required by paragraph (b) at the home address given and 
only if the list has been updated within the last 12 months. 
    (b) At the time of the application for coverage subject to 
paragraph (a), the insurer shall obtain an accurate list of the 
names and home addresses of all persons to be covered.  The 
insurer shall obtain an update of the list at least once during 
each subsequent 12-month period while the policy, plan, or 
contract is in force. 
    Sec. 4.  Minnesota Statutes 1990, section 60A.23, 
subdivision 8, is amended to read: 
    Subd. 8.  [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS 
WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1)  [SCOPE.] This 
subdivision applies to any vendor of risk management services 
and to any entity which administers, for compensation, a 
self-insurance or insurance plan.  This subdivision does not 
apply (a) to an insurance company authorized to transact 
insurance in this state, as defined by section 60A.06, 
subdivision 1, clauses (4) and (5); (b) to a service plan 
corporation, as defined by section 62C.02, subdivision 6; (c) to 
a health maintenance organization, as defined by section 62D.02, 
subdivision 4; (d) to an employer directly operating a 
self-insurance plan for its employees' benefits; or (e) to an 
entity which administers a program of health benefits 
established pursuant to a collective bargaining agreement 
between an employer, or group or association of employers, and a 
union or unions. 
    (2)  [DEFINITIONS.] For purposes of this subdivision the 
following terms have the meanings given them. 
    (a) "Administering a self-insurance or insurance plan" 
means (i) processing, reviewing or paying claims, (ii) 
establishing or operating funds and accounts, or (iii) otherwise 
providing necessary administrative services in connection with 
the operation of a self-insurance or insurance plan. 
     (b) "Employer" means an employer, as defined by section 
62E.02, subdivision 2. 
     (c) "Entity" means any association, corporation, 
partnership, sole proprietorship, trust, or other business 
entity engaged in or transacting business in this state. 
     (d) "Self-insurance or insurance plan" means a plan 
providing life, medical or hospital care, accident, sickness or 
disability insurance, as an employee fringe benefit, or a plan 
providing liability coverage for any other risk or hazard, which 
is or is not directly insured or provided by a licensed insurer, 
service plan corporation, or health maintenance organization. 
     (e) "Vendor of risk management services" means an entity 
providing for compensation actuarial, financial management, 
accounting, legal or other services for the purpose of designing 
and establishing a self-insurance or insurance plan for an 
employer. 
     (3)  [LICENSE.] No vendor of risk management services or 
entity administering a self-insurance or insurance plan may 
transact this business in this state unless it is licensed to do 
so by the commissioner.  An applicant for a license shall state 
in writing the type of activities it seeks authorization to 
engage in and the type of services it seeks authorization to 
provide.  The license may be granted only when the commissioner 
is satisfied that the entity possesses the necessary 
organization, background, expertise, and financial integrity to 
supply the services sought to be offered.  The commissioner may 
issue a license subject to restrictions or limitations upon the 
authorization, including the type of services which may be 
supplied or the activities which may be engaged in.  The license 
fee is $100.  All licenses are for a period of two years. 
     (4)  [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.] 
To assure that self-insurance or insurance plans are financially 
solvent, are administered in a fair and equitable fashion, and 
are processing claims and paying benefits in a prompt, fair, and 
honest manner, vendors of risk management services and entities 
administering insurance or self-insurance plans are subject to 
the supervision and examination by the commissioner.  Vendors of 
risk management services, entities administering insurance or 
self-insurance plans, and insurance or self-insurance plans 
established or operated by them are subject to the trade 
practice requirements of sections 72A.19 to 72A.30.  In lieu of 
an unlimited guarantee from a parent corporation for a vendor of 
risk management services or an entity administering insurance or 
self-insurance plans, the commissioner may accept a fidelity 
bond in a form satisfactory to the commissioner in an amount 
equal to 120 percent of the total amount of claims handled by 
the applicant in the prior year.  If at any time the total 
amount of claims handled during a year exceeds the amount upon 
which the bond was calculated, the administrator shall 
immediately notify the commissioner.  The commissioner may 
require that the bond be increased accordingly. 
    (5)  [RULEMAKING AUTHORITY.] To carry out the purposes of 
this subdivision, the commissioner may adopt rules, including 
emergency rules, pursuant to sections 14.001 to 14.69.  These 
rules may: 
    (a) establish reporting requirements for administrators of 
insurance or self-insurance plans; 
    (b) establish standards and guidelines to assure the 
adequacy of financing, reinsuring, and administration of 
insurance or self-insurance plans; 
    (c) establish bonding requirements or other provisions 
assuring the financial integrity of entities administering 
insurance or self-insurance plans; or 
    (d) establish other reasonable requirements to further the 
purposes of this subdivision. 
    Sec. 5.  Minnesota Statutes 1990, section 62A.146, is 
amended to read: 
    62A.146 [CONTINUATION OF BENEFITS TO SURVIVORS.] 
    No policy, contract, or plan of accident and health 
protection issued by an insurer, nonprofit health service plan 
corporation, or health maintenance organization, providing 
coverage of hospital or medical expense on either an expense 
incurred basis or other than an expense incurred basis which in 
addition to coverage of the insured, subscriber, or enrollee, 
also provides coverage to dependents, shall, except upon the 
written consent of the survivor or survivors of the deceased 
insured, subscriber, or enrollee, terminate, suspend, or 
otherwise restrict the participation in or the receipt of 
benefits otherwise payable under the policy, contract, or plan 
to the survivor or survivors until the earlier of the following 
dates:  
    (a) the date the surviving spouse becomes covered under 
another group health plan; or 
    (b) the date coverage would have terminated under the 
policy, contract, or plan had the insured, subscriber, or 
enrollee lived.  
    The survivor or survivors, in order to have the coverage 
and benefits extended, may be required to pay the entire cost of 
the protection on a monthly basis.  The policy, contract, or 
plan must require the group policyholder or contract holder to, 
upon request, provide the insured, subscriber, or enrollee with 
written verification from the insurer of the cost of this 
coverage promptly at the time of eligibility for this coverage 
and at any time during the continuation period.  In no event 
shall the amount of premium or fee contributions charged exceed 
102 percent of the cost to the plan for such period of coverage 
for other similarly situated spouses and dependent children who 
are not the survivors of a deceased insured, without regard to 
whether such cost is paid by the employer or employee.  Failure 
of the survivor to make premium or fee payments within 90 days 
after notice of the requirement to pay the premiums or fees 
shall be a basis for the termination of the coverage without 
written consent.  In event of termination by reason of the 
survivor's failure to make required premium or fee 
contributions, written notice of cancellation must be mailed to 
the survivor's last known address at least 30 days before the 
cancellation.  If the coverage is provided under a group policy, 
contract, or plan, any required premium or fee contributions for 
the coverage shall be paid by the survivor to the group 
policyholder or contract holder for remittance to the insurer, 
nonprofit health service plan corporation, or health maintenance 
organization.  
    Sec. 6.  Minnesota Statutes 1990, section 62A.17, 
subdivision 2, is amended to read: 
    Subd. 2.  [RESPONSIBILITY OF EMPLOYEE.] Every covered 
employee electing to continue coverage shall pay the former 
employer, on a monthly basis, the cost of the continued 
coverage.  The policy, contract, or plan must require the group 
policyholder or contract holder to, upon request, provide the 
employee with written verification from the insurer of the cost 
of this coverage promptly at the time of eligibility for this 
coverage and at any time during the continuation period.  If the 
policy, contract, or health care plan is administered by a 
trust, every covered employee electing to continue coverage 
shall pay the trust the cost of continued coverage according to 
the eligibility rules established by the trust.  In no event 
shall the amount of premium charged exceed 102 percent of the 
cost to the plan for such period of coverage for similarly 
situated employees with respect to whom neither termination nor 
layoff has occurred, without regard to whether such cost is paid 
by the employer or employee.  The employee shall be eligible to 
continue the coverage until the employee becomes covered under 
another group health plan, or for a period of 18 months after 
the termination of or lay off from employment, whichever is 
shorter.  If the employee becomes covered under another group 
policy, contract, or health plan and the new group policy, 
contract, or health plan contains any preexisting condition 
limitations, the employee may, subject to the 18-month maximum 
continuation limit, continue coverage with the former employer 
until the preexisting condition limitations have been 
satisfied.  The new policy, contract, or health plan is primary 
except as to the preexisting condition.  In the case of a 
newborn child who is a dependent of the employee, the new 
policy, contract, or health plan is primary upon the date of 
birth of the child, regardless of which policy, contract, or 
health plan coverage is deemed primary for the mother of the 
child.  
    Sec. 7.  Minnesota Statutes 1990, section 62A.21, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [CONTINUATION PRIVILEGE.] Every policy described 
in subdivision 1 shall contain a provision which permits 
continuation of coverage under the policy for the insured's 
former spouse and dependent children upon entry of a valid 
decree of dissolution of marriage.  The coverage shall be 
continued until the earlier of the following dates: 
    (a) the date the insured's former spouse becomes covered 
under any other group health plan; or 
    (b) the date coverage would otherwise terminate under the 
policy. 
    If the coverage is provided under a group policy, any 
required premium contributions for the coverage shall be paid by 
the insured on a monthly basis to the group policyholder for 
remittance to the insurer.  The policy must require the group 
policyholder to, upon request, provide the insured with written 
verification from the insurer of the cost of this coverage 
promptly at the time of eligibility for this coverage and at any 
time during the continuation period.  In no event shall the 
amount of premium charged exceed 102 percent of the cost to the 
plan for such period of coverage for other similarly situated 
spouses and dependent children with respect to whom the marital 
relationship has not dissolved, without regard to whether such 
cost is paid by the employer or employee. 
    Sec. 8.  [62A.285] [PROHIBITED UNDERWRITING; BREAST 
IMPLANTS.] 
    Subdivision 1.  [SCOPE OF COVERAGE.] This section applies 
to all policies of accident and health insurance regulated under 
this chapter, subscriber contracts offered by nonprofit health 
service plan corporations regulated under chapter 62C, health 
maintenance contracts regulated under chapter 62D, and health 
benefit certificates offered through a fraternal benefit society 
regulated under chapter 64B.  This section does not apply to 
policies, plans, certificates, or contracts payable on a fixed 
indemnity or nonexpense incurred basis, or policies, plans, 
certificates, or contracts that provide only accident coverage. 
    Subd. 2.  [REQUIRED COVERAGE.] No policy, plan, 
certificate, or contract referred to in subdivision 1 shall be 
issued or renewed to provide coverage to a Minnesota resident if 
it provides an exclusion, reduction, or other limitation as to 
coverage, deductible, coinsurance, or copayment applicable 
solely to conditions caused by breast implants. 
    Subd. 3.  [REFUSAL TO ISSUE OR RENEW.] No issuer of a 
policy, plan, certificate, or contract referred to in 
subdivision 1 shall refuse to issue or renew at standard premium 
rates a policy, plan, certificate, or contract referred to in 
subdivision 1 solely because the prospective insured or enrollee 
has breast implants.  
    Subd. 4.  [EXCLUSION PERMITTED.] A policy, plan, 
certificate, or contract referred to in subdivision 1 may limit 
or exclude coverage for conditions caused by breast implants, if 
the conditions were diagnosed prior to the date that coverage 
for the person begins.  
    Sec. 9.  Minnesota Statutes 1990, section 62C.142, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [CONTINUATION PRIVILEGE.] Every subscriber 
contract, other than a contract whose continuance is contingent 
upon continued employment or membership, shall contain a 
provision which permits continuation of coverage under the 
contract for the subscriber's former spouse and children upon 
entry of a valid decree of dissolution of marriage, if the 
decree requires the subscriber to provide continued coverage for 
those persons.  The coverage may be continued until the earlier 
of the following dates:  
    (a) the date of remarriage of either the subscriber or the 
subscriber's former spouse; or 
    (b) the date coverage would otherwise terminate under the 
subscriber contract.  
    The contract must require the group contract holder to, 
upon request, provide the insured with written verification from 
the insurer of the cost of this coverage promptly at the time of 
eligibility for this coverage and at any time during the 
continuation period.  In no event shall the amount of premium 
charged exceed 102 percent of the cost to the plan for such 
period of coverage for other similarly situated spouses and 
dependent children with respect to whom the marital relationship 
has not dissolved, without regard to whether such cost is paid 
by the employer or employee. 
    Sec. 10.  Minnesota Statutes 1990, section 62D.101, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [CONTINUATION PRIVILEGE.] Every health 
maintenance contract as described in subdivision 1 shall contain 
a provision which permits continuation of coverage under the 
contract for the enrollee's former spouse and children upon 
entry of a valid decree of dissolution of marriage.  The 
coverage shall be continued until the earlier of the following 
dates:  
    (a) the date the enrollee's former spouse becomes covered 
under another group plan or Medicare; or 
    (b) the date coverage would otherwise terminate under the 
health maintenance contract.  
    If coverage is provided under a group policy, any required 
premium contributions for the coverage shall be paid by the 
enrollee on a monthly basis to the group contract holder to be 
paid to the health maintenance organization.  The contract must 
require the group contract holder to, upon request, provide the 
enrollee with written verification from the insurer of the cost 
of this coverage promptly at the time of eligibility for this 
coverage and at any time during the continuation period.  In no 
event shall the fee charged exceed 102 percent of the cost to 
the plan for the period of coverage for other similarly situated 
spouses and dependent children when the marital relationship has 
not dissolved, regardless of whether the cost is paid by the 
employer or employee. 
    Sec. 11.  Minnesota Statutes 1991 Supplement, section 
62E.10, subdivision 9, is amended to read: 
    Subd. 9.  [EXPERIMENTAL DELIVERY METHOD.] The association 
may petition the commissioner of commerce for a waiver to allow 
the experimental use of alternative means of health care 
delivery.  The commissioner may approve the use of the 
alternative means the commissioner considers appropriate.  The 
commissioner may waive any of the requirements of this chapter 
and chapters 60A, 62A, and 62D in granting the waiver.  The 
commissioner may also grant to the association any additional 
powers as are necessary to facilitate the specific waiver, 
including the power to implement a provider payment schedule.  
    This subdivision is effective until August 1, 1992 1993. 
    Sec. 12.  Minnesota Statutes 1991 Supplement, section 
62E.12, is amended to read: 
    62E.12 [MINIMUM BENEFITS OF COMPREHENSIVE HEALTH INSURANCE 
PLAN.] 
    The association through its comprehensive health insurance 
plan shall offer policies which provide the benefits of a number 
one qualified plan, and a number two qualified plan, except that 
the maximum lifetime benefit on these plans shall be $1,000,000, 
and basic and extended basic Medicare supplement plans.  The 
requirement that a policy issued by the association must be a 
qualified plan is satisfied if the association contracts with a 
preferred provider network and the level of benefits for 
services provided within the network satisfies the requirements 
of a qualified plan.  If the association uses a preferred 
provider network, payments to nonparticipating providers must 
meet the minimum requirements of section 72A.20, subdivision 
15.  They shall offer health maintenance organization contracts 
in those areas of the state where a health maintenance 
organization has agreed to make the coverage available and has 
been selected as a writing carrier.  Notwithstanding the 
provisions of section 62E.06 the state plan shall exclude 
coverage of services of a private duty nurse other than on an 
inpatient basis and any charges for treatment in a hospital 
located outside of the state of Minnesota in which the covered 
person is receiving treatment for a mental or nervous disorder, 
unless similar treatment for the mental or nervous disorder is 
medically necessary, unavailable in Minnesota and provided upon 
referral by a licensed Minnesota medical practitioner. 
    Sec. 13.  Minnesota Statutes 1990, section 65A.29, 
subdivision 11, is amended to read: 
    Subd. 11.  [NONRENEWAL PLAN.] Every insurer shall establish 
a plan that sets out the minimum number and amount of claims 
during an experience period that may result in a nonrenewal.  A 
clear and concise written statement of this plan must be 
provided to the insured at the time claim forms and instructions 
are provided to the insured or a claimant under section 72A.201, 
subdivision 4 when any future losses may result in nonrenewal of 
the policy. 
    The plan must, at a minimum, comply with the requirements 
of subdivision 8 and the rules adopted by the commissioner. 
     Sec. 14.  Minnesota Statutes 1990, section 72A.20, is 
amended by adding a subdivision to read: 
    Subd. 28.  [CONVERSION FEES PROHIBITED.] An issuer 
providing health coverage through conversion policies, plans, or 
contracts shall not impose a fee or charge, other than the 
premium, for issuing these policies, plans, or contracts. 
    Sec. 15.  Minnesota Statutes 1990, section 332.15, 
subdivision 4, is amended to read: 
    Subd. 4.  [BOND.] Every applicant shall submit to the 
commissioner at the time of the application for a license, a 
surety bond to be approved by the attorney general in which the 
applicant shall be the obligor, in a sum to be determined by the 
commissioner but not less than $5,000, and in which an insurance 
company, which is duly authorized by the state of Minnesota to 
transact the business of fidelity and surety insurance, shall be 
a surety; provided, however, the commissioner may accept a 
deposit in cash, or securities such as may legally be purchased 
by savings banks or for trust funds of an aggregate market value 
equal to the bond requirement, in lieu of the surety bond, such 
cash or securities to be deposited with the state treasurer.  
The commissioner may also require a fidelity bond in an 
appropriate amount covering employees of any applicant.  Each 
branch office or additional place of business of an applicant 
shall be bonded as provided herein.  In determining the bond 
amount necessary for the maintenance of any office be it surety, 
fidelity or both the commissioner shall consider the financial 
responsibility, experience, character and general fitness of the 
agency and its operators and owners; the volume of business 
handled or proposed to be handled; the location of the office 
and the geographical area served or proposed to be served; and 
such other information the commissioner may deem pertinent based 
upon past performance, previous examinations, annual reports and 
manner of business conducted in other states. 
    Sec. 16.  Minnesota Statutes 1991 Supplement, section 
332.55, is amended to read: 
    332.55 [BOND.] 
    A credit services organization must submit to the 
commissioner at the time of registration, a surety bond of 
$10,000 to be approved by the attorney general and in which an 
insurance company, which is authorized by the state of Minnesota 
to transact the business of fidelity and surety insurance, is a 
surety.  The credit services organization must be the obligor.  
The bond must benefit the state of Minnesota and any person who 
may have a cause of action against the obligor arising out of 
the obligor's activities as a credit services organization.  The 
commissioner may accept a deposit in cash, or securities that 
may be legally purchased by savings banks or for trust funds of 
an aggregate market value equal to the bond requirement, in lieu 
of the surety bond.  The cash or securities must be deposited 
with the state treasurer. 
    Sec. 17.  Minnesota Statutes 1991 Supplement, section 
345.485, is amended to read: 
    345.485 [RECOVERY OF PROPERTY IN OTHER STATES BY OTHERS.] 
    The commissioner may request that the attorney general of 
another state or another person or entity in the other state 
make a demand or bring an action to recover unclaimed property 
in the name of the commissioner in the other state.  The 
commissioner may request that another person or entity make a 
demand or bring an action to recover unclaimed property in this 
state in the name of the commissioner.  This state shall pay all 
expenses including attorney fees incurred under this section.  
The commissioner may agree to pay fees to the person or entity 
making the demand or bringing the action based in whole or in 
part on a percentage of the value of any property recovered.  
Expenses paid under this section shall not reduce the amount to 
which the claimant is entitled. 
    Sec. 18.  [MINIMUM LOSS RATIO STUDY.] 
    The commissioner of commerce shall study the effect of 
minimum loss ratios required under Minnesota Statutes, section 
62A.135, and report to the legislature by January 31, 1993. 
    Sec. 19.  [EFFECTIVE DATE.] 
    Section 8 is effective the day following final enactment.  

                                ARTICLE 5
    Section 1.  Minnesota Statutes 1990, section 62B.07, is 
amended by adding a subdivision to read: 
    Subd. 8.  [ANNUAL REPORT.] Each insurer that sold insurance 
regulated under this chapter in this state or to a Minnesota 
resident during the preceding calendar year shall file, as a 
supplement to its annual statement, a report covering that 
calendar year.  The report must include the following data for 
coverage regulated by this chapter and sold in this state or to 
a Minnesota resident, all shown separately for each rate for 
each policy form or certificate form used for credit insurance 
regulated under chapter 62B: 
    (1) claims incurred; 
    (2) premiums earned; 
    (3) expenses other than claims; 
    (4) the data described in clauses (1), (2), and (3), shown 
separately for policies sold at each premium rate used by the 
insurer; 
    (5) a statement as to whether the insurer applies or has 
applied underwriting criteria to coverage sold under this 
chapter, a description of any such criteria and the specific 
policies or certificates to which the criteria are applied; 
    (6) information as to the compensation paid in regard to 
the sale of credit insurance regulated under chapter 62B as 
follows:  
    (i) the name and address of each person or company to whom 
compensation was paid; 
    (ii) the total compensation paid to each person or company; 
and 
    (iii) the total premiums written by each person or company 
for which the compensation in clause (2) was paid; and 
     (7) any other information requested by the commissioner.  
    For purposes of this section, "compensation" includes 
pecuniary or nonpecuniary remuneration of any kind relating to 
the sale or renewal of the policy or certificate, including but 
not limited to bonuses, gifts, prizes, awards, dividends, 
experience refunds, retrospective commissions, finder's fees, 
and increased or decreased prices for other transactions with 
the insurer.  
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective for the annual report due after 
January 1, 1993. 
    Presented to the governor April 17, 1992 
    Signed by the governor April 29, 1992, 8:13 a.m.