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Minnesota Legislature

Office of the Revisor of Statutes

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

  
    Laws of Minnesota 1993 

                        CHAPTER 343-H.F.No. 555 
           An act relating to insurance; credit; permitting the 
          sale of credit involuntary unemployment insurance; 
          appropriating money; amending Minnesota Statutes 1992, 
          sections 47.016, subdivision 1; 48.185, subdivision 4; 
          52.04, subdivision 1; 56.125, subdivision 3; 56.155, 
          subdivision 1; 60K.03, subdivision 7; 60K.19, 
          subdivision 3; 62B.01; 62B.02, by adding a 
          subdivision; 62B.03; 62B.04, by adding a subdivision; 
          62B.05; 62B.06, subdivisions 1, 2, and 4; 62B.07, 
          subdivisions 2 and 6; 62B.08, subdivisions 1, 3, 4, 
          and by adding subdivisions; 62B.09, subdivision 3; 
          62B.11; 62B.12; and 72A.20, subdivision 27. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1992, section 47.016, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] (a) For the purpose of this 
section, the following terms have the meanings given them.  
    (b) "Credit insurance" means credit life and, accident and 
health insurance, and credit involuntary unemployment insurance 
as defined in section 62B.02.  
    (c) "Officer," "director," "employee," and "shareholder" 
include the spouse and minor children of the officer, director, 
employee, or shareholder.  
    (d) "Interest" includes ownership through a spouse or minor 
children; ownership through a broker, nominee, or agent; and 
ownership through a corporation, partnership, association, joint 
venture, or proprietorship.  
    (e) "Financial institution" means any person who lends 
money and sells credit insurance to the borrower.  
    Sec. 2.  Minnesota Statutes 1992, section 48.185, 
subdivision 4, is amended to read: 
    Subd. 4.  No charges other than those provided for in 
subdivision 3 shall be made directly or indirectly for any 
credit extended under the authority of this section, except that 
there may be charged to the debtor: 
    (a) annual charges, not to exceed $50 per annum, payable in 
advance, for the privilege of using a bank credit card; 
    (b) charges for premiums on credit life and, credit 
accident and health, and credit involuntary unemployment 
insurance if: 
    (1) the insurance is not required by the financial 
institution and this fact is clearly disclosed in writing to the 
debtor; and 
    (2) the debtor is notified in writing of the cost of the 
insurance and affirmatively elects, in writing, to purchase the 
insurance; 
    (c) charges for the use of an automated teller machine when 
cash advances are obtained pursuant to this section through the 
use of an automated teller machine; 
    (d) in the case of a financial institution referred to in 
subdivision 1 that does not charge an annual fee, delinquency 
and collection charges as follows: 
    (1) on each payment in arrears for a period not less than 
ten days, in an amount not in excess of the delinquency and 
collection charge permitted in section 168.71; 
    (2) for any monthly or other periodic payment period where 
the debtor has exceeded or thereby exceeds the maximum approved 
credit limit under the open-end loan account arrangement, in an 
amount not in excess of the service charge limitations in 
section 332.50; and 
     (3) for any returned check or returned automatic payment 
withdrawal request, in an amount not in excess of the service 
charge limitation in section 332.50; and 
     (e) to the extent not otherwise prohibited by law, charges 
for other goods or services offered by or through a financial 
institution referred to in subdivision 1 which the debtor elects 
to purchase, including, but not limited to, charges for check 
and draft copies and for the replacement of lost or stolen cards.
    Sec. 3.  Minnesota Statutes 1992, section 52.04, 
subdivision 1, is amended to read: 
    Subdivision 1.  A credit union has the following powers: 
      (1) to offer its members and other credit unions various 
classes of shares, share certificates, deposits, or deposit 
certificates; 
      (2) to receive the savings of its members either as payment 
on shares or as deposits, including the right to conduct 
Christmas clubs, vacation clubs, and other thrift organizations 
within its membership.  Trust funds received by a real estate 
broker or the broker's salespersons in trust may be deposited in 
a credit union; 
      (3) to make loans to members for provident or productive 
purposes as provided in section 52.16; 
      (4) to make loans to a cooperative society or other 
organization having membership in the credit union; 
      (5) to deposit in state and national banks and trust 
companies authorized to receive deposits; 
      (6) to invest in any investment legal for savings banks or 
for trust funds in the state and, notwithstanding clause (3), to 
invest in and make loans of unsecured days funds (federal funds 
or similar unsecured loans) to financial institutions insured by 
an agency of the federal government and a member of the Federal 
Reserve System or required to maintain reserves at the Federal 
Reserve; 
      (7) to borrow money as hereinafter indicated; 
      (8) to adopt and use a common seal and alter the same at 
pleasure; 
        (9) to make payments on shares of and deposit with any 
other credit union chartered by this or any other state or 
operating under the provisions of the federal Credit Union Act, 
in amounts not exceeding in the aggregate 25 percent of its 
unimpaired assets.  However, payments on shares of and deposit 
with credit unions chartered by other states are restricted to 
credit unions insured by the National Credit Union 
Administration.  The restrictions imposed by this clause do not 
apply to share accounts and deposit accounts of the Minnesota 
corporate credit union in United States central credit union or 
to share accounts and deposit accounts of credit unions in the 
Minnesota corporate credit union; 
        (10) to contract with any licensed insurance company or 
society to insure the lives of members to the extent of their 
share accounts, in whole or in part, and to pay all or a portion 
of the premium therefor; 
        (11) to indemnify each director, officer, or committee 
member, or former director, officer, or committee member against 
all expenses, including attorney's fees but excluding amounts 
paid pursuant to a judgment or settlement agreement, reasonably 
incurred in connection with or arising out of any action, suit, 
or proceeding to which that person is a party by reason of being 
or having been a director, officer, or committee member of the 
credit union, except with respect to matters as to which that 
person is finally adjudged in the action, suit, or proceeding to 
be liable for negligence or misconduct in the performance of 
duties.  The indemnification is not exclusive of any other 
rights to which that person may be entitled under any bylaw, 
agreement, vote of members, or otherwise; 
       (12) upon written authorization from a member, retained at 
the credit union, to make payments to third parties by 
withdrawals from the member's share or deposit accounts or 
through proceeds of loans made to such member, or by permitting 
the credit union to make those payments from the member's funds 
prior to deposit; to permit draft withdrawals from member 
accounts, but a credit union proposing to permit draft 
withdrawals shall notify the commissioner of commerce, in the 
form prescribed, of its intent not less than 90 days prior to 
authorizing draft withdrawals.  The board of directors of a 
credit union may restrict one class of shares to the extent that 
it may not be redeemed, withdrawn, or transferred except upon 
termination of membership in the credit union; 
       (13) to inform its members as to the availability of 
various group purchasing plans which are related to the 
promotion of thrift or the borrowing of money for provident and 
productive purposes by means of informational materials placed 
in the credit union's office, through its publications, or by 
direct mailings to members by the credit union; 
       (14) to facilitate its members' voluntary purchase of types 
of insurance incidental to promotion of thrift or the borrowing 
of money for provident and productive purposes including, but 
not limited to the following types of group or individual 
insurance:  Fire, theft, automobile, life and temporary 
disability; to be the policy holder of a group insurance plan or 
a subgroup under a master policy plan and to disseminate 
information to its members concerning the insurance provided 
thereunder; to remit premiums to an insurer or the holder of a 
master policy on behalf of a credit union member, if the credit 
union obtains written authorization from the member for 
remittance by share or deposit withdrawals or through proceeds 
of loans made by the members, or by permitting the credit union 
to make the payments from the member's funds prior to deposit; 
and to accept from the insurer reimbursement for expenses 
incurred or in the case of credit life and, accident and health, 
and involuntary unemployment insurance within the meaning of 
chapter 62B commissions for the handling of the insurance.  The 
amount reimbursed or the commissions received may constitute the 
general income of the credit union.  The directors, officers, 
committee members and employees of a credit union shall not 
profit on any insurance sale facilitated through the credit 
unions; 
    (15) to contract with another credit union to furnish 
services which either could otherwise perform.  Contracted 
services under this clause are subject to regulation and 
examination by the commissioner of commerce like other services; 
     (16) in furtherance of the twofold purpose of promoting 
thrift among its members and creating a source of credit for 
them at legitimate rates of interest for provident purposes, and 
not in limitation of the specific powers hereinbefore conferred, 
to have all the powers enumerated, authorized, and permitted by 
this chapter, and such other rights, privileges and powers 
incidental to, or necessary for, the accomplishment of the 
objectives and purposes of the credit union; 
     (17) to rent safe deposit boxes to its members if the 
credit union obtains adequate insurance or bonding coverage for 
losses which might result from the rental of safe deposit boxes; 
     (18) notwithstanding the provisions of section 52.05, to 
accept deposits of public funds in an amount secured by 
insurance or other means pursuant to chapter 118 or section 
9.031; 
     (19) to accept and maintain treasury tax and loan accounts 
of the United States and to pledge collateral to secure the 
treasury tax or loan accounts, in accordance with the 
regulations of the Department of Treasury of the United States; 
     (20) to accept deposits pursuant to section 149.12, 
notwithstanding the provisions of section 52.05, if the deposits 
represent funding of prepaid funeral plans of members; 
     (21) to sell, in whole or in part, real estate secured 
loans provided that:  
     (a) the loan is secured by a first lien; 
     (b) the board of directors approves the sale; 
        (c) if the sale is partial, the agreement to sell a partial 
interest shall, at a minimum:  
        (i) identify the loan or loans covered by the agreement; 
        (ii) provide for the collection, processing, remittance of 
payments of principal and interest, taxes and insurance premiums 
and other charges or escrows, if any; 
        (iii) define the responsibilities of each party in the 
event the loan becomes subject to collection, loss or 
foreclosure; 
        (iv) provide that in the event of loss, each owner shall 
share in the loss in proportion to its interest in the loan or 
loans; 
        (v) provide for the distribution of payments of principal 
to each owner proportionate to its interest in the loan or 
loans; 
        (vi) provide for loan status reports; 
        (vii) state the terms and conditions under which the 
agreement may be terminated or modified; and 
       (d) the sale is without recourse or repurchase unless the 
agreement:  
       (i) requires repurchase of a loan because of any breach of 
warranty or misrepresentation; 
       (ii) allows the seller to repurchase at its discretion; or 
       (iii) allows substitution of one loan for another; 
       (22) in addition to the sale of loans secured by a first 
lien on real estate, to sell, pledge, discount, or otherwise 
dispose of, in whole or in part, to any source, a loan or group 
of loans, other than a self-replenishing line of credit; 
provided, that within a calendar year beginning January 1 the 
total dollar value of loans sold, other than loans secured by 
real estate or insured by a state or federal agency, shall not 
exceed 25 percent of the dollar amount of all loans and 
participating interests in loans held by the credit union at the 
beginning of the calendar year, unless otherwise authorized in 
writing by the commissioner; 
     (23) to designate the par value of the shares of the credit 
union by board resolution; 
     (24) to exercise by resolution the powers set forth in 
United States Code, title 12, section 1757, as amended through 
August 1, 1985.  Before exercising each power, the board must 
submit a plan to the commissioner of commerce detailing 
implementation of the power to be used; 
     (25) to offer self-directed individual retirement accounts 
and Keogh accounts and act as custodian and trustee of these 
accounts if: 
     (1) all contributions of funds are initially made to a 
deposit, share or share certificate account in the credit union; 
     (2) any subsequent transfer of funds to other assets is 
solely at the direction of the member and the credit union 
exercises no investment discretion and provides no investment 
advice with respect to plan assets; and 
     (3) the member is clearly notified of the fact that 
National Credit Union Share Insurance Fund coverage is limited 
to funds held in deposit, share or share certificate accounts of 
National Credit Union Share Insurance Fund-insured credit unions.
    Sec. 4.  Minnesota Statutes 1992, section 56.125, 
subdivision 3, is amended to read: 
    Subd. 3.  [CHARGES.] In addition to the charges authorized 
in subdivision 1, a licensee may contract for and receive in 
connection with an open-end loan agreement the additional 
charges, fees, costs, and expenses with respect to the line of 
credit limit permitted by sections 56.131, subdivisions 1, 
paragraph (f), clauses (4) and (5), 2, 5, and 6; and 56.155 with 
respect to other loans, with the following variations:  
    (1) If credit life or, disability, or involuntary 
unemployment insurance is provided and if the insured dies or, 
becomes disabled, or becomes involuntarily unemployed when there 
is an outstanding open-end loan indebtedness, the amount of the 
insurance may not exceed the total balance of the loan due on 
the date of the borrower's death or on the date of the last 
billing statement in the case of credit life insurance, or all 
minimum payments which become due on the loan during the covered 
period of disability in the case of credit disability insurance, 
or during the covered period of involuntary unemployment in the 
case of credit involuntary unemployment insurance.  The 
additional charge for credit life insurance or, credit 
disability insurance, or credit involuntary unemployment 
insurance must be calculated in each billing cycle by applying 
the current monthly premium rate for the insurance to the unpaid 
balances in the borrower's account.  
    (2) The amount, terms, and conditions of any credit 
insurance against loss or damage to property must be reasonable 
in relation to the character and value of the property insured.  
    Sec. 5.  Minnesota Statutes 1992, section 56.155, 
subdivision 1, is amended to read: 
    Subdivision 1.  [AUTHORIZATION.] No licensee shall, 
directly or indirectly, sell or offer for sale any insurance in 
connection with any loan made under this chapter except as and 
to the extent authorized by this section.  The sale of credit 
life and, credit accident and health, and credit involuntary 
unemployment insurance is subject to the provisions of chapter 
62B, except that the term of the insurance may exceed 60 months 
if the term of the loan exceeds 60 months.  Life, accident, and 
health, and involuntary unemployment insurance, or any of them, 
may be written upon or in connection with any loan but must not 
be required as additional security for the indebtedness.  If the 
debtor chooses to procure credit life insurance or, credit 
accident and health insurance, or credit involuntary 
unemployment insurance as security for the indebtedness, the 
debtor shall have the option of furnishing this security through 
existing policies of insurance that the debtor owns or controls, 
or of furnishing the coverage through any insurer authorized to 
transact business in this state.  A statement in substantially 
the following form must be made orally and provided in writing 
in bold face type of a minimum size of 12 points to the borrower 
before the transaction is completed for each credit life and, 
accident and health, and involuntary unemployment insurance 
coverage sold: 
 CREDIT LIFE INSURANCE AND, CREDIT DISABILITY INSURANCE, AND 
CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED 
TO OBTAIN CREDIT.  YOU MAY BUY ANY INSURANCE FROM ANYONE 
YOU CHOOSE OR YOU MAY USE EXISTING INSURANCE.  
    The licensee shall disclose whether or not the benefits 
commence as of the first day of disability or involuntary 
unemployment and shall further disclose the number of days that 
an insured obligor must be disabled or involuntarily unemployed, 
as defined in the policy, before benefits, whether retroactive 
or nonretroactive, commence.  In case there are multiple 
obligors under a transaction subject to this chapter, no policy 
or certificate of insurance providing credit accident and health 
or credit unemployment benefits may be procured by or through a 
licensee upon more than one of the obligors.  In case there are 
multiple obligors under a transaction subject to this chapter, 
no policy or certificate of insurance providing credit life 
insurance may be procured by or through a licensee upon more 
than two of the obligors in which case they shall be insured 
jointly.  The premium or identifiable charge for the insurance 
must not exceed that filed by the insurer with the department of 
commerce.  The charge, computed at the time the loan is made for 
a period not to exceed the full term of the loan contract on an 
amount not to exceed the total amount required to pay principal 
and charges, may be deducted from the proceeds or may be 
included as part of the principal of any loan.  If a borrower 
procures insurance by or through a licensee, the statement 
required by section 56.14 must disclose the cost to the borrower 
and the type of insurance, and the licensee shall cause to be 
delivered to the borrower a copy of the policy, certificate, or 
other evidence thereof, within a reasonable time.  No licensee 
shall decline new or existing insurance which meets the 
standards set out in this section nor prevent any obligor from 
obtaining this insurance coverage from other sources.  
Notwithstanding any other provision of this chapter, any gain or 
advantage to the licensee or to any employee, affiliate, or 
associate of the licensee from this insurance or the sale or 
provision thereof is not an additional or further charge in 
connection with the loan; nor are any of the provisions 
pertaining to insurance contained in this section prohibited by 
any other provision of this chapter. 
    Sec. 6.  Minnesota Statutes 1992, section 60K.03, 
subdivision 7, is amended to read: 
    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 credit 
life or, credit accident and health, or credit involuntary 
unemployment 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. 7.  Minnesota Statutes 1992, section 60K.19, 
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, at the time of license renewal, certify 
to the commissioner in writing that they will sell only credit 
life, credit accident and health, credit involuntary 
unemployment, and credit property insurance, during that year 
and do in fact so limit their sale of insurance.  
    Sec. 8.  Minnesota Statutes 1992, section 62B.01, is 
amended to read: 
    62B.01 [SCOPE.] 
    All life insurance and, accident and health insurance, and 
involuntary unemployment insurance in connection with loan or 
other credit transactions shall be are subject to the provisions 
of sections 62B.01 to 62B.14, except mortgage life, mortgage 
accidental death, and mortgage disability insurance.  
Insurance shall is not be subject to the provisions of sections 
62B.01 to 62B.14 where its issuance is an isolated transaction 
on the part of the insurer not related to an agreement or a plan 
for insuring debtors of the creditor.  Credit life and, credit 
accident and health, and credit involuntary unemployment 
insurance provided at no additional cost to the borrower shall 
are not be subject to the provisions of sections 62B.01 to 
62B.14.  
     Sec. 9.  Minnesota Statutes 1992, section 62B.02, is 
amended by adding a subdivision to read: 
    Subd. 3a.  "Credit involuntary unemployment insurance" 
means insurance on a debtor in connection with a specified loan 
or other credit transaction to provide payment to a creditor in 
the event of involuntary unemployment of the debtor for the 
installment payments or other periodic payments becoming due 
while the debtor is involuntarily unemployed. 
    Sec. 10.  Minnesota Statutes 1992, section 62B.03, is 
amended to read: 
    62B.03 [FORMS OF CREDIT LIFE INSURANCE AND, CREDIT ACCIDENT 
AND HEALTH INSURANCE, AND CREDIT INVOLUNTARY UNEMPLOYMENT 
INSURANCE.] 
    Credit life insurance and, credit accident and health 
insurance, and credit involuntary unemployment insurance shall 
be issued only in the following forms: 
    (1) Individual policies of life insurance issued to debtors 
on the term plan; 
    (2) Individual policies of accident and health insurance 
issued to debtors on a term plan or disability benefit 
provisions in individual policies of credit life insurance; 
    (3) Individual policies of involuntary unemployment 
insurance issued to debtors on the term plan; 
     (4) Group policies of life insurance issued to creditors 
providing insurance upon the lives of debtors on the term plan; 
    (4) (5) Group policies of accident and health insurance 
issued to creditors on a term plan insuring debtors or 
disability benefit provisions in group credit life insurance 
policies to provide such coverage; 
    (6) Group policies of involuntary unemployment insurance 
issued to creditors on a term plan insuring debtors. 
    Sec. 11.  Minnesota Statutes 1992, section 62B.04, is 
amended by adding a subdivision to read: 
    Subd. 3.  [CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE.] The 
total amount of periodic indemnity payable by credit involuntary 
unemployment insurance in the event of involuntary unemployment 
shall not exceed the aggregate of the periodic scheduled unpaid 
installments of the indebtedness; and the amount of each 
periodic indemnity payment shall not exceed the original 
indebtedness divided by the number of periodic installments. 
    Sec. 12.  Minnesota Statutes 1992, section 62B.05, is 
amended to read: 
    62B.05 [TERM OF CREDIT LIFE INSURANCE AND CREDIT ACCIDENT 
AND HEALTH INSURANCE.] 
    The term of any credit life insurance or, credit accident 
and health insurance, or credit involuntary unemployment 
insurance shall, subject to acceptance by the insurer, commence 
on the date when the debtor becomes obligated to the creditor, 
except that, where a group policy provides coverage with respect 
to existing obligations, the insurance on a debtor with respect 
to the indebtedness shall commence on the effective date of the 
policy.  Where evidence of insurability is required and the 
evidence is furnished more than 30 days after the date when the 
debtor becomes obligated to the creditor, the term of the 
insurance may commence on the date on which the insurance 
company determines the evidence to be satisfactory, and in that 
event there shall be an appropriate refund or adjustment of any 
charge to the debtor for insurance.  The term of the insurance 
shall not extend more than 15 days beyond the scheduled maturity 
date of the indebtedness except when extended without additional 
cost to the debtor. 
    If an indebtedness is prepaid in full before its scheduled 
maturity, except by performance of the insurer's obligation 
under the policy, the insurance shall be deemed canceled and a 
refund shall be paid or credited as provided in section 62B.08.  
Upon prepayment in full, the creditor shall make the refund of 
unearned premium, unless the credit insurance was originated by 
a third party, in which case the creditor shall promptly notify 
the third party who shall make the refund. 
    Sec. 13.  Minnesota Statutes 1992, section 62B.06, 
subdivision 1, is amended to read: 
    Subdivision 1.  All credit life insurance and, credit 
accident and health insurance, and credit involuntary 
unemployment insurance shall be evidenced by an individual 
policy, memorandum copy, or in the case of group insurance by a 
certificate of insurance, which shall be delivered to the debtor.
    Sec. 14.  Minnesota Statutes 1992, section 62B.06, 
subdivision 2, is amended to read: 
    Subd. 2.  Each individual policy or group certificate of 
credit life insurance, or credit accident and health insurance, 
or credit involuntary unemployment insurance, shall, in addition 
to other requirements of law, set forth the name and home office 
address of the insurer, the name or names of the debtor or in 
the case of a certificate under a group policy, the identity by 
name or otherwise of the debtor, the rate or amount of payment, 
if any, by the debtor separately for credit life insurance and, 
credit accident and health insurance, and credit involuntary 
unemployment insurance, a description of the amount, term and 
coverage including any exceptions, limitations and restrictions, 
and shall state that the benefits shall be paid to the creditor 
to reduce or extinguish the unpaid indebtedness and, wherever 
the amount of insurance may exceed the unpaid indebtedness, that 
any such excess shall be payable to the debtor, if living, 
otherwise to a beneficiary, other than the creditor, named by 
the debtor or, otherwise to the debtor's estate.  No individual 
or group policy of credit accident and health insurance or 
credit involuntary unemployment insurance issued, amended, 
renewed, or delivered in this state on or after January 1, 1976 
shall contain any provision offsetting, or in any other manner 
reducing any benefit under the policy by the amount of, or in 
proportion to, any increase in disability or other benefits 
received or receivable under the federal Social Security Act, as 
amended subsequent to the date of commencement of such benefit.  
    Sec. 15.  Minnesota Statutes 1992, section 62B.06, 
subdivision 4, is amended to read: 
    Subd. 4.  If the individual policy or group certificate of 
insurance is not delivered to the debtor at the time the 
indebtedness is incurred, a copy of the application for the 
policy or a notice of proposed insurance, signed by the debtor 
and setting forth the name and home office address of the 
insurer, the name or names of the debtor, the premium or amount 
of payment by the debtor, if any, separately for credit life 
insurance and, credit accident and health insurance, and credit 
involuntary unemployment insurance, the amount, term and a brief 
description of the coverage provided, shall be delivered to the 
debtor at the time the indebtedness is incurred.  The copy of 
the application for, or notice of proposed insurance, shall also 
refer exclusively to insurance coverage, and shall be separate 
and apart from the loan, sale or other credit statement of 
account, instrument or agreement, unless the information 
required by this subdivision is prominently set forth therein.  
Upon acceptance of the insurance by the insurer and within 30 
days of the date on which the indebtedness is incurred, the 
insurer shall cause the individual policy or group certificate 
of insurance to be delivered to the debtor.  The application or 
notice of proposed insurance shall state that upon acceptance by 
the insurer, the insurance shall become effective as provided in 
section 62B.05.  If an application for a policy or a notice of 
proposed insurance is not delivered at the time the indebtedness 
is incurred as required by this subdivision, the creditor shall 
assume all of the liabilities under such insurance until an 
insurer accepts the risk.  
    Sec. 16.  Minnesota Statutes 1992, section 62B.07, 
subdivision 2, is amended to read: 
    Subd. 2.  The commissioner shall within 60 days after the 
filing of policies, certificates of insurance, notices of 
proposed insurance, applications for insurance, endorsements and 
riders, disapprove any such form if the premium rates charged or 
to be charged are excessive in relation to benefits, or if it 
contains provisions which are unjust, unfair, inequitable, 
misleading, deceptive or encourage misrepresentation of the 
coverage, or are contrary to any provision of the insurance laws 
or of any rule promulgated thereunder.  In order to determine 
whether the premium to be charged under a particular policy form 
submitted by an insurer is excessive in relation to benefits, 
and to facilitate the submission and approval of policy forms 
and premium rates to be used in connection therewith, the 
commissioner shall give full consideration to and make 
reasonable allowances for underwriting expenses including, but 
not limited to, claim adjustment expenses, general 
administrative expenses including costs for handling return 
premiums, compensation to agents, expense allowances to 
creditors, if any, branch and field expenses and other 
acquisition costs, the types of policies actually issued and 
authorized as defined in section 62B.03, (1), (2), (3) 
and, (4), (5), and (6), and any and all other factors and trends 
demonstrated to be relevant.  An insurer may support these 
factors by statistical information, experience, actuarial 
computations, and/or estimates certified by an executive officer 
of the insurer, and the commissioner shall give due 
consideration to such supporting data.  
    Sec. 17.  Minnesota Statutes 1992, section 62B.07, 
subdivision 6, is amended to read: 
    Subd. 6.  If a group policy of credit life insurance or, 
credit accident and health insurance, or credit involuntary 
unemployment insurance 
    (1) has been delivered in this state before May 28, 1967, 
or 
    (2) has been or is delivered in another state before or 
after May 28, 1967, the insurer shall be required to file only 
the group certificate and notice of proposed insurance delivered 
or issued for delivery in this state as specified in 
subdivisions 2 and 4 of section 62B.06 and the forms shall be 
approved by the commissioner if they conform to the requirements 
specified in those subdivisions and if the schedules of premium 
rates applicable to the insurance evidenced by the certificate 
or notice are not in excess of the insurer's schedules of 
premium rates filed with the commissioner; provided, however, 
the premium rate in effect on existing group policies may be 
continued until the first policy anniversary date following the 
date this act is effective as provided in section 62B.12.  
    Sec. 18.  Minnesota Statutes 1992, section 62B.08, 
subdivision 1, is amended to read: 
    Subdivision 1.  An insurer may revise its schedules or 
premium rates from time to time, and shall file such revised 
schedules with the commissioner.  No insurer shall issue any 
credit life insurance policy or, credit accident and health 
insurance policy, or credit involuntary unemployment insurance 
policy for which the premium rate exceeds that determined by the 
schedules of the insurer then on file with the commissioner.  
    Sec. 19.  Minnesota Statutes 1992, section 62B.08, 
subdivision 3, is amended to read: 
    Subd. 3.  If a creditor requires a debtor to make a payment 
for credit life insurance or, credit accident and health 
insurance, or credit involuntary unemployment insurance and an 
individual policy or group certificate of insurance is not 
issued, the creditor shall immediately give written notice to 
the debtor and shall promptly make an appropriate credit to the 
account.  
    Sec. 20.  Minnesota Statutes 1992, section 62B.08, 
subdivision 4, is amended to read: 
    Subd. 4.  The amount charged to a debtor for credit life or 
insurance, credit health and accident and health insurance, or 
credit involuntary unemployment insurance shall not exceed the 
premiums charged by the insurer, as computed at the time the 
charge to the debtor is determined, and any premium charged or 
collected on a single premium basis shall be submitted to the 
insurer within 90 days of the month in which said premium is 
charged or collected.  
     Sec. 21.  Minnesota Statutes 1992, section 62B.08, is 
amended by adding a subdivision to read: 
    Subd. 5.  With respect to credit involuntary unemployment 
insurance only, an insurer, subsidiary, or parent of the insurer 
shall not pay compensation to a creditor or a group policyholder 
offering credit involuntary unemployment insurance in excess of 
30 percent of the net written premiums. 
    Sec. 22.  Minnesota Statutes 1992, section 62B.08, is 
amended by adding a subdivision to read: 
    Subd. 6.  "Compensation" means any valuable consideration, 
direct or indirect, paid by or on behalf of the insurer, or by 
any subsidiary or parent, or subsidiary of the parent of the 
insurer, or by any other person to whom or on behalf of any 
group policyholder or creditor or withheld from an insurer by 
any group policyholder or creditor, including but not limited 
to:  commissions, retrospective commissions, retrospective rate 
credits, experience refunds, dividends, service fees, expense 
allowances or reimbursements, gifts, equipment, facilities, 
goods or services, or any other form of remuneration resulting 
directly from the sale of credit involuntary unemployment 
insurance. 
    Sec. 23.  Minnesota Statutes 1992, section 62B.09, 
subdivision 3, is amended to read: 
    Subd. 3.  Any creditor doing business in the state of 
Minnesota may, in the same office or place of business where 
such creditor transacts business, take applications or 
enrollments for credit life and insurance, credit accident and 
health insurance, or credit involuntary unemployment insurance 
upon a borrower or purchaser or one of them if there are two or 
more in connection with the making of a loan or sale. 
    Sec. 24.  Minnesota Statutes 1992, section 62B.11, is 
amended to read: 
    62B.11 [EXISTING INSURANCE; CHOICE OF INSURER.] 
    When credit life insurance or, credit accident and health 
insurance, or credit involuntary unemployment insurance is 
required as additional security for any indebtedness, the debtor 
shall, upon request to the creditor, have the option of 
furnishing the required amount of insurance through existing 
policies of insurance owned or controlled by the debtor or of 
procuring and furnishing the required coverage through any 
insurer authorized to transact an insurance business within this 
state.  
    Sec. 25.  Minnesota Statutes 1992, section 62B.12, is 
amended to read: 
    62B.12 [ENFORCEMENT RULEMAKING.] 
    The commissioner may, after notice and hearing, issue rules 
the commissioner deems appropriate for the supervision of 
sections 62B.01 to 62B.14.  On finding that there has been a 
violation of sections 62B.01 to 62B.14, or any rules issued 
pursuant thereto, after written notice thereof and hearing given 
to the insurer or other person authorized or licensed by the 
commissioner, the commissioner shall set forth the details of 
the findings together with an order for compliance by a 
specified date.  The order shall be binding on the insurer and 
other person authorized or licensed by the commissioner on the 
date specified unless sooner withdrawn by the commissioner or a 
stay has been ordered by a court of competent jurisdiction.  The 
provisions of sections 62B.05, 62B.06, 62B.07 and 62B.08, shall 
not be operative until 90 days after May 28, 1967, and the 
commissioner may extend by not more than an additional 90 days 
the initial period within which the provisions of those sections 
shall not be operative.  The commissioner shall promulgate rules 
to establish rates for credit involuntary unemployment insurance 
prior to its issuance, and to enact the other provisions of this 
act, and the commissioner shall report by February 15, 1994, to 
the house of representatives committee on financial institutions 
and insurance and to the senate commerce and consumer protection 
committee on the rules or status of the rulemaking, including 
the expected loss ratio.  The commissioner is not obligated to 
promulgate a rule unless and until four or more insurers who 
plan to write credit involuntary unemployment insurance in 
Minnesota agree to pay for the cost of the promulgation of any 
rules authorized by this section.  Companies selling credit 
involuntary unemployment insurance shall be assessed by the 
department to pay the costs of rulemaking. 
    Moneys collected pursuant to this provision must be 
deposited in the state treasury and credited to a special 
account and are appropriated to the commissioner for the 
rulemaking purposes authorized by this section. 
    For the purposes of chapter 62B, any insurer authorized to 
offer the coverage specified by section 60A.06, subdivision 1, 
clause (4), shall be authorized to sell credit involuntary 
unemployment insurance pursuant to this chapter. 
    Sec. 26.  Minnesota Statutes 1992, section 72A.20, 
subdivision 27, is amended to read: 
    Subd. 27.  [SOLICITATIONS AND SALES OF INSURANCE PRODUCTS 
TO BORROWERS.] (a) A loan officer, a loan representative, or 
other person involved in taking or processing a loan may not 
solicit an insurance product, except for credit life and, credit 
disability or, credit involuntary unemployment, mortgage life, 
mortgage accidental death, or mortgage disability, and except 
for life insurance when offered in lieu of credit life 
insurance, from the completion of the initial loan application, 
as defined in the federal Equal Credit Opportunity Act, United 
States Code, title 15, sections 1691 to 1691f, and any 
regulations adopted under those sections, until after the 
closing of the loan transaction.  
    (b) This subdivision applies only to loan transactions 
covered by the federal Truth-in-Lending Act, United States Code, 
title 15, sections 1601 to 1666j, and any regulations adopted 
under those sections.  
    (c) This subdivision does not apply to sales of title 
insurance, homeowner's insurance, a package 
homeowner's-automobile insurance product, automobile insurance, 
or a similar insurance product, required to perfect title to, or 
protect, property for which a security interest will be taken if 
the product is required as a condition of the loan. 
    (d) Nothing in this subdivision prohibits the solicitation 
or sale of any insurance product by means of mass communication. 
     Sec. 27.  [EFFECTIVE DATE.] 
    Sections 1 to 26 are effective the day following final 
enactment. 
    Presented to the governor May 20, 1993 
    Signed by the governor May 24, 1993, 5:50 p.m.