Minnesota Session Laws - 1993, Regular Session

  
    Laws of Minnesota 1993 

                        CHAPTER 361-S.F.No. 176 
           An act relating to insurance; workers' compensation; 
          regulating distributions of excess surplus made by the 
          workers' compensation reinsurance association; 
          clarifying the law regulating distributions of excess 
          surplus; amending Minnesota Statutes 1992, sections 
          45.027, subdivision 1; and 79.34, by adding a 
          subdivision; proposing coding for new law in Minnesota 
          Statutes, chapter 79. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [LEGISLATIVE FINDINGS.] 
    The intent and public purpose of the legislature in 
creating the workers' compensation reinsurance association was 
to benefit employers by lowering their costs for mandated 
workers' compensation insurance through a low cost, compulsory, 
nonprofit reinsurance mechanism.  In 1992 the reinsurance 
association declared and distributed a $100,000,000 excess 
surplus to insurers and self-insured employers.  That excess 
surplus was not refunded to employer policyholders, whom the 
legislature intended to benefit when it created the reinsurance 
association.  An orderly process with state assistance is 
required to ensure that employer policyholders receive their 
intended rightful share of the original $100,000,000 excess 
surplus and a second $302,000,000 excess surplus declared in 
March 1993, that is being held by the reinsurance association.  
An orderly process requires balancing fairness to employers with 
administrative feasibility.  Sections 1 to 11 are the 
legislature's determination of that proper balance.  The public 
purpose for creating the nonprofit reinsurance association 
requires that this surplus be refunded to Minnesota employers, 
who are the ultimate payors of the premiums that helped create 
this excess surplus. 
    Sec. 2.  [1992 WORKERS' COMPENSATION REINSURANCE 
ASSOCIATION EXCESS SURPLUS DISTRIBUTION.] 
    Subdivision 1.  [SCOPE.] This section governs any 
distribution of excess surplus made by the workers' compensation 
reinsurance association in 1992 other than distributions to 
self-insured members of the association.  No distribution of 
that excess surplus other than that provided by this section may 
be made.  For the purpose of this section, a distribution is 
made upon the actual distribution of excess surplus from the 
association.  For the purpose of this section, "policyholder" 
means a workers' compensation insurance policyholder in 1992. 
    Subd. 2.  [STATE FUND MUTUAL INSURANCE COMPANY.] Any 
distribution of excess surplus of the workers' compensation 
reinsurance association received by the state fund mutual 
insurance company in 1992 must be refunded to policyholders.  
Each policyholder shall receive a share of the state fund 
mutual's distribution equal to the policyholder's proportionate 
share of the state fund mutual's 1992 earned Minnesota workers' 
compensation insurance premium, as reported in its annual 
statement for 1992 to the commissioner of commerce. 
    In no case shall the refund exceed the policyholder's 
earned premium for 1992.  If any portion of the distribution 
remains after the refund required under this subdivision has 
been made, a further refund based upon 1991 earned premiums, or 
such additional years' earned premiums as necessary to fully 
refund the distribution, shall be made by applying the method of 
calculation set forth in this subdivision. 
    Subd. 3.  [ASSIGNED RISK PLAN.] Any distribution of excess 
surplus of the workers' compensation reinsurance association in 
1992 received by the assigned risk plan must be returned to 
policyholders.  Each policyholder shall receive a share of the 
distribution equal to the policyholder's proportionate share of 
the assigned risk plan's 1992 earned Minnesota workers' 
compensation premium as reported in its annual statement for 
1992 to the commissioner of commerce. 
    In no case shall the refund exceed the policyholder's 
earned premium for 1992.  If any portion of the distribution 
remains after the refund required under this subdivision has 
been made, a further refund based upon 1991 earned premiums, or 
such additional years' earned premiums as necessary to fully 
refund the distribution, shall be made by applying the method of 
calculation set forth in this subdivision. 
    Subd. 4.  [INSURED EMPLOYERS.] Any distribution of excess 
surplus of the workers' compensation reinsurance association in 
1992 received by insurers and not governed by subdivisions 2 and 
3 must be returned to policyholders.  Each policyholder shall 
receive a share of the distribution equal to the policyholder's 
proportionate share of its company's 1992 earned Minnesota 
workers' compensation premium, as reported in its annual 
statement for 1992 to the commissioner of commerce. 
    In no case shall the refund exceed the policyholder's 
earned premium for 1992.  If any portion of the distribution 
remains after the refund required under this subdivision has 
been made, a further refund based upon 1991 earned premiums, or 
such additional years' earned premiums as necessary to fully 
refund the distribution, shall be made by applying the method of 
calculation set forth in this subdivision. 
    Subd. 5.  [DISTRIBUTION DEADLINE.] Except as provided in 
subdivision 6, an insurer shall refund its portion of the 1992 
workers' compensation reinsurance association surplus 
distribution to its policyholders according to this section 
within 60 days of the effective date of this act. 
    Subd. 6.  [UNCLAIMED REFUNDS.] Any part of the refund not 
distributed within one year after it is required to be 
distributed under subdivision 5 due to the inability to identify 
or locate policyholders shall be returned to the workers' 
compensation reinsurance association.  
    Subd. 7.  [COSTS.] The state fund mutual insurance company, 
the assigned risk plan, and any insurer member of the 
reinsurance association may retain the lesser of five percent of 
the amount it refunds to policyholders or actual costs as 
administrative costs of complying with this section apportioned 
as an equal percentage of each refund. 
    Sec. 3.  Minnesota Statutes 1992, 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 2 and 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. 4.  [79.361] [POST 1992 DISTRIBUTION OF WORKERS' 
COMPENSATION REINSURANCE ASSOCIATION SURPLUS.] 
    Subdivision 1.  [SCOPE.] This section governs the 
distribution of excess surplus of the workers' compensation 
reinsurance association declared after January 1, 1993.  A 
distribution of excess surplus is declared on the date the board 
votes to make a distribution.  No distribution of excess surplus 
other than that provided by this section may be made.  
    Subd. 2.  [SELF-INSURED.] A self-insurer shall receive a 
distribution of excess surplus in an amount equal to the 
self-insurer's share of the premiums paid to the workers' 
compensation reinsurance association for the period and for each 
retention layer for which the distribution is made. 
    Subd. 3.  [INSURED EMPLOYERS.] A policyholder, other than a 
policyholder insured by the assigned risk plan or the state fund 
mutual insurance company, shall receive a refund of a share of 
the distribution equal to the policyholder's share of the annual 
total earned Minnesota workers' compensation insurance premium, 
as reported to the commissioner of commerce in the most recent 
annual statements of insurers, including the assigned risk plan 
and the state fund mutual insurance company. 
    Subd. 4.  [ASSIGNED RISK PLAN.] A policyholder of the 
assigned risk plan shall receive a refund of a share of the 
distribution equal to the policyholder's share of the annual 
total earned Minnesota workers' compensation insurance premium, 
as reported to the commissioner of commerce in the most recent 
annual statements of insurers, including the assigned risk plan 
and the state fund mutual insurance company. 
    Subd. 5.  [STATE FUND MUTUAL INSURANCE COMPANY.] A 
policyholder of the state fund mutual insurance company shall 
receive a refund of a share of the distribution equal to the 
policyholder's share of the annual total earned Minnesota 
workers' compensation insurance premium, as reported to the 
commissioner of commerce in the most recent annual statements of 
insurers, including the assigned risk plan and the state fund 
mutual insurance company. 
    Subd. 6.  [DISTRIBUTION DEFINED.] For the purpose of 
subdivisions 3 to 5, "distribution" means a distribution 
described in subdivision 1 minus a distribution to self-insurers 
under subdivision 2. 
    Subd. 7.  [POLICYHOLDER.] For the purpose of this section 
"policyholder" means a workers' compensation insurance 
policyholder in the calendar year preceding a declaration of 
excess surplus by the board of the reinsurance association. 
    Subd. 8.  [INFORMATION REQUIRED.] Insurers and the workers' 
compensation insurers rating association of Minnesota must 
provide the workers' compensation reinsurance association with 
information necessary to administer and calculate the refunds to 
policyholders governed by this section within 60 days of a 
request by the association.  For the purpose of this 
subdivision, "insurer" includes the assigned risk plan. 
    Subd. 9.  [REFUND DUE DATE.] Policyholders must receive the 
refund within 60 days of the day the reinsurance association 
receives the information required to be provided by subdivision 
8. 
    Subd. 10.  [UNCLAIMED REFUND.] Any part of the refund not 
distributed within one year after the due date of a refund under 
this section due to the inability to identify or locate 
policyholders remains with the workers' compensation reinsurance 
association.  
    Subd. 11.  [COSTS OF DISTRIBUTION.] The reinsurance 
association may pay the actual and reasonable costs of the 
refunds made under this section from earnings on a declared 
excess surplus prior to its distribution. 
    Sec. 5.  Minnesota Statutes 1992, section 79.34, is amended 
by adding a subdivision to read: 
    Subd. 2a.  [DEFICIENCY.] If the board determines that a 
distribution of excess surplus resulted in inadequate funds 
being available to pay claims that arose during the period upon 
which that distribution was calculated, the board shall 
determine the amount of the deficiency.  The deficiency shall be 
made up by imposing an assessment rate against self-insured 
members and policyholders of insurer members.  The board shall 
notify the commissioner of commerce of the amount of the 
deficiency and recommend an assessment rate.  The commissioner 
shall order an assessment at a rate and for the time period 
necessary to eliminate the deficiency.  The assessment rate 
shall be applied to the exposure base of self-insured employers 
and insured employers.  The assessment may not be retroactive 
and applies only prospectively.  The assessment may be spread 
over a period of time that will cause the least financial 
hardship to employers.  All assessments under this subdivision 
are payable to the association.  The commissioner may issue 
orders necessary to administer this section.  The orders are not 
rules subject to chapter 14. 
    Sec. 6.  [79.362] [WORKERS' COMPENSATION REINSURANCE 
ASSOCIATION EXCESS SURPLUS DISTRIBUTION.] 
    An order of the commissioner of the department of labor and 
industry relating to the distribution of excess surplus of the 
workers' compensation reinsurance association shall be reviewed 
by the commissioner of commerce.  The commissioner of commerce 
may amend, approve, or reject an order or issue further orders 
to accomplish the purposes of sections 2 and 4.  The 
commissioner may not change the amount of the distribution 
ordered by the commissioner of labor and industry without 
agreement of the commissioner of labor and industry.  An order 
of the commissioner of commerce under this section is not 
subject to chapter 14. 
    Sec. 7.  [RESOLUTIONS AND ORDER NULLIFIED.] 
    Any resolution or plan of operation of the workers' 
compensation reinsurance association or order of the 
commissioner of labor and industry that purports to grant any 
claim to excess surplus to insurer members of the association 
that conflicts with sections 1 to 11 is nullified to the extent 
of the conflict. 
    Sec. 8.  [79.363] [DISTRIBUTION OF EXCESS SURPLUS.] 
    The distribution of excess surplus of the workers' 
compensation reinsurance association is not a distribution of 
excess premiums to members.  Any excess surplus not refunded 
according to section 2 must be returned to the association and 
must not be distributed to its members.  Any excess surplus not 
distributed or refunded according to section 4 must be retained 
by the association and must not be distributed to members. 
    Sec. 9.  [DISTRIBUTION EARNINGS.] 
    For the purpose of section 2, the refund to policyholders 
of excess surplus shall include any earnings on a distribution 
of excess surplus while the distribution was in the possession 
of an insurer. 
    Sec. 10.  [COSTS OF LITIGATION.] 
    The workers' compensation reinsurance association shall 
reimburse the state for any and all costs, disbursements, and 
attorney fees in any way incurred by the state as part of or 
resulting from any litigation, including administrative or civil 
actions, involving the enforcement or validity of sections 1 to 
11. 
    Sec. 11.  [ORIGINAL JURISDICTION.] 
    The Minnesota supreme court has original jurisdiction over 
any action challenging the constitutionality or validity of this 
act and shall expedite the resolution of the action. 
    Sec. 12.  [EFFECTIVE DATE.] 
    This act is effective the day following final enactment and 
applies retroactively to August 1, 1992. 
    Presented to the governor May 20, 1993 
    Signed by the governor May 24, 1993, 5:44 p.m.