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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 163-S.F.No. 1404 
                  An act relating to insurance; regulating reinsurance 
                  intermediaries; providing for the investment of funds 
                  held by reinsurance intermediaries; amending Minnesota 
                  Statutes 1994, sections 60A.715; and 60A.73, 
                  subdivision 4. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1994, section 60A.715, is 
        amended to read: 
           60A.715 [REQUIRED CONTRACT PROVISIONS; REINSURANCE 
        INTERMEDIARY-BROKERS.] 
           Transactions between a RB and the insurer it represents in 
        this capacity shall only be entered into pursuant to a written 
        authorization, specifying the responsibilities of each party.  
        The authorization must, at a minimum, provide that: 
           (1) the insurer may terminate the RB's authority at any 
        time; 
           (2) the RB will render accounts to the insurer accurately 
        detailing all material transactions, including information 
        necessary to support all commissions, charges, and other fees 
        received by, or owing to the RB, and remit all funds due to the 
        insurer within 30 days of receipt; 
           (3) all funds collected for the insurer's account will be 
        held by the RB in a fiduciary capacity in a bank that is a 
        qualified United States financial institution and may be 
        invested in direct obligations of, or obligations guaranteed or 
        insured by, the United States, its agencies, or its 
        instrumentalities, excluding mortgage-backed securities.  These 
        funds may not be invested in obligations whose maturities exceed 
        90 days; 
           (4) the RB will comply with section 60A.72; 
           (5) the RB will comply with the written standards 
        established by the insurer for the cession or retrocession of 
        all risks; and 
           (6) the RB will disclose to the insurer any relationship 
        with any reinsurer to which business will be ceded or retroceded.
           Sec. 2.  Minnesota Statutes 1994, section 60A.73, 
        subdivision 4, is amended to read: 
           Subd. 4.  [HANDLING OF FUNDS.] All funds collected for the 
        reinsurer's account will be held by the RM in a fiduciary 
        capacity in a bank which is a qualified United States financial 
        institution as defined herein and may be invested in direct 
        obligations of, or obligations guaranteed or insured by, the 
        United States, its agencies, or its instrumentalities, excluding 
        mortgage-backed securities.  These funds may not be invested in 
        obligations whose maturities exceed 90 days.  The RM may retain 
        no more than three months estimated claims payments and 
        allocated loss adjustment expenses.  The RM shall maintain a 
        separate bank account for each reinsurer that it represents. 
           Presented to the governor May 12, 1995 
           Signed by the governor May 15, 1995, 9:58 a.m.