Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 253-H.F.No. 673 
                  An act relating to insurance; regulating risk-based 
                  capital for insurers; enacting the model act of the 
                  National Association of Insurance Commissioners; 
                  amending Minnesota Statutes 1994, section 13.71, by 
                  adding a subdivision; proposing coding for new law in 
                  Minnesota Statutes, chapter 60A. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1994, section 13.71, is 
        amended by adding a subdivision to read: 
           Subd. 20.  [RISK-BASED CAPITAL DATA.] Risk-based capital 
        reports and related reports, data, and orders maintained by the 
        commissioner of commerce are classified under section 60A.67. 
           Sec. 2.  [60A.60] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For the purposes of sections 
        60A.60 to 60A.696, the terms defined in this section have the 
        meanings given them. 
           Subd. 2.  [ADJUSTED RISK-BASED CAPITAL REPORT.] "Adjusted 
        risk-based capital report" means a risk-based capital report 
        that has been adjusted by the commissioner according to section 
        60A.61, subdivision 5. 
           Subd. 3.  [CORRECTIVE ORDER.] "Corrective order" means an 
        order issued by the commissioner specifying corrective actions 
        that the commissioner has determined are required. 
           Subd. 4.  [DOMESTIC INSURER.] "Domestic insurer" means an 
        insurance company incorporated or organized in this state. 
           Subd. 5.  [FOREIGN INSURER.] "Foreign insurer" means an 
        insurance company that is admitted to do business in this state 
        under section 60A.19 but is not incorporated or organized in 
        this state. 
           Subd. 6.  [NAIC.] "NAIC" means the National Association of 
        Insurance Commissioners. 
           Subd. 7.  [LIFE AND/OR HEALTH INSURER.] "Life and/or health 
        insurer" means an insurance company authorized to transact 
        business under section 60A.06, subdivision 1, clause (4), or a 
        property and casualty insurer transacting business only under 
        section 60A.06, subdivision 1, clause (5)(a). 
           Subd. 8.  [PROPERTY AND CASUALTY INSURER.] "Property and 
        casualty insurer" means an insurance company authorized to 
        transact business under section 60A.06, subdivision 1, clauses 
        (1), (2), (3), (5), (6), (8), (9), (10), (11), (12), (13), (14), 
        and (15), but does not include monoline mortgage guaranty 
        insurers, and financial guaranty insurers. 
           Subd. 9.  [NEGATIVE TREND.] "Negative trend" means, with 
        respect to a life and/or health insurer, negative trend over a 
        period of time, as determined according to the "trend test 
        calculation" included in the risk-based capital instructions. 
           Subd. 10.  [RISK-BASED CAPITAL INSTRUCTIONS.] "Risk-based 
        instructions" means the risk-based capital report including 
        risk-based capital instructions adopted by the NAIC, as those 
        risk-based instructions may be amended by the NAIC from time to 
        time according to the procedures adopted by the NAIC. 
           Subd. 11.  [RISK-BASED CAPITAL LEVEL.] "Risk-based capital 
        level" means an insurer's company action level risk-based 
        capital, regulatory action level risk-based capital, authorized 
        control level risk-based capital, or mandatory control level 
        risk-based capital where: 
           (1) "company action level risk-based capital" means, with 
        respect to an insurer, the product of 2.0 and its authorized 
        control level risk-based capital; 
           (2) "regulatory action level risk-based capital" means the 
        product of 1.5 and its authorized control level risk-based 
        capital; 
           (3) "authorized control level risk-based capital" means the 
        number determined under the risk-based capital formula according 
        to the risk-based capital instructions; 
           (4) "mandatory control level risk-based capital" means the 
        product of .70 and the authorized control level risk-based 
        capital. 
           Subd. 12.  [RISK-BASED CAPITAL PLAN.] "Risk-based capital 
        plan" means a comprehensive financial plan containing the 
        elements specified in section 60A.62, subdivision 2.  If the 
        commissioner rejects the risk-based capital plan, and it is 
        revised by the insurer, with or without the commissioner's 
        recommendation, the plan must be called the "revised risk-based 
        capital plan." 
           Subd. 13.  [RISK-BASED CAPITAL REPORT.] "Risk-based capital 
        report" means the report required in section 60A.61. 
           Subd. 14.  [TOTAL ADJUSTED CAPITAL.] "Total adjusted 
        capital" means the sum of: 
           (1) an insurer's statutory capital and surplus as 
        determined in accordance with statutory accounting applicable to 
        the annual statement required to be filed under section 60A.13; 
        and 
           (2) other items, if any, as the risk-based capital 
        instructions may provide. 
           Sec. 3.  [60A.61] [RISK-BASED CAPITAL REPORTS.] 
           Subdivision 1.  [GENERAL REQUIREMENTS.] Every domestic 
        insurer shall, on or before each March 1, prepare and submit to 
        the commissioner a report of its risk-based capital levels as of 
        the end of the calendar year just ended, in a form and 
        containing the information required by the risk-based capital 
        instructions.  In addition, every domestic insurer shall file 
        its risk-based capital report: 
           (1) with the NAIC according to the risk-based capital 
        instructions; and 
           (2) with the insurance commissioner in a state in which the 
        insurer is authorized to do business, if the insurance 
        commissioner has notified the insurer of its request in writing, 
        in which case the insurer shall file its risk-based capital 
        report not later than the later of: 
           (i) 15 days from the receipt of notice to file its 
        risk-based capital report with that state; or 
           (ii) March 1. 
           Subd. 2.  [LIFE AND/OR HEALTH INSURERS.] A life and/or 
        health insurer's risk-based capital must be determined according 
        to the formula set forth in the risk-based capital 
        instructions.  The formula must take into account, and may 
        adjust for the covariance between: 
           (1) the risk with respect to the insurer's assets; 
           (2) the risk of adverse insurance experience with respect 
        to the insurer's liabilities and obligations; 
           (3) the interest rate risk with respect to the insurer's 
        business; and 
           (4) all other business risks and other relevant risks set 
        forth in the risk-based capital instructions; 
        determined in each case by applying the factors in the manner 
        set forth in the risk-based capital instructions. 
           Subd. 3.  [PROPERTY AND CASUALTY INSURERS.] A property and 
        casualty insurer's risk-based capital must be determined 
        according to the formula set forth in the risk-based capital 
        instructions.  The formula must take into account, and may 
        adjust for the covariance between: 
           (1) asset risk; 
           (2) credit risk; 
           (3) underwriting risk; and 
           (4) all other business risks and other relevant risks set 
        forth in the risk-based capital instructions; 
        determined in each case by applying the factors in the manner 
        set forth in the risk-based capital instructions. 
           Subd. 4.  [MAINTAINING ADDITIONAL CAPITAL.] An excess of 
        capital over the amount produced by the risk-based capital 
        requirements contained in sections 60A.60 to 60A.696 and the 
        formulas, schedules, and instructions referenced in sections 
        60A.60 to 60A.696 is desirable in the business of insurance.  
        Accordingly, insurers should seek to maintain capital above the 
        risk-based capital levels required by sections 60A.60 to 60A.696.
        Additional capital is used and useful in the insurance business 
        and helps to secure an insurer against various risks inherent 
        in, or affecting, the business of insurance and not accounted 
        for or only partially measured by the risk-based capital 
        requirements contained in sections 60A.60 to 60A.696. 
           Subd. 5.  [ADJUSTED RISK-BASED CAPITAL REPORT.] If a 
        domestic insurer files a risk-based capital report that in the 
        judgment of the commissioner is inaccurate, then the 
        commissioner shall adjust the risk-based capital report to 
        correct the inaccuracy and shall notify the insurer of the 
        adjustment.  The notice must contain a statement of the reason 
        for the adjustment.  A risk-based capital report as so adjusted 
        is referred to as an "adjusted risk-based capital report." 
           Sec. 4.  [60A.62] [COMPANY ACTION LEVEL EVENT.] 
           Subdivision 1.  [DEFINITION.] "Company action level event" 
        means any of the following events: 
           (1) the filing of a risk-based capital report by an insurer 
        which indicates that: 
           (i) the insurer's total adjusted capital is greater than or 
        equal to its regulatory action level risk-based capital but less 
        than its company action level risk-based capital; or 
           (ii) if a life and/or health insurer, the insurer has total 
        adjusted capital that is greater than or equal to its company 
        action level risk-based capital but less than the product of its 
        authorized control level risk-based capital and 2.5 and has a 
        negative trend; 
           (2) the notification by the commissioner to the insurer of 
        an adjusted risk-based capital report that indicates an event in 
        clause (1), provided the insurer does not challenge the adjusted 
        risk-based report under section 60A.66; or 
           (3) if, pursuant to section 60A.66, an insurer challenges 
        an adjusted risk-based capital report that indicates the event 
        in clause (1), the notification by the commissioner to the 
        insurer that the commissioner has, after a hearing, rejected the 
        insurer's challenge. 
           Subd. 2.  [PLAN.] In the event of a company action level 
        event, the insurer shall prepare and submit to the commissioner 
        a risk-based capital plan that: 
           (1) identifies the conditions that contribute to the 
        company action level event; 
           (2) contains proposals of corrective actions that the 
        insurer intends to take and would be expected to result in the 
        elimination of the company action level event; 
           (3) provides projections of the insurer's financial results 
        in the current year and at least the four succeeding years, both 
        in the absence of proposed corrective actions and giving effect 
        to the proposed corrective actions, including projected 
        statutory balance sheets, income statements, and cash flow 
        statements.  The projections for both new and renewal business 
        might include separate projections for each major line of 
        business and separately identify each significant income, 
        expense, and benefit component; 
           (4) identifies the key assumptions impacting the insurer's 
        projections and the sensitivity of the projections to the 
        assumptions; and 
           (5) identifies the quality of, and problems associated 
        with, the insurer's business, including, but not limited to, its 
        assets, anticipated business growth and associated surplus 
        strain, extraordinary exposure to risk, mix of business, and use 
        of reinsurance, if any, in each case. 
           Subd. 3.  [SUBMISSION.] The risk-based capital plan must be 
        submitted: 
           (1) within 45 days of the company action level event; or 
           (2) if the insurer challenges an adjusted risk-based 
        capital report pursuant to section 60A.66, within 45 days after 
        notification to the insurer that the commissioner has, after a 
        hearing, rejected the insurer's challenge. 
           Subd. 4.  [NOTIFICATION BY COMMISSIONER.] Within 60 days 
        after the submission by an insurer of a risk-based capital plan 
        to the commissioner, the commissioner shall notify the insurer 
        whether the risk-based capital plan must be implemented or is, 
        in the judgment of the commissioner, unsatisfactory.  If the 
        commissioner determines the risk-based capital plan is 
        unsatisfactory, the notification to the insurer must set forth 
        the reasons for the determination, and may set forth proposed 
        revisions that will render the risk-based capital plan 
        satisfactory, in the judgment of the commissioner.  Upon 
        notification from the commissioner, the insurer shall prepare a 
        revised risk-based capital plan, that may incorporate by 
        reference any revisions proposed by the commissioner, and shall 
        submit the revised risk-based capital plan to the commissioner: 
           (1) within 45 days after the notification from the 
        commissioner; or 
           (2) if the insurer challenges the notification from the 
        commissioner under section 60A.66, within 45 days after a 
        notification to the insurer that the commissioner has, after a 
        hearing, rejected the insurer's challenge. 
           Subd. 5.  [UNSATISFACTORY PLAN.] In the event of a 
        notification by the commissioner to an insurer that the 
        insurer's risk-based capital plan or revised risk-based capital 
        plan is unsatisfactory, the commissioner may at the 
        commissioner's discretion, subject to the insurer's right to a 
        hearing under section 60A.66, specify in the notification that 
        the notification constitutes a regulatory action level event. 
           Subd. 6.  [FILINGS TO OTHER STATES.] Every domestic insurer 
        that files a risk-based capital plan or revised risk-based 
        capital plan with the commissioner shall file a copy of the 
        risk-based capital plan or revised risk-based capital plan with 
        the insurance commissioner in any state in which the insurer is 
        authorized to do business if: 
           (1) the state has a risk-based capital provision 
        substantially similar to section 60A.67, subdivision 1; and 
           (2) the insurance commissioner of that state has notified 
        the insurer of its request for the filing in writing, in which 
        case the insurer shall file a copy of the risk-based capital 
        plan or revised risk-based capital plan in that state no later 
        than the later of: 
           (i) 15 days after the receipt of notice to file a copy of 
        its risk-based capital plan or revised risk-based plan with the 
        state; or 
           (ii) the date on which the risk-based capital plan or 
        revised risk-based capital plan is filed under section 60A.62, 
        subdivisions 3 and 4. 
           Sec. 5.  [60A.63] [REGULATORY ACTION LEVEL EVENT.] 
           Subdivision 1.  [DEFINITION.] "Regulatory action level 
        event" means, with respect to an insurer, any of the following 
        events: 
           (1) the filing of a risk-based capital report by the 
        insurer that indicates that the insurer's total adjusted capital 
        is greater than or equal to its authorized control level 
        risk-based capital but less than its regulatory action level 
        risk-based capital; 
           (2) the notification by the commissioner to an insurer of 
        an adjusted risk-based capital report that indicates the event 
        in clause (1), provided the insurer does not challenge the 
        adjusted risk-based capital report under section 60A.66; 
           (3) if, pursuant to section 60A.66, the insurer challenges 
        an adjusted risk-based capital report that indicates the event 
        in clause (1), the notification by the commissioner to the 
        insurer that the commissioner has, after a hearing, rejected the 
        insurer's challenge; 
           (4) the failure of the insurer to file a risk-based capital 
        report by March 1, unless the insurer has provided an 
        explanation for the failure that is satisfactory to the 
        commissioner and has cured the failure within ten days after 
        March 1; 
           (5) the failure of the insurer to submit a risk-based 
        capital plan to the commissioner within the time period set 
        forth in section 60A.62, subdivision 3; 
           (6) notification by the commissioner to the insurer that: 
           (i) the risk-based capital plan or revised risk-based 
        capital plan submitted by the insurer is, in the judgment of the 
        commissioner, unsatisfactory; and 
           (ii) the notification constitutes a regulatory action level 
        event with respect to the insurer, provided the insurer has not 
        challenged the determination under section 60A.66; 
           (7) if, pursuant to section 60A.66, the insurer challenges 
        a determination by the commissioner under clause (6), the 
        notification by the commissioner to the insurer that the 
        commissioner has, after a hearing, rejected the challenge; 
           (8) notification by the commissioner to the insurer that 
        the insurer has failed to adhere to its risk-based capital plan 
        or revised risk-based capital plan, but only if the failure has 
        a substantial adverse effect on the ability of the insurer to 
        eliminate the company action level event according to its 
        risk-based capital plan or revised risk-based capital plan and 
        the commissioner has so stated in the notification, provided the 
        insurer has not challenged the determination under section 
        60A.66; or 
           (9) if, pursuant to section 60A.66, the insurer challenges 
        a determination by the commissioner under clause (8), the 
        notification by the commissioner to the insurer that the 
        commissioner has, after a hearing, rejected the challenge. 
           Subd. 2.  [COMMISSIONER'S DUTIES.] In the event of a 
        regulatory action level event, the commissioner shall: 
           (1) require the insurer to prepare and submit a risk-based 
        capital plan, or, if applicable, a revised risk-based capital 
        plan; 
           (2) examine or analyze as the commissioner considers 
        necessary the assets, liabilities, and operations of the insurer 
        including reviewing its risk-based capital plan or revised 
        risk-based capital plan; and 
           (3) subsequent to the examination or analysis, issue a 
        corrective order specifying the corrective actions the 
        commissioner determines are required. 
           Subd. 3.  [CORRECTIVE ACTION.] In determining corrective 
        actions, the commissioner may take into account factors 
        considered relevant with respect to the insurer based upon the 
        commissioner's examination or analysis of the assets, 
        liabilities and operations of the insurer, including, but not 
        limited to, the results of any sensitivity tests undertaken 
        pursuant to the risk-based capital instructions.  The risk-based 
        capital plan or revised risk-based capital plan must be 
        submitted: 
           (1) within 45 days after the occurrence of the regulatory 
        action level event; 
           (2) if the insurer challenges an adjusted risk-based 
        capital report pursuant to section 60A.66 and the challenge is 
        not frivolous in the judgment of the commissioner, within 45 
        days after the notification to the insurer that the commissioner 
        has, after a hearing, rejected the insurer's challenge; or 
           (3) if the insurer challenges a revised risk-based capital 
        plan pursuant to section 60A.66 and the challenge is not 
        frivolous in the judgment of the commissioner, within 45 days 
        after the notification to the insurer that the commissioner has, 
        after a hearing, rejected the insurer's challenge. 
           Subd. 4.  [EXAMINATION AND REVIEW.] The commissioner may 
        retain actuaries and investment experts and other consultants as 
        may be necessary in the judgment of the commissioner to review 
        the insurer's risk-based capital plan or revised risk-based 
        capital plan, examine or analyze the assets, liabilities, and 
        operations of the insurer and formulate the corrective order 
        with respect to the insurer.  The fees, costs, and expenses 
        relating to consultants shall be borne by the affected insurer 
        or other party as directed by the commissioner. 
           Sec. 6.  [60A.64] [AUTHORIZED CONTROL LEVEL EVENT.] 
           Subdivision 1.  [DEFINITION.] "Authorized control level 
        event" means any of the following events: 
           (1) the filing of a risk-based capital report by the 
        insurer that indicates that the insurer's total adjusted capital 
        is greater than or equal to its mandatory control level 
        risk-based capital but less than its authorized control level 
        risk-based capital; 
           (2) the notification by the commissioner to the insurer of 
        an adjusted risk-based capital report that indicates the event 
        in clause (1), provided the insurer does not challenge the 
        adjusted risk-based capital report under section 60A.66; 
           (3) if, pursuant to section 60A.66, the insurer challenges 
        an adjusted risk-based capital report that indicates the event 
        in clause (1), notification by the commissioner to the insurer 
        that the commissioner has, after a hearing, rejected the 
        insurer's challenge; 
           (4) the failure of the insurer to respond, in a manner 
        satisfactory to the commissioner, to a corrective order, 
        provided the insurer has not challenged the corrective order 
        under section 60A.66; or 
           (5) if the insurer has challenged a corrective order under 
        section 60A.66 and the commissioner has, after a hearing, 
        rejected the challenge or modified the corrective order, the 
        failure of the insurer to respond, in a manner satisfactory to 
        the commissioner, to the corrective order subsequent to 
        rejection or modification by the commissioner. 
           Subd. 2.  [COMMISSIONER'S DUTIES.] In the event of an 
        authorized control level event with respect to an insurer, the 
        commissioner shall: 
           (1) take the actions required under section 60A.63 
        regarding an insurer with respect to which a regulatory action 
        level event has occurred; or 
           (2) if the commissioner considers it to be in the best 
        interests of the policyholders and creditors of the insurer and 
        of the public, take the actions necessary to cause the insurer 
        to be placed under regulatory control under chapter 60B.  In the 
        event the commissioner takes these actions, the authorized 
        control level event is considered sufficient grounds for the 
        commissioner to take action under chapter 60B, and the 
        commissioner has the rights, powers, and duties with respect to 
        the insurer set forth in chapter 60B.  In the event the 
        commissioner takes actions under this clause pursuant to an 
        adjusted risk-based capital report, the insurer is entitled to 
        the protections afforded to insurers under section 60B.11 
        pertaining to summary proceedings. 
           Sec. 7.  [60A.65] [MANDATORY CONTROL LEVEL EVENT.] 
           Subdivision 1.  [DEFINITION.] "Mandatory control level 
        event" means any of the following events: 
           (1) the filing of a risk-based capital report that 
        indicates that the insurer's total adjusted capital is less than 
        its mandatory control level risk-based capital; 
           (2) notification by the commissioner to the insurer of an 
        adjusted risk-based capital report that indicates the event in 
        clause (1), provided the insurer does not challenge the adjusted 
        risk-based capital report under section 60A.66; or 
           (3) if, pursuant to section 60A.66, the insurer challenges 
        an adjusted risk-based capital report that indicates the event 
        in clause (1), notification by the commissioner to the insurer 
        that the commissioner has, after a hearing, rejected the 
        insurer's challenge. 
           Subd. 2.  [COMMISSIONER'S DUTIES.] In the event of a 
        mandatory control level event: 
           (1) with respect to a life and/or health insurer, the 
        commissioner shall take the actions necessary to place the 
        insurer under regulatory control under chapter 60B.  In that 
        event, the mandatory control level event is considered 
        sufficient grounds for the commissioner to take action under 
        chapter 60B, and the commissioner has the rights, powers, and 
        duties with respect to the insurer set forth in chapter 60B.  If 
        the commissioner takes actions pursuant to an adjusted 
        risk-based capital report, the insurer is entitled to the 
        protections of section 60B.11 pertaining to summary 
        proceedings.  However, the commissioner may forego action for up 
        to 90 days after the mandatory control level event if the 
        commissioner finds there is a reasonable expectation that the 
        mandatory control level event may be eliminated within the 
        90-day period; and 
           (2) with respect to a property and casualty insurer, the 
        commissioner shall take the actions necessary to place the 
        insurer under regulatory control under chapter 60B, or, in the 
        case of an insurer that is writing no business and that is 
        running off its existing business, may allow the insurer to 
        continue its run-off under the supervision of the commissioner.  
        In either event, the mandatory control level event is sufficient 
        grounds for the commissioner to take action under chapter 60B, 
        and the commissioner has the rights, powers, and duties with 
        respect to the insurer set forth in chapter 60B.  If the 
        commissioner takes actions pursuant to an adjusted risk-based 
        capital report, the insurer is entitled to the protections of 
        section 60B.11 pertaining to summary proceedings.  However, the 
        commissioner may forego action for up to 90 days after the 
        mandatory control level event if the commissioner finds there is 
        a reasonable expectation that the mandatory control level event 
        may be eliminated within the 90-day period. 
           Sec. 8.  [60A.66] [HEARINGS.] 
           Upon: 
           (1) notification to an insurer by the commissioner of an 
        adjusted risk-based report; 
           (2) notification to an insurer by the commissioner that: 
           (i) the insurer's risk-based capital plan or revised 
        risk-based capital plan is unsatisfactory; and 
           (ii) the notification constitutes a regulatory action level 
        event with respect to the insurer; 
           (3) notification to an insurer by the commissioner that the 
        insurer has failed to adhere to its risk-based capital plan or 
        revised risk-based capital plan and that the failure has 
        substantial adverse effect on the ability of the insurer to 
        eliminate the company action level event with respect to the 
        insurer according to its risk-based capital plan or revised 
        risk-based capital plan; or 
           (4) notification to an insurer by the commissioner of a 
        corrective order with respect to the insurer, 
        the insurer has the right to a confidential hearing conducted in 
        accordance with chapter 14, on a record, at which the insurer 
        may challenge any determination or action by the commissioner.  
        The insurer shall notify the commissioner of its request for a 
        hearing within five days after the notification by the 
        commissioner under clause (1), (2), (3), or (4).  Upon receipt 
        of the insurer's request for a hearing, the commissioner shall 
        set a date for the hearing no less than ten nor more than 30 
        days after the date of the insurer's request. 
           Sec. 9.  [60A.67] [CONFIDENTIALITY.] 
           Subdivision 1.  [GENERALLY.] All risk-based capital 
        reports, to the extent the information in them is not required 
        to be set forth in a publicly available annual statement 
        schedule, and risk-based capital plans, including the results or 
        report of an examination or analysis of an insurer performed 
        pursuant to sections 60A.60 to 60A.696, and any corrective order 
        issued by the commissioner pursuant to an examination or 
        analysis, with respect to a domestic insurer or foreign insurer 
        that are filed with the commissioner constitute information that 
        might be damaging to the insurer if made available to its 
        competitors, and shall be maintained by the commissioner as 
        nonpublic data as defined in section 13.02, subdivision 9.  This 
        information is not subject to subpoena, other than by the 
        commissioner and then only for the purpose of enforcement 
        actions taken by the commissioner pursuant to sections 60A.60 to 
        60A.696 or other provision of the insurance laws of this state. 
           Subd. 2.  [PROHIBITION ON ANNOUNCEMENTS.] The comparison of 
        an insurer's total adjusted capital to any of its risk-based 
        capital levels is a regulatory tool that may indicate the need 
        for possible corrective action with respect to the insurer and 
        is not intended as a means to rank insurers generally.  Except 
        as otherwise required under sections 60A.60 to 60A.696, the 
        making, publishing, dissemination, circulating, or placing 
        before the public, or causing, directly or indirectly to be 
        made, published, disseminated, circulated, or placed before the 
        public, in a newspaper, magazine, or other publication, or in 
        the form of a notice, circular, pamphlet, letter, or poster, or 
        over any radio or television station, or in any other way, an 
        advertisement, announcement, or statement containing an 
        assertion, representation, or statement with regard to the 
        risk-based capital levels of an insurer, or of any component 
        derived in the calculation, by an insurer, agent, broker, or 
        other person engaged in any manner in the insurance business 
        would be misleading and is prohibited.  However, if a materially 
        false statement with respect to the comparison regarding an 
        insurer's total adjusted capital to its risk-based capital 
        levels, or any of them, or an inappropriate comparison of any 
        other amount to the insurer's risk-based capital levels is 
        published in a written publication and the insurer is able to 
        demonstrate to the commissioner with substantial proof the 
        falsity of the statement, or the inappropriateness, as the case 
        may be, then the insurer may publish an announcement in a 
        written publication if the sole purpose of the announcement is 
        to rebut the materially false statement. 
           Subd. 3.  [PROHIBITION ON USE IN RATEMAKING.] The 
        risk-based capital instructions, risk-based capital reports, 
        adjusted risk-based capital reports, risk-based capital plans, 
        and revised risk-based capital plans are intended solely for use 
        by the commissioner in monitoring the solvency of insurers and 
        the need for possible corrective action with respect to insurers.
        This information shall not be used by the commissioner for 
        ratemaking nor considered or introduced as evidence in a rate 
        proceeding nor used by the commissioner to calculate or derive 
        any elements of an appropriate premium level or rate of return 
        for a line of insurance that an insurer or an affiliate is 
        authorized to write. 
           Sec. 10.  [60A.68] [SUPPLEMENTAL PROVISIONS; RULES; 
        EXEMPTION.] 
           (a) Sections 60A.60 to 60A.696 are supplemental to other 
        laws of this state and do not preclude or limit other powers or 
        duties of the commissioner under those laws, including, but not 
        limited to, chapters 60B and 60G. 
           (b) The commissioner may exempt from the application of 
        sections 60A.60 to 60A.696 a domestic property and casualty 
        insurer that: 
           (1) writes direct business only in this state; 
           (2) writes direct annual premiums of $2,000,000 or less; 
        and 
           (3) assumes no reinsurance in excess of five percent of 
        direct premium written. 
           Sec. 11.  [60A.69] [FOREIGN INSURERS.] 
           Subdivision 1.  [REPORTING REQUIREMENTS.] A foreign insurer 
        shall, upon the written request of the commissioner, submit to 
        the commissioner a risk-based capital report as of the end of 
        the calendar year just ended not later than the later of: 
           (1) the date a risk-based capital report would be required 
        to be filed by a domestic insurer under sections 60A.60 to 
        60A.696; or 
           (2) fifteen days after the request is received by the 
        foreign insurer. 
           A foreign insurer shall, at the written request of the 
        commissioner, promptly submit to the commissioner copies of all 
        risk-based capital plans that are filed by the insurer with the 
        insurance commissioners of other states. 
           Subd. 2.  [A RISK-BASED CAPITAL PLAN REQUIREMENT.] In the 
        event of a company action level event, regulatory action level 
        event, or authorized control level event with respect to a 
        foreign insurer as determined under the risk-based capital 
        statute applicable in the state of domicile of the insurer, or, 
        if no risk-based capital statute is in force in that state, 
        under sections 60A.60 to 60A.696, if the insurance commissioner 
        of the state of domicile of the foreign insurer fails to require 
        the foreign insurer to file a risk-based capital plan in the 
        manner specified under that state's risk-based capital statute, 
        or, if no risk-based capital statute is in force in that state, 
        under section 60A.62, the commissioner may require the foreign 
        insurer to file a risk-based capital plan with the 
        commissioner.  In this event, the failure of the foreign insurer 
        to file a risk-based capital plan with the commissioner shall be 
        grounds to order the insurer to cease and desist from writing 
        new insurance business in this state.  This section does not 
        limit the commissioner's authority to require a foreign insurer 
        to file a copy of the risk-based capital plan submitted to the 
        commissioner in the state of domicile. 
           Subd. 3.  [LIQUIDATION OF PROPERTY.] In the event of a 
        mandatory control level event with respect to a foreign insurer, 
        if no domiciliary receiver has been appointed with respect to 
        the foreign insurer under the rehabilitation and liquidation 
        statute applicable in the state of domicile of the foreign 
        insurer, the commissioner may make application to the district 
        court permitted under chapter 60B with respect to the 
        liquidation of property of foreign insurers found in this state, 
        and the occurrence of the mandatory control level event is 
        adequate grounds for the application. 
           Sec. 12.  [60A.695] [IMMUNITY.] 
           There is no liability on the part of, and no cause of 
        action arises against, the commissioner or the commerce 
        department or its employees or agents for an action taken by 
        them in the performance of their powers and duties under 
        sections 60A.60 to 60A.696. 
           Sec. 13.  [60A.696] [NOTICES.] 
           All notices by the commissioner to an insurer that may 
        result in regulatory action under sections 60A.60 to 60A.696 are 
        effective upon dispatch if transmitted by registered or 
        certified mail, or in the case of other transmission is 
        effective upon the insurer's receipt of the notice. 
           Sec. 14.  [EFFECTIVE DATE.] 
           This act is effective for annual statements filed after 
        January 1, 1996. 
           Presented to the governor May 23, 1995 
           Signed by the governor May 25, 1995, 8:52 a.m.