Minnesota Session Laws - 1997, Regular Session

                            CHAPTER 77-H.F.No. 1637 
                  An act relating to insurance; adopting 
                  insurance-related recommendations of the arson task 
                  force; amending Minnesota Statutes 1996, sections 
                  65A.296, subdivision 1; 65A.50, subdivision 13; 
                  72A.20, subdivision 12; 72A.201, subdivision 8; 
                  299F.053, subdivision 2; and 299F.054, subdivision 4. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1996, section 65A.296, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [NOTICE FROM INSURER.] After receiving 
        written notice of a claim by an insured on a homeowner's 
        insurance policy, the insurer may notify the insured that the 
        insurer may deny the claim unless a completed proof of loss is 
        received by the insurer within 60 days of the date on which the 
        written notice under this subdivision was received by the 
        insured.  The notice given by the insurer must be sent by 
        certified mail, return receipt requested, and must include a 
        proof of loss form to be completed by the insured together with 
        accompanying instructions for completing the form.  The proof of 
        loss form and the accompanying instructions must meet the 
        readability standards of chapter 72C. 
           Sec. 2.  Minnesota Statutes 1996, section 65A.50, 
        subdivision 13, is amended to read: 
           Subd. 13.  [RETENTION ON LIST.] (a) A municipality shall 
        remain on the list until a written request for deletion has been 
        received by the commissioner, or until the municipality has 
        failed to comply with paragraph (b), and the amended list has 
        been prepared pursuant to this subdivision. 
           (b) Municipalities on the list shall report every two years 
        to the commissioner in writing regarding the extent of the 
        municipality's use of this section and the effect of this 
        section on arson fires in that municipality.  The report must be 
        filed with the commissioner no later than 90 days after the 
        two-year anniversary of the municipality's placement on the list 
        and thereafter no later than 90 days after each subsequent 
        two-year period.  If the commissioner has not received a report 
        required under this paragraph, the commissioner shall promptly 
        provide the municipality a written reminder notice.  If the 
        commissioner has not received the report within 30 days after 
        providing the written notice, the municipality shall be treated 
        as having made a written request for deletion under paragraph 
        (a). 
           Sec. 3.  Minnesota Statutes 1996, section 72A.20, 
        subdivision 12, is amended to read: 
           Subd. 12.  [UNFAIR SERVICE.] Causing or permitting with 
        such frequency to indicate a general business practice any 
        unfair, deceptive, or fraudulent act concerning any claim or 
        complaint of an insured or claimant including, but not limited 
        to, the following practices:  
           (1) misrepresenting pertinent facts or insurance policy 
        provisions relating to coverages at issue; 
           (2) failing to acknowledge and act reasonably promptly upon 
        communications with respect to claims arising under insurance 
        policies; 
           (3) failing to adopt and implement reasonable standards for 
        the prompt investigation of claims arising under insurance 
        policies; 
           (4) refusing to pay claims without conducting a reasonable 
        investigation based upon all available information; 
           (5) failing to affirm or deny coverage of claims within a 
        reasonable time after proof of loss statements have been 
        completed; 
           (6) not attempting in good faith to effectuate prompt, 
        fair, and equitable settlements of claims in which liability has 
        become reasonably clear; 
           (7) compelling insureds to institute litigation to recover 
        amounts due under an insurance policy by offering substantially 
        less than the amounts ultimately recovered in actions brought by 
        the insureds; 
           (8) attempting to settle a claim for less than the amount 
        to which reasonable persons would have believed they were 
        entitled by reference to written or printed advertising material 
        accompanying or made part of an application; 
           (9) attempting to settle claims on the basis of an 
        application which was altered without notice to, or knowledge or 
        consent of, the insured; 
           (10) making claims payments to insureds or beneficiaries 
        not accompanied by a statement setting forth the coverage under 
        which the payments are being made; 
           (11) making known to insureds or claimants a policy of 
        appealing from arbitration awards in favor of insureds or 
        claimants for the purpose of compelling them to accept 
        settlements or compromises less than the amount awarded in 
        arbitration; 
           (12) delaying the investigation or payment of claims by 
        requiring an insured, claimant, or the physician of either to 
        submit a preliminary claim report and then requiring the 
        subsequent submission of formal proof of loss forms, both of 
        which submissions contain substantially the same information; 
           (13) failing to promptly settle claims, where liability has 
        become reasonably clear, under one portion of the insurance 
        policy coverage in order to influence settlements under other 
        portions of the insurance policy coverage; 
           (14) failing to promptly provide a reasonable explanation 
        of the basis in the insurance policy in relation to the facts or 
        applicable law for denial of a claim or for the offer of a 
        compromise settlement; 
           (15) requiring an insured to provide information or 
        documentation that is or would be dated more than five years 
        prior to or five years after the date of a fire loss, except for 
        proof of ownership of the damaged property. 
           Sec. 4.  Minnesota Statutes 1996, section 72A.201, 
        subdivision 8, is amended to read: 
           Subd. 8.  [STANDARDS FOR CLAIM DENIAL.] The following acts 
        by an insurer, adjuster, or self-insured, or self-insurance 
        administrator constitute unfair settlement practices:  
           (1) denying a claim or any element of a claim on the 
        grounds of a specific policy provision, condition, or exclusion, 
        without informing the insured of the policy provision, 
        condition, or exclusion on which the denial is based; 
           (2) denying a claim without having made a reasonable 
        investigation of the claim; 
           (3) denying a liability claim because the insured has 
        requested that the claim be denied; 
           (4) denying a liability claim because the insured has 
        failed or refused to report the claim, unless an independent 
        evaluation of available information indicates there is no 
        liability; 
           (5) denying a claim without including the following 
        information:  
           (i) the basis for the denial; 
           (ii) the name, address, and telephone number of the 
        insurer's claim service office or the claim representative of 
        the insurer to whom the insured or claimant may take any 
        questions or complaints about the denial; and 
           (iii) the claim number and the policy number of the 
        insured; and 
           (iv) if the denied claim is a fire claim, the insured's 
        right to file with the department of commerce a complaint 
        regarding the denial, and the address and telephone number of 
        the department of commerce; 
           (6) denying a claim because the insured or claimant failed 
        to exhibit the damaged property unless:  
           (i) the insurer, within a reasonable time period, made a 
        written demand upon the insured or claimant to exhibit the 
        property; and 
           (ii) the demand was reasonable under the circumstances in 
        which it was made; 
           (7) denying a claim by an insured or claimant based on the 
        evaluation of a chemical dependency claim reviewer selected by 
        the insurer unless the reviewer meets the qualifications 
        specified under subdivision 8a.  An insurer that selects 
        chemical dependency reviewers to conduct claim evaluations must 
        annually file with the commissioner of commerce a report 
        containing the specific evaluation standards and criteria used 
        in these evaluations.  The report must be filed at the same time 
        its annual statement is submitted under section 60A.13.  The 
        report must also include the number of evaluations performed on 
        behalf of the insurer during the reporting period, the types of 
        evaluations performed, the results, the number of appeals of 
        denials based on these evaluations, the results of these 
        appeals, and the number of complaints filed in a court of 
        competent jurisdiction. 
           Sec. 5.  Minnesota Statutes 1996, section 299F.053, 
        subdivision 2, is amended to read: 
           Subd. 2.  [AUTHORIZED PERSON.] "Authorized person" means:  
           (a) the state fire marshal when authorized or charged with 
        the investigation of fires at the place where the fire actually 
        took place; 
           (b) superintendent of the bureau of criminal apprehension; 
           (c) the prosecuting attorney responsible for prosecutions 
        in the county where the fire occurred; 
           (d) the sheriff or chief of police responsible for 
        investigation in the county where the fire occurred; 
           (e) the county attorney responsible for the prosecution in 
        the county where the fire occurred; 
           (f) the Federal Bureau of Investigation or any other 
        federal agency; 
           (g) the United States attorney's office when authorized or 
        charged with investigation or prosecution of a case involving a 
        fire loss; 
           (h) the chief administrative officer of the municipal arson 
        squad or the chief of the fire department responsible for the 
        investigation of the fire under section 299F.04, subdivision 1; 
        or 
           (i) the commissioner of commerce. 
           Sec. 6.  Minnesota Statutes 1996, section 299F.054, 
        subdivision 4, is amended to read: 
           Subd. 4.  [GOOD FAITH IMMUNITY.] (a) An insurance company 
        or its agent acting in its behalf, or an authorized person who 
        releases information, whether oral or written, acting in good 
        faith, pursuant to subdivisions 1 to 3a is immune from any 
        liability, civil or criminal, that might otherwise be incurred 
        or imposed. 
           (b) A person who, acting in good faith, reports to an 
        authorized person information, whether oral or written, that is 
        or may be relevant to the investigation of a fire is immune from 
        any civil liability that might otherwise be incurred or imposed. 
           Sec. 7.  [ARSON REPORTING FACT SHEET.] 
           The Minnesota attorney general, in conjunction with the 
        state fire marshal, shall develop and distribute an arson 
        reporting immunity law fact sheet.  The fact sheet must be 
        designed to enhance public understanding of the need to report 
        information, help deter arson, and help prosecute when arson 
        occurs.  The attorney general shall offer to the 
        property/casualty insurance industry the opportunity to provide 
        assistance in developing the fact sheet. 
           Sec. 8.  [EFFECTIVE DATE.] 
           Sections 1 to 4 are effective January 1, 1998.  Sections 5 
        to 7 are effective the day following final enactment. 
           Presented to the governor April 29, 1997 
           Signed by the governor May 2, 1997, 2:00 p.m.