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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 177-H.F.No. 837 
                  An act relating to insurance; regulating insurers, 
                  agents, and coverages; modifying reporting 
                  requirements; regulating the rehabilitation and 
                  liquidation of insurers; modifying certain notice and 
                  disclosure provisions; modifying certain definitions; 
                  making technical changes; amending Minnesota Statutes 
                  1998, sections 60A.02, subdivision 1a, and by adding a 
                  subdivision; 60A.052, subdivision 2, and by adding a 
                  subdivision; 60A.06, subdivisions 1 and 2; 60A.075, by 
                  adding a subdivision; 60A.092, subdivisions 6 and 11; 
                  60A.10, subdivision 1; 60A.111, subdivision 1; 60A.13, 
                  subdivision 1; 60A.16, subdivisions 2, 3, and 4; 
                  60A.19, subdivision 1; 60A.32; 60B.21, subdivision 2; 
                  60B.25; 60B.26, subdivision 1; 60B.39, subdivision 2; 
                  60B.44, subdivisions 4, 6, and by adding subdivisions; 
                  60D.20, subdivision 2; 60K.02, subdivision 1; 60K.03, 
                  subdivisions 2 and 3; 60K.19, subdivisions 7 and 8; 
                  61A.276, subdivision 2; 61A.60, subdivision 1; 61B.19, 
                  subdivision 3; 62A.04, subdivision 3; 62A.135, 
                  subdivision 5; 62A.50, subdivision 3; 62A.61; 62A.65, 
                  subdivision 5; 62B.04, subdivision 2; 62D.12, 
                  subdivision 2; 62E.02, subdivision 1; 62E.05, 
                  subdivision 1; 62E.09; 62E.13, subdivisions 6 and 8; 
                  62E.14, subdivision 2; 62E.15, subdivision 2; 62I.07, 
                  subdivision 1; 62L.02, subdivision 24; 62L.03, 
                  subdivision 5; 62L.05, subdivision 5; 62L.14, 
                  subdivision 7; 62Q.105, subdivision 1; 62Q.185; 
                  62Q.30; 62S.01, subdivision 14; 62S.05, subdivision 2; 
                  65A.01, subdivisions 1, 3, and by adding a 
                  subdivision; 65A.27, subdivision 4; 65A.29, 
                  subdivision 4; 65B.02, subdivision 2; 65B.44, 
                  subdivision 1; 65B.48, subdivision 5; 72A.125, 
                  subdivision 3; 72A.20, subdivision 29; 72B.04, 
                  subdivision 10; 79A.01, subdivision 10, and by adding 
                  a subdivision; 79A.02, subdivisions 1, 3, and 4; 
                  79A.03, subdivisions 6, 7, 9, 10, and by adding a 
                  subdivision; 79A.06, subdivision 5, and by adding a 
                  subdivision; 79A.21, subdivision 2; 79A.23, 
                  subdivisions 1 and 2; and 256B.0644; proposing coding 
                  for new law in Minnesota Statutes, chapter 60B; 
                  repealing Minnesota Statutes 1998, sections 60A.11, 
                  subdivision 24a; 60B.36; 60B.44, subdivisions 3 and 5; 
                  60K.08; 65A.29, subdivision 12; 62Q.30; and 79A.04, 
                  subdivision 8; Minnesota Rules, part 2780.0500, item C.
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1998, section 60A.02, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [ASSOCIATION OR ASSOCIATIONS.] (a) "Association" 
        or "associations" means an organized body of people who have 
        some interest in common and that has at the onset a minimum of 
        100 persons; is organized and maintained in good faith for 
        purposes other than that of obtaining insurance; and has a 
        constitution and bylaws which provide that:  (1) the association 
        or associations hold regular meetings not less frequently than 
        annually to further purposes of the members; (2) except for 
        credit unions, the association or associations collect dues or 
        solicit contributions from members; (3) the members have voting 
        privileges and representation on the governing board and 
        committees, which provide the members with control of the 
        association including the purchase and administration of 
        insurance products offered to members; and (4) the members are 
        not, within the first 30 days of membership, directly solicited, 
        offered, or sold an insurance policy if the policy is available 
        as an association benefit. 
           (b) An association may apply to the commissioner for a 
        waiver of the 30-day waiting period to that association.  The 
        commissioner may grant the waiver upon a finding of all at least 
        three of the following:  (1) the association is in full 
        compliance with this subdivision; (2) sanctions have not been 
        imposed against the association as a result of significant 
        disciplinary action by the commissioner; and (3) at least 80 
        percent of the association's income comes from dues, 
        contributions, or sources other than income from the sale of 
        insurance; or (4) the association has been organized and 
        maintained for at least ten years. 
           Sec. 2.  Minnesota Statutes 1998, section 60A.02, is 
        amended by adding a subdivision to read: 
           Subd. 2b.  [FILED.] In cases where a law requires documents 
        to be filed with the commissioner, the documents will be 
        considered filed when they are received by the department of 
        commerce. 
           Sec. 3.  Minnesota Statutes 1998, section 60A.052, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SUSPENSION OR REVOCATION OF AUTHORITY OR 
        CENSURE.] If the commissioner determines that one of the 
        conditions listed in subdivision 1 exists, the commissioner may 
        issue an order requiring the insurance company to show cause why 
        any or all of the following should not occur:  (1) revocation or 
        suspension of any or all certificates of authority granted to 
        the foreign or domestic insurance company or its agent; (2) 
        censuring of the insurance company; or (3) cancellation of all 
        or some of the company's insurance contracts then in force in 
        this state; or (4) the imposition of a civil penalty.  The order 
        shall be calculated to give reasonable notice of the time and 
        place for hearing thereon, and shall state the reasons for the 
        entry of the order.  All hearings shall be conducted in 
        accordance with chapter 14.  The insurer may waive its right to 
        the hearing.  If the insurer is under the supervision or control 
        of the insurance department of the insurer's state of domicile, 
        that insurance department, acting on behalf of the insurer, may 
        waive the insurer's right to the hearing.  After the hearing, 
        the commissioner shall enter an order disposing of the matter as 
        the facts require.  If the insurance company fails to appear at 
        a hearing after having been duly notified of it, the company 
        shall be considered in default, and the proceeding may be 
        determined against the company upon consideration of the order 
        to show cause, the allegations of which may be considered to be 
        true. 
           Sec. 4.  Minnesota Statutes 1998, section 60A.052, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [WITHDRAWAL OF INSURER FROM STATE.] No insurer 
        shall withdraw from this state until its direct liability to its 
        policyholders and obligees under all its insurance contracts 
        then in force in this state have been assumed by another 
        licensed insurer according to section 60A.09, subdivision 4a. 
           Sec. 5.  Minnesota Statutes 1998, section 60A.06, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [STATUTORY LINES.] Insurance corporations 
        may be authorized to transact in any state or territory in the 
        United States, in the Dominion of Canada, and in foreign 
        countries, when specified in their charters or certificates of 
        incorporation, either as originally granted or as thereafter 
        amended, any of the following kinds of business, upon the stock 
        plan, or upon the mutual plan when the formation of such mutual 
        companies is otherwise authorized by law; and business trusts as 
        authorized by law of this state shall only be authorized to 
        transact in this state the following kind of business 
        hereinafter specified in clause (7) hereof when specified in 
        their "declaration of trust": 
           (1) To insure against loss or damage to property on land 
        and against loss of rents and rental values, leaseholds of 
        buildings, use and occupancy and direct or consequential loss or 
        damage caused by fire, smoke or smudge, water or other fluid or 
        substance, lightning, windstorm, tornado, cyclone, earthquake, 
        collapse and slippage, rain, hail, frost, snow, freeze, change 
        of temperature, weather or climatic conditions, excess or 
        deficiency of moisture, floods, the rising of waters, oceans, 
        lakes, rivers or their tributaries, bombardment, invasion, 
        insurrection, riot, civil war or commotion, military or usurped 
        power, electrical power interruption or electrical breakdown 
        from any cause, railroad equipment, motor vehicles or aircraft, 
        accidental injury to sprinklers, pumps, conduits or containers 
        or other apparatus erected for extinguishing fires, explosion, 
        whether fire ensues or not, except explosions on risks specified 
        in clause (3); provided, however, that there may be insured 
        hereunder the following:  (a) explosion of any kind originating 
        outside the insured building or outside of the building 
        containing the property insured, (b) explosion of pressure 
        vessels which do not contain steam or which are not operated 
        with steam coils or steam jackets; and (c) risks under home 
        owners multiple peril policies; 
           (2)(a) To insure vessels, freight, goods, wares, 
        merchandise, specie, bullion, jewels, profits, commissions, bank 
        notes, bills of exchange, and other evidences of debt, bottomry 
        and respondentia interest, and every insurance appertaining to 
        or connected with risks of transportation and navigation on and 
        under water, on land or in the air; 
           (b) To insure all personal property floater risks; 
           (3) To insure against any loss from either direct or 
        indirect damage to any property or interest of the assured or of 
        another, resulting from the explosion of or injury to (a) any 
        boiler, heater or other fired pressure vessel; (b) any unfired 
        pressure vessel; (c) pipes or containers connected with any of 
        said boilers or vessels; (d) any engine, turbine, compressor, 
        pump or wheel; (e) any apparatus generating, transmitting or 
        using electricity; (f) any other machinery or apparatus 
        connected with or operated by any of the previously named 
        boilers, vessels or machines; and including the incidental power 
        to make inspections of and to issue certificates of inspection 
        upon, any such boilers, apparatus, and machinery, whether 
        insured or otherwise; 
           (4) To make contracts of life and endowment insurance, to 
        grant, purchase, or dispose of annuities or endowments of any 
        kind; and, in such contracts, or in contracts supplemental 
        thereto to provide for additional benefits in event of death of 
        the insured by accidental means, total permanent disability of 
        the insured, or specific dismemberment or disablement suffered 
        by the insured, or acceleration of life or endowment or annuity 
        benefits in advance of the time they would otherwise be payable; 
           (5)(a) To insure against loss or damage by the sickness, 
        bodily injury or death by accident of the assured or dependents, 
        or those for whom the assured has assumed a portion of the 
        liability for the loss or damage, including liability for 
        payment of medical care costs or for provision of medical care; 
           (b) To insure against the legal liability, whether imposed 
        by common law or by statute or assumed by contract, of employers 
        for the death or disablement of, or injury to, employees; 
           (6) To guarantee the fidelity of persons in fiduciary 
        positions, public or private, or to act as surety on official 
        and other bonds, and for the performance of official or other 
        obligations; 
           (7) To insure owners and others interested in real estate 
        against loss or damage, by reason of defective titles, 
        encumbrances, or otherwise; 
           (8) To insure against loss or damage by breakage of glass, 
        located or in transit; 
           (9)(a) To insure against loss by burglary, theft, or 
        forgery; 
           (b) To insure against loss of or damage to moneys, coins, 
        bullion, securities, notes, drafts, acceptance or any other 
        valuable paper or document, resulting from any cause, except 
        while in the custody or possession of and being transported by 
        any carrier for hire or in the mail; 
           (c) To insure individuals by means of an all risk type of 
        policy commonly known as the "personal property floater" against 
        any kind and all kinds of loss of or damage to, or loss of use 
        of, any personal property other than merchandise; 
           (d) To insure against loss or damage by water or other 
        fluid or substance; 
           (10) To insure against loss from death of domestic animals 
        and to furnish veterinary service; 
           (11) To guarantee merchants and those engaged in business, 
        and giving credit, from loss by reason of giving credit to those 
        dealing with them; this shall be known as credit insurance; 
           (12) To insure against loss or damage to automobiles or 
        other vehicles or aircraft and their contents, by collision, 
        fire, burglary, or theft, and other perils of operation, and 
        against liability for damage to persons, or property of others, 
        by collision with such vehicles or aircraft, and to insure 
        against any loss or hazard incident to the ownership, operation, 
        or use of motor or other vehicles or aircraft; 
           (13) To insure against liability for loss or damage to the 
        property or person of another caused by the insured or by those 
        for whom the insured is responsible, including insurance of 
        medical, hospital, surgical, funeral or other related expense of 
        the insured or other person injured, irrespective of legal 
        liability of the insured, when issued with or supplemental to 
        policies of liability insurance; 
           (14) To insure against loss of or damage to any property of 
        the insured, resulting from the ownership, maintenance or use of 
        elevators, except loss or damage by fire; 
           (15) To insure against attorneys fees, court costs, witness 
        fees and incidental expenses incurred in connection with the use 
        of the professional services of attorneys at law.  
           Sec. 6.  Minnesota Statutes 1998, section 60A.06, 
        subdivision 2, is amended to read: 
           Subd. 2.  [OTHER LINES.] Any insurance corporation or 
        association heretofore or hereafter licensed to transact within 
        the state any of the kinds or classes of insurance specifically 
        authorized under the laws of this state may, when authorized by 
        its charter, transact within and without the state any lines of 
        insurance germane to its charter powers and not specifically 
        provided for under the laws of this state when these lines, or 
        combinations of lines, of insurance are not in violation of the 
        constitution or the laws of the state and, in the opinion of the 
        commissioner, not contrary to public policy, provided the 
        company or association shall first obtain authority of the 
        commissioner and meet such requirements as to capital or 
        surplus, or both, and other solvency and policy form 
        requirements as the commissioner shall prescribe.  These 
        additional hazards may be insured against by attachment to, or 
        in extension of, any policy which the company may be authorized 
        to issue under the laws of this state.  This subdivision shall 
        apply to companies operating upon the stock or mutual plan, 
        reciprocal or interinsurance exchanges.  
           Sec. 7.  Minnesota Statutes 1998, section 60A.075, is 
        amended by adding a subdivision to read: 
           Subd. 18.  [POST CONVERSION ACQUISITION.] Prior to and for 
        a period of five years following the date when the distribution 
        of consideration to the eligible members in exchange for their 
        membership interests is completed under a plan of conversion 
        according to this section, no person other than the reorganized 
        company shall directly or indirectly acquire or offer to acquire 
        in any manner ownership or beneficial ownership of ten percent 
        or more of any class of voting security of the reorganized 
        company, or of any affiliate of the reorganized company which 
        controls, directly or indirectly, a majority of the voting power 
        of the reorganized company, without the prior approval of the 
        commissioner.  For the purposes of this subdivision, the terms 
        "affiliate" and "person" have the meanings given in section 
        60D.15, and the term "reorganized company" includes any 
        successor of the reorganized company. 
           Sec. 8.  Minnesota Statutes 1998, section 60A.092, 
        subdivision 6, is amended to read: 
           Subd. 6.  [SINGLE ASSUMING INSURER; TRUST FUND 
        REQUIREMENTS.] In the case of a single assuming insurer, the 
        trust shall consist of a trusteed account representing the 
        assuming insurer's liabilities attributable to business written 
        in the United States and, in addition, the assuming insurer 
        shall maintain a trusteed surplus of not less than $20,000,000 
        or an additional amount as the commissioner considers necessary. 
        The assuming insurer shall maintain a its surplus as regards 
        policyholders in an amount not less than $50,000,000 for 
        long-tail casualty reinsurers as provided under subdivision 3, 
        paragraph (a), clause (5). 
           Sec. 9.  Minnesota Statutes 1998, section 60A.092, 
        subdivision 11, is amended to read: 
           Subd. 11.  [REINSURANCE AGREEMENT REQUIREMENTS.] (a) If the 
        assuming insurer is not licensed or accredited to transact 
        insurance or reinsurance in this state, the credit authorized 
        under subdivisions 4 and 5 shall not be allowed unless the 
        assuming insurer agrees in the reinsurance agreements: 
           (1) that in the event of the failure of the assuming 
        insurer to perform its obligations under the terms of the 
        reinsurance agreement, the assuming insurer shall submit to the 
        jurisdiction of any court of competent jurisdiction in any state 
        of the United States, comply with all requirements necessary to 
        give the court jurisdiction, and abide by the final decision of 
        the court or of any appellate court in the event of an appeal; 
        and 
           (2) to designate the commissioner or a designated attorney 
        as its true and lawful attorney upon whom may be served any 
        lawful process in any action, suit, or proceeding instituted by 
        or on behalf of the ceding company. 
           (b) Paragraph (a) is not intended to conflict with or 
        override the obligation of the parties to a reinsurance 
        agreement to arbitrate their disputes, if an obligation to do so 
        is created in the agreement. 
           (c) Credit will not be granted, nor an asset or a reduction 
        from liability allowed, to a ceding insurer for reinsurance 
        effected with assuming insurers meeting the requirements of 
        subdivision 2, 3, 4, 5, 6, or 7, unless the reinsurance contract 
        provides that in the event of the insolvency of the ceding 
        insurer, the reinsurance will be payable under the contract 
        without diminution because of that insolvency. 
           Payments by the reinsurer must be made directly to the 
        ceding insurer or its receiver, except where the contract of 
        insurance or reinsurance specifically provides for another payee 
        for the reinsurance in the event of insolvency of the ceding 
        insurer according to the applicable requirements of statutes, 
        rules, or orders of the domiciliary state of the ceding insurer. 
           Sec. 10.  Minnesota Statutes 1998, section 60A.10, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DOMESTIC COMPANIES.] (1)  [DEPOSIT AS 
        SECURITY FOR ALL POLICYHOLDERS REQUIRED.] No company in this 
        state, other than farmers' mutual, or real estate title 
        insurance companies, shall do business in this state unless it 
        has on deposit with the commissioner, for the protection of both 
        its resident and nonresident policyholders, securities to an 
        amount, the actual market value of which, exclusive of interest, 
        shall never be less than $200,000 until July 1, 1986, $300,000 
        until July 1, 1987, $400,000 until July 1, 1988, and $500,000 on 
        and after July 1, 1988 or one-half the applicable financial 
        requirement set forth in section 60A.07, whichever is less.  The 
        securities shall be retained under the control of the 
        commissioner as long as any policies of the depositing company 
        remain in force. 
           (2)  [SECURITIES DEFINED.] For the purpose of this 
        subdivision, the word "securities" means bonds or other 
        obligations of, or bonds or other obligations insured or 
        guaranteed by, the United States, any state of the United 
        States, any municipality of this state, or any agency or 
        instrumentality of the foregoing. 
           (3)  [PROTECTION OF DEPOSIT FROM LEVY.] No judgment 
        creditor or other claimant may levy upon any securities held on 
        deposit with, or for the account of, the commissioner.  Upon the 
        entry of an order by a court of competent jurisdiction for the 
        rehabilitation, liquidation or conservation of any depositing 
        company as provided in chapter 60B, that company's deposit 
        together with any accrued income thereon shall be transferred to 
        the commissioner as rehabilitator, liquidator, or conservator. 
           Sec. 11.  Minnesota Statutes 1998, section 60A.111, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REPORT.] Annually, or more frequently if 
        determined by the commissioner to be necessary for the 
        protection of policyholders, each foreign, alien and domestic 
        insurance company other than a life insurance company shall 
        report to the commissioner the ratio of its qualified assets to 
        its required liabilities.  
           Sec. 12.  Minnesota Statutes 1998, section 60A.13, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ANNUAL STATEMENTS REQUIRED.] Every 
        insurance company, including fraternal benefit societies, and 
        reciprocal exchanges, doing business in this state, shall 
        transmit to file with the commissioner, annually, on or before 
        March 1, the appropriate verified National Association of 
        Insurance Commissioners' annual statement blank, prepared in 
        accordance with the association's instructions handbook and 
        following those accounting procedures and practices prescribed 
        by the association's accounting practices and procedures manual, 
        unless the commissioner requires or finds another method of 
        valuation reasonable under the circumstances.  Another method of 
        valuation permitted by the commissioner must be at least as 
        conservative as those prescribed in the association's manual.  
        All companies required to file an annual statement under this 
        subdivision must may also be required to file with the 
        commissioner and the National Association of Insurance 
        Commissioners a copy of their annual statement on computer 
        diskette in an electronic form prescribed by the commissioner.  
        All Minnesota domestic insurers required to file annual 
        statements under this subdivision must also file quarterly 
        statements with the commissioner for the first, second, and 
        third calendar quarter on or before 45 days after the end of the 
        applicable quarter, prepared in accordance with the 
        association's instruction handbook.  All companies required to 
        file quarterly statements under this subdivision must also file 
        a copy of their quarterly statement on computer diskette may 
        also be required to file the quarterly statements with the 
        commissioner and the National Association of Insurance 
        Commissioners in an electronic form prescribed by the 
        commissioner.  In addition, the commissioner may require the 
        filing of any other information determined to be reasonably 
        necessary for the continual enforcement of these laws.  The 
        statement may be limited to the insurer's business and condition 
        in the United States unless the commissioner finds that the 
        business conducted outside the United States may detrimentally 
        affect the interests of policyholders in this state.  The 
        statements shall also contain a verified schedule showing all 
        details required by law for assessment and taxation.  The 
        statement or schedules shall be in the form and shall contain 
        all matters the commissioner may prescribe, and it may be varied 
        as to different types of insurers so as to elicit a true exhibit 
        of the condition of each insurer. 
           Sec. 13.  Minnesota Statutes 1998, section 60A.16, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PROCEDURE TO BE FOLLOWED.] (1) [AGREEMENT PLAN 
        OF MERGER.] The merger or consolidation of insurance 
        corporations can be effected only as a result of a joint 
        agreement entered into plan of merger adopted, approved, and 
        filed as follows: 
           (a) The board of directors of each of such insurance 
        corporations as desire to merge or consolidate may, by majority 
        vote, enter into a joint agreement signed by such directors and 
        prescribing A resolution containing the plan of merger shall be 
        approved by the affirmative vote of a majority of the directors 
        of the board of each constituent corporation.  The plan of 
        merger shall prescribe the terms and conditions of merger or 
        consolidation, and the mode of carrying the same into effect, 
        with such other details and provisions as are deemed necessary.  
        In the case of merging or consolidating stock insurance 
        corporations or stock and mutual insurance corporations, 
        such joint agreement plan of merger may prescribe that stock of 
        one or more of such corporations shall be converted, in whole or 
        in part, into stock or other securities of a corporation which 
        is not a merging or consolidating corporation or into cash. 
           (b) The agreement plan of merger, or a summary of the plan 
        approved by the commissioner, shall be submitted to the 
        respective shareholders or members, as the case may be, of 
        each of the merging or consolidating insurance 
        corporations constituent corporation, for consideration at a 
        regular meeting or at a special meeting duly called for the 
        purpose of considering and acting upon the agreement, and 
        if plan.  Written notice of the meeting, which shall state that 
        the purpose of the meeting is to consider the proposed plan of 
        merger, shall be given to each shareholder or member entitled to 
        vote upon the plan of merger not less than 30 nor more than 60 
        days before the meeting.  The plan of merger must be approved by 
        the affirmative vote of the holders of two-thirds of the voting 
        power of the shareholders or members present or represented at 
        the meeting of each such insurance constituent corporation shall 
        vote for the adoption of the agreement, then that fact shall be 
        certified on the agreement by the secretary of each insurance 
        corporation, and the agreement so adopted and certified shall be 
        signed and acknowledged by the president and secretary of each 
        of said insurance corporations; provided, however, that in the 
        case of a merger, except one whereby in which any shares of the 
        surviving insurance corporation are to be converted into shares 
        or other securities of another corporation or into cash, the 
        agreement need not be submitted to the shareholders or members 
        of that one of the insurance corporations into which it has been 
        agreed the others shall be merged, but the agreement may be 
        signed and acknowledged by the president and secretary of such 
        insurance corporation at the direction of the board of 
        directors.  Upon receiving the approval of the shareholders or 
        members of each constituent corporation, articles of merger 
        shall be prepared that contain the plan of merger and a 
        statement that the plan has been approved by each corporation 
        under this section. 
           (c) The agreement so adopted, certified and acknowledged 
        articles of merger shall be delivered to the commissioner of 
        commerce, who, if the agreement plan of merger is reasonable and 
        if the provisions thereof providing for any transfer of assets 
        and assumption of liabilities are fair and equitable to the 
        claimants and policyholders, shall place a certificate of 
        approval on the agreement articles of merger and shall file 
        the agreement articles in the commissioner's office, and a copy 
        copies of the agreement articles, certified by the commissioner 
        of commerce, shall be filed for record in the office of the 
        secretary of state and in the offices of the county recorders of 
        the counties in this state in which any of the corporate parties 
        to the agreement have their home or principal offices, and of 
        any counties in which any of the corporate parties have land, 
        title to which will be transferred as a result of the merger or 
        consolidation delivered to the surviving corporation or its 
        legal representative. 
           (2) [ARTICLES OF INCORPORATION OF NEW COMPANY.] (a) If the 
        joint agreement plan of merger is for a consolidation into a new 
        insurance corporation to be formed under any law or laws of this 
        state, articles of incorporation for such new insurance 
        corporation shall be prepared and delivered to the commissioner 
        of commerce together with the agreement articles of merger as 
        provided in clause (1) hereof. 
           (b) Such articles shall be prepared, executed, approved, 
        filed and recorded in the form and manner prescribed in, or 
        applicable to, the particular law or laws under which the new 
        insurance corporation is to be formed. 
           (3) [ABANDONMENT.] A proposed merger or consolidation may 
        be abandoned at any time prior to approval by the commissioner 
        under the provision for abandonment, if any, set forth in the 
        plan of merger. 
           (4) [MUTUAL INSURANCE HOLDING COMPANIES.] In the case of a 
        merger of two mutual insurance holding companies under section 
        60A.077, subdivision 2, paragraph (c), the procedures set forth 
        in subdivisions 1, 2, 3, 4, and 6 of this section shall apply, 
        subject to the following: 
           (a) the plan of merger must be fair and reasonable to the 
        members of each constituent corporation; 
           (b) no member of either constituent corporation on the 
        effective date of the merger shall lose membership solely on 
        account of the merger; 
           (c) membership and voting rights in each respective 
        constituent corporation for purposes of the meeting of the 
        members held to consider the plan of merger shall be determined 
        in accordance with the articles and bylaws of that constituent 
        corporation as of a record date established in the plan of 
        merger; and 
           (d) the commissioner may require changes to the plan or 
        require certain undertakings from the surviving corporation to 
        assure compliance with this clause. 
           Sec. 14.  Minnesota Statutes 1998, section 60A.16, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CONSUMMATION OF MERGER.] (1) A merger of one or 
        more insurance corporations into a domestic insurance 
        corporation shall be effective when the joint agreement has 
        articles of merger have been approved and filed in the office of 
        the commissioner of commerce, or at a later date specified in 
        the articles of merger. 
           (2) A consolidation of insurance corporations into a new 
        domestic insurance corporation shall be effective when the joint 
        agreement articles of merger and the new articles of 
        incorporation have been approved and filed in the office of the 
        commissioner of commerce, or at a later date as specified in the 
        plan of merger. 
           (3) A merger or consolidation of one or more domestic 
        insurance corporations into a foreign insurance corporation 
        shall be effective according to the provisions of law of the 
        jurisdiction in which such the foreign insurance corporation was 
        formed, but not until the joint agreement has been adopted, 
        certified and acknowledged, and copies thereof approved and 
        articles of merger have been filed in accordance with 
        subdivision 2, clause (1). 
           Sec. 15.  Minnesota Statutes 1998, section 60A.16, 
        subdivision 4, is amended to read: 
           Subd. 4.  [EFFECT OF MERGER OR CONSOLIDATION.] Upon the 
        consummation of the merger or consolidation as provided in 
        subdivision 3, the effect of such the merger or consolidation 
        shall be: 
           (1) That the several corporate parties to the joint 
        agreement plan of merger shall be one insurance corporation, 
        which shall be 
           (a) in the case of a merger, that one of the constituent 
        insurance corporations into which it has been agreed the others 
        shall be merged and which shall survive the merger for that 
        purpose, or 
           (b) in the case of a consolidation, the new insurance 
        corporation into which it has been agreed the others shall be 
        consolidated; 
           (2) The separate existence of the constituent insurance 
        corporations shall cease, except that of the surviving insurance 
        corporation in the case of a merger; 
           (3) The surviving or new insurance corporation, as the case 
        may be, shall possess all the rights, privileges and franchises 
        possessed by each of the former insurance corporations so merged 
        or consolidated except that such surviving or new corporation 
        shall not thereby acquire authority to engage in any insurance 
        business or exercise any right which an insurance corporation 
        may not be formed under the laws of this state to engage in or 
        exercise; 
           (4) All the property, real, personal and mixed, of each of 
        the constituent insurance corporations, and all debts due on 
        whatever account to any of them, including without limitation 
        subscriptions for shares, premiums on existing policies, and 
        other choses in action belonging to any of them, shall be taken 
        and be deemed to be transferred to and invested in such 
        surviving or new insurance corporation, as the case may be, 
        without further act or deed; 
           (5) The surviving or new insurance corporation shall be 
        responsible for all the liabilities and obligations of each of 
        the insurance corporations merged or consolidated, in accordance 
        with the terms of the agreement for merger or consolidation; but 
        the rights of the creditors of the constituent insurance 
        corporations, or of any persons dealing with such insurance 
        corporations shall not be impaired by such merger or 
        consolidation, and any claim existing or action or proceeding 
        pending by or against any of the constituent insurance 
        corporations may be prosecuted to judgment as if the merger or 
        consolidation had not taken place, or the surviving or new 
        insurance corporation may be proceeded against or substituted in 
        its place. 
           Sec. 16.  Minnesota Statutes 1998, section 60A.19, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIREMENTS.] Any insurance company of 
        another state, upon compliance with all laws governing such 
        corporations in general and with the foregoing provisions so far 
        as applicable and the following requirements, shall be admitted 
        to do business in this state: 
           (1) It shall deposit with the commissioner a certified copy 
        of its charter or certificate of incorporation and its bylaws, 
        and a statement showing its financial condition and business, 
        verified by its president and secretary or other proper 
        officers; 
           (2) It shall furnish the commissioner satisfactory evidence 
        of its legal organization and authority to transact the proposed 
        business and that its capital, assets, deposits with the proper 
        official of its own state, amount insured, number of risks, 
        reserve and other securities, and guaranties for protection of 
        policyholders, creditors, and the public, comply with those 
        required of like domestic companies; 
           (3) By a duly executed instrument filed in the office of 
        the commissioner, it shall appoint the commissioner and 
        successors in office its lawful attorneys in fact and therein 
        irrevocably agree that legal process in any action or proceeding 
        against it may be served upon them with the same force and 
        effect as if personally served upon it, so long as any of its 
        liability exists in this state; 
           (4) It shall appoint, as its agents in this state, 
        residents thereof, and obtain from the commissioner a license to 
        transact business; 
           (5) Regardless of what lines of business an insurer of 
        another state is seeking to write in this state, the lines of 
        business it is licensed to write in its state of incorporation 
        shall be the basis for establishing the financial requirements 
        it must meet for admission in this state or for continuance of 
        its authority to write business in this state; 
           (6) No insurer of another state shall be admitted to do 
        business in this state for a line of business that it is not 
        authorized to write in its state of incorporation, unless the 
        statutes of that state prohibit all insurers from writing that 
        line of business. 
           Sec. 17.  Minnesota Statutes 1998, section 60A.32, is 
        amended to read: 
           60A.32 [RATE FILING FOR CROP HAIL INSURANCE.] 
           An insurer issuing policies of insurance against crop 
        damage by hail in this state shall file its insurance rates with 
        the commissioner.  The insurance rates must be filed before 
        March 1 February 1 of the year in which a policy is issued. 
           Sec. 18.  Minnesota Statutes 1998, section 60B.21, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FIXING OF RIGHTS.] Upon issuance of the order, 
        the rights and liabilities of any such insurer and of its 
        creditors, policyholders, shareholders, members, and all other 
        persons interested in its estate are fixed as of the date of 
        filing of the petition for liquidation, except as provided in 
        sections 60B.22, 60B.25, clause (22), and 60B.39. 
           Sec. 19.  Minnesota Statutes 1998, section 60B.25, is 
        amended to read: 
           60B.25 [POWERS OF LIQUIDATOR.] 
           The liquidator shall report to the court monthly, or at 
        other intervals specified by the court, on the progress of the 
        liquidation in whatever detail the court orders.  The liquidator 
        shall coordinate activities with those of each guaranty 
        association having an interest in the liquidation and shall 
        submit a report detailing how coordination will be achieved to 
        the court for its approval within 30 days following appointment, 
        or within the time which the court, in its discretion, may 
        establish.  Subject to the court's control, the liquidator may: 
           (1) Appoint a special deputy to act under sections 60B.01 
        to 60B.61 and determine the deputy's compensation.  The special 
        deputy shall have all powers of the liquidator granted by this 
        section.  The special deputy shall serve at the pleasure of the 
        liquidator. 
           (2) Appoint or engage employees and agents, actuaries, 
        accountants, appraisers, consultants, and other personnel deemed 
        necessary to assist in the liquidation without regard to chapter 
        14. 
           (3) Fix the compensation of persons under clause (2), 
        subject to the control of the court. 
           (4) Defray all expenses of taking possession of, 
        conserving, conducting, liquidating, disposing of, or otherwise 
        dealing with the business and property of the insurer.  If the 
        property of the insurer does not contain sufficient cash or 
        liquid assets to defray the costs incurred, the liquidator may 
        advance the costs so incurred out of the appropriation made to 
        the department of commerce.  Any amounts so paid shall be deemed 
        expense of administration and shall be repaid for the credit of 
        the department of commerce out of the first available money of 
        the insurer. 
           (5) Hold hearings, subpoena witnesses and compel their 
        attendance, administer oaths, examine any person under oath and 
        compel any person to subscribe to testimony after it has been 
        correctly reduced to writing, and in connection therewith 
        require the production of any books, papers, records, or other 
        documents which the liquidator deems relevant to the inquiry. 
           (6) Collect all debts and money due and claims belonging to 
        the insurer, wherever located, and for this purpose institute 
        timely action in other jurisdictions, in order to forestall 
        garnishment and attachment proceedings against such debts; do 
        such other acts as are necessary or expedient to collect, 
        conserve, or protect its assets or property, including sell, 
        compound, compromise, or assign for purposes of collection, upon 
        such terms and conditions as the liquidator deems best, any bad 
        or doubtful debts; and pursue any creditor's remedies available 
        to enforce claims. 
           (7) Conduct public and private sales of the property of the 
        insurer in a manner prescribed by the court. 
           (8) Use assets of the estate to transfer coverage 
        obligations to a solvent assuming insurer, if the transfer can 
        be arranged without prejudice to applicable priorities under 
        section 60B.44. 
           (9) Acquire, hypothecate, encumber, lease, improve, sell, 
        transfer, abandon, or otherwise dispose of or deal with any 
        property of the insurer at its market value or upon such terms 
        and conditions as are fair and reasonable, except that no 
        transaction involving property the market value of which exceeds 
        $10,000 shall be concluded without express permission of the 
        court.  The liquidator may also execute, acknowledge, and 
        deliver any deeds, assignments, releases, and other instruments 
        necessary or proper to effectuate any sale of property or other 
        transaction in connection with the liquidation.  In cases where 
        real property sold by the liquidator is located other than in 
        the county where the liquidation is pending, the liquidator 
        shall cause to be filed with the county recorder for the county 
        in which the property is located a certified copy of the order 
        of appointment. 
           (10) Borrow money on the security of the insurer's assets 
        or without security and execute and deliver all documents 
        necessary to that transaction for the purpose of facilitating 
        the liquidation. 
           (11) Enter into such contracts as are necessary to carry 
        out the order to liquidate, and affirm or disavow any contracts 
        to which the insurer is a party. 
           (12) Continue to prosecute and institute in the name of the 
        insurer or in the liquidator's own name any suits and other 
        legal proceedings, in this state or elsewhere, and abandon the 
        prosecution of claims the liquidator deems unprofitable to 
        pursue further.  If the insurer is dissolved under section 
        60B.23, the liquidator may apply to any court in this state or 
        elsewhere for leave to be substituted for the insurer as 
        plaintiff. 
           (13) Prosecute any action which may exist in behalf of the 
        creditors, members, policyholders, or shareholders of the 
        insurer against any officer of the insurer, or any other person. 
           (14) Remove any records and property of the insurer to the 
        offices of the commissioner or to such other place as is 
        convenient for the purposes of efficient and orderly execution 
        of the liquidation. 
           (15) Deposit in one or more banks in this state such sums 
        as are required for meeting current administration expenses and 
        dividend distributions. 
           (16) Deposit with the state board of investment for 
        investment pursuant to section 11A.24, all sums not currently 
        needed, unless the court orders otherwise. 
           (17) File any necessary documents for record in the office 
        of any county recorder or record office in this state or 
        elsewhere where property of the insurer is located. 
           (18) Assert all defenses available to the insurer as 
        against third persons, including statutes of limitations, 
        statutes of frauds, and the defense of usury.  A waiver of any 
        defense by the insurer after a petition for liquidation has been 
        filed shall not bind the liquidator. 
           (19) Exercise and enforce all the rights, remedies, and 
        powers of any creditor, shareholder, policyholder, or member, 
        including any power to avoid any transfer or lien that may be 
        given by law and that is not included within sections 60B.30 and 
        60B.32. 
           (20) Intervene in any proceeding wherever instituted that 
        might lead to the appointment of a receiver or trustee, and act 
        as the receiver or trustee whenever the appointment is offered. 
           (21) Enter into agreements with any receiver or 
        commissioner of any other state relating to the rehabilitation, 
        liquidation, conservation, or dissolution of an insurer doing 
        business in both states. 
           (22) Collect from an insured any unpaid earned premium or 
        retrospectively rated premium due the insurer based on the 
        termination of coverage under section 60B.22.  Premium on surety 
        business is considered earned at inception if no policy term can 
        be determined.  All other premium will be considered earned and 
        will be prorated over the determined policy term, regardless of 
        any provision in the bond, guaranty, contract, or other 
        agreement. 
           (22) (23) Exercise all powers now held or hereafter 
        conferred upon receivers by the laws of this state not 
        inconsistent with sections 60B.01 to 60B.61. 
           (23) (24) The enumeration in this section of the powers and 
        authority of the liquidator is not a limitation, nor does it 
        exclude the right to do such other acts not herein specifically 
        enumerated or otherwise provided for as are necessary or 
        expedient for the accomplishment of or in aid of the purpose of 
        liquidation. 
           (24) (25) The power of the liquidator of a health 
        maintenance organization includes the power to transfer coverage 
        obligations to a solvent and voluntary health maintenance 
        organization, insurer, or nonprofit health service plan, and to 
        assign provider contracts of the insolvent health maintenance 
        organization to an assuming health maintenance organization, 
        insurer, or nonprofit health service plan permitted to enter 
        into such agreements.  The liquidator is not required to meet 
        the notice requirements of section 62D.121.  Transferees of 
        coverage obligations or provider contracts shall have no 
        liability to creditors or obligees of the health maintenance 
        organization except those liabilities expressly assumed. 
           Sec. 20.  Minnesota Statutes 1998, section 60B.26, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [NOTICE REQUIRED.] (a) The liquidator shall 
        give notice of the liquidation order as soon as possible by 
        first class mail and either by telegram or telephone to the 
        commissioner of commerce of each jurisdiction in which the 
        insurer is licensed to do business, by first class mail and by 
        telephone to the department of labor and industry of this state 
        if the insurer is or has been an insurer of workers' 
        compensation, by first class mail within this state and by 
        airmail outside this state to all agents of the insurer having a 
        duty under section 60B.27 this chapter, by first class mail, if 
        the insurer is a surety company to every district court judge 
        exercising probate jurisdiction and the court administrator of 
        all courts of record in this state and upon receipt of such 
        notice it shall be the duty of those judges and court 
        administrators to notify and require every executor, 
        administrator, guardian, trustee, or other fiduciary having 
        filed a bond on which such company is surety, to forthwith file 
        a new bond with new sureties, and by first class mail within 
        this state and by airmail outside this state at the last known 
        address to all persons known or reasonably expected to have 
        claims against the insurer, including all policyholders.  The 
        liquidator also shall publish a notice three consecutive times 
        in a newspaper of general circulation in the county in which the 
        liquidation is pending or in Ramsey county, the last publication 
        to be not less than three months before the earliest deadline 
        specified in the notice under subdivision 2. 
           (b) Notice to agents shall inform them of their duties 
        under section 60B.27 this chapter and inform them what 
        information they must communicate to policyholders.  Notice to 
        policyholders shall include notice of impairment and termination 
        of coverage under section 60B.22.  When it is applicable, notice 
        to policyholders shall include (1) notice of withdrawal of the 
        insurer from the defense of any case in which the policyholder 
        is interested, and (2) notice of the right to file a claim under 
        section 60B.40, subdivision 2, and (3) information about the 
        existence of section 79.28, relating to certain unpaid workers' 
        compensation awards. 
           (c) Within 15 days of the date of entry of the order, the 
        liquidator shall report to the court what notice has been 
        given.  The court may order such additional notice as it deems 
        appropriate. 
           Sec. 21.  [60B.365] [REINSURER'S LIABILITY.] 
           Subdivision 1.  [GENERALLY.] The amount recoverable by the 
        liquidator from reinsurers must not be reduced as a result of 
        the delinquency proceedings, regardless of any provision in the 
        reinsurance contract or other agreement, except as provided in 
        subdivision 2. 
           Subd. 2.  [PAYMENTS.] Payments by the reinsurer must be 
        made directly to the ceding insurer or its receiver, except 
        where the contract of insurance or reinsurance specifically 
        provides for another payee for the reinsurance in the event of 
        insolvency of the ceding insurer according to the applicable 
        requirements of statutes, rules, or orders of the domiciliary 
        state of the ceding insurer.  The receiver and reinsurer are 
        entitled to recover from a person who unsuccessfully makes a 
        claim directly against the reinsurer the receiver's attorneys' 
        fees and expenses incurred in preventing any collection by the 
        person. 
           Sec. 22.  Minnesota Statutes 1998, section 60B.39, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CLAIMS UNDER TERMINATED POLICIES.] Any claim 
        that would have become absolute if there had been no termination 
        of coverage under section 60B.22, and which was not covered by 
        insurance acquired to replace the terminated coverage, shall be 
        allowed as if the coverage had remained in effect, unless at 
        least ten days before the insured event occurred either the 
        claimant had actual notice of the termination or notice was 
        mailed to the claimant as prescribed by section 60B.26, 
        subdivision 1, or 60B.27, subdivision 1 this chapter.  If 
        allowed the claim shall share in distributions under section 
        60B.44, subdivision 9.  
           Sec. 23.  Minnesota Statutes 1998, section 60B.44, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LOSS CLAIMS; INCLUDING CLAIMS NOT COVERED BY A 
        GUARANTY ASSOCIATION.] All claims under policies or contracts of 
        coverage for losses incurred including third party claims, and 
        all claims against the insurer for liability for bodily injury 
        or for injury to or destruction of tangible property which are 
        not under policies or contracts.  All claims under life 
        insurance and annuity policies, whether for death proceeds, 
        annuity proceeds, or investment values, shall be treated as loss 
        claims.  That portion of any loss for which indemnification is 
        provided by other benefits or advantages recovered or 
        recoverable by the claimant shall not be included in this class, 
        other than benefits or advantages recovered or recoverable in 
        discharge of familial obligations of support or by way of 
        succession at death or as proceeds of life insurance, or as 
        gratuities.  No payment made by an employer to an employee shall 
        be treated as a gratuity.  Claims not covered by a guaranty 
        association are loss claims.  If any portion of a claim is 
        covered by a reinsurance treaty or similar contractual 
        obligation, that claim shall be entitled to a pro rata share, 
        based upon the relationship the claim amount bears to all claims 
        payable under the treaty or contract, of the proceeds received 
        under that treaty or contractual obligation.  
           Claims receiving pro rata payments shall not, as to any 
        remaining unpaid portion of their claim, be treated in a 
        different manner than if no such payment had been received.  
           Sec. 24.  Minnesota Statutes 1998, section 60B.44, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [UNEARNED PREMIUMS.] Claims under nonassessable 
        policies or contracts of coverage for unearned premiums or 
        subscription rates or other refunds. 
           Sec. 25.  Minnesota Statutes 1998, section 60B.44, is 
        amended by adding a subdivision to read: 
           Subd. 4b.  [FEDERAL GOVERNMENT.] Claims of the federal 
        government. 
           Sec. 26.  Minnesota Statutes 1998, section 60B.44, is 
        amended by adding a subdivision to read: 
           Subd. 4c.  [WAGES.] (a) Debts due to employees for services 
        performed, not to exceed $1,000 to each employee, that have been 
        earned within one year before the filing of the petition for 
        liquidation, subject to payment of applicable federal, state, or 
        local government taxes required by law to be withheld from the 
        debts.  Officers are not entitled to the benefit of this 
        priority.  In cases where there are no claims and no potential 
        claims of the federal government in the estate, these claims 
        will have priority over claims in subdivision 4. 
           (b) The priority in paragraph (a) is in lieu of other 
        similar priority authorized by law as to wages or compensation 
        of employees. 
           Sec. 27.  Minnesota Statutes 1998, section 60B.44, 
        subdivision 6, is amended to read: 
           Subd. 6.  [RESIDUAL CLASSIFICATION.] All other claims 
        including claims of the federal or any state or local 
        government, not falling within other classes under this 
        section.  Claims, including those of any governmental body for a 
        penalty or forfeiture, shall be allowed in this class only to 
        the extent of the pecuniary loss sustained from the act, 
        transaction, or proceeding out of which the penalty or 
        forfeiture arose, with reasonable and actual costs occasioned 
        thereby.  The remainder of such claims shall be postponed to the 
        class of claims under subdivision 9.  
           Sec. 28.  Minnesota Statutes 1998, section 60D.20, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DIVIDENDS AND OTHER DISTRIBUTIONS.] (a) Subject 
        to the limitations and requirements of this subdivision, the 
        board of directors of any domestic insurer within an insurance 
        holding company system may authorize and cause the insurer to 
        declare and pay any dividend or distribution to its shareholders 
        as the directors deem prudent from the earned surplus of the 
        insurer.  An insurer's earned surplus, also known as unassigned 
        funds, shall be determined in accordance with the accounting 
        procedures and practices governing preparation of its annual 
        statement, minus 25 percent of earned surplus attributable to 
        net unrealized capital gains.  Dividends which are paid from 
        sources other than an insurer's earned surplus as of the end of 
        the immediately preceding quarter for which the insurer has 
        filed a quarterly or annual statement as appropriate, or are 
        extraordinary dividends or distributions may be paid only as 
        provided in paragraphs (d), (e), and (f). 
           (b) The insurer shall notify the commissioner within five 
        business days following declaration of a dividend declared 
        pursuant to paragraph (a) and at least ten days prior to its 
        payment.  The commissioner shall promptly consider the 
        notification filed pursuant to this paragraph, taking into 
        consideration the factors described in subdivision 4. 
           (c) The commissioner shall review at least annually the 
        dividends paid by an insurer pursuant to paragraph (a) for the 
        purpose of determining if the dividends are reasonable based 
        upon (1) the adequacy of the level of surplus as regards 
        policyholders remaining after the dividend payments, and (2) the 
        quality of the insurer's earnings and extent to which the 
        reported earnings include extraordinary items, such as surplus 
        relief reinsurance transactions and reserve destrengthening. 
           (d) No domestic insurer shall pay any extraordinary 
        dividend or make any other extraordinary distribution to its 
        shareholders until:  (1) 30 days after the commissioner has 
        received notice of the declaration of it and has not within the 
        period disapproved the payment; or (2) the commissioner has 
        approved the payment within the 30-day period. 
           (e) For purposes of this section, an extraordinary dividend 
        or distribution includes any dividend or distribution of cash or 
        other property, whose fair market value together with that of 
        other dividends or distributions made within the preceding 12 
        months exceeds the greater of (1) ten percent of the insurer's 
        surplus as regards policyholders as of the 31st day of December 
        next preceding on December 31 of the preceding year; or (2) the 
        net gain from operations of the insurer, if the insurer is a 
        life insurer, or the net income, if the insurer is not a life 
        insurer, not including realized capital gains, for the 12-month 
        period ending the 31st day of December next preceding on 
        December 31 of the preceding year, but does not include pro rata 
        distributions of any class of the insurer's own securities.  
           (f) Notwithstanding any other provision of law, an insurer 
        may declare an extraordinary dividend or distribution that is 
        conditional upon the commissioner's approval, and the 
        declaration shall confer no rights upon shareholders until:  (1) 
        the commissioner has approved the payment of such a dividend or 
        distribution; or (2) the commissioner has not disapproved the 
        payment within the 30-day period referred to above. 
           Sec. 29.  Minnesota Statutes 1998, section 60K.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIREMENT.] No person shall act or 
        assume to act as an insurance agent in the solicitation or 
        procurement of applications for insurance, nor in the sale of 
        insurance or policies of insurance, nor in any manner aid as an 
        insurance agent in the negotiation of insurance by or with an 
        insurer, including resident agents or reciprocal or 
        interinsurance exchanges and fraternal benefit societies, until 
        that person obtains from the commissioner a license for that 
        purpose.  The license must specifically set forth the name of 
        the person authorized to act as an agent and the class or 
        classes of insurance for which that person is authorized to 
        solicit or countersign policies.  An insurance agent may qualify 
        for a license in the following classes to sell:  (1) life and 
        health; and (2) life and health and variable contracts; (3) 
        property and casualty; (4) travel baggage; (5) bail bonds; (6) 
        title insurance; and (7) farm property and liability.  
           No insurer shall appoint or reappoint a natural person, 
        partnership, or corporation to act as an insurance agent on its 
        behalf until that natural person, partnership, or corporation 
        obtains a license as an insurance agent.  
           Sec. 30.  Minnesota Statutes 1998, section 60K.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  [RESIDENT AGENT.] The commissioner shall issue a 
        resident insurance agent's license to a qualified resident of 
        this state as follows:  
           (a) A person may qualify as a resident of this state if 
        that person resides in this state or the principal place of 
        business of that person is maintained in this state.  
        Application for a license claiming residency in this state for 
        licensing purposes constitutes an election of residency in this 
        state.  A license issued upon an application claiming residency 
        in this state is void if the licensee, while holding a resident 
        license in this state, also holds, or makes application for, a 
        resident license in, or thereafter claims to be a resident of, 
        any other state or jurisdiction or if the licensee ceases to be 
        a resident of this state; provided, however, if the applicant is 
        a resident of a community or trade area, the border of which is 
        contiguous with the state line of this state, the applicant may 
        qualify for a resident license in this state and at the same 
        time hold a resident license from the contiguous state. 
           (b) The commissioner shall subject each applicant who is a 
        natural person to a written examination as to the applicant's 
        competence to act as an insurance agent.  The examination must 
        be held at a reasonable time and place designated by the 
        commissioner. 
           (c) The examination shall be approved for use by the 
        commissioner and shall test the applicant's knowledge of the 
        lines of insurance, policies, and transactions to be handled 
        under the class of license applied for, of the duties and 
        responsibilities of the licensee, and pertinent insurance laws 
        of this state. 
           (d) The examination shall be given only after the applicant 
        has completed a program of classroom studies in a school, which 
        shall not include a school sponsored by, offered by, or 
        affiliated with an insurance company or its agents; except that 
        this limitation does not preclude a bona fide professional 
        association of agents, not acting on behalf of an insurer, from 
        offering courses.  The course of study shall consist of 30 hours 
        of classroom study devoted to the basic fundamentals of 
        insurance for those seeking a Minnesota license for the first 
        time, 15 hours devoted to specific life and health topics for 
        those seeking a life and health license, and 15 hours devoted to 
        specific property and casualty topics for those seeking a 
        property and casualty license.  Of the 30 hours of required 
        classroom study, at least three hours must be devoted to state 
        insurance laws, regulations, and rules.  The program of studies 
        or study course shall have been approved by the commissioner in 
        order to qualify under this paragraph.  If the applicant has 
        been previously licensed for the particular line of insurance in 
        the state of Minnesota, the requirement of a program of studies 
        or a study course shall be waived.  A certification of 
        compliance by the organization offering the course shall 
        accompany the applicant's license application.  This program of 
        studies in a school or a study course shall not apply to farm 
        property perils and farm liability applicants, or to agents 
        writing such other lines of insurance as the commissioner may 
        exempt from examination by order. 
           (e) The applicant must pass the examination with a grade 
        determined by the commissioner to indicate satisfactory 
        knowledge and understanding of the class or classes of insurance 
        for which the applicant seeks qualification.  The commissioner 
        shall inform the applicant as to whether or not the applicant 
        has passed.  Examination results are valid for a period of three 
        years from the date of the examination.  
           (f) An applicant who has failed to pass an examination may 
        take subsequent examinations.  Examination fees for subsequent 
        examinations shall not be waived. 
           (g) Any applicant for a license covering the same class or 
        classes of insurance for which the applicant was licensed under 
        a similar license in this state, other than a temporary license, 
        within the three years preceding the date of the application 
        shall be exempt from the requirement of a written examination, 
        unless the previous license was revoked or suspended by the 
        commissioner.  An applicant whose license is not renewed under 
        section 60K.12 is exempt from the requirement of a written 
        examination.  
           Sec. 31.  Minnesota Statutes 1998, section 60K.03, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NONRESIDENT AGENT.] The commissioner shall issue 
        a nonresident insurance agent's license to a qualified person 
        who is a resident of another state or country as follows: 
           (a) A person may qualify for a license under this section 
        as a nonresident only if that person holds a license in another 
        state, province of Canada, or other foreign country which, in 
        the opinion of the commissioner, qualifies that person for the 
        same activity as that for which a license is sought. 
           (b) The commissioner shall not issue a license to a 
        nonresident applicant until that person files with the 
        commissioner a designation of the commissioner and the 
        commissioner's successors in office as the applicant's true and 
        lawful attorney upon whom may be served all lawful process in an 
        action, suit, or proceeding instituted by or on behalf of an 
        interested person arising out of the applicant's insurance 
        business in this state.  This designation constitutes an 
        agreement that this service of process is of the same legal 
        force and validity as personal service of process in this state 
        upon that applicant.  
           Service of process upon a licensee in an action or 
        proceeding begun in a court of competent jurisdiction of this 
        state may be made in compliance with section 45.028, subdivision 
        2.  
           (c) A nonresident agent shall be held to the same knowledge 
        of state insurance law, regulations, and rules as that required 
        of a resident agent according to subdivision 2, paragraph (d). 
           (c) (d) A nonresident license terminates automatically when 
        the resident license for that class of license in the state, 
        province, or foreign country in which the licensee is a resident 
        is terminated for any reason.  
           Sec. 32.  Minnesota Statutes 1998, section 60K.19, 
        subdivision 7, is amended to read: 
           Subd. 7.  [CRITERIA FOR COURSE ACCREDITATION.] (a) The 
        commissioner may accredit a course only to the extent it is 
        designed to impart substantive and procedural knowledge of the 
        insurance field.  The burden of demonstrating that the course 
        satisfies this requirement is on the individual or organization 
        seeking accreditation.  The commissioner shall approve any 
        educational program approved by Minnesota Continuing Legal 
        Education relating to the insurance field.  The commissioner is 
        authorized to establish a procedure for renewal of course 
        accreditation. 
           (b) The commissioner shall approve or disapprove 
        professional designation examinations that are recommended for 
        approval by the advisory task force.  In order for an agent to 
        receive full continuing education credit for a professional 
        designation examination, the agent must pass the examination.  
        An agent may not receive credit for classroom instruction 
        preparing for the professional designation examination and also 
        receive continuing education credit for passing the professional 
        designation examination. 
           (c) The commissioner may not accredit a course:  
           (1) that is designed to prepare students for a license 
        examination; 
           (2) in mechanical office or business skills, including 
        typing, speedreading, use of calculators, or other machines or 
        equipment; 
           (3) in sales promotion, including meetings held in 
        conjunction with the general business of the licensed agent; or 
           (4) in motivation, the art of selling, psychology, or time 
        management; or. 
           (5) which can be completed by the student at home or 
        outside the classroom without the supervision of an instructor 
        approved by the department of commerce, except that home-study 
        courses may be accredited by the commissioner if the student is 
        a nonresident agent residing in a state which is not contiguous 
        to Minnesota.  
           Sec. 33.  Minnesota Statutes 1998, section 60K.19, 
        subdivision 8, is amended to read: 
           Subd. 8.  [MINIMUM EDUCATION REQUIREMENT.] Each person 
        subject to this section shall complete a minimum of 30 credit 
        hours of courses accredited by the commissioner during each 
        24-month licensing period after the expiration of the person's 
        initial licensing period, two hours of which must be devoted to 
        state law, regulations, and rules applicable to the line or 
        lines of insurance for which the agent is licensed.  At least 15 
        of the 30 credit hours must be completed during the first 12 
        months of the 24-month licensing period.  Any person whose 
        initial licensing period extends more than six months shall 
        complete 15 hours of courses accredited by the commissioner 
        during the initial license period.  Any person teaching or 
        lecturing at an accredited course qualifies for 1-1/2 times the 
        number of credit hours that would be granted to a person 
        completing the accredited course.  No more than 15 credit hours 
        per licensing period may be credited to a person for courses 
        sponsored by, offered by, or affiliated with an insurance 
        company or its agents.  Courses sponsored by, offered by, or 
        affiliated with an insurance company or agent may restrict its 
        students to agents of the company or agency. 
           Sec. 34.  Minnesota Statutes 1998, section 61A.276, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ISSUANCE.] The funding agreements may be issued 
        to:  (1) individuals; or (2) persons authorized by a state or 
        foreign country to engage in an insurance business or 
        subsidiaries or affiliates of these persons; or (3) entities 
        other than individuals and other than persons authorized to 
        engage in an insurance business, and subsidiaries and affiliates 
        of these persons, for the following purposes:  (i) to fund 
        benefits under any employee benefit plan as defined in the 
        Employee Retirement Income Security Act of 1974, as now or 
        hereafter amended, maintained in the United States or in a 
        foreign country; (ii) to fund the activities of any organization 
        exempt from taxation under section 501(c) of the Internal 
        Revenue Code of 1986, as amended through December 31, 1992, or 
        of any similar organization in any foreign country; (iii) to 
        fund any program of any state, foreign country or political 
        subdivision thereof, or any agency or instrumentality thereof; 
        or (iv) to fund any agreement providing for periodic payments in 
        satisfaction of a claim; or (v) to fund a program of a financial 
        institution limited to banks, thrifts, credit unions, and 
        investment companies registered under the Investment Company Act 
        of 1940.  No funding agreement shall be issued in an amount less 
        than $1,000,000. 
           Sec. 35.  Minnesota Statutes 1998, section 61A.60, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [NOTICE FORM; AGENT SALES.] The notice 
        required where sections 61A.53 to 61A.60 refer to this 
        subdivision is as follows: 
                                IMPORTANT NOTICE 
        
        DEFINITION   REPLACEMENT is any transaction where, in connection
                     with the purchase of New Insurance or a New 
                     Annuity, you LAPSE, SURRENDER, CONVERT to 
                     Paid-up Insurance, Place on Extended Term, 
                     or BORROW all or part of the policy loan 
                     values on an existing insurance policy or an 
                     annuity.  (See reverse side for DEFINITIONS.) 
        IF YOU       In connection with the purchase of this insurance 
        INTEND TO    or annuity, if you have REPLACED or intend to 
        REPLACE      REPLACE your present life insurance coverage 
        COVERAGE     or annuity(ies), you should be certain that you   
                     understand all the relevant factors involved.
                     You should BE AWARE that you may be required to
                     provide EVIDENCE OF INSURABILITY and 
                     (1)  If your HEALTH condition has CHANGED since 
                     the application was taken on your present 
                     policies, you may be required to pay ADDITIONAL 
                     PREMIUMS under the NEW POLICY, or be DENIED 
                     coverage. 
                     (2)  Your present occupation or activities may not
                     be covered or could require additional premiums.  
                     (3)  The INCONTESTABLE and SUICIDE CLAUSE will 
                     begin anew in a new policy.  This could RESULT 
                     in a CLAIM under the new policy BEING DENIED 
                     that would otherwise have been paid.
                     (4)  Current law DOES MAY NOT REQUIRE your present 
                     insurer(s) to REFUND any premiums.
                     (5)  It is to your advantage to OBTAIN INFORMATION
                     regarding your existing policies or annuity 
                     contracts  [FROM THE INSURER OR AGENT FROM WHOM 
                     YOU PURCHASED THE POLICY OR ANNUITY CONTRACT.] 
                     (If you are purchasing an annuity, clauses (1), 
                     (2), and (3) above would not apply to the new 
                     annuity contract.)
                     THE INSURANCE OR ANNUITY I INTEND TO PURCHASE FROM 
                     _______________________________________INSURANCE CO.
                     MAY REPLACE OR ALTER EXISTING LIFE INSURANCE 
                     POLICY(IES) OR ANNUITY CONTRACT(S). 
                     The following policy(ies) or annuity contract(s) 
                     may be replaced as a result of this transaction:
                  Insurer                               Insured 
         as it appears on the policy        as it appears on the policy 
         or contract                        or contract  
        ______________________________     ______________________________
        ______________________________     ______________________________
        ______________________________     ______________________________
        ______________________________     ______________________________
          Policy or contract number               Insured birthdate 
        ______________________________     ______________________________
        ______________________________     ______________________________
        ______________________________     ______________________________
        ______________________________     ______________________________
                The proposed policy or contract is:
                ______________________________________  $_______________
                type of policy- or contract-generic name   face amount
                ________________________________________________________
                signature of applicant                   date
                ________________________________________________________
                address of applicant        city              state
                I certify that this form was given to and completed by 
                ________________________________________________________
                            (applicant-please print or type)
                prior to taking an application and that I am leaving a 
                signed copy for the applicant.
                     ___________________________________________________
                     agent's signature                    date
                     ___________________________________________________
                                      address
                     ___________________________________________________
                             city                       state
                  Note important statement on reverse side 
           Sec. 36.  Minnesota Statutes 1998, section 61B.19, 
        subdivision 3, is amended to read: 
           Subd. 3.  [LIMITATION OF COVERAGE.] Sections 61B.18 to 
        61B.32 do not provide coverage for: 
           (1) a portion of a policy or contract under which the 
        investment risk is borne by the policy or contract holder; 
           (2) a policy or contract of reinsurance, unless assumption 
        certificates have been issued and the insured has consented to 
        the assumption as provided under section 60A.09, subdivision 4a; 
           (3) a policy or contract issued by an assessment benefit 
        association operating under section 61A.39, or a fraternal 
        benefit society operating under chapter 64B; 
           (4) any obligation to nonresident participants of a covered 
        retirement plan or to the plan sponsor, employer, trustee, or 
        other party who owns the contract; in these cases, the 
        association is obligated under this chapter only to participants 
        in a covered plan who are residents of the state of Minnesota on 
        the date of impairment or insolvency; 
           (5) an annuity contract issued in connection with and for 
        the purpose of funding a structured settlement of a liability 
        claim, where the liability insurer remains liable; 
           (6) a portion of an unallocated annuity contract which is 
        not issued to or in connection with a specific employee, union, 
        or association of natural persons benefit plan or a governmental 
        lottery, including but not limited to, a contract issued to, or 
        purchased at the direction of, any governmental bonding 
        authority, such as a municipal guaranteed investment contract; 
           (7) a plan or program of an employer, association, or 
        similar entity to provide life, health, or annuity benefits to 
        its employees or members to the extent that the plan or program 
        is self-funded or uninsured, including benefits payable by an 
        employer, association, or similar entity under: 
           (i) a multiple employer welfare arrangement as defined in 
        the Employee Retirement Income Security Act of 1974, United 
        States Code, title 29, section 1002(40)(A), as amended; 
           (ii) a minimum premium group insurance plan; 
           (iii) a stop-loss group insurance plan; or 
           (iv) an administrative services only contract; 
           (8) any policy or contract issued by an insurer at a time 
        when it was not licensed or did not have a certificate of 
        authority to issue the policy or contract in this state; 
           (9) an unallocated annuity contract issued to an employee 
        benefit plan protected under the federal Pension Benefit 
        Guaranty Corporation; and 
           (10) a portion of a policy or contract to the extent that 
        it provides dividends or experience rating credits except to the 
        extent the dividends or experience rating credits have actually 
        become due and payable or have been credited to the policy or 
        contract before the date of impairment or insolvency, or 
        provides that a fee or allowance be paid to a person, including 
        the policy or contract holder, in connection with the service 
        to, or administration of, the policy or contract.; and 
           (11) a contractual agreement that establishes the member 
        insurer's obligations to provide a book value accounting 
        guaranty for defined contribution benefit plan participants by 
        reference to a portfolio of assets that is owned by the benefit 
        plan or its trustee, which in each case is not an affiliate of 
        the member insurer. 
           Sec. 37.  Minnesota Statutes 1998, section 62A.04, 
        subdivision 3, is amended to read: 
           Subd. 3.  [OPTIONAL PROVISIONS.] Except as provided in 
        subdivision 4, no such policy delivered or issued for delivery 
        to any person in this state shall contain provisions respecting 
        the matters set forth below unless such provisions are in the 
        words in which the same appear in this section.  The insurer 
        may, at its option, use in lieu of any such provision a 
        corresponding provision of different wording approved by the 
        commissioner which is not less favorable in any respect to the 
        insured or the beneficiary.  Any such provision contained in the 
        policy shall be preceded individually by the appropriate caption 
        appearing in this subdivision or, at the option of the insurer, 
        by such appropriate individual or group captions or subcaptions 
        as the commissioner may approve. 
           (1) A provision as follows: 
           CHANGE OF OCCUPATION:  If the insured be injured or 
        contract sickness after having changed occupations to one 
        classified by the insurer as more hazardous than that stated in 
        this policy or while doing for compensation anything pertaining 
        to an occupation so classified, the insurer will pay only such 
        portion of the indemnities provided in this policy as the 
        premiums paid would have purchased at the rates and within the 
        limits fixed by the insurer for such more hazardous occupation.  
        If the insured changes occupations to one classified by the 
        insurer as less hazardous than that stated in this policy, the 
        insurer, upon receipt of proof of such change of occupation will 
        reduce the premium rate accordingly, and will return the excess 
        pro rata unearned premium from the date of change of occupation 
        or from the policy anniversary date immediately preceding 
        receipt of such proof, whichever is the more recent.  In 
        applying this provision, the classification of occupational risk 
        and the premium rates shall be such as have been last filed by 
        the insurer prior to the occurrence of the loss for which the 
        insurer is liable or prior to date of proof of change in 
        occupation with the state official having supervision of 
        insurance in the state where the insured resided at the time 
        this policy was issued; but if such filing was not required, 
        then the classification of occupational risk and the premium 
        rates shall be those last made effective by the insurer in such 
        state prior to the occurrence of the loss or prior to the date 
        of proof of change of occupation. 
           (2) A provision as follows: 
           MISSTATEMENT OF AGE:  If the age of the insured has been 
        misstated, all amounts payable under this policy shall be such 
        as the premium paid would have purchased at the correct age. 
           (3) A provision as follows: 
           OTHER INSURANCE IN THIS INSURER:  If an accident or 
        sickness or accident and sickness policy or policies previously 
        issued by the insurer to the insured be in force concurrently 
        herewith, making the aggregate indemnity for ..... (insert type 
        of coverage or coverages) in excess of $..... (insert maximum 
        limit of indemnity or indemnities) the excess insurance shall be 
        void and all premiums paid for such excess shall be returned to 
        the insured or to the insured's estate, or, in lieu thereof: 
           Insurance effective at any one time on the insured under a 
        like policy or policies in this insurer is limited to the one 
        such policy elected by the insured, or the insured's beneficiary 
        or estate, as the case may be, and the insurer will return all 
        premiums paid for all other such policies. 
           (4) A provision as follows: 
           INSURANCE WITH OTHER INSURERS:  If there be other valid 
        coverage, not with this insurer, providing benefits for the same 
        loss on a provision of service basis or on an expense incurred 
        basis and of which this insurer has not been given written 
        notice prior to the occurrence or commencement of loss, the only 
        liability under any expense incurred coverage of this policy 
        shall be for such proportion of the loss as the amount which 
        would otherwise have been payable hereunder plus the total of 
        the like amounts under all such other valid coverages for the 
        same loss of which this insurer had notice bears to the total 
        like amounts under all valid coverages for such loss, and for 
        the return of such portion of the premiums paid as shall exceed 
        the pro rata portion for the amount so determined.  For the 
        purpose of applying this provision when other coverage is on a 
        provision of service basis, the "like amount" of such other 
        coverage shall be taken as the amount which the services 
        rendered would have cost in the absence of such coverage. 
           If the foregoing policy provision is included in a policy 
        which also contains the next following policy provision there 
        shall be added to the caption of the foregoing provision the 
        phrase "EXPENSE INCURRED BENEFITS."  The insurer may, at its 
        option, include in this provision a definition of "other valid 
        coverage," approved as to form by the commissioner, which 
        definition shall be limited in subject matter to coverage 
        provided by organizations subject to regulation by insurance law 
        or by insurance authorities of this or any other state of the 
        United States or any province of Canada, and by hospital or 
        medical service organizations, and to any other coverage the 
        inclusion of which may be approved by the commissioner.  In the 
        absence of such definition such term shall not include group 
        insurance, automobile medical payments insurance, or coverage 
        provided by hospital or medical service organizations or by 
        union welfare plans or employer or employee benefit 
        organizations.  For the purpose of applying the foregoing policy 
        provision with respect to any insured, any amount of benefit 
        provided for such insured pursuant to any compulsory benefit 
        statute (including any workers' compensation or employer's 
        liability statute) whether provided by a governmental agency or 
        otherwise shall in all cases be deemed to be "other valid 
        coverage" of which the insurer has had notice.  In applying the 
        foregoing policy provision no third party liability coverage 
        shall be included as "other valid coverage." 
           (5) A provision as follows: 
           INSURANCE WITH OTHER INSURERS:  If there be other valid 
        coverage, not with this insurer, providing benefits for the same 
        loss on other than an expense incurred basis and of which this 
        insurer has not been given written notice prior to the 
        occurrence or commencement of loss, the only liability for such 
        benefits under this policy shall be for such proportion of the 
        indemnities otherwise provided hereunder for such loss as the 
        like indemnities of which the insurer had notice (including the 
        indemnities under this policy) bear to the total amount of all 
        like indemnities for such loss, and for the return of such 
        portion of the premium paid as shall exceed the pro rata portion 
        for the indemnities thus determined. 
           If the foregoing policy provision is included in a policy 
        which also contains the next preceding policy provision there 
        shall be added to the caption of the foregoing provision the 
        phrase -- "OTHER BENEFITS."  The insurer may, at its option, 
        include in this provision a definition of "other valid 
        coverage," approved as to form by the commissioner, which 
        definition shall be limited in subject matter to coverage 
        provided by organizations subject to regulation by insurance law 
        or by insurance authorities of this or any other state of the 
        United States or any province of Canada, and to any other 
        coverage the inclusion of which may be approved by the 
        commissioner.  In the absence of such definition such term shall 
        not include group insurance, or benefits provided by union 
        welfare plans or by employer or employee benefit organizations.  
        For the purpose of applying the foregoing policy provision with 
        respect to any insured, any amount of benefit provided for such 
        insured pursuant to any compulsory benefit statute (including 
        any workers' compensation or employer's liability statute) 
        whether provided by a governmental agency or otherwise shall in 
        all cases be deemed to be "other valid coverage" of which the 
        insurer has had notice.  In applying the foregoing policy 
        provision no third party liability coverage shall be included as 
        "other valid coverage." 
           (6) A provision as follows: 
           RELATION OF EARNINGS TO INSURANCE:  If the total monthly 
        amount of loss of time benefits promised for the same loss under 
        all valid loss of time coverage upon the insured, whether 
        payable on a weekly or monthly basis, shall exceed the monthly 
        earnings of the insured at the time disability commenced or the 
        insured's average monthly earnings for the period of two years 
        immediately preceding a disability for which claim is made, 
        whichever is the greater, the insurer will be liable only for 
        such proportionate amount of such benefits under this policy as 
        the amount of such monthly earnings or such average monthly 
        earnings of the insured bears to the total amount of monthly 
        benefits for the same loss under all such coverage upon the 
        insured at the time such disability commences and for the return 
        of such part of the premiums paid during such two years as shall 
        exceed the pro rata amount of the premiums for the benefits 
        actually paid hereunder; but this shall not operate to reduce 
        the total monthly amount of benefits payable under all such 
        coverage upon the insured below the sum of $200 or the sum of 
        the monthly benefits specified in such coverages, whichever is 
        the lesser, nor shall it operate to reduce benefits other than 
        those payable for loss of time. 
           The foregoing policy provision may be inserted only in a 
        policy which the insured has the right to continue in force 
        subject to its terms by the timely payment of premiums (1) until 
        at least age 50, or, (2) in the case of a policy issued after 
        age 44, for at least five years from its date of issue.  The 
        insurer may, at its option, include in this provision a 
        definition of "valid loss of time coverage," approved as to form 
        by the commissioner, which definition shall be limited in 
        subject matter to coverage provided by governmental agencies or 
        by organizations subject to regulation by insurance law or by 
        insurance authorities of this or any other state of the United 
        States or any province of Canada, or to any other coverage the 
        inclusion of which may be approved by the commissioner or any 
        combination of such coverages.  In the absence of such 
        definition such term shall not include any coverage provided for 
        such insured pursuant to any compulsory benefit statute 
        (including any workers' compensation or employer's liability 
        statute), or benefits provided by union welfare plans or by 
        employer or employee benefit organizations. 
           (7) A provision as follows: 
           UNPAID PREMIUM:  Upon the payment of a claim under this 
        policy, any premium then due and unpaid or covered by any note 
        or written order may be deducted therefrom. 
           (8) A provision as follows: 
           CANCELLATION:  The insurer may cancel this policy at any 
        time by written notice delivered to the insured or mailed to the 
        insured's last address as shown by the records of the insurer, 
        stating when, not less than five days thereafter, such 
        cancellation shall be effective; and after the policy has been 
        continued beyond its original term the insured may cancel this 
        policy at any time by written notice delivered or mailed to the 
        insurer, effective upon receipt or on such later date as may be 
        specified in such notice.  In the event of cancellation, the 
        insurer will return promptly the unearned portion of any premium 
        paid.  If Regardless of whether it is the insurer or the insured 
        who cancels, the earned premium shall be computed by the use of 
        the short-rate table last filed with the state official having 
        supervision of insurance in the state where the insured resided 
        when the policy was issued.  If the insurer cancels, the earned 
        premium shall be computed pro rata, unless the mode of payment 
        is monthly or less, or if the unearned amount is for less than 
        one month.  Cancellation shall be without prejudice to any claim 
        originating prior to the effective date of cancellation. 
           (9) A provision as follows: 
           CONFORMITY WITH STATE STATUTES:  Any provision of this 
        policy which, on its effective date, is in conflict with the 
        statutes of the state in which the insured resides on such date 
        is hereby amended to conform to the minimum requirements of such 
        statutes. 
           (10) A provision as follows: 
           ILLEGAL OCCUPATION:  The insurer shall not be liable for 
        any loss to which a contributing cause was the insured's 
        commission of or attempt to commit a felony or to which a 
        contributing cause was the insured's being engaged in an illegal 
        occupation. 
           (11) A provision as follows: 
           NARCOTICS:  The insurer shall not be liable for any loss 
        sustained or contracted in consequence of the insured's being 
        under the influence of any narcotic unless administered on the 
        advice of a physician. 
           Sec. 38.  Minnesota Statutes 1998, section 62A.135, 
        subdivision 5, is amended to read: 
           Subd. 5.  [SUPPLEMENT TO ANNUAL STATEMENTS SUPPLEMENTAL 
        FILINGS.] Each insurer that has fixed indemnity policies in 
        force in this state shall, as a supplement to the annual 
        statement required by section 60A.13 upon request by the 
        commissioner, submit, in a form prescribed by the 
        commissioner, the experience data for the calendar year showing 
        its incurred claims, earned premiums, incurred to earned loss 
        ratio, and the ratio of the actual loss ratio to the expected 
        loss ratio for each fixed indemnity policy form in force in 
        Minnesota.  The experience data must be provided on both a 
        Minnesota only and a national basis.  If in the opinion of the 
        company's actuary, the deviation of the actual loss ratio from 
        the expected loss ratio for a policy form is due to unusual 
        reserve fluctuations, economic conditions, or other nonrecurring 
        conditions, the insurer should also file that opinion with 
        appropriate justification.  
           If the data submitted does not confirm that the insurer has 
        satisfied the loss ratio requirements of this section, the 
        commissioner shall notify the insurer in writing of the 
        deficiency.  The insurer shall have 30 days from the date of 
        receipt of the commissioner's notice to file amended rates that 
        comply with this section or a request for an exemption with 
        appropriate justification.  If the insurer fails to file amended 
        rates within the prescribed time and the commissioner does not 
        exempt the policy form from the need for a rate revision, the 
        commissioner shall order that the insurer's filed rates for the 
        nonconforming policy be reduced to an amount that would have 
        resulted in a loss ratio that complied with this section had it 
        been in effect for the reporting period of the supplement.  The 
        insurer's failure to file amended rates within the specified 
        time of the issuance of the commissioner's order amending the 
        rates does not preclude the insurer from filing an amendment of 
        its rates at a later time. 
           Sec. 39.  Minnesota Statutes 1998, section 62A.50, 
        subdivision 3, is amended to read: 
           Subd. 3.  [DISCLOSURES.] No long-term care policy shall be 
        offered or delivered in this state, whether or not the policy is 
        issued in this state, and no certificate of coverage under a 
        group long-term care policy shall be offered or delivered in 
        this state, unless a statement containing at least the following 
        information is delivered to the applicant at the time the 
        application is made: 
           (1) a description of the benefits and coverage provided by 
        the policy and the differences between this policy, a 
        supplemental Medicare policy and the benefits to which an 
        individual is entitled under parts A and B of Medicare; 
           (2) a statement of the exceptions and limitations in the 
        policy including the following language, as applicable, in bold 
        print:  "THIS POLICY DOES NOT COVER ALL NURSING CARE FACILITIES 
        OR NURSING HOME, HOME CARE, OR ADULT DAY CARE EXPENSES AND DOES 
        NOT COVER RESIDENTIAL CARE.  READ YOUR POLICY CAREFULLY TO 
        DETERMINE WHICH FACILITIES AND EXPENSES ARE COVERED BY YOUR 
        POLICY."; 
           (3) a statement of the renewal provisions including any 
        reservation by the insurer of the right to change premiums; 
           (4) a statement that the outline of coverage is a summary 
        of the policy issued or applied for and that the policy should 
        be consulted to determine governing contractual provisions; 
           (5) an explanation of the policy's loss ratio including at 
        least the following language:  "This means that, on the average, 
        policyholders may expect that $........ of every $100 in premium 
        will be returned as benefits to policyholders over the life of 
        the contract."; 
           (6) a statement of the out-of-pocket expenses, including 
        deductibles and copayments for which the insured is responsible, 
        and an explanation of the specific out-of-pocket expenses that 
        may be accumulated toward any out-of-pocket maximum as specified 
        in the policy; 
           (7) the following language, in bold print:  "YOUR PREMIUMS 
        CAN BE INCREASED IN THE FUTURE.  THE RATE SCHEDULE THAT LISTS 
        YOUR PREMIUM NOW CAN CHANGE."; 
           (8) the following language, if applicable, in bold print:  
        "IF YOU ARE NOT HOSPITALIZED PRIOR TO ENTERING A NURSING HOME OR 
        NEEDING HOME CARE, YOU WILL NOT BE ABLE TO COLLECT ANY BENEFITS 
        UNDER THIS PARTICULAR POLICY."; 
           (9) (8) the following language in bold print, with any 
        provisions that are inapplicable to the particular policy 
        omitted or crossed out:  "THIS POLICY HAS A WAITING PERIOD OF 
        ..... (CALENDAR OR BENEFIT) DAYS FOR NURSING CARE SERVICES AND A 
        WAITING PERIOD OF ..... (CALENDAR OR BENEFIT) DAYS FOR HOME CARE 
        SERVICES.  THIS MEANS THAT THIS POLICY WILL NOT COVER YOUR CARE 
        FOR THE FIRST ..... (CALENDAR OR BENEFIT) DAYS AFTER YOU ENTER A 
        NURSING HOME, OR THE FIRST ..... (CALENDAR OR BENEFIT) DAYS 
        AFTER YOU BEGIN TO USE HOME CARE SERVICES.  YOU WOULD NEED TO 
        PAY FOR YOUR CARE FROM OTHER SOURCES FOR THOSE WAITING 
        PERIODS."; and 
           (10) (9) a signed and completed copy of the application for 
        insurance is left with the applicant at the time the application 
        is made. 
           Sec. 40.  Minnesota Statutes 1998, section 62A.61, is 
        amended to read: 
           62A.61 [DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO 
        DETERMINE USUAL AND CUSTOMARY FEES.] 
           (a) A health carrier that bases reimbursement to health 
        care providers upon a usual and customary fee must maintain in 
        its office a copy of a description of the methodology used to 
        calculate fees including at least the following: 
           (1) the frequency of the determination of usual and 
        customary fees; 
           (2) a general description of the methodology used to 
        determine usual and customary fees; and 
           (3) the percentile of usual and customary fees that 
        determines the maximum allowable reimbursement. 
           (b) A health carrier must provide a copy of the information 
        described in paragraph (a) to the commissioner of health or the 
        commissioner of commerce, upon request. 
           (c) The commissioner of health or the commissioner of 
        commerce, as appropriate, may use to enforce this section any 
        enforcement powers otherwise available to the commissioner with 
        respect to the health carrier.  The commissioner of health or 
        commerce, as appropriate, may require health carriers to provide 
        the information required under this section and may use any 
        powers granted under other laws relating to the regulation of 
        health carriers to enforce compliance. 
           (d) For purposes of this section, "health carrier" has the 
        meaning given in section 62A.011. 
           (e) "Usual and customary" means the normal charge, in the 
        absence of insurance, of the provider for a service or article, 
        but not more than the prevailing charge in the area for like 
        service or article.  A "like service" is the same nature and 
        duration, requires the same skill, and is performed by a 
        provider of similar training and experience.  A "like article" 
        is one that is identically or substantially equivalent.  "Area" 
        means the municipality or, in the case of a large city, a 
        subdivision of the city, in which the service or article is 
        actually provided or a greater area as is necessary to obtain a 
        representative cross-section of charges for like service or 
        article. 
           Sec. 41.  Minnesota Statutes 1998, section 62A.65, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PORTABILITY AND CONVERSION OF COVERAGE.] (a) No 
        individual health plan may be offered, sold, issued, or with 
        respect to children age 18 or under renewed, to a Minnesota 
        resident that contains a preexisting condition limitation, 
        preexisting condition exclusion, or exclusionary rider, unless 
        the limitation or exclusion is permitted under this 
        subdivision and under chapter 62L, provided that, except for 
        children age 18 or under, underwriting restrictions may be 
        retained on individual contracts that are issued without 
        evidence of insurability as a replacement for prior individual 
        coverage that was sold before May 17, 1993.  The individual may 
        be subjected to an 18-month preexisting condition limitation, 
        unless the individual has maintained continuous coverage as 
        defined in section 62L.02.  The individual must not be subjected 
        to an exclusionary rider.  An individual who has maintained 
        continuous coverage may be subjected to a one-time preexisting 
        condition limitation of up to 12 months, with credit for time 
        covered under qualifying coverage as defined in section 62L.02, 
        at the time that the individual first is covered under an 
        individual health plan by any health carrier.  Credit must be 
        given for all qualifying coverage with respect to all 
        preexisting conditions, regardless of whether the conditions 
        were preexisting with respect to any previous qualifying 
        coverage.  The individual must not be subjected to an 
        exclusionary rider.  Thereafter, the individual must not be 
        subject to any preexisting condition limitation, preexisting 
        condition exclusion, or exclusionary rider under an individual 
        health plan by any health carrier, except an unexpired portion 
        of a limitation under prior coverage, so long as the individual 
        maintains continuous coverage as defined in section 62L.02. 
           (b) A health carrier must offer an individual health plan 
        to any individual previously covered under a group health plan 
        issued by that health carrier, regardless of the size of the 
        group, so long as the individual maintained continuous coverage 
        as defined in section 62L.02.  If the individual has available 
        any continuation coverage provided under sections 62A.146; 
        62A.148; 62A.17, subdivisions 1 and 2; 62A.20; 62A.21; 62C.142; 
        62D.101; or 62D.105, or continuation coverage provided under 
        federal law, the health carrier need not offer coverage under 
        this paragraph until the individual has exhausted the 
        continuation coverage.  The offer must not be subject to 
        underwriting, except as permitted under this paragraph.  A 
        health plan issued under this paragraph must be a qualified plan 
        as defined in section 62E.02 and must not contain any 
        preexisting condition limitation, preexisting condition 
        exclusion, or exclusionary rider, except for any unexpired 
        limitation or exclusion under the previous coverage.  The 
        individual health plan must cover pregnancy on the same basis as 
        any other covered illness under the individual health plan.  The 
        initial premium rate for the individual health plan must comply 
        with subdivision 3.  The premium rate upon renewal must comply 
        with subdivision 2.  In no event shall the premium rate exceed 
        90 percent of the premium charged for comparable individual 
        coverage by the Minnesota comprehensive health association, and 
        the premium rate must be less than that amount if necessary to 
        otherwise comply with this section.  An individual health plan 
        offered under this paragraph to a person satisfies the health 
        carrier's obligation to offer conversion coverage under section 
        62E.16, with respect to that person.  Coverage issued under this 
        paragraph must provide that it cannot be canceled or nonrenewed 
        as a result of the health carrier's subsequent decision to leave 
        the individual, small employer, or other group market.  Section 
        72A.20, subdivision 28, applies to this paragraph. 
           Sec. 42.  Minnesota Statutes 1998, section 62B.04, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CREDIT ACCIDENT AND HEALTH INSURANCE.] (a) The 
        total amount of periodic indemnity payable by credit accident 
        and health insurance in the event of disability, as defined in 
        the policy, 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.  If the credit transaction provides for a variable 
        rate of finance charge or interest, the initial rate or the 
        scheduled rates based on the initial index must be used in 
        determining the aggregate of the periodic scheduled unpaid 
        installments of the indebtedness. 
           (b) If for any reason a policy of credit disability 
        insurance will not or may not provide the policyholder or 
        certificate holder with coverage for the total amount of 
        indebtedness on the related loan or debt in the event of any one 
        instance of disability, the applicant must be given a written 
        disclosure on or accompanying the application.  If the 
        disclosure is on the application, it must be immediately above 
        the signature line, within a box and the word "WARNING" must be 
        in 14-point bold face capital letters.  The rest of the text 
        must be in capital letters and bold face 10-point print.  If the 
        disclosure is on a separate sheet, it must be on an 8-1/2 inch 
        by 11 inch sheet of paper with the word "WARNING" in 14-point 
        bold face capital letters with the remaining text in 10-point 
        bold faced capital letters.  If a separate disclosure is used, 
        it must be signed by the applicant with one copy provided to the 
        applicant and one copy maintained by the insurer for at least 
        the term of the policy or certificate, if coverage is issued.  
        The disclosure must state: 
           WARNING:  IF YOU BECOME DISABLED AS DEFINED IN THE 
        POLICY/CERTIFICATE, THIS DISABILITY INSURANCE POLICY/CERTIFICATE 
        MAY NOT COVER YOUR ENTIRE INDEBTEDNESS.  IF YOU BECOME DISABLED 
        AT A POINT WHERE THE NUMBER OF MONTHLY INSTALLMENT PAYMENTS 
        REMAINING EXCEEDS THE PERIOD OF COVERAGE BEING PROVIDED BY THIS 
        POLICY/CERTIFICATE, THE BENEFITS AVAILABLE WILL BE LESS THAN THE 
        AMOUNT NECESSARY TO PAY OFF YOUR LOAN.  IF YOU WANT COVERAGE FOR 
        THE FULL AMOUNT OF YOUR INDEBTEDNESS OR HAVE ANY QUESTIONS ABOUT 
        THE EXTENT OR NATURE OF YOUR COVERAGE, YOU SHOULD DISCUSS THEM 
        WITH YOUR AGENT AND/OR ENROLLER BEFORE SUBMITTING YOUR 
        APPLICATION.  
           (c) Any policy or certificate of credit disability 
        insurance which contains a critical period must make available 
        for any single instance of disability monthly indemnity benefit 
        payments for the term of the loan, 24 months, or the term of the 
        disability, whichever is less.  For the purposes of this 
        section, a critical period is when there is a limited number of 
        monthly benefit payments that may be paid to the beneficiary or 
        the policyholder or certificate holder as a result of any one 
        instance of disability.  
           (d) Unless the policy or certificate provides for such 
        coverage, nothing in this section shall be interpreted as 
        requiring an insurer to provide coverage for the final payment 
        of a balloon loan or for a period that exceeds the age 
        limitation in the policy or certificate or for amounts that 
        exceed the insurer's maximum liability limits. 
           Sec. 43.  Minnesota Statutes 1998, section 62D.12, 
        subdivision 2, is amended to read: 
           Subd. 2.  [COVERAGE CANCELLATION; NONRENEWAL.] No health 
        maintenance organization may cancel or fail to renew the 
        coverage of an enrollee except for (a) failure to pay the charge 
        for health care coverage; (b) termination of the health care 
        plan; (c) termination of the group plan; (d) enrollee moving out 
        of the area served, subject to section 62A.17, subdivisions 1 
        and 6, and section 62D.104; (e) enrollee moving out of an 
        eligible group, subject to section 62A.17, subdivisions 1 and 6, 
        and section 62D.104; (f) failure to make copayments required by 
        the health care plan; or (g) fraud or misrepresentation by the 
        enrollee with respect to eligibility for coverage or any other 
        material fact; or (h) other reasons established in rules 
        promulgated by the commissioner of health. 
           Sec. 44.  Minnesota Statutes 1998, section 62E.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION.] For the purposes of sections 
        62E.01 to 62E.16 62E.19, the terms and phrases defined in this 
        section have the meanings given them. 
           Sec. 45.  Minnesota Statutes 1998, section 62E.05, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CERTIFICATION.] Upon application by an 
        insurer, fraternal, or employer for certification of a plan of 
        health coverage as a qualified plan or a qualified Medicare 
        supplement plan for the purposes of sections 62E.01 to 62E.16 
        62E.19, the commissioner shall make a determination within 90 
        days as to whether the plan is qualified.  All plans of health 
        coverage, except Medicare supplement policies, shall be labeled 
        as "qualified" or "nonqualified" on the front of the policy or 
        contract, or on the schedule page.  All qualified plans shall 
        indicate whether they are number one, two, or three coverage 
        plans. 
           Sec. 46.  Minnesota Statutes 1998, section 62E.09, is 
        amended to read: 
           62E.09 [DUTIES OF COMMISSIONER.] 
           The commissioner may: 
           (a) Formulate general policies to advance the purposes of 
        sections 62E.01 to 62E.16 62E.19; 
           (b) Supervise the creation of the Minnesota comprehensive 
        health association within the limits described in section 
        62E.10; 
           (c) Approve the selection of the writing carrier by the 
        association, approve the association's contract with the writing 
        carrier, and approve the state plan coverage; 
           (d) Appoint advisory committees; 
           (e) Conduct periodic audits to assure the general accuracy 
        of the financial data submitted by the writing carrier and the 
        association; 
           (f) Contract with the federal government or any other unit 
        of government to ensure coordination of the state plan with 
        other governmental assistance programs; 
           (g) Undertake directly or through contracts with other 
        persons studies or demonstration programs to develop awareness 
        of the benefits of sections 62E.01 to 62E.16, so that the 
        residents of this state may best avail themselves of the health 
        care benefits provided by these sections; 
           (h) Contract with insurers and others for administrative 
        services; and 
           (i) Adopt, amend, suspend and repeal rules as reasonably 
        necessary to carry out and make effective the provisions and 
        purposes of sections 62E.01 to 62E.16 62E.19.  
           Sec. 47.  Minnesota Statutes 1998, section 62E.13, 
        subdivision 6, is amended to read: 
           Subd. 6.  [CLAIMS PAYMENTS.] All claims shall be paid by 
        the writing carrier pursuant to the provisions of sections 
        62E.01 to 62E.16 62E.19, and shall indicate that the claim was 
        paid by the state plan.  Each claim payment shall include 
        information specifying the procedure to be followed in the event 
        of a dispute over the amount of payment. 
           Sec. 48.  Minnesota Statutes 1998, section 62E.13, 
        subdivision 8, is amended to read: 
           Subd. 8.  [WRITING CARRIER AS AGENT.] The writing carrier 
        shall at all times when carrying out its duties under sections 
        62E.01 to 62E.16 62E.19 be considered an agent of the 
        association and the commissioner with civil liability subject to 
        the provisions of section 3.751. 
           Sec. 49.  Minnesota Statutes 1998, section 62E.14, 
        subdivision 2, is amended to read: 
           Subd. 2.  [WRITING CARRIER'S RESPONSE.] Within 30 days of 
        receipt of the certificate described in subdivision 1, the 
        writing carrier shall either reject the application for failing 
        to comply with the requirements in subdivision 1 or forward the 
        eligible person a notice of acceptance and billing information.  
        Insurance shall be effective immediately upon receipt of the 
        first month's state plan premium, and shall be retroactive to 
        the date of the application, if the applicant otherwise complies 
        with the requirements of sections 62E.01 to 62E.16 62E.19. 
           Sec. 50.  Minnesota Statutes 1998, section 62E.15, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ASSOCIATION'S DUTY.] The association shall 
        devise and implement means of maintaining public awareness of 
        the provisions of sections 62E.01 to 62E.17 62E.19 and shall 
        administer these sections in a manner which facilitates public 
        participation in the state plan. 
           Sec. 51.  Minnesota Statutes 1998, section 62I.07, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL ASSESSMENT.] Each member of the 
        association that is authorized to write property and casualty 
        insurance in the state shall participate in its losses and 
        expenses in the proportion that the direct written premiums of 
        the member on the kinds of insurance in that account bears to 
        the total aggregate direct written premiums written in this 
        state by all members on the kinds of insurance in that account.  
        The members' participation in the association shall be 
        determined annually on the direct written premiums written 
        during the preceding calendar year as reported on the annual 
        statements and other reports filed by the member with the 
        commissioner.  Direct written premiums mean that amount at page 
        14, column (2), lines 5 5.1, 8, 9, 17, 21.2, 22, 23, 24, 25, 26, 
        and 27 of the annual statement filed annually with the 
        department of commerce under section 60A.13. 
           Sec. 52.  Minnesota Statutes 1998, section 62L.02, 
        subdivision 24, is amended to read: 
           Subd. 24.  [QUALIFYING COVERAGE.] "Qualifying coverage" 
        means health benefits or health coverage provided under: 
           (1) a health benefit plan, as defined in this section, but 
        without regard to whether it is issued to a small employer and 
        including blanket accident and sickness insurance, other than 
        accident-only coverage, as defined in section 62A.11; 
           (2) part A or part B of Medicare; 
           (3) medical assistance under chapter 256B; 
           (4) general assistance medical care under chapter 256D; 
           (5) MCHA; 
           (6) a self-insured health plan; 
           (7) the MinnesotaCare program established under section 
        256L.02; 
           (8) a plan provided under section 43A.316, 43A.317, or 
        471.617; 
           (9) the Civilian Health and Medical Program of the 
        Uniformed Services (CHAMPUS) or other coverage provided under 
        United States Code, title 10, chapter 55; 
           (10) coverage provided by a health care network cooperative 
        under chapter 62R or by a health provider cooperative under 
        section 62R.17; 
           (11) a medical care program of the Indian Health Service or 
        of a tribal organization; 
           (12) the federal Employees Health Benefits Plan, or other 
        coverage provided under United States Code, title 5, chapter 89; 
           (13) a health benefit plan under section 5(e) of the Peace 
        Corps Act, codified as United States Code, title 22, section 
        2504(e); or 
           (14) a health plan; or 
           (14) (15) a plan similar to any of the above plans provided 
        in this state or in another state as determined by the 
        commissioner. 
           Sec. 53.  Minnesota Statutes 1998, section 62L.03, 
        subdivision 5, is amended to read: 
           Subd. 5.  [CANCELLATIONS AND FAILURES TO RENEW.] (a) No 
        health carrier shall cancel, decline to issue, or fail to renew 
        a health benefit plan as a result of the claim experience or 
        health status of the persons covered or to be covered by the 
        health benefit plan.  For purposes of this subdivision, a 
        failure to renew does not include a uniform modification of 
        coverage at time of renewal, as described in subdivision 1. 
           (b) A health carrier may cancel or fail to renew a health 
        benefit plan: 
           (1) for nonpayment of the required premium; 
           (2) for fraud or misrepresentation by the small employer 
        with respect to eligibility for coverage or any other material 
        fact; 
           (3) if the employer fails to comply with the minimum 
        contribution percentage required under subdivision 3; or 
           (4) for any other reasons or grounds expressly permitted by 
        the respective licensing laws and regulations governing a health 
        carrier, including, but not limited to, service area 
        restrictions imposed on health maintenance organizations under 
        section 62D.03, subdivision 4, paragraph (m), to the extent that 
        these grounds are not expressly inconsistent with this chapter. 
           (c) A health carrier may fail to renew a health benefit 
        plan: 
           (1) if eligible employee participation during the preceding 
        calendar year declines to less than 75 percent, subject to the 
        waiver of coverage provision in subdivision 3; 
           (2) if the health carrier ceases to do business in the 
        small employer market under section 62L.09; or 
           (3) if a failure to renew is based upon the health 
        carrier's decision to discontinue the health benefit plan form 
        previously issued to the small employer, but only if the health 
        carrier permits each small employer covered under the prior form 
        to switch to its choice of any other health benefit plan offered 
        by the health carrier, without any underwriting restrictions 
        that would not have been permitted for renewal purposes. 
           (d) A health carrier need not renew a health benefit plan, 
        and shall not renew a small employer plan, if an employer ceases 
        to qualify as a small employer as defined in section 62L.02.  If 
        a health benefit plan, other than a small employer plan, 
        provides terms of renewal that do not exclude an employer that 
        is no longer a small employer, the health benefit plan may be 
        renewed according to its own terms.  If a health carrier issues 
        or renews a health plan to an employer that is no longer a small 
        employer, without interruption of coverage, the health plan is 
        subject to section 60A.082.  
           (e) A health carrier may cancel or fail to renew the 
        coverage of an individual employee or dependent under a health 
        benefit plan for fraud or misrepresentation by the eligible 
        employee or dependent with respect to eligibility for coverage 
        or any other material fact. 
           Sec. 54.  Minnesota Statutes 1998, section 62L.05, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PLAN VARIATIONS.] (a) No health carrier shall 
        offer to a small employer a health benefit plan that differs 
        from the two small employer plans described in subdivisions 1 to 
        4, unless the health benefit plan complies with all provisions 
        of chapters 62A, 62C, 62D, 62E, 62H, 62N, 62Q, and 64B that 
        otherwise apply to the health carrier, except as expressly 
        permitted by paragraph (b). 
           (b) As an exception to paragraph (a), a health benefit plan 
        is deemed to be a small employer plan and to be in compliance 
        with paragraph (a) if it differs from one of the two small 
        employer plans described in subdivisions 1 to 4 only by 
        providing benefits in addition to those described in subdivision 
        4, provided that the health benefit plan has an actuarial value 
        that exceeds the actuarial value of the benefits described in 
        subdivision 4 by no more than two percent.  "Benefits in 
        addition" means additional units of a benefit listed in 
        subdivision 4 or one or more benefits not listed in subdivision 
        4. 
           Sec. 55.  Minnesota Statutes 1998, section 62L.14, 
        subdivision 7, is amended to read: 
           Subd. 7.  [COMPENSATION.] Public directors may be 
        reimbursed by the association for reasonable and necessary 
        expenses incurred by them in performing their duties as 
        directors, but shall not otherwise be compensated by the 
        association for their services and may be compensated by the 
        association at a rate of up to $55 per day spent on authorized 
        association activities. 
           Sec. 56.  Minnesota Statutes 1998, section 62Q.105, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ESTABLISHMENT.] Each health plan company 
        shall establish and make available to enrollees, by July 1, 1999 
        2001, an informal complaint resolution process that meets the 
        requirements of this section.  A health plan company must make 
        reasonable efforts to resolve enrollee complaints, and must 
        inform complainants in writing of the company's decision within 
        30 days of receiving the complaint.  The complaint resolution 
        process must treat the complaint and information related to it 
        as required under sections 72A.49 to 72A.505.  
           Sec. 57.  Minnesota Statutes 1998, section 62Q.185, is 
        amended to read: 
           62Q.185 [GUARANTEED RENEWABILITY; LARGE EMPLOYER GROUP 
        HEALTH COVERAGE.] 
           (a) No health plan company, as defined in section 62Q.01, 
        subdivision 4, shall refuse to renew a health benefit plan, as 
        defined in section 62L.02, subdivision 15, but issued to a large 
        employer, as defined in section 62Q.18, subdivision 1. 
           (b) This section does not require renewal if: 
           (1) the large employer has failed to pay premiums or 
        contributions as required under the terms of the health benefit 
        plan, or the health plan company has not received timely premium 
        payments unless the late payments were received within a grace 
        period provided under state law; 
           (2) the large employer has performed an act or practice 
        that constitutes fraud or misrepresentation of material fact 
        under the terms of the health benefit plan; 
           (3) the large employer has failed to comply with a material 
        plan provision relating to employer contribution or group 
        participation rules not prohibited by state law; 
           (4) the health plan company is ceasing to offer coverage in 
        the large employer market in this state in compliance with 
        United States Code, title 42, section 300gg-12(c), and 
        applicable state law; 
           (5) in the case of a health maintenance organization, there 
        is no longer any enrollee in the large employer's health benefit 
        plan who lives, resides, or works in the approved service area; 
        or 
           (6) in the case of a health benefit plan made available to 
        large employers only through one or more bona fide associations, 
        the membership of the large employer in the association ceases, 
        but only if such coverage is terminated uniformly without regard 
        to any health-related factor relating to any covered individual. 
           (c) This section does not prohibit a health plan company 
        from modifying the premium rate or from modifying the coverage 
        for purposes of renewal. 
           (d) This section does not require renewal of the coverage 
        of individual enrollees under the health benefit plan if the 
        individual enrollee has performed an act or practice that 
        constitutes fraud or misrepresentation of material fact under 
        the terms of the health benefit plan. 
           Sec. 58.  Minnesota Statutes 1998, section 62Q.30, is 
        amended to read: 
           62Q.30 [EXPEDITED FACT FINDING AND DISPUTE RESOLUTION 
        PROCESS.] 
           The commissioner shall establish an expedited fact finding 
        and dispute resolution process to assist enrollees of health 
        plan companies with contested treatment, coverage, and service 
        issues to be in effect July 1, 1999 2001.  If the disputed issue 
        relates to whether a service is appropriate and necessary, the 
        commissioner shall issue an order only after consulting with 
        appropriate experts knowledgeable, trained, and practicing in 
        the area in dispute, reviewing pertinent literature, and 
        considering the availability of satisfactory alternatives.  The 
        commissioner shall take steps including but not limited to 
        fining, suspending, or revoking the license of a health plan 
        company that is the subject of repeated orders by the 
        commissioner that suggests a pattern of inappropriate 
        underutilization. 
           Sec. 59.  Minnesota Statutes 1998, section 62S.01, 
        subdivision 14, is amended to read: 
           Subd. 14.  [LOSS OF FUNCTIONAL CAPACITY.] "Loss of 
        functional capacity" means requiring the substantial assistance 
        of another person to perform the prescribed activities of daily 
        living. 
           Sec. 60.  Minnesota Statutes 1998, section 62S.05, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PROHIBITED EXCLUSION.] A long-term care 
        insurance policy or certificate, other than a policy or 
        certificate issued to a group as defined in section 62S.01, 
        subdivision 15, clause (1), may not exclude coverage for a loss 
        or confinement that is the result of a preexisting condition 
        unless the loss or confinement begins within more than six 
        months following the effective date of coverage of an insured 
        person. 
           Sec. 61.  Minnesota Statutes 1998, section 65A.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DESIGNATION AND SCOPE.] The printed form 
        of a policy of fire insurance, as set forth in subdivisions 3 
        and 3a, shall be known and designated as the "Minnesota standard 
        fire insurance policy" to be used in the state of Minnesota.  No 
        policy or contract of fire insurance shall be made, issued or 
        delivered by any insurer including reciprocals or interinsurance 
        exchanges or any agent or representative thereof, on any 
        property in this state, unless it shall provide the specified 
        coverage and conform as to all provisions, stipulations, and 
        conditions, with such form of policy, except as provided in 
        sections 60A.08, subdivision 9; 60A.31 to 60A.351 60A.352; 
        65A.06; 65A.29; 72A.20, subdivision 17; and other statutes 
        containing specific requirements that are inconsistent with the 
        form of this policy.  Any policy or contract otherwise subject 
        to the provisions of this subdivision, subdivisions 3 and 3a 
        which includes either on an unspecified basis as to coverage or 
        for a single premium, coverage against the peril of fire and 
        coverage against other perils may be issued without 
        incorporating the exact language of the Minnesota standard fire 
        insurance policy, provided:  Such policy or contract shall, with 
        respect to the peril of fire, afford the insured all the rights 
        and benefits of the Minnesota standard fire insurance policy and 
        such additional benefits as the policy provides; the provisions 
        in relation to mortgagee interests and obligations in said 
        Minnesota standard fire insurance policy shall be incorporated 
        therein without change; such policy or contract is complete as 
        to its terms of coverage; and, the commissioner is satisfied 
        that such policy or contract complies with the provisions hereof.
           Sec. 62.  Minnesota Statutes 1998, section 65A.01, 
        subdivision 3, is amended to read: 
           Subd. 3.  [POLICY PROVISIONS.] On said policy following 
        such matter as provided in subdivisions 1 and 2, printed in the 
        English language in type of such size or sizes and arranged in 
        such manner, as is approved by the commissioner of commerce, the 
        following provisions and subject matter shall be stated in the 
        following words and in the following sequence, but with the 
        convenient placing, if desired, of such matter as will act as a 
        cover or back for such policy when folded, with the blanks below 
        indicated being left to be filled in at the time of the issuing 
        of the policy, to wit: 
           (Space for listing the amounts of insurance, rates and 
        premiums for the basic coverages provided under the standard 
        form of policy and for additional coverages or perils provided 
        under endorsements attached.  The description and location of 
        the property covered and the insurable value(s) of any 
        building(s) or structure(s) covered by the policy or its 
        attached endorsements; also in the above space may be stated 
        whether other insurance is limited and if limited the total 
        amount permitted.) 
           In consideration of the provisions and stipulations herein 
        or added hereto and of the premium above specified this company, 
        for a term of ..... from ..... (At 12:01 a.m. Standard Time) to 
        ..... (At 12:01 a.m. Standard Time) at location of property 
        involved, to an amount not exceeding the amount(s) above 
        specified does insure .....  and legal representatives 
        ........................................... 
           (In above space may be stated whether other insurance is 
        limited.) (And if limited the total amount permitted.) 
           Subject to form No.(s) ..... attached hereto. 
           This policy is made and accepted subject to the foregoing 
        provisions and stipulations and those hereinafter stated, which 
        are hereby made a part of this policy, together with such 
        provisions, stipulations and agreements as may be added hereto 
        as provided in this policy. 
           The insurance effected above is granted against all loss or 
        damage by fire originating from any cause, except as hereinafter 
        provided, also any damage by lightning and by removal from 
        premises endangered by the perils insured against in this 
        policy, to the property described hereinafter while located or 
        contained as described in this policy, or pro rata for five days 
        at each proper place to which any of the property shall 
        necessarily be removed for preservation from the perils insured 
        against in this policy, but not elsewhere.  The amount of said 
        loss or damage, except in case of total loss on buildings, to be 
        estimated according to the actual value of the insured property 
        at the time when such loss or damage happens. 
           If the insured property shall be exposed to loss or damage 
        from the perils insured against, the insured shall make all 
        reasonable exertions to save and protect same. 
           This entire policy shall be void if, whether before a loss, 
        the insured has willfully, or after a loss, the insured has 
        willfully and with intent to defraud, concealed or 
        misrepresented any material fact or circumstance concerning this 
        insurance or the subject thereof, or the interests of the 
        insured therein. 
           This policy shall not cover accounts, bills, currency, 
        deeds, evidences of debt, money or securities; nor, unless 
        specifically named hereon in writing, bullion, or manuscripts. 
           This company shall not be liable for loss by fire or other 
        perils insured against in this policy caused, directly or 
        indirectly by:  (a) enemy attack by armed forces, including 
        action taken by military, naval or air forces in resisting an 
        actual or immediately impending enemy attack; (b) invasion; (c) 
        insurrection; (d) rebellion; (e) revolution; (f) civil war; (g) 
        usurped power; (h) order of any civil authority except acts of 
        destruction at the time of and for the purpose of preventing the 
        spread of fire, providing that such fire did not originate from 
        any of the perils excluded by this policy. 
           Other insurance may be prohibited or the amount of 
        insurance may be limited by so providing in the policy or an 
        endorsement, rider or form attached thereto. 
           Unless otherwise provided in writing added hereto this 
        company shall not be liable for loss occurring: 
           (a) while the hazard is increased by any means within the 
        control or knowledge of the insured; or 
           (b) while the described premises, whether intended for 
        occupancy by owner or tenant, are vacant or unoccupied beyond a 
        period of 60 consecutive days; or 
           (c) as a result of explosion or riot, unless fire ensue, 
        and in that event for loss by fire only. 
           Any other peril to be insured against or subject of 
        insurance to be covered in this policy shall be by endorsement 
        in writing hereon or added hereto. 
           The extent of the application of insurance under this 
        policy and the contributions to be made by this company in case 
        of loss, and any other provision or agreement not inconsistent 
        with the provisions of this policy, may be provided for in 
        writing added hereto, but no provision may be waived except such 
        as by the terms of this policy is subject to change. 
           No permission affecting this insurance shall exist, or 
        waiver of any provision be valid, unless granted herein or 
        expressed in writing added hereto.  No provision, stipulation or 
        forfeiture shall be held to be waived by any requirements or 
        proceeding on the part of this company relating to appraisal or 
        to any examination provided for herein. 
           This policy shall be canceled at any time at the request of 
        the insured, in which case this company shall, upon demand and 
        surrender of this policy, refund the excess of paid premium 
        above the customary short rates for the expired time.  This 
        policy may be canceled at any time by this company by giving to 
        the insured 30 days' a written notice of cancellation with or 
        without tender of the excess of paid premium above the pro rata 
        premium for the expired time, which excess, if not tendered, 
        shall be refunded on demand.  Notice of cancellation shall state 
        that said excess premium (if not tendered) will be refunded on 
        demand. 
           If loss hereunder is made payable, in whole or in part, to 
        a designated mortgagee or contract for deed vendor not named 
        herein as insured, such interest in this policy may be canceled 
        by giving to such mortgagee or vendor a ten days' written notice 
        of cancellation. 
           Notwithstanding any other provisions of this policy, if 
        this policy shall be made payable to a mortgagee or contract for 
        deed vendor of the covered real estate, no act or default of any 
        person other than such mortgagee or vendor or the mortgagee's or 
        vendor's agent or those claiming under the mortgagee or vendor, 
        whether the same occurs before or during the term of this 
        policy, shall render this policy void as to such mortgagee or 
        vendor nor affect such mortgagee's or vendor's right to recover 
        in case of loss on such real estate; provided, that the 
        mortgagee or vendor shall on demand pay according to the 
        established scale of rates for any increase of risks not paid 
        for by the insured; and whenever this company shall be liable to 
        a mortgagee or vendor for any sum for loss under this policy for 
        which no liability exists as to the mortgagor, vendee, or owner, 
        and this company shall elect by itself, or with others, to pay 
        the mortgagee or vendor the full amount secured by such mortgage 
        or contract for deed, then the mortgagee or vendor shall assign 
        and transfer to the company the mortgagee's or vendor's 
        interest, upon such payment, in the said mortgage or contract 
        for deed together with the note and debts thereby secured. 
           This company shall not be liable for a greater proportion 
        of any loss than the amount hereby insured shall bear to the 
        whole insurance covering the property against the peril involved.
           In case of any loss under this policy the insured shall 
        give immediate written notice to this company of any loss, 
        protect the property from further damage, and a statement in 
        writing, signed and sworn to by the insured, shall within 60 
        days be rendered to the company, setting forth the value of the 
        property insured, except in case of total loss on buildings the 
        value of said buildings need not be stated, the interest of the 
        insured therein, all other insurance thereon, in detail, the 
        purposes for which and the persons by whom the building insured, 
        or containing the property insured, was used, and the time at 
        which and manner in which the fire originated, so far as known 
        to the insured. 
           The insured, as often as may be reasonably required, shall 
        exhibit to any person designated by this company all that 
        remains of any property herein described, and, after being 
        informed of the right to counsel and that any answers may be 
        used against the insured in later civil or criminal proceedings, 
        the insured shall, within a reasonable period after demand by 
        this company, submit to examinations under oath by any person 
        named by this company, and subscribe the oath.  The insured, as 
        often as may be reasonably required, shall produce for 
        examination all records and documents reasonably related to the 
        loss, or certified copies thereof if originals are lost, at a 
        reasonable time and place designated by this company or its 
        representatives, and shall permit extracts and copies thereof to 
        be made.  
           In case the insured and this company, except in case of 
        total loss on buildings, shall fail to agree as to the actual 
        cash value or the amount of loss, then, on the written demand of 
        either, each shall select a competent and disinterested 
        appraiser and notify the other of the appraiser selected within 
        20 days of such demand.  In case either fails to select an 
        appraiser within the time provided, then a presiding judge of 
        the district court of the county wherein the loss occurs may 
        appoint such appraiser for such party upon application of the 
        other party in writing by giving five days' notice thereof in 
        writing to the party failing to appoint.  The appraisers shall 
        first select a competent and disinterested umpire; and failing 
        for 15 days to agree upon such umpire, then a presiding judge of 
        the above mentioned court may appoint such an umpire upon 
        application of party in writing by giving five days' notice 
        thereof in writing to the other party.  The appraisers shall 
        then appraise the loss, stating separately actual value and loss 
        to each item; and, failing to agree, shall submit their 
        differences, only, to the umpire.  An award in writing, so 
        itemized, of any two when filed with this company shall 
        determine the amount of actual value and loss.  Each appraiser 
        shall be paid by the selecting party, or the party for whom 
        selected, and the expense of the appraisal and umpire shall be 
        paid by the parties equally. 
           It shall be optional with this company to take all of the 
        property at the agreed or appraised value, and also to repair, 
        rebuild or replace the property destroyed or damaged with other 
        of like kind and quality within a reasonable time, on giving 
        notice of its intention so to do within 30 days after the 
        receipt of the proof of loss herein required. 
           There can be no abandonment to this company of any property.
           The amount of loss for which this company may be liable 
        shall be payable 60 days after proof of loss, as herein 
        provided, is received by this company and ascertainment of the 
        loss is made either by agreement between the insured and this 
        company expressed in writing or by the filing with this company 
        of an award as herein provided.  It is moreover understood that 
        there can be no abandonment of the property insured to the 
        company, and that the company will not in any case be liable for 
        more than the sum insured, with interest thereon from the time 
        when the loss shall become payable, as above provided. 
           No suit or action on this policy for the recovery of any 
        claim shall be sustainable in any court of law or equity unless 
        all the requirements of this policy have been complied with, and 
        unless commenced within two years after inception of the loss. 
           This company is subrogated to, and may require from the 
        insured an assignment of all right of recovery against any party 
        for loss to the extent that payment therefor is made by this 
        company; and the insurer may prosecute therefor in the name of 
        the insured retaining such amount as the insurer has paid. 
           Assignment of this policy shall not be valid except with 
        the written consent of this company. 
           IN WITNESS WHEREOF, this company has executed and attested 
        these presents. 
         
         ........................         ........................
              (Signature)                     (Signature)         
         ........................         ........................
             (Name of office)                (Name of office)     
           Sec. 63.  Minnesota Statutes 1998, section 65A.01, is 
        amended by adding a subdivision to read: 
           Subd. 3c.  [TIME REQUIREMENTS.] (a) In the event of a 
        policy less than 60 days old that is not being renewed, or a 
        policy that it is being canceled for nonpayment of premium, the 
        notice must be mailed to the insured so that it is received at 
        least 20 days before the effective cancellation date.  If a 
        policy is being canceled for underwriting considerations, the 
        insured must be informed of the source from which the 
        information was received. 
           (b) In the event of a mid-term cancellation, for reasons 
        listed in subdivision 3a, or according to policy provisions, the 
        insured must receive a 30-day notice. 
           (c) In the event of a nonrenewal, a 60-day notice must be 
        sent to the insured, containing the specific underwriting or 
        other reason for the indicated actions. 
           (d) This subdivision does not apply to commercial policies 
        regulated under sections 60A.36 and 60A.37. 
           Sec. 64.  Minnesota Statutes 1998, section 65A.27, 
        subdivision 4, is amended to read: 
           Subd. 4.  "Homeowner's insurance" means insurance coverage, 
        as provided in section 60A.06, subdivision 1, clause (1)(c), 
        normally written by the insurer as a standard homeowner's 
        package policy or as a standard residential renter's package 
        policy.  This definition includes, but is not limited to, 
        policies that are generally described as homeowner's policies, 
        mobile/manufactured homeowner's policies, dwelling owner 
        policies, condominium owner policies, and tenant policies. 
           Sec. 65.  Minnesota Statutes 1998, section 65A.29, 
        subdivision 4, is amended to read: 
           Subd. 4.  [FORM REQUIREMENTS.] Any notice or statement 
        required by subdivisions 1 to 3, or any other notice canceling a 
        homeowner's insurance policy must be written in language which 
        is easily readable and understandable by a person of average 
        intelligence and understanding.  The statement of reason must be 
        sufficiently specific to convey, clearly and without further 
        inquiry, the basis for the insurer's refusal to renew or to 
        write the insurance coverage. 
           The notice or statement must also inform the insured of: 
           (1) the possibility of coverage through the Minnesota 
        property insurance placement facility under sections 65A.31 to 
        65A.42; 
           (2) the right to object to the commissioner under 
        subdivision 9; and 
           (3) the right to the return of unearned premium in 
        appropriate situations under subdivision 10. 
           Sec. 66.  Minnesota Statutes 1998, section 65B.02, 
        subdivision 2, is amended to read: 
           Subd. 2.  [QUALIFIED APPLICANT.] "Qualified applicant" 
        means a person who: 
           (1) Is a resident of this state, 
           (2) Owns a motor vehicle registered in accordance with the 
        laws of this state, or has a valid driver's license, or is 
        required to file proof of financial responsibility a certificate 
        of insurance with the commissioner of public safety in 
        accordance with the provisions of this chapter, and 
           (3) Has no unpaid premiums with respect to prior automobile 
        insurance. 
           Sec. 67.  Minnesota Statutes 1998, section 65B.44, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [INCLUSIONS.] Basic economic loss benefits 
        shall provide reimbursement for all loss suffered through injury 
        arising out of the maintenance or use of a motor vehicle, 
        subject to any applicable deductibles, exclusions, 
        disqualifications, and other conditions, and shall provide a 
        maximum minimum of $40,000 for loss arising out of the injury of 
        any one person, consisting of: 
           (a) $20,000 for medical expense loss arising out of injury 
        to any one person; and 
           (b) a total of $20,000 for income loss, replacement 
        services loss, funeral expense loss, survivor's economic loss, 
        and survivor's replacement services loss arising out of the 
        injury to any one person. 
           Sec. 68.  Minnesota Statutes 1998, section 65B.48, 
        subdivision 5, is amended to read: 
           Subd. 5.  (a) Every owner of a motorcycle registered or 
        required to be registered in this state or operated in this 
        state by the owner or with the owner's permission shall provide 
        and maintain security for the payment of tort liabilities 
        arising out of the maintenance or use of the motorcycle in this 
        state.  Security may be provided by a contract of liability 
        insurance complying with section 65B.49, subdivision 3, or by 
        qualifying as a self insurer in the manner provided in 
        subdivision 3. 
           (b) At the time an application for motorcycle insurance 
        without personal injury protection coverage is completed, there 
        must be attached to the application a separate form containing a 
        written notice in at least 10-point bold type, if printed, or in 
        capital letters, if typewritten that states: 
           "Under Minnesota law, a policy of motorcycle coverage 
           issued in the State of Minnesota must provide liability 
           coverage only, and there is no requirement that the policy 
           provide personal injury protection (PIP) coverage in the 
           case of injury sustained by the insured.  No PIP coverage 
           provided by an automobile insurance policy you may have in 
           force will extend to provide coverage in the event of a 
           motorcycle accident." 
           Sec. 69.  Minnesota Statutes 1998, section 72A.125, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COLLISION DAMAGE WAIVER.] A "collision damage 
        waiver" is a discharge of the responsibility of the renter or 
        leasee to return the motor vehicle in the same condition as when 
        it was first rented.  The waiver is a full and complete 
        discharge of the responsibility to return the vehicle in the 
        same condition as when it was first rented.  The waiver may not 
        contain any exclusions except those approved by the commissioner 
        pursuant to the requirements contained in section 61A.02, 
        subdivisions 2 to 5. 
           Sec. 70.  Minnesota Statutes 1998, section 72A.20, 
        subdivision 29, is amended to read: 
           Subd. 29.  [HIV TESTS; CRIME VICTIMS AND EMERGENCY MEDICAL 
        SERVICE PERSONNEL.] No insurer regulated under chapter 61A or, 
        62B, or 62S, or providing health, medical, hospitalization, 
        long-term care insurance, or accident and sickness insurance 
        regulated under chapter 62A, or nonprofit health services 
        service plan corporation regulated under chapter 62C, health 
        maintenance organization regulated under chapter 62D, or 
        fraternal benefit society regulated under chapter 64B, may: 
           (1) obtain or use the performance of or the results of a 
        test to determine the presence of the human immunodeficiency 
        virus (HIV) antibody performed on an offender under section 
        611A.19 or performed on a crime victim who was exposed to or had 
        contact with an offender's bodily fluids during commission of a 
        crime that was reported to law enforcement officials, in order 
        to make an underwriting decision, cancel, fail to renew, or take 
        any other action with respect to a policy, plan, certificate, or 
        contract; 
           (2) obtain or use the performance of or the results of a 
        test to determine the presence of the human immunodeficiency 
        virus (HIV) antibody performed on a patient pursuant to sections 
        144.761 to 144.7691, or performed on emergency medical services 
        personnel pursuant to the protocol under section 144.762, 
        subdivision 2, in order to make an underwriting decision, 
        cancel, fail to renew, or take any other action with respect to 
        a policy, plan, certificate, or contract; for purposes of this 
        clause, "patient" and "emergency medical services personnel" 
        have the meanings given in section 144.761; or 
           (3) ask an applicant for coverage or a person already 
        covered whether the person has:  (i) had a test performed for 
        the reason set forth in clause (1) or (2); or (ii) been the 
        victim of an assault or any other crime which involves bodily 
        contact with the offender. 
           A question that purports to require an answer that would 
        provide information regarding a test performed for the reason 
        set forth in clause (1) or (2) may be interpreted as excluding 
        this test.  An answer that does not mention the test is 
        considered to be a truthful answer for all purposes.  An 
        authorization for the release of medical records for insurance 
        purposes must specifically exclude any test performed for the 
        purpose set forth in clause (1) or (2) and must be read as 
        providing this exclusion regardless of whether the exclusion is 
        expressly stated.  This subdivision does not affect tests 
        conducted for purposes other than those described in clause (1) 
        or (2), including any test to determine the presence of the 
        human immunodeficiency virus (HIV) antibody if such test was 
        performed at the insurer's direction as part of the insurer's 
        normal underwriting requirements. 
           Sec. 71.  Minnesota Statutes 1998, section 72B.04, 
        subdivision 10, is amended to read: 
           Subd. 10.  [FEES.] A fee of $40 is imposed for each initial 
        license or temporary permit and $25 for each renewal thereof or 
        amendment thereto.  A fee of $20 is imposed for the registration 
        of each nonlicensed adjuster who is required to register under 
        section 72B.06.  All fees shall be transmitted to the 
        commissioner and shall be payable to the state 
        treasurer department of commerce.  If a fee is paid for an 
        examination and if within one year from the date of that payment 
        no written request for a refund is received by the commissioner 
        or the examination for which the fee was paid is not taken, the 
        fee is forfeited to the state of Minnesota. 
           Sec. 72.  Minnesota Statutes 1998, section 79A.01, 
        subdivision 10, is amended to read: 
           Subd. 10.  [COMMON CLAIMS FUND.] "Common claims fund," with 
        respect to group self-insurers, means the cash, cash 
        equivalents, or investment accounts maintained by the mutual 
        self-insurance group to pay its workers' compensation 
        liabilities.  
           Sec. 73.  Minnesota Statutes 1998, section 79A.01, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [DIMINUTIVE APPLICANTS.] "Diminutive applicants" 
        to group self-insurance means applicants to existing 
        self-insurance groups whose equity and premium are both less 
        than five percent of the total group's equity and premium. 
           Sec. 74.  Minnesota Statutes 1998, section 79A.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
        the commissioner, there is established a workers' compensation 
        self-insurers' advisory committee of five members that are 
        employers authorized to self-insure in Minnesota.  Three of the 
        members and three alternates shall be elected by the 
        self-insurers' security fund board of trustees and two members 
        and two alternates shall be appointed by the commissioner.  
           Sec. 75.  Minnesota Statutes 1998, section 79A.02, 
        subdivision 3, is amended to read: 
           Subd. 3.  [AUDIT OF SELF-INSURANCE APPLICATION.] (a) The 
        self-insurer's self-insurers' security fund shall may retain a 
        certified public accountant who shall to perform services for, 
        and report directly to, the commissioner of commerce.  When 
        requested by the workers' compensation self-insurers' advisory 
        committee, the certified public accountant shall review each an 
        application to self-insure, including the applicant's financial 
        data.  The certified public accountant shall provide a report to 
        the commissioner of commerce indicating whether the that 
        applicant has met the requirements of section 79A.03, 
        subdivisions 2 and 3. Additionally, the certified public 
        accountant shall provide advice and counsel to the commissioner 
        about relevant facts regarding the that applicant's financial 
        condition. 
           (b) If the report of the certified public accountant is 
        used by the commissioner as the basis for the commissioner's 
        determination regarding the applicant's self-insurance status, 
        the certified public accountant shall be made available to the 
        commissioner for any hearings or other proceedings arising from 
        that determination. 
           (c) The commissioner shall provide the advisory committee 
        with the summary report by the certified public accountant and 
        any financial data in possession of the department of commerce 
        that is otherwise available to the public.  
           The cost of the review shall be the obligation of the 
        self-insurer's security fund. 
           Sec. 76.  Minnesota Statutes 1998, section 79A.02, 
        subdivision 4, is amended to read: 
           Subd. 4.  [RECOMMENDATIONS TO COMMISSIONER REGARDING 
        REVOCATION.] After each fifth anniversary from the date each 
        individual and group self-insurer becomes certified to 
        self-insure, the committee shall review all relevant financial 
        data filed with the department of commerce that is otherwise 
        available to the public and make a recommendation to the 
        commissioner about whether each self-insurer's certificate 
        should be revoked.  For group self-insurers who have been in 
        existence for five years or more and have been granted renewal 
        authority, a level of funding in the common claims fund must be 
        maintained at not less than the greater of either:  (1) one 
        year's claim losses paid in the most recent year; or (2) 
        one-third of the security deposit posted with the department of 
        commerce according to section 79A.04, subdivision 2.  This 
        provision supersedes any requirements under section 79A.03, 
        subdivision 10, and Minnesota Rules, part 2780.5000. 
           Sec. 77.  Minnesota Statutes 1998, section 79A.03, 
        subdivision 6, is amended to read: 
           Subd. 6.  [APPLICATIONS FOR GROUP SELF-INSURANCE.] (a) Two 
        or more employers may apply to the commissioner for the 
        authority to self-insure as a group, using forms available from 
        the commissioner.  This initial application shall be accompanied 
        by a copy of the bylaws or plan of operation adopted by the 
        group.  Such bylaws or plan of operation shall conform to the 
        conditions prescribed by law or rule.  The commissioner shall 
        approve or disapprove the bylaws within 60 days unless a 
        question as to the legality of a specific bylaw or plan 
        provision has been referred to the attorney general's office.  
        The commissioner shall make a determination as to the 
        application within 15 days after receipt of the requested 
        response from the attorney general's office. 
           (b) After the initial application and the bylaws or plan of 
        operation have been approved by the commissioner or at the time 
        of the initial application, the group shall submit the names of 
        employers that will be members of the group; an indemnity 
        agreement providing for joint and several liability for all 
        group members for any and all workers' compensation claims 
        incurred by any member of the group, as set forth in Minnesota 
        Rules, part 2780.9920, signed by an officer of each member; and 
        an accounting review performed by a certified public 
        accountant.  A certified financial audit may be filed in lieu of 
        an accounting review.  
           (c) When a group has obtained its authority to self-insure, 
        additional applicants who wish to join the group must apply for 
        approval by submitting, at least 45 days before joining the 
        group:  (1) an application; (2) an indemnity agreement providing 
        for joint and several liability as set forth in Minnesota Rules, 
        part 2780.9920, signed by an officer of the applicant; and (3) a 
        certified financial audit performed by a certified public 
        accountant.  An accounting review performed by a certified 
        public accountant may be filed in lieu of a certified audit. 
           New diminutive applicants to the group, as defined in 
        section 79A.01, subdivision 11, applying for membership in 
        groups in existence longer than one year, who have a combined 
        equity of all group members in excess of 15 times the last 
        retention limit selected by the group with the workers' 
        compensation reinsurance association, and have posted 125 
        percent of the group's total estimated future liability, must 
        submit the items in this paragraph at least ten days before 
        joining the group. 
           If the cumulative total of premium added to the group by 
        diminutive new members is greater than 50 percent in a fiscal 
        year of the group, all subsequent new members' applications must 
        be submitted at least 45 days before joining the group. 
           In all cases of new membership, evidence that cash premiums 
        equal to not less than 20 percent of the current year's modified 
        premium of each applicant have been paid into a common claims 
        fund, maintained by the group in a designated depository, must 
        be filed with the department at least ten days before joining 
        the group. 
           Sec. 78.  Minnesota Statutes 1998, section 79A.03, 
        subdivision 7, is amended to read: 
           Subd. 7.  [FINANCIAL STANDARDS.] A self-insurer group 
        proposing to self-insure shall have and maintain: 
           (a) A combined net worth of all of the members of an amount 
        at least equal to the greater of ten times the retention 
        selected with the workers' compensation reinsurance association 
        or one-third of the current annual modified premium of the 
        members.  
           (b) Sufficient assets, net worth, and liquidity to promptly 
        and completely meet all obligations of its members under chapter 
        176 or this chapter.  In determining whether a group is in sound 
        financial condition, consideration shall be given to the 
        combined net worth of the member companies; the consolidated 
        long-term and short-term debt to equity ratios of the member 
        companies; any excess insurance other than reinsurance with the 
        workers' compensation reinsurance association, purchased by the 
        group from an insurer licensed in Minnesota or from an 
        authorized surplus line carrier; other financial data requested 
        by the commissioner or submitted by the group; and the combined 
        workers' compensation experience of the group for the last four 
        years. 
           Sec. 79.  Minnesota Statutes 1998, section 79A.03, 
        subdivision 9, is amended to read: 
           Subd. 9.  [FILING REPORTS.] (a) Incurred losses, paid and 
        unpaid, specifying indemnity and medical losses by 
        classification, payroll by classification, and current estimated 
        outstanding liability for workers' compensation shall be 
        reported to the commissioner by each self-insurer on a calendar 
        year basis, in a manner and on forms available from the 
        commissioner.  Payroll information must be filed by April 1 of 
        the following year, and loss information and total workers' 
        compensation liability must be filed by August 1 of the 
        following year.  
           (b) Each self-insurer shall, under oath, attest to the 
        accuracy of each report submitted pursuant to paragraph (a).  
        Upon sufficient cause, the commissioner shall require the 
        self-insurer to submit a certified audit of payroll and claim 
        records conducted by an independent auditor approved by the 
        commissioner, based on generally accepted accounting principles 
        and generally accepted auditing standards, and supported by an 
        actuarial review and opinion of the future contingent 
        liabilities.  The basis for sufficient cause shall include the 
        following factors:  where the losses reported appear 
        significantly different from similar types of businesses; where 
        major changes in the reports exist from year to year, which are 
        not solely attributable to economic factors; or where the 
        commissioner has reason to believe that the losses and payroll 
        in the report do not accurately reflect the losses and payroll 
        of that employer.  If any discrepancy is found, the commissioner 
        shall require changes in the self-insurer's or workers' 
        compensation service company record keeping practices. 
           (c) With the An annual loss status report due August 1 by 
        each self-insurer shall report to the commissioner any workers' 
        compensation claim from the previous year where the full, 
        undiscounted value is estimated to exceed $50,000, be filed in a 
        manner and on forms prescribed by the commissioner.  
           (d) Each individual self-insurer shall, within four months 
        after the end of its fiscal year, annually file with the 
        commissioner its latest 10K report required by the Securities 
        and Exchange Commission.  If an individual self-insurer does not 
        prepare a 10K report, it shall file an annual certified 
        financial statement, together with such other financial 
        information as the commissioner may require to substantiate data 
        in the financial statement.  
           (e) Each member of the group shall, within four seven 
        months after the end of each fiscal year for that group, file 
        the most recent annual financial statement, reviewed by a 
        certified public accountant in accordance with the Statements on 
        Standards for Accounting and Review Services, Volume 2, the 
        American Institute of Certified Public Accountants Professional 
        Standards, or audited in accordance with generally accepted 
        auditing standards, together with such other financial 
        information the commissioner may require.  In addition, the 
        group shall file, within four seven months after the end of each 
        fiscal year for that group, combining financial statements of 
        the group members, compiled by a certified public accountant in 
        accordance with the Statements on Standards for Accounting and 
        Review Services, Volume 2, the American Institute of Certified 
        Public Accountants Professional Standards.  The combining 
        financial statements shall include, but not be limited to, a 
        balance sheet, income statement, statement of changes in net 
        worth, and statement of cash flow.  Each combining financial 
        statement shall include a column for each individual group 
        member along with a total column.  
           Where a group has 50 or more members, the group shall file, 
        in lieu of the combining financial statements, a combined 
        financial statement showing only the total column for the entire 
        group's balance sheet, income statement, statement of changes in 
        net worth, and statement of cash flow.  Additionally, the group 
        shall disclose, for each member, the total assets, net worth, 
        revenue, and income for the most recent fiscal year.  The 
        combining and combined financial statements may omit all 
        footnote disclosures. 
           (f) In addition to the financial statements required by 
        paragraphs (d) and (e), interim financial statements or 10Q 
        reports required by the Securities and Exchange Commission may 
        be required by the commissioner upon an indication that there 
        has been deterioration in the self-insurer's financial 
        condition, including a worsening of current ratio, lessening of 
        net worth, net loss of income, the downgrading of the company's 
        bond rating, or any other significant change that may adversely 
        affect the self-insurer's ability to pay expected losses.  Any 
        self-insurer that files an 8K report with the Securities and 
        Exchange Commission shall also file a copy of the report with 
        the commissioner within 30 days of the filing with the 
        Securities and Exchange Commission. 
           Sec. 80.  Minnesota Statutes 1998, section 79A.03, 
        subdivision 10, is amended to read: 
           Subd. 10.  [ANNUAL AUDIT AND REFUNDS.] (a) The accounts and 
        records of the group self-insurer's fund shall be audited 
        annually.  Audits shall be made by certified public accountants, 
        based on generally accepted accounting principles and generally 
        accepted auditing standards, and supported by actuarial review 
        and opinion of the future contingent liabilities, in order to 
        determine the solvency of the self-insurer's fund.  All audits 
        required by this subdivision shall be filed with the 
        commissioner 90 days after the close of the fiscal year for the 
        group self-insurer.  The commissioner may require a special 
        audit to be made at other times if the financial stability of 
        the fund or the adequacy of its monetary reserves is in question.
           (b) One hundred percent of any surplus money for a fund 
        year in excess of 125 percent of the amount necessary to fulfill 
        all obligations under chapter 176 for that fund year may be 
        declared refundable to a member at any time after 18 months 
        following the end of such fund year.  There can be no more than 
        one refund in any 12-month period.  When all claims of any one 
        fund year have been fully paid, as certified by an actuary, all 
        surplus money from that fund year may be declared refundable. 
           Sec. 81.  Minnesota Statutes 1998, section 79A.03, is 
        amended by adding a subdivision to read: 
           Subd. 13.  [ANNUAL REQUIREMENTS.] The financial 
        requirements set forth in subdivisions 3, 4, 5, and 7, must be 
        met on an annual basis. 
           Sec. 82.  Minnesota Statutes 1998, section 79A.06, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PRIVATE EMPLOYERS WHO HAVE CEASED TO BE 
        SELF-INSURED.] (a) Private employers who have ceased to be 
        private self-insurers shall discharge their continuing 
        obligations to secure the payment of compensation which is 
        accrued during the period of self-insurance, for purposes of 
        Laws 1988, chapter 674, sections 1 to 21, by compliance with all 
        of the following obligations of current certificate holders: 
           (1) Filing reports with the commissioner to carry out the 
        requirements of this chapter; 
           (2) Depositing and maintaining a security deposit for 
        accrued liability for the payment of any compensation which may 
        become due, pursuant to chapter 176.  However, if a private 
        employer who has ceased to be a private self-insurer purchases 
        an insurance policy from an insurer authorized to transact 
        workers' compensation insurance in this state which provides 
        coverage of all claims for compensation arising out of injuries 
        occurring during the entire period the employer was 
        self-insured, whether or not reported during that period, the 
        policy will: 
           (i) discharge the obligation of the employer to maintain a 
        security deposit for the payment of the claims covered under the 
        policy; 
           (ii) discharge any obligation which the self-insurers' 
        security fund has or may have for payment of all claims for 
        compensation arising out of injuries occurring during the period 
        the employer was self-insured, whether or not reported during 
        that period; and 
           (iii) discharge the obligations of the employer to pay any 
        future assessments to the self-insurers' security fund.  
           A private employer who has ceased to be a private 
        self-insurer may instead buy an insurance policy described 
        above, except that it covers only a portion of the period of 
        time during which the private employer was self-insured; 
        purchase of such a policy discharges any obligation that the 
        self-insurers' security fund has or may have for payment of all 
        claims for compensation arising out of injuries occurring during 
        the period for which the policy provides coverage, whether or 
        not reported during that period.  
           The A policy described in this clause may not be issued by 
        an insurer unless it has previously been approved as to form and 
        substance by the commissioner; and 
           (3) Paying within 30 days all assessments of which notice 
        is sent by the security fund, for a period of seven years from 
        the last day its certificate of self-insurance was in effect.  
        Thereafter, the private employer who has ceased to be a private 
        self-insurer may either:  (i) continue to pay within 30 days all 
        assessments of which notice is sent by the security fund until 
        it has no incurred liabilities for the payment of compensation 
        arising out of injuries during the period of self-insurance; or 
        (ii) pay the security fund a cash payment equal to four percent 
        of the net present value of all remaining incurred liabilities 
        for the payment of compensation under sections 176.101 and 
        176.111 as certified by a member of the casualty actuarial 
        society.  Assessments shall be based on the benefits paid by the 
        employer during the calendar year immediately preceding the 
        calendar year in which the employer's right to self-insure is 
        terminated or withdrawn. 
           (b) With respect to a self-insurer who terminates its 
        self-insurance authority after April 1, 1998, that member shall 
        obtain and file with the commissioner an actuarial opinion of 
        its outstanding liabilities as determined by an associate or 
        fellow of the Casualty Actuarial Society.  The opinion must 
        separate liability for indemnity benefits from liability from 
        medical benefits, and must discount each up to four percent per 
        annum to net present value.  Within 30 days after notification 
        of approval of the actuarial opinion by the commissioner, the 
        member shall pay to the security fund an amount equal to 120 
        percent of that discounted outstanding indemnity liability, 
        multiplied by the greater of the average annualized assessment 
        rate since inception of the security fund or the annual rate at 
        the time of the most recent assessment before termination. 
           (c) A former member who terminated its self-insurance 
        authority before April 1, 1998, who has paid assessments to the 
        self-insurers' security fund for seven years, and whose 
        annualized assessment is $500 or less, may buy out of its 
        outstanding liabilities to the self-insurers' security fund by 
        an amount calculated as follows:  1.35 multiplied by the 
        indemnity case reserves at the time of the calculation, 
        multiplied by the then current self-insurers' security fund 
        annualized assessment rate. 
           (d) A former member who terminated its self-insurance 
        authority before April 1, 1998, and who is paying assessments 
        within the first seven years after ceasing to be self-insured 
        under paragraph (a), clause (3), may elect to buy out its 
        outstanding liabilities to the self-insurers' security fund by 
        obtaining and filing with the commissioner an actuarial opinion 
        of its outstanding liabilities as determined by an associate or 
        fellow of the Casualty Actuarial Society.  The opinion must 
        separate liability for indemnity benefits from liability from 
        medical benefits, and must discount each up to four percent per 
        annum to net present value.  Within 30 days after notification 
        of approval of the actuarial opinion by the commissioner, the 
        member shall pay to the security fund an amount equal to 120 
        percent of that discounted outstanding indemnity liability, 
        multiplied by the greater of the average annualized assessment 
        rate since inception of the security fund or the annual rate at 
        the time of the most recent assessment. 
           (e) A former member who has paid the security fund 
        according to paragraphs (b) to (d) and subsequently receives 
        authority from the commissioner to again self-insure shall be 
        assessed under section 79A.12, subdivision 2, only on indemnity 
        benefits paid on injuries that occurred after the former member 
        received authority to self-insure again; provided that the 
        member furnishes verified data regarding those benefits to the 
        security fund. 
           (f) In addition to proceedings to establish liabilities and 
        penalties otherwise provided, a failure to comply may be the 
        subject of a proceeding before the commissioner.  An appeal from 
        the commissioner's determination may be taken pursuant to the 
        contested case procedures of chapter 14 within 30 days of the 
        commissioner's written determination. 
           Any current or past member of the self-insurers' security 
        fund is subject to service of process on any claim arising out 
        of chapter 176 or this chapter in the manner provided by section 
        5.25, or as otherwise provided by law.  The issuance of a 
        certificate to self-insure to the private self-insured employer 
        shall be deemed to be the agreement that any process which is 
        served in accordance with this section shall be of the same 
        legal force and effect as if served personally within this state.
           Sec. 83.  Minnesota Statutes 1998, section 79A.06, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [PRIVATE EMPLOYERS WHO ARE SELF-INSURED.] Private 
        employers who are currently self-insurers may also purchase a 
        policy described in subdivision 5, paragraph (a), clause (2), of 
        this section, with the same effect as specified in that clause 
        for the period covered by the policy. 
           Sec. 84.  Minnesota Statutes 1998, section 79A.21, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REQUIRED DOCUMENTS.] All first-year applications 
        must be accompanied by the following: 
           (a) A detailed business plan including the risk profile of 
        the proposed membership, underwriting guidelines, marketing 
        plan, minimum financial criteria for each member, and financial 
        projections for the first year of operation.  
           (b) A plan describing the method in which premiums are to 
        be charged to the employer members.  The plan shall be 
        accompanied by copies of the member's workers' compensation 
        insurance policies in force at the time of application.  In 
        developing the premium for the group, the commercial 
        self-insurance group shall base its premium on the Minnesota 
        workers' compensation insurers association's manual of rules, 
        loss costs, and classifications approved for use in Minnesota by 
        the commissioner.  Each member applicant shall, on a form 
        approved by the commissioner, complete estimated payrolls for 
        the first 12-month period that the applicant will be 
        self-insured.  Premium volume discounts per the plan will be 
        permitted if they can be shown to be consistent with actuarial 
        standards.  
           (c) A schedule indicating actual or anticipated operational 
        expenses of the commercial self-insurance group.  No authority 
        to self-insure will be granted unless, over the term of the 
        policy year, at least 65 percent of total revenues from all 
        sources for the year are available for the payment of its claim 
        and assessment obligations.  For purposes of this calculation, 
        claim and assessment obligations include the cost of allocated 
        loss expenses as well as special compensation fund and 
        commercial self-insurance group security fund assessments but 
        exclude the cost of unallocated loss expenses. 
           (d) An indemnity agreement from each member who will 
        participate in the commercial self-insurance group, signed by an 
        officer of each member, providing for joint and several 
        liability for all claims and expenses of all of the members of 
        the commercial self-insurance group arising in any fund year in 
        which the member was a participant on a form approved by the 
        commissioner.  The indemnity agreement shall provide for 
        assessments according to the group's bylaws on an individual and 
        proportionate basis. 
           (e) A copy of the commercial self-insurance group bylaws. 
           (f) Evidence of the security deposit required under section 
        79A.24, accompanied by the actuarial certification study for the 
        minimum security deposit as required under section 79A.24.  
           (g) Each initial member of the commercial self-insurance 
        group shall submit to the commercial self-insurance group 
        accountant its most recent annual financial statement.  
        Financial statements for a period ending more than six months 
        prior to the date of the application must be accompanied by an 
        affidavit, signed by a company officer under oath, stating that 
        there has been no material lessening of the net worth nor other 
        adverse changes in its financial condition since the end of the 
        period.  Individual group members constituting at least 75 50 
        percent of the group's annual premium shall submit reviewed or 
        audited financial statements.  The remaining members may must 
        submit compilation level statements.  Statements for a period 
        ending more than 12 months prior to the date of application 
        cannot be accepted. 
           (h) A compiled combined financial statement of all group 
        members prepared by the commercial self-insurance group's 
        accountant and a list of members included in such 
        statements.  An "Agreed Upon Procedures" report, as determined 
        by the commissioner, indicating combined net worth, total 
        assets, cash flow, and net income of the group members may be 
        filed in lieu of the compiled combined financial statement. 
           (i) A copy of each member's accountant's report letter from 
        the reports used in compiling the combined financial statements. 
           (j) A list of all members and the percentage of premium 
        each represents to the total group's annual premium for the 
        policy year.  
           Sec. 85.  Minnesota Statutes 1998, section 79A.23, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIRED REPORTS TO COMMISSIONER.] Each 
        commercial self-insurance group shall submit the following 
        documents to the commissioner.  
           (a) An annual report shall be submitted by April 1 showing 
        the incurred losses, paid and unpaid, specifying indemnity and 
        medical losses by classification, payroll by classification, and 
        current estimated outstanding liability for workers' 
        compensation on a calendar year basis, in a manner and on forms 
        available from the commissioner.  In addition each group will 
        submit a quarterly interim loss report showing incurred losses 
        for all its membership. 
           (b) Each commercial self-insurance group shall submit 
        within 45 days of the end of each quarter:  
           (1) a schedule showing all the members who participate in 
        the group, their date of inception, and date of withdrawal, if 
        applicable; 
           (2) a separate section identifying which members were added 
        or withdrawn during that quarter; and 
           (3) an internal financial statement and copies of the 
        fiscal agent's statements supporting the balances in the common 
        claims fund. 
           (c) The commercial self-insurance group shall submit an 
        annual certified financial audit report of the commercial 
        self-insurance group fund by April 1 of the following year.  The 
        report must be accompanied by an expense schedule showing the 
        commercial self-insurance group's operational costs for the same 
        year including service company charges, accounting and actuarial 
        fees, fund administration charges, reinsurance premiums, 
        commissions, and any other costs associated with the 
        administration of the group program. 
           (d) An officer of the commercial self-insurance group 
        shall, under oath, attest to the accuracy of each report 
        submitted under paragraphs (a), (b), and (c).  Upon sufficient 
        cause, the commissioner shall require the commercial 
        self-insurance group to submit a certified audit of payroll and 
        claim records conducted by an independent auditor approved by 
        the commissioner, based on generally accepted accounting 
        principles and generally accepted auditing standards, and 
        supported by an actuarial review and opinion of the future 
        contingent liabilities.  The basis for sufficient cause shall 
        include the following factors: 
           (1) where the losses reported appear significantly 
        different from similar types of groups; 
           (2) where major changes in the reports exist from year to 
        year, which are not solely attributable to economic factors; or 
           (3) where the commissioner has reason to believe that the 
        losses and payroll in the report do not accurately reflect the 
        losses and payroll of the commercial self-insurance group.  
        If any discrepancy is found, the commissioner shall require 
        changes in the commercial self-insurance group's business plan 
        or service company recordkeeping practices. 
           (e) Each commercial self-insurance group shall submit by 
        September 15 a copy of the group's annual federal and state 
        income tax returns or provide proof that it has received an 
        exemption from these filings. 
           (f) With the annual loss report each commercial 
        self-insurance group shall report to the commissioner any 
        worker's compensation claim where the full, undiscounted value 
        is estimated to exceed $50,000, in a manner and on forms 
        prescribed by the commissioner. 
           (g) Each commercial self-insurance group shall submit by 
        May 1 a list of all members and the percentage of premium each 
        represents to the total group's premium for the previous 
        calendar year.  
           (h) Each commercial self-insurance group shall submit by 
        May 1 October 15 the following documents prepared by the group's 
        certified public accountant:  
           (1) a compiled combined financial statement of group 
        members and a list of members included in this statement;.  An 
        "Agreed Upon Procedures" report, as determined by the 
        commissioner, indicating combined net worth, total assets, cash 
        flow, and net income of the group members may be filed in lieu 
        of the compiled combined financial statement; and 
           (2) a report that the statements which were combined have 
        met the requirements of subdivision 2.  
           (i) If any group member comprises over 25 percent of total 
        group premium, that member's financial statement must be 
        reviewed or audited, and, at the commissioner's option, must be 
        filed with the department of commerce by May 1 of the following 
        year. 
           (j) Each commercial self-insurance group shall submit a 
        copy of each member's accountant's report letter from the 
        reports used in compiling the combined financial statements.  
           Sec. 86.  Minnesota Statutes 1998, section 79A.23, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REQUIRED REPORTS FROM MEMBERS TO GROUP.] Each 
        member of the commercial self-insurance group shall, by April 
        1 September 15, submit to the group its most recent annual 
        financial statement, together with other financial information 
        the group may require.  These financial statements submitted 
        must not have a fiscal year end date older than January 15 of 
        the group's calendar year end.  Individual group members 
        constituting at least 50 percent of the group's annual premium 
        shall submit to the group reviewed or audited financial 
        statements.  The remaining members may must submit compilation 
        level statements. 
           Sec. 87.  Minnesota Statutes 1998, section 256B.0644, is 
        amended to read: 
           256B.0644 [PARTICIPATION REQUIRED FOR REIMBURSEMENT UNDER 
        OTHER STATE HEALTH CARE PROGRAMS.] 
           A vendor of medical care, as defined in section 256B.02, 
        subdivision 7, and a health maintenance organization, as defined 
        in chapter 62D, must participate as a provider or contractor in 
        the medical assistance program, general assistance medical care 
        program, and MinnesotaCare as a condition of participating as a 
        provider in health insurance plans and programs or contractor 
        for state employees established under section 43A.18, the public 
        employees insurance program under section 43A.316, for health 
        insurance plans offered to local statutory or home rule charter 
        city, county, and school district employees, the workers' 
        compensation system under section 176.135, and insurance plans 
        provided through the Minnesota comprehensive health association 
        under sections 62E.01 to 62E.16 62E.19.  The limitations on 
        insurance plans offered to local government employees shall not 
        be applicable in geographic areas where provider participation 
        is limited by managed care contracts with the department of 
        human services.  For providers other than health maintenance 
        organizations, participation in the medical assistance program 
        means that (1) the provider accepts new medical assistance, 
        general assistance medical care, and MinnesotaCare patients, (2) 
        for providers other than dental services providers, at least 20 
        percent of the provider's patients are covered by medical 
        assistance, general assistance medical care, and MinnesotaCare 
        as their primary source of coverage, or (3) for dental services 
        providers, at least ten percent of the provider's patients are 
        covered by medical assistance, general assistance medical care, 
        and MinnesotaCare as their primary source of coverage.  The 
        commissioner shall establish participation requirements for 
        health maintenance organizations.  The commissioner shall 
        provide lists of participating medical assistance providers on a 
        quarterly basis to the commissioner of employee relations, the 
        commissioner of labor and industry, and the commissioner of 
        commerce.  Each of the commissioners shall develop and implement 
        procedures to exclude as participating providers in the program 
        or programs under their jurisdiction those providers who do not 
        participate in the medical assistance program.  The commissioner 
        of employee relations shall implement this section through 
        contracts with participating health and dental carriers. 
           Sec. 88.  [REPEALER.] 
           (a) Minnesota Statutes 1998, sections 60A.11, subdivision 
        24a; 60B.36; 60K.08; 65A.29, subdivision 12; and 79A.04, 
        subdivision 8, are repealed. 
           (b) Minnesota Statutes 1998, section 60B.44, subdivisions 3 
        and 5, are repealed. 
           (c) Minnesota Rules, part 2780.0500, item C, is repealed. 
           Sec. 89.  [EFFECTIVE DATES.] 
           (a) Sections 1, 3, 5 to 8, 20, 22 to 28, 31, 34, 35, 38, 
        39, 44 to 51, 54 to 56, 58 to 60, 66, 67, 69 to 87, and 88, 
        paragraph (b), are effective the day following final enactment. 
           (b) Sections 13 to 15 are effective the day following final 
        enactment and apply to plans of merger approved on or after that 
        date by the board of directors of the first of the constituent 
        corporations to grant such approval.  Merging or consolidating 
        insurance corporations may, however, elect to have the changes 
        made by sections 13 to 15 not apply to a merger or consolidation 
        arising out of a joint agreement entered into prior to January 
        1, 2000. 
           (c) Section 32 is effective July 1, 2000. 
           (d) Section 33 is effective December 1, 1999, and applies 
        to all license renewals on or after that date. 
           (e) Section 30 is effective as follows: 
           (1) The amendment to Minnesota Statutes, section 60K.03, 
        subdivision 2, paragraph (d), is effective January 1, 2000. 
           (2) The amendment to Minnesota Statutes, section 60K.03, 
        subdivision 2, paragraph (e), is effective the day following 
        final enactment. 
           Presented to the governor May 14, 1999 
           Signed by the governor May 18, 1999, 4:20 p.m.