Office of the Revisor of Statutes
Minnesota Session Laws - 1999, Regular Session
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.
Official Publication of the State of Minnesota
Revisor of Statutes