language to be deleted (2) new language
CHAPTER 117-S.F.No. 1826 An act relating to insurance; providing qualifications and procedures for the licensing of insurance producers; prescribing a criminal penalty; making conforming changes; amending Minnesota Statutes 2000, sections 13.7191, subdivision 6; 43A.317, subdivision 12; 60A.02, subdivision 7; 60A.14; 60A.171, subdivision 1; 60A.198, subdivision 3; 62A.41, subdivision 4; 62C.17, subdivision 5; 62D.22, subdivision 8; 62H.10, subdivision 4; 62L.12, subdivision 3; 62S.30; 64B.33; 65B.09, subdivision 1; 72A.07; 72A.125, subdivision 2; 72A.201, subdivision 3; 270B.07, subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 60K; repealing Minnesota Statutes 2000, sections 60K.01; 60K.02; 60K.03; 60K.04; 60K.05; 60K.06; 60K.07; 60K.081; 60K.09; 60K.10; 60K.11; 60K.12; 60K.13; 60K.14; 60K.15; 60K.16; 60K.17; 60K.18; 60K.19; 60K.20. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: ARTICLE 1 INSURANCE PRODUCERS Section 1. [60K.30] [PURPOSE AND SCOPE.] (a) Sections 60K.30 to 60K.56 govern the qualifications and procedures for the licensing of insurance producers. (b) Except as to the underlying requirement that a surplus lines agent or broker obtain an insurance producer license, this chapter does not apply to surplus lines agents or brokers licensed under sections 60A.195 to 60A.209, except as provided in sections 60K.39 and 60K.53, subdivision 2. Sec. 2. [60K.31] [DEFINITIONS.] Subdivision 1. [SCOPE.] For purposes of sections 60K.31 to 60K.57, the terms in subdivisions 2 to 18 have the meanings given them. The definitions in section 60A.02 are applicable to terms not defined in this section, unless the language or context clearly indicates that a different meaning is intended. Subd. 2. [BUSINESS ENTITY.] "Business entity" means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity. Subd. 3. [COMMISSIONER.] "Commissioner" means the commissioner of commerce. Subd. 4. [HOME STATE.] "Home state" means the District of Columbia and any state or territory of the United States in which an insurance producer maintains the producer's principal place of residence or principal place of business and is licensed to act as an insurance producer. Subd. 5. [INSURANCE.] "Insurance" means any of the lines of authority in section 60A.06. Subd. 6. [INSURANCE PRODUCER.] "Insurance producer" means a person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance. Subd. 7. [LICENSE.] "License" means a document issued by the commissioner authorizing a person to act as an insurance producer for the lines of authority specified in the document. The license itself does not create any authority, actual, apparent, or inherent, in the holder to represent or commit an insurance carrier. Subd. 8. [LIMITED LINE CREDIT INSURANCE.] "Limited line credit insurance" includes credit life, credit disability, credit property, credit unemployment, involuntary unemployment, mortgage life, mortgage guaranty, mortgage disability, guaranteed automobile protection insurance, and any other form of insurance offered in connection with an extension of credit that is limited to partially or wholly extinguishing that credit obligation that the commissioner determines should be designated a form of limited line credit insurance. Subd. 9. [LIMITED LINE CREDIT INSURANCE PRODUCER.] "Limited line credit insurance producer" means a person who sells, solicits, or negotiates one or more forms of limited line credit insurance coverage to individuals through a master, corporate, group, or individual policy. Subd. 10. [LIMITED LINES INSURANCE.] "Limited lines insurance" means those lines of insurance defined in section 60K.38, subdivision 1, paragraph (c), or any other line of insurance that the commissioner considers necessary to recognize for the purposes of complying with section 60K.39, subdivision 5. Subd. 11. [LIMITED LINES PRODUCER.] "Limited lines producer" means a person authorized by the commissioner to sell, solicit, or negotiate limited lines insurance. Subd. 12. [NEGOTIATE.] "Negotiate" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract if the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers. Subd. 13. [PERSON.] "Person" means an individual or a business entity. Subd. 14. [SELL.] "Sell" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company. Subd. 15. [SOLICIT.] "Solicit" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company. Subd. 16. [TERMINATE.] "Terminate" means the cancellation of the relationship between an insurance producer and the insurer or the termination of a producer's authority to transact insurance. Subd. 17. [UNIFORM BUSINESS ENTITY APPLICATION.] "Uniform Business Entity Application" means the current version of the Uniform Business Entity Application for resident and nonresident business entities of the National Association of Insurance Commissioners. Subd. 18. [UNIFORM APPLICATION.] "Uniform Application" means the current version of the Uniform Application for resident and nonresident producer licensing of the National Association of Insurance Commissioners. Sec. 3. [60K.32] [LICENSE REQUIRED.] A person shall not sell, solicit, or negotiate insurance in this state for any class or classes of insurance unless the person is licensed for that line of authority under sections 60K.31 to 60K.57. The license itself does not create any authority, actual, apparent, or inherent, in the holder to represent or commit an insurance carrier. Sec. 4. [60K.33] [CRIMINAL PENALTY.] A person who acts or assumes to act as an insurance producer without a license issued under this chapter is guilty of a gross misdemeanor. Sec. 5. [60K.34] [EXCEPTIONS TO LICENSING.] Subdivision 1. [LICENSE NOT REQUIRED.] Nothing in sections 60K.31 to 60K.57 requires an insurer to obtain an insurance producer license. In this section, the term "insurer" does not include an insurer's officers, directors, employees, subsidiaries, or affiliates. Subd. 2. [SPECIFIC EXCEPTIONS.] A license as an insurance producer is not required of the following: (1) a fraternal benefit society representative exempted pursuant to section 60K.35; (2) an officer, director, or employee of an insurer or of an insurance producer if the officer, director, or employee does not receive any commission on policies written or sold to insure risks residing, located, or to be performed in this state and: (i) the officer, director, or employee's activities are executive, administrative, managerial, clerical, or a combination of these, and are only indirectly related to the sale, solicitation, or negotiation of insurance; (ii) the officer, director, or employee's function relates to underwriting, loss control, inspection, or the processing, adjusting, investigating, or settling of a claim on a contract of insurance; or (iii) the officer, director, or employee is acting in the capacity of a special agent or agency supervisor assisting insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation, or negotiation of insurance; (3) a person who secures and furnishes information for the purpose of group life insurance, group property and casualty insurance, group annuities, group or blanket accident and health insurance; or for the purpose of enrolling individuals under plans; issuing certificates under plans or otherwise assisting in administering plans; or performs administrative services related to mass marketed property and casualty insurance; where no commission is paid to the person for the service; (4) an employer or association or its officers, directors, employees, or the trustees of an employee trust plan, to the extent that the employers, officers, employees, director, or trustees are engaged in the administration or operation of a program of employee benefits for the employer's or association's own employees or the employees of its subsidiaries or affiliates, which program involves the use of insurance issued by an insurer, as long as the employers, associations, officers, directors, employees, or trustees are not in any manner compensated, directly or indirectly, by the company issuing the contracts; (5) employees of insurers or organizations employed by insurers who are engaging in the inspection, rating or classification of risks, or in the supervision of the training of insurance producers and who are not individually engaged in the sale, solicitation, or negotiation of insurance; (6) a person whose activities in this state are limited to advertising without the intent to solicit insurance in this state through communications in printed publications or other forms of electronic mass media whose distribution is not limited to residents of the state, if the person does not sell, solicit, or negotiate insurance that would insure risks residing, located, or to be performed in this state; (7) a person who is not a resident of this state who sells, solicits, or negotiates a contract of insurance for commercial property and casualty risks to an insured with risks located in more than one state insured under that contract, if the person is otherwise licensed as an insurance producer to sell, solicit, or negotiate that insurance in the state where the insured maintains its principal place of business and the contract of insurance insures risks located in that state; (8) a salaried full-time employee who counsels or advises the employee's employer relative to the insurance interests of the employer or of the subsidiaries or business affiliates of the employer if the employee does not sell or solicit insurance or receive a commission; or (9) rental vehicle companies and their employees in connection with the offer of rental vehicle personal accident insurance under section 72A.125. Sec. 6. [60K.35] [FRATERNAL BENEFIT SOCIETY REPRESENTATIVES.] Representatives of fraternal benefit societies who solicit and negotiate insurance contracts are considered to be insurance producers and are subject to the licensing requirements of this chapter, provided that no insurance producer's license is required of: (1) any officer, employee, or secretary of a fraternal benefit society or of any subordinate lodge or branch who devotes substantially all of that person's time to activities other than the solicitation or negotiation of insurance contracts and who receives no commission or other compensation directly dependent upon the number or amount of contracts solicited or negotiated; or (2) any agent or representative of a fraternal benefit society who devotes, or intends to devote, less than 50 percent of that person's time to the solicitation and procurement of insurance contracts for that society. Any person who in the preceding calendar year has solicited and procured life insurance in excess of $50,000 face amount, or, in the case of any other kinds of insurance that the society may write, on the persons of more than 25 individuals, and who has received or will receive a commission or other compensation in the total amount of $1,000 or more, is presumed to be devoting, or intending to devote, 50 percent of that person's time to the solicitation or procurement of insurance contracts for that society. Sec. 7. [60K.36] [EXAMINATIONS.] Subdivision 1. [REQUIREMENT.] A resident individual applying for an insurance producer license shall pass a written examination unless exempt under subdivision 2 or section 60K.40. The examination must test the knowledge of the individual concerning the lines of authority for which the application is made, the duties and responsibilities of an insurance producer, and the insurance laws and rules of this state. Examinations required by this section must be approved by the commissioner. Subd. 2. [EXAMINATION NOT REQUIRED.] A resident individual applying for a limited lines credit insurance, title insurance, travel baggage insurance, or bail bonds license is not required to take a written examination. Subd. 3. [ADMINISTRATION.] The commissioner may make arrangements, including contracting with an outside testing service, for administering examinations. Subd. 4. [COURSE OF STUDY.] The examination must be given only after the applicant has completed a program of classroom studies in a school, which must not include a school sponsored by, offered by, or affiliated with an insurance company or its producers; except that this limitation does not preclude a bona fide professional association of insurance producers, not acting on behalf of an insurer, from offering courses. The course of study must consist of 30 hours of classroom study devoted to the basic fundamentals of insurance for those seeking a Minnesota license for the first time and 7.5 hours devoted to the line in which the producer seeks to be licensed. The program of studies or study course must have been approved by the commissioner in order to qualify under this subdivision. 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 must be waived. A certification of compliance by the organization offering the course must accompany the applicant's license application. This program of studies in a school or a study course does not apply to limited lines farm property liability applicants or to variable life and variable annuity applicants. Subd. 5. [FAILURE TO APPEAR OR PASS.] An individual who fails to appear for the examination as scheduled or fails to pass the examination shall reapply for an examination and remit all required fees and forms before being rescheduled for another examination. Subd. 6. [RESULTS; VALIDITY.] Examination results are valid for three years from the date of the examination. Sec. 8. [60K.37] [APPLICATION FOR LICENSE.] Subdivision 1. [RESIDENT INSURANCE PRODUCER.] A person is 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 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, obtains a resident license in, or claims to be a resident of, any other state or jurisdiction or if the licensee ceases to be a resident of this state. 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. Subd. 2. [INDIVIDUALS.] A person applying for a resident insurance producer license shall make application to the commissioner on the Uniform Application and declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the individual's knowledge and belief. Before approving the application, the commissioner shall find that the individual: (1) is at least 18 years of age; (2) has not committed any act that is a ground for denial, suspension, or revocation set forth in section 60K.43; (3) has completed, where required by the commissioner, a prelicensing course of study for the lines of authority for which the person has applied; (4) has paid the fees set forth in section 60K.55; and (5) has successfully passed the examinations for the lines of authority for which the person has applied. Subd. 3. [BUSINESSES.] (a) A business entity acting as an insurance producer is required to obtain an insurance producer license. Application must be made using the Uniform Business Entity Application. Before approving the application, the commissioner shall find that: (1) the business entity has paid the fees set forth in section 60K.55; and (2) the business entity has designated an individual licensed producer responsible for the business entity's compliance with the insurance laws and rules of this state. (b) A business entity insurance producer license does not grant authority to any individual officer, director, partner, member, or employee to act as an insurance producer. Subd. 4. [SERVICE OF PROCESS.] Application for a license under this chapter constitutes appointment of the commissioner as the person's agent for service of process under section 45.028. Subd. 5. [ADDITIONAL DOCUMENTATION.] The commissioner may require any documents reasonably necessary to verify the information contained in an application. Subd. 6. [LIMITED LINE CREDIT INSURANCE INSTRUCTION.] An insurer that sells, solicits, or negotiates any form of limited line credit insurance shall provide to each individual whose duties will include selling, soliciting, or negotiating limited line credit insurance a program of instruction that may be approved by the commissioner. Subd. 7. [VARIABLE LIFE AND VARIABLE ANNUITY.] A resident individual applying for a variable life and variable annuity license shall demonstrate that the applicant holds a current license as a life insurance producer. Sec. 9. [60K.38] [LICENSE.] Subdivision 1. [ISSUANCE.] (a) Unless denied a license under section 60K.43, a person who has met the requirements of sections 60K.36 and 60K.37 must be issued an insurance producer license. An insurance producer may receive qualification for a license in one or more of the lines of authority in paragraphs (b) and (c). (b) An individual insurance producer may receive qualification for a license in one or more of the following major lines: (1) life insurance: coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income; (2) accident and health or sickness insurance: coverage for sickness, bodily injury, or accidental death, and may include benefits for disability income; (3) property insurance: coverage for the direct or consequential loss or damage to property of every kind; (4) casualty insurance: coverage against legal liability, including that for death, injury, or disability, or damage to real or personal property; (5) variable life and variable annuity products insurance: coverage provided under variable life insurance contracts and variable annuities; and (6) personal lines: property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes. (c) An individual insurance producer may receive qualification for a license in one or more of the following limited lines: (1) limited line credit insurance; (2) farm property and liability insurance; (3) title insurance; (4) travel baggage insurance; (5) bail bonds; and (6) any other line of insurance permitted under state laws or rules. Subd. 2. [PERIOD OF EFFECTIVENESS.] An insurance producer license remains in effect unless revoked or suspended as long as the fee set forth in section 60K.55 is paid, continuing education requirements for resident individual producers are met, and all additional documentation required by the commissioner is provided by the renewal date. Subd. 3. [LAPSED LICENSE.] An individual insurance producer who allows the license to lapse may, within 12 months from the due date of the renewal fee, reinstate the license without the necessity of passing a written examination. However, a penalty in the amount of twice the unpaid renewal fee must be paid by the individual for any renewal fee received after the due date. Subd. 4. [WAIVERS.] A licensed insurance producer who is unable to comply with license renewal procedures due to military service or some other extenuating circumstance, such as a long-term medical disability, may request a waiver of those procedures. The producer may also request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures. Subd. 5. [CONTENTS.] The license must contain the licensee's name, address, producer license number, and the date of issuance, the lines of authority, the expiration date, and any other information the commissioner considers necessary. Subd. 6. [NAME OR ADDRESS CHANGES.] Licensees shall inform the commissioner, by any means acceptable to the commissioner, of a change of name or address within ten days of the change. Subd. 7. [ADMINISTRATIVE ASSISTANCE TO THE COMMISSIONER.] In order to assist in the performance of the commissioner's duties, the commissioner may contract with nongovernmental entities, including the National Association of Insurance Commissioners (NAIC) or any affiliates or subsidiaries that the NAIC oversees, to perform any ministerial functions, including the collection of fees, related to producer licensing that the commissioner and the nongovernmental entity consider appropriate. Sec. 10. [60K.39] [NONRESIDENT LICENSING.] Subdivision 1. [ISSUANCE.] Unless denied a license under section 62K.41, a nonresident person shall receive a nonresident producer license if: (1) the person is currently licensed as a resident and in good standing in the person's home state; (2) the person has submitted the proper request for licensure and has paid the fees required by section 60K.55; (3) the person has submitted or transmitted to the commissioner the application for licensure that the person submitted to the person's home state, or in lieu of the same, a completed Uniform Application; and (4) the person's home state awards nonresident producer licenses to residents of this state on the same basis. Subd. 2. [VERIFICATION OF LICENSING STATUS.] The commissioner may verify the producer's licensing status through the producer database maintained by the National Association of Insurance Commissioners, its affiliates, or subsidiaries. Subd. 3. [CHANGE OF ADDRESS.] A nonresident producer who moves from one state to another state or a resident producer who moves from this state to another state shall file a change of address and provide certification from the new resident state within ten days of the change of legal residence. No fee or license application is required. Subd. 4. [TERMINATION; RESIDENT LICENSE.] A nonresident producer license terminates automatically when the person's resident license is terminated for any reason. Subd. 5. [SURPLUS LINES PRODUCERS.] (a) Notwithstanding any other provision of sections 60K.31 to 60K.57, a person licensed as a surplus lines producer in the person's home state shall receive a nonresident surplus lines producer license under subdivision 1. Except as to subdivision 1, nothing in this section otherwise amends or supersedes any provision of sections 60A.195 to 60A.209. (b) No surplus lines agent or broker licensed under sections 60A.195 to 60A.209 may do business in this state unless the agent or broker has complied with the requirements set forth in section 60A.198, subdivision 3, paragraphs (b) to (d). Subd. 6. [LIMITED LINES PRODUCER.] Notwithstanding any other provision of sections 60K.31 to 60K.57, a person licensed as a limited line credit insurance or other type of limited lines producer in the person's home state shall receive a nonresident limited lines producer license, under subdivision 1, granting the same scope of authority as granted under the license issued by the producer's home state. For the purposes of this subdivision, limited line insurance is any authority granted by the home state that restricts the authority of the license to less than the total authority prescribed in the associated major lines pursuant to section 60K.38, subdivision 1, clauses (1) to (6). Sec. 11. [60K.40] [INDIVIDUALS LICENSED IN ANOTHER STATE; EXEMPTION FROM EXAMINATION.] Subdivision 1. [AVAILABILITY.] An individual who applies for an insurance producer license in this state who was previously licensed for the same lines of authority in another state is not required to complete any prelicensing education or examination. This exemption is only available if the person is currently licensed in that state or if the application is received within 90 days of the cancellation of the applicant's previous license and if the prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state or the state's Producer Database records, maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries, indicate that the producer is or was licensed in good standing for the line of authority requested. Subd. 2. [REQUIRED APPLICATION.] If a person licensed as an insurance producer in another state who moves to this state makes application within 90 days of establishing legal residence to become a resident licensee under section 60K.37, no prelicensing education or examination is required of that person to obtain any line of authority previously held in the prior state. Sec. 12. [60K.41] [ASSUMED NAMES.] An insurance producer doing business under any name other than the producer's legal name shall provide the commissioner with documentation that the assumed name has been properly filed with the secretary of state before using the assumed name. Sec. 13. [60K.42] [TEMPORARY LICENSING.] Subdivision 1. [COMMISSIONER'S AUTHORITY TO GRANT.] The commissioner may issue a temporary insurance producer license for a period not to exceed 180 days without requiring an examination if the commissioner considers the temporary license necessary for the servicing of an insurance business in the following cases: (1) to the surviving spouse or court-appointed personal representative of a licensed insurance producer who dies or becomes mentally or physically disabled to allow adequate time for the sale of the insurance business owned by the producer or for the recovery or return of the producer to the business or to provide for the training and licensing of new personnel to operate the producer's business; (2) to a member or employee of a business entity licensed as an insurance producer, upon the death or disability of an individual designated in the business entity application or the license; (3) to the designee of a licensed insurance producer entering active service in the armed forces of the United States of America; or (4) in any other circumstance where the commissioner considers that the public interest will best be served by the issuance of this license. Subd. 2. [LIMITATIONS.] The commissioner may by order limit the authority of any temporary licensee in any way considered necessary to protect insureds and the public. The commissioner may require the temporary licensee to have a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee and may impose other similar requirements designed to protect insureds and the public. The commissioner may by order revoke a temporary license if the interests of insureds or the public are endangered. A temporary license may not continue after the owner or the personal representative disposes of the business. Sec. 14. [60K.43] [LICENSE DENIAL, NONRENEWAL, OR REVOCATION.] Subdivision 1. [CAUSES.] The commissioner may, by order, restrict, censure, suspend, revoke, or refuse to issue or renew an insurance producer's license or may levy a civil penalty under section 45.027 or any combination of actions, for any one or more of the following causes: (1) providing incorrect, misleading, incomplete, or materially untrue information in the licensing application (2) violating any insurance laws, including chapter 45 or chapters 60A to 72A, or violating any regulation, subpoena, or order of the commissioner or of another state's insurance commissioner; (3) obtaining or attempting to obtain a license through misrepresentation or fraud; (4) improperly withholding, misappropriating, or converting any money or properties received in the course of doing insurance business; (5) misrepresenting the terms of an actual or proposed insurance contract or application for insurance; (6) having pled guilty, with or without explicitly admitting guilt, pled nolo contendere, or been convicted of a felony, gross misdemeanor, or misdemeanor involving moral turpitude, including, but not limited to, assault or similar conduct; (7) having admitted or been found to have committed any insurance unfair trade practice or fraud; (8) using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness, or financial irresponsibility whether or not involving the business of insurance in this state or elsewhere; (9) having an insurance producer license, or its equivalent, denied, suspended, or revoked, or having been the subject of a fine or any other discipline in any other state, province, district, or territory; (10) forging another's name to an application for insurance or to any document, whether or not related to an insurance transaction; (11) improperly using notes or any other reference material to complete an examination for an insurance license; (12) knowingly accepting insurance business from an individual who is not licensed; (13) failing to comply with an administrative or court order imposing a child support obligation; (14) failing to pay state income tax or comply with any administrative or court order directing payment of state income tax; (15) being permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the insurance business; (16) making any communication to a potential buyer that gives the impression that the producer is acting on behalf of a government agency; or (17) while performing residential mortgage activity regulated under chapter 58, violating any notification, disclosure, or recordkeeping requirement, or any standard of conduct imposed by chapter 58. Subd. 2. [HEARING RIGHTS.] (a) If the commissioner determines that the producer is in violation of this section, the commissioner may issue an order requiring a licensee to show cause why any or all of the following should not occur: (1) the revocation or suspension of the license; (2) the censuring of the licensee; or (3) the imposition of a civil penalty. The order must be calculated to give reasonable notice of the time and place for hearing on the matter and must state the reasons for the entry of the order. The commissioner may, by order, summarily suspend a license pending final determination of any order to show cause. If a license is suspended pending final determination of an order to show cause, a hearing on the merits must be held within 30 days of the issuance of the order of suspension. All hearings must be conducted in accordance with the provisions of chapter 14. After the hearing, the commissioner shall enter an order disposing of the matter as the facts require. If the licensee fails to appear at a hearing after having been duly notified of it, the licensee shall be considered in default, and the proceeding may be determined against the licensee upon consideration of the order to show cause, the allegations of which may be considered to be true. (b) In the event that the action by the commissioner is to nonrenew or to deny an application for a license, the commissioner shall notify the applicant or licensee and advise, in writing, the applicant or licensee of the reason for the denial or nonrenewal of the applicant's or licensee's license. The applicant or licensee may make written demand upon the commissioner within 30 days for a hearing to determine the reasonableness of the commissioner's action. The hearing must be held within 30 days and must be held pursuant to the contested case provisions of chapter 14. If no hearing is requested within 30 days of service of the notice of nonrenewal or denial, the nonrenewal or denial becomes final. Subd. 3. [ACTIONS AGAINST BUSINESS ENTITY.] The license of a business entity may be suspended, revoked, or refused if the commissioner finds, after hearing, that an individual licensee's violation was known or should have been known by one or more of the partners, officers, or managers acting on behalf of the partnership or corporation and the violation was not reported to the commissioner in a timely manner. Subd. 4. [FINE.] In addition to or in lieu of any applicable denial, suspension, or revocation of a license, a person may, after hearing, be subject to a civil fine according to section 45.027, subdivision 6. Subd. 5. [OTHER AUTHORITY OF THE COMMISSIONER.] If a license lapses, is surrendered, withdrawn, terminated, or otherwise becomes ineffective, the commissioner may institute a proceeding under this subdivision within two years after the license was last effective and enter a revocation or suspension order as of the last date on which the license was in effect, or impose a civil penalty as provided for in section 45.027, subdivision 6. Subd. 6. [CONDITIONS FOR RELICENSURE.] A revocation of a license prohibits the licensee from making a new application for a license for at least two years from the effective date of the revocation. Further, the commissioner shall, as a condition of reapplication, require the applicant to obtain a performance bond issued by an insurer authorized to transact business in this state in the amount of $20,000 or a greater amount the commissioner considers appropriate for the protection of citizens of this state in the event the commissioner grants the application. The bond must be filed with the commissioner, with the state of Minnesota as obligee, conditioned for the prompt payment to any aggrieved person entitled to payment of any amounts received by the licensee or to protect any aggrieved person from loss resulting from fraudulent, deceptive, dishonest, or other prohibited practices arising out of any transaction when the licensee was licensed or performed acts for which a license is required under this chapter. The bond remains operative for as long as that licensee is licensed. The bond required by this subdivision must provide coverage for all matters arising during the period of licensure. Sec. 15. [60K.44] [TAX CLEARANCE CERTIFICATE.] Subdivision 1. [REQUIREMENT FOR ISSUANCE OR RENEWAL OF LICENSE.] In addition to the provisions of section 60K.43, the commissioner may not issue or renew a license if the commissioner of revenue notifies the commissioner and the licensee or applicant for a license that the licensee or applicant owes the state delinquent taxes in the amount of $500 or more. The commissioner may issue or renew the license only if: (1) the commissioner of revenue issues a tax clearance certificate; and (2) the commissioner of revenue or the licensee or applicant forwards a copy of the clearance certificate to the commissioner. The commissioner of revenue may issue a clearance certificate only if the licensee or applicant does not owe the state any uncontested delinquent taxes. Subd. 2. [DEFINITIONS.] For purposes of this section, the following terms have the meanings given them: (1) "taxes" are all taxes payable to the commissioner of revenue, including penalties and interest due on those taxes; and (2) "delinquent taxes" do not include a tax liability if (i) an administrative or court action that contests the amount or validity of the liability has been filed or served, (ii) the appeal period to contest the tax liability has not expired, or (iii) the licensee or applicant has entered into a payment agreement to pay the liability and is current with the payments. Subd. 3. [CONTESTED CASE HEARING.] In lieu of the notice and hearing requirements of section 60K.43, when a licensee or applicant is required to obtain a clearance certificate under this section, a contested case hearing must be held if the licensee or applicant requests a hearing in writing to the commissioner of revenue within 30 days of the date of the notice provided in subdivision 1. The hearing must be held within 45 days of the date the commissioner of revenue refers the case to the office of administrative hearings. Notwithstanding any law to the contrary, the licensee or applicant must be served with 20 days' notice in writing specifying the time and place of the hearing and the allegations against the licensee or applicant. The notice may be served personally or by mail. Subd. 4. [IDENTIFICATION REQUIRED.] The commissioner shall require all licensees or applicants to provide their social security number and Minnesota business identification number on all license applications. Upon request of the commissioner of revenue, the commissioner must provide to the commissioner of revenue a list of all licensees and applicants, including the name and address, social security number, and business identification number. The commissioner of revenue may request a list of the licensees and applicants no more than once each calendar year. Sec. 16. [60K.45] [SURRENDER OF LICENSE.] The commissioner shall promptly notify the licensee and all appointing insurers, where applicable, of any suspension, revocation, or termination of the licensee's producer license by the commissioner. Upon receipt of the notice of suspension or revocation of a license, the licensee shall immediately deliver it to the commissioner. Sec. 17. [60K.46] [REQUIRED ACTS.] Subdivision 1. [PERSONAL SOLICITATION OF INSURANCE SALES.] (a) For the purpose of this section, "personal solicitation" means any contact by a producer, or any person acting on behalf of a producer, made for the purpose of selling or attempting to sell insurance, when either the producer or the person acting for the producer contacts the buyer in person, by telephone, or by electronic means, except: (1) an attempted sale in which the buyer personally knows the identity of the producer, the name of the general agency, if any, which the producer represents, and the fact that the producer is an insurance producer; (2) an attempted sale in which the prospective purchaser of insurance initiated the contact; or (3) a personal contact which takes place at the producer's place of business. (b) Before a personal solicitation, the producer or person acting for a producer shall, at the time of initial personal contact with the potential buyer, clearly and expressly disclose in writing: (1) the name of the person making the contact; (2) the name of the producer, general agency, or insurer that the person represents; and (3) the fact that the producer, agency, or insurer is in the business of selling insurance. If the initial personal contact is made by telephone, the disclosures required by this subdivision need not be made in writing. Subd. 2. [FEES FOR SERVICES.] No person shall charge a fee for any services rendered in connection with the solicitation, negotiation, or servicing of any insurance contract unless: (1) before rendering the services, a written statement is provided disclosing: (i) the services for which fees are charged; (ii) the amount of the fees; (iii) that the fees are charged in addition to premiums; and (iv) that premiums include a commission; and (2) all fees charged are reasonable in relation to the services rendered. Subd. 3. [COMMISSIONS OR COMPENSATION.] A duly licensed producer may pay commissions or assign or direct that commissions be paid to a partnership of which the producer is a member, employee, or agent, or to a corporation of which the producer is an officer, employee, or agent. Subd. 4. [SUITABILITY OF INSURANCE.] In recommending the purchase of any life, endowment, individual accident and sickness, long-term care, annuity, life-endowment, or Medicare supplement insurance to a customer, a producer must have reasonable grounds for believing that the recommendation is suitable for the customer and must make reasonable inquiries to determine suitability. The suitability of a recommended purchase of insurance will be determined by reference to the totality of the particular customer's circumstances, including, but not limited to, the customer's income, the customer's need for insurance, and the values, benefits, and costs of the customer's existing insurance program, if any, when compared to the values, benefits, and costs of the recommended policy or policies. This subdivision does not apply to limited lines insurance under section 60K.38, subdivision 1, paragraph (c). Subd. 5. [PREMIUMS.] All premiums or other money received by a producer from an insured or applicant for insurance must be promptly deposited directly in a business checking, savings, or other similar account maintained by the producer or agency, unless the money is forwarded directly to the designated insurer. Subd. 6. [PRIVACY OF INSURED.] Except as otherwise provided by law, no insurance producer may disclose or cause to be disclosed to any other person the identity of a person insured through the producer without the consent of the insured. Subd. 7. [ALTERING EXISTING POLICIES; WRITTEN BINDERS REQUIRED.] An insurance producer having express authority to bind coverage, who orally agrees on behalf of an insurer to provide insurance coverage, or to alter an existing insurance agreement, shall execute and deliver a written memorandum or binder containing the terms of the oral agreement to the insured within three business days from the time the oral agreement is entered. Sec. 18. [60K.47] [LIABILITY FOR PLACING INSURANCE IN UNAUTHORIZED COMPANY.] Any person, whether or not licensed as an insurance producer, who participates in any manner in the sale of any insurance policy or certificate, or any other contract providing benefits, for or on behalf of any company that is required to be, but that is not authorized to engage in the business of insurance in this state, other than pursuant to sections 60A.195 to 60A.209, is personally liable for all premiums, whether earned or unearned, paid by the insured, and the premiums may be recovered by the insured. In addition, that person is personally liable for any loss the insured has sustained or may sustain if the loss is one resulting from a risk or hazard covered in the issued policy, certificate, or contract, or which would have been covered if the policy, certificate, or contract had been issued to the purchaser of the insurance. Sec. 19. [60K.48] [COMMISSIONS.] Subdivision 1. [PAYMENT PROHIBITED.] An insurance company or insurance producer shall not pay a commission, service fee, brokerage, or other valuable consideration to a person for selling, soliciting, or negotiating insurance in this state if that person is required to be licensed under sections 60K.31 to 60K.57 and is not so licensed. Subd. 2. [ACCEPTANCE PROHIBITED.] A person shall not accept a commission, service fee, brokerage, or other valuable consideration for selling, soliciting, or negotiating insurance in this state if that person is required to be licensed under sections 60K.31 to 60K.57 and is not so licensed. Subd. 3. [EXCEPTIONS.] (a) Renewal or other deferred commissions may be paid to a person for selling, soliciting, or negotiating insurance in this state if the person was required to be licensed under sections 60K.31 to 60K.57 at the time of the sale, solicitation, or negotiation and was so licensed at that time. (b) An insurer or insurance producer may pay or assign commissions, service fees, brokerages, or other valuable consideration to an insurance agency or to persons who do not sell, solicit, or negotiate insurance in this state, unless the payment would constitute an illegal rebate or otherwise violate section 72A.20, subdivision 10. A duly licensed producer may pay commissions or assign or direct that commissions be paid to a partnership of which the producer is a member, employee, or agent, or to a corporation of which the agent is an officer, employee, or agent. Sec. 20. [60K.49] [APPOINTMENTS.] Subdivision 1. [AGENT OF INSURER.] A person performing acts requiring a producer license under this chapter is at all times the agent of the insurer and not the insured. Subd. 2. [REQUIREMENTS.] Except as described in subdivision 3, a licensed insurance producer shall not engage in the business of insurance with an insurer unless the producer either: (1) has been appointed by that insurer; or (2) has the permission of the insurer to transact business on its behalf and obtains an appointment from the insurer within 15 days after the first application is submitted to the insurer. Subd. 3. [EXCEPTION.] A licensed insurance producer may, in response to the needs of a customer, procure insurance in a class of insurance for which the producer is licensed from an insurer by which the producer is not appointed, if the transaction is consummated through an appointed agent of the insurer. Subd. 4. [PROCEDURE.] To appoint a producer as its agent, the appointing insurer shall file, in a format approved by the commissioner, a notice of appointment within 15 days from the date the agency contract is executed or the first insurance application is submitted. An insurer may also elect to appoint a producer to all or some insurers within the insurer's holding company system or group by the filing of a single appointment request. No insurer shall appoint a producer until the producer obtains a license under this chapter. Subd. 5. [ELIGIBILITY.] Upon receipt of the notice of appointment, the commissioner shall verify within a reasonable time not to exceed 30 days that the insurance producer is eligible for appointment. If the insurance producer is determined to be ineligible for appointment, the commissioner shall notify the insurer within five days of its determination. Subd. 6. [FEES.] An insurer shall pay an appointment fee, in the amount and method of payment set forth in section 60A.14, subdivision 1, for each insurance producer appointed by the insurer. Subd. 7. [PERIOD OF EFFECTIVENESS.] Appointments shall remain in force until voluntarily terminated by the insurer or the producer, or until the license of the producer has been terminated for any reason. An insurer may terminate the appointment at any time by notifying the commissioner and the producer under section 60K.51. If the insurer does not specify an effective date, the termination is effective on the date the notice is received by the commissioner. Within 30 days after the insurer gives notice to the commissioner, the insurer shall furnish the producer with a current statement of the producer's commission account. Sec. 21. [60K.50] [LIMITATION ON APPOINTMENTS.] No insurer or representative of an insurer shall knowingly appoint a producer who is known to the insurer or representative to have engaged in any of the activities in section 60K.43 or to be otherwise unqualified or unfit. Upon discovery by the insurer or a representative of the insurer that an appointed producer has engaged in any of the activities in section 60K.43 or is otherwise unqualified or unfit, the insurer shall immediately terminate the appointment and notify the commissioner as set forth in section 60K.51. No insurer shall employ a producer whose license has been revoked. Sec. 22. [60K.51] [NOTIFICATION TO COMMISSIONER OF TERMINATION.] Subdivision 1. [TERMINATION FOR CAUSE.] An insurer or authorized representative of the insurer that terminates the appointment, employment, contract, or other insurance business relationship with a producer shall notify the commissioner within 30 days following the effective date of the termination, using a format acceptable to the commissioner, if the reason for termination is one of the reasons set forth in section 60K.43 or the insurer has knowledge that the producer was found by a court, government body, or self-regulatory organization authorized by law to have engaged in any of the activities in section 60K.43. Upon the written request of the commissioner, the insurer shall provide additional information, documents, records, or other data pertaining to the termination or activity of the producer. Subd. 2. [TERMINATION WITHOUT CAUSE.] An insurer or authorized representative of the insurer that terminates the appointment, employment, or contract with a producer for any reason not set forth in section 60K.43 shall notify the commissioner within 30 days following the effective date of the termination, using a format acceptable to the commissioner. Upon written request of the commissioner, the insurer shall provide additional information, documents, records, or other data pertaining to the termination. Subd. 3. [ONGOING NOTIFICATION REQUIREMENT.] The insurer or the authorized representative of the insurer shall promptly notify the commissioner in a format acceptable to the commissioner if, upon further review or investigation, the insurer discovers additional information that would have been reportable to the commissioner under subdivision 1 had the insurer then known of its existence. Subd. 4. [COPY OF NOTIFICATION TO BE PROVIDED TO PRODUCER.] (a) Within 15 days after making the notification required by subdivisions 1 to 3, the insurer shall mail a copy of the notification to the producer at the producer's last known address. If the producer is terminated for cause for any of the reasons listed in section 60K.43, the insurer shall provide a copy of the notification to the producer at the producer's last known address by certified mail, return receipt requested, postage prepaid, or by overnight delivery using a nationally recognized carrier. (b) Within 30 days after the producer has received the original or additional notification, the producer may file written comments concerning the substance of the notification with the commissioner. The producer shall, by the same means, simultaneously send a copy of the comments to the reporting insurer. The comments become a part of the commissioner's file and must accompany every copy of a report distributed or disclosed for any reason about the producer as permitted under subdivision 6. Subd. 5. [IMMUNITIES.] (a) In the absence of actual malice, an insurer, the authorized representative of the insurer, a producer, the commissioner, or an organization of which the commissioner is a member and that compiles the information and makes it available to other insurance commissioners or regulatory or law enforcement agencies is not subject to civil liability, and no civil cause of action arises against these entities or their respective agents or employees, as a result of any statement or information required by or provided pursuant to this section or any information relating to any statement that may be requested in writing by the commissioner, from an insurer or producer. The immunity granted in this subdivision extends to a statement by a terminating insurer or producer to an insurer or producer limited solely and exclusively to whether a termination for cause under subdivision 1 was reported to the commissioner, provided that the propriety of any termination for cause under subdivision 1 is certified in writing by an officer or authorized representative of the insurer or producer terminating the relationship. (b) In any action brought against a person that may have immunity under paragraph (a) for making any statement required by this section or providing any information relating to any statement that may be requested by the commissioner, the party bringing the action shall plead specifically in any allegation that paragraph (a) does not apply because the person making the statement or providing the information did so with actual malice. (c) Paragraph (a) or (b) does not abrogate or modify any existing statutory or common law privileges or immunities. Subd. 6. [CLASSIFICATION OF INVESTIGATIVE DATA.] Any documents, materials, or other information in the control or possession of the department of commerce that is furnished by an insurer, producer, or an employee or agent of an insurer or producer acting on behalf of the insurer or producer, or obtained by the commissioner in an investigation pursuant to this section is classified as confidential or private data pursuant to section 13.41, subdivision 2. Sec. 23. [60K.52] [USE AND SHARING OF LICENSING AND INVESTIGATIVE DATA.] Subdivision 1. [COMMISSIONER'S AUTHORITY.] In order to assist in the performance of the commissioner's duties under sections 60K.31 to 60K.57, the commissioner: (1) may share licensing data or any active or inactive investigative data with other state, federal, and international regulatory agencies, with the National Association of Insurance Commissioners, its affiliates or subsidiaries, and with state, federal, and international law enforcement authorities if the recipient agrees to maintain the data in a manner consistent with its data classification; (2) may receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the National Association of Insurance Commissioners, its affiliates or subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and (3) may enter into agreements governing sharing and use of information consistent with this subdivision. No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information occurs as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in this subdivision. Nothing in sections 60K.31 to 60K.57 prohibits the commissioner from releasing information concerning final, adjudicated actions, including for-cause terminations, to a database or other clearinghouse service maintained by the National Association of Insurance Commissioners, its affiliates, or subsidiaries of the National Association of Insurance Commissioners. Subd. 2. [PENALTIES FOR FAILING TO REPORT.] An insurer, the authorized representative of the insurer, or a producer that fails to report as required under this section or that is found to have reported with actual malice by a court of competent jurisdiction may, after notice and hearing, have its license or certificate of authority suspended or revoked and may be fined in accordance with section 45.027. Sec. 24. [60K.53] [RECIPROCITY.] Subdivision 1. [NONRESIDENT LICENSE WAIVER.] The commissioner shall waive any requirements for a nonresident license applicant with a valid license from the applicant's home state, except the requirements imposed by section 60K.39, if the applicant's home state awards nonresident licenses to residents of this state on the same basis. Subd. 2. [CONTINUING EDUCATION REQUIREMENTS.] A nonresident producer's satisfaction of that person's home state's continuing education requirements for licensed insurance producers constitutes satisfaction of this state's continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed upon producers from this state on the same basis. Sec. 25. [60K.54] [REPORTING OF ACTIONS.] Subdivision 1. [ADMINISTRATIVE ACTIONS.] A producer shall report to the commissioner any administrative action taken against the producer in another jurisdiction or by another governmental agency in this state within 30 days of the final disposition of the matter. This report must include a copy of the order, consent to order, or other relevant legal documents. Subd. 2. [CRIMINAL PROSECUTIONS.] Within 30 days of the initial pretrial hearing date, a producer shall report to the commissioner any criminal prosecution of the producer taken in any jurisdiction. The report must include a copy of the initial complaint filed, the order resulting from the hearing, and any other relevant legal documents. In addition, a producer shall report to the commissioner within ten days any conviction, guilty plea, or plea of nolo contendere to any felony or gross misdemeanor. Sec. 26. [60K.55] [FEES.] Subdivision 1. [RENEWAL FEES.] Each producer licensed under this chapter shall pay a renewal fee as prescribed by subdivision 2. Subd. 2. [LICENSING FEES.] (a) In addition to fees provided for examinations, each insurance producer licensed under this chapter shall pay to the commissioner a fee of: (1) $40 for an initial life, accident and health, property, or casualty license issued to an individual insurance producer, and a fee of $40 for each renewal; (2) $75 for an initial variable life and variable annuity license issued to an individual insurance producer, and a fee of $50 for each renewal; (3) $80 for an initial personal lines license issued to an individual insurance producer, and a fee of $80 for each renewal; (4) $80 for an initial limited lines license issued to an individual insurance producer, and a fee of $80 for each renewal; (5) $200 for an initial license issued to a business entity, and a fee of $150 for each renewal; and (6) $500 for an initial surplus lines license, and a fee of $500 for each renewal. (b) Initial licenses issued under this chapter are valid for a period not to exceed 24 months and expire on October 31 of the renewal year assigned by the commissioner. Each renewal insurance producer license is valid for a period of 24 months. Licensees who submit renewal applications postmarked or delivered on or before October 15 of the renewal year may continue to transact business whether or not the renewal license has been received by November 1. Licensees who submit applications postmarked or delivered after October 15 of the renewal year must not transact business after the expiration date of the license until the renewal license has been received. (c) All fees are nonreturnable, except that an overpayment of any fee may be refunded upon proper application. Sec. 27. [60K.56] [CONTINUING INSURANCE EDUCATION.] Subdivision 1. [DEFINITION.] For the purposes of this section, "course" means a course, program of instruction, or seminar of continuing insurance education. A "professional designation examination" means a written, proctored, and graded examination the passage of which leads to a bona fide insurance or financial planning professional designation used by insurance producers. Subd. 2. [APPLICABILITY.] This section applies to all natural persons licensed by this state to sell lines of insurance for which licensing examinations are required. Subd. 3. [EXEMPTIONS.] This section does not apply to persons soliciting or selling solely on behalf of companies organized and operating according to chapter 67A. Subd. 4. [POWERS OF THE COMMISSIONER.] (a) The commissioner shall make the final determination as to accreditation and assignment of credit hours for courses. (b) The commissioner shall adopt procedures for reporting compliance with the minimum education requirement. (c) The commissioner shall adopt rules according to chapter 14 to carry out the purposes of this section. Subd. 5. [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 insurance producer to receive full continuing education credit for a professional designation examination, the producer must pass the examination. A producer 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. Subd. 6. [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. 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. Subd. 7. [WAIVER OF REQUIREMENTS.] (a) The commissioner may grant a waiver or an extension of time up to 90 days to complete the minimum education requirement to an individual upon a showing of good cause. It is the licensed person's responsibility to request a waiver or extension on a form prescribed by the commissioner. As of the day the licensed person properly files a request for a waiver or extension, the license remains in effect until the commissioner notifies the licensed person of the commissioner's decision. The commissioner may approve a waiver or extension subject to any reasonable conditions. The person's license remains in effect during the compliance period determined by the commissioner. If the licensed person fails to comply with any reasonable conditions imposed by the commissioner, the commissioner shall terminate the license. If the request for a waiver or extension is denied by the commissioner, the licensed person shall have 30 days within which to satisfy the minimum education requirement involved in the request for a waiver or extension. If the minimum education requirement is not satisfied within the compliance period, the commissioner shall terminate the person's license. (b) Upon application on a form prescribed by the commissioner, the commissioner may grant a waiver of the minimum education requirement to a licensee who is no longer actively engaged in the solicitation and sale of insurance. A licensed person seeking a waiver from the requirements of this section may be required to submit information to the commissioner that substantiates the person's retirement or inactive status. A licensed person receiving a waiver from the commissioner may maintain and renew a license but may not solicit or sell new insurance business while this waiver is in effect. A licensee may, for a fee, continue to service an insurance policy for which the licensee is the producer of record, if the policy is in force at the time the waiver is granted. An insurer may not terminate a service contract or refuse to pay compensation because the waiver does not allow the licensee to solicit or sell new insurance. For the purposes of receiving renewal commissions and other benefits or compensation from insurers, an agent receiving a waiver under this paragraph is considered to be the holder of a valid insurance producer license in this state. Subd. 8. [REPORTING.] (a) After completing the minimum education requirement, each person subject to this section shall file or cause to be filed a compliance report in accordance with the procedures adopted by the commissioner. The compliance report must not claim credit for continuing education not actually completed at the date of filing the report. (b) An institution offering an accredited course shall comply with the procedure for reporting compliance adopted by the commissioner. (c) If a person subject to this section completes a nonaccredited course, that person may submit a written report to the advisory committee accompanied by a fee of not more than $10 payable to the state of Minnesota for deposit in the general fund. This report must be accompanied by proof satisfactory to the commissioner that the person has completed the minimum education requirement for the annual period during which the nonaccredited course was completed. Upon the recommendation of the advisory committee that the course satisfies the criteria for course accreditation, the commissioner may approve the nonaccredited course and shall so inform the person. If the nonaccredited course is approved by the commissioner, it may be used to satisfy the minimum education requirement for the person's next annual compliance period. Subd. 9. [ENFORCEMENT.] If a person subject to this section fails to complete the minimum education or reporting requirement or to pay the prescribed fees for any licensing period, no license may be renewed or continued in force for that person for any class of insurance beginning June 1 of the year due and that person may not act as an insurance producer until the person has demonstrated to the satisfaction of the commissioner that all requirements of this section have been complied with or that a waiver or extension has been obtained. Sec. 28. [REPEALER.] Minnesota Statutes 2000, sections 60K.01; 60K.02; 60K.03; 60K.04; 60K.05; 60K.06; 60K.07; 60K.081; 60K.09; 60K.10; 60K.11; 60K.12; 60K.13; 60K.14; 60K.15; 60K.16; 60K.17; 60K.18; 60K.19; and 60K.20, are repealed. Sec. 29. [EFFECTIVE DATE.] Sections 1 to 28 are effective July 1, 2002. ARTICLE 2 CORRECTIVE, CONFORMING, AND OTHER PROVISIONS Section 1. Minnesota Statutes 2000, section 13.7191, subdivision 6, is amended to read: Subd. 6. [INSURANCE
AGENTPRODUCER LICENSING; TERMINATION.] Access to data on insurance agentproducer terminations held by the commissioner of commerce is governed by section 60K.1060K.51. Sec. 2. Minnesota Statutes 2000, section 43A.317, subdivision 12, is amended to read: Subd. 12. [STATUS OF AGENTS.] Notwithstanding sections 60K.03, subdivision 5,60K.49 and 72A.07, the program may use, and pay referral fees, commissions, or other compensation to, agents licensed as life and health agentsinsurance producers under chapter 60K or licensed under section 62C.17, regardless of whether the agents are appointed to represent the particular health carriers or community integrated service networks that provide the coverage available through the program. When acting under this subdivision, an agent is not an agent of the health carrier or community integrated service network, with respect to that transaction. Sec. 3. Minnesota Statutes 2000, section 60A.02, subdivision 7, is amended to read: Subd. 7. [INSURANCE AGENT OR INSURANCE AGENCY.] An "insurance agent" or "insurance agency" is a personan insurance producer licensed under sections 60K.30 to 60K.56 acting under express authority from, and an appointment pursuant to section 60K.02by, an insurer and on its behalf to solicit insurance, or to appoint other agentsinsurance producers to solicit insurance, or to write and countersign policies of insurance, or to collect premiums therefor within this state, or to exercise any or all these powers when so authorized by the insurer. The term "person" includes a natural person, a partnership, a corporation, or other entity, including an insurance agency. Sec. 4. Minnesota Statutes 2000, section 60A.14, is amended to read: 60A.14 [FEES.] Subdivision 1. [FEES OTHER THAN EXAMINATION FEES.] In addition to the fees and charges provided for examinations, the following fees must be paid to the commissioner for deposit in the general fund: (a) by township mutual fire insurance companies: (1) for filing certificate of incorporation $25 and amendments thereto, $10; (2) for filing annual statements, $15; (3) for each annual certificate of authority, $15; (4) for filing bylaws $25 and amendments thereto, $10. (b) by other domestic and foreign companies including fraternals and reciprocal exchanges: (1) for filing certified copy of certificate of articles of incorporation, $100; (2) for filing annual statement, $225; (3) for filing certified copy of amendment to certificate or articles of incorporation, $100; (4) for filing bylaws, $75 or amendments thereto, $75; (5) for each company's certificate of authority, $575, annually. (c) the following general fees apply: (1) for each certificate, including certified copy of certificate of authority, renewal, valuation of life policies, corporate condition or qualification, $25; (2) for each copy of paper on file in the commissioner's office 50 cents per page, and $2.50 for certifying the same; (3) for license to procure insurance in unadmitted foreign companies, $575; (4) for valuing the policies of life insurance companies, one cent per $1,000 of insurance so valued, provided that the fee shall not exceed $13,000 per year for any company. The commissioner may, in lieu of a valuation of the policies of any foreign life insurance company admitted, or applying for admission, to do business in this state, accept a certificate of valuation from the company's own actuary or from the commissioner of insurance of the state or territory in which the company is domiciled; (5) for receiving and filing certificates of policies by the company's actuary, or by the commissioner of insurance of any other state or territory, $50; (6) for each appointment of an agent filed with the commissioner, a domestic insurer shall remit $5 and all other insurers shall remit $3$10; (7) for filing forms and rates, $75 per filing; (8) for annual renewal of surplus lines insurer license, $300. The commissioner shall adopt rules to define filings that are subject to a fee. Subd. 2. [RETALIATORY PROVISIONS.] When, by the laws of any other state or nation, any fines, penalties, licenses, or fees additional to, or in excess of, those imposed by this section upon foreign insurance companies and their agents, are imposed upon insurance companies of this state or their agents doing business in such state, the same fines, penalties, licenses, and fees shall be imposed upon all insurance companies of that state and their agents doing business in this state, so long as such laws of such other state remain in force. This subdivision does not apply to agent appointment fees required under subdivision 1, clause (6). Sec. 5. Minnesota Statutes 2000, section 60A.171, subdivision 1, is amended to read: Subdivision 1. (a) After an agency contractual relationship has been in effect for a period of three years, an insurance company writing fire or casualty loss insurance in this state may not terminate the agency contractual relationship with any appointed agent unless the company has attempted to rehabilitate the agent as provided in subdivision 4. The insurer shall provide written notice of intent to rehabilitate. (b) If the agent and company are not able to reach a mutually acceptable plan of rehabilitation, the company may terminate the agency contractual relationship after providing written notice of termination to the agent at least 90 days in advance. (c) The notice of termination must include the reasons for termination and a copy of the notice of intent to rehabilitate. (d) An insurance company may not terminate an agency contract based upon any of the following: (1) an adverse loss experience for a single year; (2) the geographic location of the agent's auto and homeowners insurance business; or (3) the performance of obligations required of an insurer under Minnesota Statutes. (e) For purposes of this section, "fire or casualty loss insurance" means any line of insurance which an insurance agent with a personal lines, property, or casualty license under sections 60K.30 to 60K.56 may write in this state. Sec. 6. Minnesota Statutes 2000, section 60A.198, subdivision 3, is amended to read: Subd. 3. [PROCEDURE FOR OBTAINING LICENSE.] A person licensed as an agent in this state pursuant to other law may obtain a surplus lines license by doing the following: (a) filing an application in the form and with the information the commissioner may reasonably require to determine the ability of the applicant to act in accordance with sections 60A.195 to 60A.209; (b) maintaining an agent's license in this state; (c) agreeing to file with the commissioner of revenue all returns required by chapter 297I and paying to the commissioner of revenue all amounts required under chapter 297I; and (d) paying a fee as prescribed by section 60K.06, subdivision 2, paragraph (a), clause (4)60K.55. Sec. 7. Minnesota Statutes 2000, section 62A.41, subdivision 4, is amended to read: Subd. 4. [UNLICENSED SALES.] Notwithstanding section 60K.02, subdivision 160K.32, a person who acts or assumes to act as an insurance agentproducer without a valid license for the purpose of selling or attempting to sell Medicare supplement insurance, and the person who aids or abets the actor, is guilty of a felony and is subject to a civil penalty of not more than $5,000 per violation. Sec. 8. Minnesota Statutes 2000, section 62C.17, subdivision 5, is amended to read: Subd. 5. A person shall not be qualified for a license if upon examination or reexamination it is determined that the person is incompetent to act as an agent or solicitora producer, if the person has acted in any manner which would disqualify a person to hold a license as an insurance agent or solicitorproducer under sections 60K.01 to 60K.1860K.30 to 60K.56, or if the person fails to produce documents subpoenaed by the commissioner, or fails to appear at a hearing to which the person is a party or has been subpoenaed, if the production of documents or appearance is lawfully required. Sec. 9. Minnesota Statutes 2000, section 62D.22, subdivision 8, is amended to read: Subd. 8. [INSURANCE AGENTS.] All agents, solicitors, and brokers engaged in soliciting or dealing with enrollees or prospective enrollees of a health maintenance organization, whether employees or under contract to the health maintenance organization, shall be subject to the provisions of sections 60K.01 to 60K.1860K.30 to 60K.56, concerning the licensure of healthinsurance agents, solicitors, and brokers,producers and lawful rules thereunder. Medical doctors and others who merely explain the operation of health maintenance organizations shall be exempt from the provisions of sections 60K.01 to 60K.1860K.30 to 60K.56. Section 60K.0360K.37, subdivision 21, shall not apply except as to provide for an examination of an applicant in the applicant's knowledge concerning the operations and benefits of health maintenance organizations and related insurance matters. Sec. 10. Minnesota Statutes 2000, section 62H.10, subdivision 4, is amended to read: Subd. 4. [BROKER.] "Broker" means an agent engaged in brokerage business pursuant to section 60K.08160K.49. Sec. 11. Minnesota Statutes 2000, section 62L.12, subdivision 3, is amended to read: Subd. 3. [AGENT'S LICENSURE.] An agent licensed under chapter 60K or section 62C.17 who knowingly and willfully breaks apart a small group for the purpose of selling individual health plans to eligible employees and dependents of a small employer that meets the participation and contribution requirements of section 62L.03, subdivision 3, is guilty of an unfair trade practice and subject to disciplinary action, including the revocation or suspension of license, under section 60K.1160K.43 or 62C.17. The action must be by order and subject to the notice, hearing, and appeal procedures specified in section 60K.1160K.43. The action of the commissioner is subject to judicial review as provided under chapter 14. Sec. 12. Minnesota Statutes 2000, section 62S.30, is amended to read: 62S.30 [APPROPRIATENESS OF RECOMMENDED PURCHASE.] In recommending the purchase or replacement of a long-term care insurance policy or certificate, an agent shall comply with section 60K.1460K.46, subdivision 4. Sec. 13. Minnesota Statutes 2000, section 64B.33, is amended to read: 64B.33 [LICENSING OF AGENTS.] Agents of societies shall be licensed in accordance with the provisions of chapters 60A and 60K regulating the licensing, revocation, suspension, or termination of license of resident and nonresident agents, except as otherwise provided in section 60K.0560K.35. Sec. 14. Minnesota Statutes 2000, section 65B.09, subdivision 1, is amended to read: Subdivision 1. [AGENTS' RESPONSIBILITY.] Every person licensed under sections 60K.02 and 60K.0360K.30 to 60K.56 who is authorized to solicit, negotiate or effect automobile insurance on behalf of any member shall: (1) offer to place coverage through the facility for any qualified applicant who is ineligible or unacceptable for coverage in the insurer or insurers for whom the agent is authorized to solicit, negotiate or effect automobile insurance. Provided, that the failure of an agent to make such an offer to a qualified applicant shall not subject the agent to any liability to the applicant; (2) forward to the facility all applications and any deposit premiums which are required by the plan of operation, rules and procedures of the facility, if the qualified applicant accepts the offer to have coverage placed through the facility; (3) be entitled to receive compensation for placing insurance through the facility at the uniform rates of compensation as provided in the plan of operation, and all members shall pay such compensation. Sec. 15. Minnesota Statutes 2000, section 72A.07, is amended to read: 72A.07 [VIOLATIONS OF LAWS RELATING TO AGENTS, PENALTIES.] Any person, firm, or corporation violating, or failing to comply with, any of the provisions of sections 60K.01 to 60K.1860K.30 to 60K.56 and any person who acts in any manner in the negotiation or transaction of unlawful insurance with an insurance company not licensed to do business in the state, or who, as principal or agent, violates any provision of law relating to the negotiation or effecting of contracts of insurance, shall be guilty of a misdemeanor. Upon the filing of a complaint by the commissioner of commerce in a court of competent jurisdiction against any person violating any provisions of this section, the county attorney of the county in which the violation occurred shall prosecute the person. Upon the conviction of any agent of any violation of the provisions of sections 60K.01 to 60K.1860K.30 to 60K.56, the commissioner shall suspend the authority of the agent to transact any insurance business within the state for a period of not less than three months. Any insurer employing an agent and failing to procure an appointment, as required by sections 60K.01 to 60K.1860K.30 to 60K.56, or allowing the agent to transact business for it within the state before an appointment has been procured, shall pay the commissioner, for the use of the state, a penalty of $25 for each offense. Each sale of an insurance policy by an agent who is not appointed by an insurance company shall constitute a separate offense, but no insurer shall be required to pay more than $300 in penalties as a result of the activities of a single unappointed agent. In the event of failure to pay a penalty within ten days' after notice from the commissioner, the authority of the insurer to do business in this state shall be revoked by the commissioner until the penalty is paid. No insurer whose authority is revoked shall be readmitted until it shall have complied with all the terms and conditions imposed for admission in the first instance. Any action taken by the commissioner under this section shall be subject to review by the district court of the county in which the office of the commissioner is located. Sec. 16. Minnesota Statutes 2000, section 72A.125, subdivision 2, is amended to read: Subd. 2. [SALE BY AUTO RENTAL COMPANIES.] An auto rental company that offers or sells rental vehicle personal accident insurance, personal effects insurance, or liability insurance in this state in conjunction with the rental of a vehicle shall only sell these products if the forms and rates have met the relevant requirements of section 61A.02, 62A.02, or other relevant sections requiring approval of forms and rates taking into account the possible infrequency and severity of loss that may be incurred. An auto rental company offering insurance products for sale shall conduct a training program for its agents or employees, which must be submitted to the commissioner for approval. Sections 60K.01 to 60K.1960K.30 to 60K.56 do not apply if the persons engaged in the sale of these products are employees of the auto rental company who do not receive commissions or other remuneration for selling the product in addition to their regular compensation. Compensation may not be determined in any part by the sale of insurance products. The auto rental company before engaging in the sale of the product must file with the commissioner the following documents: (1) an appointment of the commissioner as agent for service of process; (2) an agreement that the auto rental company assumes all responsibility for the authorized actions of all unlicensed employees who sell the insurance product on its behalf in conjunction with the rental of its vehicles; (3) an agreement that the auto rental company with respect to itself and its employees will be subject to this chapter regarding the marketing of the insurance products and the conduct of those persons involved in the sale of insurance products in the same manner as if it were a licensed agent. An auto rental company failing to file the documents in clauses (1) to (3) is guilty of an individual violation as to the unlicensed sale of insurance for each sale that occurs after August 1, 1987, until they make the required filings. Each individual sale after August 1, 1987, and prior to the filing required by this section is subject to, in addition to any other penalties allowable by law, up to a $200 per violation fine. Further, the sale of the insurance product by an auto rental company or any employee or agent of the company after August 1, 1987, without having complied with this section shall be deemed to be in acceptance of the provisions of this section. Insurance sold pursuant to this subdivision must be limited in availability to rental vehicle customers though coverage may extend to the customer, other drivers, and passengers using or riding in the rented vehicles; and limited in duration to a period equal to and concurrent with that of the vehicle rental. Persons purchasing rental vehicle personal accident insurance, personal effects insurance, or liability insurance may be provided a certificate summarizing the policy provisions in lieu of a copy of the policy if a copy of the policy is available for inspection at the place of sale and a free copy of the policy may be obtained from the auto rental company's home office. The commissioner may, after a hearing, revoke an auto rental company's right to operate under this section if the company has violated the insurance laws of this state and the revocation is in the public interest. Sec. 17. Minnesota Statutes 2000, section 72A.201, subdivision 3, is amended to read: Subd. 3. [DEFINITIONS.] For the purposes of this section, the following terms have the meanings given them. (1) [ADJUSTER OR ADJUSTERS.] "Adjuster" or "adjusters" is as defined in section 72B.02. (2) [AGENT.] "Agent" means insurance agents or insurance agencies licensed pursuant to sections 60K.01 to 60K.1860K.30 to 60K.56, and representatives of these agents or agencies. (3) [CLAIM.] "Claim" means a request or demand made with an insurer for the payment of funds or the provision of services under the terms of any policy, certificate, contract of insurance, binder, or other contracts of temporary insurance. The term does not include a claim under a health insurance policy made by a participating provider with an insurer in accordance with the participating provider's service agreement with the insurer which has been filed with the commissioner of commerce prior to its use. (4) [CLAIM SETTLEMENT.] "Claim settlement" means all activities of an insurer related directly or indirectly to the determination of the extent of liabilities due or potentially due under coverages afforded by the policy, and which result in claim payment, claim acceptance, compromise, or other disposition. (5) [CLAIMANT.] "Claimant" means any individual, corporation, association, partnership, or other legal entity asserting a claim against any individual, corporation, association, partnership, or other legal entity which is insured under an insurance policy or insurance contract of an insurer. (6) [COMPLAINT.] "Complaint" means a communication primarily expressing a grievance. (7) [INSURANCE POLICY.] "Insurance policy" means any evidence of coverage issued by an insurer including all policies, contracts, certificates, riders, binders, and endorsements which provide or describe coverage. The term includes any contract issuing coverage under a self-insurance plan, group self-insurance plan, or joint self-insurance employee health plans. (8) [INSURED.] "Insured" means an individual, corporation, association, partnership, or other legal entity asserting a right to payment under their insurance policy or insurance contract arising out of the occurrence of the contingency or loss covered by the policy or contract. The term does not apply to a person who acquires rights under a mortgage. (9) [INSURER.] "Insurer" includes any individual, corporation, association, partnership, reciprocal exchange, Lloyds, fraternal benefits society, self-insurer, surplus line insurer, self-insurance administrator, and nonprofit service plans under the jurisdiction of the department of commerce. (10) [INVESTIGATION.] "Investigation" means a reasonable procedure adopted by an insurer to determine whether to accept or reject a claim. (11) [NOTIFICATION OF CLAIM.] "Notification of claim" means any communication to an insurer by a claimant or an insured which reasonably apprises the insurer of a claim brought under an insurance contract or policy issued by the insurer. Notification of claim to an agent of the insurer is notice to the insurer. (12) [PROOF OF LOSS.] "Proof of loss" means the necessary documentation required from the insured to establish entitlement to payment under a policy. (13) [SELF-INSURANCE ADMINISTRATOR.] "Self-insurance administrator" means any vendor of risk management services or entities administering self-insurance plans, licensed pursuant to section 60A.23, subdivision 8. (14) [SELF-INSURED OR SELF-INSURER.] "Self-insured" or "self-insurer" means any entity authorized pursuant to section 65B.48, subdivision 3; chapter 62H; section 176.181, subdivision 2; Laws of Minnesota 1983, chapter 290, section 171; section 471.617; or section 471.981 and includes any entity which, for a fee, employs the services of vendors of risk management services in the administration of a self-insurance plan as defined by section 60A.23, subdivision 8, clause (2), subclauses (a) and (d). Sec. 18. Minnesota Statutes 2000, section 270B.07, subdivision 1, is amended to read: Subdivision 1. [DISCLOSURE TO LICENSING AUTHORITIES.] The commissioner may disclose return information with respect to returns filed under Minnesota tax laws to licensing authorities of the state or political subdivisions of the state to the extent necessary to enforce the license clearance programs under sections 60K.1260K.44, 82.27, 147.091, 148.10, 150A.08, and 270.72. Sec. 19. [EFFECTIVE DATE.] Sections 1 to 18 are effective July 1, 2002. Presented to the governor May 14, 2001 Signed by the governor May 17, 2001, 10:24 a.m.