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Minnesota Session Laws - 2001, Regular Session
Key: (1) 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 AGENT PRODUCER LICENSING;
TERMINATION.] Access to data on insurance agent producer
terminations held by the commissioner of commerce is governed by
section 60K.10 60K.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 agents insurance 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 person an insurance
producer licensed under sections 60K.30 to 60K.56 acting under
express authority from, and an appointment pursuant to section
60K.02 by, an insurer and on its behalf to solicit insurance, or
to appoint other agents insurance 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 1 60K.32, a person who acts or assumes to
act as an insurance agent producer 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 solicitor a
producer, if the person has acted in any manner which would
disqualify a person to hold a license as an insurance agent or
solicitor producer under sections 60K.01 to 60K.18 60K.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.18 60K.30 to 60K.56, concerning the licensure
of health insurance 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.18
60K.30 to 60K.56. Section 60K.03 60K.37, subdivision 2 1,
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.081 60K.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.11 60K.43
or 62C.17. The action must be by order and subject to the
notice, hearing, and appeal procedures specified in
section 60K.11 60K.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.14 60K.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.05 60K.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.03 60K.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.18
60K.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.18 60K.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.18 60K.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.19 60K.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.18 60K.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.12 60K.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.
Official Publication of the State of Minnesota
Revisor of Statutes