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Office of the Revisor of Statutes

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

                            CHAPTER 142-S.F.No. 1964 
                  An act relating to insurance; regulating the life and 
                  health guaranty association; modifying coverages; 
                  assessments; rights and duties; amending Minnesota 
                  Statutes 2000, sections 61B.19, subdivisions 2, 3, 4, 
                  5; 61B.20, subdivisions 1, 14, 15, 16, 17, 18, by 
                  adding subdivisions; 61B.22, subdivision 3; 61B.23, 
                  subdivisions 3, 4, 11, 12, 13, by adding subdivisions; 
                  61B.24, subdivisions 4, 5, by adding subdivisions; 
                  61B.26; 61B.27; 61B.28, subdivisions 1, 3, by adding a 
                  subdivision; 61B.29. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2000, section 61B.19, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SCOPE.] (a) Sections 61B.18 to 61B.32 provide 
        coverage for the policies and contracts specified in paragraph 
        (b) to: 
           (1) persons who are owners of or certificate holders under 
        these policies or contracts, or, (i) in the case of unallocated 
        annuity contracts, to the persons who are the contract holders 
        or participants in a covered retirement plan, or (ii) in the 
        case of structured settlement annuities, to persons who are 
        payees in respect of their liability claims (or beneficiaries of 
        such payees who are deceased) and who: 
           (i) (A) are residents; or 
           (ii) (B) are not residents, but only under all of the 
        following conditions:  the insurers that issued the policies or 
        contracts are domiciled in the state of Minnesota; those 
        insurers never held a license or certificate of authority in the 
        states in which those persons reside; those states have 
        associations similar to the association created by sections 
        61B.18 to 61B.32; and those persons are not eligible for 
        coverage by those associations; and 
           (2) persons who, regardless of where they reside, except 
        for nonresident certificate holders under group policies or 
        contracts, are the beneficiaries, assignees, or payees of the 
        persons covered under clause (1). 
           (b) Sections 61B.18 to 61B.32 provide coverage to the 
        persons specified in paragraph (a) for direct, nongroup life, 
        health, annuity, and supplemental policies or contracts, for 
        subscriber contracts issued by a nonprofit health service plan 
        corporation operating under chapter 62C, for certificates under 
        direct group policies and contracts, and for unallocated annuity 
        contracts issued by member insurers, except as limited by 
        sections 61B.18 to 61B.32.  Except as expressly excluded under 
        subdivision 3, annuity contracts and certificates under group 
        annuity contracts include, but are not limited to, guaranteed 
        investment contracts, deposit administration contracts, 
        unallocated funding agreements, allocated funding agreements, 
        structured settlement agreements, lottery contracts, annuities, 
        annuities issued to or in connection with government lotteries, 
        and any immediate or deferred annuity contracts.  Covered 
        unallocated annuity contracts include those that fund a 
        qualified defined contribution retirement plan under sections 
        401, 403(b), and 457 of the Internal Revenue Code of 1986, as 
        amended through December 31, 1992. 
           Sec. 2.  Minnesota Statutes 2000, section 61B.19, 
        subdivision 3, is amended to read: 
           Subd. 3.  [LIMITATION OF COVERAGE.] Sections 61B.18 to 
        61B.32 do not provide coverage for: 
           (1) a portion of a policy or contract not guaranteed by the 
        insurer, or under which the investment risk is borne by the 
        policy or contract holder; 
           (2) a policy or contract of reinsurance, unless assumption 
        certificates have been issued and the insured has consented to 
        the assumption as provided under section 60A.09, subdivision 4a; 
           (3) a policy or contract issued by an assessment benefit 
        association operating under section 61A.39, or a fraternal 
        benefit society operating under chapter 64B; 
           (4) any obligation to nonresident participants of a covered 
        retirement plan or to the plan sponsor, employer, trustee, or 
        other party who owns the contract; in these cases, the 
        association is obligated under this chapter only to participants 
        in a covered plan who are residents of the state of Minnesota on 
        the date of impairment or insolvency; 
           (5) an annuity contract issued in connection with and for 
        the purpose of funding a structured settlement of a liability 
        claim, a structured settlement annuity in situations where the a 
        liability insurer remains liable to the payee; 
           (6) a portion of an unallocated annuity contract which is 
        not issued to or in connection with a specific employee, union, 
        or association of natural persons benefit plan or a governmental 
        lottery, including but not limited to, a contract issued to, or 
        purchased at the direction of, any governmental bonding 
        authority, such as a municipal guaranteed investment contract; 
           (7) a portion of a policy or contract issued to a plan or 
        program of an employer, association, or similar entity to 
        provide life, health, or annuity benefits to its employees or 
        members to the extent that the plan or program is self-funded or 
        uninsured, including benefits payable by an employer, 
        association, or similar entity under: 
           (i) a multiple employer welfare arrangement as defined in 
        the Employee Retirement Income Security Act of 1974, United 
        States Code, title 29, section 1002(40)(A), as amended; 
           (ii) a minimum premium group insurance plan; 
           (iii) a stop-loss group insurance plan; or 
           (iv) an administrative services only contract; 
           (8) any policy or contract issued by an insurer at a time 
        when it was not licensed or did not have a certificate of 
        authority to issue the policy or contract in this state; 
           (9) an unallocated annuity contract issued to an employee 
        or in connection with a benefit plan protected under the federal 
        Pension Benefit Guaranty Corporation, regardless of whether the 
        federal Pension Benefit Guaranty Corporation has yet become 
        liable to make any payments with respect to the benefit plan; 
           (10) a portion of a policy or contract to the extent that 
        it provides for (i) dividends or experience rating credits 
        except to the extent the dividends or experience rating credits 
        have actually become due and payable or have been credited to 
        the policy or contract before the date of impairment or 
        insolvency, (ii) voting rights, or provides that a fee or 
        allowance be paid to a (iii) payment of any fees or allowances 
        to any person, including the policy or contract holder, in 
        connection with the service to, or administration of, the policy 
        or contract; and 
           (11) a contractual agreement that establishes the member 
        insurer's obligations to provide a book value accounting 
        guaranty for defined contribution benefit plan participants by 
        reference to a portfolio of assets that is owned by the benefit 
        plan or its trustee, which in each case is not an affiliate of 
        the member insurer.; 
           (12) a portion of a policy or contract to the extent that 
        the rate of interest on which it is based, or the interest rate, 
        crediting rate, or similar factor determined by use of an index 
        or other external reference stated in the policy or contract, 
        employed in calculating returns or changes in value: 
           (i) averaged over the period of four years prior to the 
        date on which the member insurer becomes an impaired or 
        insolvent insurer under sections 61B.18 to 61B.32, whichever is 
        earlier, exceeds the rate of interest determined by subtracting 
        two percentage points from Moody's Corporate Bond Yield Average 
        averaged for that same four-year period or for the lesser period 
        if the policy or contract was issued less than four years before 
        the member insurer becomes an impaired or insolvent insurer 
        under sections 61B.18 to 61B.32, whichever is earlier; and 
           (ii) on and after the date on which the member insurer 
        becomes an impaired or insolvent insurer under this chapter, 
        whichever is earlier, exceeds the rate of interest determined by 
        subtracting three percentage points from Moody's Corporate Bond 
        Yield Average as most recently available; 
           (13) a portion of a policy or contract to the extent it 
        provides for interest or other changes in value to be determined 
        by the use of an index or other external reference stated in the 
        policy or contract, but which have not been credited to the 
        policy or contract, or as to which the policy or contract 
        owner's rights are subject to forfeiture, as of the date the 
        member insurer becomes an impaired or insolvent insurer under 
        sections 61B.18 to 61B.32, whichever is earlier.  If a policy's 
        or contract's interest or changes in value are credited less 
        frequently than annually, then for purposes of determining the 
        values that have been credited and not subject to forfeiture 
        under this clause, the interest or changes in value determined 
        by using the procedures defined in the policy or contract will 
        be credited as if the contractual date of crediting interest or 
        changing values was the date of impairment or insolvency, 
        whichever is earlier, and will not be subject to forfeiture; and 
           (14) a portion of a policy or contract to the extent that 
        the assessments required by section 61B.24 with respect to the 
        policy or contract are preempted by federal or state law.  
           Sec. 3.  Minnesota Statutes 2000, section 61B.19, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LIMITATION OF BENEFITS.] The benefits for which 
        the association may become liable shall in no event exceed the 
        lesser of: 
           (1) the contractual obligations for which the insurer is 
        liable or would have been liable if it were not an impaired or 
        insolvent insurer; or 
           (2) subject to the limitation in clause (4) (5), with 
        respect to any one life, regardless of the number of policies or 
        contracts: 
           (i) $300,000 in life insurance death benefits, but not more 
        than $100,000 in net cash surrender and net cash withdrawal 
        values for life insurance; 
           (ii) $300,000 in health insurance benefits, including any 
        net cash surrender and net cash withdrawal values; 
           (iii) $100,000 in annuity net cash surrender and net cash 
        withdrawal values; 
           (iv) $300,000 in present value of annuity benefits for 
        structured settlement annuities which are part of a structured 
        settlement or for annuities in regard to which periodic annuity 
        benefits, for a period of not less than the annuitant's lifetime 
        or for a period certain of not less than ten years, have begun 
        to be paid, on or before the date of impairment or insolvency; 
        or 
           (3) subject to the limitations in clauses (5) and (6), with 
        respect to each individual resident participating in a 
        retirement plan, except a defined benefit plan, established 
        under section 401, 403(b), or 457 of the Internal Revenue Code 
        of 1986, as amended through December 31, 1992, covered by an 
        unallocated annuity contract, or the beneficiaries of each such 
        individual if deceased, in the aggregate, $100,000 in net cash 
        surrender and net cash withdrawal values; 
           (4) where no coverage limit has been specified for a 
        covered policy or benefit, the coverage limit shall be $300,000 
        in present value; 
           (5) in no event shall the association be liable to expend 
        more than $300,000 in the aggregate with respect to any one life 
        under clause (2), items (i), (ii), (iii), (iv), and clause (4), 
        and any one individual under clause (3); 
           (6) in no event shall the association be liable to expend 
        more than $7,500,000 with respect to all unallocated annuities 
        of a retirement plan, except a defined benefit plan, established 
        under section 401, 403(b), or 457 of the Internal Revenue Code 
        of 1986, as amended through December 31, 1992.  If total claims 
        from a plan exceed $7,500,000, the $7,500,000 shall be prorated 
        among the claimants; 
           (7) for purposes of applying clause (2)(ii) and clause (5), 
        with respect only to health insurance benefits, the term "any 
        one life" applies to each individual covered by a health 
        insurance policy; 
           (8) where covered contractual obligations are equal to or 
        less than the limits stated in this subdivision, the association 
        will pay the difference between the covered contractual 
        obligations and the amount credited by the estate of the 
        insolvent or impaired insurer, if that amount has been 
        determined or, if it has not, the covered contractual limit, 
        subject to the association's right of subrogation; 
           (9) where covered contractual obligations exceed the limits 
        stated in this subdivision, the amount payable by the 
        association will be determined as though the covered contractual 
        obligations were equal to those limits.  In making the 
        determination, the estate shall be deemed to have credited the 
        covered person the same amount as the estate would credit a 
        covered person with contractual obligations equal to those 
        limits; or 
           (10) the following illustrates how the principles stated in 
        clauses (8) and (9) apply.  The example illustrated concerns 
        hypothetical claims subject to the limit stated in clause 
        (2)(iii).  The principles stated in clauses (8) and (9), and 
        illustrated in this clause, apply to claims subject to any 
        limits stated in this subdivision. 
                          CONTRACTUAL OBLIGATIONS OF:
                                 $50,000 
                                        Guaranty 
                           Estate      Association 
        0% recovery         $ 0          $ 50,000 
        from estate
        25% recovery      $ 12,500       $ 37,500 
        from estate
        50% recovery      $ 25,000       $ 25,000 
        from estate
        75% recovery      $ 37,500       $ 12,500 
        from estate
                                $100,000 
                                        Guaranty
                           Estate      Association
        0% recovery         $ 0          $100,000 
        from estate
        25% recovery      $ 25,000       $ 75,000 
        from estate
        50% recovery      $ 50,000       $ 50,000 
        from estate
        75% recovery      $ 75,000       $ 25,000 
        from estate
                                $200,000 
                                        Guaranty
                           Estate      Association
        0% recovery         $ 0          $100,000
        from estate
        25% recovery      $ 50,000       $ 75,000
        from estate
        50% recovery      $100,000       $ 50,000
        from estate
        75% recovery      $150,000       $ 25,000
        from estate 
           For purposes of this subdivision, the commissioner shall 
        determine the discount rate to be used in determining the 
        present value of annuity benefits. 
           Sec. 4.  Minnesota Statutes 2000, section 61B.19, 
        subdivision 5, is amended to read: 
           Subd. 5.  [LIMITED LIABILITY.] The liability of the 
        association is strictly limited by the express terms of the 
        covered policies and contracts and by the provisions of sections 
        61B.18 to 61B.32 and is not affected by the contents of any 
        brochures, illustrations, advertisements, or oral statements by 
        agents, brokers, or others used or made in connection with their 
        sale.  This limitation on liability does not prevent an insured 
        from proving liability that is greater than the express terms of 
        the covered policy or contract.  The insured must bring an 
        action to claim the greater liability no later than one year 
        after entry of an order of rehabilitation, conservation, or 
        liquidation.  The association is not liable for any 
        extra-contractual claims, such as claims relating to bad faith 
        in payment of claims and claims relating to marketing practices, 
        exemplary, or punitive damages.  The association is not liable 
        for attorney fees or interest other than as provided for by the 
        terms of the policies or contracts, subject to the other limits 
        of sections 61B.18 to 61B.32. 
           Sec. 5.  Minnesota Statutes 2000, section 61B.20, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION.] The definitions in this 
        section apply to sections 61B.19 61B.18 to 61B.32. 
           Sec. 6.  Minnesota Statutes 2000, section 61B.20, is 
        amended by adding a subdivision to read: 
           Subd. 13a.  [MOODY'S CORPORATE BOND YIELD 
        AVERAGE.] "Moody's Corporate Bond Yield Average" means the 
        Monthly Average Corporates as published by Moody's Investors 
        Service, Inc., or any successor thereto.  
           Sec. 7.  Minnesota Statutes 2000, section 61B.20, 
        subdivision 14, is amended to read: 
           Subd. 14.  [PERSON.] "Person" means an individual, 
        corporation, partnership, unincorporated association, limited 
        liability company, governmental body or entity, or voluntary 
        organization. 
           Sec. 8.  Minnesota Statutes 2000, section 61B.20, 
        subdivision 15, is amended to read: 
           Subd. 15.  [PREMIUMS.] "Premiums" means amounts or 
        considerations by whatever name called received on covered 
        policies or contracts less premiums, considerations, and 
        deposits returned, and less dividends and experience credits on 
        those covered policies or contracts to the extent not guaranteed 
        in advance.  The term does not include amounts received for 
        policies or contracts or for the portions of policies or 
        contracts for which coverage is not provided under section 
        61B.19, subdivision 3, except that assessable premium shall not 
        be reduced on account of section 61B.19, subdivision 4, relating 
        to limitations with respect to any one life, any one individual, 
        and any one contract holder.  Premiums subject to assessment 
        under section 61B.24, include all amounts received on any 
        unallocated annuity contract issued to a contract holder 
        resident in this state if the contract is not otherwise excluded 
        from coverage under section 61B.19, subdivision 3; provided that 
        "premiums" shall not include any premiums in excess of the 
        liability limit on any unallocated annuity contract specified in 
        section 61B.19, subdivision 4. 
           Sec. 9.  Minnesota Statutes 2000, section 61B.20, 
        subdivision 16, is amended to read: 
           Subd. 16.  [RESIDENT.] "Resident" means a person who 
        resides in Minnesota at the time a member insurer is initially 
        determined by the commissioner or a court to be an impaired or 
        insolvent insurer and to whom a contractual obligation is owed.  
        A person may be a resident of only one state, which in the case 
        of a person other than a natural person is its principal place 
        of business, and which, in the case of a trust, is the principal 
        place of business of the settlor or entity which established the 
        trust.  Citizens of the United States who are either (i) 
        residents of foreign countries, or (ii) residents of United 
        States possessions, territories, or protectorates that do not 
        have an association similar to the association created by 
        sections 61B.19 to 61B.32, are considered residents of this 
        state if the insurer that issued the covered policies or 
        contracts was domiciled in this state.  
           Sec. 10.  Minnesota Statutes 2000, section 61B.20, is 
        amended by adding a subdivision to read: 
           Subd. 16a.  [STATE.] "State" means a state, the District of 
        Columbia, Puerto Rico, and a United States possession, 
        territory, or protectorate.  
           Sec. 11.  Minnesota Statutes 2000, section 61B.20, is 
        amended by adding a subdivision to read: 
           Subd. 16b.  [STRUCTURED SETTLEMENT ANNUITY.] "Structured 
        settlement annuity" means an annuity purchased in order to fund 
        periodic payments for a plaintiff or other claimant in payment 
        for or with respect to personal injury suffered by the plaintiff 
        or other claimant.  
           Sec. 12.  Minnesota Statutes 2000, section 61B.20, 
        subdivision 17, is amended to read: 
           Subd. 17.  [SUPPLEMENTAL CONTRACT.] "Supplemental contract" 
        means an a written agreement entered into for the distribution 
        of policy or contract proceeds. 
           Sec. 13.  Minnesota Statutes 2000, section 61B.20, 
        subdivision 18, is amended to read: 
           Subd. 18.  [UNALLOCATED ANNUITY CONTRACT.] "Unallocated 
        annuity contract" means an annuity contract, funding agreement, 
        or group annuity certificate that is not issued to and owned by 
        an individual, except to the extent of annuity benefits 
        guaranteed to an individual by an insurer under the contract or 
        certificate. 
           Sec. 14.  Minnesota Statutes 2000, section 61B.22, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COMMITTEES AND MEETINGS.] Except as otherwise 
        required under the plan of operation: 
           (a) The board of directors may, by unanimous affirmative 
        action of the entire board, designate three or more directors as 
        an executive committee, which, to the extent determined by 
        unanimous affirmative action of the entire board, has and shall 
        exercise the authority of the board in the management of the 
        business of the association.  This executive committee shall act 
        only in the interval between meetings of the board, and is 
        subject at all times to the control and direction of the board. 
           (b) The board of directors may, by unanimous affirmative 
        action of the entire board, create additional committees, which 
        have and shall exercise the specific authority and 
        responsibility as determined by the unanimous affirmative action 
        of the entire board. 
           (c) Any action that may be taken at a meeting of the board 
        of directors or of a lawfully constituted executive committee 
        may be taken without a meeting if authorized by a writing or 
        writings signed by all the directors or by all of the members of 
        the committee, as the case may be.  This action is effective on 
        the date on which the last signature is placed on the writing or 
        writings, or on an earlier effective date established in the 
        writing or writings. 
           (d) Members of the board of directors or of a lawfully 
        constituted executive committee may participate in a meeting of 
        the board or committee by means of conference telephone or 
        similar communications equipment through which all persons 
        participating in the meeting can hear each other.  Participation 
        in a meeting as provided in this paragraph constitutes presence 
        in person at the meeting. 
           Sec. 15.  Minnesota Statutes 2000, section 61B.23, 
        subdivision 3, is amended to read: 
           Subd. 3.  [INSOLVENT INSURER.] If a member insurer is an 
        insolvent insurer then, subject to any conditions imposed by the 
        association and approved by the commissioner, the association 
        shall, in its discretion: 
           (1) guaranty, assume, or reinsure, or cause to be 
        guaranteed, assumed, or reinsured, the policies or contracts of 
        the insolvent insurer; 
           (2) assure payment of the contractual obligations of the 
        insolvent insurer which are due and owing; 
           (3) provide money, pledges, guarantees, or other means as 
        are reasonably necessary to discharge its duties; or 
           (4) with respect only to life and health insurance 
        policies, provide benefits and coverages in accordance with 
        subdivision 4. 
           Sec. 16.  Minnesota Statutes 2000, section 61B.23, 
        subdivision 4, is amended to read: 
           Subd. 4.  [PAYMENTS; ALTERNATIVE POLICIES.] When proceeding 
        under subdivision 2, paragraph (a), clause (2), or subdivision 
        3, clause (4), the association shall, with respect to only life 
        and health insurance policies and annuities: 
           (a) Assure payment of benefits for premiums identical to 
        the premiums and benefits, except for terms of conversion and 
        renewability, that would have been payable under the policies of 
        the impaired or insolvent insurer, for claims incurred: 
           (1) with respect to group policies, not later than the 
        earlier of the next renewal date under those policies or 
        contracts or 45 days, but in no event less than 30 days, after 
        the date on which the association becomes obligated with respect 
        to those policies; or 
           (2) with respect to individual policies, not later than the 
        earlier of the next renewal date, if any, under those policies 
        or one year, but in no event less than 30 days, from the date on 
        which the association becomes obligated with respect to those 
        policies. 
           (b) Make diligent efforts to provide all known insureds or 
        annuitants for individual policies or group policyholders 
        policyowners with respect to group policies 30 days' notice of 
        the termination pursuant to paragraph (a) of the benefits 
        provided. 
           (c) With respect to individual policies, make available to 
        each known insured or annuitant, or owner if other than the 
        insured or annuitant, and with respect to an individual formerly 
        insured or formerly an annuitant under a group policy who is not 
        eligible for replacement group coverage, make available 
        substitute coverage on an individual basis in accordance with 
        paragraph (d), if the insureds or annuitants had a right under 
        law or the terminated policy or annuity to convert coverage to 
        individual coverage or to continue an individual policy or 
        annuity in force until a specified age or for a specified time, 
        during which the insurer had no right unilaterally to make 
        changes in any provision of the policy or annuity or had a right 
        only to make changes in premium by class. 
           (d)(1) In providing the substitute coverage required under 
        paragraph (c), the association may offer either to reissue the 
        terminated coverage or to issue an alternative policy. 
           (2) Alternative or reissued policies must be offered 
        without requiring evidence of insurability, and must not provide 
        for any waiting period or exclusion that would not have applied 
        under the terminated policy. 
           (3) The association may reinsure any alternative or 
        reissued policy. 
           (e)(1) Alternative policies adopted by the association are 
        subject to the approval of the commissioner.  The association 
        may adopt alternative policies of various types for future 
        issuance without regard to any particular impairment or 
        insolvency. 
           (2) Alternative policies must contain at least the minimum 
        statutory provisions required in this state and provide benefits 
        that are not unreasonable in relation to the premium charged. 
        The association shall set the premium in accordance with a table 
        of rates which it shall adopt.  The premium must reflect the 
        amount of insurance to be provided and the age and class of risk 
        of each insured, but must not reflect any changes in the health 
        of the insured after the original policy was last underwritten. 
           (3) Any alternative policy issued by the association must 
        provide coverage of a type similar to that of the policy issued 
        by the impaired or insolvent insurer, as determined by the 
        association. 
           (f) If the association elects to reissue terminated 
        coverage at a premium rate different from that charged under the 
        terminated policy, the premium must be set by the association in 
        accordance with the amount of insurance provided and the age and 
        class of risk, subject to approval of the commissioner or by a 
        court of competent jurisdiction. 
           (g) The association's obligations with respect to coverage 
        under any policy of the impaired or insolvent insurer or under 
        any reissued or alternative policy ceases on the date the 
        coverage or policy is replaced by another similar policy by the 
        policyholder, the insurer, or the association and the 
        preexisting condition limitations have been satisfied. 
           (h) When proceeding under this subdivision with respect to 
        any policy carrying guaranteed minimum interest rates, the 
        association shall assure the payment or crediting of a rate of 
        interest consistent with section 61B.19, subdivision 3, clause 
        (12).  
           Sec. 17.  Minnesota Statutes 2000, section 61B.23, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [BOARD DISCRETION.] The board of directors of 
        the association has discretion and may exercise reasonable 
        business judgment to determine the means by which the 
        association is to provide the benefits of sections 61B.18 to 
        61B.32 in an economical and efficient manner.  
           Sec. 18.  Minnesota Statutes 2000, section 61B.23, is 
        amended by adding a subdivision to read: 
           Subd. 4b.  [BENEFITS PROVIDED UNDER A PLAN.] Where the 
        association has arranged or offered to provide the benefits of 
        sections 61B.18 to 61B.32 to a covered person under a plan or 
        arrangement that fulfills the association's obligations under 
        sections 61B.18 to 61B.32, the person is not entitled to 
        benefits from the association in addition to or other than those 
        provided under the plan or arrangement.  
           Sec. 19.  Minnesota Statutes 2000, section 61B.23, is 
        amended by adding a subdivision to read: 
           Subd. 4c.  [COVERAGE OF POLICIES WITH INDEXED INTEREST OR 
        SIMILAR PROVISIONS.] In carrying out its duties in connection 
        with guaranteeing, assuming, or reinsuring policies or contracts 
        under sections 61B.18 to 61B.32, the association may, subject to 
        approval of the receivership court, issue substitute coverage 
        for a policy or contract that provides an interest rate, 
        crediting rate, or similar factor determined by use of an index, 
        or other external reference stated in the policy or contract 
        employed in calculating returns or changes in value by issuing 
        an alternative policy or contract in accordance with the 
        following provisions: 
           (1) in lieu of the index or other external reference 
        provided for in the original policy or contract, the alternative 
        policy or contract provides for (i) a fixed interest rate or 
        (ii) payment of dividends with minimum guarantees or (iii) a 
        different method for calculating interest or changes in value; 
           (2) there is no requirement for evidence of insurability, 
        waiting period or other exclusion that would not have applied 
        under the replaced policy or contract; and 
           (3) the alternative policy or contract is substantially 
        similar to the replaced policy or contract in all other material 
        terms.  
           Sec. 20.  Minnesota Statutes 2000, section 61B.23, is 
        amended by adding a subdivision to read: 
           Subd. 8a.  [DEPOSITS IN THIS STATE FOR INSOLVENT OR 
        IMPAIRED INSURER.] A deposit in this state, held pursuant to law 
        or required by the commissioner for the benefit of creditors, 
        including policy owners, not turned over to the domiciliary 
        liquidator upon the entry of a final order of liquidation or 
        order approving a rehabilitation plan of an insurer domiciled in 
        this state or in a reciprocal state, pursuant to section 60B.54, 
        shall be promptly paid to the association.  The association is 
        entitled to retain a portion of any amount so paid to it equal 
        to the percentage determined by dividing the aggregate amount of 
        policy owners claims related to that insolvency for which the 
        association has provided statutory benefits by the aggregate 
        amount of all policy owners' claims in this state related to 
        that insolvency.  The association shall remit to the domiciliary 
        receiver the amount so paid to the association and not retained 
        pursuant to this subdivision.  Any amount retained by the 
        association shall be treated as a distribution of estate assets 
        pursuant to section 60B.46 or similar provision of the state of 
        domicile of the impaired or insolvent insurer.  
           Sec. 21.  Minnesota Statutes 2000, section 61B.23, 
        subdivision 11, is amended to read: 
           Subd. 11.  [STANDING IN COURT.] The association has 
        standing to appear or intervene before any court or agency in 
        this state with jurisdiction over an impaired or insolvent 
        insurer concerning which the association is or may become 
        obligated under sections 61B.18 to 61B.32 or with jurisdiction 
        over any person or property against whom the association may 
        have rights through subrogation or otherwise.  This standing 
        extends to all matters germane to the powers and duties of the 
        association, including proposals for reinsuring, modifying, or 
        guaranteeing the policies or contracts of the impaired or 
        insolvent insurer and the determination of the policies or 
        contracts and contractual obligations.  The association may 
        appear or intervene before a court or agency in another state 
        with jurisdiction over an impaired or insolvent insurer for 
        which the association is or may become obligated or with 
        jurisdiction over a third party any person or property against 
        whom the association may have rights through subrogation of the 
        insurer's policyholders or of any other person, or otherwise, 
        provided, however, in the case of any such appearance or 
        intervention, the association shall not submit for adjudication 
        its obligations to provide coverage under the Minnesota Life and 
        Health Insurance Guaranty Association Act without the prior 
        approval of the commissioner. 
           Sec. 22.  Minnesota Statutes 2000, section 61B.23, 
        subdivision 12, is amended to read: 
           Subd. 12.  [ASSIGNMENTS; SUBROGATION RIGHTS.] (a) A person 
        receiving benefits under sections 61B.18 to 61B.32 shall be 
        considered to have assigned the rights under, and any causes of 
        action against any person for losses arising under, resulting 
        from or otherwise relating to, the covered policy or contract to 
        the association to the extent of the benefits received because 
        of sections 61B.18 to 61B.32, whether the benefits are payments 
        of or on account of contractual obligations, continuation of 
        coverage, or provision of substitute or alternative coverages. 
        The association may require an assignment to it of those rights 
        and causes of action by a payee, policy or contract owner, 
        beneficiary, insured, or annuitant as a condition precedent to 
        the receipt of rights or benefits conferred by sections 61B.18 
        to 61B.32 upon that person.  The assignment and subrogation 
        rights of the association include any rights that a person may 
        have as a beneficiary of a plan covered under the Employee 
        Retirement Income Security Act of 1974, United States Code, 
        title 29, section 1003, as amended. 
           (b) The subrogation rights of the association under this 
        subdivision against the assets of the impaired or insolvent 
        insurer have the same priority as those of a person entitled to 
        receive benefits under sections 61B.18 to 61B.32. 
           (c) In addition to paragraphs (a) and (b), the association 
        has all common law rights of subrogation and other equitable or 
        legal remedies that would have been available to the impaired or 
        insolvent insurer or person receiving benefits under sections 
        61B.18 to 61B.32. including without limitation, in the case of a 
        structured settlement annuity, any rights of the owner, 
        beneficiary or payee of the annuity, to the extent of benefits 
        received pursuant to sections 61B.18 to 61B.32, against a person 
        originally or by succession responsible for the losses arising 
        from the personal injury relating to the annuity or payment 
        thereof, excepting any such person responsible solely by reason 
        of serving as an assignee in respect of a qualified assignment 
        under section 130 of the Internal Revenue Code of 1986, as 
        amended. 
           (d) If the preceding provisions of this subdivision are 
        invalid or ineffective with respect to any person or claim for 
        any reason, the amount payable by the association with respect 
        to the related covered obligations shall be reduced by the 
        amount realized by any other person with respect to the person 
        or claim that is attributable to the policies or portion thereof 
        covered by the association.  
           (e) If the association has provided benefits with respect 
        to a covered obligation and a person recovers amounts as to 
        which the association has rights as described in the preceding 
        paragraphs of this subdivision, the person shall pay to the 
        association the portion of the recovery attributable to the 
        policies or portion thereof covered by the association.  
           Sec. 23.  Minnesota Statutes 2000, section 61B.23, 
        subdivision 13, is amended to read: 
           Subd. 13.  [PERMISSIVE POWERS.] The association may: 
           (1) enter into contracts as are necessary or proper to 
        carry out the provisions and purposes of sections 61B.18 to 
        61B.32; 
           (2) sue or be sued, including taking any legal actions 
        necessary or proper to recover any unpaid assessments under 
        section 61B.26 to settle claims or potential claims against it; 
           (3) borrow money to effect the purposes of sections 61B.18 
        to 61B.32 and any notes or other evidence of indebtedness of the 
        association not in default are legal investments for domestic 
        insurers and may be carried as admitted assets; 
           (4) employ or retain persons as are necessary or 
        appropriate to handle the financial transactions of the 
        association, and to perform other functions as the association 
        considers necessary or proper under sections 61B.18 to 61B.32; 
           (5) enter into arbitration or take legal action as may be 
        necessary or appropriate to avoid or recover payment of improper 
        claims; 
           (6) exercise, for the purposes of sections 61B.18 to 61B.32 
        and to the extent approved by the commissioner, the powers of a 
        domestic life or health insurer, but in no case may the 
        association issue insurance policies or annuity contracts other 
        than those issued to perform its obligations under sections 
        61B.18 to 61B.32; 
           (7) join an organization of one or more other state 
        associations of similar purposes, to further the purposes and 
        administer the powers and duties of the association; 
           (8) negotiate and contract with any liquidator, 
        rehabilitator, conservator, or ancillary receiver to carry out 
        the powers and duties of the association; and 
           (9) participate in the organization of and/or own stock in 
        an entity which exists or was formed for the purpose of assuming 
        liability for contracts or policies issued by impaired or 
        insolvent insurers; and 
           (10) request information from a person seeking coverage 
        from the association in order to aid the association in 
        determining its obligations under sections 61B.18 to 61B.32 with 
        respect to the person, and the person shall promptly comply with 
        the request. 
           Sec. 24.  Minnesota Statutes 2000, section 61B.23, is 
        amended by adding a subdivision to read: 
           Subd. 14.  [ASSOCIATION ELECTION TO SUCCEED TO RIGHTS OF 
        INSOLVENT OR IMPAIRED INSURER UNDER INDEMNITY REINSURANCE 
        CONTRACTS.] (a) At any time within one year after the date on 
        which the association becomes responsible for the obligations of 
        a member insurer the coverage date, the association may elect to 
        succeed to the rights and obligations of the member insurer, 
        that accrue on or after the coverage date and that relate to 
        contracts covered in whole or in part by the association, under 
        any one or more indemnity reinsurance agreements entered into by 
        the member insurer as a ceding insurer and selected by the 
        association.  However, the association may not exercise an 
        election with respect to a reinsurance agreement if the 
        receiver, rehabilitator, or liquidator of the member insurer has 
        previously and expressly disaffirmed the reinsurance agreement.  
        The election shall be effected by a notice to the receiver, 
        rehabilitator, or liquidator, and to the affected reinsurers.  
        If the association makes an election, clauses (1) through (4) 
        apply with respect to the agreements selected by the association:
           (1) the association is responsible for all unpaid premiums 
        due under the agreements for periods both before and after the 
        coverage date, and is responsible for the performance of all 
        other obligations to be performed after the coverage date, in 
        each case that relates to contracts covered in whole or in part 
        by the association and the association may charge contracts 
        covered in part by the association, through reasonable 
        allocation methods, the costs for reinsurance in excess of the 
        obligations of the association; 
           (2) the association is entitled to any amounts payable by 
        the reinsurer under the agreements with respect to losses or 
        events that occur in periods after the coverage date and that 
        relate to contracts covered by the association in whole or in 
        part, provided that, upon receipt of any such amounts, the 
        association is obliged to pay to the beneficiary under the 
        policy or contract on account of which the amounts were paid a 
        portion of the amount equal to the excess of: 
           (i) the amount received by the association, over 
           (ii) the benefits paid by the association on account of the 
        policy or contract less the retention of the impaired or 
        insolvent member insurer applicable to the loss or event; 
           (3) within 30 days following the association's election, 
        the association and each indemnity reinsurer shall calculate the 
        net balance due to or from the association under each 
        reinsurance agreement as of the date of the association's 
        election, giving full credit to all items paid by either the 
        member insurer or its receiver, rehabilitator, or liquidator or 
        the indemnity reinsurer during the period between the coverage 
        date and the date of the association's election and (i) either 
        the association or indemnity reinsurer shall pay the net balance 
        due the other within five days of the completion of the 
        aforementioned calculation and (ii) if the receiver, 
        rehabilitator, or liquidator has received any amounts due the 
        association pursuant to paragraph (a), the receiver, 
        rehabilitator, or liquidator shall remit the same to the 
        association as promptly as practicable; and 
           (4) if the association, within 60 days of the election, 
        pays the premiums due for periods both before and after the 
        coverage date that relate to contracts covered by the 
        association in whole or in part, the reinsurer shall not be 
        entitled to terminate the reinsurance agreements insofar as the 
        agreements relate to contracts covered by the association in 
        whole or in part and shall not be entitled to set off any unpaid 
        premium due for periods prior to the coverage date against 
        amounts due the association.  
           (b) In the event the association transfers its obligations 
        to another insurer, and if the association and the other insurer 
        agree, the other insurer shall succeed to the rights and 
        obligations of the association under paragraph (a) effective as 
        of the date agreed upon by the association and the other insurer 
        and regardless of whether the association has made the election 
        referred to in paragraph (a) provided that: 
           (1) the indemnity reinsurance agreements shall 
        automatically terminate for new reinsurance unless the indemnity 
        reinsurer and the other insurer agree to the contrary; 
           (2) the obligations described in the proviso to paragraph 
        (a), clause (2) shall no longer apply on and after the date the 
        indemnity reinsurance agreement is transferred to the third 
        party insurer; and 
           (3) paragraph (b) does not apply if the association has 
        previously expressly determined in writing that it will not 
        exercise the election referred to in paragraph (a).  
           (c) The provisions of this subdivision shall supersede the 
        provisions of any law of this state or of any affected 
        reinsurance agreement that provides for or requires any payment 
        of reinsurance proceeds, on account of losses or events that 
        occur in periods after the coverage date, to the receiver, 
        liquidator, or rehabilitator of the insolvent member insurer.  
        The receiver, rehabilitator, or liquidator shall remain entitled 
        to any amounts payable by the reinsurer under the reinsurance 
        agreement with respect to losses or events that occur in periods 
        prior to the coverage date subject to applicable setoff 
        provisions.  
           (d) Except as otherwise expressly provided in this 
        subdivision, nothing in this subdivision alters or modifies the 
        terms and conditions of the indemnity reinsurance agreements of 
        the insolvent member insurer.  Nothing in this subdivision 
        abrogates or limits any rights of any reinsurer to claim that it 
        is entitled to rescind a reinsurance agreement.  Nothing in this 
        subdivision gives a policyowner or beneficiary an independent 
        cause of action against an indemnity reinsurer that is not 
        otherwise set forth in the indemnity reinsurance agreement. 
           Sec. 25.  Minnesota Statutes 2000, section 61B.23, is 
        amended by adding a subdivision to read: 
           Subd. 15.  [VENUE; APPEAL BOND.] Except as otherwise 
        provided in section 61B.24, subdivision 10, or 61B.26, paragraph 
        (c), venue in a suit against the association arising under 
        sections 62B.18 to 62B.32 shall be in Ramsey county.  The 
        association shall not be required to give an appeal bond in an 
        appeal that relates to a cause of action arising under sections 
        61B.18 to 61B.32.  
           Sec. 26.  Minnesota Statutes 2000, section 61B.24, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ABATEMENT OR DEFERMENT.] The association may 
        abate or defer, in whole or in part, the assessment of a member 
        insurer if, in the opinion of the board, payment of the 
        assessment would endanger the ability of the member insurer to 
        fulfill its contractual obligations.  In the event an assessment 
        against a member insurer is abated, or deferred in whole or in 
        part, the amount by which the assessment is abated or deferred 
        may be assessed against the other member insurers in a manner 
        consistent with the basis for assessments as provided in this 
        section.  Once the conditions which caused a deferral have been 
        removed or rectified, the member insurer shall pay all 
        assessments that were deferred pursuant to a repayment plan 
        approved by the association.  
           Sec. 27.  Minnesota Statutes 2000, section 61B.24, 
        subdivision 5, is amended to read: 
           Subd. 5.  [MAXIMUM ASSESSMENT.] (a) The total of all 
        assessments upon a member insurer for the life and annuity 
        account and for each subaccount of the life and annuity account 
        and for the health account shall not in any one calendar year 
        exceed two percent of that member insurer's average annual 
        premiums as calculated in subdivision 3, paragraph (c), on 
        policies or contracts covered by that account or subaccount.  If 
        two or more assessments are made with respect to insurers that 
        become impaired or insolvent in different calendar years, 
        average annual premiums for purposes of the assessment 
        percentage limitation are based upon the higher of the 
        three-year averages calculated under subdivision 3, paragraph 
        (c).  If an impaired insurer becomes insolvent, the date of 
        impairment must be used to determine the assessment.  In 
        addition, if the board of directors determines that a one 
        percent If the maximum assessment for any subaccount of the life 
        and annuity account in any one calendar year will not provide an 
        amount sufficient to carry out the responsibilities of the 
        association, then pursuant to subdivision 3, the board of 
        directors shall make a one percent assessment for the affected 
        subaccount or subaccounts and assess the remaining necessary 
        amount against all three subaccounts on a pro rata basis; 
        provided that if the maximum annual two percent assessment limit 
        would be exceeded in a subaccount by the assessment, then the 
        other subaccounts will be assessed for the balance of any 
        remaining necessary amount up to the maximum annual two percent 
        limit in those other subaccounts assess based on the other 
        subaccounts of the life and annuity account for the necessary 
        additional amount, subject to the maximum of two percent stated 
        above for each subaccount. 
           (b) The total of all assessments upon a member insurer for 
        the health account shall not in any one calendar year exceed two 
        percent of that member insurer's average annual premiums as 
        calculated under subdivision 3, paragraph (c), on policies or 
        contracts covered by that account.  If two or more assessments 
        are made with respect to insurers that become impaired or 
        insolvent in different calendar years, average annual premiums 
        for purposes of the assessment percentage limitation is based 
        upon the higher of the three-year averages calculated under 
        subdivision 3, paragraph (c). 
           (c) (b) If the maximum assessment for an account, together 
        with the other assets of the association in that account, does 
        not provide in any one calendar year in that account an amount 
        sufficient to carry out the responsibilities of the association, 
        the necessary additional funds must be assessed as soon as 
        permitted by sections 61B.18 to 61B.32. 
           (d) (c) The board may adopt general principles in the plan 
        of operation for allocating funds among claims, whether relating 
        to one or more impaired or insolvent insurers, when the maximum 
        assessment will be insufficient to cover anticipated claims. 
           (e) (d) If assessments under this section are inadequate to 
        pay all obligations of the impaired insurer that are or become 
        due and owing, then the association shall prepare a plan 
        approved by the commissioner for prioritization of payments.  If 
        the association adopts general principles in the plan of 
        operations, the association shall use the general principles in 
        preparing the plan required under this paragraph.  No formerly 
        impaired or insolvent insurer may be reinstated until all 
        payments of or on account of the insurer's contractual 
        obligations by the guaranty association, along with all expenses 
        thereof and interest on all such payments and expenses, shall 
        have been repaid to the guaranty association or a plan of 
        repayment by the insurer shall have been approved by the 
        commissioner. 
           Sec. 28.  Minnesota Statutes 2000, section 61B.24, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [PROCEDURE FOR PROTESTS REGARDING 
        ASSESSMENTS.] (a) A member insurer that wishes to protest all or 
        part of an assessment shall pay when due the full amount of the 
        assessment as set forth in the notice provided by the 
        association.  The payment is available to meet association 
        obligations during the pendency of the protest or any subsequent 
        appeal.  Payment must be accompanied by a statement in writing 
        that the payment is made under protest and setting forth a brief 
        statement of the grounds for the protest.  
           (b) Within 60 days following the payment of an assessment 
        under protest by a member insurer, the association shall notify 
        the member insurer in writing of its determination with respect 
        to the protest unless the association notifies the member 
        insurer that additional time is required to resolve the issues 
        raised by the protest.  
           (c) Within 30 days after a final decision has been made, 
        the association shall notify the protesting member insurer in 
        writing of that final decision.  Within 60 days of receipt of 
        notice of the final decision, the protesting member insurer may 
        appeal that final action to the commissioner.  
           (d) In the alternative to rendering a final decision with 
        respect to a protest based on a question regarding the 
        assessment base, the association may refer the protest to the 
        commissioner for a final decision, with or without a 
        recommendation from the association.  
           (e) If the protest or appeal on the assessment is upheld, 
        the amount paid in error or excess shall be returned to the 
        member company.  Interest on a refund due a protesting member 
        shall be paid at the rate actually earned by the association.  
           Sec. 29.  Minnesota Statutes 2000, section 61B.24, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [MEMBER INSURERS' DUTY TO PROVIDE INFORMATION TO 
        ASSOCIATION.] The association may request information of member 
        insurers in order to aid in the exercise of its power under this 
        section and member insurers shall promptly comply with a request.
           Sec. 30.  Minnesota Statutes 2000, section 61B.26, is 
        amended to read: 
           61B.26 [DUTIES AND POWERS OF THE COMMISSIONER.] 
           (a) In addition to other duties and powers in sections 
        61B.18 to 61B.32, the commissioner shall: 
           (1) notify the board of directors of the existence of an 
        impaired or insolvent insurer within three days after a 
        determination of impairment or insolvency is made or the 
        commissioner receives notice of impairment or insolvency; 
           (2) upon request of the board of directors, provide the 
        association with a statement of the premiums in this and any 
        other appropriate states for each member insurer; 
           (3) when an impairment is declared and the amount of the 
        impairment is determined, serve a demand upon the impaired 
        insurer to make good the impairment within a reasonable time; 
        notice to the impaired insurer shall constitute notice to its 
        shareholders, if any; the failure of the insurer to promptly 
        comply with the commissioner's demand shall not excuse the 
        association from the performance of its powers and duties under 
        sections 61B.18 to 61B.32; and 
           (4) in a liquidation, conservation, or rehabilitation 
        proceeding involving a domestic insurer, be appointed as the 
        liquidator, conservator, or rehabilitator. 
           (b) The commissioner may suspend or revoke, after notice 
        and hearing, the certificate of authority to transact insurance 
        in this state of any member insurer which fails to pay an 
        assessment when due or fails to comply with the plan of 
        operation.  As an alternative, the commissioner may levy a 
        forfeiture on any member insurer which fails to pay an 
        assessment when due.  A forfeiture shall not exceed five percent 
        of the unpaid assessment per month, but no forfeiture shall be 
        less than $100 per month. 
           (c) An A final action of the board of directors or the 
        association may be appealed to the commissioner if the appeal is 
        taken within 30 60 days of the aggrieved party's receipt of 
        notice of the final action being appealed.  If a member company 
        is appealing an assessment, the amount assessed must be paid to 
        the association and be available to meet association obligations 
        during the pendency of an appeal.  If the appeal on the 
        assessment is upheld, the amount paid in error or excess must be 
        returned to the member company.  Any final action or order of 
        the commissioner is subject to judicial review in a court of 
        competent jurisdiction, in the manner provided by chapter 14.  A 
        determination or decision by the commissioner under sections 
        61B.18 to 61B.32 is not subject to the contested case or 
        rulemaking provisions of chapter 14. 
           (d) The liquidator, rehabilitator, or conservator of an 
        impaired insurer may notify all interested persons of the effect 
        of sections 61B.18 to 61B.32. 
           (e) For the purposes of sections 61B.18 to 61B.32, the 
        commissioner may delegate any of the powers conferred by law. 
           (f) Nonperformance of any of the acts specified in this 
        section or failure to meet the specific time limits does not 
        affect the association, its members, or any other person as to 
        the person's duties and obligations. 
           Sec. 31.  Minnesota Statutes 2000, section 61B.27, is 
        amended to read: 
           61B.27 [PREVENTION OF INSOLVENCIES.] 
           (a) To aid in the detection and prevention of insurer 
        insolvencies or impairments the commissioner shall notify the 
        commissioners of insurance of all the other states, territories 
        of the United States, and the District of Columbia when the 
        commissioner takes one of the following actions against a member 
        insurer: 
           (i) revocation of license; or 
           (ii) suspension of license.  
           The notice must be mailed to all commissioners within 30 
        days following the action. 
           (b) If the commissioner deems it appropriate, the 
        commissioner may: 
           (1) Report to the board of directors when the commissioner 
        has taken any of the actions specified in paragraph (a) or has 
        received a report from another commissioner indicating that an 
        action specified in paragraph (a) has been taken in another 
        state.  The report to the board of directors must contain all 
        significant details of the action taken or the report received 
        from another commissioner. 
           (2) Report to the board of directors when the commissioner 
        has reasonable cause to believe from an examination, whether 
        completed or in process, of a member company that the company 
        may be an impaired or insolvent insurer. 
           (3) Furnish to the board of directors the national 
        association of insurance commissioners insurance regulatory 
        information system ratios and listings of companies not included 
        in the ratios developed by the national association of insurance 
        commissioners, and the board may use the information in carrying 
        out its duties and responsibilities under this section.  The 
        report and the information contained in it must be kept 
        confidential by the board of directors until it has been made 
        public by the commissioner or other lawful authority.  Nothing 
        in this provision supersedes other requirements of law.  
           (4) Notify the board if the commissioner makes a formal 
        order requiring the company to restrict its premium writing, 
        obtain additional contributions to surplus, withdraw from this 
        state, reinsure all or any part of its business, or increase 
        capital, surplus, or any other account for the security of 
        policyholders or creditors. 
           (c) The commissioner may seek the advice and 
        recommendations of the board of directors concerning any matter 
        affecting the commissioner's duties and responsibilities 
        regarding the financial condition of member insurers and of 
        companies seeking admission to transact insurance business in 
        this state. 
           (d) The board of directors may, upon majority vote, make 
        reports and recommendations to the commissioner upon matters 
        germane to the solvency, liquidation, rehabilitation, or 
        conservation of any member insurer or germane to the solvency of 
        a company seeking to do an insurance business in this state. 
        Those reports and recommendations shall not be considered public 
        documents. 
           (e) The board of directors, upon majority vote, shall may 
        notify the commissioner of information indicating that a member 
        insurer may be an impaired or insolvent insurer. 
           (f) The board of directors may, upon majority vote, request 
        that the commissioner order an examination of a member insurer 
        which the board in good faith believes may be an impaired or 
        insolvent insurer.  Within 30 days of the receipt of the 
        request, the commissioner shall begin the examination.  The 
        examination may be conducted as a national association of 
        insurance commissioners examination or may be conducted by those 
        persons designated by the commissioner.  The cost of the 
        examination must be paid by the association and the examination 
        report must be treated as are other examination reports.  In no 
        event shall an examination report be released to the board of 
        directors prior to its release to the public, but this shall not 
        preclude the commissioner from complying with paragraph (a). 
           The commissioner shall notify the board of directors when 
        the examination is completed.  The request for an examination 
        must be kept on file by the commissioner, but it shall not be 
        open to public inspection prior to the release of the 
        examination report to the public. 
           (g) (f) The board of directors may, upon majority vote, 
        make recommendations to the commissioner for the detection and 
        prevention of insurer insolvencies. 
           (h) (g) The board of directors may, at the conclusion of an 
        insurer insolvency in which the association was obligated to pay 
        covered claims, prepare a report to the commissioner containing 
        the information it may have in its possession bearing on the 
        history and causes of the insolvency.  The board shall cooperate 
        with the boards of directors of guaranty associations in other 
        states in preparing a report on the history and causes of 
        insolvency of a particular insurer, and may adopt by reference 
        any report prepared by those other associations. 
           (i) (h) Nonperformance by the commissioner of any of the 
        acts specified in this section or failure to meet the specified 
        time limits does not affect the association, its members, or any 
        other person as to the person's duties and obligations. 
           Nothing in this section supersedes other requirements of 
        law. 
           Sec. 32.  Minnesota Statutes 2000, section 61B.28, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [RECORDS.] Records must be kept of all 
        negotiations and meetings in which the association or its 
        representatives are involved of the board of directors to 
        discuss the activities of the association in carrying out its 
        powers and duties under section 61B.23.  Records of negotiations 
        or meetings the association with respect to an impaired or 
        insolvent insurer shall be made public only upon the termination 
        of a liquidation, rehabilitation, or conservation proceeding 
        involving the impaired or insolvent insurer, upon the 
        termination of the impairment or insolvency of the insurer, or 
        upon the order of a court of competent jurisdiction.  Nothing in 
        this subdivision limits the duty of the association to report 
        its activities under section 61B.27. 
           Sec. 33.  Minnesota Statutes 2000, section 61B.28, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ASSOCIATION AS CREDITOR.] For the purpose of 
        carrying out its obligations under sections 61B.18 to 61B.32, 
        the association is considered to be a creditor of the impaired 
        or insolvent insurer to the extent of assets attributable to 
        covered policies, reduced by amounts to which the association is 
        entitled recovers from the assets of the impaired or insolvent 
        insurer as subrogee under section 61B.23, subdivision 
        12.  Recoveries by the association as subrogee under section 
        61B.23, subdivision 12, from assets other than from assets of 
        the impaired or insolvent insurer shall not reduce or act as an 
        offset to the association's claim as creditor of the impaired or 
        insolvent insurer.  Assets of the impaired or insolvent insurer 
        attributable to covered policies must be used to continue all 
        covered policies and pay all contractual obligations of the 
        impaired or insolvent insurer as required by sections 61B.18 to 
        61B.32.  Assets attributable to covered policies, as used in 
        this subdivision, are that proportion of the assets which the 
        reserves that should have been established for those policies 
        bear to the reserves that should have been established for all 
        policies of insurance written by the impaired or insolvent 
        insurer. 
           Sec. 34.  Minnesota Statutes 2000, section 61B.28, is 
        amended by adding a subdivision to read: 
           Subd. 3a.  [ASSOCIATION ACCESS TO INSOLVENT INSURER'S 
        ASSETS.] As a creditor of the impaired or insolvent insurer as 
        established in subdivision 3 of this section and consistent with 
        section 60B.46, the association and other similar associations 
        is entitled to receive a disbursement of assets out of the 
        marshalled assets, from time to time as the assets become 
        available to reimburse it, as a credit against contractual 
        obligations under sections 61B.18 to 61B.32.  If the liquidator 
        has not, within 120 days of a final determination of insolvency 
        of an insurer by the receivership court, made an application to 
        the court for the approval of a proposal to disburse assets out 
        of marshalled assets to guaranty associations having obligations 
        because of the insolvency, then the association shall be 
        entitled to make application to the receivership court for 
        approval of its own proposal to disburse these assets.  
           Sec. 35.  Minnesota Statutes 2000, section 61B.29, is 
        amended to read: 
           61B.29 [EXAMINATION OF THE ASSOCIATION; ANNUAL REPORT.] 
           The association is subject to examination and regulation by 
        the commissioner.  The board of directors shall submit to the 
        commissioner before May 1 each year, a financial report in a 
        form approved by the commissioner and a report of its activities 
        during the association's preceding fiscal year.  Upon request of 
        a member insurer, the association must provide the member 
        insurer with a copy of the report. 
           Presented to the governor May 17, 2001 
           Signed by the governor May 21, 2001, 10:35 a.m.