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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 215-S.F.No. 1054 
                  An act relating to insurance; regulating insurers, 
                  agents, coverages and benefits, costs, claims, 
                  investments, and notifications and disclosures; 
                  prescribing powers and duties of the commissioner; 
                  eliminating the regulation of nonprofit legal services 
                  plans; amending Minnesota Statutes 2000, sections 
                  60A.06, subdivision 3; 60A.08, subdivision 13; 60A.11, 
                  subdivision 10; 60A.129, subdivision 2; 60A.14, 
                  subdivision 1; 60A.16, subdivision 1; 60A.23, 
                  subdivision 8; 61A.072, by adding a subdivision; 
                  62A.17, subdivision 1; 62A.20, subdivision 1; 62A.21, 
                  subdivision 2a; 62A.302; 62A.31, subdivisions 1a, 1i, 
                  3; 62A.65, subdivision 8; 62E.04, subdivision 4; 
                  62E.06, subdivision 1; 62I.07, subdivision 1; 62L.05, 
                  subdivisions 1, 2; 62M.03, subdivision 2; 62M.05, 
                  subdivision 5; 62Q.01, subdivision 6; 62Q.73, 
                  subdivision 3; 65A.29, subdivision 7; 65B.04, 
                  subdivision 3; 65B.06, subdivisions 1, 4; 65B.16; 
                  65B.19, subdivision 2; 67A.20, by adding a 
                  subdivision; 70A.07; 79A.02, subdivision 1; 79A.03, 
                  subdivision 7; 79A.04, subdivision 16; 79A.15; 
                  471.617, subdivision 1; proposing coding for new law 
                  in Minnesota Statutes, chapters 62A; 62L; repealing 
                  Minnesota Statutes 2000, sections 13.7191, subdivision 
                  11; 60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05; 
                  62G.06; 62G.07; 62G.08; 62G.09; 62G.10; 62G.11; 
                  62G.12; 62G.13; 62G.14; 62G.15; 62G.16; 62G.17; 
                  62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23; 
                  62G.24; 62G.25. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2000, section 60A.06, 
        subdivision 3, is amended to read: 
           Subd. 3.  [LIMITATION ON COMBINATION POLICIES.] (a) Unless 
        specifically authorized by subdivision 1, clause (4), it is 
        unlawful to combine in one policy coverage permitted by 
        subdivision 1, clauses (4) and (5)(a).  This subdivision does 
        not prohibit the simultaneous sale of these products, but the 
        sale must involve two separate and distinct policies.  
           (b) This subdivision does not apply to group policies.  
           (c) This subdivision does not apply to policies permitted 
        by subdivision 1, clause (4), that contain benefits providing 
        acceleration of life, endowment, or annuity benefits in advance 
        of the time they would otherwise be payable, or to long-term 
        care policies as defined in section 62A.46, subdivision 2, or 
        chapter 62S.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 2.  Minnesota Statutes 2000, section 60A.08, 
        subdivision 13, is amended to read: 
           Subd. 13.  [REDUCTION OF LIMITS BY COSTS OF DEFENSE 
        PROHIBITED.] (a) No insurer shall issue or renew a policy of 
        liability insurance in this state that reduces the limits of 
        liability stated in the policy by the costs of legal defense. 
           (b) This subdivision does not apply to:  
           (1) professional liability insurance with annual aggregate 
        limits of liability greater than of at least $100,000, including 
        directors' and officers' and errors and omissions liability 
        insurance; 
           (2) environmental impairment liability insurance; 
           (3) insurance policies issued to large commercial risks; or 
           (4) coverages that the commissioner determines to be 
        appropriate which will be published in the manner prescribed for 
        surplus lines insurance in section 60A.201, subdivision 4.  
           (c) For purposes of this subdivision, "large commercial 
        risks" means an insured whose gross annual revenues in the 
        fiscal year preceding issuance of the policy were at least 
        $10,000,000. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 3.  Minnesota Statutes 2000, section 60A.11, 
        subdivision 10, is amended to read: 
           Subd. 10.  [DEFINITIONS.] The following terms have the 
        meaning assigned in this subdivision for purposes of this 
        section and section 60A.111: 
           (a) "Adequate evidence" means a written confirmation, 
        advice, or other verification issued by a depository, issuer, or 
        custodian bank which shows that the investment is held for the 
        company; 
           (b) "Adequate security" means a letter of credit qualifying 
        under subdivision 11, paragraph (f), cash, or the pledge of an 
        investment authorized by any subdivision of this section; 
           (c) "Admitted assets," for purposes of computing percentage 
        limitations on particular types of investments, means the assets 
        as shown by the company's annual statement, required by section 
        60A.13, as of the December 31 immediately preceding the date the 
        company acquires the investment; 
           (d) "Clearing corporation" means The Depository Trust 
        Company or any other clearing agency registered with the 
        securities and exchange commission pursuant to the Securities 
        Exchange Act of 1934, section 17A, Euro-clear Clearance System 
        Limited and CEDEL S.A., and, with the approval of the 
        commissioner, any other clearing corporation as defined in 
        section 336.8-102; 
           (e) "Control" has the meaning assigned to that term in, and 
        must be determined in accordance with, section 60D.15, 
        subdivision 4; 
           (f) "Custodian bank" means a bank or trust company or a 
        branch of a bank or trust company that is acting as custodian 
        and is supervised and examined by state or federal authority 
        having supervision over the bank or trust company or with 
        respect to a company's foreign investments only by the 
        regulatory authority having supervision over banks or trust 
        companies in the jurisdiction in which the bank, trust company, 
        or branch is located, and any banking institutions qualifying as 
        an "Eligible Foreign Custodian" under the Code of Federal 
        Regulations, section 270.17f-5, adopted under section 17(f) of 
        the Investment Company Act of 1940, and specifically including 
        Euro-clear Clearance System Limited and CEDEL S.A., acting as 
        custodians; 
           (g) "Evergreen clause" means a provision that automatically 
        renews a letter of credit for a time certain if the issuer of 
        the letter of credit fails to affirmatively signify its 
        intention to nonrenew upon expiration; 
           (h) "Government obligations" means direct obligations for 
        the payment of money, or obligations for the payment of money to 
        the extent guaranteed as to the payment of principal and 
        interest by any governmental issuer where the obligations are 
        payable from ad valorem taxes or guaranteed by the full faith, 
        credit, and taxing power of the issuer and are not secured 
        solely by special assessments for local improvements; 
           (i) "Noninvestment grade obligations" means obligations 
        which, at the time of acquisition, were rated below Baa/BBB or 
        the equivalent by a securities rating agency or which, at the 
        time of acquisition, were not in one of the two highest 
        categories established by the securities valuation office of the 
        National Association of Insurance Commissioners; 
           (j) "Issuer" means the corporation, business trust, 
        governmental unit, partnership, association, individual, or 
        other entity which issues or on behalf of which is issued any 
        form of obligation; 
           (k) "Licensed real estate appraiser" means a person who 
        develops and communicates real estate appraisals and who holds a 
        current, valid license under chapter 82B or a substantially 
        similar licensing requirement in another jurisdiction; 
           (l) "Member bank" means a national bank, state bank or 
        trust company which is a member of the Federal Reserve System; 
           (m) "National securities exchange" means an exchange 
        registered under section 6 of the Securities Exchange Act of 
        1934 or an exchange regulated under the laws of the Dominion of 
        Canada; 
           (n) "NASDAQ" means the reporting system for securities 
        meeting the definition of National Market System security as 
        provided under Part I to Schedule D of the National Association 
        of Securities Dealers Incorporated bylaws; 
           (o) "Obligations" include bonds, notes, debentures, 
        transportation equipment certificates, repurchase agreements, 
        bank certificates of deposit, time deposits, bankers' 
        acceptances, and other obligations for the payment of money not 
        in default as to payments of principal and interest on the date 
        of investment, whether constituting general obligations of the 
        issuer or payable only out of certain revenues or certain funds 
        pledged or otherwise dedicated for payment.  Leases are 
        considered obligations if the lease is assigned for the benefit 
        of the company and is nonterminable by the lessee or lessees 
        thereunder upon foreclosure of any lien upon the leased 
        property, and rental payments are sufficient to amortize the 
        investment over the primary lease term; 
           (p) "Qualified assets" means the sum of (1) all investments 
        qualified in accordance with this section other than investments 
        in affiliates and subsidiaries, (2) investments in obligations 
        of affiliates as defined in section 60D.15, subdivision 2, 
        secured by real or personal property sufficient to qualify the 
        investment under subdivision 19 or 23, (3) qualified investments 
        in subsidiaries, as defined in section 60D.15, subdivision 9, on 
        a consolidated basis with the insurance company without 
        allowance for goodwill or other intangible value, and (4) cash 
        on hand and on deposit, agent's balances or uncollected premiums 
        not due more than 90 days, assets held pursuant to section 
        60A.12, subdivision 2, investment income due and accrued, funds 
        due or on deposit or recoverable on loss payments under 
        contracts of reinsurance entered into pursuant to section 
        60A.09, premium bills and notes receivable, federal income taxes 
        recoverable, and equities and deposits in pools and 
        associations; 
           (q) "Qualified net earnings" means that the net earnings of 
        the issuer after elimination of extraordinary nonrecurring items 
        of income and expense and before income taxes and fixed charges 
        over the five immediately preceding completed fiscal years, or 
        its period of existence if less than five years, has averaged 
        not less than 1-1/4 times its average annual fixed charges 
        applicable to the period; 
           (r) "Required liabilities" means the sum of (1) total 
        liabilities as required to be reported in the company's most 
        recent annual report to the commissioner of commerce of this 
        state, (2) for companies operating under the stock plan, the 
        minimum paid-up capital and surplus required to be maintained 
        pursuant to section 60A.07, subdivision 5a, (3) for companies 
        operating under the mutual or reciprocal plan, the minimum 
        amount of surplus required to be maintained pursuant to section 
        60A.07, subdivision 5b, and (4) the amount, if any, by which the 
        company's loss and loss adjustment expense reserves exceed 350 
        percent of its surplus as it pertains to policyholders as of the 
        same date.  The commissioner may waive the requirement in clause 
        (4) unless the company's written premiums exceed 300 percent of 
        its surplus as it pertains to policyholders as of the same 
        date.  In addition to the required amounts pursuant to clauses 
        (1) to (4), the commissioner may require that the amount of any 
        apparent reserve deficiency that may be revealed by one to five 
        year loss and loss adjustment expense development analysis for 
        the five years reported in the company's most recent annual 
        statement to the commissioner be added to required liabilities; 
           (s) "Revenue obligations" means obligations for the payment 
        of money by a governmental issuer where the obligations are 
        payable from revenues, earnings, or special assessments on 
        properties benefited by local improvements of the issuer which 
        are specifically pledged therefor; 
           (t) "Security" has the meaning given in section 5 of the 
        Security Act of 1933 and specifically includes, but is not 
        limited to, stocks, stock equivalents, warrants, rights, 
        options, obligations, American Depository Receipts (ADR's), 
        repurchase agreements, and reverse repurchase agreements; and 
           (u) "Unrestricted surplus" means the amount by which 
        qualified assets exceed 110 percent of required liabilities.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 4.  Minnesota Statutes 2000, section 60A.129, 
        subdivision 2, is amended to read: 
           Subd. 2.  [LOSS RESERVE CERTIFICATION.] (a) Each domestic 
        company engaged in providing the types of coverage described in 
        section 60A.06, subdivision 1, clause (1), (2), (3), (5)(b), 
        (6), (8), (9), (10), (11), (12), (13), or (14), must have its 
        loss reserves certified by a qualified actuary.  The company 
        must file the certification with the commissioner within 30 days 
        of completion of the certification, but not later than June 1.  
        The actuary providing the certification must not may be an 
        employee of the company but the commissioner may still require 
        an independent actuarial certification as described in 
        subdivision 1.  This subdivision does not apply to township 
        mutual companies, or to other domestic insurers having less than 
        $1,000,000 of premiums written in any year and fewer than 1,000 
        policyholders.  The commissioner may allow an exception to the 
        stand alone certification where it can be demonstrated that a 
        company in a group has a pooling or 100 percent reinsurance 
        agreement used in a group which substantially affects the 
        solvency and integrity of the reserves of the company, or where 
        it is only the parent company of a group which is licensed to do 
        business in Minnesota.  If these circumstances exist, the 
        company may file a written request with the commissioner for an 
        exception.  Companies writing reinsurance alone are not exempt 
        from this requirement.  The certification must contain the 
        following statement:  "The loss reserves and loss expense 
        reserves have been examined and found to be calculated in 
        accordance with generally accepted actuarial principles and 
        practices In my opinion, the reserves described in this 
        certification are consistent with reserves computed in 
        accordance with standards and principles established by the 
        Actuarial Standards Board and are fairly stated."  
           (b) Each foreign company engaged in providing the types of 
        coverage described in section 60A.06, subdivision 1, clause (1), 
        (2), (3), (5)(b), (6), (8), (9), (10), (11), (12), (13), or 
        (14), required by this section to file an annual audited 
        financial report, whose total net earned premium for Schedule P, 
        Part 1A to Part 1H plus Part 1R, (Schedule P, Part 1A to Part 1H 
        plus Part 1R, Column 4, current year premiums earned, from the 
        company's most currently filed annual statement) is equal to 
        one-third or more of the company's total net earned premium 
        (Underwriting and Investment Exhibit, Part 2, Column 4, total 
        line, of the annual statement) must have a reserve certification 
        by a qualified actuary at least every three years.  In the year 
        that the certification is due, the company must file the 
        certification with the commissioner within 30 days of completion 
        of the certification, but not later than June 1.  The actuary 
        providing the certification must not be an employee of the 
        company.  Companies writing reinsurance alone are not exempt 
        from this requirement.  The certification must contain the 
        following statement:  "The loss reserves and loss expense 
        reserves have been examined and found to be calculated in 
        accordance with generally accepted actuarial principles and 
        practices and are fairly stated."  
           (c) Each company providing life and/or health insurance 
        coverages described in section 60A.06, subdivision 1, clause (4) 
        or (5)(a), required by this section to file an audited annual 
        financial report, whose premiums and annuity considerations (net 
        of reinsurance) from accident and health equal one-third or more 
        of the company's total premiums and annuity considerations (net 
        of reinsurance), as reported in the summary of operations, must 
        have its aggregate reserve for accident and health policies and 
        liability for policy and contract claims for accident and health 
        certified by a qualified actuary at least once every three 
        years.  The actuary providing the certification must not be an 
        employee of the company.  Companies writing reinsurance alone 
        are not exempt from this requirement.  The certification must 
        contain the following statement:  "The policy and contract 
        claims reserves for accident and health have been examined and 
        found to be calculated in accordance with generally accepted 
        actuarial principles and practices and are fairly stated." 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 5.  Minnesota Statutes 2000, section 60A.14, 
        subdivision 1, is amended to read: 
           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; 
           (7) for filing forms and rates, $75 per filing, to be paid 
        on a quarterly basis in response to an invoice.  Billing and 
        payment may be made electronically; 
           (8) for annual renewal of surplus lines insurer license, 
        $300. 
           The commissioner shall adopt rules to define filings that 
        are subject to a fee. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 6.  Minnesota Statutes 2000, section 60A.16, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SCOPE.] (1) [DOMESTIC INSURANCE 
        CORPORATIONS.] Any two or more domestic insurance corporations, 
        formed for any of the purposes for which stock, mutual, or stock 
        and mutual insurance corporations, or reciprocal or 
        interinsurance contract exchanges might be formed under the laws 
        of this state, may be 
           (a) merged into one of such domestic insurance 
        corporations, or 
           (b) consolidated into a new insurance corporation to be 
        formed under the laws of this state. 
           (2) [DOMESTIC AND FOREIGN INSURANCE CORPORATIONS.] Any such 
        domestic insurance corporations and any foreign insurance 
        corporations formed to carry on any insurance business for the 
        conduct of which an insurance corporation might be organized 
        under the laws of this state, may be 
           (a) merged into one of such domestic insurance 
        corporations, or 
           (b) merged into one of such foreign insurance corporations, 
        or 
           (c) consolidated into a new insurance corporation to be 
        formed under the laws of this state, or 
           (d) consolidated into a new insurance corporation to be 
        formed under the laws of the government under which one of such 
        foreign insurance corporations was formed, provided that each of 
        such foreign insurance corporations is authorized by the laws of 
        the government under which it was formed to effect such merger 
        or consolidation. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 7.  Minnesota Statutes 2000, section 60A.23, 
        subdivision 8, is amended to read: 
           Subd. 8.  [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS 
        WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1)  [SCOPE.] This 
        subdivision applies to any vendor of risk management services 
        and to any entity which administers, for compensation, a 
        self-insurance or insurance plan.  This subdivision does not 
        apply (a) to an insurance company authorized to transact 
        insurance in this state, as defined by section 60A.06, 
        subdivision 1, clauses (4) and (5); (b) to a service plan 
        corporation, as defined by section 62C.02, subdivision 6; (c) to 
        a health maintenance organization, as defined by section 62D.02, 
        subdivision 4; (d) to an employer directly operating a 
        self-insurance plan for its employees' benefits; (e) to an 
        entity which administers a program of health benefits 
        established pursuant to a collective bargaining agreement 
        between an employer, or group or association of employers, and a 
        union or unions; or (f) to an entity which administers a 
        self-insurance or insurance plan if a licensed Minnesota insurer 
        is providing insurance to the plan and if the licensed insurer 
        has appointed the entity administering the plan as one of its 
        licensed agents within this state. 
           (2)  [DEFINITIONS.] For purposes of this subdivision the 
        following terms have the meanings given them. 
           (a) "Administering a self-insurance or insurance plan" 
        means (i) processing, reviewing or paying claims, (ii) 
        establishing or operating funds and accounts, or (iii) otherwise 
        providing necessary administrative services in connection with 
        the operation of a self-insurance or insurance plan. 
           (b) "Employer" means an employer, as defined by section 
        62E.02, subdivision 2. 
           (c) "Entity" means any association, corporation, 
        partnership, sole proprietorship, trust, or other business 
        entity engaged in or transacting business in this state. 
           (d) "Self-insurance or insurance plan" means a plan 
        providing life, medical or hospital care, accident, sickness or 
        disability insurance for the benefit of employees or members of 
        an association, or a plan providing liability coverage for any 
        other risk or hazard, which is or is not directly insured or 
        provided by a licensed insurer, service plan corporation, or 
        health maintenance organization. 
           (e) "Vendor of risk management services" means an entity 
        providing for compensation actuarial, financial management, 
        accounting, legal or other services for the purpose of designing 
        and establishing a self-insurance or insurance plan for an 
        employer. 
           (3)  [LICENSE.] No vendor of risk management services or 
        entity administering a self-insurance or insurance plan may 
        transact this business in this state unless it is licensed to do 
        so by the commissioner.  An applicant for a license shall state 
        in writing the type of activities it seeks authorization to 
        engage in and the type of services it seeks authorization to 
        provide.  The license may be granted only when the commissioner 
        is satisfied that the entity possesses the necessary 
        organization, background, expertise, and financial integrity to 
        supply the services sought to be offered.  The commissioner may 
        issue a license subject to restrictions or limitations upon the 
        authorization, including the type of services which may be 
        supplied or the activities which may be engaged in.  The license 
        fee is $1,000 for the initial application and $1,000 for each 
        two-year renewal.  All licenses are for a period of two years. 
           (4)  [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.] 
        To assure that self-insurance or insurance plans are financially 
        solvent, are administered in a fair and equitable fashion, and 
        are processing claims and paying benefits in a prompt, fair, and 
        honest manner, vendors of risk management services and entities 
        administering insurance or self-insurance plans are subject to 
        the supervision and examination by the commissioner.  Vendors of 
        risk management services, entities administering insurance or 
        self-insurance plans, and insurance or self-insurance plans 
        established or operated by them are subject to the trade 
        practice requirements of sections 72A.19 to 72A.30.  In lieu of 
        an unlimited guarantee from a parent corporation for a vendor of 
        risk management services or an entity administering insurance or 
        self-insurance plans, the commissioner may accept a surety bond 
        in a form satisfactory to the commissioner in an amount equal to 
        120 percent of the total amount of claims handled by the 
        applicant in the prior year.  If at any time the total amount of 
        claims handled during a year exceeds the amount upon which the 
        bond was calculated, the administrator shall immediately notify 
        the commissioner.  The commissioner may require that the bond be 
        increased accordingly.  
           No contract entered into after July 1, 2001, between a 
        licensed vendor of risk management services and a group 
        authorized to self-insure for workers' compensation liabilities 
        under section 79A.03, subdivision 6, may take effect until it 
        has been filed with the commissioner, and either (1) the 
        commissioner has approved it or (2) 60 days have elapsed and the 
        commissioner has not disapproved it as misleading or violative 
        of public policy. 
           (5)  [RULEMAKING AUTHORITY.] To carry out the purposes of 
        this subdivision, the commissioner may adopt rules pursuant to 
        sections 14.001 to 14.69.  These rules may: 
           (a) establish reporting requirements for administrators of 
        insurance or self-insurance plans; 
           (b) establish standards and guidelines to assure the 
        adequacy of financing, reinsuring, and administration of 
        insurance or self-insurance plans; 
           (c) establish bonding requirements or other provisions 
        assuring the financial integrity of entities administering 
        insurance or self-insurance plans; or 
           (d) establish other reasonable requirements to further the 
        purposes of this subdivision. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 8.  Minnesota Statutes 2000, section 61A.072, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [ACCELERATED BENEFITS.] (a) "Accelerated benefits"
        covered under this section are benefits payable under the life 
        insurance contract: 
           (1) to a policyholder or certificate holder, during the 
        lifetime of the insured, in anticipation of death upon the 
        occurrence of a specified life-threatening or catastrophic 
        condition as defined by the policy or rider; 
           (2) that reduce the death benefit otherwise payable under 
        the life insurance contract; and 
           (3) that are payable upon the occurrence of a single 
        qualifying event that results in the payment of a benefit amount 
        fixed at the time of acceleration. 
           (b) "Qualifying event" means one or more of the following: 
           (1) a medical condition that would result in a drastically 
        limited life span as specified in the contract; 
           (2) a medical condition that has required or requires 
        extraordinary medical intervention, such as, but not limited to, 
        major organ transplant or continuous artificial life support 
        without which the insured would die; or 
           (3) a condition that requires continuous confinement in an 
        eligible institution as defined in the contract if the insured 
        is expected to remain there for the rest of the insured's life. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 9.  Minnesota Statutes 2000, section 62A.17, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONTINUATION OF COVERAGE.] Every group 
        insurance policy, group subscriber contract, and health care 
        plan included within the provisions of section 62A.16, except 
        policies, contracts, or health care plans covering employees of 
        an agency of the federal government, shall contain a provision 
        which permits every covered employee who is voluntarily or 
        involuntarily terminated or laid off from employment, if the 
        policy, contract, or health care plan remains in force for 
        active employees of the employer, to elect to continue the 
        coverage for the employee and dependents. 
           An employee shall be considered to be laid off from 
        employment if there is a reduction in hours to the point where 
        the employee is no longer eligible under the policy, contract, 
        or health care plan.  Termination shall not include discharge 
        for gross misconduct.  
           Upon request by the terminated or laid off employee, a 
        health carrier must provide the instructions necessary to enable 
        the employee to elect continuation of coverage. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 10.  Minnesota Statutes 2000, section 62A.20, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIREMENT.] Every policy of accident and 
        health insurance providing coverage of hospital or medical 
        expense on either an expense-incurred basis or other than an 
        expense-incurred basis, which in addition to covering the 
        insured also provides coverage to the spouse and dependent 
        children of the insured shall contain: 
           (1) a provision which permits allows the spouse and 
        dependent children to elect to continue coverage when the 
        insured becomes enrolled for benefits under Title XVIII of the 
        Social Security Act (Medicare); and 
           (2) a provision which permits allows the dependent children 
        to continue coverage when they cease to be dependent children 
        under the generally applicable requirement of the plan. 
           Upon request by the insured or the insured's spouse or 
        dependent child, a health carrier must provide the instructions 
        necessary to enable the spouse or child to elect continuation of 
        coverage. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 11.  Minnesota Statutes 2000, section 62A.21, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [CONTINUATION PRIVILEGE.] Every policy described 
        in subdivision 1 shall contain a provision which permits 
        continuation of coverage under the policy for the insured's 
        former spouse and dependent children upon entry of a valid 
        decree of dissolution of marriage.  The coverage shall be 
        continued until the earlier of the following dates: 
           (a) the date the insured's former spouse becomes covered 
        under any other group health plan; or 
           (b) the date coverage would otherwise terminate under the 
        policy. 
           If the coverage is provided under a group policy, any 
        required premium contributions for the coverage shall be paid by 
        the insured on a monthly basis to the group policyholder for 
        remittance to the insurer.  The policy must require the group 
        policyholder to, upon request, provide the insured with written 
        verification from the insurer of the cost of this coverage 
        promptly at the time of eligibility for this coverage and at any 
        time during the continuation period.  In no event shall the 
        amount of premium charged exceed 102 percent of the cost to the 
        plan for such period of coverage for other similarly situated 
        spouses and dependent children with respect to whom the marital 
        relationship has not dissolved, without regard to whether such 
        cost is paid by the employer or employee. 
           Upon request by the insured's former spouse or dependent 
        child, a health carrier must provide the instructions necessary 
        to enable the child or former spouse to elect continuation of 
        coverage. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 12.  Minnesota Statutes 2000, section 62A.302, is 
        amended to read: 
           62A.302 [COVERAGE OF DEPENDENTS.] 
           Subdivision 1.  [SCOPE OF COVERAGE.] This section applies 
        to all health plans as defined in section 62A.011: 
           (1) a health plan as defined in section 62A.011; 
           (2) coverage described in section 62A.011, subdivision 3, 
        clauses (4), (6), (7), (8), (9), and (10); and 
           (3) a policy, contract, or certificate issued by a 
        community integrated service network licensed under chapter 62N. 
           Subd. 2.  [REQUIRED COVERAGE.] Every health plan included 
        in subdivision 1 that provides dependent coverage must define 
        "dependent" no more restrictively than the definition provided 
        in section 62L.02. 
           Sec. 13.  Minnesota Statutes 2000, section 62A.31, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [MINIMUM COVERAGE.] The policy must provide a 
        minimum of the coverage set out in subdivision 2 and for an 
        extended basic plan, the additional requirements of section 
        62E.07. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 14.  Minnesota Statutes 2000, section 62A.31, 
        subdivision 1i, is amended to read: 
           Subd. 1i.  [REPLACEMENT COVERAGE.] If a Medicare supplement 
        policy or certificate replaces another Medicare supplement 
        policy or certificate, the issuer of the replacing policy or 
        certificate shall waive any time periods applicable to 
        preexisting conditions, waiting periods, elimination periods, 
        and probationary periods in the new Medicare supplement policy 
        or certificate for benefits to the extent the time was spent 
        under the original policy or certificate.  For purposes of this 
        subdivision, "Medicare supplement policy or certificate" means 
        all coverage described in section 62A.011, subdivision 4 3, 
        clause (10). 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 15.  Minnesota Statutes 2000, section 62A.31, 
        subdivision 3, is amended to read: 
           Subd. 3.  [DEFINITIONS.] (a) The definitions provided in 
        this subdivision apply to sections 62A.31 to 62A.44. 
           (b) "Accident," "accidental injury," or "accidental means" 
        means to employ "result" language and does not include words 
        that establish an accidental means test or use words such as 
        "external," "violent," "visible wounds," or similar words of 
        description or characterization. 
           (1) The definition shall not be more restrictive than the 
        following:  "Injury or injuries for which benefits are provided 
        means accidental bodily injury sustained by the insured person 
        which is the direct result of an accident, independent of 
        disease or bodily infirmity or any other cause, and occurs while 
        insurance coverage is in force." 
           (2) The definition may provide that injuries shall not 
        include injuries for which benefits are provided or available 
        under a workers' compensation, employer's liability or similar 
        law, or motor vehicle no-fault plan, unless prohibited by law. 
           (c) "Applicant" means: 
           (1) in the case of an individual Medicare supplement policy 
        or certificate, the person who seeks to contract for insurance 
        benefits; and 
           (2) in the case of a group Medicare supplement policy or 
        certificate, the proposed certificate holder. 
           (d) "Bankruptcy" means a situation in which a 
        Medicare+Choice organization that is not an issuer has filed, or 
        has had filed against it, a petition for declaration of 
        bankruptcy and has ceased doing business in the state. 
           (e) "Benefit period" or "Medicare benefit period" shall not 
        be defined more restrictively than as defined in the Medicare 
        program. 
           (f) "Certificate" means a certificate delivered or issued 
        for delivery in this state or offered to a resident of this 
        state under a group Medicare supplement policy or certificate. 
           (g) "Certificate form" means the form on which the 
        certificate is delivered or issued for delivery by the issuer. 
           (h) "Convalescent nursing home," "extended care facility," 
        or "skilled nursing facility" shall not be defined more 
        restrictively than as defined in the Medicare program. 
           (i) "Employee welfare benefit plan" means a plan, fund, or 
        program of employee benefits as defined in United States Code, 
        title 29, section 1002 (Employee Retirement Income Security Act).
           (j) "Health care expenses" means expenses of health 
        maintenance organizations associated with the delivery of health 
        care services which are analogous to incurred losses of 
        insurers.  The expenses shall not include: 
           (1) home office and overhead costs; 
           (2) advertising costs; 
           (3) commissions and other acquisition costs; 
           (4) taxes; 
           (5) capital costs; 
           (6) administrative costs; and 
           (7) claims processing costs. 
           (k) "Hospital" may be defined in relation to its status, 
        facilities, and available services or to reflect its 
        accreditation by the joint commission on accreditation of 
        hospitals, but not more restrictively than as defined in the 
        Medicare program. 
           (l) "Insolvency" means a situation in which an issuer, 
        licensed to transact the business of insurance in this state, 
        including the right to transact business as any type of issuer, 
        has had a final order of liquidation entered against it with a 
        finding of insolvency by a court of competent jurisdiction in 
        the issuer's state of domicile. 
           (m) "Issuer" includes insurance companies, fraternal 
        benefit societies, health service plan corporations, health 
        maintenance organizations, and any other entity delivering or 
        issuing for delivery Medicare supplement policies or 
        certificates in this state or offering these policies or 
        certificates to residents of this state. 
           (n) "Medicare" shall be defined in the policy and 
        certificate.  Medicare may be defined as the Health Insurance 
        for the Aged Act, title XVIII of the Social Security Amendments 
        of 1965, as amended, or title I, part I, of Public Law Number 
        89-97, as enacted by the 89th Congress of the United States of 
        America and popularly known as the Health Insurance for the Aged 
        Act, as amended. 
           (o) "Medicare eligible expenses" means health care expenses 
        covered by Medicare, to the extent recognized as reasonable and 
        medically necessary by Medicare. 
           (p) "Medicare+Choice plan" means a plan of coverage for 
        health benefits under Medicare part C as defined in section 1859 
        of the federal Social Security Act, United States Code, title 
        42, section 1395w-28, and includes: 
           (1) coordinated care plans which provide health care 
        services, including, but not limited to, health maintenance 
        organization plans, with or without a point-of-service option, 
        plans offered by provider-sponsored organizations, and preferred 
        provider organization plans; 
           (2) medical savings account plans coupled with a 
        contribution into a Medicare+Choice medical savings account; and 
           (3) Medicare+Choice private fee-for-service plans. 
           (q) "Medicare-related coverage" means a policy, contract, 
        or certificate issued as a supplement to Medicare, regulated 
        under sections 62A.31 to 62A.44, including Medicare select 
        coverage; policies, contracts, or certificates that supplement 
        Medicare issued by health maintenance organizations; or 
        policies, contracts, or certificates governed by section 1833 
        (known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA" 
        or "risk" contracts) of the federal Social Security Act, United 
        States Code, title 42, section 1395, et seq., as amended.; or 
        Section 4001 of the Balanced Budget Act of 1997 (BBA)(Public Law 
        105-33), Sections 1851 to 1859 of the Social Security Act 
        establishing Part C of the Medicare program, known as the 
        "Medicare+Choice program." 
           (r) "Medicare supplement policy or certificate" means a 
        group or individual policy of accident and sickness insurance or 
        a subscriber contract of hospital and medical service 
        associations or health maintenance organizations, or those 
        policies or certificates covered by section 1833 of the federal 
        Social Security Act, United States Code, title 42, section 1395, 
        et seq., or an issued policy under a demonstration project 
        specified under amendments to the federal Social Security Act, 
        which is advertised, marketed, or designed primarily as a 
        supplement to reimbursements under Medicare for the hospital, 
        medical, or surgical expenses of persons eligible for Medicare. 
           (s) "Physician" shall not be defined more restrictively 
        than as defined in the Medicare program or section 62A.04, 
        subdivision 1, or 62A.15, subdivision 3a. 
           (t) "Policy form" means the form on which the policy is 
        delivered or issued for delivery by the issuer. 
           (u) "Secretary" means the Secretary of the United States 
        Department of Health and Human Services. 
           (v) "Sickness" shall not be defined more restrictively than 
        the following: 
           "Sickness means illness or disease of an insured person 
           which first manifests itself after the effective date of 
           insurance and while the insurance is in force." 
           The definition may be further modified to exclude 
        sicknesses or diseases for which benefits are provided under a 
        workers' compensation, occupational disease, employer's 
        liability, or similar law. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 16.  [62A.421] [DEMONSTRATION PROJECTS.] 
           Subdivision 1.  [ESTABLISHMENT.] The commissioner may 
        establish demonstration projects to allow an issuer of Medicare 
        supplement policies to extend coverage to individuals enrolled 
        in part A or part B, or both, of the Medicare program, Title 
        XVIII of the Social Security Act, United States Code, title 42, 
        section 1395, et seq.  For purposes of this section, the 
        commissioner may waive compliance with the benefits described in 
        sections 62A.315 and 62A.316 and other applicable statutes and 
        rules if there is reasonable evidence that the statutes or rules 
        prohibit the operation of the demonstration project, but may not 
        waive the six-month guaranteed issue provision.  The 
        commissioner shall provide for public comment before any statute 
        or rule is waived. 
           Subd. 2.  [BENEFITS.] A demonstration project must provide 
        health benefits equal to or exceeding the level of benefits 
        provided in Title XVIII of the Social Security Act and an 
        out-of-hospital prescription drug benefit.  The out-of-hospital 
        prescription drug benefit may be waived by the commissioner if 
        the issuer presents evidence satisfactory to the commissioner 
        that the inclusion of the benefit would restrict the operation 
        of the demonstration project. 
           Subd. 3.  [APPLICATION.] An issuer electing to participate 
        in a demonstration project shall apply to the commissioner for 
        approval on a form developed by the commissioner.  The 
        application shall include at least the following: 
           (1) a statement identifying the population that the project 
        is designed to serve; 
           (2) a description of the proposed project including a 
        statement projecting a schedule of costs and benefits for the 
        policyholder; 
           (3) reference to the sections of Minnesota Statutes and 
        department of commerce rules for which waiver is requested; 
           (4) evidence that application of the requirements of 
        applicable Minnesota Statutes and department of commerce rules 
        would, unless waived, prohibit the operation of the 
        demonstration project; 
           (5) an estimate of the number of years needed to adequately 
        demonstrate the project's effects; and 
           (6) other information the commissioner may reasonably 
        require. 
           Subd. 4.  [TIMELINE.] The commissioner shall approve, deny, 
        or refer back to the issuer for modification, the application 
        for a demonstration project within 60 days of the receipt of a 
        complete application. 
           Subd. 5.  [PERIOD SPECIFIED.] The commissioner may approve 
        an application for a demonstration project for a period of six 
        years, with an option to renew. 
           Subd. 6.  [ANNUAL REPORT.] Each issuer for which a 
        demonstration project is approved shall annually file a report 
        with the commissioner summarizing the project's experience at 
        the same time it files its annual report.  The report shall be 
        on a form developed by the commissioner and shall be separate 
        from the annual report. 
           Subd. 7.  [RESCISSION OF APPROVAL.] The commissioner may 
        rescind approval of a demonstration project if the commissioner 
        makes any of the findings listed in section 60A.052 or 62D.15, 
        subdivision 1, with respect to the project for which it has not 
        been granted a specific exemption, or if the commissioner finds 
        that the project's operation is contrary to the information 
        contained in the approved application. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 17.  Minnesota Statutes 2000, section 62A.65, 
        subdivision 8, is amended to read: 
           Subd. 8.  [CESSATION OF INDIVIDUAL BUSINESS.] 
        Notwithstanding the provisions of subdivisions 1 to 7, a health 
        carrier may elect to cease doing business in the individual 
        health plan market in this state if it complies with the 
        requirements of this subdivision.  For purposes of this section, 
        "cease doing business" means to discontinue issuing new 
        individual health plans and to refuse to renew all of the health 
        carrier's existing individual health plans issued in this state 
        whose terms permit refusal to renew under the circumstances 
        specified in this subdivision.  This subdivision does not permit 
        cancellation of an individual health plan, unless the terms of 
        the health plan permit cancellation under the circumstances 
        specified in this subdivision.  A health carrier electing to 
        cease doing business in the individual health plan market in 
        this state shall notify the commissioner 180 days prior to the 
        effective date of the cessation.  Within 30 days after the 
        termination, the health carrier shall submit to the commissioner 
        a complete list of policyholders that have been terminated.  The 
        cessation of business does not include the failure of a health 
        carrier to offer or issue new business in the individual health 
        plan market or continue an existing product line in that market, 
        provided that a health carrier does not terminate, cancel, or 
        fail to renew its current individual health plan business.  A 
        health carrier electing to cease doing business in the 
        individual health plan market shall provide 120 days' written 
        notice to each policyholder covered by an individual health plan 
        issued by the health carrier.  This notice must also inform each 
        policyholder of the existence of the Minnesota Comprehensive 
        Health Association, the requirements for being accepted, the 
        procedures for applying for coverage, and the telephone numbers 
        at the department of health and the department of commerce for 
        information about private individual or family health coverage.  
        A health carrier that ceases to write new business in the 
        individual health plan market shall continue to be governed by 
        this section with respect to continuing individual health plan 
        business conducted by the health carrier.  A health carrier that 
        ceases to do business in the individual health plan market after 
        July 1, 1994, is prohibited from writing new business in the 
        individual health plan market in this state for a period of five 
        years from the date of notice to the commissioner.  This 
        subdivision applies to any health maintenance organization that 
        ceases to do business in the individual health plan market in 
        one service area with respect to that service area only.  
        Nothing in this subdivision prohibits an affiliated health 
        maintenance organization from continuing to do business in the 
        individual health plan market in that same service area.  The 
        right to refuse to renew an individual health plan under this 
        subdivision does not apply to individual health plans issued on 
        a guaranteed renewable basis that does not permit refusal to 
        renew under the circumstances specified in this subdivision.  
           Sec. 18.  Minnesota Statutes 2000, section 62E.04, 
        subdivision 4, is amended to read: 
           Subd. 4.  [MAJOR MEDICAL COVERAGE.] Each insurer and 
        fraternal shall affirmatively offer coverage of major medical 
        expenses to every applicant who applies to the insurer or 
        fraternal for a new unqualified policy, which has a lifetime 
        benefit limit of less than $1,000,000, at the time of 
        application and annually to every holder of such an unqualified 
        policy of accident and health insurance renewed by the insurer 
        or fraternal.  The coverage shall provide that when a covered 
        individual incurs out-of-pocket expenses of $5,000 or more 
        within a calendar year for services covered in section 62E.06, 
        subdivision 1, benefits shall be payable, subject to any 
        copayment authorized by the commissioner, up to a maximum 
        lifetime limit of $500,000 not less than $1,000,000.  The offer 
        of coverage of major medical expenses may consist of the offer 
        of a rider on an existing unqualified policy or a new policy 
        which is a qualified plan. 
           Sec. 19.  Minnesota Statutes 2000, section 62E.06, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [NUMBER THREE PLAN.] A plan of health 
        coverage shall be certified as a number three qualified plan if 
        it otherwise meets the requirements established by chapters 62A 
        and, 62C, and 62Q, and the other laws of this state, whether or 
        not the policy is issued in Minnesota, and meets or exceeds the 
        following minimum standards: 
           (a) The minimum benefits for a covered individual shall, 
        subject to the other provisions of this subdivision, be equal to 
        at least 80 percent of the cost of covered services in excess of 
        an annual deductible which does not exceed $150 per person.  The 
        coverage shall include a limitation of $3,000 per person on 
        total annual out-of-pocket expenses for services covered under 
        this subdivision.  The coverage shall be subject to a maximum 
        lifetime benefit of not less than $500,000 $1,000,000. 
           The $3,000 limitation on total annual out-of-pocket 
        expenses and the $500,000 $1,000,000 maximum lifetime benefit 
        shall not be subject to change or substitution by use of an 
        actuarially equivalent benefit. 
           (b) Covered expenses shall be the usual and customary 
        charges for the following services and articles when prescribed 
        by a physician: 
           (1) hospital services; 
           (2) professional services for the diagnosis or treatment of 
        injuries, illnesses, or conditions, other than dental, which are 
        rendered by a physician or at the physician's direction; 
           (3) drugs requiring a physician's prescription; 
           (4) services of a nursing home for not more than 120 days 
        in a year if the services would qualify as reimbursable services 
        under Medicare; 
           (5) services of a home health agency if the services would 
        qualify as reimbursable services under Medicare; 
           (6) use of radium or other radioactive materials; 
           (7) oxygen; 
           (8) anesthetics; 
           (9) prostheses other than dental but including scalp hair 
        prostheses worn for hair loss suffered as a result of alopecia 
        areata; 
           (10) rental or purchase, as appropriate, of durable medical 
        equipment other than eyeglasses and hearing aids; 
           (11) diagnostic X-rays and laboratory tests; 
           (12) oral surgery for partially or completely unerupted 
        impacted teeth, a tooth root without the extraction of the 
        entire tooth, or the gums and tissues of the mouth when not 
        performed in connection with the extraction or repair of teeth; 
           (13) services of a physical therapist; 
           (14) transportation provided by licensed ambulance service 
        to the nearest facility qualified to treat the condition; or a 
        reasonable mileage rate for transportation to a kidney dialysis 
        center for treatment; and 
           (15) services of an occupational therapist. 
           (c) Covered expenses for the services and articles 
        specified in this subdivision do not include the following: 
           (1) any charge for care for injury or disease either (i) 
        arising out of an injury in the course of employment and subject 
        to a workers' compensation or similar law, (ii) for which 
        benefits are payable without regard to fault under coverage 
        statutorily required to be contained in any motor vehicle, or 
        other liability insurance policy or equivalent self-insurance, 
        or (iii) for which benefits are payable under another policy of 
        accident and health insurance, Medicare, or any other 
        governmental program except as otherwise provided by section 
        62A.04, subdivision 3, clause (4); 
           (2) any charge for treatment for cosmetic purposes other 
        than for reconstructive surgery when such service is incidental 
        to or follows surgery resulting from injury, sickness, or other 
        diseases of the involved part or when such service is performed 
        on a covered dependent child because of congenital disease or 
        anomaly which has resulted in a functional defect as determined 
        by the attending physician; 
           (3) care which is primarily for custodial or domiciliary 
        purposes which would not qualify as eligible services under 
        Medicare; 
           (4) any charge for confinement in a private room to the 
        extent it is in excess of the institution's charge for its most 
        common semiprivate room, unless a private room is prescribed as 
        medically necessary by a physician, provided, however, that if 
        the institution does not have semiprivate rooms, its most common 
        semiprivate room charge shall be considered to be 90 percent of 
        its lowest private room charge; 
           (5) that part of any charge for services or articles 
        rendered or prescribed by a physician, dentist, or other health 
        care personnel which exceeds the prevailing charge in the 
        locality where the service is provided; and 
           (6) any charge for services or articles the provision of 
        which is not within the scope of authorized practice of the 
        institution or individual rendering the services or articles. 
           (d) The minimum benefits for a qualified plan shall 
        include, in addition to those benefits specified in clauses (a) 
        and (e), benefits for well baby care, effective July 1, 1980, 
        subject to applicable deductibles, coinsurance provisions, and 
        maximum lifetime benefit limitations. 
           (e) Effective July 1, 1979, the minimum benefits of a 
        qualified plan shall include, in addition to those benefits 
        specified in clause (a), a second opinion from a physician on 
        all surgical procedures expected to cost a total of $500 or more 
        in physician, laboratory, and hospital fees, provided that the 
        coverage need not include the repetition of any diagnostic tests.
           (f) Effective August 1, 1985, the minimum benefits of a 
        qualified plan must include, in addition to the benefits 
        specified in clauses (a), (d), and (e), coverage for special 
        dietary treatment for phenylketonuria when recommended by a 
        physician. 
           (g) Outpatient mental health coverage is subject to section 
        62A.152, subdivision 2. 
           Sec. 20.  Minnesota Statutes 2000, section 62I.07, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL ASSESSMENT.] Each member of the 
        association that is authorized to write property and casualty 
        insurance in the state shall participate in its losses and 
        expenses in the proportion that the direct written premiums of 
        the member on the kinds of insurance in that account bears to 
        the total aggregate direct written premiums written in this 
        state by all members on the kinds of insurance in that account.  
        The members' participation in the association shall be 
        determined annually on the direct written premiums written 
        during the preceding calendar year as reported on the annual 
        statements and other reports filed by the member with the 
        commissioner.  Direct written premiums mean that amount at page 
        14 15, column (2), lines 5.1 5.2, 8, 9, 17, 21.2, 22, 23, 24, 
        25, 26, and 27 of the annual statement filed annually with the 
        department of commerce under section 60A.13. 
           Sec. 21.  Minnesota Statutes 2000, section 62L.05, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TWO SMALL EMPLOYER PLANS.] Each health 
        carrier in the small employer market must make available, on a 
        guaranteed issue basis, to any small employer that satisfies the 
        contribution and participation requirements of section 62L.03, 
        subdivision 3, both of the small employer plans described in 
        subdivisions 2 and 3.  Under subdivisions 2 and 3, coinsurance 
        and deductibles do not apply to child health supervision 
        services and prenatal services, as defined by section 62A.047.  
        The maximum out-of-pocket costs for covered services must be 
        $3,000 per individual and $6,000 per family per year.  The 
        maximum lifetime benefit must be $500,000 not less than 
        $1,000,000.  
           Sec. 22.  Minnesota Statutes 2000, section 62L.05, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DEDUCTIBLE-TYPE SMALL EMPLOYER PLAN.] The 
        benefits of the deductible-type small employer plan offered by a 
        health carrier must be equal to 80 percent of the charges, as 
        specified in subdivision 10, for health care services, supplies, 
        or other articles covered under the small employer plan, in 
        excess of an annual deductible which must be $500 $2,250 per 
        individual and $1,000 $4,500 per family. 
           Sec. 23.  [62L.23] [SUSPENSION OF REINSURANCE OPERATIONS; 
        REACTIVATION.] 
           Subdivision 1.  [SUSPENSION.] The commissioner may, by 
        order, suspend the operation of sections 62L.13 to 62L.22, upon 
        receipt of a recommendation for suspension from the association 
        board of directors.  The order is effective 30 days after 
        publication in the State Register.  
           Subd. 2.  [SUSPENSION OF REINSURANCE OPERATIONS.] Upon the 
        issuance of an order issued pursuant to subdivision 1, the 
        association shall suspend its operations in an orderly manner 
        supervised by the commissioner and shall provide for the proper 
        storage of the association's records.  Notwithstanding the 
        provisions of subdivision 1, the association may continue to 
        levy assessments under section 62L.22 for the purpose of 
        satisfying the association's presuspension expenses and the 
        expenses associated with the association's suspension activities 
        pursuant to this subdivision.  The assessments must be approved 
        by the commissioner. 
           Subd. 3.  [NO CANCELLATION PERMITTED.] Effective upon the 
        effective date of an order issued pursuant to subdivision 1, 
        reinsurance must be terminated for any person reinsured by the 
        association pursuant to section 62L.18.  No health carrier may 
        cancel or fail to renew a health benefit plan for any person 
        whose reinsurance with the association has been terminated 
        subsequently to the issuance of an order pursuant to subdivision 
        1 solely because of the termination of reinsurance.  
           Subd. 4.  [REACTIVATION OF REINSURANCE OPERATIONS.] The 
        commissioner may, by order, reactivate the operation of sections 
        62L.13 to 62L.22, on a finding that the private market for 
        reinsurance of health benefit plans has failed and that 
        commercial reinsurance is unavailable to health carriers 
        operating in the small employer market in Minnesota.  The 
        commissioner may not make findings or issue an order pursuant to 
        this subdivision until a hearing is held pursuant to chapter 14. 
           Subd. 5.  [TRANSITION.] After issuance of any order 
        pursuant to subdivision 4, the commissioner shall immediately 
        appoint an interim board of directors of the association.  The 
        terms of members of this interim board must be for a period not 
        to exceed 18 months.  The board shall cause the reinsurance 
        operations of the association to be resumed within 180 days of 
        an order issued pursuant to subdivision 4. 
           Subd. 6.  [MODIFICATION OF FIVE-YEAR RULE.] If the 
        commissioner issues an order pursuant to subdivision 4, any 
        health carrier may elect to participate in the reinsurance 
        association, notwithstanding any departicipation by the health 
        carrier within the preceding five years that, pursuant to 
        section 62L.17, would have otherwise prohibited the health 
        carrier's participation. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 24.  Minnesota Statutes 2000, section 62M.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NONLICENSED UTILIZATION REVIEW ORGANIZATION.] An 
        organization that meets the definition of a utilization review 
        organization under section 62M.02, subdivision 21, that is not 
        licensed in this state that performs utilization review services 
        for Minnesota residents must register with the commissioner of 
        commerce and must certify compliance with sections 62M.01 to 
        62M.16. 
           Initial registration must occur no later than January 1, 
        1993.  The registration is effective for two years and may be 
        renewed for another two years by written request.  Each 
        utilization review organization registered under this chapter 
        shall notify the commissioner of commerce within 30 days of any 
        change in the name, address, or ownership of the 
        organization.  The organization shall pay to the commissioner of 
        commerce a fee of $1,000 for the initial registration 
        application and $1,000 for each two-year renewal. 
           Sec. 25.  Minnesota Statutes 2000, section 62M.05, 
        subdivision 5, is amended to read: 
           Subd. 5.  [NOTIFICATION TO CLAIMS ADMINISTRATOR.] If the 
        utilization review organization and the claims administrator are 
        separate entities, the utilization review organization must 
        forward, electronically or in writing, a notification of 
        certification or determination not to certify to the appropriate 
        claims administrator for the health benefit plan.  If it is 
        determined by the claims administrator that the certified health 
        care service is not covered by the health benefit plan, the 
        claims administrator must promptly notify the claimant and 
        provider of this information. 
           Sec. 26.  Minnesota Statutes 2000, section 62Q.01, 
        subdivision 6, is amended to read: 
           Subd. 6.  [MEDICARE-RELATED COVERAGE.] "Medicare-related 
        coverage" means a policy, contract, or certificate issued as a 
        supplement to Medicare, regulated under sections 62A.31 to 
        62A.44, including Medicare select coverage; policies, contracts, 
        or certificates that supplement Medicare issued by health 
        maintenance organizations; or policies, contracts, or 
        certificates governed by section 1833 (known as "cost" or "HCPP" 
        contracts) or 1876 (known as "TEFRA" or "risk" contracts) of the 
        federal Social Security Act, United States Code, title 42, 
        section 1395, et seq., as amended.; or Section 4001 of the 
        Balanced Budget Act of 1997 (BBA)(Public Law 105-33), Sections 
        1851 to 1859 of the Social Security Act establishing Part C of 
        the Medicare program, known as the "Medicare+Choice program." 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 27.  Minnesota Statutes 2000, section 62Q.73, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RIGHT TO EXTERNAL REVIEW.] (a) Any enrollee or 
        anyone acting on behalf of an enrollee who has received an 
        adverse determination may submit a written request for an 
        external review of the adverse determination, if applicable 
        under section 62Q.68, subdivision 1, or 62M.06, to the 
        commissioner of health if the request involves a health plan 
        company regulated by that commissioner or to the commissioner of 
        commerce if the request involves a health plan company regulated 
        by that commissioner.  Notification of the enrollee's right to 
        external review must accompany the denial issued by the insurer. 
        The written request must be accompanied by a filing fee of $25.  
        The fee may be waived by the commissioner of health or commerce 
        in cases of financial hardship. 
           (b) Nothing in this section requires the commissioner of 
        health or commerce to independently investigate an adverse 
        determination referred for independent external review. 
           (c) If an enrollee requests an external review, the health 
        plan company must participate in the external review.  The cost 
        of the external review in excess of the filing fee described in 
        paragraph (a) shall be borne by the health plan company.  
           Sec. 28.  Minnesota Statutes 2000, section 65A.29, 
        subdivision 7, is amended to read: 
           Subd. 7.  [RENEWAL; NOTICE REQUIREMENT.] No insurer shall 
        refuse to renew, or reduce limits of coverage, or eliminate any 
        coverage in a homeowner's insurance policy unless it mails or 
        delivers to the insured, at the address shown in the policy, at 
        least 60 days' advance notice of its intention.  The notice must 
        contain the specific underwriting or other reason or reasons for 
        the indicated action and must state the name of the insurer and 
        the date the notice is issued.  
           Proof of mailing this notice to the insured at the address 
        shown in the policy is sufficient proof that the notice required 
        by this section has been given. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 29.  Minnesota Statutes 2000, section 65B.04, 
        subdivision 3, is amended to read: 
           Subd. 3.  [AMENDMENTS.] The plan of operation may be 
        amended by a majority vote of the governing committee, and the 
        approval of the commissioner and ratification by a majority of 
        the members.  An order by the commissioner disapproving an 
        amendment to the plan of operation must be issued within 30 days 
        of receipt by the commissioner of the proposed amendment, 
        certified by the governing committee as having been adopted by 
        that committee by a majority vote, or the amendment shall be 
        deemed approved by the commissioner.  An order of disapproval 
        may be appealed as provided in chapter 14.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 30.  Minnesota Statutes 2000, section 65B.06, 
        subdivision 1, is amended to read: 
           Subdivision 1.  With respect to private passenger, nonfleet 
        automobiles, the facility shall provide for the equitable 
        distribution of qualified applicants to members in accordance 
        with the participation ratio or among these insurance companies 
        as selected under the provisions of the plan of operation. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 31.  Minnesota Statutes 2000, section 65B.06, 
        subdivision 4, is amended to read: 
           Subd. 4.  Coverage made available under this section shall 
        be the standard automobile policy and endorsement forms, as 
        approved by the commissioner, with such changes, additions and 
        amendments as are adopted by the governing committee and 
        approved by the commissioner. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 32.  Minnesota Statutes 2000, section 65B.16, is 
        amended to read: 
           65B.16 [STATEMENT OF REASONS FOR CANCELLATION OR 
        REDUCTION.] 
           No notice of cancellation or reduction in the limits of 
        liability of coverage of an automobile insurance policy under 
        section 65B.15 shall be effective unless the specific 
        underwriting or other reason or reasons for such cancellation or 
        reduction in the limits of liability of coverage are stated in 
        such notice and the notice is mailed or delivered by the insurer 
        so as to provide the named insured with at least 30 days days' 
        notice prior to the effective date of cancellation; provided, 
        however, that when nonpayment of premium is the reason for 
        cancellation or when the company is exercising its right to 
        cancel insurance which has been in effect for less than 60 days 
        at least ten days' notice of cancellation, and the reasons for 
        the cancellation, shall be given.  Information regarding moving 
        traffic violations or motor vehicle accidents must be 
        specifically requested on the application in order for a company 
        to use those incidents to exercise its right to cancel within 
        the first 59 days of coverage.  When nonpayment of premiums is 
        the reason for cancellation, the reason must be given to the 
        insured with the notice of cancellation; and if the company is 
        exercising its right to cancel within the first 59 days of 
        coverage and notice is given with less than ten days remaining 
        in the 59-day period, the coverage must be extended, to expire 
        ten days after notice was mailed.  
           Sec. 33.  Minnesota Statutes 2000, section 65B.19, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NOTICE OF RIGHT TO COMPLAIN.] When the insurer 
        notifies the policyholder of nonrenewal, cancellation or 
        reduction in the limits of liability of coverage under section 
        65B.16 or 65B.17, the insurer shall also notify the named 
        insured of the right to complain within 30 days of receipt by 
        the named insured of notice of nonrenewal, cancellation or 
        reduction in the limits of liability to the commissioner of such 
        action and of the nature of and possible eligibility for 
        insurance through the Minnesota automobile insurance plan.  Such 
        notice shall be included in the notice of nonrenewal, 
        cancellation or reduction in the limits of liability of 
        coverage, and shall state that such notice of the insured's 
        right of complaint to the commissioner and of the availability 
        of insurance through the Minnesota automobile insurance plan is 
        given pursuant to sections 65B.14 to 65B.21.  The notice must 
        state the name of the insurer and the date the notice is issued. 
           Sec. 34.  Minnesota Statutes 2000, section 67A.20, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [WITH LICENSED INSURERS.] Township mutual fire 
        insurance companies may enter into reinsurance agreements with 
        any Minnesota licensed insurer authorized to write the same 
        lines of business. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 35.  Minnesota Statutes 2000, section 70A.07, is 
        amended to read: 
           70A.07 [RATES AND FORMS OPEN TO INSPECTION.] 
           All rates and, supplementary rate information, and forms, 
        furnished to the commissioner under this chapter shall, as soon 
        as the rates are reviewed by the commissioner as the 
        commissioner's review has been completed, be open to public 
        inspection at any reasonable time.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 36.  Minnesota Statutes 2000, section 79A.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
        the commissioner, there is established a workers' compensation 
        self-insurers' advisory committee of five members that are 
        employers authorized to self-insure in Minnesota.  Three of the 
        members and three alternates shall be elected by the 
        self-insurers' security fund board of trustees and two members 
        and two alternates shall be appointed by the 
        commissioner.  Notwithstanding section 15.059, subdivision 5a, 
        the advisory committee does not expire June 30, 2001. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 37.  Minnesota Statutes 2000, section 79A.03, 
        subdivision 7, is amended to read: 
           Subd. 7.  [FINANCIAL STANDARDS.] A self-insurer group shall 
        have and maintain: 
           (a) A combined net worth of all of the members of an amount 
        at least equal to the greater of ten times the retention 
        selected with the workers' compensation reinsurance association 
        or one-third of the current annual modified premium of the 
        members.  
           (b) Sufficient assets, net worth, and liquidity to promptly 
        and completely meet all obligations of its members under chapter 
        176 or this chapter.  In determining whether a group is in sound 
        financial condition, consideration shall be given to the 
        combined net worth of the member companies; the consolidated 
        long-term and short-term debt to equity ratios of the member 
        companies; any excess insurance other than reinsurance with the 
        workers' compensation reinsurance association, purchased by the 
        group from an insurer licensed in Minnesota or from an 
        authorized surplus line carrier; other financial data requested 
        by the commissioner or submitted by the group; and the combined 
        workers' compensation experience of the group for the last four 
        years. 
           No authority to self-insure will be granted unless, over 
        the term of the policy year, at least 65 percent of total 
        revenues from all sources for the year are available for the 
        payment of its claim and assessment obligations, and insurance 
        premiums for stop loss coverage.  For purposes of this 
        calculation, claim and assessment obligations include the cost 
        of allocated loss expenses as well as special compensation fund 
        and self-insurers' security fund assessments but exclude the 
        cost of unallocated loss expenses. 
           [EFFECTIVE DATE.] This section is effective July 1, 2001. 
           Sec. 38.  Minnesota Statutes 2000, section 79A.04, 
        subdivision 16, is amended to read: 
           Subd. 16.  [CERTIFICATE TO SELF-INSURE; REVOCATION.] If, 
        following a private self-insurer's bankruptcy, insolvency, or 
        certificate of default, the commissioner calls its security and 
        proceeds in accordance with this section, the commissioner shall 
        revoke the certificate to self-insure of the private 
        self-insurer as soon as practicable but no later than 30 days 
        after its security has been called.  No insolvent self-insurer, 
        as defined in section 79A.01, subdivision 4, shall be eligible 
        to receive another grant of authority to self-insure unless 
        either:  (1) the insolvent self-insurer's posted security was 
        sufficient to pay all direct and indirect administrative and 
        professional expenses of the security fund related to the 
        insolvent self-insurer, and all losses, including estimated 
        future liability, allocated loss expense, and unallocated loss 
        expense of the insolvent self-insurer; or (2) the insolvent 
        self-insurer pays the security fund an amount equal to all such 
        losses and expenses the security fund has paid or will be 
        required to pay related to this insolvent self-insurer. 
           Sec. 39.  Minnesota Statutes 2000, section 79A.15, is 
        amended to read: 
           79A.15 [SURETY BOND FORM.] 
           The form for the surety bond under this chapter shall be: 
                               STATE OF MINNESOTA 
                             DEPARTMENT OF COMMERCE 
              SURETY BOND OF SELF-INSURER OF WORKERS' COMPENSATION 
         
        IN THE MATTER OF THE CERTIFICATE OF      )
                                                 )
                                                 )    SURETY BOND 
                                                 )    NO. .............
                                                 )    PREMIUM: ........
                                                 )
        Employer, Certificate No: .............. )
        KNOW ALL PERSONS BY THESE PRESENTS:
             That ..................................................... 
                                  (Employer)
        whose address is ..............................................
        as Principal, and .............................................
                                  (Surety) 
        a corporation organized under the laws of ..................... 
        and authorized to transact a general surety business in the 
        State of Minnesota, as Surety, are held and firmly bound to the 
        State of Minnesota in the penal sum of 
        ...........................dollars ($..........) for which 
        payment we bind ourselves, our heirs, executors, administrators, 
        successors, and assigns, jointly and severally, firmly by these 
        presents. 
           WHEREAS in accordance with Minnesota Statutes, chapter 176, 
        the principal elected to self-insure, and made application for, 
        or received from the commissioner of commerce of the state of 
        Minnesota, a certificate to self-insure, upon furnishing of 
        proof satisfactory to the commissioner of commerce of ability to 
        self-insure and to compensate any or all employees of said 
        principal for injury or disability, and their dependents for 
        death incurred or sustained by said employees pursuant to the 
        terms, provisions, and limitations of said statute; 
           NOW THEREFORE, the conditions of this bond or obligation 
        are such that if principal shall pay and furnish compensation, 
        pursuant to the terms, provisions, and limitations of said 
        statute to its employees for injury or disability, and to the 
        dependents of its employees, then this bond or obligation shall 
        be null and void; otherwise to remain in full force and effect.  
           FURTHERMORE, it is understood and agreed that: 
           1.  This bond may be amended, by agreement between the 
        parties hereto and the commissioner of commerce as to the 
        identity of the principal herein named; and, by agreement of the 
        parties hereto, as to the premium or rate of premium.  Such 
        amendment must be by endorsement upon, or rider to, this bond, 
        executed by the surety and delivered to or filed with the 
        commissioner. 
           2.  The surety does, by these presents, undertake and agree 
        that the obligation of this bond shall cover and extend to all 
        past, present, existing, and potential liability of said 
        principal, as a self-insurer, to the extent of the penal sum 
        herein named without regard to specific injuries, date or dates 
        of injuries, happenings or events.  
           3.  The penal sum of this bond may be increased or 
        decreased, by agreement between the parties hereto and the 
        commissioner of commerce, without impairing the obligation 
        incurred under this bond for the overall coverage of the said 
        principal, for all past, present, existing, and potential 
        liability, as a self-insurer, without regard to specific 
        injuries, date or dates of injuries, happenings or events, to 
        the extent, in the aggregate, of the penal sum as increased or 
        decreased.  Such amendment must be by endorsement. 
           4.  The aggregate liability of the surety hereunder on all 
        claims whatsoever shall not exceed the penal sum of this bond in 
        any event. 
           5.  This bond shall be continuous in form and shall remain 
        in full force and effect unless terminated as follows: 
           (a) The obligation of this bond shall terminate upon 
        written notice of cancellation from the surety, given by 
        registered or certified mail to the commissioner of commerce, 
        state of Minnesota, save and except as to all past, present, 
        existing, and potential liability of the principal incurred, 
        including obligations resulting from claims which are incurred 
        but not yet reported, as a self-insurer prior to effective date 
        of termination.  This termination is effective 60 days after 
        receipt of notice of cancellation by the commissioner of 
        commerce, state of Minnesota. 
           (b) This bond shall also terminate upon the revocation of 
        the certificate to self-insure, save and except as to all past, 
        present, existing, and potential liability of the principal 
        incurred, including obligations resulting from claims which are 
        incurred but not yet reported, as a self-insurer prior to 
        effective date of termination.  The principal and the surety, 
        herein named, shall be immediately notified in writing by said 
        commissioner, in the event of such revocation. 
           6.  Where the principal posts with the commissioner of 
        commerce, state of Minnesota, or the state treasurer, state of 
        Minnesota, a replacement security deposit, in the form of a 
        surety bond, irrevocable letter of credit, cash, securities, or 
        any combination thereof, in the full amount as may be required 
        by the commissioner of commerce, state of Minnesota, to secure 
        all incurred liabilities for the payment of compensation of said 
        principal under Minnesota Statutes, chapter 176, the surety is 
        released from obligations under the surety bond upon the date of 
        acceptance by the commissioner of commerce, state of Minnesota, 
        of said replacement security deposit. 
           7.  If the said principal shall suspend payment of workers' 
        compensation benefits or shall become insolvent or a receiver 
        shall be appointed for its business, or the commissioner of 
        commerce, state of Minnesota, issues a certificate of default, 
        the undersigned surety will become liable for the workers' 
        compensation obligations of the principal on the date benefits 
        are suspended.  The surety shall begin payments within 14 days 
        under paragraph 8, or 30 days under paragraph 10, after receipt 
        of written notification by certified mail from the commissioner 
        of commerce, state of Minnesota, to begin payments under the 
        terms of this bond. 
           8.  If the surety exercises its option to administer 
        claims, it shall pay benefits due to the principal's injured 
        workers within 14 days of the receipt of the notification by the 
        commissioner of commerce, state of Minnesota, pursuant to 
        paragraph 7, without a formal award of a compensation judge, the 
        commissioner of labor and industry, any intermediate appellate 
        court, or the Minnesota supreme court and such payment will be a 
        charge against the penal sum of the bond.  Administrative and 
        legal costs and payment of assessments incurred by the surety in 
        discharging its obligations and payment of the principal's 
        obligations for administration and legal expenses and payment of 
        assessments under Minnesota Statutes, chapters 79A and 176, 
        shall also be a charge against the penal sum of the bond; 
        however, the total amount of this surety bond set aside for the 
        payment of said administrative and legal expenses and payment of 
        assessments shall be limited to a maximum ten percent of the 
        total penal sum of the bond unless otherwise authorized by the 
        security fund. 
           9.  If any part or provision of this bond shall be declared 
        unenforceable or held to be invalid by a court of proper 
        jurisdiction, such determination shall not affect the validity 
        or enforceability of the other provisions or parts of this bond. 
           10.  If the surety does not give notice to the 
        (self-insurer's security fund) (commercial self-insurance group 
        security fund) and the commissioner of commerce, state of 
        Minnesota, within two five business days of receipt of written 
        notification from the commissioner of commerce, state of 
        Minnesota, pursuant to paragraph 7, to exercise its option to 
        administer claims pursuant to paragraph 8, then the 
        (self-insurer's security fund) (commercial self-insurance 
        security fund) will assume the payments of the workers' 
        compensation obligations of the principal pursuant to Minnesota 
        Statutes, chapter 176.  Administrative, legal, actuarial, and 
        other direct costs attributed to the principal shall also be a 
        charge against the penal sum of the bond.  The surety shall pay, 
        within 30 days of the receipt of the notification by the 
        commissioner of commerce, state of Minnesota, pursuant to 
        paragraph 7, to the (self-insurer's security fund) (commercial 
        self-insurance group security fund) as an initial deposit an 
        amount equal to ten 50 percent of the penal sum of the bond, and 
        shall thereafter, upon notification from the (self-insurer's 
        security fund) (commercial self-insurance group security fund) 
        that the balance of the initial deposit, including interest 
        earned as provided below with respect to the segregated account, 
        had fallen to one ten percent of the penal sum of the bond, 
        remit to the (self-insurer's security fund) (commercial 
        self-insurance group security fund) an amount equal to the 
        payments made by the (self-insurer's security fund) (commercial 
        self-insurance group security fund) in the three calendar months 
        immediately preceding said notification. an additional ten 
        percent of the penal sum of the bond.  All such payments will be 
        a charge against the penal sum of the bond.  The initial deposit 
        and all subsequent deposits shall be deposited by the 
        (self-insurer's security fund) (commercial self-insurance group 
        security fund) into a segregated, interest-bearing account.  
        These deposits, together with any interest earned thereon, shall 
        be used to satisfy all obligations of the surety hereunder.  
        Upon determination that there are no remaining reserves for any 
        known claims covered under the bond, the balance of the account, 
        including any interest earned thereon, shall be paid to the 
        surety. 
           Said repayment of the funds to the surety will not 
        discharge the bond, which shall remain in full force and effect 
        as to all past, present, existing, and potential liability of 
        the principal incurred, including obligations resulting from 
        claims which are incurred but not yet reported, as a 
        self-insurer prior to the effective date of termination of the 
        bond. 
           11.  Disputes concerning the posting, renewal, termination, 
        exoneration, or return of all or any portion of the principal's 
        security deposit or any liability arising out of the posting or 
        failure to post security, or the adequacy of the security or the 
        reasonableness of administrative costs, including legal costs, 
        arising between or among a surety, the issuer of an agreement of 
        assumption and guarantee of workers' compensation liabilities, 
        the issuer of a letter of credit, any custodian of the security 
        deposit, the principal, or the (self-insurer's security fund) 
        (commercial self-insurance group security fund) shall be 
        resolved by the commissioner of commerce pursuant to Minnesota 
        Statutes, chapters 79A and 176.  
           12.  Written notification to the surety required by this 
        bond shall be sent to: 
                                         .........................
                                         Name of Surety 
                                         .........................
                                         To the attention of Person or
                                           Position
                                         .........................
                                         Address 
                                         .........................
                                         City, State, Zip 
           Written notification to the principal required by this bond 
        shall be sent to: 
                                         .........................
                                         Name of Principal
                                         .........................
                                         To the attention of Person or
                                           Position
                                         .........................
                                         Address
                                         .........................
                                         City, State, Zip
           13.  This bond is executed by the surety to comply with 
        Minnesota Statutes, chapter 176, and said bond shall be subject 
        to all terms and provisions thereof. 
                                         .........................
                                         Name of Surety
                                         .........................
                                         Address
                                         .........................
                                         City, State, Zip
           THIS bond is executed under an unrevoked appointment or 
        power of attorney.  
           I certify (or declare) under penalty of perjury under the 
        laws of the state of Minnesota that the foregoing is true and 
        correct.  
           
        ..............                   .............................
        Date                             Signature of Attorney-In-Fact 
                                         .............................
                                         Printed or Typed Name of  
                                         Attorney-In-Fact 
           A copy of the transcript or record of the unrevoked 
        appointment, power of attorney, bylaws, or other instrument, 
        duly certified by the proper authority and attested by the seal 
        of the insurer entitling or authorizing the person who executed 
        the bond to do so for and in behalf of the insurer, must be 
        filed in the office of the commissioner of commerce or must be 
        included with this bond for such filing. 
           [EFFECTIVE DATE.] This section is effective for bonds 
        posted on or after January 1, 2002. 
           Sec. 40.  Minnesota Statutes 2000, section 471.617, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [IF MORE THAN 100 EMPLOYEES; CONDITIONS.] A 
        statutory or home rule charter city, county, school district, or 
        instrumentality thereof which has more than 100 employees, may 
        by ordinance or resolution self-insure for any employee health 
        benefits including long-term disability, but not for employee 
        life benefits.  Any self-insurance plan shall provide all 
        benefits which are required by law to be provided by group 
        health insurance policies.  Self-insurance plans shall must be 
        certified as provided by section 62E.05 and must be filed and 
        certified by the department of commerce before they are issued 
        or delivered to any person in this state.  
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 41.  [REPEALER.] 
           Minnesota Statutes 2000, sections 13.7191, subdivision 11; 
        60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05; 62G.06; 62G.07; 
        62G.08; 62G.09; 62G.10; 62G.11; 62G.12; 62G.13; 62G.14; 62G.15; 
        62G.16; 62G.17; 62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23; 
        62G.24; and 62G.25, are repealed. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Presented to the governor May 25, 2001 
           Signed by the governor May 29, 2001, 11:28 a.m.