Minnesota Session Laws - 2003, Regular Session

                             CHAPTER 21-H.F.No. 536 
                  An act relating to insurance; regulating the joint 
                  underwriting association; modifying coverage; 
                  modifying the market assistance responsibilities of 
                  the association; amending Minnesota Statutes 2002, 
                  sections 62I.02, subdivisions 1, 3; 62I.03, by adding 
                  a subdivision; 62I.04; 62I.05; 62I.08; 62I.13, 
                  subdivisions 1, 2; 62I.14; 62I.16, subdivision 3; 
                  62I.21; 62I.22, subdivision 1; repealing Minnesota 
                  Statutes 2002, sections 62I.09; 62I.10; 62I.11; 
                  62I.13, subdivision 4. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2002, section 62I.02, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CREATION.] The Minnesota joint 
        underwriting association is created to provide insurance 
        coverage to any person or entity unable to obtain insurance 
        through ordinary methods if the insurance is required by 
        statute, ordinance, or otherwise required by law, or is 
        necessary to earn a livelihood or conduct a business and serves 
        a public purpose, including, but not limited to, liquor 
        liability.  Prudent business practice or mere desire to have 
        insurance coverage is not a sufficient standard for the 
        association to offer insurance coverage to a person or entity.  
        For purposes of this subdivision, directors' and officers' 
        liability insurance is considered to be a business necessity and 
        not merely a prudent business practice.  The association shall 
        be specifically authorized to provide insurance coverage to day 
        care providers, foster parents, foster homes, developmental 
        achievement centers, group homes, and rehabilitation facilities 
        for mentally, emotionally, or physically handicapped persons, 
        and citizen participation groups established pursuant to the 
        Housing and Community Redevelopment Act of 1974, Public Law 
        Number 93-383.  Because the activities of certain persons or 
        entities present a risk that is so great, the association shall 
        not offer insurance coverage to any person or entity the board 
        of directors of the association determines is outside the 
        intended scope and purpose of the association because of the 
        gravity of the risk of offering insurance coverage.  The 
        association shall not offer environmental impairment pollution 
        liability or, product liability insurance, and completed 
        operations insurance.  The association shall not offer coverage 
        for activities that are conducted substantially outside the 
        state of Minnesota unless the insurance is required by statute, 
        ordinance, or otherwise required by law.  Every insurer 
        authorized to write property and casualty insurance and personal 
        injury liability insurance in this state shall be a member of 
        the association as a condition to obtaining and retaining a 
        license to write insurance in this state. 
           Sec. 2.  Minnesota Statutes 2002, section 62I.02, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REAUTHORIZATION.] The authorization to issue 
        insurance to day care providers, foster parents, foster homes, 
        developmental activity centers, group homes, and rehabilitation 
        facilities for mentally, emotionally, or physically handicapped 
        persons, and citizen participation groups established pursuant 
        to the Housing and Community Redevelopment Act of 1974, Public 
        Law Number 93-383, is valid for a period of two years from the 
        date it was made.  The commissioner may reauthorize the issuance 
        of insurance for these groups and other classes of business for 
        additional two-year periods pursuant to sections 62I.21 and 
        62I.22.  This subdivision is not a limitation on the number of 
        times the commissioner may reauthorize the issuance of insurance.
           Sec. 3.  Minnesota Statutes 2002, section 62I.03, is 
        amended by adding a subdivision to read: 
           Subd. 5a.  [MARKET ASSISTANCE COORDINATOR.] "Market 
        assistance coordinator" means an employee of the association, or 
        a person under contract with the association, who assists a 
        person or entity applying to the association for coverage to 
        obtain coverage in the private market. 
           Sec. 4.  Minnesota Statutes 2002, section 62I.04, is 
        amended to read: 
           62I.04 [POLICY ISSUANCE.] 
           Any person or entity that is a resident of the state of 
        Minnesota who has a current notice of refusal to insure from an 
        insurer licensed to offer insurance in the state of Minnesota 
        may make written application to the association for coverage.  
        The applicable premium or required portion of it must be paid 
        prior to coverage by the association. 
           The application shall be filed simultaneously with the 
        association and the market assistance plan for the association. 
           The association is authorized to (1) issue or cause to be 
        issued insurance policies to applicants subject to limits 
        specified in the plan of operation; (2) underwrite the insurance 
        and adjust and pay losses with respect to it, or appoint service 
        companies to perform those functions; (3) conduct risk 
        management and loss prevention services; (4) assume reinsurance 
        from its members; and (4) (5) cede reinsurance; and (6) retain, 
        hire, or appoint individuals or companies to perform any of 
        these functions. 
           Sec. 5.  Minnesota Statutes 2002, section 62I.05, is 
        amended to read: 
           62I.05 [PLAN OF OPERATION.] 
           Within 45 days after the appointment of the directors of 
        the association, the directors shall submit to the commissioner 
        for review, a proposed plan of operation, consistent with the 
        provisions of this chapter. 
           The plan of operation shall provide economic, fair, and 
        nondiscriminatory administration and for the prompt, efficient 
        provision of insurance coverage of the types provided by section 
        62I.01.  It shall provide for an expedited review and 
        determination by the board of any application for a type of 
        coverage that has not been previously excluded or authorized.  
        The action of the board on the application shall be an amendment 
        to the plan of operation and the type of coverage shall 
        thereafter be specified in the plan as either excluded or 
        authorized.  It may contain other provisions necessary for the 
        operation of the association, including but not limited to 
        preliminary assessment of all members for initial expenses 
        necessary to commence operations, establishment of necessary 
        facilities, management of the association, assessment of members 
        to defray losses and expenses, commission arrangements, 
        reasonable and objective underwriting standards, acceptance and 
        cessation of reinsurance, appointment of servicing carriers or 
        other servicing arrangements and procedures for determining 
        amounts of insurance to be provided by the association. 
           The plan of operation is subject to approval by the 
        commissioner.  If the commissioner disapproves all or any part 
        of the proposed plan of operation, the directors shall within 15 
        days submit for review an appropriate revised plan of 
        operation.  If a revised plan is not submitted within 15 days 
        the commissioner shall promulgate a plan of operation.  The plan 
        of operation approved or promulgated by the commissioner is 
        effective and operational upon the order of the commissioner. 
           Amendments to the plan of operation may be made by the 
        directors of the association subject to approval by the 
        commissioner. 
           Sec. 6.  Minnesota Statutes 2002, section 62I.08, is 
        amended to read: 
           62I.08 [APPLICATION PROCEDURE.] 
           A person or entity that has been denied coverage or is 
        unable to find an insurer willing to write coverage is eligible 
        to make an application to the association.  The application 
        shall be on a form approved by the board of directors.  To show 
        eligibility to participate in the association the applicant 
        shall certify that the applicant has been unable to find anyone 
        to offer the coverage sought by the applicant.  No further proof 
        shall be required of the applicant, except that the application 
        form approved by the board of directors may require the date and 
        the name of the insurance company denying coverage and may 
        require a copy of a written offer if the rate qualifies the 
        applicant to apply under section 62I.13, subdivision 2.  The 
        application shall be filed simultaneously with the association 
        and the market assistance plan of the association. 
           Sec. 7.  Minnesota Statutes 2002, section 62I.13, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERALLY.] To be eligible to participate 
        in the association, an applicant must apply for coverage through 
        the market assistance program coordinator, as required by 
        section 62I.08.  Except as provided by subdivision 4, the market 
        assistance program has 30 days from the receipt of the 
        application to secure an offer of coverage for the applicant.  
        If the market assistance program is able to secure an offer of 
        coverage for the applicant and if the offer of coverage would 
        not be considered a refusal for purposes of the association, 
        then coverage may not be extended by the association.  
        Eligibility for coverage by the association is also subject to 
        the terms and conditions of subdivisions 2 and 3. 
           Sec. 8.  Minnesota Statutes 2002, section 62I.13, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MINIMUM OF QUALIFICATIONS.] Anyone who is unable 
        to obtain insurance in the private market and who so certifies 
        to the association in the application is eligible to make 
        written application to the association for coverage.  The 
        application may require information as provided in section 
        62I.08.  Payment of the applicable premium or required portion 
        of it must be paid prior to coverage by the association.  An 
        offer of coverage at a rate in excess of the rate that would be 
        charged by the association for similar coverage and risk shall 
        be deemed to be a refusal of coverage for purposes of 
        eligibility for participation in the association.  It shall not 
        be deemed to be a written notice of refusal if the rate for 
        coverage offered is less than ten percent in excess of the joint 
        underwriting association rates for similar coverage and risk or 
        20 percent in excess of the joint underwriting association rates 
        for liquor liability coverages.  However, the offered rate must 
        also be the rate that the insurer has filed with the department 
        of commerce if the insurer is required to file its rates with 
        the department.  If the insurer is not required to file its 
        rates with the department, the offered rate must be the rate 
        generally charged by the insurer for similar coverage and risk. 
           Sec. 9.  Minnesota Statutes 2002, section 62I.14, is 
        amended to read: 
           62I.14 [ASSESSMENTS.] 
           In the event the commissioner deems it necessary to make an 
        assessment, an assessed insurer must pay the assessment within 
        30 days of receipt of notice of the assessment.  The 
        commissioner may suspend or revoke an insurer's certificate of 
        authority and impose a civil penalty in an amount not to exceed 
        $5,000 $10,000 for an insurer's failure to pay the assessment 
        within the 30-day period. 
           Sec. 10.  Minnesota Statutes 2002, section 62I.16, 
        subdivision 3, is amended to read: 
           Subd. 3.  [SUPERVISION.] All money paid into the fund shall 
        be held in escrow by the escrow administrator selected 
        separately accounted for by the board of directors.  The escrow 
        administrator may invest the money held in escrow subject to the 
        approval of the board the fund may be invested.  All investment 
        income shall be credited to the fund.  All expenses of the 
        administration of the fund shall be charged against the fund.  
        The money held in escrow the fund shall be used solely for the 
        purpose of discharging when due any retrospective premium 
        charges payable by policyholders and any retrospective premium 
        refunds payable to policyholders under the group retrospective 
        rating plan.  Payment of retrospective premium charges shall be 
        made upon certification of the amount due.  If all money 
        accruing to the fund is exhausted in payment of retrospective 
        premium charges, all liability and obligations of the 
        association's policyholders with respect to the payment of 
        retrospective premium charges shall terminate and shall be 
        conclusively presumed to have been discharged.  Any 
        stabilization reserve fund charges from a particular policy year 
        not used to pay retrospective premiums must be returned to 
        policyholders after all claims and expense obligations from that 
        particular policy year are satisfied. 
           Sec. 11.  Minnesota Statutes 2002, section 62I.21, is 
        amended to read: 
           62I.21 [ACTIVATION OF MARKET ASSISTANCE PLAN AND JOINT 
        UNDERWRITING ASSOCIATION.] 
           Upon submission of an application for placement of general 
        liability insurance coverage under section 62I.13 in a class of 
        business for which the market assistance plan and the joint 
        underwriting association are is not then activated, where the 
        applicant has been refused coverage within the meaning of 
        section 62I.13, subdivision 2, the commissioner may by notice in 
        the State Register activate the market assistance plan and the 
        joint underwriting association on Minnesota risks for the class 
        of business.  The plan and association are is activated for a 
        period of 180 days from publication of the notice.  At the same 
        time the notice is published, the commissioner shall prepare a 
        written petition requesting that a hearing be held to determine 
        whether activation of the market assistance plan and the joint 
        underwriting association is necessary beyond the 180-day 
        period.  The hearing must be held in accordance with section 
        62I.22.  The commissioner by order shall deactivate a market 
        assistance program and the joint underwriting association at any 
        time the commissioner finds that the market assistance program 
        and the joint underwriting association are is not necessary. 
           Sec. 12.  Minnesota Statutes 2002, section 62I.22, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ADMINISTRATIVE LAW JUDGE.] The 
        commissioner shall forward a copy of the petition to activate 
        the market assistance plan and the joint underwriting 
        association with respect to a class of business to the chief 
        administrative law judge.  The chief administrative law judge 
        shall, within three business days of receipt of the copy of the 
        petition, set a hearing date, assign an administrative law judge 
        to hear the matter, and notify the commissioner of the hearing 
        date and the administrative law judge assigned to hear the 
        matter.  The hearing date must be no less than 60 days nor more 
        than 90 days from the date of receipt of the petition by the 
        chief administrative law judge. 
           Sec. 13.  [REPEALER.] 
           Minnesota Statutes 2002, sections 62I.09; 62I.10; 62I.11; 
        and 62I.13, subdivision 4, are repealed. 
           Presented to the governor April 25, 2003 
           Signed by the governor April 28, 2003, 12:45 p.m.