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                            CHAPTER 446-S.F.No. 1980 
                  An act relating to insurance; regulating coverages; 
                  regulating premium taxes; modifying agent 
                  cancellations or terminations; providing certain 
                  filing requirements for domestic insurers; regulating 
                  disclosures and policy and contract provisions; 
                  providing for the operation and administration of the 
                  medical malpractice joint underwriting association and 
                  the Minnesota joint underwriting association; 
                  regulating policy cancellations or terminations and 
                  claims practices; regulating information handling 
                  practices; establishing solvency requirements; making 
                  technical changes; regulating the provision of certain 
                  insured services; requiring a study and a report; 
                  amending Minnesota Statutes 1994, sections 60A.07, 
                  subdivision 8; 60A.08, subdivision 14; 60A.09, 
                  subdivision 4a; 60A.11, subdivision 21; 60A.171, 
                  subdivision 7, and by adding a subdivision; 60A.36, 
                  subdivision 1; 60C.09, subdivision 2; 60C.11, by 
                  adding a subdivision; 61A.02, subdivision 2, and by 
                  adding a subdivision; 61A.072, subdivision 4; 61A.32; 
                  61B.20, subdivision 15; 61B.28, subdivision 7; 62A.02, 
                  by adding a subdivision; 62A.31, subdivisions 1p, 1r, 
                  1s, and 3; 62A.315; 62A.318; 62A.39; 62A.44, 
                  subdivision 2; 62A.49, subdivision 1; 62A.60; 62F.03, 
                  subdivision 6; 62F.04, subdivision 1a; 62I.02, 
                  subdivisions 2, 5, and by adding a subdivision; 
                  62I.07; 62L.09, subdivision 3; 65A.01, subdivision 3; 
                  65A.10, subdivision 1; 65A.295; 65B.14, by adding a 
                  subdivision; 65B.15, subdivision 1; 65B.64, 
                  subdivision 3; 70A.07; 72A.20, subdivisions 17, 23, 
                  26, 30, and by adding a subdivision; 148.235, 
                  subdivisions 2 and 4; 471.617, subdivision 2, as 
                  amended; and 471.98, subdivision 3, as amended; 
                  Minnesota Statutes 1995 Supplement, sections 60A.07, 
                  subdivision 10; 60A.15, subdivision 1; 60A.67, 
                  subdivision 2; 60K.03, subdivision 7; 61A.09, 
                  subdivision 1; 62A.042; 62A.135, subdivision 1; 
                  62A.31, subdivision 1h; 62A.46, subdivision 2; 62A.48, 
                  subdivision 1; 62C.14, subdivision 14; 62E.05, 
                  subdivision 1; 62F.02, subdivision 2; 62L.045; and 
                  65B.47, subdivision 1a; proposing coding for new law 
                  in Minnesota Statutes, chapters 60A; 61A; 62A; 62Q; 
                  and 72A; repealing Minnesota Statutes 1994, sections 
                  60A.13, subdivision 8; 60A.40; 60B.27; 62I.20; 65A.25; 
                  and 72A.205; Laws 1995, chapter 140, section 1. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
           Section 1.  Minnesota Statutes 1994, section 60A.08, 
        subdivision 14, is amended to read: 
           Subd. 14.  [AGREEMENT TO RESCIND POLICY OR RELEASE BAD 
        FAITH CLAIM.] (a) If the insurer has knowledge of any claims 
        against the insured that would remain unsatisfied due to the 
        financial condition of the insured, the insurer and the insured 
        may not agree to: 
           (1) rescind the policy; or 
           (2) directly or indirectly transfer to, or release to, the 
        insurer the insured's claim or potential claim against the 
        insurer based upon the insurer's refusal to settle a claim 
        against the insured.  
           (b) Before entering into an agreement to rescind a policy 
        described in paragraph (a), an insurer must make a good faith 
        effort to ascertain:  (1) the existence and identity of all 
        claims against the policy; and (2) the financial condition of 
        the insured. 
           (c) The insured must provide reasonable financial 
        information upon request of the insurer. 
           (d) An agreement made in violation of this section is void 
        and unenforceable. 
           Sec. 2.  Minnesota Statutes 1994, section 60A.09, 
        subdivision 4a, is amended to read: 
           Subd. 4a.  [ASSUMPTION TRANSACTIONS REGULATED.] No life 
        company, whether domestic, foreign, or alien, shall perform an 
        assumption transaction, including an assumption reinsurance 
        agreement, with respect to a policy issued to a Minnesota 
        resident, unless: 
           (1) the assumption agreement has been filed with the 
        commissioner; 
           (2) the assumption agreement specifically provides that the 
        original insurer remains liable to the insured in the event the 
        assuming insurer is unable to fulfill its obligations or the 
        original insurer acknowledges in writing to the commissioner 
        that it remains liable to the insured in the event the assuming 
        insurer is unable to fulfill its obligations; 
           (3) the proposed certificate of assumption to be provided 
        to the policyholder has been filed with the commissioner for 
        review and approval as provided in section 61A.02; and 
           (4) the proposed certificate of assumption contains, in 
        bold face type, the following language: 
           "Policyholder:  Please be advised that you retain all 
        rights with respect to your policy against your original insurer 
        in the event the assuming insurer is unable to fulfill its 
        obligations.  In such event, your original insurer remains 
        liable to you notwithstanding the terms of its assumption 
        agreement." 
           With respect to residents of Minnesota, the notice to 
        policyholders shall also include a statement as to the effect on 
        guaranty fund coverage, if any, that will result from the 
        transfer. 
           Clauses (2) and (4) above do not apply if the policyholder 
        consents in a signed writing to a release of the original 
        insurer from liability and to a waiver of the protections 
        provided in clauses (2) and (4) after being informed in writing 
        by the insurer of the circumstances relating to and the effect 
        of the assumption, provided that the consent form signed by the 
        policyholder has been filed with and approved by the 
        commissioner. 
           If a company is deemed by the commissioner to be in a 
        hazardous condition or is under a court ordered supervision, 
        rehabilitation, liquidation, conservation or receivership, and 
        the transfer of policies is in the best interest of the 
        policyholders, as determined by the commissioner, a transfer may 
        be effected notwithstanding the provisions in this subdivision 
        by using a different form of consent by policyholders.  This may 
        include a form of implied consent and adequate notification to 
        the policyholder of the circumstances requiring the transfer as 
        approved by the commissioner.  This paragraph does not apply 
        when a policy is transferred to the Minnesota life and health 
        guaranty association or to the Minnesota insurance guaranty 
        association. 
           Sec. 3.  Minnesota Statutes 1995 Supplement, section 
        60A.15, subdivision 1, is amended to read: 
           Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
        before April 1, June 1, and December 1 of each year, every 
        domestic and foreign company, including town and farmers' mutual 
        insurance companies, domestic mutual insurance companies, marine 
        insurance companies, health maintenance organizations, 
        integrated service networks, community integrated service 
        networks, and nonprofit health service plan corporations, shall 
        pay to the commissioner of revenue installments equal to 
        one-third of the insurer's total estimated tax for the current 
        year.  Except as provided in paragraphs (d) and (e), 
        installments must be based on a sum equal to two percent of the 
        premiums described in paragraph (b). 
           (b) Installments under paragraph (a), (d), or (e) are 
        percentages of gross premiums less return premiums on all direct 
        business received by the insurer in this state, or by its agents 
        for it, in cash or otherwise, during such year. 
           (c) Failure of a company to make payments of at least 
        one-third of either (1) the total tax paid during the previous 
        calendar year or (2) 80 percent of the actual tax for the 
        current calendar year shall subject the company to the penalty 
        and interest provided in this section, unless the total tax for 
        the current tax year is $500 or less. 
           (d) For health maintenance organizations, nonprofit health 
        services plan corporations, integrated service networks, and 
        community integrated service networks, the installments must be 
        based on an amount equal to one percent of premiums described in 
        paragraph (b) that are paid after December 31, 1995. 
           (e) For purposes of computing installments for town and 
        farmers' mutual insurance companies and for mutual property 
        casualty companies with total assets on December 31, 1989, of 
        $1,600,000,000 or less, the following rates apply: 
           (1) for all life insurance, two percent; 
           (2) for town and farmers' mutual insurance companies and 
        for mutual property and casualty companies with total assets of 
        $5,000,000 or less, on all other coverages, one percent; and 
           (3) for mutual property and casualty companies with total 
        assets on December 31, 1989, of $1,600,000,000 or less, on all 
        other coverages, 1.26 percent. 
           (f) Premiums under medical assistance, general assistance 
        medical care, the MinnesotaCare program, and the Minnesota 
        comprehensive health insurance plan are not subject to tax under 
        this section. 
           Sec. 4.  Minnesota Statutes 1994, section 60A.171, 
        subdivision 7, is amended to read: 
           Subd. 7.  The provisions of this section do not apply to 
        the termination of an agent's contract for insolvency, 
        abandonment, gross and willful misconduct, or failure to pay 
        over to the company money due to the company after receipt by 
        the agent of a written demand therefor, or after revocation of 
        the agent's license by the commissioner of commerce; nor to the 
        termination of agents who write insurance business exclusively 
        for one company or agents in the direct employ of the 
        company.  This section does not apply to the termination of an 
        agent's contract if the agent is directly employed by the 
        company or if the agent writes 80 percent or more of the agent's 
        gross annual insurance business for one company or any or all of 
        its subsidiaries. 
           Sec. 5.  Minnesota Statutes 1994, section 60A.171, is 
        amended by adding a subdivision to read: 
           Subd. 12.  For purposes of this section, a cancellation or 
        termination of an agent's contract is considered to have 
        occurred if the company cancels a line of insurance business or 
        a volume of insurance business that equals or exceeds 75 percent 
        of the insurance business placed by that agent with the company. 
           Sec. 6.  [60A.179] [LIFE OR HEALTH INSURANCE POLICY QUOTAS 
        FOR EXCLUSIVE AGENTS.] 
           Subdivision 1.  [APPLICATION.] This section applies to 
        licensed insurance agents as defined by section 60A.176. 
           Subd. 2.  [PROHIBITED PRACTICE.] No insurer shall require 
        an agent who has been licensed as an agent three years or more 
        to sell a specified number of life or health insurance policies 
        or a specified dollar amount of life and health insurance in 
        relation to the sale of other insurance products.  No insurer 
        may terminate an agent's contract or reduce or restrict an 
        agent's underwriting authority on property and casualty 
        insurance policies based upon the sale of life or health 
        insurance. 
           Sec. 7.  Minnesota Statutes 1994, section 60A.36, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REASON FOR CANCELLATION.] No insurer may 
        cancel a policy of commercial liability and/or property 
        insurance during the term of the policy, except for one or more 
        of the following reasons:  
           (1) nonpayment of premium; 
           (2) misrepresentation or fraud made by or with the 
        knowledge of the insured in obtaining the policy or in pursuing 
        a claim under the policy; 
           (3) actions by the insured that have substantially 
        increased or substantially changed the risk insured; 
           (4) refusal of the insured to eliminate known conditions 
        that increase the potential for loss after notification by the 
        insurer that the condition must be removed; 
           (5) substantial change in the risk assumed, except to the 
        extent that the insurer should reasonably have foreseen the 
        change or contemplated the risk in writing the contract; 
           (6) loss of reinsurance by the insurer which provided 
        coverage to the insurer for a significant amount of the 
        underlying risk insured.  A notice of cancellation under this 
        clause shall advise the policyholder that the policyholder has 
        ten days from the date of receipt of the notice to appeal the 
        cancellation to the commissioner of commerce and that the 
        commissioner will render a decision as to whether the 
        cancellation is justified because of the loss of reinsurance 
        within five 30 business days after receipt of the appeal; 
           (7) a determination by the commissioner that the 
        continuation of the policy could place the insurer in violation 
        of the insurance laws of this state; or 
           (8) nonpayment of dues to an association or organization, 
        other than an insurance association or organization, where 
        payment of dues is a prerequisite to obtaining or continuing the 
        insurance.  This provision for cancellation for failure to pay 
        dues does not apply to persons who are retired at 62 years of 
        age or older or who are disabled according to social security 
        standards.  
           Sec. 8.  Minnesota Statutes 1995 Supplement, section 
        60K.03, subdivision 7, is amended to read: 
           Subd. 7.  [EXCEPTIONS.] The following are exempt from the 
        general licensing requirements prescribed by this section:  
           (1) agents of township mutuals who are exempted pursuant to 
        section 60K.04; 
           (2) fraternal benefit society representatives exempted 
        pursuant to section 60K.05; 
           (3) any regular salaried officer or employee of a licensed 
        insurer, without license or other qualification, may act on 
        behalf of that licensed insurer in the negotiation of insurance 
        for that insurer, provided that a licensed agent must 
        participate in the sale of the insurance; 
           (4) employers and their officers or employees, and the 
        trustees or employees of any trust plan, to the extent that the 
        employers, officers, employees, or trustees are engaged in the 
        administration or operation of any program of employee benefits 
        for the employees of the employers or employees of their 
        subsidiaries or affiliates involving the use of insurance issued 
        by a licensed insurance company; provided that the activities of 
        the officers, employees and trustees are incidental to clerical 
        or administrative duties and their compensation does not vary 
        with the volume of insurance or applications for insurance; 
           (5) employees of a creditor who enroll debtors for credit 
        life, credit accident and health, or credit involuntary 
        unemployment insurance; provided the employees receive no 
        commission or fee for it; 
           (6) clerical or administrative employees of an insurance 
        agent who take insurance applications or receive premiums in the 
        office of their employer, if the activities are incidental to 
        clerical or administrative duties and the employee's 
        compensation does not vary with the volume of the applications 
        or premiums; 
           (7) rental vehicle companies and their employees in 
        connection with the offer of rental vehicle personal accident 
        insurance under section 72A.125; and 
           (8) employees of a retailer who enroll purchasers for 
        credit insurance associated with a retail purchase; provided the 
        employees receive no commission, fee, bonus, or other form of 
        compensation for it; and 
           (9) representatives of prepaid legal service plans in 
        connection with the sale and marketing of these plans. 
           Sec. 9.  Minnesota Statutes 1994, section 61A.02, 
        subdivision 2, is amended to read: 
           Subd. 2.  [APPROVAL REQUIRED.] No policy or certificate of 
        life insurance or annuity contract, issued to an individual, 
        group, or multiple employer trust, nor any rider of any kind or 
        description which is made a part thereof shall be issued or 
        delivered in this state, or be issued by a life insurance 
        company organized under the laws of this state, until the form 
        of the same has been approved by the commissioner.  In making a 
        determination under this section, the commissioner may require 
        the insurer to provide rates and advertising materials related 
        to policies or contracts, certificates, or similar evidence of 
        coverage issued or delivered in this state.  
           This section applies Subdivisions 1 to 5 apply to a policy, 
        certificate of insurance, or similar evidence of coverage issued 
        to a Minnesota resident or issued to provide coverage to a 
        Minnesota resident.  This section does Subdivisions 1 to 5 do 
        not apply to a certificate of insurance or similar evidence of 
        coverage that meets the conditions of section 61A.093, 
        subdivision 2. 
           Sec. 10.  Minnesota Statutes 1994, section 61A.02, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [FILING BY DOMESTIC INSURERS FOR PURPOSES OF 
        COMPLYING WITH ANOTHER STATE'S FILING REQUIREMENTS.] A domestic 
        insurer may file with the commissioner for informational 
        purposes only a policy, certificate of insurance, or annuity 
        contract that is not intended to be offered or sold within this 
        state.  This subdivision only applies to the filing in Minnesota 
        of a policy, certificate of insurance, or annuity contract 
        issued to an insured, certificate holder, or annuitant located 
        outside of this state when the filing is for the express purpose 
        of complying with the law of the state in which the insured, 
        certificate holder, or annuitant resides.  In no event may a 
        policy, certificate of insurance, or annuity contract filed 
        under this subdivision for out-of-state use be issued or 
        delivered in Minnesota unless and until the policy, certificate 
        of insurance, or annuity contract is approved under subdivision 
        2. 
           Sec. 11.  Minnesota Statutes 1994, section 61A.072, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LONG-TERM CARE EXPENSES.] If the right to 
        receive accelerated benefits is contingent upon the insured 
        receiving long-term care services, the contract or supplemental 
        contract shall include the following provisions:  
           (1) the minimum accelerated benefit shall be $1,200 per 
        month if the insured is receiving nursing facility services and 
        $750 per month if the insured is receiving home services with a 
        minimum lifetime benefit limit of $50,000; 
           (2) coverage is effective immediately and benefits shall 
        commence with the receipt of services as defined in section 
        62A.46, subdivision 3, 4, or 5, but may include a waiting period 
        of not more than 90 days, provided that no more than one waiting 
        period may be required per benefit period as defined in section 
        62A.46, subdivision 11; 
           (3) premium shall be waived during any period in which 
        benefits are being paid to the insured during confinement to a 
        nursing home facility; 
           (4) coverage may not be canceled or renewal refused except 
        on the grounds of nonpayment of premium; 
           (5) coverage must include preexisting conditions during the 
        first six months of coverage if the insured was not diagnosed or 
        treated for the particular condition during the 90 days 
        immediately preceding the effective date of coverage; 
           (6) the contract or supplemental contract shall contain the 
        following disclosure:  
           "THE ACCELERATED LIFE INSURANCE BENEFITS PROVIDED UNDER 
        THIS CONTRACT MAY NOT COVER ALL NURSING HOME, HOME CARE, OR 
        ADULT DAY CARE EXPENSES.  BENEFITS ARE NOT PAYABLE UPON RECEIPT 
        OF RESIDENTIAL CARE.  READ YOUR POLICY CAREFULLY TO DETERMINE 
        YOUR BENEFIT AMOUNT."; 
           (7) coverage must include mental or nervous disorders which 
        have a demonstrable organic cause such as Alzheimer's and 
        related dementias; 
           (8) (7) no prior hospitalization requirement shall be 
        allowed unless a similar requirement is allowed by section 
        62A.48, subdivision 1; and 
           (9) (8) the contract shall include a cancellation provision 
        that meets the requirements of section 62A.50, subdivision 2. 
           Sec. 12.  Minnesota Statutes 1995 Supplement, section 
        61A.09, subdivision 1, is amended to read: 
           Subdivision 1.  No group life insurance policy or group 
        annuity shall be issued for delivery in this state until the 
        form thereof and the form of any certificates issued thereunder 
        have been filed in accordance with and subject to the provisions 
        of section 61A.02.  Each person insured under such a group life 
        insurance policy (excepting policies which insure the lives of 
        debtors of a creditor or vendor to secure payment of 
        indebtedness) shall be furnished a certificate of insurance 
        issued by the insurer and containing the following: 
           (a) Name and location of the insurance company; 
           (b) A statement as to the insurance protection to which the 
        certificate holder is entitled, including any changes in such 
        protection depending on the age of the person whose life is 
        insured; 
           (c) Any and all provisions regarding the termination or 
        reduction of the certificate holder's insurance protection; 
           (d) A statement that the master group policy may be 
        examined at a reasonably accessible place; 
           (e) The maximum rate of contribution to be paid by the 
        certificate holder; 
           (f) Beneficiary and method required to change such 
        beneficiary; 
           (g) A statement that alternative methods for the payment of 
        group life policy proceeds of $15,000 or more must be offered to 
        beneficiaries in lieu of a lump sum distribution, at their 
        request.  Alternative payment methods which must be offered at 
        the request of the beneficiaries must include, but are not 
        limited to, a life income option, an income option for fixed 
        amounts or fixed time periods, and the option to select an 
        interest-bearing account with the company with the right to 
        select another option at a later date; 
           (h) In the case of a group term insurance policy if the 
        policy provides that insurance of the certificate holder will 
        terminate, in case of a policy issued to an employer, by reason 
        of termination of the certificate holder's employment, or in 
        case of a policy issued to an organization of which the 
        certificate holder is a member, by reason of termination of 
        membership, a provision to the effect that in case of 
        termination of employment or membership, or in case of 
        termination of the group policy, the certificate holder shall be 
        entitled to have issued by the insurer, without evidence of 
        insurability, upon application made to the insurer within 31 
        days after the termination, and upon payment of the premium 
        applicable to the class of risk to which that person belongs and 
        to the form and amount of the policy at that person's then 
        attained age, a policy of life insurance only, in any one of the 
        forms customarily issued by the insurer except term insurance, 
        in an amount equal to the amount of the life insurance 
        protection under such group insurance policy at the time of such 
        termination; and shall contain a further provision to the effect 
        that upon the death of the certificate holder during such 31-day 
        period and before any such individual policy has become 
        effective, the amount of insurance for which the certificate 
        holder was entitled to make application shall be payable as a 
        death benefit by the insurer.  
           This section applies to a policy, certificate of insurance, 
        or similar evidence of coverage issued to a Minnesota resident 
        or issued to provide coverage to a Minnesota resident.  This 
        section does not apply to a certificate of insurance or similar 
        evidence of coverage that meets the conditions of section 
        61A.093, subdivision 2. 
           Sec. 13.  [61A.53] [DEFINITIONS.] 
           Subdivision 1.  [APPLICABILITY.] For purposes of sections 
        61A.53 to 61A.60, the terms defined in this section have the 
        meanings given. 
           Subd. 2.  [REPLACEMENT.] "Replacement" means any 
        transaction in which new life insurance or a new annuity is to 
        be purchased, and it is known or should be known to the 
        proposing agent or broker or to the proposing insurer if there 
        is no agent, that by reason of the transaction, existing life 
        insurance or annuity has been or is to be: 
           (1) lapsed, forfeited, surrendered, or otherwise 
        terminated; 
           (2) converted to reduced paid-up insurance, continued as 
        extended term insurance, or otherwise reduced in value by the 
        use of nonforfeiture benefits or other policy values; 
           (3) amended so as to effect either a reduction in benefits 
        or in the term for which coverage would otherwise remain in 
        force or for which benefits would be paid; 
           (4) reissued with any reduction in cash value; or 
           (5) pledged as collateral or subjected to borrowing, 
        whether in a single loan or under a schedule of borrowing over a 
        period of time for amounts in the aggregate exceeding 25 percent 
        of the loan value set forth in the policy. 
           Subd. 3.  [CONSERVATION.] "Conservation" means any attempt 
        by the existing insurer or its agent or broker to dissuade a 
        policy owner or contract holder from the replacement of existing 
        life insurance or annuity.  Conservation does not include 
        routine administrative procedures such as late payment 
        reminders, late payment offers, or reinstatement offers. 
           Subd. 4.  [DIRECT-RESPONSE SALE.] "Direct-response sale" 
        means any sale of life insurance or annuity where the insurer 
        does not use an agent in the sale or delivery of the policy or 
        contract. 
           Subd. 5.  [EXISTING INSURER.] "Existing insurer" means the 
        insurance company whose policy or contract is or will be changed 
        or terminated in such a manner as described within the 
        definition of "replacement." 
           Subd. 6.  [EXISTING LIFE INSURANCE OR ANNUITY.] "Existing 
        life insurance or annuity" means any life insurance or annuity 
        in force, including life insurance under a binding or 
        conditional receipt or a life insurance policy or annuity 
        contract that is within an unconditional refund period. 
           Subd. 7.  [REPLACING INSURER.] "Replacing insurer" means 
        the insurance company that issues or proposes to issue a new 
        policy or contract which is a replacement of existing life 
        insurance or annuity. 
           Sec. 14.  [61A.54] [EXEMPTIONS.] 
           Unless otherwise specifically included, sections 61A.53 to 
        61A.60 do not apply to transactions involving: 
           (1) credit life insurance; 
           (2) group life insurance or group annuities; 
           (3) an application to the existing insurer that issued the 
        existing life insurance or annuity, where a contractual change 
        or a conversion privilege is being exercised; 
           (4) proposed life insurance that is to replace life 
        insurance under a binding or conditional receipt issued by the 
        same company; or 
           (5) transactions where the replacing insurer and the 
        existing insurer are the same, or are subsidiaries or affiliates 
        under common ownership or control; provided, however, that 
        agents or brokers proposing replacement shall comply with 
        section 61A.55, subdivision 1. 
           Sec. 15.  [61A.55] [DUTIES OF AGENTS AND BROKERS.] 
           Subdivision 1.  [SUBMISSION TO INSURER.] Each agent or 
        broker who initiates the application shall submit to the insurer 
        to which an application for life insurance or annuity is 
        presented, with or as part of each application: 
           (1) a statement signed by the applicant as to whether 
        replacement of existing life insurance or annuity is involved in 
        the transaction; and 
           (2) a signed statement as to whether the agent or broker 
        knows replacement is or may be involved in the transaction. 
           Subd. 2.  [REPLACEMENT INFORMATION.] Where a replacement is 
        involved, the agent or broker shall: 
           (1) present to the applicant, not later than at the time of 
        taking the application, a "notice regarding replacement" in the 
        form as described in section 61A.60, subdivision 1, or other 
        substantially similar form approved by the commissioner.  The 
        notice shall be fully completed and signed by both the applicant 
        and the agent or broker and left with the applicant.  The 
        completed notice must list all existing life insurance and 
        annuity to be replaced, properly identified by name of insurer, 
        the insured, and contract number.  If a contract number has not 
        been assigned by the existing insurer, alternative 
        identification, such as an application or receipt number, shall 
        be listed; 
           (2) leave with the applicant the original or a copy of any 
        written or printed communications used for presentation to the 
        applicant; and 
           (3) submit to the replacing insurer with the application a 
        copy of the fully completed and signed replacement notice 
        provided under this subdivision. 
           Subd. 3.  [MATERIALS USED TO DISSUADE REPLACEMENT.] Each 
        agent or broker who uses written or printed communications in a 
        conservation shall leave with the applicant the original or a 
        copy of the communications. 
           Sec. 16.  [61A.56] [DUTIES OF ALL INSURERS.] 
           Each insurer shall: 
           (1) inform its field representatives or other personnel 
        responsible for compliance with sections 61A.53 to 61A.60 of the 
        requirements of those sections; and 
           (2) require with or as a part of each completed application 
        for life insurance or annuity a statement signed by the 
        applicant as to whether the proposed insurance or annuity will 
        replace existing life insurance or annuity. 
           Sec. 17.  [61A.57] [DUTIES OF INSURERS THAT USE AGENTS OR 
        BROKERS.] 
           Each insurer that uses an agent or broker in a life 
        insurance or annuity sale shall: 
           (a) require with or as part of each completed application 
        for life insurance or annuity, a statement signed by the agent 
        or broker as to whether the agent or broker knows replacement is 
        or may be involved in the transaction; 
           (b) where a replacement is involved: 
           (1) require from the agent or broker with the application 
        for life insurance or annuity, a copy of the fully completed and 
        signed replacement notice provided the applicant under section 
        61A.55.  The existing life insurance or annuity must be 
        identified by name of insurer, insured, and contract number.  If 
        a number has not been assigned by the existing insurer, 
        alternative identification, such as an application or receipt 
        number, must be listed; and 
           (2) send to each existing insurer a written communication 
        advising of the replacement or proposed replacement and the 
        identification information obtained under this section.  This 
        written communication must be made within five working days of 
        the date that the application is received in the replacing 
        insurer's home or regional office, or the date the proposed 
        policy or contract is issued, whichever is sooner. 
           (c) The replacing insurer shall maintain evidence of the 
        "notice regarding replacement" and a replacement register, 
        cross-indexed, by replacing agent and existing insurer to be 
        replaced.  Evidence that all requirements were met shall be 
        maintained for at least six years. 
           (d) The replacing insurer shall provide in its policy or 
        contract, or in a separate written notice that is delivered with 
        the policy or contract, that the applicant has a right to an 
        unconditional refund of all premiums paid, which right may be 
        exercised within a period of 20 days beginning from the date of 
        delivery of the policy. 
           Sec. 18.  [61A.58] [DUTIES OF INSURERS WITH RESPECT TO 
        DIRECT RESPONSE SALES.] 
           (a) If in the solicitation of a direct response sale, the 
        insurer did not propose the replacement, and a replacement is 
        involved, the insurer shall send to the applicant with the 
        policy or contract a replacement notice as described in section 
        61A.60, subdivision 2, or other substantially similar form 
        approved by the commissioner.  
           (b) If the insurer proposed the replacement, it shall: 
           (1) provide to applicants or prospective applicants with or 
        as a part of the application a replacement notice as described 
        in section 61A.60, subdivision 2, or other substantially similar 
        form approved by the commissioner; 
           (2) request from the applicant with or as part of the 
        application, a list of all existing life insurance policies or 
        annuity contracts to be replaced and properly identified by name 
        of insurer and insured; and 
           (3) comply with the requirements of section 61A.57, 
        paragraph (b), clause (2), if the applicant furnishes the names 
        of the existing insurers, and the requirements of section 
        61A.57, paragraphs (c) and (d), except that it need not index 
        the replacement register by replacing agent. 
           Sec. 19.  [61A.59] [ENFORCEMENT; EFFECT OF COMPLIANCE.] 
           (a) An agent, broker or insurer shall not recommend the 
        replacement or conservation of an existing policy or contract by 
        use of a substantially inaccurate presentation or comparison of 
        an existing policy's or contract's premiums and benefits or 
        dividends and values, if any.  An insurer, agent, 
        representative, officer, or employee of the insurer failing to 
        comply with the requirements of sections 61A.53 to 61A.60 is 
        subject to such penalties as may be appropriate under this 
        chapter.  
           (b) Patterns of action by policyholders or contract holders 
        who purchase replacing policies or contracts from the same agent 
        or broker, after indicating on applications that replacement is 
        not involved, are prima facie evidence of the agent's or 
        broker's knowledge that replacement was intended in connection 
        with the sale of those policies, and the patterns of action are 
        prima facie evidence of the agent's or broker's intent to 
        violate sections 61A.53 to 61A.60. 
           (c) Sections 61A.53 to 61A.60 do not prohibit the use of 
        additional material other than that which is required that does 
        not violate those sections or any other statute or rule. 
           (d) Compliance by an insurer, agent, or broker with 
        sections 61A.53 to 61A.60 does not limit any cause of action or 
        other remedies that the insured may otherwise have against an 
        insurer, agent, or broker.  In a proceeding in which the 
        insured's knowledge or understanding is an issue, compliance 
        with those sections may be admitted as evidence on that issue, 
        but shall not be conclusive. 
           Sec. 20.  [61A.60] [REQUIRED REPLACEMENT NOTICE AND FORM.] 
           Subdivision 1.  [NOTICE FORM; AGENT SALES.] The notice 
        required where sections 61A.53 to 61A.60 refer to this 
        subdivision is as follows: 
                               IMPORTANT NOTICE 
        
        DEFINITION:  REPLACEMENT IS any transaction where, in connection
                     with the purchase of New Insurance or a New 
                     Annuity, you LAPSE, SURRENDER, CONVERT to 
                     Paid-up Insurance, Place on Extended Term, 
                     or BORROW all or part of the policy loan 
                     values on an existing insurance policy or an 
                     annuity.  (See reverse side for DEFINITIONS.) 
         
         
        IF YOU       In connection with the purchase of this insurance 
        INTEND TO    or annuity, if you have REPLACED or intend to 
        REPLACE      REPLACE your present life insurance coverage 
        COVERAGE     or annuity(ies), you should be certain that you   
                     understand all the relevant factors involved.
         
                     You should BE AWARE that you may be required to
                     provide [EVIDENCE OF INSURABILITY] and 
                     1)  If your HEALTH condition has CHANGED since 
                     the application was taken on your present 
                     policies, you may be required to pay ADDITIONAL 
                     PREMIUMS under the NEW POLICY, or be DENIED 
                     coverage. 
                     2)  Your present occupation or activities [may not
                     be covered or could require additional premiums.]
                     3)  The INCONTESTABLE and SUICIDE CLAUSE will 
                     begin anew in a new policy.  This could RESULT 
                     in a [CLAIM under the new policy BEING DENIED] 
                     that would otherwise have been paid.
                     4)  Current law DOES NOT REQUIRE your present 
                     insurer(s) to REFUND any premiums.
                     5)  It is to your advantage to OBTAIN INFORMATION
                     regarding your existing policies or annuity 
                     contracts [from the insurer or agent from whom 
                     you purchased the policy or annuity contract.]
         
                     (If you are purchasing an annuity, clauses (1), 
                     (2), and (3) above would not apply to the new 
                     annuity contract.)
                     THE INSURANCE OR ANNUITY I INTEND TO PURCHASE FROM 
                     _______________________________________INSURANCE CO.
                     MAY REPLACE OR ALTER EXISTING LIFE INSURANCE 
                     POLICY(IES) OR ANNUITY CONTRACT(S). 
                     The following policy(ies) or annuity contract(s) 
                     may be replaced as a result of this transaction:
                 [Insurer                              [Insured 
         as it appears on the policy        as it appears on the policy 
         or contract]                       or contract] 
        ______________________________     ______________________________
        ______________________________     ______________________________
        ______________________________     ______________________________
        ______________________________     ______________________________
         [Policy or Contract Number]             [Insured Birthdate]
        ______________________________     ______________________________
        ______________________________     ______________________________
        ______________________________     ______________________________
        ______________________________     ______________________________
                The proposed policy or contract is:
                ______________________________________  $_______________
                type of policy- or contract-generic name   face amount
                ________________________________________________________
                signature of applicant                   date
                ________________________________________________________
                address of applicant        city              state
                I certify that this form was given to and completed by 
                ________________________________________________________
                            (applicant-please print or type)
                prior to taking an application and that I am leaving a 
                signed copy for the applicant.
                     ___________________________________________________
                     agent's signature                    date
                     ___________________________________________________
                                      address
                     ___________________________________________________
                             city                       state
                  [NOTE IMPORTANT STATEMENT ON REVERSE SIDE]
           Subd. 2.  [NOTICE FORM; DIRECT RESPONSE SALES.] The notice 
        required where sections 61A.53 to 61A.60 refer to this 
        subdivision is as follows: 
                               IMPORTANT NOTICE
                                 REQUIRED BY
                           MINNESOTA INSURANCE LAW
        DEFINITION: REPLACEMENT is any transaction where, in connection 
                    with the purchase of New Insurance or a New Annuity, 
                    you LAPSE, SURRENDER, CONVERT to Paid-up Insurance, 
                    Place on Extended Term, or BORROW all or part of 
                    the policy loan values on an existing insurance 
                    policy or an annuity.  (See reverse side for 
                    DEFINITIONS.) 
        IF YOU      In connection with the purchase of this insurance 
        INTEND TO   or annuity, if you have REPLACED or intend to 
        REPLACE     REPLACE your present life insurance coverage or 
        COVERAGE    annuity(ies), you should be certain that you 
                    understand all the relevant factors involved. 
                      You should BE AWARE that you may be required 
                    to provide [Evidence of insurability] and 
                    (1) If your HEALTH condition has CHANGED since 
                        the application was taken on your present 
                        policies, you may be required to pay 
                        ADDITIONAL PREMIUMS under the NEW POLICY, 
                        or be DENIED coverage. 
                    (2) Your present occupation or activities [may 
                        not be covered or could require additional 
                        premiums.]
                    (3) The INCONTESTABLE and SUICIDE CLAUSE will 
                        begin anew in a new policy.  This could 
                        RESULT in a [CLAIM under the new policy 
                        BEING DENIED] that would otherwise have 
                        been paid. 
                    (4) Current law DOES NOT REQUIRE your present 
                        insurer(s) to REFUND any premiums. 
                    (5) It may be to your advantage to OBTAIN 
                        INFORMATION regarding your existing 
                        policies or annuity contracts [from the insurer
                        or agent from whom you purchased the policy 
                        or annuity contract.]
                      (If an annuity is being purchased, Items 1, 
                    2 and 3 above would not apply to the new 
                    contract.)
        CAUTION     If after studying the information made 
                    available to you, you decide to replace your 
                    existing life insurance or annuity with our policy 
                    or annuity contract, you are urged not to 
                    take action to terminate or alter your existing
                    coverage or annuity(ies) until after you have
                    been issued the new policy or annuity contract,
                    examined it and found it to be acceptable to you.  If
                    you should terminate or otherwise materially alter
                    your existing coverage or annuity(ies) and 
                    fail to qualify for the life insurance for which
                    you have applied, you may find yourself unable to
                    purchase other life insurance or be able to
                    purchase it only at substantially higher rates. 
        INSURER'S MAILING DATE:...............................
           Subd. 3.  [DEFINITIONS.] The following definitions must 
        appear on the back of the notice forms provided in subdivisions 
        1 and 2: 
                                 DEFINITIONS 
           PREMIUMS:  Premiums are the payments you make in exchange 
        for an insurance policy or annuity contract.  They are unlike 
        deposits in a savings or investment program, because if you drop 
        the policy or contract, you might get back less than you paid in.
           CASH SURRENDER VALUE:  This is the amount of money you can 
        get in cash if you surrender your life insurance policy or 
        annuity.  If there is a policy loan, the cash surrender value is 
        the difference between the cash value printed in the policy and 
        the loan value.  Not all policies have cash surrender values. 
           LAPSE:  A life insurance policy may lapse when you do not 
        pay the premiums within the grace period.  If you had a cash 
        surrender value, the insurer might change your policy to as much 
        extended term insurance or paid-up insurance as the cash 
        surrender value will buy.  Sometimes the policy lets the insurer 
        borrow from the cash surrender value to pay the premiums. 
           SURRENDER:  You surrender a life insurance policy when you 
        either let it lapse or tell the company you want to drop it.  
        Whenever a policy has a cash surrender value, you can get it in 
        cash if you return the policy to the company with a written 
        request.  Most insurers will also let you exchange the cash 
        value of the policy for paid-up or extended term insurance. 
           CONVERT TO PAID-UP INSURANCE:  This means you use your cash 
        surrender value to change your insurance to a paid-up policy 
        with the same insurer.  The death benefit generally will be 
        lower than under the old policy, but you will not have to pay 
        any more premiums. 
           PLACE ON EXTENDED TERM:  This means you use your cash 
        surrender value to change your insurance to term insurance with 
        the same insurer.  In this case, the net death benefit will be 
        the same as before.  However, you will only be covered for a 
        specified period of time stated in the policy. 
           BORROW POLICY LOAN VALUES:  If your life insurance policy 
        has a cash surrender value, you can almost always borrow all or 
        part of it from the insurer.  Interest will be charged according 
        to the terms of the policy, and if the loan with unpaid interest 
        ever exceeds the cash surrender value, your policy will be 
        surrendered.  If you die, the amount of the loan and any unpaid 
        interest due will be subtracted from the death benefits. 
           EVIDENCE OF INSURABILITY:  This means proof that you are an 
        acceptable risk.  You have to meet the insurer's standards 
        regarding age, health, occupation, etc., to be eligible for 
        coverage. 
           INCONTESTABLE CLAUSE:  This says that after two years, 
        depending on the policy or insurer, the life insurer will not 
        resist a claim because you made a false or incomplete statement 
        when you applied for the policy.  For the early years, though, 
        if there are wrong answers on the application and the insurer 
        finds out about them, the insurer can deny a claim as if the 
        policy had never existed. 
           SUICIDE CLAUSE:  This says that if you commit suicide after 
        being insured for less than two years, depending on the policy 
        and insurer, your beneficiaries will receive only a refund of 
        the premiums that were paid. 
           Subd. 4.  [PRINTING OF NOTICES.] The notices in 
        subdivisions 1 and 2 must be reproduced in their entirety on one 
        side of an 8-1/2 by 11 inch sheet of plain paper.  The 
        definitions contained in subdivision 3 must be printed on the 
        reverse side.  The insurer may print its legal name in the space 
        provided.  
           Sec. 21.  Minnesota Statutes 1994, section 61B.28, 
        subdivision 7, is amended to read: 
           Subd. 7.  [NOTICE CONCERNING LIMITATIONS AND EXCLUSIONS.] 
        (a) No person, including an insurer, agent, or affiliate of an 
        insurer or agent, shall offer for sale in this state a covered 
        life insurance, annuity, or health insurance policy or contract 
        without delivering at the time of application for that policy or 
        contract a notice in the form specified in subdivision 8, or in 
        a form approved by the commissioner under paragraph (b), 
        relating to coverage provided by the Minnesota life and health 
        insurance guaranty association.  The notice may be part of the 
        application.  A copy of the notice must be given to the 
        applicant.  The notice must be delivered to the applicant at the 
        time of application for the policy or contract, except that if 
        the application is not taken from the applicant in person, the 
        notice must be sent to the applicant within 72 hours after the 
        application is taken.  The person offering the policy or 
        contract shall document the fact that the notice was given at 
        the time of application or was sent within the specified time. 
        This does not require that the receipt of the notice be 
        acknowledged by the applicant. 
           (b) The association may prepare, and file with the 
        commissioner for approval, a form of notice as an alternative to 
        the form of notice specified in subdivision 8 describing the 
        general purposes and limitations of this chapter.  The form of 
        notice shall: 
           (1) state the name, address, and telephone number of the 
        Minnesota life and health insurance guaranty association; 
           (2) prominently warn the policy or contract holder that the 
        Minnesota life and health insurance guaranty association may not 
        cover the policy or, if coverage is available, it will be 
        subject to substantial limitations and exclusions and 
        conditioned on continued residence in the state; 
           (3) state that the insurer and its agents are prohibited by 
        law from using the existence of the Minnesota life and health 
        insurance guaranty association for the purpose of sales, 
        solicitation, or inducement to purchase any form of insurance; 
           (4) emphasize that the policy or contract holder should not 
        rely on coverage under the Minnesota life and health insurance 
        guaranty association when selecting an insurer; 
           (5) provide other information as directed by the 
        commissioner.  The commissioner may approve any form of notice 
        proposed by the association and, as to the approved form of 
        notice, the association may notify all member insurers by mail 
        that the form of notice is available as an alternative to the 
        notice specified in subdivision 8.  
           (c) A policy or contract not covered by the Minnesota Life 
        and Health Insurance Guaranty Association or the Minnesota 
        Insurance Guaranty Association must contain the following notice 
        in ten-point type, stamped in red ink or contrasting type on the 
        policy or contract and the application: 
           "THIS POLICY OR CONTRACT IS NOT PROTECTED BY THE MINNESOTA 
           LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION OR THE 
           MINNESOTA INSURANCE GUARANTY ASSOCIATION.  IN THE CASE OF 
           INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED.  ONLY THE 
           ASSETS OF THIS INSURER WILL BE AVAILABLE TO PAY YOUR CLAIM."
           This section does not apply to fraternal benefit societies 
        regulated under chapter 64B. 
           Sec. 22.  Minnesota Statutes 1994, section 62A.02, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [FILING BY DOMESTIC INSURERS FOR PURPOSES OF 
        COMPLYING WITH ANOTHER STATE'S FILING REQUIREMENTS.] A domestic 
        insurer may file with the commissioner for informational 
        purposes only a policy or certificate of insurance that is not 
        intended to be offered or sold within this state.  This 
        subdivision only applies to the filing in Minnesota of a policy 
        or certificate of insurance issued to an insured or certificate 
        holder located outside of this state when the filing is for the 
        express purpose of complying with the law of the state in which 
        the insured or certificate holder resides.  In no event may a 
        policy or certificate of insurance filed under this subdivision 
        for out-of-state use be issued or delivered in Minnesota unless 
        and until the policy or certificate of insurance is approved 
        under subdivision 2. 
           Sec. 23.  Minnesota Statutes 1995 Supplement, section 
        62A.042, is amended to read: 
           62A.042 [FAMILY COVERAGE; COVERAGE OF NEWBORN INFANTS.] 
           Subdivision 1.  [INDIVIDUAL FAMILY POLICIES; RENEWALS.] (a) 
        No policy of individual accident and sickness insurance which 
        provides for insurance for more than one person under section 
        62A.03, subdivision 1, clause (3), and no individual health 
        maintenance contract which provides for coverage for more than 
        one person under chapter 62D, shall be renewed to insure or 
        cover any person in this state or be delivered or issued for 
        delivery to any person in this state unless the policy or 
        contract includes as insured or covered members of the family 
        any newborn infants, including dependent grandchildren who 
        reside with a covered grandparent, immediately from the moment 
        of birth and thereafter which insurance or contract shall 
        provide coverage for illness, injury, congenital malformation, 
        or premature birth.  For purposes of this paragraph, "newborn 
        infants" includes grandchildren who are financially dependent 
        upon a covered grandparent and who reside with that covered 
        grandparent continuously from birth.  No policy or contract 
        covered by this section may require notification to a health 
        carrier as a condition for this dependent coverage.  However, if 
        the policy or contract mandates an additional premium for each 
        dependent, the health carrier shall be entitled to all premiums 
        that would have been collected had the health carrier been aware 
        of the additional dependent.  The health carrier may withhold 
        payment of any health benefits for the new dependent until it 
        has been compensated with the applicable premium which would 
        have been owed if the health carrier had been informed of the 
        additional dependent immediately. 
           (b) The coverage under paragraph (a) includes benefits for 
        inpatient or outpatient expenses arising from medical and dental 
        treatment up to age 18, including orthodontic and oral surgery 
        treatment, involved in the management of birth defects known as 
        cleft lip and cleft palate.  If orthodontic services are 
        eligible for coverage under a dental insurance plan and another 
        policy or contract, the dental plan shall be primary and the 
        other policy or contract shall be secondary in regard to the 
        coverage required under paragraph (a).  Payment for dental or 
        orthodontic treatment not related to the management of the 
        congenital condition of cleft lip and cleft palate shall not be 
        covered under this provision.  
           Subd. 2.  [GROUP POLICIES; RENEWALS.] (a) No group accident 
        and sickness insurance policy and no group health maintenance 
        contract which provide for coverage of family members or other 
        dependents of an employee or other member of the covered group 
        shall be renewed to cover members of a group located in this 
        state or delivered or issued for delivery to any person in this 
        state unless the policy or contract includes as insured or 
        covered family members or dependents any newborn infants, 
        including dependent grandchildren who reside with a covered 
        grandparent, immediately from the moment of birth and thereafter 
        which insurance or contract shall provide coverage for illness, 
        injury, congenital malformation, or premature birth.  For 
        purposes of this paragraph, "newborn infants" includes 
        grandchildren who are financially dependent upon a covered 
        grandparent and who reside with that covered grandparent 
        continuously from birth.  No policy or contract covered by this 
        section may require notification to a health carrier as a 
        condition for this dependent coverage.  However, if the policy 
        or contract mandates an additional premium for each dependent, 
        the health carrier shall be entitled to all premiums that would 
        have been collected had the health carrier been aware of the 
        additional dependent.  The health carrier may reduce the health 
        benefits owed to the insured, certificate holder, member, or 
        subscriber by the amount of past due premiums applicable to the 
        additional dependent. 
           (b) The coverage under paragraph (a) includes benefits for 
        inpatient or outpatient expenses arising from medical and dental 
        treatment up to age 18, including orthodontic and oral surgery 
        treatment, involved in the management of birth defects known as 
        cleft lip and cleft palate.  If orthodontic services are 
        eligible for coverage under a dental insurance plan and another 
        policy or contract, the dental plan shall be primary and the 
        other policy or contract shall be secondary in regard to the 
        coverage required under paragraph (a).  Payment for dental or 
        orthodontic treatment not related to the management of the 
        congenital condition of cleft lip and cleft palate shall not be 
        covered under this provision. 
           Sec. 24.  [62A.3091] [NONDISCRIMINATE COVERAGE OF TESTS.] 
           Subdivision 1.  [SCOPE OF REQUIREMENT.] This section 
        applies to any of the following if issued or renewed to a 
        Minnesota resident or to cover a Minnesota resident: 
           (1) a health plan, as defined in section 62A.011; 
           (2) coverage described in section 62A.011, subdivision 3, 
        clauses (2), (3), or (6) to (12); and 
           (3) a policy, contract, or certificate issued by a 
        community integrated service network or an integrated service 
        network licensed under chapter 62N. 
           Subd. 2.  [REQUIREMENT.] Coverage described in subdivision 
        1 that covers laboratory tests, diagnostic tests, and X-rays 
        must provide the same coverage, without requiring additional 
        signatures, for all such tests ordered by an advanced practice 
        nurse operating pursuant to chapter 148.  Nothing in this 
        section shall be construed to interfere with any written 
        agreement between a physician and an advanced practice nurse. 
           Sec. 25.  [62A.3092] [EQUAL TREATMENT OF SURGICAL FIRST 
        ASSISTING SERVICES.] 
           Subdivision 1.  [SCOPE OF REQUIREMENT.] This section 
        applies to any of the following if issued or renewed to a 
        Minnesota resident or to cover a Minnesota resident: 
           (1) a health plan, as defined in section 62A.011; 
           (2) coverage described in section 62A.011, subdivision 3, 
        clauses (2), (3), or (6) to (12); and 
           (3) a policy, contract, or certificate issued by a 
        community integrated service network or an integrated service 
        network licensed under chapter 62N.  
           Subd. 2.  [REQUIREMENT.] Coverage described in subdivision 
        1 that provides for payment for surgical first assisting 
        benefits or services shall be construed as providing for payment 
        for a registered nurse who performs first assistant functions 
        and services that are within the scope of practice of a 
        registered nurse. 
           Sec. 26.  Minnesota Statutes 1995 Supplement, section 
        62A.135, subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the following terms have the meanings given them: 
           (a) "fixed indemnity policy" is a policy form, other than 
        an accidental death and dismemberment policy, a disability 
        income policy, or a long-term care policy as defined in section 
        62A.46, subdivision 2, that pays a predetermined, specified, 
        fixed benefit for services provided.  Claim costs under these 
        forms are generally not subject to inflation, although they may 
        be subject to changes in the utilization of health care 
        services.  For policy forms providing both expense-incurred and 
        fixed benefits, the policy form is a fixed indemnity policy if 
        50 percent or more of the total claims are for predetermined, 
        specified, fixed benefits; 
           (b) "guaranteed renewable" means that, during the renewal 
        period (to a specified age) renewal cannot be declined nor 
        coverage changed by the insurer for any reason other than 
        nonpayment of premiums, fraud, or misrepresentation, but the 
        insurer can revise rates on a class basis upon approval by the 
        commissioner; 
           (c) "noncancelable" means that, during the renewal period 
        (to a specified age) renewal cannot be declined nor coverage 
        changed by the insurer for any reason other than nonpayment of 
        premiums, fraud, or misrepresentation and that rates cannot be 
        revised by the insurer.  This includes policies that are 
        guaranteed renewable to a specified age, such as 60 or 65, at 
        guaranteed rates; and 
           (d) "average annualized premium" means the average of the 
        estimated annualized premium per covered person based on the 
        anticipated distribution of business using all significant 
        criteria having a price difference, such as age, sex, amount, 
        dependent status, mode of payment, and rider frequency.  For 
        filing of rate revisions, the amount is the anticipated average 
        assuming the revised rates have fully taken effect. 
           Sec. 27.  Minnesota Statutes 1995 Supplement, section 
        62A.31, subdivision 1h, is amended to read: 
           Subd. 1h.  [LIMITATIONS ON DENIALS, CONDITIONS, AND PRICING 
        OF COVERAGE.] No issuer of Medicare supplement policies, 
        including policies that supplement Medicare issued by health 
        maintenance organizations or those policies governed by section 
        1833 or 1876 of the federal Social Security Act, United States 
        Code, title 42, section 1395, et seq., health carrier issuing 
        Medicare-related coverage in this state may impose preexisting 
        condition limitations or otherwise deny or condition the 
        issuance or effectiveness of any Medicare supplement insurance 
        policy form such coverage available for sale in this state, nor 
        may it discriminate in the pricing of such a policy coverage, 
        because of the health status, claims experience, receipt of 
        health care, medical condition, or age of an applicant where an 
        application for such insurance coverage is submitted prior to or 
        during the six-month period beginning with the first day of the 
        month in which an individual first enrolled for benefits under 
        Medicare Part B.  This paragraph subdivision applies to each 
        Medicare-related coverage offered by a health carrier regardless 
        of whether the individual has attained the age of 65 years.  If 
        an individual who is enrolled in Medicare Part B due to 
        disability status is involuntarily disenrolled due to loss of 
        disability status, the individual is eligible for the another 
        six-month enrollment period provided under this subdivision if 
        beginning the first day of the month in which the individual 
        later becomes eligible for and enrolls again in Medicare Part 
        B.  An individual who is or was previously enrolled in Medicare 
        Part B due to disability status is eligible for another 
        six-month enrollment period under this subdivision beginning the 
        first day of the month in which the individual has attained the 
        age of 65 years and either maintains enrollment in, or enrolls 
        again in, Medicare Part B. 
           Sec. 28.  Minnesota Statutes 1994, section 62A.31, 
        subdivision 1p, is amended to read: 
           Subd. 1p.  [RENEWAL OR CONTINUATION PROVISIONS.] Medicare 
        supplement policies and certificates shall include a renewal or 
        continuation provision.  The language or specifications of the 
        provision shall be consistent with the type of contract issued.  
        The provision shall be appropriately captioned and shall appear 
        on the first page of the policy or certificate, and shall 
        include any reservation by the issuer of the right to change 
        premiums.  Except for riders or endorsements by which the issuer 
        effectuates a request made in writing by the insured, exercises 
        a specifically reserved right under a Medicare supplement policy 
        or certificate, or is required to reduce or eliminate benefits 
        to avoid duplication of Medicare benefits, all riders or 
        endorsements added to a Medicare supplement policy or 
        certificate after the date of issue or at reinstatement or 
        renewal that reduce or eliminate benefits or coverage in the 
        policy or certificate shall require a signed acceptance by the 
        insured.  After the date of policy or certificate issue, a rider 
        or endorsement that increases benefits or coverage with a 
        concomitant increase in premium during the policy or certificate 
        term shall be agreed to in writing and signed by the insured, 
        unless the benefits are required by the minimum standards for 
        Medicare supplement policies or if the increased benefits or 
        coverage is required by law.  Where a separate additional 
        premium is charged for benefits provided in connection with 
        riders or endorsements, the premium charge shall be set forth in 
        the policy, declaration page, or certificate.  If a Medicare 
        supplement policy or certificate contains limitations with 
        respect to preexisting conditions, the limitations shall appear 
        as a separate paragraph of the policy or certificate and be 
        labeled as "preexisting condition limitations." 
           Issuers of accident and sickness policies or certificates 
        that provide hospital or medical expense coverage on an expense 
        incurred or indemnity basis, other than incidentally, to a 
        person persons eligible for Medicare by reason of age shall 
        provide to such those applicants a Medicare Supplement Buyer's " 
        Guide to Health Insurance for People with Medicare" in the form 
        developed by the Health Care Financing Administration and in a 
        type size no smaller than 12-point type.  Delivery of 
        the Buyer's guide must be made whether or not such policies or 
        certificates are advertised, solicited, or issued as Medicare 
        supplement policies or certificates as defined in this section.  
        Except in the case of direct response issuers, delivery of 
        the Buyer's guide must be made to the applicant at the time of 
        application, and acknowledgment of receipt of the Buyer's guide 
        must be obtained by the issuer.  Direct response issuers shall 
        deliver the Buyer's guide to the applicant upon request, but no 
        later than the time at which the policy is delivered. 
           Sec. 29.  Minnesota Statutes 1994, section 62A.31, 
        subdivision 1r, is amended to read: 
           Subd. 1r.  [COMMUNITY RATE.] Each health maintenance 
        organization, health service plan corporation, insurer, or 
        fraternal benefit society that sells coverage that supplements 
        Medicare-related coverage shall establish a separate community 
        rate for that coverage.  Beginning January 1, 1993, no 
        Medicare-related coverage that supplements Medicare or that is 
        governed by section 1833 or 1876 of the federal Social Security 
        Act, United States Code, title 42, section 1395, et seq., may be 
        offered, issued, sold, or renewed to a Minnesota resident, 
        except at the community rate required by this subdivision.  The 
        same community rate must apply to newly issued coverage and to 
        renewal coverage. 
           For coverage that supplements Medicare and for the Part A 
        rate calculation for plans governed by section 1833 of the 
        federal Social Security Act, United States Code, title 42, 
        section 1395, et seq., the community rate may take into account 
        only the following factors: 
           (1) actuarially valid differences in benefit designs or 
        provider networks; 
           (2) geographic variations in rates if preapproved by the 
        commissioner of commerce; and 
           (3) premium reductions in recognition of healthy lifestyle 
        behaviors, including but not limited to, refraining from the use 
        of tobacco.  Premium reductions must be actuarially valid and 
        must relate only to those healthy lifestyle behaviors that have 
        a proven positive impact on health.  Factors used by the health 
        carrier making this premium reduction must be filed with and 
        approved by the commissioner of commerce. 
           For insureds not residing in Anoka, Carver, Chisago, 
        Dakota, Hennepin, Ramsey, Scott, or Washington county, a health 
        plan may, at the option of the health carrier, phase in 
        compliance under the following timetable: 
           (i) a premium adjustment as of March 1, 1993, that consists 
        of one-half of the difference between the community rate that 
        would be applicable to the person as of March 1, 1993, and the 
        premium rate that would be applicable to the person as of March 
        1, 1993, under the rate schedule permitted on December 31, 1992. 
        A health plan may, at the option of the health carrier, 
        implement the entire premium difference described in this clause 
        for any person as of March 1, 1993, if the premium difference 
        would be 15 percent or less of the premium rate that would be 
        applicable to the person as of March 1, 1993, under the rate 
        schedule permitted on December 31, 1992, if the health plan does 
        so uniformly regardless of whether the premium difference causes 
        premiums to rise or to fall.  The premium difference described 
        in this clause is in addition to any premium adjustment 
        attributable to medical cost inflation or any other lawful 
        factor and is intended to describe only the premium difference 
        attributable to the transition to the community rate; and 
           (ii) with respect to any person whose premium adjustment 
        was constrained under clause (i), a premium adjustment as of 
        January 1, 1994, that consists of the remaining one-half of the 
        premium difference attributable to the transition to the 
        community rate, as described in clause (i). 
           A health plan that initially follows the phase-in timetable 
        may at any subsequent time comply on a more rapid timetable.  A 
        health plan that is in full compliance as of January 1, 1993, 
        may not use the phase-in timetable and must remain in full 
        compliance.  Health plans that follow the phase-in timetable 
        must charge the same premium rate for newly issued coverage that 
        they charge for renewal coverage.  A health plan whose premiums 
        are constrained by clause (i) may take the constraint into 
        account in establishing its community rate. 
           From January 1, 1993 to February 28, 1993, a health plan 
        may, at the health carrier's option, charge the community rate 
        under this paragraph or may instead charge premiums permitted as 
        of December 31, 1992. 
           Sec. 30.  Minnesota Statutes 1994, section 62A.31, 
        subdivision 1s, is amended to read: 
           Subd. 1s.  [PRESCRIPTION DRUG COVERAGE.] Beginning January 
        1, 1993, a health maintenance organization that issues 
        Medicare-related coverage that supplements Medicare or that 
        issues coverage governed by section 1833 or 1876 of the federal 
        Social Security Act, United States Code, title 42, section 1395 
        et seq., must offer, to each person to whom it offers any 
        contract described in this subdivision, at least one contract 
        that either: 
           (1) covers 80 percent of the reasonable and customary 
        charge for prescription drugs or the copayment equivalency; or 
           (2) offers the coverage described in clause (1) as an 
        optional rider that may be purchased separately from other 
        optional coverages.  
           Sec. 31.  Minnesota Statutes 1994, section 62A.31, 
        subdivision 3, is amended to read: 
           Subd. 3.  [DEFINITIONS.] (a) "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. 
           (b) "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. 
           (c) "Benefit period" or "Medicare benefit period" shall not 
        be defined more restrictively than as defined in the Medicare 
        program. 
           (d) "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. 
           (e) "Certificate form" means the form on which the 
        certificate is delivered or issued for delivery by the issuer. 
           (f) "Convalescent nursing home," "extended care facility," 
        or "skilled nursing facility" shall not be defined more 
        restrictively than as defined in the Medicare program. 
           (g) "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. 
           (h) "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. 
           (i) "Issuer" includes insurance companies, fraternal 
        benefit societies, health care service plans, 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. 
           (j) "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. 
           (k) "Medicare eligible expenses" means health care expenses 
        covered by Medicare, to the extent recognized as reasonable and 
        medically necessary by Medicare. 
           (l) "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. 
           (m) "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, other than a 
        policy or certificate issued under a contract under or those 
        policies or certificates covered by section 1833 or 1876 of the 
        federal Social Security Act, United States Code, title 42, 
        section 1395, et seq., or an issued policy under a demonstration 
        project authorized 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. 
           (m) (n) "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. 
           (n) (o) "Policy form" means the form on which the policy is 
        delivered or issued for delivery by the issuer. 
           (o) (p) "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. 
           Sec. 32.  Minnesota Statutes 1994, section 62A.315, is 
        amended to read: 
           62A.315 [EXTENDED BASIC MEDICARE SUPPLEMENT PLAN; 
        COVERAGE.] 
           The extended basic Medicare supplement plan must have a 
        level of coverage so that it will be certified as a qualified 
        plan pursuant to section 62E.07, and will provide: 
           (1) coverage for all of the Medicare part A inpatient 
        hospital deductible and coinsurance amounts, and 100 percent of 
        all Medicare part A eligible expenses for hospitalization not 
        covered by Medicare; 
           (2) coverage for the daily copayment amount of Medicare 
        part A eligible expenses for the calendar year incurred for 
        skilled nursing facility care; 
           (3) coverage for the copayment amount of Medicare eligible 
        expenses under Medicare part B regardless of hospital 
        confinement, and the Medicare part B deductible amount; 
           (4) 80 percent of the usual and customary hospital and 
        medical expenses and supplies described in section 62E.06, 
        subdivision 1, not to exceed any charge limitation established 
        by the Medicare program or state law, the usual and customary 
        hospital and medical expenses and supplies, described in section 
        62E.06, subdivision 1, while in a foreign country, and 
        prescription drug expenses, not covered by Medicare's eligible 
        expenses Medicare; 
           (5) coverage for the reasonable cost of the first three 
        pints of blood, or equivalent quantities of packed red blood 
        cells as defined under federal regulations under Medicare parts 
        A and B, unless replaced in accordance with federal regulations; 
           (6) 100 percent of the cost of immunizations and routine 
        screening procedures for cancer, including mammograms and pap 
        smears; 
           (7) preventive medical care benefit:  coverage for the 
        following preventive health services: 
           (i) an annual clinical preventive medical history and 
        physical examination that may include tests and services from 
        clause (ii) and patient education to address preventive health 
        care measures; 
           (ii) any one or a combination of the following preventive 
        screening tests or preventive services, the frequency of which 
        is considered medically appropriate: 
           (A) fecal occult blood test and/or digital rectal 
        examination; 
           (B) dipstick urinalysis for hematuria, bacteriuria, and 
        proteinuria; 
           (C) pure tone (air only) hearing screening test 
        administered or ordered by a physician; 
           (D) serum cholesterol screening every five years; 
           (E) thyroid function test; 
           (F) diabetes screening; 
           (iii) any other tests or preventive measures determined 
        appropriate by the attending physician.  
           Reimbursement shall be for the actual charges up to 100 
        percent of the Medicare-approved amount for each service as if 
        Medicare were to cover the service as identified in American 
        Medical Association current procedural terminology (AMA CPT) 
        codes to a maximum of $120 annually under this benefit.  This 
        benefit shall not include payment for any procedure covered by 
        Medicare; 
           (8) at-home recovery benefit:  coverage for services to 
        provide short-term at-home assistance with activities of daily 
        living for those recovering from an illness, injury, or surgery: 
           (i) for purposes of this benefit, the following definitions 
        shall apply: 
           (A) "activities of daily living" include, but are not 
        limited to, bathing, dressing, personal hygiene, transferring, 
        eating, ambulating, assistance with drugs that are normally 
        self-administered, and changing bandages or other dressings; 
           (B) "care provider" means a duly qualified or licensed home 
        health aide/homemaker, personal care aide, or nurse provided 
        through a licensed home health care agency or referred by a 
        licensed referral agency or licensed nurses registry; 
           (C) "home" means a place used by the insured as a place of 
        residence, provided that the place would qualify as a residence 
        for home health care services covered by Medicare.  A hospital 
        or skilled nursing facility shall not be considered the 
        insured's place of residence; 
           (D) "at-home recovery visit" means the period of a visit 
        required to provide at-home recovery care, without limit on the 
        duration of the visit, except each consecutive four hours in a 
        24-hour period of services provided by a care provider is one 
        visit; 
           (ii) coverage requirements and limitations: 
           (A) at-home recovery services provided must be primarily 
        services that assist in activities of daily living; 
           (B) the insured's attending physician must certify that the 
        specific type and frequency of at-home recovery services are 
        necessary because of a condition for which a home care plan of 
        treatment was approved by Medicare; 
           (C) coverage is limited to: 
           (I) no more than the number and type of at-home recovery 
        visits certified as medically necessary by the insured's 
        attending physician.  The total number of at-home recovery 
        visits shall not exceed the number of Medicare-approved home 
        health care visits under a Medicare-approved home care plan of 
        treatment; 
           (II) the actual charges for each visit up to a maximum 
        reimbursement of $40 per visit; 
           (III) $1,600 per calendar year; 
           (IV) seven visits in any one week; 
           (V) care furnished on a visiting basis in the insured's 
        home; 
           (VI) services provided by a care provider as defined in 
        this section; 
           (VII) at-home recovery visits while the insured is covered 
        under the policy or certificate and not otherwise excluded; 
           (VIII) at-home recovery visits received during the period 
        the insured is receiving Medicare-approved home care services or 
        no more than eight weeks after the service date of the last 
        Medicare-approved home health care visit; 
           (iii) coverage is excluded for: 
           (A) home care visits paid for by Medicare or other 
        government programs; and 
           (B) care provided by family members, unpaid volunteers, or 
        providers who are not care providers. 
           Sec. 33.  Minnesota Statutes 1994, section 62A.318, is 
        amended to read: 
           62A.318 [MEDICARE SELECT POLICIES AND CERTIFICATES.] 
           (a) This section applies to Medicare select policies and 
        certificates, as defined in this section, including those issued 
        by health maintenance organizations.  No policy or certificate 
        may be advertised as a Medicare select policy or certificate 
        unless it meets the requirements of this section. 
           (b) For the purposes of this section: 
           (1) "complaint" means any dissatisfaction expressed by an 
        individual concerning a Medicare select issuer or its network 
        providers; 
           (2) "grievance" means dissatisfaction expressed in writing 
        by an individual insured under a Medicare select policy or 
        certificate with the administration, claims practices, or 
        provision of services concerning a Medicare select issuer or its 
        network providers; 
           (3) "Medicare select issuer" means an issuer offering, or 
        seeking to offer, a Medicare select policy or certificate; 
           (4) "Medicare select policy" or "Medicare select 
        certificate" means a Medicare supplement policy or certificate 
        that contains restricted network provisions; 
           (5) "network provider" means a provider of health care, or 
        a group of providers of health care, that has entered into a 
        written agreement with the issuer to provide benefits insured 
        under a Medicare select policy or certificate; 
           (6) "restricted network provision" means a provision that 
        conditions the payment of benefits, in whole or in part, on the 
        use of network providers; and 
           (7) "service area" means the geographic area approved by 
        the commissioner within which an issuer is authorized to offer a 
        Medicare select policy or certificate. 
           (c) The commissioner may authorize an issuer to offer a 
        Medicare select policy or certificate pursuant to this section 
        and section 4358 of the Omnibus Budget Reconciliation Act (OBRA) 
        of 1990, Public Law Number 101-508, if the commissioner finds 
        that the issuer has satisfied all of the requirements of 
        Minnesota Statutes. 
           (d) A Medicare select issuer shall not issue a Medicare 
        select policy or certificate in this state until its plan of 
        operation has been approved by the commissioner. 
           (e) A Medicare select issuer shall file a proposed plan of 
        operation with the commissioner, in a format prescribed by the 
        commissioner.  The plan of operation shall contain at least the 
        following information: 
           (1) evidence that all covered services that are subject to 
        restricted network provisions are available and accessible 
        through network providers, including a demonstration that: 
           (i) the services can be provided by network providers with 
        reasonable promptness with respect to geographic location, hours 
        of operation, and after-hour care.  The hours of operation and 
        availability of after-hour care shall reflect usual practice in 
        the local area.  Geographic availability shall reflect the usual 
        travel times within the community; 
           (ii) the number of network providers in the service area is 
        sufficient, with respect to current and expected policyholders, 
        either: 
           (A) to deliver adequately all services that are subject to 
        a restricted network provision; or 
           (B) to make appropriate referrals; 
           (iii) there are written agreements with network providers 
        describing specific responsibilities; 
           (iv) emergency care is available 24 hours per day and seven 
        days per week; and 
           (v) in the case of covered services that are subject to a 
        restricted network provision and are provided on a prepaid 
        basis, there are written agreements with network providers 
        prohibiting the providers from billing or otherwise seeking 
        reimbursement from or recourse against an individual insured 
        under a Medicare select policy or certificate.  This section 
        does not apply to supplemental charges or coinsurance amounts as 
        stated in the Medicare select policy or certificate; 
           (2) a statement or map providing a clear description of the 
        service area; 
           (3) a description of the grievance procedure to be used; 
           (4) a description of the quality assurance program, 
        including: 
           (i) the formal organizational structure; 
           (ii) the written criteria for selection, retention, and 
        removal of network providers; and 
           (iii) the procedures for evaluating quality of care 
        provided by network providers, and the process to initiate 
        corrective action when warranted; 
           (5) a list and description, by specialty, of the network 
        providers; 
           (6) copies of the written information proposed to be used 
        by the issuer to comply with paragraph (i); and 
           (7) any other information requested by the commissioner. 
           (f) A Medicare select issuer shall file proposed changes to 
        the plan of operation, except for changes to the list of network 
        providers, with the commissioner before implementing the 
        changes.  The changes shall be considered approved by the 
        commissioner after 30 days unless specifically disapproved. 
           An updated list of network providers shall be filed with 
        the commissioner at least quarterly. 
           (g) A Medicare select policy or certificate shall not 
        restrict payment for covered services provided by nonnetwork 
        providers if: 
           (1) the services are for symptoms requiring emergency care 
        or are immediately required for an unforeseen illness, injury, 
        or condition; and 
           (2) it is not reasonable to obtain the services through a 
        network provider. 
           (h) A Medicare select policy or certificate shall provide 
        payment for full coverage under the policy or certificate for 
        covered services that are not available through network 
        providers. 
           (i) A Medicare select issuer shall make full and fair 
        disclosure in writing of the provisions, restrictions, and 
        limitations of the Medicare select policy or certificate to each 
        applicant.  This disclosure must include at least the following: 
           (1) an outline of coverage sufficient to permit the 
        applicant to compare the coverage and premiums of the Medicare 
        select policy or certificate with: 
           (i) other Medicare supplement policies or certificates 
        offered by the issuer; and 
           (ii) other Medicare select policies or certificates; 
           (2) a description, including address, phone number, and 
        hours of operation, of the network providers, including primary 
        care physicians, specialty physicians, hospitals, and other 
        providers; 
           (3) a description of the restricted network provisions, 
        including payments for coinsurance and deductibles when 
        providers other than network providers are used; 
           (4) a description of coverage for emergency and urgently 
        needed care and other out-of-service area coverage; 
           (5) a description of limitations on referrals to restricted 
        network providers and to other providers; 
           (6) a description of the policyholder's rights to purchase 
        any other Medicare supplement policy or certificate otherwise 
        offered by the issuer; and 
           (7) a description of the Medicare select issuer's quality 
        assurance program and grievance procedure. 
           (j) Before the sale of a Medicare select policy or 
        certificate, a Medicare select issuer shall obtain from the 
        applicant a signed and dated form stating that the applicant has 
        received the information provided pursuant to paragraph (i) and 
        that the applicant understands the restrictions of the Medicare 
        select policy or certificate. 
           (k) A Medicare select issuer shall have and use procedures 
        for hearing complaints and resolving written grievances from the 
        subscribers.  The procedures shall be aimed at mutual agreement 
        for settlement and may include arbitration procedures.  
           (1) The grievance procedure must be described in the policy 
        and certificates and in the outline of coverage. 
           (2) At the time the policy or certificate is issued, the 
        issuer shall provide detailed information to the policyholder 
        describing how a grievance may be registered with the issuer. 
           (3) Grievances must be considered in a timely manner and 
        must be transmitted to appropriate decision makers who have 
        authority to fully investigate the issue and take corrective 
        action. 
           (4) If a grievance is found to be valid, corrective action 
        must be taken promptly. 
           (5) All concerned parties must be notified about the 
        results of a grievance. 
           (6) The issuer shall report no later than March 31 of each 
        year to the commissioner regarding the grievance procedure.  The 
        report shall be in a format prescribed by the commissioner and 
        shall contain the number of grievances filed in the past year 
        and a summary of the subject, nature, and resolution of the 
        grievances. 
           (l) At the time of initial purchase, a Medicare select 
        issuer shall make available to each applicant for a Medicare 
        select policy or certificate the opportunity to purchase a 
        Medicare supplement policy or certificate otherwise offered by 
        the issuer. 
           (m)(1) At the request of an individual insured under a 
        Medicare select policy or certificate, a Medicare select issuer 
        shall make available to the individual insured the opportunity 
        to purchase a Medicare supplement policy or certificate offered 
        by the issuer that has comparable or lesser benefits and that 
        does not contain a restricted network provision.  The issuer 
        shall make the policies or certificates available without 
        requiring evidence of insurability after the Medicare supplement 
        policy or certificate has been in force for six months.  If the 
        issuer does not have available for sale a policy or certificate 
        without restrictive network provisions, the issuer shall provide 
        enrollment information for the Minnesota comprehensive health 
        association Medicare supplement plans. 
           (2) For the purposes of this paragraph, a Medicare 
        supplement policy or certificate will be considered to have 
        comparable or lesser benefits unless it contains one or more 
        significant benefits not included in the Medicare select policy 
        or certificate being replaced.  For the purposes of this 
        paragraph, a significant benefit means coverage for the Medicare 
        part A deductible, coverage for prescription drugs, coverage for 
        at-home recovery services, or coverage for part B excess charges.
           (n) Medicare select policies and certificates shall provide 
        for continuation of coverage if the secretary of health and 
        human services determines that Medicare select policies and 
        certificates issued pursuant to this section should be 
        discontinued due to either the failure of the Medicare select 
        program to be reauthorized under law or its substantial 
        amendment. 
           (1) Each Medicare select issuer shall make available to 
        each individual insured under a Medicare select policy or 
        certificate the opportunity to purchase a Medicare supplement 
        policy or certificate offered by the issuer that has comparable 
        or lesser benefits and that does not contain a restricted 
        network provision.  The issuer shall make the policies and 
        certificates available without requiring evidence of 
        insurability. 
           (2) For the purposes of this paragraph, a Medicare 
        supplement policy or certificate will be considered to have 
        comparable or lesser benefits unless it contains one or more 
        significant benefits not included in the Medicare select policy 
        or certificate being replaced.  For the purposes of this 
        paragraph, a significant benefit means coverage for the Medicare 
        part A deductible, coverage for prescription drugs, coverage for 
        at-home recovery services, or coverage for part B excess charges.
           (o) A Medicare select issuer shall comply with reasonable 
        requests for data made by state or federal agencies, including 
        the United States Department of Health and Human Services, for 
        the purpose of evaluating the Medicare select program. 
           (p) Medicare select policies and certificates under this 
        section shall be regulated and approved by the department of 
        commerce. 
           (q) Medicare select policies and certificates must be 
        either a basic plan or an extended basic plan.  Before a 
        Medicare select policy or certificate is sold or issued in this 
        state, the applicant must be provided with an explanation of 
        coverage for both a Medicare select basic and a Medicare select 
        extended basic policy or certificate and must be provided with 
        the opportunity of purchasing either a Medicare select basic or 
        a Medicare select extended basic policy.  The basic plan may 
        also include any of the optional benefit riders authorized by 
        section 62A.316.  Preventive care provided by Medicare select 
        policies or certificates must be provided as set forth in 
        section 62A.315 or 62A.316, except that the benefits are as 
        defined in chapter 62D. 
           (r) Medicare select policies and certificates are exempt 
        from the requirements of section 62A.31, subdivision 1, 
        paragraph (d).  This paragraph expires January 1, 1994. 
           Sec. 34.  Minnesota Statutes 1994, section 62A.39, is 
        amended to read: 
           62A.39 [DISCLOSURE.] 
           No individual Medicare supplement plan shall be delivered 
        or issued in this state and no certificate shall be delivered 
        under a group Medicare supplement plan delivered or issued in 
        this state unless the plan is shown on the cover page and an 
        outline containing at least the following information in no less 
        than 12-point type is delivered to the applicant at the time the 
        application is made:  
           (a) A description of the principal benefits and coverage 
        provided in the policy; 
           (b) A statement of the exceptions, reductions, and 
        limitations contained in the policy including the following 
        language, as applicable, in bold print:  "THIS POLICY DOES NOT 
        COVER ALL MEDICAL EXPENSES BEYOND THOSE COVERED BY MEDICARE.  
        THIS POLICY DOES NOT COVER ALL SKILLED NURSING HOME CARE 
        EXPENSES AND DOES NOT COVER CUSTODIAL OR RESIDENTIAL NURSING 
        CARE.  READ YOUR POLICY CAREFULLY TO DETERMINE WHICH NURSING 
        HOME FACILITIES AND EXPENSES ARE COVERED BY YOUR POLICY."; 
           (c) A statement of the renewal provisions including any 
        reservations by the insurer of a right to change premiums.  The 
        premium and manner of payment shall be stated for all plans that 
        are offered to the prospective applicant.  All possible premiums 
        for the prospective applicant shall be illustrated; 
           (d)  [READ YOUR POLICY OR CERTIFICATE VERY CAREFULLY.] A 
        statement that the outline of coverage is a summary of the 
        policy issued or applied for and that the policy should be 
        consulted to determine governing contractual provisions.  
        Additionally, it does not give all the details of Medicare 
        coverage.  Contact your local Social Security office or consult 
        the Medicare handbook for more details; 
           (e) A statement of the policy's loss ratio as follows:  
        "This policy provides an anticipated loss ratio of (..%).  This 
        means that, on the average, policyholders may expect that 
        ($....) of every $100.00 in premium will be returned as benefits 
        to policyholders over the life of the contract."; 
           (f) When the outline of coverage is provided at the time of 
        application and the Medicare supplement policy or certificate is 
        issued on a basis that would require revision of the outline, a 
        substitute outline of coverage properly describing the policy or 
        certificate shall accompany the policy or certificate when it is 
        delivered and contain the following statement, in no less than 
        12-point type, immediately above the company name: 
        "NOTICE:  Read this outline of coverage carefully.  It is not 
        identical to the outline of coverage provided upon application, 
        and the coverage originally applied for has not been issued."; 
           (g)  [RIGHT TO RETURN POLICY OR CERTIFICATE.] "If you find 
        that you are not satisfied with your policy or certificate for 
        any reason, you may return it to (insert issuer's address).  If 
        you send the policy or certificate back to us within 30 days 
        after you receive it, we will treat the policy or certificate as 
        if it had never been issued and return all of your payments 
        within ten days."; 
           (h)  [POLICY OR CERTIFICATE REPLACEMENT.] "If you are 
        replacing another health insurance policy or certificate, do NOT 
        cancel it until you have actually received your new policy or 
        certificate and are sure you want to keep it."; 
           (i)  [NOTICE.] "This policy or certificate may not fully 
        cover all of your medical costs."  
           A.  (for agents:) 
           "Neither (insert company's name) nor its agents are 
        connected with Medicare." 
           B.  (for direct response:) 
           "(insert company's name) is not connected with Medicare." 
           (j) Notice regarding policies or certificates which are not 
        Medicare supplement policies.  
           Any accident and sickness insurance policy or certificate, 
        other than a Medicare supplement policy, or a policy or 
        certificate issued pursuant to a contract under the federal 
        Social Security Act, section 1833 or 1876 (United States Code, 
        title 42, section 1395, et seq.), disability income policy; 
        basic, catastrophic, or major medical expense policy; single 
        premium nonrenewable policy; or other policy, issued for 
        delivery in this state to persons eligible for Medicare shall 
        notify insureds under the policy that the policy is not a 
        Medicare supplement policy or certificate.  The notice shall 
        either be printed or attached to the first page of the outline 
        of coverage delivered to insureds under the policy, or if no 
        outline of coverage is delivered, to the first page of the 
        policy or certificate delivered to insureds.  The notice shall 
        be in no less than 12-point type and shall contain the following 
        language: 
           "THIS (POLICY OR CERTIFICATE) IS NOT A MEDICARE SUPPLEMENT 
           (POLICY OR CONTRACT).  If you are eligible for Medicare, 
           review the Medicare supplement buyer's "Guide to Health 
           Insurance for People with Medicare" available from the 
           company." 
           (k)  [COMPLETE ANSWERS ARE VERY IMPORTANT.] "When you fill 
        out the application for the new policy or certificate, be sure 
        to answer truthfully and completely all questions about your 
        medical and health history.  The company may cancel your policy 
        or certificate and refuse to pay any claims if you leave out or 
        falsify important medical information."  If the policy or 
        certificate is guaranteed issue, this paragraph need not appear. 
           "Review the application carefully before you sign it.  Be 
        certain that all information has been properly recorded."  
           Include for each plan, prominently identified in the cover 
        page, a chart showing the services, Medicare payments, plan 
        payments, and insured payments for each plan, using the same 
        language, in the same order, using uniform layout and format. 
           The outline of coverage provided to applicants pursuant to 
        this section consists of four parts:  a cover page, premium 
        information, disclosure pages, and charts displaying the 
        features of each benefit plan offered by the insurer. 
           Sec. 35.  Minnesota Statutes 1994, section 62A.44, 
        subdivision 2, is amended to read: 
           Subd. 2.  [QUESTIONS.] (a) Application forms shall include 
        the following questions designed to elicit information as to 
        whether, as of the date of the application, the applicant has 
        another Medicare supplement or other health insurance policy or 
        certificate in force or whether a Medicare supplement policy or 
        certificate is intended to replace any other accident and 
        sickness policy or certificate presently in force.  A 
        supplementary application or other form to be signed by the 
        applicant and agent containing the questions and statements may 
        be used. 
           "(1) You do not need more than one Medicare supplement 
           policy or certificate. 
           (2) If you are 65 or older, purchase this policy, you may 
           want to evaluate your existing health coverage and decide 
           if you need multiple coverages. 
           (3) You may be eligible for benefits under Medicaid and may 
           not need a Medicare supplement policy or certificate.  
           (3) (4) The benefits and premiums under your Medicare 
           supplement policy or certificate will can be suspended, if 
           requested, during your entitlement to benefits under 
           Medicaid for 24 months.  You must request this suspension 
           within 90 days of becoming eligible for Medicaid.  If you 
           are no longer entitled to Medicaid, your policy or 
           certificate will be reinstated if requested within 90 days 
           of losing Medicaid eligibility. 
           (5) Counseling services may be available in Minnesota to 
           provide advice concerning medical assistance through state 
           Medicaid, Qualified Medicare Beneficiaries (QMBs), and 
           Specified Low-Income Medicare Beneficiaries (SLMBs). 
           To the best of your knowledge: 
           (1) Do you have another Medicare supplement policy or 
           certificate in force, including health care service 
           contract or health maintenance organization contract?  
           (a) If so, with which company? 
           (b) If so, do you intend to replace your current Medicare 
        supplement policy with this policy or certificate? 
           (2) Do you have any other health insurance policies that 
           provide benefits that which this Medicare supplement policy 
           or certificate would duplicate?  
           (a) If you do so, please name the company and the. 
           (b) What kind of policy.?  
           (3) If the answer to question 1 or 2 is yes, do you intend 
           to replace these medical or health policies with this 
           policy or certificate? 
           (4) Are you covered by for medical assistance through the 
           state Medicaid program?  If so, which of the following 
           programs provides coverage for you?  
           a.  Specified Low-Income Medicare Beneficiary (SLMB), 
           b.  Qualified Medicare Beneficiary (QMB), or 
           c.  full Medicaid Beneficiary?" 
           (b) Agents shall list any other health insurance policies 
        they have sold to the applicant.  
           (1) List policies sold that are still in force.  
           (2) List policies sold in the past five years that are no 
        longer in force.  
           (c) In the case of a direct response issuer, a copy of the 
        application or supplemental form, signed by the applicant, and 
        acknowledged by the insurer, shall be returned to the applicant 
        by the insurer on delivery of the policy or certificate.  
           (d) Upon determining that a sale will involve replacement 
        of Medicare supplement coverage, any issuer, other than a direct 
        response issuer, or its agent, shall furnish the applicant, 
        before issuance or delivery of the Medicare supplement policy or 
        certificate, a notice regarding replacement of Medicare 
        supplement coverage.  One copy of the notice signed by the 
        applicant and the agent, except where the coverage is sold 
        without an agent, shall be provided to the applicant and an 
        additional signed copy shall be retained by the issuer.  A 
        direct response issuer shall deliver to the applicant at the 
        time of the issuance of the policy or certificate the notice 
        regarding replacement of Medicare supplement coverage. 
           (e) The notice required by paragraph (d) for an issuer 
        shall be provided in substantially the following form in no less 
        than 12-point type: 
                   "NOTICE TO APPLICANT REGARDING REPLACEMENT 
                        OF MEDICARE SUPPLEMENT INSURANCE
                     (Insurance company's name and address)
          SAVE THIS NOTICE!  IT MAY BE IMPORTANT TO YOU IN THE FUTURE.
           According to (your application) (information you have 
        furnished), you intend to terminate existing Medicare supplement 
        insurance and replace it with a policy or certificate to be 
        issued by (Company Name) Insurance Company.  Your new policy or 
        certificate will provide 30 days within which you may decide 
        without cost whether you desire to keep the policy or 
        certificate. 
           You should review this new coverage carefully.  Compare it 
        with all accident and sickness coverage you now have.  Terminate 
        your present policy only If, after due consideration, you find 
        that purchase of this Medicare supplement coverage is a wise 
        decision you should terminate your present Medicare supplement 
        policy.  You should evaluate the need for other accident and 
        sickness coverage you have that may duplicate this policy. 
           STATEMENT TO APPLICANT BY ISSUER, AGENT, (BROKER OR OTHER 
           REPRESENTATIVE):  I have reviewed your current medical or 
           health insurance coverage.  The replacement of insurance 
           involved in this transaction does not duplicate coverage, 
           To the best of my knowledge this Medicare supplement policy 
           will not duplicate your existing Medicare supplement policy 
           because you intend to terminate the existing Medicare 
           supplement policy.  The replacement policy or certificate 
           is being purchased for the following reason(s) (check one): 
           ______  Additional benefits 
           ______  No change in benefits, but lower premiums 
           ______  Fewer benefits and lower premiums 
           ______  Other (please specify)  
           ____________________________________________________________
           ____________________________________________________________
           ____________________________________________________________
           (1) Health conditions which you may presently have 
           (preexisting conditions) may not be immediately or fully 
           covered under the new policy or certificate.  This could 
           result in denial or delay of a claim for benefits under the 
           new policy or certificate, whereas a similar claim might 
           have been payable under your present policy or certificate. 
           (2) State law provides that your replacement policy or 
           certificate may not contain new preexisting conditions, 
           waiting periods, elimination periods, or probationary 
           periods.  The insurer will waive any time periods 
           applicable to preexisting conditions, waiting periods, 
           elimination periods, or probationary periods in the new 
           policy (or coverage) for similar benefits to the extent the 
           time was spent (depleted) under the original policy or 
           certificate. 
           (3) If you still wish to terminate your present policy or 
           certificate and replace it with new coverage, be certain to 
           truthfully and completely answer all questions on the 
           application concerning your medical and health history.  
           Failure to include all material medical information on an 
           application may provide a basis for the company to deny any 
           future claims and to refund your premium as though your 
           policy or certificate had never been in force.  After the 
           application has been completed and before you sign it, 
           review it carefully to be certain that all information has 
           been properly recorded.  (If the policy or certificate is 
           guaranteed issue, this paragraph need not appear.) 
           Do not cancel your present policy or certificate until you 
           have received your new policy or certificate and you are 
           sure that you want to keep it. 
           
           _____________________________________________________ 
           (Signature of Agent, Broker, or Other Representative)* 
           
           _____________________________________________________ 
           (Typed Name and Address of Issuer, Agent, or Broker) 
           
           _____________________ 
           (Date) 
           
           __________________________________ 
           (Applicant's Signature) 
           
           _____________________ 
           (Date) 
           
           *Signature not required for direct response sales." 
           
           (f) Paragraph (e), clauses (1) and (2), of the replacement 
        notice (applicable to preexisting conditions) may be deleted by 
        an issuer if the replacement does not involve application of a 
        new preexisting condition limitation. 
           Sec. 36.  Minnesota Statutes 1995 Supplement, section 
        62A.46, subdivision 2, is amended to read: 
           Subd. 2.  [LONG-TERM CARE POLICY.] "Long-term care policy" 
        means an individual or group policy, certificate, subscriber 
        contract, or other evidence of coverage that provides benefits 
        for prescribed long-term care, including nursing facility 
        services and or home care services, or both nursing facility 
        services and home care services, pursuant to the requirements of 
        sections 62A.46 to 62A.56.  
           Sections 62A.46, 62A.48, and 62A.52 to 62A.56 do not apply 
        to a long-term care policy issued to (a) an employer or 
        employers or to the trustee of a fund established by an employer 
        where only employees or retirees, and dependents of employees or 
        retirees, are eligible for coverage or (b) to a labor union or 
        similar employee organization.  The associations exempted from 
        the requirements of sections 62A.31 to 62A.44 under 62A.31, 
        subdivision 1, clause (c) shall not be subject to the provisions 
        of sections 62A.46 to 62A.56 until July 1, 1988. 
           Sec. 37.  Minnesota Statutes 1995 Supplement, section 
        62A.48, subdivision 1, is amended to read: 
           Subdivision 1.  [POLICY REQUIREMENTS.] No individual or 
        group policy, certificate, subscriber contract, or other 
        evidence of coverage of nursing home care or other long-term 
        care services shall be offered, issued, delivered, or renewed in 
        this state, whether or not the policy is issued in this state, 
        unless the policy is offered, issued, delivered, or renewed by a 
        qualified insurer and the policy satisfies the requirements of 
        sections 62A.46 to 62A.56.  A long-term care policy must cover 
        prescribed long-term care in nursing facilities and at least or 
        the prescribed long-term home care services in section 62A.46, 
        subdivision 4, clauses (1) to (5), provided by a home health 
        agency.  A long-term care policy may cover both prescribed 
        long-term care in nursing facilities and the prescribed 
        long-term home care services in section 62A.46, subdivision 4, 
        clauses (1) to (5), provided by a home health agency.  Coverage 
        under a long-term care policy, other than one that covers only 
        nursing facility services, must include:  a minimum lifetime 
        benefit limit of at least $25,000 for services, and.  A 
        long-term care policy that covers only nursing facility services 
        must include a minimum lifetime benefit limit of not less than 
        one year of nursing facility services.  Nursing facility and 
        home care coverages under a long-term care policy must not be 
        subject to separate lifetime maximums for policies that cover 
        both nursing facility and home health care.  Prior 
        hospitalization may not be required under a long-term care 
        policy. 
           The policy must cover preexisting conditions during the 
        first six months of coverage if the insured was not diagnosed or 
        treated for the particular condition during the 90 days 
        immediately preceding the effective date of coverage.  Coverage 
        under the policy may include a waiting period of up to 90 days 
        before benefits are paid, but there must be no more than one 
        waiting period per benefit period; for purposes of this 
        sentence, "days" can mean calendar or benefit days.  If benefit 
        days are used, an appropriate premium reduction and disclosure 
        must be made.  No policy may exclude coverage for mental or 
        nervous disorders which have a demonstrable organic cause, such 
        as Alzheimer's and related dementias.  No policy may require the 
        insured to be homebound or house confined to receive home care 
        services.  The policy must include a provision that the plan 
        will not be canceled or renewal refused except on the grounds of 
        nonpayment of the premium, provided that the insurer may change 
        the premium rate on a class basis on any policy anniversary 
        date.  A provision that the policyholder may elect to have the 
        premium paid in full at age 65 by payment of a higher premium up 
        to age 65 may be offered.  A provision that the premium would be 
        waived during any period in which benefits are being paid to the 
        insured during confinement in a nursing facility must be 
        included.  A nongroup policyholder may return a policy within 30 
        days of its delivery and have the premium refunded in full, less 
        any benefits paid under the policy, if the policyholder is not 
        satisfied for any reason. 
           No individual long-term care policy shall be offered or 
        delivered in this state until the insurer has received from the 
        insured a written designation of at least one person, in 
        addition to the insured, who is to receive notice of 
        cancellation of the policy for nonpayment of premium.  The 
        insured has the right to designate up to a total of three 
        persons who are to receive the notice of cancellation, in 
        addition to the insured.  The form used for the written 
        designation must inform the insured that designation of one 
        person is required and that designation of up to two additional 
        persons is optional and must provide space clearly designated 
        for listing between one and three persons.  The designation 
        shall include each person's full name, home address, and 
        telephone number.  Each time an individual policy is renewed or 
        continued, the insurer shall notify the insured of the right to 
        change this written designation. 
           The insurer may file a policy form that utilizes a plan of 
        care prepared as provided under section 62A.46, subdivision 5, 
        clause (1) or (2). 
           Sec. 38.  Minnesota Statutes 1994, section 62A.49, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERALLY.] Section 62A.48 does not 
        prohibit the sale of policies, certificates, subscriber 
        contracts, or other evidences of coverage that provide home care 
        services only.  This does not, however, remove the requirement 
        that home care service benefits must be provided as part of a 
        long-term care policy pursuant to that section.  Home care 
        services only policies may be sold, provided that they meet the 
        requirements set forth in sections 62A.46 to 62A.56, except that 
        they do not have to meet those conditions that relate to 
        long-term care in nursing facilities.  Disclosures and 
        representations regarding these policies must be adjusted 
        accordingly to remove references to coverage for nursing home 
        care. 
           Sec. 39.  Minnesota Statutes 1994, section 62A.60, is 
        amended to read: 
           62A.60 [RETROACTIVE DENIAL OF EXPENSES.] 
           In cases where the subscriber or insured is liable for 
        costs beyond applicable copayments or deductibles, no insurer 
        may retroactively deny payment to a person who is covered when 
        the services are provided for health care services that are 
        otherwise covered, if the insurer or its representative failed 
        to provide prior or concurrent review or authorization for the 
        expenses when required to do so under the policy, plan, or 
        certificate.  If prior or concurrent review or authorization was 
        provided by the insurer or its representative, and the 
        preexisting condition limitation provision, the general 
        exclusion provision and any other coinsurance, or other policy 
        requirements have been met, the insurer may not deny payment for 
        the authorized service or time period except in cases where 
        fraud or substantive misrepresentation occurred. 
           Sec. 40.  Minnesota Statutes 1995 Supplement, section 
        62C.14, subdivision 14, is amended to read: 
           Subd. 14.  No subscriber's individual contract or any group 
        contract which provides for coverage of family members or other 
        dependents of a subscriber or of an employee or other group 
        member of a group subscriber, shall be renewed, delivered, or 
        issued for delivery in this state unless such contract includes 
        as covered family members or dependents any newborn infants, 
        including dependent grandchildren, immediately from the moment 
        of birth and thereafter which insurance shall provide coverage 
        for illness, injury, congenital malformation or premature 
        birth.  For purposes of this paragraph, "newborn infants" 
        includes grandchildren who are financially dependent upon a 
        covered grandparent and who reside with that covered grandparent 
        continuously from birth.  No policy, contract, or agreement 
        covered by this section may require notification to a health 
        carrier as a condition for this dependent coverage.  However, if 
        the policy, contract, or agreement mandates an additional 
        premium for each dependent, the health carrier shall be entitled 
        to all premiums that would have been collected had the health 
        carrier been aware of the additional dependent.  The health 
        carrier may withhold payment of any health benefits for the new 
        dependent until it has been compensated with the applicable 
        premium which would have been owed if the health carrier had 
        been informed of the additional dependent immediately. 
           Sec. 41.  Minnesota Statutes 1995 Supplement, section 
        62E.05, subdivision 1, is amended to read: 
           Subdivision 1.  [CERTIFICATION.] Upon application by an 
        insurer, fraternal, or employer for certification of a plan of 
        health coverage as a qualified plan or a qualified medicare 
        supplement plan for the purposes of sections 62E.01 to 62E.16, 
        the commissioner shall make a determination within 90 days as to 
        whether the plan is qualified.  All plans of health coverage, 
        except Medicare supplement policies, shall be labeled as 
        "qualified" or "nonqualified" on the front of the policy or 
        evidence of insurance contract, or on the schedule page.  All 
        qualified plans shall indicate whether they are number one, two, 
        or three coverage plans. 
           Sec. 42.  Minnesota Statutes 1995 Supplement, section 
        62F.02, subdivision 2, is amended to read: 
           Subd. 2.  [DIRECTORS.] The association shall have a board 
        of directors composed of 11 persons chosen for a term of four 
        years as follows:  five persons elected by members of the 
        association at a meeting called by the commissioner; three 
        members who are health care providers appointed by the 
        commissioner prior to the election by the association; and three 
        public members, as defined in section 214.02, appointed by the 
        governor prior to the election by the association.  If the 
        commissioner determines that it is no longer cost-effective or 
        efficient to operate a separate board of directors to administer 
        the medical malpractice joint underwriting association, the 
        commissioner shall deactivate the board and assign all of the 
        board's authority and responsibilities under this chapter to the 
        Minnesota joint underwriting association board of directors 
        established under section 62I.02. 
           Sec. 43.  Minnesota Statutes 1994, section 62F.03, 
        subdivision 6, is amended to read: 
           Subd. 6.  "Net direct premiums" means gross direct premiums 
        written on personal injury liability insurance, including the 
        liability component of multiple peril package policies as 
        computed by the commissioner, less return premiums for the 
        unused or unabsorbed portions of premium deposits.  Net direct 
        premiums do not include policyholder dividends. 
           Sec. 44.  Minnesota Statutes 1994, section 62F.04, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [REAUTHORIZATION.] The authorization to issue 
        insurance is valid for a period of two years from the date it 
        was made.  The commissioner may reauthorize the issuance of 
        insurance for additional two-year periods under the terms of 
        subdivision 1 according to the procedures set forth in 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. 45.  Minnesota Statutes 1994, section 62I.02, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DIRECTOR BOARD OF DIRECTORS.] The association 
        shall have a board of directors composed of 11 persons chosen as 
        follows:  five persons elected by members of the association at 
        a meeting called by the commissioner; three public members, as 
        defined in section 214.02, appointed by the commissioner; and 
        three members, appointed by the commissioner representing groups 
        to whom coverage has been extended by the association.  The 
        terms of the members shall be four years.  Terms may be 
        staggered so that no more than six members are appointed or 
        elected every two years.  Members may serve until their 
        successors are appointed or elected.  If at any time no coverage 
        is currently extended by the association, then either additional 
        public members may be appointed to fill these three positions 
        or, at the option of the commissioner, representatives from 
        groups who had previously been covered by the association may 
        serve as directors.  In the event that the commissioner assigns 
        the responsibility for administering chapter 62F to the 
        Minnesota joint underwriting association, the board of directors 
        must be increased by four additional members.  The commissioner 
        shall appoint two of the additional members, one of whom must be 
        a licensed health care provider, and one of whom must be a 
        public member.  Association members shall elect the other two 
        members, one of whom must be a representative of medical 
        malpractice insurers, and one of whom must be a representative 
        of personal injury liability insurers. 
           Sec. 46.  Minnesota Statutes 1994, section 62I.02, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ACCOUNTS.] (a) For the purposes of 
        administration and assessment, and except as otherwise 
        authorized under paragraph (b), the association shall be divided 
        into two separate accounts: 
           (1) the property and casualty insurance account; and 
           (2) the personal injury liability insurance account 
        account-liquor. 
           (b) If the association is authorized by the commissioner to 
        issue medical malpractice insurance, the association shall 
        establish a third account for purposes of administration and 
        assessment.  This account must be identified as the personal 
        injury liability insurance account-medical malpractice. 
           Sec. 47.  Minnesota Statutes 1994, section 62I.02, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [MEDICAL MALPRACTICE.] If the association is 
        authorized by the commissioner to issue medical malpractice 
        insurance, it shall administer the medical malpractice insurance 
        program according to chapter 62F. 
           Sec. 48.  Minnesota Statutes 1994, section 62I.07, is 
        amended to read: 
           62I.07 [MEMBERSHIP ASSESSMENTS.] 
           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, column (2), lines 5, 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. 
           Subd. 2.  [PERSONAL INJURY LIABILITY INSURANCE ASSESSMENT; 
        LIQUOR LIABILITY.] A member of the association shall participate 
        in its writings, expenses, servicing allowance, management fees, 
        and losses in the proportion that the net direct premiums of the 
        member, excluding that portion of premiums attributable to the 
        operation of the association, written during the preceding 
        calendar year on the kinds of insurance in that account bears to 
        the aggregate net direct premiums written in this state by all 
        members on the kinds of insurance in that account.  The member's 
        participation in the association shall be determined annually on 
        the basis of net direct premiums written during the preceding 
        calendar year, as reported in the annual statements and other 
        reports filed by the member with the commissioner.  Net direct 
        premiums mean gross direct premiums written on personal injury 
        liability insurance, including the liability component of 
        multiple peril package policies as computed by the commissioner, 
        less return premiums for the unused or unabsorbed portions of 
        premium deposits.  The net direct premiums are calculated using 
        lines 5.2 CMP, and 17-other liability from page 14, column (2) 
        of the annual statement filed annually with the department of 
        commerce pursuant to section 60A.13. 
           Subd. 3.  [PERSONAL INJURY LIABILITY INSURANCE ASSESSMENT; 
        MEDICAL MALPRACTICE.] If an assessment is needed for medical 
        malpractice, the assessment is made using the following lines 
        from page 14, column (2) of the annual statement filed annually 
        with the department of commerce pursuant to section 60A.13 using 
        the following lines:  5.2 commercial multiperil liability, 11 
        medical malpractice, 17-other liability, 19.1 PIP-private 
        passenger, 19.3 PIP-commercial. 
           Sec. 49.  Minnesota Statutes 1994, section 62L.09, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REENTRY PROHIBITION.] (a) Except as otherwise 
        provided in paragraph (b), a health carrier that ceases to do 
        business in the small employer market after July 1, 1993, is 
        prohibited from writing new business in the small employer 
        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 small employer 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 small employer market in that same service 
        area.  
           (b) The commissioner of commerce or the commissioner of 
        health may permit a health carrier that ceases to do business in 
        the small employer market in this state after July 1, 1993, to 
        begin writing new business in the small employer market if: 
           (1) since the carrier ceased doing business in the small 
        employer market, legislative action has occurred that has 
        significantly changed the effect on the carrier of its decision 
        to cease doing business in the small employer market; and 
           (2) the commissioner deems it appropriate. 
           Sec. 50.  [62Q.49] [ENROLLEE COST SHARING; NEGOTIATED 
        PROVIDER PAYMENTS.] 
           Subdivision 1.  [APPLICABILITY.] This section applies to 
        all health plans, as defined in section 62Q.01, subdivision 3, 
        that provide coverage for health care to be provided entirely or 
        partially: 
           (1) through contracts in which health care providers agree 
        to accept discounted charges, negotiated charges, or other 
        limits on health care provider charges; 
           (2) by employees of, or facilities or entities owned by, 
        the issuer of the health plan; or 
           (3) through contracts with health care providers that 
        provide for payment to the providers on a fully or partially 
        capitated basis or on any other non-fee-for-service basis. 
           Subd. 2.  [DISCLOSURE REQUIRED.] (a) All health plans 
        included in subdivision 1 must clearly specify how the cost of 
        health care used to calculate any copayments, coinsurance, or 
        lifetime benefits will be affected by the arrangements described 
        in subdivision 1. 
           (b) Any summary or other marketing material used in 
        connection with marketing of a health plan that is subject to 
        this section must prominently disclose and clearly explain the 
        provisions required under paragraph (a), if the summary or other 
        marketing material refers to copayments, coinsurance, or maximum 
        lifetime benefits. 
           (c) A health plan that is subject to paragraph (a) must not 
        be used in this state if the commissioner of commerce or health, 
        as appropriate, has determined that it does not comply with this 
        section. 
           Sec. 51.  [62Q.50] [PROSTATE CANCER SCREENING.] 
           A health plan must cover prostate cancer screening for men 
        40 years of age or over who are symptomatic or in a high-risk 
        category and for all men 50 years of age or older. 
           The screening must consist at a minimum of a 
        prostate-specific antigen blood test and a digital rectal 
        examination. 
           This coverage is subject to any deductible, coinsurance, 
        copayment, or other limitation on coverage applicable to other 
        coverages under the plan. 
           For purposes of this section, "health plan" includes 
        coverage that is excluded under section 62A.011, subdivision 3, 
        clauses (7) and (10). 
           Sec. 52.  [62Q.51] [POINT-OF-SERVICE OPTION.] 
           Subdivision 1.  [DEFINITION.] For purposes for this 
        section, "point-of-service option" means a health plan under 
        which the health plan company will reimburse an appropriately 
        licensed or registered provider for providing covered services 
        to an enrollee, without regard to whether the provider belongs 
        to a particular network and without regard to whether the 
        enrollee was referred to the provider by another provider.  
           Subd. 2.  [REQUIRED POINT-OF-SERVICE OPTION.] Each health 
        plan company operating in the small group or large group market 
        shall offer at least one point-of-service option in each such 
        market in which it operates. 
           Subd. 3.  [RATE APPROVAL.] The premium rates and cost 
        sharing requirements for each option must be submitted to the 
        commissioner of health or the commissioner of commerce as 
        required by law.  A health plan that includes lower enrollee 
        cost sharing for services provided by network providers than for 
        services provided by out-of-network providers, or lower enrollee 
        cost sharing for services provided with prior authorization or 
        second opinion than for services provided without prior 
        authorization or second opinion, qualifies as a point-of-service 
        option. 
           Subd. 4.  [EXEMPTION.] This section does not apply to a 
        health plan company with fewer than 50,000 enrollees. 
           Sec. 53.  Minnesota Statutes 1994, section 65A.01, 
        subdivision 3, is amended to read: 
           Subd. 3.  [POLICY PROVISIONS.] On said policy following 
        such matter as provided in subdivisions 1 and 2, printed in the 
        English language in type of such size or sizes and arranged in 
        such manner, as is approved by the commissioner of commerce, the 
        following provisions and subject matter shall be stated in the 
        following words and in the following sequence, but with the 
        convenient placing, if desired, of such matter as will act as a 
        cover or back for such policy when folded, with the blanks below 
        indicated being left to be filled in at the time of the issuing 
        of the policy, to wit: 
           (Space for listing the amounts of insurance, rates and 
        premiums for the basic coverages provided under the standard 
        form of policy and for additional coverages or perils provided 
        under endorsements attached.  The description and location of 
        the property covered and the insurable value(s) of any 
        building(s) or structure(s) covered by the policy or its 
        attached endorsements; also in the above space may be stated 
        whether other insurance is limited and if limited the total 
        amount permitted.) 
           In consideration of the provisions and stipulations herein 
        or added hereto and of the premium above specified this company, 
        for a term of ..... from ..... (At 12:01 a.m. Standard Time) to 
        ..... (At 12:01 a.m. Standard Time) at location of property 
        involved, to an amount not exceeding the amount(s) above 
        specified does insure .....  and legal representatives 
        ........................................... 
           (In above space may be stated whether other insurance is 
        limited.) (And if limited the total amount permitted.) 
           Subject to form No.(s) ..... attached hereto. 
           This policy is made and accepted subject to the foregoing 
        provisions and stipulations and those hereinafter stated, which 
        are hereby made a part of this policy, together with such 
        provisions, stipulations and agreements as may be added hereto 
        as provided in this policy. 
           The insurance effected above is granted against all loss or 
        damage by fire originating from any cause, except as hereinafter 
        provided, also any damage by lightning and by removal from 
        premises endangered by the perils insured against in this 
        policy, to the property described hereinafter while located or 
        contained as described in this policy, or pro rata for five days 
        at each proper place to which any of the property shall 
        necessarily be removed for preservation from the perils insured 
        against in this policy, but not elsewhere.  The amount of said 
        loss or damage, except in case of total loss on buildings, to be 
        estimated according to the actual value of the insured property 
        at the time when such loss or damage happens. 
           If the insured property shall be exposed to loss or damage 
        from the perils insured against, the insured shall make all 
        reasonable exertions to save and protect same. 
           This entire policy shall be void if, whether before a loss, 
        the insured has willfully, or after a loss, the insured has 
        willfully and with intent to defraud, concealed or 
        misrepresented any material fact or circumstance concerning this 
        insurance or the subject thereof, or the interests of the 
        insured therein. 
           This policy shall not cover accounts, bills, currency, 
        deeds, evidences of debt, money or securities; nor, unless 
        specifically named hereon in writing, bullion, or manuscripts. 
           This company shall not be liable for loss by fire or other 
        perils insured against in this policy caused, directly or 
        indirectly by:  (a) enemy attack by armed forces, including 
        action taken by military, naval or air forces in resisting an 
        actual or immediately impending enemy attack; (b) invasion; (c) 
        insurrection; (d) rebellion; (e) revolution; (f) civil war; (g) 
        usurped power; (h) order of any civil authority except acts of 
        destruction at the time of and for the purpose of preventing the 
        spread of fire, providing that such fire did not originate from 
        any of the perils excluded by this policy. 
           Other insurance may be prohibited or the amount of 
        insurance may be limited by so providing in the policy or an 
        endorsement, rider or form attached thereto. 
           Unless otherwise provided in writing added hereto this 
        company shall not be liable for loss occurring: 
           (a) while the hazard is increased by any means within the 
        control or knowledge of the insured; or 
           (b) while the described premises, whether intended for 
        occupancy by owner or tenant, are vacant or unoccupied beyond a 
        period of 60 consecutive days; or 
           (c) as a result of explosion or riot, unless fire ensue, 
        and in that event for loss by fire only. 
           Any other peril to be insured against or subject of 
        insurance to be covered in this policy shall be by endorsement 
        in writing hereon or added hereto. 
           The extent of the application of insurance under this 
        policy and the contributions to be made by this company in case 
        of loss, and any other provision or agreement not inconsistent 
        with the provisions of this policy, may be provided for in 
        writing added hereto, but no provision may be waived except such 
        as by the terms of this policy is subject to change. 
           No permission affecting this insurance shall exist, or 
        waiver of any provision be valid, unless granted herein or 
        expressed in writing added hereto.  No provision, stipulation or 
        forfeiture shall be held to be waived by any requirements or 
        proceeding on the part of this company relating to appraisal or 
        to any examination provided for herein. 
           This policy shall be canceled at any time at the request of 
        the insured, in which case this company shall, upon demand and 
        surrender of this policy, refund the excess of paid premium 
        above the customary short rates for the expired time.  This 
        policy may be canceled at any time by this company by giving to 
        the insured a ten 30 days' written notice of cancellation with 
        or without tender of the excess of paid premium above the pro 
        rata premium for the expired time, which excess, if not 
        tendered, shall be refunded on demand.  Notice of cancellation 
        shall state that said excess premium (if not tendered) will be 
        refunded on demand. 
           If loss hereunder is made payable, in whole or in part, to 
        a designated mortgagee or contract for deed vendor not named 
        herein as insured, such interest in this policy may be canceled 
        by giving to such mortgagee or vendor a ten days' written notice 
        of cancellation. 
           Notwithstanding any other provisions of this policy, if 
        this policy shall be made payable to a mortgagee or contract for 
        deed vendor of the covered real estate, no act or default of any 
        person other than such mortgagee or vendor or the mortgagee's or 
        vendor's agent or those claiming under the mortgagee or vendor, 
        whether the same occurs before or during the term of this 
        policy, shall render this policy void as to such mortgagee or 
        vendor nor affect such mortgagee's or vendor's right to recover 
        in case of loss on such real estate; provided, that the 
        mortgagee or vendor shall on demand pay according to the 
        established scale of rates for any increase of risks not paid 
        for by the insured; and whenever this company shall be liable to 
        a mortgagee or vendor for any sum for loss under this policy for 
        which no liability exists as to the mortgagor, vendee, or owner, 
        and this company shall elect by itself, or with others, to pay 
        the mortgagee or vendor the full amount secured by such mortgage 
        or contract for deed, then the mortgagee or vendor shall assign 
        and transfer to the company the mortgagee's or vendor's 
        interest, upon such payment, in the said mortgage or contract 
        for deed together with the note and debts thereby secured. 
           This company shall not be liable for a greater proportion 
        of any loss than the amount hereby insured shall bear to the 
        whole insurance covering the property against the peril involved.
           In case of any loss under this policy the insured shall 
        give immediate written notice to this company of any loss, 
        protect the property from further damage, and a statement in 
        writing, signed and sworn to by the insured, shall within 60 
        days be rendered to the company, setting forth the value of the 
        property insured, except in case of total loss on buildings the 
        value of said buildings need not be stated, the interest of the 
        insured therein, all other insurance thereon, in detail, the 
        purposes for which and the persons by whom the building insured, 
        or containing the property insured, was used, and the time at 
        which and manner in which the fire originated, so far as known 
        to the insured. 
           The insured, as often as may be reasonably required, shall 
        exhibit to any person designated by this company all that 
        remains of any property herein described, and, after being 
        informed of the right to counsel and that any answers may be 
        used against the insured in later civil or criminal proceedings, 
        the insured shall, within a reasonable period after demand by 
        this company, submit to examinations under oath by any person 
        named by this company, and subscribe the oath.  The insured, as 
        often as may be reasonably required, shall produce for 
        examination all records and documents reasonably related to the 
        loss, or certified copies thereof if originals are lost, at a 
        reasonable time and place designated by this company or its 
        representatives, and shall permit extracts and copies thereof to 
        be made.  
           In case the insured and this company, except in case of 
        total loss on buildings, shall fail to agree as to the actual 
        cash value or the amount of loss, then, on the written demand of 
        either, each shall select a competent and disinterested 
        appraiser and notify the other of the appraiser selected within 
        20 days of such demand.  In case either fails to select an 
        appraiser within the time provided, then a presiding judge of 
        the district court of the county wherein the loss occurs may 
        appoint such appraiser for such party upon application of the 
        other party in writing by giving five days' notice thereof in 
        writing to the party failing to appoint.  The appraisers shall 
        first select a competent and disinterested umpire; and failing 
        for 15 days to agree upon such umpire, then a presiding judge of 
        the above mentioned court may appoint such an umpire upon 
        application of party in writing by giving five days' notice 
        thereof in writing to the other party.  The appraisers shall 
        then appraise the loss, stating separately actual value and loss 
        to each item; and, failing to agree, shall submit their 
        differences, only, to the umpire.  An award in writing, so 
        itemized, of any two when filed with this company shall 
        determine the amount of actual value and loss.  Each appraiser 
        shall be paid by the selecting party, or the party for whom 
        selected, and the expense of the appraisal and umpire shall be 
        paid by the parties equally. 
           It shall be optional with this company to take all of the 
        property at the agreed or appraised value, and also to repair, 
        rebuild or replace the property destroyed or damaged with other 
        of like kind and quality within a reasonable time, on giving 
        notice of its intention so to do within 30 days after the 
        receipt of the proof of loss herein required. 
           There can be no abandonment to this company of any property.
           The amount of loss for which this company may be liable 
        shall be payable 60 days after proof of loss, as herein 
        provided, is received by this company and ascertainment of the 
        loss is made either by agreement between the insured and this 
        company expressed in writing or by the filing with this company 
        of an award as herein provided.  It is moreover understood that 
        there can be no abandonment of the property insured to the 
        company, and that the company will not in any case be liable for 
        more than the sum insured, with interest thereon from the time 
        when the loss shall become payable, as above provided. 
           No suit or action on this policy for the recovery of any 
        claim shall be sustainable in any court of law or equity unless 
        all the requirements of this policy have been complied with, and 
        unless commenced within two years after inception of the loss. 
           This company is subrogated to, and may require from the 
        insured an assignment of all right of recovery against any party 
        for loss to the extent that payment therefor is made by this 
        company; and the insurer may prosecute therefor in the name of 
        the insured retaining such amount as the insurer has paid. 
           Assignment of this policy shall not be valid except with 
        the written consent of this company. 
           IN WITNESS WHEREOF, this company has executed and attested 
        these presents. 
         
         ........................         ........................
              (Signature)                     (Signature)         
         ........................         ........................
             (Name of office)                (Name of office)     
           Sec. 54.  Minnesota Statutes 1994, section 65A.10, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [BUILDINGS.] Nothing contained in sections 
        65A.08 and 65A.09 shall be construed to preclude insurance 
        against the cost, in excess of actual cash value at the time any 
        loss or damage occurs, of actually repairing, rebuilding or 
        replacing the insured property.  Subject to any applicable 
        policy limits, where an insurer offers replacement cost 
        insurance,:  (i) the insurance must cover the cost of replacing, 
        rebuilding, or repairing any loss or damaged property in 
        accordance with the minimum code as required by state or local 
        authorities; and (ii) the insurance coverage may not be 
        conditioned on replacing or rebuilding the damaged property at 
        its original location on the owner's property if the structure 
        must be relocated because of zoning or land use regulations of 
        state or local government.  In the case of a partial loss, 
        unless more extensive coverage is otherwise specified in the 
        policy, this coverage applies only to the damaged portion of the 
        property. 
           Sec. 55.  Minnesota Statutes 1994, section 65A.295, is 
        amended to read: 
           65A.295 [HOMEOWNER'S INSURANCE COVERAGE.] 
           (a) Every insurer writing homeowner's insurance in this 
        state shall make available at least one form of homeowner's 
        policy for each level of peril coverage offered by the insurer 
        in which the insured has the option to specify the dollar amount 
        of coverage provided for structures other than the dwelling and 
        for personal property.  The premium must be reduced to reflect 
        the reduced risk of lesser coverage. 
           (b) A written notice must be provided to all applicants for 
        homeowner's insurance at the time of application informing them 
        of the options provided in paragraph (a). 
           (c) Coverage for structures other than the dwelling is the 
        coverage provided under "Coverage B, Other Structures" in the 
        standard homeowner's policy.  Coverage for personal property is 
        the coverage provided under "Coverage C, Personal Property" in 
        the standard homeowner's package policy. 
           (d) (c) "Level of peril" refers to basic, broad, and all 
        risk levels of coverage. 
           Sec. 56.  Minnesota Statutes 1994, section 65B.14, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [VIOLATIONS.] "Violations" means all moving 
        traffic violations that are recorded by the department of public 
        safety on a household member's motor vehicle record, and 
        violations reported by a similar authority in another state or 
        moving traffic violations reported by the insured. 
           Sec. 57.  Minnesota Statutes 1994, section 65B.15, 
        subdivision 1, is amended to read: 
           Subdivision 1.  No cancellation or reduction in the limits 
        of liability of coverage during the policy period of any policy 
        shall be effective unless notice thereof is given and unless 
        based on one or more reasons stated in the policy which shall be 
        limited to the following: 
           1.  Nonpayment of premium; or 
           2.  The policy was obtained through a material 
        misrepresentation; or 
           3.  Any insured made a false or fraudulent claim or 
        knowingly aided or abetted another in the presentation of such a 
        claim; or 
           4.  The named insured failed to disclose fully motor 
        vehicle accidents and moving traffic violations of the named 
        insured for the preceding 36 months if called for in the written 
        application; or 
           5.  The named insured failed to disclose in the written 
        application any requested information necessary for the 
        acceptance or proper rating of the risk; or 
           6.  The named insured knowingly failed to give any required 
        written notice of loss or notice of lawsuit commenced against 
        the named insured, or, when requested, refused to cooperate in 
        the investigation of a claim or defense of a lawsuit; or 
           7.  The named insured or any other operator who either 
        resides in the same household, or customarily operates an 
        automobile insured under such policy, unless the other operator 
        is identified as a named insured in another policy as an insured:
           (a) has, within the 36 months prior to the notice of 
        cancellation, had that person's driver's license under 
        suspension or revocation because the person committed a moving 
        traffic violation or because the person refused to be tested 
        under section 169.121, subdivision 1, paragraph (a); or 
           (b) is or becomes subject to epilepsy or heart attacks, and 
        such individual does not produce a written opinion from a 
        physician testifying to that person's medical ability to operate 
        a motor vehicle safely, such opinion to be based upon a 
        reasonable medical probability; or 
           (c) has an accident record, conviction record (criminal or 
        traffic), physical condition or mental condition, any one or all 
        of which are such that the person's operation of an automobile 
        might endanger the public safety; or 
           (d) has been convicted, or forfeited bail, during the 24 
        months immediately preceding the notice of cancellation for 
        criminal negligence in the use or operation of an automobile, or 
        assault arising out of the operation of a motor vehicle, or 
        operating a motor vehicle while in an intoxicated condition or 
        while under the influence of drugs; or leaving the scene of an 
        accident without stopping to report; or making false statements 
        in an application for a driver's license, or theft or unlawful 
        taking of a motor vehicle; or 
           (e) has been convicted of, or forfeited bail for, one or 
        more violations within the 18 months immediately preceding the 
        notice of cancellation, of any law, ordinance, or rule which 
        justify a revocation of a driver's license.  
           8.  The insured automobile is: 
           (1) so mechanically defective that its operation might 
        endanger public safety; or 
           (2) used in carrying passengers for hire or compensation, 
        provided however that the use of an automobile for a car pool 
        shall not be considered use of an automobile for hire or 
        compensation; or 
           (3) used in the business of transportation of flammables or 
        explosives; or 
           (4) an authorized emergency vehicle; or 
           (5) subject to an inspection law and has not been inspected 
        or, if inspected, has failed to qualify within the period 
        specified under such inspection law; or 
           (6) substantially changed in type or condition during the 
        policy period, increasing the risk substantially, such as 
        conversion to a commercial type vehicle, a dragster, sports car 
        or so as to give clear evidence of a use other than the original 
        use. 
           Sec. 58.  Minnesota Statutes 1995 Supplement, section 
        65B.47, subdivision 1a, is amended to read: 
           Subd. 1a.  [EXEMPTIONS.] Subdivision 1 does not apply to:  
           (1) a commuter van; 
           (2) a vehicle being used to transport children as part of a 
        family or group family day care program; 
           (3) a vehicle being used to transport children to school or 
        to a school-sponsored activity; 
           (4) a bus while it is in operation within the state of 
        Minnesota as to any Minnesota resident who is an insured as 
        defined in section 65B.43, subdivision 5; 
           (5) a passenger in a taxi; or 
           (6) a taxi driver, provided that this clause applies only 
        to policies issued or renewed on or after September 1, 1996, and 
        prior to September 1, 1997. 
           Sec. 59.  Minnesota Statutes 1994, section 65B.64, 
        subdivision 3, is amended to read: 
           Subd. 3.  A person shall not be entitled to basic economic 
        loss benefits through the assigned claims plan with respect to 
        injury which was sustained if at the time of such injury the 
        injured person was the owner of a private passenger motor 
        vehicle for which security is required under sections 65B.41 to 
        65B.71 and that person failed to have such security in effect. 
           For purposes of determining whether security is required 
        under section 65B.48, an owner of any vehicle is deemed to have 
        contemplated the operation or use of the vehicle at all times 
        unless the owner demonstrates to the contrary by clear and 
        convincing objective evidence. 
           Persons, whether or not related by blood or marriage, who dwell 
        and function together with the owner as a family, other than 
        adults who have been adjudicated as incompetent and minor 
        children, shall also be disqualified from benefits through the 
        assigned claims plan. 
           Sec. 60.  Minnesota Statutes 1994, section 70A.07, is 
        amended to read: 
           70A.07 [RATES OPEN TO INSPECTION.] 
           All rates and supplementary rate information, furnished to 
        the commissioner under this chapter shall, as soon as the rates 
        are effective reviewed by the commissioner, be open to public 
        inspection at any reasonable time.  
           Sec. 61.  Minnesota Statutes 1994, section 72A.20, 
        subdivision 17, is amended to read: 
           Subd. 17.  [RETURN OF PREMIUMS.] (a) Refusing, upon 
        surrender of an individual policy of life insurance in the case 
        of the insured's death, or in the case of a surrender prior to 
        death, of an individual insurance policy not covered by the 
        standard nonforfeiture laws under section 61A.24, to refund to 
        the owner all unearned premiums paid on the policy covering the 
        insured as of the time of the insured's death or surrender if 
        the unearned premium is for a period of more than one month.  
           (b) Refusing, upon termination or cancellation of a policy 
        of automobile insurance under section 65B.14, subdivision 2, or 
        a policy of homeowner's insurance under section 65A.27, 
        subdivision 4, or a policy of accident and sickness insurance 
        under section 62A.01, or a policy of comprehensive health 
        insurance under chapter 62E, to refund to the insured all 
        unearned premiums paid on the policy covering the insured as of 
        the time of the termination or cancellation if the unearned 
        premium is for a period of more than one month.  The return of 
        unearned premium must be delivered to the insured within 30 days 
        following receipt by the insurer of the insured's request for 
        cancellation. 
           (c) This subdivision does not apply to policies of 
        insurance providing coverage only for motorcycles or other 
        seasonally rated or limited use vehicles where the rate is 
        reduced to reflect seasonal or limited use. 
           (d) For purposes of this section, a premium is unearned 
        during the period of time the insurer has not been exposed to 
        any risk of loss.  Except for premiums for motorcycle coverage 
        or other seasonally rated or limited use vehicles where the rate 
        is reduced to reflect seasonal or limited use, the unearned 
        premium is determined by multiplying the premium by the fraction 
        that results from dividing the period of time from the date of 
        termination to the date the next scheduled premium is due by the 
        period of time for which the premium was paid. 
           (e) The owner may cancel a policy referred to in this 
        section at any time during the policy period.  This provision 
        supersedes any inconsistent provision of law or any inconsistent 
        policy provision. 
           Sec. 62.  Minnesota Statutes 1994, section 72A.20, 
        subdivision 23, is amended to read: 
           Subd. 23.  [DISCRIMINATION IN AUTOMOBILE INSURANCE 
        POLICIES.] (a) No insurer that offers an automobile insurance 
        policy in this state shall: 
           (1) use the employment status of the applicant as an 
        underwriting standard or guideline; or 
           (2) deny coverage to a policyholder for the same reason. 
           (b) No insurer that offers an automobile insurance policy 
        in this state shall: 
           (1) use the applicant's status as a tenant, as the term is 
        defined in section 566.18, subdivision 2, as an underwriting 
        standard or guideline; or 
           (2) deny coverage to a policyholder for the same reason; or 
           (3) make any discrimination in offering or establishing 
        rates, premiums, dividends, or benefits of any kind, or by way 
        of rebate, for the same reason.  
           (c) No insurer that offers an automobile insurance policy 
        in this state shall: 
           (1) use the failure of the applicant to have an automobile 
        policy in force during any period of time before the application 
        is made as an underwriting standard or guideline; or 
           (2) deny coverage to a policyholder for the same reason. 
           This provision does not apply if the applicant was required 
        by law to maintain automobile insurance coverage and failed to 
        do so. 
           An insurer may require reasonable proof that the applicant 
        did not fail to maintain this coverage.  The insurer is not 
        required to accept the mere lack of a conviction or citation for 
        failure to maintain this coverage as proof of failure to 
        maintain coverage.  The insurer must provide the applicant with 
        information identifying the documentation that is required to 
        establish reasonable proof that the applicant did not fail to 
        maintain the coverage. 
           (d) No insurer that offers an automobile insurance policy 
        in this state shall use an applicant's prior claims for benefits 
        paid under section 65B.44 as an underwriting standard or 
        guideline if the applicant was 50 percent or less negligent in 
        the accident or accidents causing the claims. 
           Sec. 63.  Minnesota Statutes 1994, section 72A.20, 
        subdivision 26, is amended to read: 
           Subd. 26.  [LOSS EXPERIENCE.] An insurer shall without cost 
        to the insured provide an insured with the loss or claims 
        experience of that insured for the current policy period and for 
        the two policy periods preceding the current one for which the 
        insurer has provided coverage, within 30 days of a request for 
        the information by the policyholder.  Claims experience data 
        must be provided to the insured in accordance with state and 
        federal requirements regarding the confidentiality of medical 
        data.  The insurer shall not be responsible for providing 
        information without cost more often than once in a 12-month 
        period.  The insurer is not required to provide the information 
        if the policy covers the employee of more than one employer and 
        the information is not maintained separately for each employer 
        and not all employers request the data. 
           An insurer, health maintenance organization, or a 
        third-party administrator may not request more than three years 
        of loss or claims experience as a condition of submitting an 
        application or providing coverage. 
           This subdivision does not apply to individual life and 
        health insurance policies or personal automobile or homeowner's 
        insurance only applies to group life policies and group health 
        policies. 
           Sec. 64.  Minnesota Statutes 1994, section 72A.20, 
        subdivision 30, is amended to read: 
           Subd. 30.  [RECORDS RETENTION.] An insurer shall retain 
        copies of all underwriting documents, policy forms, and 
        applications for three years from the effective date of the 
        policy.  An insurer shall retain all claim files and 
        documentation related to a claim for three years from the date 
        the claim was paid or denied.  This subdivision does not relieve 
        the insurer of its obligation to produce these documents to the 
        department after the retention period has expired in connection 
        with an enforcement action or administrative proceeding against 
        the insurer from whom the documents are requested, if the 
        insurer has retained the documents.  Records required to be 
        retained by this section may be retained in paper, photograph, 
        microprocess, magnetic, mechanical, or electronic media, or by 
        any process which accurately reproduces or forms a durable 
        medium for the reproduction of a record. 
           Sec. 65.  Minnesota Statutes 1994, section 72A.20, is 
        amended by adding a subdivision to read: 
           Subd. 35.  [DETERMINATION OF HEALTH PLAN POLICY 
        LIMITS.] Any health plan that includes a specific policy limit 
        within its insurance policy, certificate, or subscriber 
        agreement shall calculate the policy limit by using the amount 
        actually paid on behalf of the insured, subscriber, or 
        dependents for services covered under the policy, subscriber 
        agreement, or certificate unless the amount paid is greater than 
        the billed charge. 
           Sec. 66.  [72A.207] [GRADED DEATH BENEFITS.] 
           For the purpose of this section, a graded death benefit is 
        a provision within a life insurance policy in which the death 
        benefit, in the early years of the policy, is less than the face 
        amount of the policy, but which increases with the passage of 
        time. 
           No policy of life insurance paying a graded death benefit 
        may be issued in this state unless the graded death benefit is 
        equal to at least four times the first year premium.  This 
        section does not prohibit the return of premiums or premiums 
        plus interest in connection with the voluntary or judicially 
        ordered rescission of the policy, or according to the terms of 
        the exclusions from coverage for suicide, aviation, or war risk. 
           Sec. 67.  Minnesota Statutes 1994, section 148.235, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NURSE PRACTITIONERS.] A registered nurse who (1) 
        has graduated from a program of study designed to prepare 
        registered nurses for advanced practice as nurse practitioners, 
        (2) is certified through a national professional nursing 
        organization which certifies nurse practitioners and is included 
        in the list of professional nursing organizations adopted by the 
        board under section 62A.15, subdivision 3a, and (3) has a 
        written agreement with a physician based on standards 
        established by the Minnesota nurses association and the 
        Minnesota medical association that defines the delegated 
        responsibilities related to the prescription of drugs and 
        therapeutic devices, may prescribe and administer drugs and 
        therapeutic devices within the scope of the written agreement 
        and within practice as a nurse practitioner.  The written 
        agreement required under this subdivision shall be based on 
        standards established by the Minnesota nurses association and 
        the Minnesota medical association as of January 1, 1996, unless 
        both associations agree to revisions.  The written agreement 
        shall be maintained at the certified nurse practitioner's place 
        of employment and does not need to be filed with the board of 
        nursing. 
           Sec. 68.  Minnesota Statutes 1994, section 148.235, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CLINICAL NURSE SPECIALISTS IN PSYCHIATRIC AND 
        MENTAL HEALTH NURSING.] A registered nurse who (1) has a masters 
        degree, (2) is certified through a national professional nursing 
        organization which certifies clinical specialists in psychiatric 
        and mental health nursing and is included in the list of 
        professional nursing organizations adopted by the board under 
        section 62A.15, subdivision 3a, (3) has successfully completed 
        no less than 30 hours of formal study in the prescribing of 
        psychotropic medications and medications to treat their side 
        effects which included instruction in health assessment, 
        psychotropic classifications, psychopharmacology, indications, 
        dosages, contraindications, side effects, and evidence of 
        application, and (4) has a verbal agreement or a written 
        agreement with a psychiatrist based on standards established by 
        the Minnesota nurses association and the Minnesota psychiatric 
        association that specifies and defines the delegated 
        responsibilities related to the prescription of drugs in 
        relationship to the diagnosis, may prescribe and administer 
        drugs used to treat psychiatric and behavioral disorders and the 
        side effects of those drugs within the scope of the written 
        agreement and within practice as a clinical specialist in 
        psychiatric and mental health nursing.  The written agreement 
        required under this subdivision shall be based on standards 
        established by the Minnesota nurses association and the 
        Minnesota medical association as of January 1, 1996, unless both 
        associations agree to revisions.  The written agreement shall be 
        maintained at the certified clinical nurse specialist's place of 
        employment and does not need to be filed with the board of 
        nursing. 
           Nothing in this subdivision removes or limits the legal 
        professional liability of the treating psychiatrist, clinical 
        nurse specialist, mental health clinic or hospital for the 
        prescription and administration of drugs by a clinical 
        specialist in accordance with this subdivision. 
           Sec. 69.  [MEDICAL MALPRACTICE INSURANCE COVERAGE; 
        REAUTHORIZATION.] 
           Any authorization to issue insurance according to Minnesota 
        Statutes, section 62F.04, valid on the effective date of this 
        section remains valid for an additional two-year period at the 
        end of the initial two-year authorization.  The additional 
        authorization period granted by this section applies only to the 
        types of coverages authorized as of the effective date of this 
        section. 
           Sec. 70.  [COMMITTEE STUDY; DISCLOSURE OF FINANCIAL 
        INCENTIVES.] 
           The house committee on financial institutions and insurance 
        shall study how best to disclose to consumers any financial 
        arrangements between health plan companies and health care 
        providers that may provide financial incentives for providers to 
        restrict care provided to consumers. 
           Sec. 71.  [TAXI INSURANCE REVIEW; REPORT] 
           The commissioner of commerce shall review the impact that 
        Laws of Minnesota 1995, chapter 227, has on the following: 
           (1) any increase in the cost of individual policies of 
        personal automobile insurance that is attributable to coverage 
        of taxi drivers as reported by insurers providing the majority 
        of coverage in the state; 
           (2) the number and dollar amount of claims for injuries 
        attributable to taxi drivers who carry individual policies of 
        insurance as reported by insurers providing the majority of 
        coverage in the state; 
           (3) the number and dollar amount of claims filed by drivers 
        of taxis insured under policies issued to owners of taxis leased 
        to drivers, to the extent that the data is available; 
           (4) the entry of insurers providing coverage for owners of 
        vehicles used as taxis; 
           (5) changes in the cost of coverage carried by owners of 
        vehicles used as taxis. 
           The commissioner shall provide a written report to the 
        chair of the committee on financial institutions and insurance 
        of the house of representatives and the chair of the committee 
        on commerce of the senate by March 1, 1997. 
           Sec. 72.  [REPEALER.] 
           (a) Minnesota Statutes 1994, sections 60A.40; 60B.27; 
        62I.20; 65A.25; and 72A.205, are repealed. 
           (b) Laws 1995, chapter 140, section 1, is repealed. 
           (c) Section 51 is repealed effective August 1, 1998. 
           Sec. 73.  [EFFECTIVE DATES.] 
           Sections 2, 5, 9, 10, 12, 21, 22, 26 to 31, 36 to 38, 41 to 
        48, 61, 64, 66, and 69 are effective the day following final 
        enactment. 
           Section 3 is effective retroactive to January 1, 1996. 
           Sections 51 and 52 are effective August 1, 1996, and 
        applies to all health plans issued or renewed to provide 
        coverage to Minnesota residents on or after that date. 
           Section 49 is effective retroactive to July 1, 1995. 
           Sections 1 and 13 to 20 are effective January 1, 1997. 
           Section 50 is effective June 30, 1997, and applies to 
        health plans issued or renewed on or after that date. 
                                   ARTICLE 2 
           Section 1.  Minnesota Statutes 1994, section 60A.07, 
        subdivision 8, is amended to read: 
           Subd. 8.  [SPECIAL PROVISIONS AS TO MUTUAL COMPANIES.] (1) 
        [AMENDMENT OF ARTICLES OR CERTIFICATE OF INCORPORATION.] The 
        certificate of incorporation or articles of association of any 
        domestic insurance company without capital stock, now or 
        hereafter organized and existing under the laws of this state, 
        may be amended in respect to any matter which an original 
        certificate of incorporation or articles of association of a 
        corporation of the same kind might lawfully have contained by 
        the adoption of a resolution specifying the proposed amendment, 
        at a regular meeting of the members thereof or at a special 
        meeting called for that expressly stated purpose, by the 
        affirmative vote of a majority of the members present, in person 
        or by proxy, at the meeting, and by causing the resolution to be 
        embraced in a certificate duly executed by its president and 
        secretary or other presiding and recording officers, under its 
        corporate seal, and approved, filed, recorded, and published in 
        the manner prescribed by law for the execution, approval, 
        filing, recording, and publishing of a like original certificate 
        of incorporation or articles of association. 
           (2) [RENEWAL OF CORPORATE EXISTENCE.] Any domestic 
        insurance company or corporation having no capital stock, 
        heretofore or hereafter organized and existing under the laws of 
        this state, whose period of duration has expired or is about to 
        expire, may, on or before the date of the expiration, or within 
        six months after the date of expiration, renew its corporate 
        existence from the date of such expiration for any period 
        permitted by the laws of this state, by the adoption of a 
        resolution to that effect by the affirmative vote of 
        three-fourths of the members present, in person or by proxy, at 
        a regular meeting of the members, or at any special meeting 
        called for that expressly stated purpose, and by causing the 
        resolution to be embraced in a certificate duly executed by its 
        president and secretary or other presiding and recording 
        officers, under its corporate seal, and approved, filed, 
        recorded, and published in the manner prescribed by law for the 
        execution, approval, filing, recording, and publishing of an 
        original certificate of incorporation or articles of association.
           (3) [BYLAWS.] The bylaws of any domestic insurance 
        corporation without capital stock, in cases where the bylaws 
        must be adopted or approved by the members thereof, may be 
        adopted, altered, or amended at a regular meeting of the members 
        thereof, or at a special meeting called for that expressly 
        stated purpose, by the affirmative vote of a majority of the 
        members present, in person or by proxy, at the meeting. 
           (4) [CONVERSION OF A DOMESTIC MUTUAL INTO A STOCK INSURANCE 
        CORPORATION.] A domestic mutual corporation may be converted 
        into a stock insurance corporation as follows: 
           (a) [ACTION BY BOARD OF DIRECTORS.] The board of directors 
        shall adopt a plan of conversion. 
           (b) [PLAN OF CONVERSION.] (i) The plan of conversion shall 
        provide that, upon consummation of the conversion, each 
        policyholder at the date of the passage of the resolution by the 
        board of directors shall be entitled to such shares of stock of 
        the new company as the policyholder's equitable share of the 
        surplus of the company will purchase.  This equitable share 
        shall be determined by independent certified auditors or 
        consulting actuaries and shall be subject to approval by the 
        commissioner.  If a policyholder's equitable share of the 
        surplus of the company produces a fractional share, the 
        policyholder shall be given the option of either receiving the 
        value of the fractional share in cash or of purchasing the 
        fractional part of a share that will entitle the policyholder to 
        a full share. 
           (ii) No shares of the corporation being organized shall be 
        issued or subscribed for, formally or informally, directly or 
        indirectly during the conversion except as authorized under 
        subparagraph (i). 
           (iii) The corporation shall not pay compensation or 
        remuneration of any kind to any person in connection with the 
        proposed conversion, except at reasonable rates for printing 
        costs, and for legal and other professional fees for services 
        actually rendered. 
           (iv) The plan of conversion shall include a copy of the 
        proposed articles of incorporation which shall comply with the 
        requirements of chapter 300.  Except as otherwise specifically 
        provided, the corporation resulting from conversion under this 
        section shall be deemed to have been organized as of the date of 
        issuance of the initial certificate of authority to the mutual 
        corporation being converted. 
           (c) [APPROVAL BY POLICYHOLDERS.] Within 30 days after its 
        adoption by the board of directors, the plan of conversion shall 
        be submitted to the policyholders for approval by the 
        affirmative vote of a majority of the policyholders entitled to 
        vote, in the manner prescribed by subparagraph (1).  Every 
        policyholder as of the date of the adoption under subparagraph 
        (a) shall be entitled to one vote for each policy held.  Only 
        such policyholders shall be entitled to vote. 
           (d) [APPROVAL BY THE COMMISSIONER.] (i) Within 30 days 
        after its adoption by the policyholders, the plan of conversion 
        shall be submitted to the commissioner with an application for 
        approval. 
           (ii) The commissioner shall not approve if the value of 
        single shares is set at a figure that substantially burdens 
        policyholders who wish to purchase a fractional share under 
        subparagraph (b)(i). 
           (iii) If the commissioner finds that the plan of conversion 
        has been duly approved by the policyholders, that the conversion 
        would not violate any law and would not be contrary to the 
        interests of the policyholders, the commissioner shall approve 
        the plan of conversion and shall issue a new certificate of 
        authority to the corporation. 
           (e) [CONVERSION.] After filing an amendment of the articles 
        of incorporation as provided by chapter 300, the corporation 
        shall become a stock corporation and shall no longer be a mutual 
        corporation, and the board of directors shall execute the plan 
        of conversion. 
           (f) [SECURITIES REGULATION.] The filing with the 
        commissioner of commerce of a certified copy of the plan of 
        conversion as adopted by the policyholders and approved by the 
        commissioner shall constitute registration under chapter 80A, of 
        the securities authorized to be issued to policyholders 
        thereunder. 
           Sec. 2.  Minnesota Statutes 1995 Supplement, section 
        60A.07, subdivision 10, is amended to read: 
           Subd. 10.  [SPECIAL PROVISIONS AS TO LIFE COMPANIES.] (1) 
        [PREREQUISITES OF LIFE COMPANIES.] No mutual life company shall 
        be qualified to issue any policy until applications for at least 
        $200,000 of insurance, upon lives of at least 200 separate 
        residents, have been actually and in good faith made, accepted, 
        and entered upon its books and at least one full annual premium 
        thereunder, based upon the authorized table of mortality, 
        received in cash or in absolutely payable and collectible 
        notes.  A duplicate receipt for each premium, conditioned for 
        the return thereof unless the policy be issued within one year 
        thereafter, shall be issued, and one copy delivered to the 
        applicant and the other filed with the commissioner, together 
        with the certificate of a solvent authorized bank in the state, 
        of the deposit therein of such cash and notes, aggregating the 
        amount aforesaid, specifying the maker, payee, date, maturity, 
        and amount of each.  Such cash and notes shall be held by it not 
        longer than one year, and at or before the expiration thereof to 
        be by it paid or delivered, upon the written order of the 
        commissioner, to such company or applicants, respectively. 
           (2)  [FOREIGN COMPANIES MAY BECOME DOMESTIC.] Any company 
        organized under the laws of any other state or country, which 
        might have been originally incorporated under the laws of this 
        state, and which has been admitted to do business therein for 
        either or both the purpose of life or accident insurance, upon 
        complying with all the requirements of law relative to the 
        execution, filing, recording and publishing of original 
        certificates and payment of incorporation fees by like domestic 
        corporations, therein designating its principal place of 
        business at a place in this state, may become a domestic 
        corporation, and be entitled to like certificates of its 
        corporate existence and license to transact business in this 
        state, and be subject in all respects to the authority and 
        jurisdiction thereof. 
           (3)  [TEMPORARY CAPITAL STOCK OF MUTUAL LIFE COMPANIES.] A 
        new mutual life insurance company which has complied with the 
        provisions of clause (1) or an existing mutual life insurance 
        company may establish, a temporary capital of, such amount not 
        less than $100,000, as may be approved by the commissioner.  
        Such temporary capital shall be invested by the company in the 
        same manner as is provided for the investment of its other 
        funds.  Out of the net surplus of the company the holders of the 
        temporary capital stock may receive a dividend which may be 
        cumulative.  This capital stock shall not be a liability of the 
        company but shall be retired within a reasonable time and 
        according to terms approved by the commissioner.  At the time 
        for the retirement of this capital stock, the holders shall be 
        entitled to receive from the company the par value thereof and 
        any dividends thereon due and unpaid, and thereupon the stock 
        shall be surrendered and canceled.  In the event of the 
        liquidation of the company, the holders of temporary capital 
        stock shall have the same preference in the assets of the 
        company as shareholders have in a stock insurance company.  
        Dividends on this stock are subject to section 60D.20, 
        subdivision 2. 
           Temporary capital stock may be issued with or without 
        voting rights.  If issued with voting rights, the holders shall, 
        at all meetings, be entitled to one vote for each $10 of 
        temporary capital stock held.  
           Sec. 3.  [60A.075] [MUTUAL COMPANY CONVERSION TO STOCK 
        COMPANY.] 
           Subdivision 1.  [DEFINITIONS.] For the purposes of this 
        section, the terms in this subdivision have the meanings given 
        them. 
           (a) "Eligible member" means a policyholder whose policy is 
        in force as of the record date, which is the date that the 
        mutual company's board of directors adopts a plan of conversion 
        or some other date specified as the record date in the plan of 
        conversion and approved by the commissioner.  Unless otherwise 
        provided in the plan, a person insured under a group policy is 
        not an eligible member, unless on the record date: 
           (1) the person is insured or covered under a group life 
        policy or group annuity contract under which funds are 
        accumulated and allocated to the respective covered persons; 
           (2) the person has the right to direct the application of 
        the funds so allocated; 
           (3) the group policyholder makes no contribution to the 
        premiums or deposits for the policy or contract; and 
           (4) the converting mutual company has the names and 
        addresses of the persons covered under the group life policy or 
        group annuity contract. 
           (b) "Reorganized company" means a Minnesota domestic stock 
        insurance company that has converted from a Minnesota domestic 
        mutual insurance company according to this section. 
           (c) "Plan of conversion" or "plan" means a plan adopted by 
        a Minnesota domestic mutual insurance company's board of 
        directors under this section to convert the mutual company into 
        a Minnesota domestic stock insurance company. 
           (d) "Policy" means a policy or contract of insurance issued 
        by a converting mutual company, including an annuity contract. 
           (e) "Commissioner" means the commissioner of commerce. 
           (f) "Converting mutual company" means a Minnesota domestic 
        mutual insurance company seeking to convert to a Minnesota 
        domestic stock insurance company according to this section. 
           (g) "Effective date of a conversion" means the date 
        determined according to subdivision 6. 
           (h) "Membership interests" means all policyholders' rights 
        as members of the converting mutual company, including but not 
        limited to, rights to vote and to participate in any 
        distributions of surplus, whether or not incident to the 
        company's liquidation. 
           (i) "Equitable surplus" means the converting mutual 
        company's surplus as regards policyholders as of the effective 
        date of the conversion determined in a manner that is not unfair 
        or inequitable to policyholders. 
           (j) "Permitted issuer" means:  (1) a corporation organized 
        and owned by the converting mutual company or by any other 
        insurance company or insurance holding company for the purpose 
        of purchasing and holding all of the stock of the reorganized 
        company; (2) a stock insurance company owned by the converting 
        mutual company or by any other insurance company or insurance 
        holding company into which the converting mutual company will be 
        merged; or (3) any other corporation approved by the 
        commissioner. 
           Subd. 2.  [AUTHORIZATION.] A mutual insurance company may 
        become a stock insurance company according to a plan of 
        conversion established and approved in the manner provided by 
        this section. 
           Subd. 3.  [ADOPTION OF A PLAN OF CONVERSION BY THE BOARD OF 
        DIRECTORS.] (a) A converting mutual company shall, by the 
        affirmative vote of a majority of its board of directors, adopt 
        a plan of conversion consistent with the requirements of this 
        section. 
           (b) At any time before approval of a plan by the 
        commissioner, the converting mutual company, by the affirmative 
        vote of a majority of its board of directors, may amend or 
        withdraw the plan. 
           Subd. 4.  [APPROVAL OF THE PLAN OF CONVERSION BY THE 
        COMMISSIONER.] (a) [DOCUMENTS TO BE FILED.] After adoption of 
        the plan by the converting mutual company's board of directors, 
        but before the members' approval of the plan, the converting 
        mutual company shall file the following documents with the 
        commissioner for review and approval: 
           (1) the plan of conversion, including an independent 
        evaluation of the pro forma market value and of the equitable 
        surplus of the company and of the estimated value of any shares 
        to be issued and an independent actuarial opinion, if required; 
           (2) the form of notice of meeting for eligible members to 
        vote on the plan; 
           (3) the form of any proxies to be solicited from eligible 
        members; 
           (4) the proposed articles of incorporation and bylaws of 
        the converted stock company; 
           (5) information required under chapter 60D if the plan 
        results in a change of control of the converting mutual company; 
        and 
           (6) other information or documentation requested by the 
        commissioner or required by rule. 
           (b) [REQUIRED FINDINGS.] The commissioner shall approve or 
        conditionally approve the plan upon finding that: 
           (1) the provisions of this section have been fully met; and 
           (2) the plan will not be unfair or inequitable to 
        policyholders. 
           (c) [TIME.] The plan of conversion shall, by order, be 
        approved, conditionally approved, or disapproved by the 
        commissioner within the later of 30 days from the commissioner's 
        receipt of all required information from the converting mutual 
        company or 30 days after the conclusion of a public hearing held 
        according to paragraph (e).  An approval or conditional approval 
        of a plan expires if the reorganization is not completed within 
        180 days after the approval or conditional approval unless this 
        time period is extended by the commissioner for good cause shown.
           (d) [CONSULTANTS.] The commissioner may retain, at the 
        converting mutual company's expense, qualified experts not 
        otherwise a part of the commissioner's staff to assist in 
        reviewing the plan and supplemental materials and valuations. 
           (e) [HEARING.] The commissioner may, but need not, conduct 
        a public hearing regarding the proposed plan of conversion.  The 
        hearing must begin no later than 30 days after submission to the 
        commissioner of a plan of conversion and all required 
        information.  The commissioner shall give the converting mutual 
        company at least 20 days' notice of the hearing.  At the 
        hearing, the converting mutual company, its policyholders, and 
        any other person whose interest may be affected by the proposed 
        conversion may present evidence, examine and cross-examine 
        witnesses, and offer oral and written arguments or comments 
        according to the procedure for contested cases under chapter 
        14.  The persons participating may conduct discovery proceedings 
        in the same manner as prescribed for the district courts of this 
        state.  All discovery proceedings must be concluded no later 
        than three days before the scheduled commencement date of the 
        public hearing. 
           Subd. 5.  [APPROVAL OF THE PLAN BY THE ELIGIBLE 
        MEMBERS.] (a) [NOTICE.] Following approval or conditional 
        approval of the plan by the commissioner, all eligible members 
        shall be given notice of a regular or special meeting of the 
        policyholders called for the purpose of considering the plan and 
        any corporate actions that are a part of, or are reasonably 
        attendant to, the accomplishment of the plan. 
           (b) [NOTICE REQUIRED.] A copy of the plan or a summary of 
        the plan must accompany the notice.  The notice must be mailed 
        to each eligible member's last known address, as shown on the 
        converting mutual company's records, within 45 days of the 
        commissioner's approval of the plan, unless the commissioner 
        directs an earlier date for mailing.  The meeting to vote upon 
        the plan must be set for a date no less than 45 days after the 
        date when the notice of the meeting is mailed by the converting 
        mutual company unless the commissioner directs an earlier date 
        for the meeting.  If the meeting to vote upon the plan is held 
        coincident with the converting mutual company's annual meeting 
        of policyholders, only one combined notice of meeting is 
        required. 
           (c) [FAILURE TO GIVE NOTICE.] If the converting mutual 
        company complies substantially and in good faith with the notice 
        requirements of this section, the converting mutual company's 
        failure to give any member or members any required notice does 
        not impair the validity of any action taken under this section. 
           (d) [VOTING.] (1) The plan must be adopted upon receiving 
        the affirmative vote of a majority of the votes cast by eligible 
        members. 
           (2) Eligible members may vote in person or by proxy.  The 
        form of any proxy must be filed with and approved by the 
        commissioner. 
           (3) The number of votes each eligible member may cast shall 
        be determined by the converting mutual company's bylaws.  If the 
        bylaws are silent, or if the commissioner determines that the 
        voting requirements under the bylaws would be unfair or would 
        prejudice the rights of the eligible members, each eligible 
        member may cast one vote. 
           Subd. 6.  [CONVERSION.] (a) [FILING.] Following approval by 
        the members, the converting mutual company shall file a copy of 
        the company's amended or restated articles of incorporation with 
        the commissioner, together with a certified copy of the minutes 
        of the meeting at which the plan was adopted and a certified 
        copy of the plan.  The commissioner shall review and, if 
        appropriate, approve the amended or restated articles.  After 
        approval by the commissioner, the converting mutual company 
        shall file the articles with the secretary of state as provided 
        by chapter 300. 
           (b) [EFFECTIVE DATE.] Effective on the date of filing an 
        amendment or restatement of the articles of incorporation with 
        the secretary of state as provided by chapter 300, or on a later 
        date if the plan so specifies, the converting mutual corporation 
        shall become a stock corporation and shall no longer be a mutual 
        corporation. 
           Subd. 7.  [PLAN NOT UNFAIR OR INEQUITABLE.] A plan of 
        conversion shall not be unfair or inequitable to policyholders.  
        A plan of conversion is not unfair or inequitable if it 
        satisfies the conditions of subdivision 8, 9, or 10.  The 
        commissioner may determine that any other plan proposed by a 
        converting mutual company is not unfair or inequitable to 
        policyholders. 
           Subd. 8.  [SHARE CONVERSION.] A plan of conversion under 
        this subdivision shall provide for exchange of policyholders' 
        membership interests in return for shares in the reorganized 
        company, according to paragraphs (a) to (c). 
           (a) The policyholders' membership interests shall be 
        exchanged, in a manner that takes into account the estimated 
        proportionate contribution of equitable surplus of each class of 
        participating policies and contracts, for all of the common 
        shares of the reorganized company or its parent company or a 
        permitted issuer, or for a combination of the common shares of 
        the reorganized company or its parent company or a permitted 
        issuer. 
           (b) Unless the anticipated issuance within a shorter period 
        is disclosed in the plan of conversion, the issuer of common 
        shares shall not, within two years after the effective date of 
        reorganization, issue either of the following: 
           (1) any of its common shares or any securities convertible 
        with or without consideration into the common shares or carrying 
        any warrant to subscribe to or purchase common shares; and 
           (2) any warrant, right, or option to subscribe to or 
        purchase the common shares or other securities described in 
        paragraph (a), except for the issue of common shares to or for 
        the benefit of policyholders according to the plan of conversion 
        and the issue of options for the purchase of common shares being 
        granted to officers, directors, or employees of the reorganized 
        company or its parent company, if any, according to this section.
           (c) Unless the common shares have a public market when 
        issued, the issuer shall use its best efforts to encourage and 
        assist in the establishment of a public market for the common 
        shares within two years of the effective date of the conversion 
        or a longer period as disclosed in the plan of conversion.  
        Within one year after any offering of stock other than the 
        initial distribution, but no later than six years after the 
        effective date of the conversion, the reorganized company shall 
        offer to make available to policyholders who received and 
        retained shares of common stock or securities described in 
        paragraph (b), clause (1), a procedure to dispose of those 
        shares of stock at market value without brokerage commissions or 
        similar fees. 
           Subd. 9.  [SURPLUS DISTRIBUTION.] A plan of conversion 
        under this subdivision shall provide for the exchange of the 
        policyholders' membership interests in return for the operation 
        of the converting mutual company's participating policies as a 
        closed block of business and for the distribution of the 
        company's equitable surplus to policyholders, and shall provide 
        for the issuance of new shares of the reorganized company or its 
        parent corporation, each according to paragraphs (a) to (i). 
           (a) The converting mutual company's participating business, 
        comprised of its participating policies and contracts in force 
        on the effective date of the conversion or other reasonable date 
        as provided in the plan, shall be operated by the reorganized 
        company as a closed block of participating business.  However, 
        at the option of the converting mutual company, group policies 
        and group contracts may be omitted from the closed block. 
           (b) Assets of the converting mutual company must be 
        allocated to the closed block of participating business in an 
        amount equal to the reserves and liabilities for the converting 
        mutual life insurer's participating policies and contracts in 
        force on the effective date of the conversion.  The plan must be 
        accompanied by an opinion of an independent qualified actuary 
        who meets the standards set forth in the insurance laws or 
        regulations for the submission of actuarial opinions as to the 
        adequacy of reserves or assets.  The opinion must relate to the 
        adequacy of the assets allocated to support the closed block of 
        business.  The actuarial opinion must be based on methods of 
        analysis considered appropriate for those purposes by the 
        Actuarial Standards Board. 
           (c) The reorganized company shall keep a separate 
        accounting for the closed block and shall make and include in 
        the annual statement to be filed with the commissioner each year 
        a separate statement showing the gains, losses, and expenses 
        properly attributable to the closed block. 
           (d) Notwithstanding the establishment of a closed block, 
        the entire assets of the reorganized company shall be available 
        for the payment of benefits to policyholders.  Payment must 
        first be made from the assets supporting the closed block until 
        exhausted, and then from the general assets of the reorganized 
        company. 
           (e) The converting mutual company's equitable surplus shall 
        be distributed to eligible participating policyholders in a form 
        or forms selected by the converting mutual company.  The form of 
        distribution may consist of cash, securities of the reorganized 
        company, securities of another institution, a certificate of 
        contribution, additional life insurance, annuity benefits, 
        increased dividends, reduced premiums, or other equitable 
        consideration or any combination of forms of consideration.  The 
        consideration, if any, given to a class or category of 
        policyholders may differ from the consideration given to another 
        class or category of policyholders.  A certificate of 
        contribution must be repayable in ten years, be equal to 100 
        percent of the value of the policyholders' membership interest, 
        and bear interest at the highest rate charged by the reorganized 
        company for policy loans on the effective date of the conversion.
           (f) The consideration must be allocated among the 
        policyholders in a manner that is fair and equitable to the 
        policyholders. 
           (g) The reorganized company or its parent corporation shall 
        issue and sell shares of one or more classes having a total 
        price equal to the estimated value in the market of the shares 
        on the initial offering date.  The estimated value must take 
        into account all of the following: 
           (1) the pro forma market value of the reorganized company; 
           (2) the consideration to be given to policyholders 
        according to paragraph (e); 
           (3) the proceeds of the sale of the shares; and 
           (4) any additional value attributable to the shares as a 
        result of a purchaser or a group of purchasers who acted in 
        concert to obtain shares in the initial offering, attaining, 
        through such purchase, control of the reorganized company or its 
        parent corporation. 
           (h) If a purchaser or a group of purchasers acting in 
        concert is to attain control in the initial offering, the mutual 
        company shall not, directly or indirectly, pay for any of the 
        costs or expenses of conversion of the mutual company, whether 
        or not the conversion is effected. 
           (i) Periodically, with the commissioner's approval, the 
        reorganized company may share in the profits of the closed block 
        of participating business for the benefit of stockholders if the 
        assets allocated to the closed block are in excess of those 
        necessary to support the closed block. 
           Subd. 10.  [SUBSCRIPTION RIGHTS.] A plan of conversion 
        under this subdivision shall provide for exchange of the 
        policyholders' membership interests in return for the operation 
        of the converting mutual company's participating policies as a 
        closed block of business, for the creation of a liquidation 
        account to protect the interests of policyholders, and for the 
        issuance of subscription rights to eligible policyholders, and 
        shall provide for the issuance of shares by the reorganized 
        company, each according to paragraphs (a) to (j). 
           (a) The converting mutual company's participating business, 
        comprised of its participating policies and contracts in force 
        on the effective date of the conversion, or such other 
        reasonable date specified in the plan, and excluding at the 
        converting mutual company's option any group policies or group 
        contracts, shall be operated by the reorganized company as a 
        closed block of participating business according to subdivision 
        9, paragraphs (a) to (d). 
           (b) The reorganized company or its parent corporation or a 
        permitted issuer shall issue and sell shares of one or more 
        classes having a total price equal to the estimated value of the 
        shares in the market on the initial offering date taking into 
        account the proceeds of the sale of shares and the consideration 
        given to policyholders. 
           (c) The policyholders shall receive nontransferable 
        preemptive subscription rights to purchase all of the common 
        shares of the issuer according to paragraph (b). 
           (d) The preemptive subscription rights to purchase the 
        common shares must be allocated among the participating 
        policyholders in whole shares in a manner provided in the plan 
        that takes into account the estimated contribution of each class 
        of participating policies and contracts to the total amount of 
        the policyholders' consideration.  The plan must provide a fair 
        and equitable means for the allocation of shares in the event of 
        an oversubscription.  The plan must further provide that any 
        shares of capital stock not subscribed by eligible members must 
        be sold in a public offering through an underwriter, unless the 
        number of shares unsubscribed is so small in number so as not to 
        warrant the expense of a public offering, in which case the plan 
        may provide for the purchase of the unsubscribed shares by 
        private placement or through any fair and equitable alternative 
        means approved by the commissioner. 
           (e) The number of the common shares that a person, together 
        with any affiliates or group of persons acting in concert, may 
        subscribe or purchase in the reorganization, must be limited to 
        not more than five percent of the common shares.  For this 
        purpose, neither the members of the board of directors of the 
        reorganized company nor its parent corporation, if any, is 
        considered to be affiliates or a group of persons acting in 
        concert solely by reason of their board membership. 
           (f) Unless the common shares have a public market when 
        issued, officers and directors of the issuer and their 
        affiliates shall not, for at least three years after the date of 
        conversion, purchase common shares of the issuer, except with 
        the approval of the commissioner. 
           (g) Unless the common shares have a public market when 
        issued, the issuer shall use its best efforts to encourage and 
        assist in the establishment of a public market for the common 
        shares. 
           (h) The issuer shall not, for at least three years 
        following the conversion, repurchase any of its common shares 
        except according to a pro rata tender offer to all shareholders, 
        or with the approval of the commissioner. 
           (i) A liquidation account must be established for the 
        benefit of policyholders in the event of a complete liquidation 
        of the reorganized company.  The liquidation account must be 
        equal to the equitable surplus of the converting mutual company 
        as of the effective date of the conversion.  The function of the 
        liquidation account is solely to establish a priority on 
        liquidation and its existence does not restrict the use or 
        application of the surplus of the reorganized company except as 
        specified in paragraph (j).  The liquidation account must be 
        allocated equitably as of the effective date of conversion among 
        the then participating policyholders.  The amount allocated to a 
        policy or contract must not increase and must be reduced to zero 
        when the policy or contract terminates.  In the event of a 
        complete liquidation of the reorganized company, the 
        policyholders among which the liquidation account is allocated 
        are entitled to receive a liquidation distribution in the amount 
        of the liquidation account before any liquidation distribution 
        is made with respect to shares. 
           (j) Until the liquidation account has been reduced to zero, 
        the issuer shall not declare or pay a cash dividend on, or 
        repurchase any of, its common shares in an amount in excess of 
        its cumulative earned surplus generated after the conversion 
        determined according to statutory accounting principles, if the 
        effect would be to cause the amount of the statutory surplus of 
        the reorganized company to be reduced below the then amount of 
        the liquidation account. 
           Subd. 11.  [OPTIONAL PROVISIONS.] A plan under subdivision 
        8, 9, or 10 may include, with the approval of the commissioner, 
        any of the provisions in paragraphs (a) and (b). 
           (a) A plan may provide that any shares of the stock of the 
        reorganized company or its parent corporation or a permitted 
        issuer included in the policyholders' consideration must be 
        placed on the effective date of the conversion in a trust or 
        other entity existing for the exclusive benefit of the 
        participating policyholders and established solely for the 
        purposes of effecting the reorganization.  Under this option, 
        the shares placed in trust must be sold over a period of not 
        more than ten years and the proceeds of the shares must be 
        distributed using the distribution priorities prescribed in the 
        plan. 
           (b) A plan may provide that the directors and officers of 
        the converting mutual company shall receive, without payment, 
        nontransferable subscription rights to purchase capital stock of 
        the reorganized company, its parent, or a permitted issuer.  
        Those subscription rights must be allocated among the directors 
        and officers by a fair and equitable formula. 
           (1) The total number of shares that may be purchased under 
        this clause, may not exceed 35 percent of the total number of 
        shares to be issued in the case of a converting mutual company 
        with total assets of less than $50,000,000 or 25 percent of the 
        total shares to be issued in the case of a converting mutual 
        company with total assets of more than $500,000,000.  For 
        converting mutual companies with total assets between 
        $50,000,000 and $500,000,000, the total number of shares that 
        may be purchased may not exceed an interpolated percentage 
        between 25 and 35 percent. 
           (2) Stock purchased by a director or officer under clause 
        (1) may not be sold within one year following the effective date 
        of the conversion. 
           (3) The plan may also provide that a director or officer, 
        or person acting in concert with a director or officer of the 
        converting mutual company, may not acquire any capital stock of 
        the reorganized company for three years after the effective date 
        of the conversion, except through a licensed securities broker 
        or dealer, without the permission of the commissioner.  That 
        provision may not apply to prohibit the directors and officers 
        from purchasing stock through subscription rights received in 
        the plan under clause (1). 
           (c) A plan may allocate to a tax-qualified employee benefit 
        plan nontransferable subscription rights to purchase up to ten 
        percent of the capital stock of the reorganized company, its 
        parent, or a permitted issuer.  The employee benefit plan must 
        be entitled to exercise its subscription rights regardless of 
        the amount of shares purchased by other persons. 
           Subd. 12.  [ALTERNATIVE PLAN OF CONVERSION.] In lieu of 
        selecting a plan of conversion provided for in this section, the 
        converting mutual company may convert according to a plan 
        approved by the commissioner if the commissioner finds that the 
        plan does not prejudice the interests of the members, is fair 
        and equitable, and is based upon an independent appraisal of the 
        market value of the mutual company by a qualified person, and is 
        a fair and equitable allocation of any consideration to be given 
        eligible members.  The commissioner may retain, at the 
        converting mutual company's expense, any qualified expert not 
        otherwise a part of the commissioner's staff to assist in 
        reviewing whether the alternative plan may be approved and the 
        valuation of the company. 
           Subd. 13.  [EFFECT OF CONVERSION.] (a) Upon the conversion 
        of a converting mutual company to a reorganized company 
        according to this section, the corporate existence of the 
        converting mutual company must be continued in the reorganized 
        company.  All the rights, franchises, and interests of the 
        converting mutual company in and to all property and things in 
        action belonging to this property, is considered transferred to 
        and vested in the reorganized company without any deed or 
        transfer.  Simultaneously, the reorganized company is considered 
        to have assumed all the obligations and liabilities of the 
        converting mutual company. 
           (b) The directors and officers of the converting mutual 
        company, unless otherwise specified in the plan of conversion, 
        shall serve as directors and officers of the reorganized company 
        until new directors and officers of the reorganized company are 
        duly elected according to the articles of incorporation and 
        bylaws of the reorganized company. 
           (c) All policies in force on the effective date of the 
        conversion continue to remain in force under the terms of those 
        policies, except that any voting rights of the policyholders 
        provided for under the policies are extinguished on the 
        effective date of the conversion. 
           Subd. 14.  [CONFLICT OF INTEREST.] No director, officer, 
        agent, employee of the converting mutual company, or any other 
        person shall receive a fee, commission, or other valuable 
        consideration, other than the person's usual regular salary and 
        compensation, for in any manner aiding, promoting, or assisting 
        in the conversion except as set forth in the plan approved by 
        the commissioner.  This provision does not prohibit the payment 
        of reasonable fees and compensation to attorneys, accountants, 
        investment bankers, and actuaries for services performed in the 
        independent practice of their professions. 
           Subd. 15.  [COSTS AND EXPENSES.] All the costs and expenses 
        connected with a plan of conversion must be paid for or 
        reimbursed by the converting mutual company or the reorganized 
        company except where the plan provides otherwise. 
           Subd. 16.  [LIMITATION OF ACTIONS.] (a) An action 
        challenging the validity of or arising out of acts taken or 
        proposed to be taken according to this section must be commenced 
        within 180 days after the effective date of the conversion. 
           (b) The converting mutual company, the reorganized company, 
        or any defendant in an action described in paragraph (a), may 
        petition the court in the action to order a party to give 
        security for the reasonable attorney fees that may be incurred 
        by a party to the action.  The amount of security may be 
        increased or decreased in the discretion of the court having 
        jurisdiction if a showing is made that the security provided is 
        or may become inadequate or excessive. 
           Subd. 17.  [SUPERVISORY CONVERSIONS.] The commissioner may 
        waive or alter any of the requirements of this section to 
        protect the interests of policyholders if the converting mutual 
        company is subject to the commissioner's administrative 
        supervision under chapter 60G or rehabilitation under chapter 
        60B. 
           Sec. 4.  [60A.077] [MUTUAL INSURANCE HOLDING COMPANIES.] 
           Subdivision 1.  [FORMATION.] (a) A domestic mutual 
        insurance company, upon approval of the commissioner, may 
        reorganize by forming an insurance holding company based upon a 
        mutual plan and continuing the corporate existence of the 
        reorganizing insurance company as a stock insurance company.  
        The commissioner, if satisfied that the interests of the 
        policyholders are properly protected and that the plan of 
        reorganization is fair and equitable to the policyholders, may 
        approve the proposed plan of reorganization and may require as a 
        condition of approval the modifications of the proposed plan of 
        reorganization as the commissioner finds necessary for the 
        protection of the policyholders' interests.  The commissioner 
        shall retain jurisdiction over the mutual insurance holding 
        company according to this section and chapter 60D to assure that 
        policyholder interests are protected. 
           (b) All of the initial shares of the capital stock of the 
        reorganized insurance company must be issued to the mutual 
        insurance holding company or to an intermediate stock holding 
        company that is wholly owned by the mutual insurance holding 
        company.  The membership interests of the policyholders of the 
        reorganized insurance company become membership interests in the 
        mutual insurance holding company.  "Membership interests" means 
        those interests described in section 60A.075, subdivision 1, 
        paragraph (h).  Policyholders of the reorganized insurance 
        company shall be members of the mutual insurance holding company 
        in accordance with the articles of incorporation and bylaws of 
        the mutual insurance holding company.  The mutual insurance 
        holding company shall, at all times, directly or through an 
        intermediate stock holding company, control a majority of the 
        voting shares of the capital stock of the reorganized insurance 
        company. 
           Subd. 2.  [MERGER.] (a) A domestic mutual insurance 
        company, upon the approval of the commissioner, may reorganize 
        by merging its policyholders' membership interests into a mutual 
        insurance holding company formed according to subdivision 1 and 
        continuing the corporate existence of the reorganizing insurance 
        company as a stock insurance company subsidiary of the mutual 
        insurance holding company.  "Membership interests" means those 
        interests described in section 60A.075, subdivision 1, paragraph 
        (h).  The commissioner, if satisfied that the interests of the 
        policyholder are properly protected and that the merger is fair 
        and equitable to the policyholders, may approve the proposed 
        merger and may require as a condition of approval the 
        modifications of the proposed merger as the commissioner finds 
        necessary for the protection of the policyholders' interests.  
        The commissioner shall retain jurisdiction over the mutual 
        insurance holding company organized according to this section to 
        assure that policyholder interests are protected. 
           (b) All of the initial shares of the capital stock of the 
        reorganized insurance company must be issued to the mutual 
        insurance holding company, or to an intermediate stock holding 
        company that is wholly owned by the mutual insurance holding 
        company.  The membership interests of the policyholders of the 
        reorganized insurance company become membership interests in the 
        mutual insurance holding company.  Policyholders of the 
        reorganized insurance company shall be members of the mutual 
        insurance holding company according to the articles of 
        incorporation and bylaws of the mutual insurance holding company.
           Subd. 3.  [PLAN OF REORGANIZATION; APPROVAL BY 
        COMMISSIONER.] (a) The reorganizing or merging insurer shall 
        file a plan of reorganization, approved by the affirmative vote 
        of a majority of its board of directors, for review and approval 
        by the commissioner.  The plan must provide for the following: 
           (1) establishing a mutual insurance holding company with at 
        least one stock insurance company subsidiary, the majority of 
        shares of which must be owned, either directly or through an 
        intermediate stock holding company, by the mutual insurance 
        holding company; 
           (2) analyzing the benefits and risks attendant to the 
        proposed reorganization, including the rationale for the 
        reorganization and analysis of the comparative benefits and 
        risks of a demutualization under section 60A.075; 
           (3) protecting the immediate and long-term interests of 
        existing policyholders; 
           (4) ensuring immediate membership in the mutual insurance 
        holding company of all existing policyholders of the 
        reorganizing domestic insurance company; 
           (5) describing a plan providing for membership interests of 
        future policyholders; 
           (6) describing the number of members of the board of 
        directors of the mutual insurance holding company required to be 
        policyholders; 
           (7) ensuring that, in the event of proceedings under 
        chapter 60B involving a stock insurance company subsidiary of 
        the mutual insurance holding company that resulted from the 
        reorganization of a domestic mutual insurance company, the 
        assets of the mutual insurance holding company will be available 
        to satisfy the policyholder obligations of the stock insurance 
        company; 
           (8) for periodic distribution of accumulated holding 
        company earnings to members; 
           (9) describing the nature and content of the annual report 
        and financial statement to be sent to each member; 
           (10) a copy of the proposed mutual insurance holding 
        company's articles of incorporation and bylaws specifying all 
        membership rights; 
           (11) the names, addresses, and occupational information of 
        all corporate officers and members of the proposed mutual 
        insurance holding company board of directors; 
           (12) information sufficient to demonstrate that the 
        financial condition of the reorganizing or merging company will 
        not be diminished upon reorganization; 
           (13) a copy of the articles of incorporation and bylaws for 
        any proposed insurance company subsidiary or intermediate 
        holding company subsidiary; 
           (14) describing any plans for the initial sale of stock for 
        the reorganized insurance company; and 
           (15) any other information requested by the commissioner or 
        required by rule. 
           (b) The commissioner may approve the plan upon finding that 
        the requirements of this section have been fully met and the 
        plan will protect the immediate and long-term interests of 
        policyholders. 
           (c) The commissioner may retain, at the reorganizing or 
        merging mutual company's expense, any qualified experts not 
        otherwise a part of the commissioner's staff to assist in 
        reviewing the plan. 
           (d) The commissioner may, but need not, conduct a public 
        hearing regarding the proposed plan.  The hearing must be held 
        within 30 days after submission of a completed plan of 
        reorganization to the commissioner.  The commissioner shall give 
        the reorganizing mutual company at least 20 days' notice of the 
        hearing.  At the hearing, the reorganizing mutual company, its 
        policyholders, and any other person whose interest may be 
        affected by the proposed reorganization, may present evidence, 
        examine and cross-examine witnesses, and offer oral and written 
        arguments or comments according to the procedure for contested 
        cases under chapter 14.  The persons participating may conduct 
        discovery proceedings in the same manner as prescribed for the 
        district courts of this state.  All discovery proceedings must 
        be concluded no later than three days before the scheduled 
        commencement of the public hearing. 
           Subd. 4.  [APPROVAL BY COMMISSIONER.] The plan by order 
        shall be approved, conditionally approved, or disapproved within 
        the later of 30 days from the date of the commissioner's receipt 
        of all required information or 30 days after the conclusion of 
        the public hearing.  An approval or conditional approval of a 
        plan of reorganization expires if the reorganization is not 
        completed within 180 days after the approval or conditional 
        approval unless the time period is extended by the commissioner 
        upon a showing of good cause. 
           Subd. 5.  [APPROVAL BY MEMBERS.] The plan shall be approved 
        by the members as provided in section 60A.075, subdivision 5. 
           Subd. 6.  [INCORPORATION.] A mutual insurance holding 
        company resulting from the reorganization of a domestic mutual 
        insurance company organized under chapter 300 shall be 
        incorporated pursuant to chapter 300.  The articles of 
        incorporation and any amendments to the articles of the mutual 
        insurance holding company are subject to approval of the 
        commissioner in the same manner as those of an insurance company.
           Subd. 7.  [APPLICABILITY OF CERTAIN PROVISIONS.] (a) A 
        mutual insurance holding company is considered to be an insurer 
        subject to chapter 60B and shall automatically be a party to any 
        proceeding under chapter 60B involving an insurance company 
        that, as a result of a reorganization according to subdivision 1 
        or 2, is a subsidiary of the mutual insurance holding company.  
        In any proceeding under chapter 60B involving the reorganized 
        insurance company, the assets of the mutual insurance holding 
        company are considered to be assets of the estate of the 
        reorganized insurance company for purposes of satisfying the 
        claims of the reorganized insurance company's policyholders.  A 
        mutual insurance holding company shall not dissolve or liquidate 
        without the approval of the commissioner or as ordered by the 
        district court according to chapter 60B. 
           (b) A mutual insurance holding company is subject to 
        chapter 60D to the extent consistent with this section. 
           (c) As a condition to approval of the plan, the 
        commissioner may require the mutual insurance holding company to 
        comply with any provision of the insurance laws necessary to 
        protect the interests of the policyholders as if the mutual 
        insurance holding company were a domestic mutual insurance 
        company.  
           Subd. 8.  [APPLICABILITY OF DEMUTUALIZATION PROVISIONS.] (a)
        Except as otherwise provided, section 60A.075 is not applicable 
        to a reorganization or merger according to this section, and 
        except for section 60A.075, subdivisions 14 to 16. 
           (b) Section 60A.075 is applicable to demutualization of a 
        mutual insurance holding company that resulted from the 
        reorganization of a domestic mutual insurance company organized 
        under chapter 300 as if it were a mutual insurance company. 
           Subd. 9.  [MEMBERSHIP INTERESTS.] A membership interest in 
        a domestic mutual insurance holding company does not constitute 
        a security as defined in section 80A.14, subdivision 18. 
           Subd. 10.  [FINANCIAL STATEMENT REQUIREMENTS.] (a) In 
        addition to any items required under chapter 60D, each mutual 
        insurance holding company shall file with the commissioner, by 
        April 1 of each year, an annual statement consisting of the 
        following: 
           (1) an income statement, balance sheet, and cashflow 
        statement prepared in accordance with generally accepted 
        accounting principles; 
           (2) complete information on the status of any closed block 
        formed as part of a plan of reorganization; 
           (3) an investment plan covering all assets; and 
           (4) a statement disclosing any intention to pledge, borrow 
        against, alienate, hypothecate, or in any way encumber the 
        assets of the mutual insurance holding company.  Action taken 
        according to the statement is subject to the commissioner's 
        prior written approval. 
           (b) The aggregate pledges and encumbrances of a mutual 
        holding company's assets shall not affect more than 49 percent 
        of the company's stock in any subsidiary insurance holding 
        company or subsidiary insurance company that resulted from a 
        reorganization or merger. 
           (c) At least 50 percent of the generally accepted 
        accounting principles (GAAP) net worth of a mutual insurance 
        holding company must be invested in insurance company 
        subsidiaries. 
           Subd. 11.  [SALE OF STOCK AND PAYMENT OF DIVIDENDS.] No 
        solicitation for the sale of the stock of the reorganized 
        insurance company, or of an intermediate stock holding company 
        of the mutual insurance holding company, may be made without the 
        commissioner's prior written approval.  Dividends and other 
        distributions to the shareholders of the reorganized stock 
        insurance company or of an intermediate stock holding company 
        shall not be made except in compliance with section 60D.20. 
           Sec. 5.  Minnesota Statutes 1994, section 60A.11, 
        subdivision 21, is amended to read: 
           Subd. 21.  [FOREIGN INVESTMENTS.] Obligations of and 
        investments in foreign countries, on the following conditions:  
           (a) a company may acquire and hold any foreign investments 
        which are required as a condition of doing business in the 
        foreign country or necessary for the convenient accommodation of 
        its foreign business.  An investment is considered necessary for 
        the convenient accommodation of the insurance company's foreign 
        business only if it is demonstrably and directly related in size 
        and purpose to the company's foreign insurance operations; and 
           (b) a company may not also invest not more than five 
        percent of its total admitted assets in any combination of:  
           (1) the obligations of foreign governments, corporations, 
        or business trusts; 
           (2) obligations of federal, provincial, or other political 
        subdivisions backed by the full faith and credit of the foreign 
        governmental unit; 
           (3) or in the stocks or stock equivalents or obligations of 
        foreign corporations or business trusts not qualifying for 
        investment under subdivision 12, if the obligations, stocks or 
        stock equivalents are listed or regularly traded on the London, 
        Paris, Zurich, or Tokyo stock exchange or any similar regular 
        securities exchange not disapproved by the commissioner within 
        30 days following notice from the company of its intention to 
        invest in these securities. 
           Sec. 6.  Minnesota Statutes 1995 Supplement, section 
        60A.67, subdivision 2, is amended to read: 
           Subd. 2.  [PROHIBITION ON ANNOUNCEMENTS.] The comparison of 
        an insurer's total adjusted capital to any of its risk-based 
        capital levels is a regulatory tool that may indicate the need 
        for possible corrective action with respect to the insurer and 
        is not intended as a means to rank insurers generally.  Except 
        as otherwise required under sections 60A.60 to 60A.696, the 
        making, publishing, dissemination, circulating, or placing 
        before the public, or causing, directly or indirectly to be 
        made, published, disseminated, circulated, or placed before the 
        public, in a newspaper, magazine, or other publication, or in 
        the form of a notice, circular, pamphlet, letter, or poster, or 
        over any radio or television station, or in any other way, an 
        advertisement, announcement, or statement containing an 
        assertion, representation, or statement with regard to the 
        risk-based capital levels of an insurer, or of any component 
        derived in the calculation, by an insurer, agent, broker, or 
        other person engaged in any manner in the insurance business 
        would be misleading and is prohibited.  However, if a materially 
        false statement with respect to the comparison regarding an 
        insurer's total adjusted capital to its risk-based capital 
        levels, or any of them, or an inappropriate comparison of any 
        other amount to the insurer's risk-based capital levels is 
        published in a written publication and the insurer is able to 
        demonstrate to the commissioner with substantial proof the 
        falsity of the statement, or the inappropriateness, as the case 
        may be, then the insurer may publish an announcement in a 
        written publication if the sole purpose of the announcement is 
        to rebut the materially false statement.  This subdivision does 
        not prohibit an insurance company or its holding company from 
        disclosing information about its risk-based capital levels in 
        the notes to its financial statements if required by 
        pronouncements of the American Institute of Certified Public 
        Accountants or the Financial Accounting Standards Board, or 
        making this disclosure as required by other governmental 
        regulatory agencies. 
           Sec. 7.  Minnesota Statutes 1994, section 60C.09, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FURTHER DEFINITION.] In addition to subdivision 
        1, a covered claim does not include: 
           (1) claims by an affiliate of the insurer; and 
           (2) claims due a reinsurer, insurer, insurance pool, or 
        underwriting association, as subrogation recoveries or otherwise.
        This clause does not prevent a person from presenting the 
        excluded claim to the insolvent insurer or its liquidator, but 
        the claims shall not be asserted against another person, 
        including the person to whom the benefits were paid or the 
        insured of the insolvent insurer, except to the extent that the 
        claim is outside the coverage of the policy issued by the 
        insolvent insurer; and 
           (3) any first-party claims, resulting from insolvencies 
        which occur after July 31, 1996, by an insured whose net worth 
        exceeds $25,000,000 on December 31 of the year prior to the year 
        in which the insurer becomes an insolvent insurer; provided that 
        an insured's net worth on that date shall be deemed to include 
        the aggregate net worth of the insured and all of its 
        subsidiaries as calculated on a consolidated basis. 
           Sec. 8.  Minnesota Statutes 1994, section 60C.11, is 
        amended by adding a subdivision to read: 
           Subd. 7.  The association may recover the amount of any 
        covered claim paid, resulting from insolvencies which occur 
        after July 31, 1996, on behalf of an insured who has a net worth 
        of $25,000,000 as provided in section 60C.09, subdivision 2, 
        clause (3), on December 31 of the year immediately preceding the 
        date the insurer becomes an insolvent insurer and whose 
        liability obligations to other persons are satisfied in whole or 
        in part by payments made under this chapter. 
           Sec. 9.  Minnesota Statutes 1994, section 61A.32, is 
        amended to read: 
           61A.32 [DOMESTIC MUTUAL AND STOCK AND MUTUAL COMPANIES; 
        VOTING RIGHTS OF MEMBERS.] 
           Every person insured by a domestic mutual life insurance 
        company, and every participating policyholder of a domestic 
        stock and mutual life insurance company as defined in sections 
        61A.33 to 61A.36, shall be a member, entitled to one vote and 
        one vote additional for each $1,000 of insurance in excess of 
        the first $1,000; provided, that no member shall be entitled to 
        more than 100 votes; and, provided, further, that in the case of 
        group insurance on employees such group shall be deemed to be a 
        single member and the employer shall be deemed to be such member 
        for the purpose of voting, having not to exceed 100 votes, 
        provided, that in cases where the employees pay all or any part 
        of the premium, either directly or by payroll deductions, the 
        employees shall be allowed to choose their representative, who 
        shall exercise a voting power in proportion to the percentage of 
        premium paid by such employees.  Every member shall be notified 
        of its annual meetings by a written notice mailed to the 
        member's address, or by an imprint on the back of the policy, 
        premium notice, receipt or certificate of renewal, as follows: 
           "The insured is hereby notified that by virtue of this 
        policy the insured is a member of the .......... Insurance 
        Company, and that the annual meetings of said company are held 
        at its home office on the ..... day of ..... in each year, at 
        .......... o'clock."  
           The blanks shall be duly filled in print.  Any such member 
        may vote by proxy by filing written proxy appointment with the 
        secretary of the company at its home office at least five days 
        before the first meeting at which it is to be used.  Such proxy 
        appointment may be for a specified period of time or may provide 
        that it will be in effect until revoked not to exceed one year.  
        A proxy may be revoked by a member at any time by written notice 
        to the secretary of the company or by executing a new proxy 
        appointment and filing it as required herein:  provided, 
        however, that any member may always appear personally and 
        exercise rights as a member at any meeting of the company.  
           A domestic mutual life insurance company may by its 
        articles of incorporation or bylaws provide for a representative 
        system of voting in any meeting of members.  The articles or 
        bylaws may provide for the selection of representatives from 
        districts as therein specified, such representatives to 
        represent approximately equal numbers of members with power to 
        exercise all the voting powers, rights and privileges of the 
        members they represent with the same force and effect as might 
        be exercised by the members themselves.  In such a 
        representative system the votes cast by the representative shall 
        be one vote for each member, notwithstanding the amount of 
        insurance carried, and proxy voting shall not be permitted; 
        provided, however, that any member may always appear personally 
        and exercise rights as a member of the company at any meeting of 
        the membership.  
           Sec. 10.  Minnesota Statutes 1994, section 61B.20, 
        subdivision 15, is amended to read: 
           Subd. 15.  [PREMIUMS.] "Premiums" means amounts received on 
        covered policies or contracts less premiums, considerations, and 
        deposits returned, and less dividends and experience credits on 
        those covered policies or contracts to the extent not guaranteed 
        in advance.  The term does not include amounts received for 
        policies or contracts or for the portions of policies or 
        contracts for which coverage is not provided under section 
        61B.19, subdivision 3, except that assessable premium shall not 
        be reduced on account of section 61B.19, subdivision 4, relating 
        to limitations with respect to any one life, any one individual, 
        and any one contract holder,.  Premiums subject to assessment 
        under section 61B.24, include all amounts received on any 
        unallocated annuity contract issued to a contract holder 
        resident in this state if the contract is not otherwise excluded 
        from coverage under section 61B.19, subdivision 3; provided that 
        "premiums" shall not include any premiums in excess of the 
        liability limit on any unallocated annuity contract specified in 
        section 61B.19, subdivision 4. 
           Sec. 11.  [REPEALER.] 
           Minnesota Statutes 1994, section 60A.13, subdivision 8, is 
        repealed. 
                                   ARTICLE 3
           Section 1.  Minnesota Statutes 1995 Supplement, section 
        62L.045, is amended to read: 
           62L.045 [ASSOCIATIONS.] 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the following terms have the meanings given: 
           (a) "Association" means: 
           (1) an association as defined in section 60A.02; 
           (2) a group or organization of political subdivisions; 
           (3) an educational cooperative service unit a service 
        cooperative created under section 123.58 123.582; or 
           (4) a joint self-insurance pool authorized under section 
        471.617, subdivision 2. 
           (b) "Qualified association" means an association, as 
        defined in this subdivision, that: 
           (1) is registered with the commissioner of commerce; 
           (2) provides health plan coverage through a health carrier 
        that participates in the small employer market in this state, 
        other than through associations, to the extent that the 
        association purchases health plan coverage rather than 
        self-insures; 
           (3) has and adheres to membership and participation 
        criteria and health plan coverage eligibility criteria that are 
        not designed to disproportionately include or attract small 
        employers that are likely to have low costs of health coverage 
        or to disproportionately exclude or repel small employers that 
        are likely to have high costs of health coverage; and 
           (4) permits any small employer that meets its membership, 
        participation, and eligibility criteria to become a member and 
        to obtain health plan coverage through the association. 
           (c) "Health coverage" means a health benefit plan as 
        defined in section 62L.02, subdivision 15; or similar 
        self-insured coverage offered, sold, issued, or renewed by an 
        association as defined in paragraph (a) to a small employer.  
           Subd. 2.  [QUALIFIED ASSOCIATIONS.] (a) A qualified 
        association, as defined in this section, and health benefit 
        plans coverage offered by it, to it, or through it, to a small 
        employer in this state must comply with the requirements of this 
        chapter regarding guaranteed issue, guaranteed renewal, 
        preexisting condition limitations, credit against preexisting 
        condition limitations for continuous coverage, treatment of MCHA 
        enrollees, and the definition of dependent, and with section 
        62A.65, subdivision 5, paragraph (b).  They must also comply 
        with all other requirements of this chapter not specifically 
        exempted in paragraph (b) or (c). 
           (b) A qualified association and a health carrier offering, 
        selling, issuing, or renewing a health benefit plan coverage to, 
        or to cover, a small employer in this state through the 
        qualified association, may, but are not, in connection with that 
        health benefit plan coverage, required to: 
           (1) offer the two small employer plans described in section 
        62L.05; and 
           (2) offer to small employers that are not members of the 
        association, health benefit plans coverage offered to, by, or 
        through the qualified association. 
           (c) A qualified association, and a health carrier offering, 
        selling, issuing, and renewing a health benefit plan coverage 
        to, or to cover, a small employer in this state must comply with 
        section 62L.08, except that: 
           (1) a separate index rate may be applied by a health 
        carrier to each qualified association, provided that: 
           (1) (i) the premium rate applied to participating small 
        employer members of the qualified association is no more than 25 
        percent above and no more than 25 percent below the index rate 
        applied to the qualified association, irrespective of when 
        members applied for health coverage; and 
           (2) (ii) the index rate applied by a health carrier to a 
        qualified association is no more than 20 percent above and no 
        more than 20 percent below the index rate applied by the health 
        carrier to any other qualified association or to any small 
        employer.  In comparing index rates for purposes of this clause, 
        the 20 percent shall be calculated as a percent of the larger 
        index rate; and 
           (2) a qualified association described in subdivision 1, 
        paragraph (a), clauses (2) to (4), providing health coverage 
        through a health carrier, or on a self-insured basis in 
        compliance with section 471.617 and the rules adopted under that 
        section, may cover small employers and other employers within 
        the same pool and may charge premiums to small employer members 
        on the same basis as it charges premiums to members that are not 
        small employers, if the premium rates charged to small employers 
        do not have greater variation than permitted under section 
        62L.08.  A qualified association operating under this clause 
        shall annually prove to the commissioner of commerce that it 
        complies with this clause through a sampling procedure 
        acceptable to the commissioner.  If the qualified association 
        fails to prove compliance to the satisfaction of the 
        commissioner, the association shall agree to a written plan of 
        correction acceptable to the commissioner.  The qualified 
        association is considered to be in compliance under this clause 
        if there is a premium rate that would, if used as an index rate, 
        result in all premium rates in the sample being in compliance 
        with section 62L.08.  This clause does not exempt a qualified 
        association or a health carrier providing coverage through the 
        qualified association from the loss ratio requirement of section 
        62L.08, subdivision 11. 
           Subd. 3.  [OTHER ASSOCIATIONS.] Associations as defined in 
        this section that are not qualified associations; health benefit 
        plans coverage offered, sold, issued, or renewed by or through 
        them; and the health carriers doing so, must fully comply with 
        this chapter with respect to small employers that are members of 
        the association. 
           Subd. 4.  [PRINCIPLES; ASSOCIATION COVERAGE.] (a) This 
        subdivision applies to associations as defined in this section, 
        whether qualified associations or not, and is intended to 
        clarify subdivisions 1 to 3.  
           (b) This section applies only to associations that 
        provide health coverage to small employers. 
           (c) The requirements of guaranteed issue and guaranteed 
        renewal apply to coverage issued to cover small employers and 
        persons covered through them, within the context of an 
        arrangement between an association and a health carrier.  A 
        health carrier is not required under this chapter to comply with 
        guaranteed issue and guaranteed renewal with respect to its 
        relationship with the association itself.  An arrangement 
        between the health carrier and the association, once entered 
        into, must comply with guaranteed issue and guaranteed renewal 
        with respect to members of the association that are small 
        employers and persons covered through them. 
           (d) When an arrangement between a health carrier and an 
        association has validly terminated, the health carrier has no 
        continuing obligation to small employers and persons covered 
        through them, except as otherwise provided in: 
           (1) section 62A.65, subdivision 5, paragraph (b); 
           (2) any other continuation or conversion rights applicable 
        under state or federal law; and 
           (3) section 60A.082, relating to group replacement 
        coverage, and rules adopted under that section. 
           (e) When an association's arrangement with a health carrier 
        has terminated and the association has entered into a new 
        arrangement with that health carrier or a different health 
        carrier, the new arrangement is subject to section 60A.082 and 
        rules adopted under it, with respect to members of the 
        association that are small employers and persons covered through 
        them. 
           (f) An association that offers its members more than one 
        health plan of health coverage may have uniform rules 
        restricting movement between the health plans of health 
        coverage, if the rules do not discriminate against small 
        employers. 
           (g) This chapter does not require or prohibit separation of 
        an association's members into one group consisting only of small 
        employers and another group or other groups consisting of all 
        other members.  The association must comply with this section 
        with respect to the small employer group. 
           (h) For purposes of this section, "member" of an 
        association includes an employer participant in the association. 
           (i) For purposes of this section, health coverage issued 
        to, or to cover, a small employer includes a certificate of 
        coverage issued directly to the employer's employees and 
        dependents, rather than to the small employer. 
           Subd. 5.  [REGISTRATION.] The commissioner may require all 
        associations that are subject to this section to register with 
        the commissioner prior to an initial purchase of health coverage 
        under this section. 
           Sec. 2.  Minnesota Statutes 1994, section 471.617, 
        subdivision 2, as amended by Laws 1995, chapter 233, article 2, section 
        56, 
        is amended 
        to read: 
           Subd. 2.  Any two or more statutory or home rule charter 
        cities, counties, school districts, or instrumentalities thereof 
        which together have more than 100 employees may jointly 
        self-insure for any employee health benefits including long-term 
        disability, but not for employee life benefits, subject to the 
        same requirements as an individual self-insurer under 
        subdivision 1.  Self-insurance pools under this section are 
        subject to section 62L.045.  A self-insurance pool established 
        and operated by one or more service cooperatives governed by 
        section 123.582 to provide coverage described in this 
        subdivision qualifies under this subdivision.  The commissioner 
        of commerce may adopt rules pursuant to chapter 14, providing 
        standards or guidelines for the operation and administration of 
        self-insurance pools. 
           Sec. 3.  Minnesota Statutes 1994, section 471.98, 
        subdivision 3, as amended by Laws 1995, chapter 256, section 19, is 
        amended 
        to read: 
           Subd. 3.  [POOL.] "Pool" means any self-insurance fund or 
        agreement for the reciprocal assumption of risk established by 
        or among two or more political subdivisions for coverage of 
        their respective risks including, but not limited to, the pools 
        described in section 471.982, subdivision 3.  Except in 
        connection with provisions in sections 471.981 and 471.982 that 
        relate to bonding, "pool" does not include a self-insurance pool 
        for employee health benefits under section 471.617. 
           Sec. 4.  [SMALL SELF-INSURED POLITICAL SUBDIVISION POOLS.] 
           Self-insurance pools under Minnesota Statutes, section 
        471.617, subdivision 2, having fewer than 1,500 enrollees as of 
        March 1, 1996, shall become subject to Minnesota Statutes, 
        chapter 62L, effective January 1, 1998. 
           Sec. 5.  [EFFECTIVE DATE.] 
           Sections 1 to 3 are effective January 1, 1997, and apply to 
        coverage issued; renewed; or continued as defined in Minnesota 
        Statutes, section 60A.02, subdivision 2a; on or after that date. 
           Presented to the governor April 4, 1996 
           Signed by the governor April 11, 1996, 11:58 a.m.

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