1.1 	A bill for an act
1.2 	relating to insurance; regulating continuation coverage for life insurance; 
1.3 	authorizing the use of certain mortality tables to calculate reserves for certain 
1.4 	life policies; regulating life insurance policy illustrations and interest rate 
1.5 	disclosures; requiring auto insurers to notify the commissioner of decision to 
1.6 	withdraw from the market; regulating certain notices of cancellation and certain 
1.7 	policy renewals; modifying a definition; amending Minnesota Statutes 2006, 
1.8 	sections 60A.351; 61A.092, subdivision 6; 61A.25, subdivision 4; 65B.17, by 
1.9 	adding a subdivision; 72A.52, subdivision 1; 72B.02, subdivision 7; proposing 
1.10 	coding for new law in Minnesota Statutes, chapter 61A; repealing Minnesota 
1.11 	Statutes 2006, section 45.025, subdivisions 1, 2, 3, 4, 5, 6, 8, 9, 10; Minnesota 
1.12 	Rules, parts 2790.1750; 2790.1751.
1.13 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.14 	Section 1. Minnesota Statutes 2006, section 60A.351, is amended to read:
1.15 	60A.351 RENEWAL OF INSURANCE POLICY WITH ALTERED RATES.
1.16 	If an insurance company licensed to do business in this state offers or purports to 
1.17 	offer to renew any commercial liability and/or property insurance policy at less favorable 
1.18 	terms as to the dollar amount of coverage or deductibles, higher rates, and/or higher rating 
1.19 	plan, the new terms, the new rates and/or rating plan may take effect on the renewal date 
1.20 	of the policy if the insurer has sent to the policyholder notice of the new terms, new rates 
1.21 	and/or rating plan at least 6030 days prior to the expiration date. If the insurer has not so 
1.22 	notified the policyholder, the policyholder may elect to cancel the renewal policy within 
1.23 	the 60-day period after receipt of the notice. Earned premium for the period of coverage, 
1.24 	if any, shall be calculated pro rata upon the prior rate. This section does not apply to 
1.25 	ocean marine insurance, accident and health insurance, reinsurance, and coverage under 
1.26 	the federal Terrorism Risk Insurance Act.
2.1 	This section does not apply if the change relates to guide "a" rates or excess rates 
2.2 	also known as "consent to rates" or if there has been any change in the risk insured.

2.3 	Sec. 2. Minnesota Statutes 2006, section 61A.092, subdivision 6, is amended to read:
2.4 		Subd. 6.Application. This section applies to a policy, certificate of insurance, 
2.5 	or similar evidence of coverage issued to a Minnesota resident or issued to provide 
2.6 	coverage to a Minnesota resident. This section does not apply to: (1) a certificate of 
2.7 	insurance or similar evidence of coverage that meets the conditions of section 61A.093, 
2.8 	subdivision 2; or (2) a group life insurance policy that contains a provision permitting the 
2.9 	certificate holder, upon termination or layoff from employment, to retain the coverage 
2.10 	provided under the employer's group policy or another group policy offered by the insurer 
2.11 	by paying premiums directly to the insurer, provided that the employer shall give the 
2.12 	employee notice of the employee's and each related certificate holder's right to continue 
2.13 	the insurance by paying premiums directly to the insurer. The insurer may reserve the 
2.14 	right to increase premium rates after the first 18 months of continued coverage provided 
2.15 	for under clause (2). A related certificate holder is an insured spouse or dependent child of 
2.16 	the employee. Upon termination of this group policy or at the option of the insured who 
2.17 	has continued coverage under clause (2), each covered employee, spouse, and dependent 
2.18 	child is entitled to have issued to them a life conversion policy as prescribed in section 
2.19 	61A.09, subdivision 1, paragraph (h). 

2.20 	Sec. 3. Minnesota Statutes 2006, section 61A.25, subdivision 4, is amended to read:
2.21 		Subd. 4.Reserve valuation of life insurance and endowment benefits; modified 
2.22 	premiums. (a) Except as otherwise provided in paragraph (b) and subdivisions 4a and 7, 
2.23 	reserves according to the commissioners reserve valuation method, for the life insurance 
2.24 	and endowment benefits of policies providing for a uniform amount of insurance and 
2.25 	requiring the payment of uniform premiums shall be the excess, if any, of the present value 
2.26 	at the date of valuation of future guaranteed benefits provided for by the policies over 
2.27 	the then present value of any future modified net premiums therefor. The modified net 
2.28 	premiums for a policy shall be the uniform percentage of the respective contract premiums 
2.29 	for the benefits that the present value, at the date of issue of the policy, of all the modified 
2.30 	net premiums shall be equal to the sum of the then present value of the benefits provided 
2.31 	for by the policy and the excess of clause (1) over clause (2) as follows:
2.32 	(1) a net level annual premium equal to the present value, at the date of issue, of the 
2.33 	benefits provided for after the first policy year, divided by the present value at the date of 
2.34 	issue of an annuity of one per annum payable on the first and each subsequent anniversary 
3.1 	of the policy on which a premium falls due; but the net level annual premium shall not 
3.2 	exceed the net level annual premium on the 19 year premium whole life plan for insurance 
3.3 	of the same amount at an age one year higher than the age at issue of the policy;
3.4 	(2) a net one year term premium for the benefits provided for in the first policy year.
3.5 	(b) For a life insurance policy issued on or after January 1, 1985, for which the 
3.6 	contract premium in the first policy year exceeds that of the second year and for which 
3.7 	no comparable additional benefit is provided in the first year for the excess and which 
3.8 	provides an endowment benefit or a cash surrender value or a combination thereof in an 
3.9 	amount greater than the excess premium, the reserve according to the commissioners 
3.10 	reserve valuation method as of a policy anniversary occurring on or before the assumed 
3.11 	ending date defined herein as the first policy anniversary on which the sum of any 
3.12 	endowment benefit and any cash surrender value then available is greater than the excess 
3.13 	premium shall, except as otherwise provided in subdivision 7, be the greater of the reserve 
3.14 	as of the policy anniversary calculated as described in paragraph (a) and the reserve as 
3.15 	of the policy anniversary calculated as described in that paragraph, but with the value 
3.16 	defined in clause (1) of that paragraph being reduced by 15 percent of the amount of the 
3.17 	excess first year premium; all present values of benefits and premiums being determined 
3.18 	without reference to premiums or benefits provided for by the policy after the assumed 
3.19 	ending date; the policy being assumed to mature on that date as an endowment; and the 
3.20 	cash surrender value provided on that date being considered as an endowment benefit. 
3.21 	In making the above comparison the mortality and interest bases stated in subdivisions 
3.22 	3 and 3b shall be used.
3.23 	(c) Reserves according to the commissioners reserve valuation method for (1) life 
3.24 	insurance policies providing for a varying amount of insurance or requiring the payment 
3.25 	of varying premiums, (2) group annuity and pure endowment contracts purchased under 
3.26 	a retirement plan or plan of deferred compensation, established or maintained by an 
3.27 	employer, including but not limited to a partnership or sole proprietorship, or by an 
3.28 	employee organization, or by both, other than a plan providing individual retirement 
3.29 	accounts or individual retirement annuities under Section 408 of the Internal Revenue 
3.30 	Code, as amended, (3) disability and accidental death benefits in all policies and contracts, 
3.31 	and (4) all other benefits, except life insurance and endowment benefits in life insurance 
3.32 	policies and benefits provided by all other annuity and pure endowment contracts, shall be 
3.33 	calculated by a method consistent with the principles of paragraphs (a) and (b), except 
3.34 	that any extra premiums charged because of impairments or special hazards shall be 
3.35 	disregarded in the determination of modified net premiums.
4.1 	(d) For a universal life insurance policy that guarantees coverage to remain in 
4.2 	force as long as the accumulation of premiums paid satisfies a secondary guarantee 
4.3 	requirement, reserves according to the commissioners reserve valuation method may be 
4.4 	calculated using a lapse assumption only in accordance with and in the circumstances 
4.5 	described in the National Association of Insurance Commissioners' accounting practices 
4.6 	and procedures manual for policies issued on or after January 1, 2007, and on or before 
4.7 	December 31, 2010.

4.8 	Sec. 4. [61A.257] PREFERRED MORTALITY TABLES FOR USE IN 
4.9 	DETERMINING MINIMUM RESERVE LIABILITIES.
4.10 		Subdivision 1.Definitions. (a) For the purposes of this section only, the following 
4.11 	terms have the meanings given them.
4.12 	(b) "2001 CSO Mortality Table" means that mortality table, consisting of separate 
4.13 	rates of mortality for male and female lives, developed by the American Academy of 
4.14 	Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the 
4.15 	Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and 
4.16 	adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in 
4.17 	the Proceedings of the NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO 
4.18 	Preferred Class Structure Mortality Table defined in paragraph (b). Unless the context 
4.19 	indicates otherwise, the "2001 CSO Mortality Table" includes both the ultimate form of 
4.20 	that table and the select and ultimate form of that table and includes both the smoker and 
4.21 	nonsmoker mortality tables and the composite mortality tables. It also includes both the 
4.22 	age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables 
4.23 	in the 2001 CSO Mortality Table include the following:
4.24 	(1) "2001 CSO Mortality Table (F)" means that mortality table consisting of the rates 
4.25 	of mortality for female lives from the 2001 CSO Mortality Table;
4.26 	(2) "2001 CSO Mortality Table (M)" means that mortality table consisting of the 
4.27 	rates of mortality for male lives from the 2001 CSO Mortality Table;
4.28 	(3) "composite mortality tables" means mortality tables with rates of mortality that 
4.29 	do not distinguish between smokers and nonsmokers; and
4.30 	(4) "smoker and nonsmoker mortality tables" means mortality tables with separate 
4.31 	rates of mortality for smokers and nonsmokers.
4.32 	(c) "2001 CSO Preferred Class Structure Mortality Table" means mortality tables 
4.33 	with separate rates of mortality for Super Preferred Nonsmokers, Preferred Nonsmokers, 
4.34 	Residual Standard Nonsmokers, Preferred Smokers, and Residual Standard Smoker splits 
4.35 	of the 2001 CSO Nonsmoker and Smoker Tables as adopted by the NAIC at the September 
5.1 	2006 national meeting and published in the NAIC Proceedings (3rd Quarter 2006). Unless 
5.2 	the context indicates otherwise, the "2001 CSO Preferred Class Structure Mortality Table" 
5.3 	includes both the ultimate form of that table and the select and ultimate form of that 
5.4 	table, the smoker and nonsmoker mortality tables, both the male and female mortality 
5.5 	tables and the gender composite mortality tables, and both the age-nearest-birthday and 
5.6 	age-last-birthday bases of the mortality table.
5.7 	(d) "Statistical agent" means an entity with proven systems for protecting the 
5.8 	confidentiality of individual insured and insurer information; demonstrated resources 
5.9 	for and history of ongoing electronic communications and data transfer ensuring data 
5.10 	integrity with insurers, which are its members or subscribers; and a history of and means 
5.11 	for aggregation of data and accurate promulgation of the experience modifications in a 
5.12 	timely manner.
5.13 		Subd. 2.2001 CSO Preferred Class Structure Table. At the election of the 
5.14 	insurer, for each calendar year of issue, for any one or more specified plans of insurance 
5.15 	and subject to satisfying the conditions stated in this section, the 2001 CSO Preferred 
5.16 	Class Structure Mortality Table may be substituted in place of the 2001 CSO Smoker or 
5.17 	Nonsmoker Mortality Table as the minimum valuation standard under section 61A.25 for 
5.18 	policies issued on or after January 1, 2007. No such election must be made until the 
5.19 	insurer demonstrates at least 20 percent of the business to be valued on this table is in one 
5.20 	or more of the preferred classes. A table from the 2001 CSO Preferred Class Structure 
5.21 	Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to the requirements 
5.22 	of this section, will be treated as part of the 2001 CSO Mortality Table only for purposes 
5.23 	of reserve valuation pursuant to section 61A.25 and Minnesota Rules, chapter 2748.
5.24 		Subd. 3.Conditions. (a) For each plan of insurance with separate rates for preferred 
5.25 	and standard nonsmoker lives, an insurer may use the Super Preferred Nonsmoker, 
5.26 	Preferred Nonsmoker, and Residual Standard Nonsmoker Tables to substitute for the 
5.27 	Nonsmoker Mortality Table found in the 2001 CSO Mortality Table to determine minimum 
5.28 	reserves. At the time of election and annually thereafter, except for business valued under 
5.29 	the Residual Standard Nonsmoker Table, the qualified actuary shall certify that:
5.30 	(1) the present value of death benefits over the next ten years after the valuation date, 
5.31 	using the anticipated mortality experience without recognition of mortality improvement 
5.32 	beyond the valuation date for each class, is less than the present value of death benefits 
5.33 	using the valuation basic table corresponding to the valuation table being used for that 
5.34 	class; and
5.35 	(2) the present value of death benefits over the future life of the contracts, using 
5.36 	anticipated mortality experience without recognition of mortality improvement beyond 
6.1 	the valuation date for each class, is less than the present value of death benefits using the 
6.2 	valuation basic table corresponding to the valuation table being used for that class.
6.3 	(b) For each plan of insurance with separate rates for preferred and standard smoker 
6.4 	lives, an insurer may use the Preferred Smoker and Residual Standard Smoker Tables to 
6.5 	substitute for the Smoker Mortality Table found in the 2001 CSO Mortality Table to 
6.6 	determine minimum reserves. At the time of election and annually thereafter, for business 
6.7 	valued under the Preferred Smoker Table, the qualified actuary shall certify that:
6.8 	(1) the present value of death benefits over the next ten years after the valuation date, 
6.9 	using the anticipated mortality experience without recognition of mortality improvement 
6.10 	beyond the valuation date for each class, is less than the present value of death benefits 
6.11 	using the Preferred Smoker Valuation Basic Table corresponding to the valuation table 
6.12 	being used for that class; and
6.13 	(2) the present value of death benefits over the future life of the contracts, using 
6.14 	anticipated mortality experience without recognition of mortality improvement beyond 
6.15 	the valuation date for each class, is less than the present value of death benefits using the 
6.16 	Preferred Smoker Valuation Basic Table.
6.17 	(c) Unless exempted by the commissioner, every authorized insurer using the 2001 
6.18 	CSO Preferred Class Structure Table shall annually file with the commissioner, the 
6.19 	NAIC, or a statistical agent designated by the NAIC and acceptable to the commissioner, 
6.20 	statistical reports showing mortality and such other information as the commissioner may 
6.21 	deem necessary or expedient for the administration of the provisions of this section. The 
6.22 	form of the reports shall be established by the commissioner or the commissioner may 
6.23 	require the use of a form established by the NAIC or by a statistical agent designated by 
6.24 	the NAIC and acceptable to the commissioner.

6.25 	Sec. 5. [61A.70] APPLICABILITY AND SCOPE.
6.26 	Sections 61A.70 to 61A.745 apply to all group and individual life insurance policies 
6.27 	and certificates except:
6.28 	(1) variable life insurance;
6.29 	(2) individual and group annuity contracts;
6.30 	(3) credit life insurance; or
6.31 	(4) life insurance policies with no illustrated death benefits on any individual 
6.32 	exceeding $10,000.

6.33 	Sec. 6. [61A.705] DEFINITIONS.
6.34 	For the purposes of sections 61A.70 to 61A.745:
7.1 	(a) "Actuarial Standards Board" means the board established by the American 
7.2 	Academy of Actuaries to develop and promulgate standards of actuarial practice.
7.3 	(b) "Contract premium" means the gross premium that is required to be paid under 
7.4 	a fixed premium policy, including the premium for a rider for which benefits are shown 
7.5 	in the illustration.
7.6 	(c) "Currently payable scale" means a scale of nonguaranteed elements in effect for 
7.7 	a policy form as of the preparation date of the illustration or declared to become effective 
7.8 	within the next 95 days.
7.9 	(d) "Disciplined current scale" means a scale of nonguaranteed elements constituting 
7.10 	a limit on illustrations currently being illustrated by an insurer that is reasonably based 
7.11 	on actual recent historical experience, as certified annually by an illustration actuary 
7.12 	designated by the insurer. Further guidance in determining the disciplined current scale 
7.13 	as contained in standards established by the Actuarial Standards Board may be relied 
7.14 	upon if the standards:
7.15 	(1) are consistent with all provisions of sections 61A.70 to 61A.745;
7.16 	(2) limit a disciplined current scale to reflect only actions that have already been 
7.17 	taken or events that have already occurred;
7.18 	(3) do not permit a disciplined current scale to include any projected trends of 
7.19 	improvements in experience or any assumed improvements in experience beyond the 
7.20 	illustration date; and
7.21 	(4) do not permit assumed expenses to be less than minimum assumed expenses.
7.22 	(e) "Generic name" means a short title descriptive of the policy being illustrated such 
7.23 	as "whole life," "term life," or "flexible premium adjustable life."
7.24 	(f) "Guaranteed elements" and "nonguaranteed elements" are defined as follows:
7.25 	(1) "guaranteed elements" means the premiums, benefits, values, credits, or charges 
7.26 	under a policy of life insurance that are guaranteed and determined at issue; and
7.27 	(2) "nonguaranteed elements" means the premiums, benefits, values, credits, or 
7.28 	charges under a policy of life insurance that are not guaranteed or not determined at issue.
7.29 	(g) "Illustrated scale" means a scale of nonguaranteed elements currently being 
7.30 	illustrated that is not more favorable to the policy owner than the lesser of:
7.31 	(1) the disciplined current scale; or
7.32 	(2) the currently payable scale.
7.33 	(h) "Illustration" means a presentation or depiction that includes nonguaranteed 
7.34 	elements of a policy of life insurance over a period of years and that is one of the three 
7.35 	types defined in clauses (1) to (3):
8.1 	(1) "basic illustration" means a ledger or proposal used in the sale of a life insurance 
8.2 	policy that shows both guaranteed and nonguaranteed elements;
8.3 	(2) "supplemental illustration" means an illustration furnished in addition to a basic 
8.4 	illustration that meets the applicable requirements of sections 61A.70 to 61A.745, and that 
8.5 	may be presented in a format differing from the basic illustration, but may only depict a 
8.6 	scale of nonguaranteed elements that is permitted in a basic function; and
8.7 	(3) "in-force illustration" means an illustration furnished at any time after the policy 
8.8 	that it depicts has been in force for one year or more.
8.9 	(i) "Illustration actuary" means an actuary meeting the requirements of section 11 
8.10 	who certifies to illustrations based on the standard of practice adopted by the Actuarial 
8.11 	Standards Board.
8.12 	(j) "Lapse-supported illustration" means an illustration of a policy form failing 
8.13 	the test of self-supporting as defined in sections 61A.70 to 61A.745, under a modified 
8.14 	persistency rate assumption using persistency rates underlying the disciplined current 
8.15 	scale for the first five years and 100 percent policy persistency thereafter.
8.16 	(k)(1) "Minimum assumed expenses" means the minimum expenses that may be 
8.17 	used in the calculation of the disciplined current scale for a policy form. The insurer 
8.18 	may choose to designate each year the method of determining assumed expenses for all 
8.19 	policy forms from the following:
8.20 	(i) fully allocated expenses;
8.21 	(ii) marginal expenses; and
8.22 	(iii) a generally recognized expense table based on fully allocated expenses 
8.23 	representing a significant portion of insurance companies and approved by the National 
8.24 	Association of Insurance Commissioners or by the commissioner.
8.25 	(2) Marginal expenses may be used only if greater than a generally recognized 
8.26 	expense table. If no generally recognized expense table is approved, fully allocated 
8.27 	expenses must be used.
8.28 	(l) "Nonterm group life" means a group policy or individual policies of life insurance 
8.29 	issued to members of an employer group or other permitted group where:
8.30 	(1) every plan of coverage was selected by the employer or other group 
8.31 	representative;
8.32 	(2) some portion of the premium is paid by the group or through payroll deduction; 
8.33 	and
8.34 	(3) group underwriting or simplified underwriting is used.
8.35 	(m) "Policy owner" means the owner named in the policy or the certificate holder in 
8.36 	the case of a group policy.
9.1 	(n) "Premium outlay" means the amount of premium assumed to be paid by the 
9.2 	policy owner or other premium payer out-of-pocket.
9.3 	(o) "Self-supporting illustration" means an illustration of a policy form for which it 
9.4 	can be demonstrated that, when using experience assumptions underlying the disciplined 
9.5 	current scale, for all illustrated points in time on or after the 15th policy anniversary or the 
9.6 	20th policy anniversary for second-or-later-to-die policies (or upon policy expiration if 
9.7 	sooner), the accumulated value of all policy cash flows equals or exceeds the total policy 
9.8 	owner value available. For this purpose, policy owner value will include cash surrender 
9.9 	values and any other illustrated benefit amounts available at the policy owner's election.

9.10 	Sec. 7. [61A.71] POLICIES TO BE ILLUSTRATED.
9.11 	(a) Each insurer marketing policies to which sections 61A.70 to 61A.745 are 
9.12 	applicable shall notify the commissioner whether a policy form is to be marketed with 
9.13 	or without an illustration. For all policy forms being actively marketed on the effective 
9.14 	date of sections 61A.70 to 61A.745, the insurer shall identify in writing those forms and 
9.15 	whether or not an illustration will be used with them. For policy forms filed after the 
9.16 	effective date of sections 61A.70 to 61A.745, the identification must be made at the time 
9.17 	of filing. Any previous identification may be changed by notice to the commissioner.
9.18 	(b) If the insurer identifies a policy form as one to be marketed without an 
9.19 	illustration, any use of an illustration for any policy using that form prior to the first 
9.20 	policy anniversary is prohibited.
9.21 	(c) If a policy form is identified by the insurer as one to be marketed with an 
9.22 	illustration, a basic illustration prepared and delivered in accordance with sections 
9.23 	61A.70 to 61A.745 is required, except that a basic illustration need not be provided to 
9.24 	individual members of a group or to individuals insured under multiple lives coverage 
9.25 	issued to a single applicant unless the coverage is marketed to these individuals. The 
9.26 	illustration furnished an applicant for a group life insurance policy or policies issued to a 
9.27 	single applicant on multiple lives may be either an individual or composite illustration 
9.28 	representative of the coverage on the lives of member of the group or the multiple lives 
9.29 	covered.
9.30 	(d) Potential enrollees of nonterm group life subject to this regulation shall be 
9.31 	furnished a quotation with the enrollment materials. The quotation must show potential 
9.32 	policy values for sample ages and policy years on a guaranteed and nonguaranteed basis 
9.33 	appropriate to the group and the coverage. This quotation must not be considered an 
9.34 	illustration for purposes of sections 61A.70 to 61A.745, but all information provided shall 
9.35 	be consistent with the illustrated scale. A basic illustration must be provided at delivery of 
10.1 	the certificate to enrollees for nonterm group life who enroll for more than the minimum 
10.2 	premium necessary to provide pure death benefit protection. In addition, the insurer shall 
10.3 	make a basic illustration available to any nonterm group life enrollee who requests it.

10.4 	Sec. 8. [61A.715] GENERAL RULES AND PROHIBITIONS.
10.5 	(a) An illustration used in the sale of a life insurance policy must satisfy the 
10.6 	applicable requirements of sections 61A.70 to 61A.745, be clearly labeled "life insurance 
10.7 	illustration," and contain the following basic information:
10.8 	(1) name of insurer;
10.9 	(2) name and business address of producer or insurer's authorized representative, if 
10.10 	any;
10.11 	(3) name, age, and sex of proposed insured, except where a composite illustration is 
10.12 	permitted under sections 61A.70 to 61A.745;
10.13 	(4) underwriting or rating classification upon which the illustration is based;
10.14 	(5) generic name of policy, the company product name, if different, and form 
10.15 	number;
10.16 	(6) initial death benefit; and
10.17 	(7) dividend option election or application of nonguaranteed elements, if applicable.
10.18 	(b) When using an illustration in the sale of a life insurance policy, an insurer or 
10.19 	its producers or other authorized representatives shall not:
10.20 	(1) represent the policy as anything other than a life insurance policy;
10.21 	(2) use or describe nonguaranteed elements in a manner that is misleading or has the 
10.22 	capacity or tendency to mislead;
10.23 	(3) state or imply that the payment or amount of nonguaranteed elements is 
10.24 	guaranteed;
10.25 	(4) use an illustration that does not comply with the requirements of sections 61A.70 
10.26 	to 61A.745;
10.27 	(5) use an illustration that at any policy duration depicts policy performance more 
10.28 	favorable to the policy owner than that produced by the illustrated scale of the insurer 
10.29 	whose policy is being illustrated;
10.30 	(6) provide an applicant with an incomplete illustration;
10.31 	(7) represent in any way that premium payments will not be required for each year 
10.32 	of the policy in order to maintain the illustrated death benefits, unless that is the fact;
10.33 	(8) use the term "vanish" or "vanishing premium," or a similar term that implies the 
10.34 	policy becomes paid up, to describe a plan for using nonguaranteed elements to pay a 
10.35 	portion of future premiums;
11.1 	(9) except for policies that can never develop nonforfeiture values, use an illustration 
11.2 	that is "lapse-supported"; or
11.3 	(10) use an illustration that is not "self-supporting."
11.4 	(c) If an interest rate used to determine the illustrated nonguaranteed elements is 
11.5 	shown, it must not be greater than the earned interest rate underlying the disciplined 
11.6 	current scale.

11.7 	Sec. 9. [61A.72] STANDARDS FOR BASIC ILLUSTRATIONS.
11.8 		Subdivision 1.Format.  A basic illustration must conform with the following 
11.9 	requirements:
11.10 	(1) the illustration must be labeled with the date on which it was prepared;
11.11 	(2) each page, including any explanatory notes or pages, must be numbered and 
11.12 	show its relationship to the total number of pages in the illustration (e.g., the fourth page 
11.13 	of a seven-page illustration must be labeled "page 4 of 7 pages");
11.14 	(3) the assumed dates of payment receipt and benefit payout within a policy year 
11.15 	must be clearly identified;
11.16 	(4) if the age of the proposed insured is shown as a component of the tabular detail, 
11.17 	it must be issue age plus the number of years the policy is assumed to have been in force;
11.18 	(5) the assumed payments on which the illustrated benefits and values are based 
11.19 	must be identified as premium outlay or contract premium, as applicable. For policies that 
11.20 	do not require a specific contract premium, the illustrated payments must be identified 
11.21 	as premium outlay;
11.22 	(6) guaranteed death benefits and values available upon surrender, if any, for the 
11.23 	illustrated premium outlay or contract premium must be shown and clearly labeled 
11.24 	guaranteed;
11.25 	(7) if the illustration shows any nonguaranteed elements, they cannot be based on a 
11.26 	scale more favorable to the policy owner than the insurer's illustrated scale at any duration. 
11.27 	These elements must be clearly labeled nonguaranteed;
11.28 	(8) the guaranteed elements, if any, must be shown before corresponding 
11.29 	nonguaranteed elements and must be specifically referred to on any page of an illustration 
11.30 	that shows or describes only the nonguaranteed elements (e.g., "see page one for 
11.31 	guaranteed elements");
11.32 	(9) the account or accumulation value of a policy, if shown, must be identified by the 
11.33 	name this value is given in the policy being illustrated and shown in close proximity to the 
11.34 	corresponding value available upon surrender;
12.1 	(10) the value available upon surrender must be identified by the name this value 
12.2 	is given in the policy being illustrated and must be the amount available to the policy 
12.3 	owner in a lump sum after deduction of surrender charges, policy loans, and policy loan 
12.4 	interest, as applicable;
12.5 	(11) illustrations may show policy benefits and values in graphic or chart form 
12.6 	in addition to the tabular form;
12.7 	(12) any illustration of nonguaranteed elements shall be accompanied by a statement 
12.8 	indicating that:
12.9 	(i) the benefits and values are not guaranteed;
12.10 	(ii) the assumptions on which they are based are subject to change by the insurer; and
12.11 	(iii) actual results may be more or less favorable;
12.12 	(13) if the illustration shows that the premium payer may have the option to allow 
12.13 	policy charges to be paid using nonguaranteed values, the illustration must clearly disclose 
12.14 	that a charge continues to be required and that, depending on actual results, the premium 
12.15 	payer may need to continue or resume premium outlays. Similar disclosure must be made 
12.16 	for premium outlay of lesser amounts or shorter durations than the contract premium. If a 
12.17 	contract premium is due, the premium outlay display must not be left blank or show zero 
12.18 	unless accompanied by an asterisk or similar mark to draw attention to the fact that the 
12.19 	policy is not paid up; and
12.20 	(14) if the applicant plans to use dividends or policy values, guaranteed or 
12.21 	nonguaranteed, to pay all or a portion of the contract premium or policy charges, or for 
12.22 	any other purpose, the illustration may reflect those plans and the impact on future policy 
12.23 	benefits and values.
12.24 		Subd. 2.Narrative summary.  A basic illustration must include the following:
12.25 	(1) a brief description of the policy being illustrated, including a statement that it 
12.26 	is a life insurance policy;
12.27 	(2) a brief description of the premium outlay or contract premium, as applicable, 
12.28 	for the policy. For a policy that does not require payment of a specific contract premium, 
12.29 	the illustration shall show the premium outlay that must be paid to guarantee coverage 
12.30 	for the term of the contract, subject to maximum premiums allowable to qualify as a life 
12.31 	insurance policy under the applicable provisions of the Internal Revenue Code;
12.32 	(3) a brief description of any policy features, riders, or options, guaranteed or 
12.33 	nonguaranteed, shown in the basic illustration and the impact they may have on the 
12.34 	benefits and values of the policy;
12.35 	(4) identification and a brief definition of column headings and key terms used in 
12.36 	the illustration; and
13.1 	(5) a statement containing in substance the following: "This illustration assumes 
13.2 	that the currently illustrated nonguaranteed elements will continue unchanged for all 
13.3 	years shown. This is not likely to occur, and actual results may be more or less favorable 
13.4 	than those shown."
13.5 		Subd. 3.Numeric summary. (a) Following the narrative summary, a basic 
13.6 	illustration must include a numeric summary of the death benefits and values and the 
13.7 	premium outlay and contract premium, as applicable. For a policy that provides for a 
13.8 	contract premium, the guaranteed death benefits and values must be based on the contract 
13.9 	premium. This summary must be shown for at least policy years five, ten, and 20 and at 
13.10 	age 70, if applicable, on the three bases shown in clauses (1) to (3). For multiple life 
13.11 	policies the summary must show policy years five, ten, 20, and 30:
13.12 	(1) policy guarantees;
13.13 	(2) insurer's illustrated scale; and
13.14 	(3) insurer's illustrated scale used but with the nonguaranteed elements reduced 
13.15 	as follows:
13.16 	(i) dividends at 50 percent of the dividends contained in the illustrated scale used;
13.17 	(ii) nonguaranteed credited interest at rates that are the average of the guaranteed 
13.18 	rates and the rates contained in the illustrated scale used; and
13.19 	(iii) all nonguaranteed charges, including but not limited to term insurance charges, 
13.20 	mortality, and expense charges at rates that are the average of the guaranteed rates and the 
13.21 	rates contained in the illustrated scale used.
13.22 	(b) In addition, if coverage would cease prior to policy maturity or age 100, the year 
13.23 	in which coverage ceases must be identified for each of the three bases.
13.24 		Subd. 4.Statements.  (a) Statements substantially similar to paragraphs (b) and (c) 
13.25 	must be included on the same page as the numeric summary and signed by the applicant or 
13.26 	the policy owner in the case of an illustration provided at time of delivery, as required 
13.27 	in sections 61A.70 to 61A.745.
13.28 	(b) A statement to be signed and dated by the applicant or policy owner reading as 
13.29 	follows: "I have received a copy of this illustration and understand that any nonguaranteed 
13.30 	elements illustrated are subject to change and could be either higher or lower. The agent 
13.31 	has told me they are not guaranteed."
13.32 	(c) A statement to be signed and dated by the insurance producer or other authorized 
13.33 	representative of the insurer reading as follows: "I certify that this illustration has been 
13.34 	presented to the applicant and that I have explained that any nonguaranteed elements 
13.35 	illustrated are subject to change. I have made no statements that are inconsistent with 
13.36 	the illustration."
14.1 		Subd. 5.Tabular detail.  (a) A basic illustration must include the following for at 
14.2 	least each policy year from one to ten and for every fifth policy year thereafter ending at 
14.3 	age 100, policy maturity or final expiration; and except for term insurance beyond the 20th 
14.4 	year, for any year in which the premium outlay and contract premium, if applicable, is 
14.5 	subject to change:
14.6 	(1) the premium outlay and mode the applicant plans to pay and the contract 
14.7 	premium, as applicable;
14.8 	(2) the corresponding guaranteed death benefit, as provided in the policy; and
14.9 	(3) the corresponding guaranteed value available upon surrender, as provided 
14.10 	in the policy.
14.11 	(b) For a policy that provides for a contract premium, the guaranteed death benefit 
14.12 	and value available upon surrender must correspond to the contract premium.
14.13 	(c) Nonguaranteed elements may be shown if described in the contract. In the case 
14.14 	of an illustration for a policy on which the insurer intends to credit terminal dividends, 
14.15 	they may be shown if the insurer's current practice is to pay terminal dividends. If any 
14.16 	nonguaranteed elements are shown they must be down at the same durations as the 
14.17 	corresponding guaranteed elements, if any. If no guaranteed benefit or value is available 
14.18 	at any duration for which a nonguaranteed benefit or value is shown, a zero must be 
14.19 	displayed in the guaranteed column.

14.20 	Sec. 10. [61A.725] STANDARDS FOR SUPPLEMENTAL ILLUSTRATIONS.
14.21 	(a) A supplemental illustration may be provided so long as:
14.22 	(1) it is appended to, accompanied by, or preceded by a basic illustration that 
14.23 	complies with sections 61A.70 to 61A.745;
14.24 	(2) the nonguaranteed elements shown are not more favorable to the policy owner 
14.25 	than the corresponding elements based on the scale used in the basic illustration.
14.26 	(3) it contains the same statement required of a basic illustration that nonguaranteed 
14.27 	elements are not guaranteed; and
14.28 	(4) for a policy that has a contract premium, the contract premium underlying the 
14.29 	supplemental illustration is equal to the contract premium shown in the basic illustration. 
14.30 	For policies that do not require a contract premium, the premium outlay underlying 
14.31 	the supplemental illustration must be equal to the premium outlay shown in the basic 
14.32 	illustration.
14.33 	(b) The supplemental illustration must include a notice referring to the basic 
14.34 	illustration for guaranteed elements and other important information.

15.1 	Sec. 11. [61A.73] DELIVERY OF ILLUSTRATION AND RECORD 
15.2 	RETENTION.
15.3 	(a)(1) If a basic illustration is used by an insurance producer or other authorized 
15.4 	representative of the insurer in the sale of a life insurance policy and the policy is applied 
15.5 	for as illustrated, a copy of that illustration, signed in accordance with sections 61A.70 to 
15.6 	61A.745, must be submitted to the insurer at the time of policy application. A copy also 
15.7 	must be provided to the applicant.
15.8 	(2) If the policy is issued other than as applied for, a revised basic illustration 
15.9 	conforming to the policy as issued must be sent with the policy. The revised illustration 
15.10 	must conform to the requirements of sections 61A.70 to 61A.745, must be labeled 
15.11 	"Revised Illustration," and must be signed and dated by the applicant or policy owner and 
15.12 	producer or other authorized representative of the insurer no later than the time the policy 
15.13 	is delivered. A copy must be provided to the insurer and the policy owner.
15.14 	(b)(1) If no illustration is used by an insurance producer or other authorized 
15.15 	representative in the sale of a life insurance policy or if the policy is applied for other 
15.16 	than as illustrated, the producer or representative shall certify to that effect in writing 
15.17 	on a form provided by the insurer. On the same form the applicant shall acknowledge 
15.18 	that no illustration conforming to the policy applied for was provided and shall further 
15.19 	acknowledge an understanding that an illustration conforming to the policy as issued will 
15.20 	be provided no later than at the time of policy delivery. This form shall be submitted to the 
15.21 	insurer at the time of policy application.
15.22 	(2) If the policy is issued, a basic illustration conforming to the policy as issued must 
15.23 	be sent with the policy and signed no later than the time the policy is delivered. A copy 
15.24 	must be provided to the insurer and the policy owner.
15.25 	(c) If the basic illustration or revised illustration is sent to the applicant or policy 
15.26 	owner by mail from the insurer, it must include instructions for the applicant or policy 
15.27 	owner to sign the duplicate copy of the numeric summary page of the illustration for the 
15.28 	policy issued and return the signed copy to the insurer. The insurer's obligation under this 
15.29 	paragraph must be satisfied if it can demonstrate that it has made a diligent effort to secure 
15.30 	a signed copy of the numeric summary page. The requirement to make a diligent effort 
15.31 	must be deemed satisfied if the insurer includes in the mailing a self-addressed postage 
15.32 	prepaid envelope with instructions for the return of the signed numeric summary page.
15.33 	(d) A copy of the basic illustration and a revised basic illustration, if any, signed as 
15.34 	applicable, along with any certification that either no illustration was used or that the policy 
15.35 	was applied for other than as illustrated, must be retained by the insurer until three years 
15.36 	after the policy is no longer in force. A copy need not be retained if no policy is issued.

16.1 	Sec. 12. [61A.735] ANNUAL REPORT; NOTICE TO POLICY OWNERS.
16.2 	(a) In the case of a policy designated as one for which illustrations will be used, the 
16.3 	insurer shall provide each policy owner with an annual report on the status of the policy 
16.4 	that must contain at least the information in this section.
16.5 	(b) For universal life policies, the report must include the following:
16.6 	(1) the beginning and end date of the current report period;
16.7 	(2) the policy value at the end of the previous report period and at the end of the 
16.8 	current report period;
16.9 	(3) the total amounts that have been credited or debited to the policy value during 
16.10 	the current report period, identifying each by type (e.g., interest, mortality, expense, and 
16.11 	riders);
16.12 	(4) the current death benefit at the end of the current report period on each life 
16.13 	covered by the policy;
16.14 	(5) the net cash surrender value of the policy as of the end of the current report period;
16.15 	(6) the amount of outstanding loans, if any, as of the end of the current report period;
16.16 	(7) for fixed premium policies, assuming guaranteed interest, mortality, and expense 
16.17 	loads and continued scheduled premium payments, the policy's net cash surrender value 
16.18 	is such that it would not maintain insurance in force until the end of the next reporting 
16.19 	period, a notice to this effect must be included in the report; or
16.20 	(8) for flexible premium policies, assuming guaranteed interest, mortality, and 
16.21 	expense loads, the policy's net cash surrender value will not maintain insurance in force 
16.22 	until the end of the next reporting period unless further premium payments are made, a 
16.23 	notice to this effect must be included in the report.
16.24 	(b) For all other policies, the report must include where applicable:
16.25 	(1) current death benefit;
16.26 	(2) annual contract premium;
16.27 	(3) current cash surrender value;
16.28 	(4) current dividend;
16.29 	(5) application of current dividend; and
16.30 	(6) amount of outstanding loan.
16.31 	(c) Insurers writing life insurance policies that do not build nonforfeiture values shall 
16.32 	only be required to provide an annual report with respect to these policies for those years 
16.33 	when a change has been made to nonguaranteed policy elements by the insurer.
16.34 	(d) If the annual report does not include an in-force illustration, it must contain the 
16.35 	following notice displayed prominently: "IMPORTANT POLICY OWNER NOTICE: 
16.36 	You should consider requesting more detailed information about your policy to understand 
17.1 	how it may perform in the future. You should not consider replacement of your policy 
17.2 	or make changes in your coverage without requesting a current illustration. You may 
17.3 	annually request, without charge, such an illustration by calling [insurer's phone number], 
17.4 	writing to [insurer's name] at [insurer's address] or contacting your agent. If you do not 
17.5 	receive a current illustration of your policy within 30 days from your request, you should 
17.6 	contact your state insurance department." The insurer may vary the sequential order of the 
17.7 	methods for obtaining an in-force illustration.
17.8 	(e) Upon request of the policy owner, the insurer shall furnish an in-force illustration 
17.9 	of current and future benefits and values based on the insurer's present illustrated scale. 
17.10 	This illustration must comply with the requirements of sections 61A.715, paragraphs (a) 
17.11 	and (b), and 61A.72, subdivisions 1 and 5. No signature or other acknowledgment of 
17.12 	receipt of this illustration must be required.
17.13 	(f) If an adverse change in nonguaranteed elements that could affect the policy has 
17.14 	been made by the insurer since the last annual report, the annual report must contain a 
17.15 	notice of that fact and the nature of the change prominently displayed.

17.16 	Sec. 13. [61A.74] ANNUAL CERTIFICATIONS.
17.17 	(a) The board of directors of each insurer shall appoint one or more illustration 
17.18 	actuaries.
17.19 	(b) The illustration actuary shall certify that the disciplined current scale used in 
17.20 	illustrations is in conformity with the Actuarial Standard of Practice for Compliance with 
17.21 	the NAIC Model Regulation on Life Insurance Illustrations promulgated by the Actuarial 
17.22 	Standards Board, and that the illustrated scales used in insurer-authorized illustrations 
17.23 	meet the requirements of sections 61A.70 to 61A.745.
17.24 	(c) The illustration actuary shall:
17.25 	(1) be a member in good standing of the American Academy of Actuaries;
17.26 	(2) be familiar with the standard of practice regarding life insurance policy 
17.27 	illustrations;
17.28 	(3) not have been found by the commissioner, following appropriate notice and 
17.29 	hearing to have:
17.30 	(i) violated any provision of, or any obligation imposed by, the insurance law or 
17.31 	other law in the course of the actuary's dealings as an illustration actuary;
17.32 	(ii) been found guilty of fraudulent or dishonest practices;
17.33 	(iii) demonstrated the actuary's incompetence, lack of cooperation, or 
17.34 	untrustworthiness to act as an illustration actuary; or
18.1 	(iv) resigned or been removed as an illustration actuary within the past five years as 
18.2 	a result of acts or omissions indicated in any adverse report on examination or as a result 
18.3 	of a failure to adhere to generally acceptable actuarial standards;
18.4 	(4) not fail to notify the commissioner of any action taken by a commissioner of 
18.5 	another state similar to that under clause (3);
18.6 	(5) disclose in the annual certification whether, since the last certification, a currently 
18.7 	payable scale applicable for business issued within the previous five years and within 
18.8 	the scope of the certification has been reduced for reasons other than changes in the 
18.9 	experience factors underlying the disciplined current scale. If nonguaranteed elements 
18.10 	illustrated for new policies are not consistent with those illustrated for similar in-force 
18.11 	policies, this must be disclosed in the annual certification. If nonguaranteed elements 
18.12 	illustrated for both new and in-force policies are not consistent with the nonguaranteed 
18.13 	elements actually being paid, charged, or credited to the same or similar forms, this must 
18.14 	be disclosed in the annual certification; and
18.15 	(6) disclose in the annual certification the method used to allocate overhead expenses 
18.16 	for all illustrations:
18.17 	(i) fully allocated expenses;
18.18 	(ii) marginal expenses; or
18.19 	(iii) a generally recognized expense table based on fully allocated expenses 
18.20 	representing a significant portion of insurance companies and approved by the National 
18.21 	Association of Insurance Commissioners or by the commissioner.
18.22 	(d)(1) The illustration actuary shall file a certification with the board and with the 
18.23 	commissioner:
18.24 	(i) annually for all policy forms for which illustrations are used; and
18.25 	(ii) before a new policy form is illustrated.
18.26 	(2) If an error in a previous certification is discovered, the illustration actuary shall 
18.27 	notify the board of directors of the insurer and the commissioner promptly.
18.28 	(e) If an illustration actuary is unable to certify the scale for any policy form 
18.29 	illustration the insurer intends to use, the actuary shall notify the board of directors of the 
18.30 	insurer and the commissioner promptly of the actuary's inability to certify.
18.31 	(f) A responsible officer of the insurer, other than the illustration actuary, shall 
18.32 	certify annually:
18.33 	(1) that the illustration formats meet the requirements of sections 61A.70 to 61A.745 
18.34 	and that the scales used in insurer-authorized illustrations are those scales certified by the 
18.35 	illustration actuary; and
19.1 	(2) that the company has provided its agents with information about the expense 
19.2 	allocation method used by the company in its illustrations and disclosed as required in 
19.3 	paragraph (c), clause (6).
19.4 	(g) The annual certifications must be provided to the commissioner each year by a 
19.5 	date determined by the insurer.
19.6 	(h) If an insurer changes the illustration actuary responsible for all or a portion of the 
19.7 	company's policy forms, the insurer shall notify the commissioner of that fact promptly 
19.8 	and disclose the reason for the change.

19.9 	Sec. 14. [61A.745] PENALTIES.
19.10 	In addition to any other penalties provided by the laws of this state, an insurer or 
19.11 	producer that violates a requirement of sections 61A.70 to 61A.745 is guilty of a violation 
19.12 	of section 72A.20.

19.13 	Sec. 15. Minnesota Statutes 2006, section 65B.17, is amended by adding a subdivision 
19.14 	to read:
19.15 		Subd. 2a.Authorization to nonrenew. An insurer withdrawing from the market by 
19.16 	nonrenewing a line of business must notify the commissioner in writing at least 90 days 
19.17 	before termination of any policy is effective. The notice must contain the effective date of 
19.18 	the withdrawal plan, the number of policies affected, the reason for the withdrawal, and 
19.19 	the availability of coverage in the market.

19.20 	Sec. 16. Minnesota Statutes 2006, section 72A.52, subdivision 1, is amended to read:
19.21 		Subdivision 1.Contents. In addition to all other legal requirements a policy or 
19.22 	contract of insurance described in section 72A.51 shall show the name and address of the 
19.23 	insurer and the seller of the policy or contract and shall state, clearly and conspicuously 
19.24 	in boldface type of a minimum size of ten points, a right to cancel notice in which shall 
19.25 	include the following form or its equivalent: "RIGHT TO CANCEL. You may cancel this 
19.26 	policy by delivering or mailing a written notice or sending a telegram to (insert name and 
19.27 	mailing address of the insurer or the seller of the policy or contract) and by returning 
19.28 	the policy or contract before midnight of the tenth day after the date you receive the 
19.29 	policy. Notice given by mail and return of the policy or contract by mail are effective on 
19.30 	being postmarked, properly addressed and postage prepaid. The insurer must return all 
19.31 	payments made for this policy within ten days after it receives notice of cancellation 
19.32 	and the returned policy."
19.33 	(1) a minimum of ten days beginning on the date the policy is received by the owner; 
20.1 	(2) a minimum of 30 days beginning on the date the policy is received by the owner 
20.2 	if the policy is a replacement policy; 
20.3 	(3) a requirement for the return of the policy to the company or an agent of the 
20.4 	company;
20.5 	(4) a statement that the policy is considered void from the beginning and the parties 
20.6 	shall be in the same position as if no policy had been issued; and
20.7 	(5) a refund of all premiums paid, including any fees or charges, if the policy is 
20.8 	returned. 
20.9 	For variable annuity contracts issued pursuant to sections 61A.13 to 61A.21, this 
20.10 	notice shall be suitably modified so as to notify the purchaser that the purchaser is entitled 
20.11 	to a refund of the amount calculated in accordance with the provisions of section 72A.51, 
20.12 	subdivision 3. 

20.13 	Sec. 17. Minnesota Statutes 2006, section 72B.02, subdivision 7, is amended to read:
20.14 		Subd. 7.Staff adjuster. "Staff adjuster" means an adjuster who is a salaried 
20.15 	employee of an insurance company or an affiliate of an insurance company and who is 
20.16 	engaged in adjusting insured losses solely for that company or other companies under 
20.17 	common control or ownership.

20.18 	Sec. 18.  REPEALER.
 20.19 	(a) Minnesota Statutes 2006, section 45.025, subdivisions 1, 2, 3, 4, 5, 6, 8, 9, and 
20.20 	10, are repealed.
20.21 	(b) Minnesota Rules, parts 2790.1750; and 2790.1751, are repealed.