1.1                          A bill for an act 
  1.2             relating to insurance; regulating insurers, agents, 
  1.3             and coverages; modifying reporting requirements; 
  1.4             regulating the rehabilitation and liquidation of 
  1.5             insurers; modifying certain notice and disclosure 
  1.6             provisions; modifying certain definitions; making 
  1.7             technical changes; amending Minnesota Statutes 1998, 
  1.8             sections 60A.02, subdivision 1a, and by adding a 
  1.9             subdivision; 60A.052, subdivision 2, and by adding a 
  1.10            subdivision; 60A.06, subdivisions 1 and 2; 60A.075, by 
  1.11            adding a subdivision; 60A.092, subdivisions 6 and 11; 
  1.12            60A.10, subdivision 1; 60A.111, subdivision 1; 60A.13, 
  1.13            subdivision 1; 60A.16, subdivisions 2, 3, and 4; 
  1.14            60A.19, subdivision 1; 60A.32; 60B.21, subdivision 2; 
  1.15            60B.25; 60B.26, subdivision 1; 60B.39, subdivision 2; 
  1.16            60B.44, subdivisions 4, 6, and by adding subdivisions; 
  1.17            60D.20, subdivision 2; 60K.02, subdivision 1; 60K.03, 
  1.18            subdivisions 2 and 3; 60K.19, subdivision 8; 61A.276, 
  1.19            subdivision 2; 61A.60, subdivision 1; 61B.19, 
  1.20            subdivision 3; 62A.04, subdivision 3; 62A.135, 
  1.21            subdivision 5; 62A.50, subdivision 3; 62A.61; 62A.65, 
  1.22            subdivision 5; 62B.04, subdivision 2; 62D.12, 
  1.23            subdivision 2; 62E.02, subdivision 1; 62E.05, 
  1.24            subdivision 1; 62E.09; 62E.13, subdivisions 6 and 8; 
  1.25            62E.14, subdivision 2; 62E.15, subdivision 2; 62I.07, 
  1.26            subdivision 1; 62L.02, subdivision 24; 62L.03, 
  1.27            subdivision 5; 62L.05, subdivision 5; 62L.14, 
  1.28            subdivision 7; 62Q.185; 62S.01, subdivision 14; 
  1.29            62S.05, subdivision 2; 65A.01, subdivision 1; 65A.27, 
  1.30            subdivision 4; 65A.29, subdivision 4; 65B.02, 
  1.31            subdivision 2; 65B.44, subdivision 1; 65B.48, 
  1.32            subdivision 5; 72A.125, subdivision 3; 72A.20, 
  1.33            subdivision 29; 72B.04, subdivision 10; 79A.01, 
  1.34            subdivision 10, and by adding a subdivision; 79A.02, 
  1.35            subdivisions 1 and 4; 79A.03, subdivisions 6, 7, 9, 
  1.36            10, and by adding a subdivision; 79A.21, subdivision 
  1.37            2; 79A.23, subdivisions 1 and 2; and 256B.0644; 
  1.38            proposing coding for new law in Minnesota Statutes, 
  1.39            chapter 60B; repealing Minnesota Statutes 1998, 
  1.40            sections 60A.11, subdivision 24a; 60B.36; 60B.44, 
  1.41            subdivisions 3 and 5; 60K.08; 65A.29, subdivision 12; 
  1.42            and 79A.04, subdivision 8; Minnesota Rules, part 
  1.43            2780.0500, item C. 
  1.44  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.1      Section 1.  Minnesota Statutes 1998, section 60A.02, 
  2.2   subdivision 1a, is amended to read: 
  2.3      Subd. 1a.  [ASSOCIATION OR ASSOCIATIONS.] (a) "Association" 
  2.4   or "associations" means an organized body of people who have 
  2.5   some interest in common and that has at the onset a minimum of 
  2.6   100 persons; is organized and maintained in good faith for 
  2.7   purposes other than that of obtaining insurance; and has a 
  2.8   constitution and bylaws which provide that:  (1) the association 
  2.9   or associations hold regular meetings not less frequently than 
  2.10  annually to further purposes of the members; (2) except for 
  2.11  credit unions, the association or associations collect dues or 
  2.12  solicit contributions from members; (3) the members have voting 
  2.13  privileges and representation on the governing board and 
  2.14  committees, which provide the members with control of the 
  2.15  association including the purchase and administration of 
  2.16  insurance products offered to members; and (4) the members are 
  2.17  not, within the first 30 days of membership, directly solicited, 
  2.18  offered, or sold an insurance policy if the policy is available 
  2.19  as an association benefit. 
  2.20     (b) An association may apply to the commissioner for a 
  2.21  waiver of the 30-day waiting period to that association.  The 
  2.22  commissioner may grant the waiver upon a finding of ~~all~~ at least 
  2.23  three of the following:  (1) the association is in full 
  2.24  compliance with this subdivision; (2) sanctions have not been 
  2.25  imposed against the association as a result of significant 
  2.26  disciplinary action by the commissioner; and (3) at least 80 
  2.27  percent of the association's income comes from dues, 
  2.28  contributions, or sources other than income from the sale of 
  2.29  insurance; or (4) the association has been organized and 
  2.30  maintained for at least ten years. 
  2.31     Sec. 2.  Minnesota Statutes 1998, section 60A.02, is 
  2.32  amended by adding a subdivision to read: 
  2.33     Subd. 2b.  [FILED.] In cases where a law requires documents 
  2.34  to be filed with the commissioner, the documents will be 
  2.35  considered filed when they are received by the department of 
  2.36  commerce. 
  3.1      Sec. 3.  Minnesota Statutes 1998, section 60A.052, 
  3.2   subdivision 2, is amended to read: 
  3.3      Subd. 2.  [SUSPENSION OR REVOCATION OF AUTHORITY OR 
  3.4   CENSURE.] If the commissioner determines that one of the 
  3.5   conditions listed in subdivision 1 exists, the commissioner may 
  3.6   issue an order requiring the insurance company to show cause why 
  3.7   any or all of the following should not occur:  (1) revocation or 
  3.8   suspension of any or all certificates of authority granted to 
  3.9   the foreign or domestic insurance company or its agent; (2) 
  3.10  censuring of the insurance company; ~~or~~ (3) cancellation of all 
  3.11  or some of the company's insurance contracts then in force in 
  3.12  this state; or (4) the imposition of a civil penalty.  The order 
  3.13  shall be calculated to give reasonable notice of the time and 
  3.14  place for hearing thereon, and shall state the reasons for the 
  3.15  entry of the order.  All hearings shall be conducted in 
  3.16  accordance with chapter 14.  The insurer may waive its right to 
  3.17  the hearing.  If the insurer is under the supervision or control 
  3.18  of the insurance department of the insurer's state of domicile, 
  3.19  that insurance department, acting on behalf of the insurer, may 
  3.20  waive the insurer's right to the hearing.  After the hearing, 
  3.21  the commissioner shall enter an order disposing of the matter as 
  3.22  the facts require.  If the insurance company fails to appear at 
  3.23  a hearing after having been duly notified of it, the company 
  3.24  shall be considered in default, and the proceeding may be 
  3.25  determined against the company upon consideration of the order 
  3.26  to show cause, the allegations of which may be considered to be 
  3.27  true. 
  3.28     Sec. 4.  Minnesota Statutes 1998, section 60A.052, is 
  3.29  amended by adding a subdivision to read: 
  3.30     Subd. 4a.  [WITHDRAWAL OF INSURER FROM STATE.] No insurer 
  3.31  shall withdraw from this state until its direct liability to its 
  3.32  policyholders and obligees under all its insurance contracts 
  3.33  then in force in this state have been assumed by another 
  3.34  licensed insurer according to section 60A.09, subdivision 4a. 
  3.35     Sec. 5.  Minnesota Statutes 1998, section 60A.06, 
  3.36  subdivision 1, is amended to read: 
  4.1      Subdivision 1.  [STATUTORY LINES.] Insurance corporations 
  4.2   may be authorized to transact in any state or territory in the 
  4.3   United States, in the Dominion of Canada, and in foreign 
  4.4   countries, when specified in their charters or certificates of 
  4.5   incorporation, either as originally granted or as thereafter 
  4.6   amended, any of the following kinds of business, upon the stock 
  4.7   plan, or upon the mutual plan when the formation of such mutual 
  4.8   companies is otherwise authorized by law; and business trusts as 
  4.9   authorized by law of this state shall only be authorized to 
  4.10  transact in this state the following kind of business 
  4.11  hereinafter specified in clause (7) hereof when specified in 
  4.12  their "declaration of trust": 
  4.13     (1) To insure against loss or damage to property on land 
  4.14  and against loss of rents and rental values, leaseholds of 
  4.15  buildings, use and occupancy and direct or consequential loss or 
  4.16  damage caused by fire, smoke or smudge, water or other fluid or 
  4.17  substance, lightning, windstorm, tornado, cyclone, earthquake, 
  4.18  collapse and slippage, rain, hail, frost, snow, freeze, change 
  4.19  of temperature, weather or climatic conditions, excess or 
  4.20  deficiency of moisture, floods, the rising of waters, oceans, 
  4.21  lakes, rivers or their tributaries, bombardment, invasion, 
  4.22  insurrection, riot, civil war or commotion, military or usurped 
  4.23  power, electrical power interruption or electrical breakdown 
  4.24  from any cause, railroad equipment, motor vehicles or aircraft, 
  4.25  accidental injury to sprinklers, pumps, conduits or containers 
  4.26  or other apparatus erected for extinguishing fires, explosion, 
  4.27  whether fire ensues or not, except explosions on risks specified 
  4.28  in clause (3); provided, however, that there may be insured 
  4.29  hereunder the following:  (a) explosion of any kind originating 
  4.30  outside the insured building or outside of the building 
  4.31  containing the property insured, (b) explosion of pressure 
  4.32  vessels which do not contain steam or which are not operated 
  4.33  with steam coils or steam jackets; and (c) risks under home 
  4.34  owners multiple peril policies; 
  4.35     (2)(a) To insure vessels, freight, goods, wares, 
  4.36  merchandise, specie, bullion, jewels, profits, commissions, bank 
  5.1   notes, bills of exchange, and other evidences of debt, bottomry 
  5.2   and respondentia interest, and every insurance appertaining to 
  5.3   or connected with risks of transportation and navigation on and 
  5.4   under water, on land or in the air; 
  5.5      (b) To insure all personal property floater risks; 
  5.6      (3) To insure against any loss from either direct or 
  5.7   indirect damage to any property or interest of the assured or of 
  5.8   another, resulting from the explosion of or injury to (a) any 
  5.9   boiler, heater or other fired pressure vessel; (b) any unfired 
  5.10  pressure vessel; (c) pipes or containers connected with any of 
  5.11  said boilers or vessels; (d) any engine, turbine, compressor, 
  5.12  pump or wheel; (e) any apparatus generating, transmitting or 
  5.13  using electricity; (f) any other machinery or apparatus 
  5.14  connected with or operated by any of the previously named 
  5.15  boilers, vessels or machines; and including the incidental power 
  5.16  to make inspections of and to issue certificates of inspection 
  5.17  upon, any such boilers, apparatus, and machinery, whether 
  5.18  insured or otherwise; 
  5.19     (4) To make contracts of life and endowment insurance, to 
  5.20  grant, purchase, or dispose of annuities or endowments of any 
  5.21  kind; and, in such contracts, or in contracts supplemental 
  5.22  thereto to provide for additional benefits in event of death of 
  5.23  the insured by accidental means, total permanent disability of 
  5.24  the insured, or specific dismemberment or disablement suffered 
  5.25  by the insured, or acceleration of life or endowment or annuity 
  5.26  benefits in advance of the time they would otherwise be payable; 
  5.27     (5)(a) To insure against loss or damage by the sickness, 
  5.28  bodily injury or death by accident of the assured or dependents, 
  5.29  or those for whom the assured has assumed a portion of the 
  5.30  liability for the loss or damage, including liability for 
  5.31  payment of medical care costs or for provisions of medical care; 
  5.32     (b) To insure against the legal liability, whether imposed 
  5.33  by common law or by statute or assumed by contract, of employers 
  5.34  for the death or disablement of, or injury to, employees; 
  5.35     (6) To guarantee the fidelity of persons in fiduciary 
  5.36  positions, public or private, or to act as surety on official 
  6.1   and other bonds, and for the performance of official or other 
  6.2   obligations; 
  6.3      (7) To insure owners and others interested in real estate 
  6.4   against loss or damage, by reason of defective titles, 
  6.5   encumbrances, or otherwise; 
  6.6      (8) To insure against loss or damage by breakage of glass, 
  6.7   located or in transit; 
  6.8      (9)(a) To insure against loss by burglary, theft, or 
  6.9   forgery; 
  6.10     (b) To insure against loss of or damage to moneys, coins, 
  6.11  bullion, securities, notes, drafts, acceptance or any other 
  6.12  valuable paper or document, resulting from any cause, except 
  6.13  while in the custody or possession of and being transported by 
  6.14  any carrier for hire or in the mail; 
  6.15     (c) To insure individuals by means of an all risk type of 
  6.16  policy commonly known as the "personal property floater" against 
  6.17  any kind and all kinds of loss of or damage to, or loss of use 
  6.18  of, any personal property other than merchandise; 
  6.19     (d) To insure against loss or damage by water or other 
  6.20  fluid or substance; 
  6.21     (10) To insure against loss from death of domestic animals 
  6.22  and to furnish veterinary service; 
  6.23     (11) To guarantee merchants and those engaged in business, 
  6.24  and giving credit, from loss by reason of giving credit to those 
  6.25  dealing with them; this shall be known as credit insurance; 
  6.26     (12) To insure against loss or damage to automobiles or 
  6.27  other vehicles or aircraft and their contents, by collision, 
  6.28  fire, burglary, or theft, and other perils of operation, and 
  6.29  against liability for damage to persons, or property of others, 
  6.30  by collision with such vehicles or aircraft, and to insure 
  6.31  against any loss or hazard incident to the ownership, operation, 
  6.32  or use of motor or other vehicles or aircraft; 
  6.33     (13) To insure against liability for loss or damage to the 
  6.34  property or person of another caused by the insured or by those 
  6.35  for whom the insured is responsible, including insurance of 
  6.36  medical, hospital, surgical, funeral or other related expense of 
  7.1   the insured or other person injured, irrespective of legal 
  7.2   liability of the insured, when issued with or supplemental to 
  7.3   policies of liability insurance; 
  7.4      (14) To insure against loss of or damage to any property of 
  7.5   the insured, resulting from the ownership, maintenance or use of 
  7.6   elevators, except loss or damage by fire; 
  7.7      (15) To insure against attorneys fees, court costs, witness 
  7.8   fees and incidental expenses incurred in connection with the use 
  7.9   of the professional services of attorneys at law.  
  7.10     Sec. 6.  Minnesota Statutes 1998, section 60A.06, 
  7.11  subdivision 2, is amended to read: 
  7.12     Subd. 2.  [OTHER LINES.] Any insurance corporation or 
  7.13  association heretofore or hereafter licensed to transact within 
  7.14  the state any of the kinds or classes of insurance specifically 
  7.15  authorized under the laws of this state may, when authorized by 
  7.16  its charter, transact within and without the state any lines of 
  7.17  insurance germane to its charter powers and not specifically 
  7.18  provided for under the laws of this state when these lines, or 
  7.19  combinations of lines, of insurance are not in violation of the 
  7.20  constitution or the laws of the state and, in the opinion of the 
  7.21  commissioner, not contrary to public policy, provided the 
  7.22  company or association shall first obtain authority of the 
  7.23  commissioner and meet ~~such requirements as to~~ capital or 
  7.24  surplus~~, or both,~~ and other solvency and policy form 
  7.25  requirements as the commissioner shall prescribe.  These 
  7.26  additional hazards may be insured against by attachment to, or 
  7.27  in extension of, any policy which the company may be authorized 
  7.28  to issue under the laws of this state.  This subdivision shall 
  7.29  apply to companies operating upon the stock or mutual plan, 
  7.30  reciprocal or interinsurance exchanges.  
  7.31     Sec. 7.  Minnesota Statutes 1998, section 60A.075, is 
  7.32  amended by adding a subdivision to read: 
  7.33     Subd. 18.  [POSTCONVERSION ACQUISITION.] Prior to and for a 
  7.34  period of five years following the date when the distribution of 
  7.35  consideration to the eligible members in exchange for their 
  7.36  membership interests is completed under a plan of conversion 
  8.1   according to this section, no person other than the reorganized 
  8.2   company shall directly or indirectly acquire or offer to acquire 
  8.3   in any manner ownership or beneficial ownership of ten percent 
  8.4   or more of any class of voting security of the reorganized 
  8.5   company, or of any affiliate of the reorganized company which 
  8.6   controls, directly or indirectly, a majority of the voting power 
  8.7   of the reorganized company, without the prior approval of the 
  8.8   commissioner.  For the purposes of this subdivision, the terms 
  8.9   "affiliate" and "person" have the meanings given in section 
  8.10  60D.15, and the term "reorganized company" includes any 
  8.11  successor of the reorganized company. 
  8.12     Sec. 8.  Minnesota Statutes 1998, section 60A.092, 
  8.13  subdivision 6, is amended to read: 
  8.14     Subd. 6.  [SINGLE ASSUMING INSURER; TRUST FUND 
  8.15  REQUIREMENTS.] In the case of a single assuming insurer, the 
  8.16  trust shall consist of a trusteed account representing the 
  8.17  assuming insurer's liabilities attributable to business written 
  8.18  in the United States and, in addition, ~~the assuming insurer~~ 
  8.19  ~~shall maintain~~ a trusteed surplus of not less than $20,000,000 
  8.20  or an additional amount as the commissioner considers necessary. 
  8.21  The assuming insurer shall maintain ~~a~~ its surplus as regards 
  8.22  policyholders in an amount not less than $50,000,000 for 
  8.23  long-tail casualty reinsurers as provided under subdivision 3, 
  8.24  paragraph (a), clause (5). 
  8.25     Sec. 9.  Minnesota Statutes 1998, section 60A.092, 
  8.26  subdivision 11, is amended to read: 
  8.27     Subd. 11.  [REINSURANCE AGREEMENT REQUIREMENTS.] (a) If the 
  8.28  assuming insurer is not licensed or accredited to transact 
  8.29  insurance or reinsurance in this state, the credit authorized 
  8.30  under subdivisions 4 and 5 shall not be allowed unless the 
  8.31  assuming insurer agrees in the reinsurance agreements: 
  8.32     (1) that in the event of the failure of the assuming 
  8.33  insurer to perform its obligations under the terms of the 
  8.34  reinsurance agreement, the assuming insurer shall submit to the 
  8.35  jurisdiction of any court of competent jurisdiction in any state 
  8.36  of the United States, comply with all requirements necessary to 
  9.1   give the court jurisdiction, and abide by the final decision of 
  9.2   the court or of any appellate court in the event of an appeal; 
  9.3   and 
  9.4      (2) to designate the commissioner or a designated attorney 
  9.5   as its true and lawful attorney upon whom may be served any 
  9.6   lawful process in any action, suit, or proceeding instituted by 
  9.7   or on behalf of the ceding company. 
  9.8      (b) Paragraph (a) is not intended to conflict with or 
  9.9   override the obligation of the parties to a reinsurance 
  9.10  agreement to arbitrate their disputes, if an obligation to do so 
  9.11  is created in the agreement. 
  9.12     (c) Credit will not be granted, nor an asset or a reduction 
  9.13  from liability allowed, to a ceding insurer for reinsurance 
  9.14  effected with assuming insurers meeting the requirements of 
  9.15  subdivision 2, 3, 4, 5, 6, or 7, unless the reinsurance contract 
  9.16  provides that in the event of the insolvency of the ceding 
  9.17  insurer, the reinsurance will be payable under the contract 
  9.18  without diminution because of that insolvency. 
  9.19     Payments by the reinsurer must be made directly to the 
  9.20  ceding insurer or its receiver, except where the contract of 
  9.21  insurance or reinsurance specifically provides for another payee 
  9.22  for the reinsurance in the event of insolvency of the ceding 
  9.23  insurer according to the applicable requirements of statutes, 
  9.24  rules, or orders of the domiciliary state of the ceding insurer. 
  9.25     Sec. 10.  Minnesota Statutes 1998, section 60A.10, 
  9.26  subdivision 1, is amended to read: 
  9.27     Subdivision 1.  [DOMESTIC COMPANIES.] (1)  [DEPOSIT AS 
  9.28  SECURITY FOR ALL POLICYHOLDERS REQUIRED.] No company in this 
  9.29  state, other than farmers' mutual, or real estate title 
  9.30  insurance companies, shall do business in this state unless it 
  9.31  has on deposit with the commissioner, for the protection of both 
  9.32  its resident and nonresident policyholders, securities to an 
  9.33  amount, the actual market value of which, exclusive of interest, 
  9.34  shall never be less than ~~$200,000 until July 1, 1986, $300,000~~ 
  9.35  ~~until July 1, 1987, $400,000 until July 1, 1988, and~~ $500,000 ~~on~~ 
  9.36  ~~and after July 1, 1988~~ or one-half the applicable financial 
 10.1   requirement set forth in section 60A.07, whichever is less.  The 
 10.2   securities shall be retained under the control of the 
 10.3   commissioner as long as any policies of the depositing company 
 10.4   remain in force. 
 10.5      (2)  [SECURITIES DEFINED.] For the purpose of this 
 10.6   subdivision, the word "securities" means bonds or other 
 10.7   obligations of, or bonds or other obligations insured or 
 10.8   guaranteed by, the United States, any state of the United 
 10.9   States, any municipality of this state, or any agency or 
 10.10  instrumentality of the foregoing. 
 10.11     (3)  [PROTECTION OF DEPOSIT FROM LEVY.] No judgment 
 10.12  creditor or other claimant may levy upon any securities held on 
 10.13  deposit with, or for the account of, the commissioner.  Upon the 
 10.14  entry of an order by a court of competent jurisdiction for the 
 10.15  rehabilitation, liquidation or conservation of any depositing 
 10.16  company as provided in chapter 60B, that company's deposit 
 10.17  together with any accrued income thereon shall be transferred to 
 10.18  the commissioner as rehabilitator, liquidator, or conservator. 
 10.19     Sec. 11.  Minnesota Statutes 1998, section 60A.111, 
 10.20  subdivision 1, is amended to read: 
 10.21     Subdivision 1.  [REPORT.] Annually, or more frequently if 
 10.22  determined by the commissioner to be necessary for the 
 10.23  protection of policyholders, each foreign~~, alien~~ and domestic 
 10.24  insurance company other than a life insurance company shall 
 10.25  report to the commissioner the ratio of its qualified assets to 
 10.26  its required liabilities.  
 10.27     Sec. 12.  Minnesota Statutes 1998, section 60A.13, 
 10.28  subdivision 1, is amended to read: 
 10.29     Subdivision 1.  [ANNUAL STATEMENTS REQUIRED.] Every 
 10.30  insurance company, including fraternal benefit societies, and 
 10.31  reciprocal exchanges, doing business in this state, shall 
 10.32  ~~transmit to~~ file with the commissioner, annually, on or before 
 10.33  March 1, the appropriate verified National Association of 
 10.34  Insurance Commissioners' annual statement blank, prepared in 
 10.35  accordance with the association's instructions handbook and 
 10.36  following those accounting procedures and practices prescribed 
 11.1   by the association's accounting practices and procedures manual, 
 11.2   unless the commissioner requires or finds another method of 
 11.3   valuation reasonable under the circumstances.  Another method of 
 11.4   valuation permitted by the commissioner must be at least as 
 11.5   conservative as those prescribed in the association's manual.  
 11.6   All companies required to file an annual statement under this 
 11.7   subdivision ~~must~~ may also be required to file with the 
 11.8   commissioner and the National Association of Insurance 
 11.9   Commissioners a copy of their annual statement ~~on computer~~ 
 11.10  ~~diskette~~ in an electronic form prescribed by the commissioner.  
 11.11  All Minnesota domestic insurers required to file annual 
 11.12  statements under this subdivision must also file quarterly 
 11.13  statements with the commissioner for the first, second, and 
 11.14  third calendar quarter on or before 45 days after the end of the 
 11.15  applicable quarter, prepared in accordance with the 
 11.16  association's instruction handbook.  All companies required to 
 11.17  file quarterly statements under this subdivision ~~must also file~~ 
 11.18  ~~a copy of their quarterly statement on computer diskette~~ may 
 11.19  also be required to file with the commissioner and the National 
 11.20  Association of Insurance Commissioners in an electronic form 
 11.21  prescribed by the commissioner.  In addition, the commissioner 
 11.22  may require the filing of any other information determined to be 
 11.23  reasonably necessary for the continual enforcement of these 
 11.24  laws.  The statement may be limited to the insurer's business 
 11.25  and condition in the United States unless the commissioner finds 
 11.26  that the business conducted outside the United States may 
 11.27  detrimentally affect the interests of policyholders in this 
 11.28  state.  The statements shall also contain a verified schedule 
 11.29  showing all details required by law for assessment and 
 11.30  taxation.  The statement or schedules shall be in the form and 
 11.31  shall contain all matters the commissioner may prescribe, and it 
 11.32  may be varied as to different types of insurers so as to elicit 
 11.33  a true exhibit of the condition of each insurer. 
 11.34     Sec. 13.  Minnesota Statutes 1998, section 60A.16, 
 11.35  subdivision 2, is amended to read: 
 11.36     Subd. 2.  [PROCEDURE TO BE FOLLOWED.] (1) [~~AGREEMENT~~ PLAN 
 12.1   OF MERGER.] The merger or consolidation of insurance 
 12.2   corporations can be effected only as a result of a ~~joint~~ 
 12.3   ~~agreement entered into~~ plan of merger adopted, approved, and 
 12.4   filed as follows: 
 12.5      (a) ~~The board of directors of each of such insurance~~ 
 12.6   ~~corporations as desire to merge or consolidate may, by majority~~ 
 12.7   ~~vote, enter into a joint agreement signed by such directors and~~ 
 12.8   ~~prescribing~~ A resolution containing the plan of merger shall be 
 12.9   approved by the affirmative vote of a majority of the directors 
 12.10  of the board of each constituent corporation.  The plan of 
 12.11  merger shall prescribe the terms and conditions of merger or 
 12.12  consolidation, and the mode of carrying the same into effect, 
 12.13  with such other details and provisions as are deemed necessary.  
 12.14  In the case of merging or consolidating stock insurance 
 12.15  corporations or stock and mutual insurance corporations, 
 12.16  such ~~joint agreement~~ plan of merger may prescribe that stock of 
 12.17  one or more of such corporations shall be converted, in whole or 
 12.18  in part, into stock or other securities of a corporation which 
 12.19  is not a merging or consolidating corporation or into cash. 
 12.20     (b) The ~~agreement~~ plan of merger, or a summary of the plan 
 12.21  approved by the commissioner, shall be submitted to the 
 12.22  respective shareholders or members, as the case may be, of 
 12.23  each ~~of the merging or consolidating insurance~~ 
 12.24  ~~corporations~~ constituent corporation, for consideration at a 
 12.25  regular meeting or at a special meeting duly called for the 
 12.26  purpose of considering and acting upon the ~~agreement, and~~ 
 12.27  ~~if~~ plan.  Written notice of the meeting, which shall state that 
 12.28  the purpose of the meeting is to consider the proposed plan of 
 12.29  merger, shall be given to each shareholder or member entitled to 
 12.30  vote upon the plan of merger not less than 30 nor more than 60 
 12.31  days before the meeting.  The plan of merger must be approved by 
 12.32  the affirmative vote of the holders of two-thirds of the voting 
 12.33  power of the shareholders or members present or represented at 
 12.34  the meeting of each ~~such insurance~~ constituent corporation ~~shall~~ 
 12.35  ~~vote for the adoption of the agreement, then that fact shall be~~ 
 12.36  ~~certified on the agreement by the secretary of each insurance~~ 
 13.1   ~~corporation, and the agreement so adopted and certified shall be~~ 
 13.2   ~~signed and acknowledged by the president and secretary of each~~ 
 13.3   ~~of said insurance corporations~~; provided, however, that in the 
 13.4   case of a merger, except one ~~whereby~~ in which any shares of the 
 13.5   surviving insurance corporation are to be converted into shares 
 13.6   or other securities of another corporation or into cash, the 
 13.7   agreement need not be submitted to the shareholders or members 
 13.8   of that one of the insurance corporations into which it has been 
 13.9   agreed the others shall be merged~~, but the agreement may be~~ 
 13.10  ~~signed and acknowledged by the president and secretary of such~~ 
 13.11  ~~insurance corporation at the direction of the board of~~ 
 13.12  ~~directors~~.  Upon receiving the approval of the shareholders or 
 13.13  members of each constituent corporation, articles of merger 
 13.14  shall be prepared that contain the plan of merger and a 
 13.15  statement that the plan has been approved by each corporation 
 13.16  under this section. 
 13.17     (c) The ~~agreement so adopted, certified and acknowledged~~ 
 13.18  articles of merger shall be delivered to the commissioner of 
 13.19  commerce, who, if the ~~agreement~~ plan of merger is reasonable and 
 13.20  if the provisions thereof providing for any transfer of assets 
 13.21  and assumption of liabilities are fair and equitable to the 
 13.22  claimants and policyholders, shall place a certificate of 
 13.23  approval on the ~~agreement~~ articles of merger and shall file 
 13.24  the ~~agreement~~ articles in the commissioner's office, and ~~a copy~~ 
 13.25  copies of the ~~agreement~~ articles, certified by the commissioner 
 13.26  of commerce, shall be filed for record in the office of the 
 13.27  secretary of state and ~~in the offices of the county recorders of~~ 
 13.28  ~~the counties in this state in which any of the corporate parties~~ 
 13.29  ~~to the agreement have their home or principal offices, and of~~ 
 13.30  ~~any counties in which any of the corporate parties have land,~~ 
 13.31  ~~title to which will be transferred as a result of the merger or~~ 
 13.32  ~~consolidation~~ delivered to the surviving corporation or its 
 13.33  legal representative. 
 13.34     (2) [ARTICLES OF INCORPORATION OF NEW COMPANY.] (a) If the 
 13.35  ~~joint agreement~~ plan of merger is for a consolidation into a new 
 13.36  insurance corporation to be formed under any law or laws of this 
 14.1   state, articles of incorporation for such new insurance 
 14.2   corporation shall be prepared and delivered to the commissioner 
 14.3   of commerce together with the ~~agreement~~ articles of merger as 
 14.4   provided in clause (1) hereof. 
 14.5      (b) Such articles shall be prepared, executed, approved, 
 14.6   filed and recorded in the form and manner prescribed in, or 
 14.7   applicable to, the particular law or laws under which the new 
 14.8   insurance corporation is to be formed. 
 14.9      (3) [ABANDONMENT.] A proposed merger or consolidation may 
 14.10  be abandoned at any time prior to approval by the commissioner 
 14.11  under the provision for abandonment, if any, set forth in the 
 14.12  plan of merger. 
 14.13     (4) [MUTUAL INSURANCE HOLDING COMPANIES.] In the case of a 
 14.14  merger of two mutual insurance holding companies under section 
 14.15  60A.077, subdivision 2, paragraph (c), the procedures set forth 
 14.16  in this subdivision and subdivisions 1, 3, 4, and 6 shall apply, 
 14.17  subject to the following: 
 14.18     (a) the plan of merger must be fair and reasonable to the 
 14.19  members of each constituent corporation; 
 14.20     (b) no member of either constituent corporation on the 
 14.21  effective date of the merger shall lose membership solely on 
 14.22  account of the merger; 
 14.23     (c) membership and voting rights in each respective 
 14.24  constituent corporation for purposes of the meeting of the 
 14.25  members held to consider the plan of merger shall be determined 
 14.26  in accordance with the articles and bylaws of that constituent 
 14.27  corporation as of a record date established in the plan of 
 14.28  merger; and 
 14.29     (d) the commissioner may require changes to the plan or 
 14.30  require certain undertakings from the surviving corporation to 
 14.31  assure compliance with this clause (4). 
 14.32     Sec. 14.  Minnesota Statutes 1998, section 60A.16, 
 14.33  subdivision 3, is amended to read: 
 14.34     Subd. 3.  [CONSUMMATION OF MERGER.] (1) A merger of one or 
 14.35  more insurance corporations into a domestic insurance 
 14.36  corporation shall be effective when the ~~joint agreement has~~ 
 15.1   articles of merger have been approved and filed in the office of 
 15.2   the commissioner of commerce, or at a later date specified in 
 15.3   the articles of merger. 
 15.4      (2) A consolidation of insurance corporations into a new 
 15.5   domestic insurance corporation shall be effective when the ~~joint~~ 
 15.6   ~~agreement~~ articles of merger and the new articles of 
 15.7   incorporation have been approved and filed in the office of the 
 15.8   commissioner of commerce, or at a later date specified in the 
 15.9   plan of merger. 
 15.10     (3) A merger or consolidation of one or more domestic 
 15.11  insurance corporations into a foreign insurance corporation 
 15.12  shall be effective according to the provisions of law of the 
 15.13  jurisdiction in which ~~such~~ the foreign insurance corporation was 
 15.14  formed, but not until the ~~joint agreement has been adopted,~~ 
 15.15  ~~certified and acknowledged, and copies thereof approved and~~ 
 15.16  articles of merger have been filed in accordance with 
 15.17  subdivision 2, clause (1). 
 15.18     Sec. 15.  Minnesota Statutes 1998, section 60A.16, 
 15.19  subdivision 4, is amended to read: 
 15.20     Subd. 4.  [EFFECT OF MERGER OR CONSOLIDATION.] Upon the 
 15.21  consummation of the merger or consolidation as provided in 
 15.22  subdivision 3, the effect of ~~such~~ the merger or consolidation 
 15.23  shall be: 
 15.24     (1) That the several corporate parties to the ~~joint~~ 
 15.25  ~~agreement~~ plan of merger shall be one insurance corporation, 
 15.26  which shall be 
 15.27     (a) in the case of a merger, that one of the constituent 
 15.28  insurance corporations into which it has been agreed the others 
 15.29  shall be merged and which shall survive the merger for that 
 15.30  purpose, or 
 15.31     (b) in the case of a consolidation, the new insurance 
 15.32  corporation into which it has been agreed the others shall be 
 15.33  consolidated; 
 15.34     (2) The separate existence of the constituent insurance 
 15.35  corporations shall cease, except that of the surviving insurance 
 15.36  corporation in the case of a merger; 
 16.1      (3) The surviving or new insurance corporation, as the case 
 16.2   may be, shall possess all the rights, privileges and franchises 
 16.3   possessed by each of the former insurance corporations so merged 
 16.4   or consolidated except that such surviving or new corporation 
 16.5   shall not thereby acquire authority to engage in any insurance 
 16.6   business or exercise any right which an insurance corporation 
 16.7   may not be formed under the laws of this state to engage in or 
 16.8   exercise; 
 16.9      (4) All the property, real, personal and mixed, of each of 
 16.10  the constituent insurance corporations, and all debts due on 
 16.11  whatever account to any of them, including without limitation 
 16.12  subscriptions for shares, premiums on existing policies, and 
 16.13  other choses in action belonging to any of them, shall be taken 
 16.14  and be deemed to be transferred to and invested in such 
 16.15  surviving or new insurance corporation, as the case may be, 
 16.16  without further act or deed; 
 16.17     (5) The surviving or new insurance corporation shall be 
 16.18  responsible for all the liabilities and obligations of each of 
 16.19  the insurance corporations merged or consolidated, in accordance 
 16.20  with the terms of the agreement for merger or consolidation; but 
 16.21  the rights of the creditors of the constituent insurance 
 16.22  corporations, or of any persons dealing with such insurance 
 16.23  corporations shall not be impaired by such merger or 
 16.24  consolidation, and any claim existing or action or proceeding 
 16.25  pending by or against any of the constituent insurance 
 16.26  corporations may be prosecuted to judgment as if the merger or 
 16.27  consolidation had not taken place, or the surviving or new 
 16.28  insurance corporation may be proceeded against or substituted in 
 16.29  its place. 
 16.30     Sec. 16.  Minnesota Statutes 1998, section 60A.19, 
 16.31  subdivision 1, is amended to read: 
 16.32     Subdivision 1.  [REQUIREMENTS.] Any insurance company of 
 16.33  another state, upon compliance with all laws governing such 
 16.34  corporations in general and with the foregoing provisions so far 
 16.35  as applicable and the following requirements, shall be admitted 
 16.36  to do business in this state: 
 17.1      (1) It shall deposit with the commissioner a certified copy 
 17.2   of its charter or certificate of incorporation and its bylaws, 
 17.3   and a statement showing its financial condition and business, 
 17.4   verified by its president and secretary or other proper 
 17.5   officers; 
 17.6      (2) It shall furnish the commissioner satisfactory evidence 
 17.7   of its legal organization and authority to transact the proposed 
 17.8   business and that its capital, assets, deposits with the proper 
 17.9   official of its own state, amount insured, number of risks, 
 17.10  reserve and other securities, and guaranties for protection of 
 17.11  policyholders, creditors, and the public, comply with those 
 17.12  required of like domestic companies; 
 17.13     (3) By a duly executed instrument filed in the office of 
 17.14  the commissioner, it shall appoint the commissioner and 
 17.15  successors in office its lawful attorneys in fact and therein 
 17.16  irrevocably agree that legal process in any action or proceeding 
 17.17  against it may be served upon them with the same force and 
 17.18  effect as if personally served upon it, so long as any of its 
 17.19  liability exists in this state; 
 17.20     (4) It shall appoint, as its agents in this state, 
 17.21  residents thereof, and obtain from the commissioner a license to 
 17.22  transact business; 
 17.23     (5) Regardless of what lines of business an insurer of 
 17.24  another state is seeking to write in this state, the lines of 
 17.25  business it is licensed to write in its state of incorporation 
 17.26  shall be the basis for establishing the financial requirements 
 17.27  it must meet for admission in this state or for continuance of 
 17.28  its authority to write business in this state; 
 17.29     (6) No insurer of another state shall be admitted to do 
 17.30  business in this state for a line of business that it is not 
 17.31  authorized to write in its state of incorporation, unless the 
 17.32  statutes of that state prohibit all insurers from writing that 
 17.33  line of business. 
 17.34     Sec. 17.  Minnesota Statutes 1998, section 60A.32, is 
 17.35  amended to read: 
 17.36     60A.32 [RATE FILING FOR CROP HAIL INSURANCE.] 
 18.1      An insurer issuing policies of insurance against crop 
 18.2   damage by hail in this state shall file its insurance rates with 
 18.3   the commissioner.  The insurance rates must be filed before 
 18.4   ~~March 1~~ February 1 of the year in which a policy is issued. 
 18.5      Sec. 18.  Minnesota Statutes 1998, section 60B.21, 
 18.6   subdivision 2, is amended to read: 
 18.7      Subd. 2.  [FIXING OF RIGHTS.] Upon issuance of the order, 
 18.8   the rights and liabilities of any such insurer and of its 
 18.9   creditors, policyholders, shareholders, members, and all other 
 18.10  persons interested in its estate are fixed as of the date of 
 18.11  filing of the petition for liquidation, except as provided in 
 18.12  sections 60B.22, 60B.25, clause (22), and 60B.39. 
 18.13     Sec. 19.  Minnesota Statutes 1998, section 60B.25, is 
 18.14  amended to read: 
 18.15     60B.25 [POWERS OF LIQUIDATOR.] 
 18.16     The liquidator shall report to the court monthly, or at 
 18.17  other intervals specified by the court, on the progress of the 
 18.18  liquidation in whatever detail the court orders.  The liquidator 
 18.19  shall coordinate activities with those of each guaranty 
 18.20  association having an interest in the liquidation and shall 
 18.21  submit a report detailing how coordination will be achieved to 
 18.22  the court for its approval within 30 days following appointment, 
 18.23  or within the time which the court, in its discretion, may 
 18.24  establish.  Subject to the court's control, the liquidator may: 
 18.25     (1) Appoint a special deputy to act under sections 60B.01 
 18.26  to 60B.61 and determine the deputy's compensation.  The special 
 18.27  deputy shall have all powers of the liquidator granted by this 
 18.28  section.  The special deputy shall serve at the pleasure of the 
 18.29  liquidator. 
 18.30     (2) Appoint or engage employees and agents, actuaries, 
 18.31  accountants, appraisers, consultants, and other personnel deemed 
 18.32  necessary to assist in the liquidation without regard to chapter 
 18.33  14. 
 18.34     (3) Fix the compensation of persons under clause (2), 
 18.35  subject to the control of the court. 
 18.36     (4) Defray all expenses of taking possession of, 
 19.1   conserving, conducting, liquidating, disposing of, or otherwise 
 19.2   dealing with the business and property of the insurer.  If the 
 19.3   property of the insurer does not contain sufficient cash or 
 19.4   liquid assets to defray the costs incurred, the liquidator may 
 19.5   advance the costs so incurred out of the appropriation made to 
 19.6   the department of commerce.  Any amounts so paid shall be deemed 
 19.7   expense of administration and shall be repaid for the credit of 
 19.8   the department of commerce out of the first available money of 
 19.9   the insurer. 
 19.10     (5) Hold hearings, subpoena witnesses and compel their 
 19.11  attendance, administer oaths, examine any person under oath and 
 19.12  compel any person to subscribe to testimony after it has been 
 19.13  correctly reduced to writing, and in connection therewith 
 19.14  require the production of any books, papers, records, or other 
 19.15  documents which the liquidator deems relevant to the inquiry. 
 19.16     (6) Collect all debts and money due and claims belonging to 
 19.17  the insurer, wherever located, and for this purpose institute 
 19.18  timely action in other jurisdictions, in order to forestall 
 19.19  garnishment and attachment proceedings against such debts; do 
 19.20  such other acts as are necessary or expedient to collect, 
 19.21  conserve, or protect its assets or property, including sell, 
 19.22  compound, compromise, or assign for purposes of collection, upon 
 19.23  such terms and conditions as the liquidator deems best, any bad 
 19.24  or doubtful debts; and pursue any creditor's remedies available 
 19.25  to enforce claims. 
 19.26     (7) Conduct public and private sales of the property of the 
 19.27  insurer in a manner prescribed by the court. 
 19.28     (8) Use assets of the estate to transfer coverage 
 19.29  obligations to a solvent assuming insurer, if the transfer can 
 19.30  be arranged without prejudice to applicable priorities under 
 19.31  section 60B.44. 
 19.32     (9) Acquire, hypothecate, encumber, lease, improve, sell, 
 19.33  transfer, abandon, or otherwise dispose of or deal with any 
 19.34  property of the insurer at its market value or upon such terms 
 19.35  and conditions as are fair and reasonable, except that no 
 19.36  transaction involving property the market value of which exceeds 
 20.1   $10,000 shall be concluded without express permission of the 
 20.2   court.  The liquidator may also execute, acknowledge, and 
 20.3   deliver any deeds, assignments, releases, and other instruments 
 20.4   necessary or proper to effectuate any sale of property or other 
 20.5   transaction in connection with the liquidation.  In cases where 
 20.6   real property sold by the liquidator is located other than in 
 20.7   the county where the liquidation is pending, the liquidator 
 20.8   shall cause to be filed with the county recorder for the county 
 20.9   in which the property is located a certified copy of the order 
 20.10  of appointment. 
 20.11     (10) Borrow money on the security of the insurer's assets 
 20.12  or without security and execute and deliver all documents 
 20.13  necessary to that transaction for the purpose of facilitating 
 20.14  the liquidation. 
 20.15     (11) Enter into such contracts as are necessary to carry 
 20.16  out the order to liquidate, and affirm or disavow any contracts 
 20.17  to which the insurer is a party. 
 20.18     (12) Continue to prosecute and institute in the name of the 
 20.19  insurer or in the liquidator's own name any suits and other 
 20.20  legal proceedings, in this state or elsewhere, and abandon the 
 20.21  prosecution of claims the liquidator deems unprofitable to 
 20.22  pursue further.  If the insurer is dissolved under section 
 20.23  60B.23, the liquidator may apply to any court in this state or 
 20.24  elsewhere for leave to be substituted for the insurer as 
 20.25  plaintiff. 
 20.26     (13) Prosecute any action which may exist in behalf of the 
 20.27  creditors, members, policyholders, or shareholders of the 
 20.28  insurer against any officer of the insurer, or any other person. 
 20.29     (14) Remove any records and property of the insurer to the 
 20.30  offices of the commissioner or to such other place as is 
 20.31  convenient for the purposes of efficient and orderly execution 
 20.32  of the liquidation. 
 20.33     (15) Deposit in one or more banks in this state such sums 
 20.34  as are required for meeting current administration expenses and 
 20.35  dividend distributions. 
 20.36     (16) Deposit with the state board of investment for 
 21.1   investment pursuant to section 11A.24, all sums not currently 
 21.2   needed, unless the court orders otherwise. 
 21.3      (17) File any necessary documents for record in the office 
 21.4   of any county recorder or record office in this state or 
 21.5   elsewhere where property of the insurer is located. 
 21.6      (18) Assert all defenses available to the insurer as 
 21.7   against third persons, including statutes of limitations, 
 21.8   statutes of frauds, and the defense of usury.  A waiver of any 
 21.9   defense by the insurer after a petition for liquidation has been 
 21.10  filed shall not bind the liquidator. 
 21.11     (19) Exercise and enforce all the rights, remedies, and 
 21.12  powers of any creditor, shareholder, policyholder, or member, 
 21.13  including any power to avoid any transfer or lien that may be 
 21.14  given by law and that is not included within sections 60B.30 and 
 21.15  60B.32. 
 21.16     (20) Intervene in any proceeding wherever instituted that 
 21.17  might lead to the appointment of a receiver or trustee, and act 
 21.18  as the receiver or trustee whenever the appointment is offered. 
 21.19     (21) Enter into agreements with any receiver or 
 21.20  commissioner of any other state relating to the rehabilitation, 
 21.21  liquidation, conservation, or dissolution of an insurer doing 
 21.22  business in both states. 
 21.23     (22) Collect from an insured any unpaid earned premium or 
 21.24  retrospectively rated premium due the insurer based on the 
 21.25  termination of coverage under section 60B.22.  Premium on surety 
 21.26  business is considered earned at inception if no policy term can 
 21.27  be determined.  All other premium will be considered earned and 
 21.28  will be prorated over the determined policy term, regardless of 
 21.29  any provision in the bond, guaranty, contract, or other 
 21.30  agreement. 
 21.31     ~~(22)~~ (23) Exercise all powers now held or hereafter 
 21.32  conferred upon receivers by the laws of this state not 
 21.33  inconsistent with sections 60B.01 to 60B.61. 
 21.34     ~~(23)~~ (24) The enumeration in this section of the powers and 
 21.35  authority of the liquidator is not a limitation, nor does it 
 21.36  exclude the right to do such other acts not herein specifically 
 22.1   enumerated or otherwise provided for as are necessary or 
 22.2   expedient for the accomplishment of or in aid of the purpose of 
 22.3   liquidation. 
 22.4      ~~(24)~~ (25) The power of the liquidator of a health 
 22.5   maintenance organization includes the power to transfer coverage 
 22.6   obligations to a solvent and voluntary health maintenance 
 22.7   organization, insurer, or nonprofit health service plan, and to 
 22.8   assign provider contracts of the insolvent health maintenance 
 22.9   organization to an assuming health maintenance organization, 
 22.10  insurer, or nonprofit health service plan permitted to enter 
 22.11  into such agreements.  The liquidator is not required to meet 
 22.12  the notice requirements of section 62D.121.  Transferees of 
 22.13  coverage obligations or provider contracts shall have no 
 22.14  liability to creditors or obligees of the health maintenance 
 22.15  organization except those liabilities expressly assumed. 
 22.16     Sec. 20.  Minnesota Statutes 1998, section 60B.26, 
 22.17  subdivision 1, is amended to read: 
 22.18     Subdivision 1.  [NOTICE REQUIRED.] (a) The liquidator shall 
 22.19  give notice of the liquidation order as soon as possible by 
 22.20  first class mail and either by telegram or telephone to the 
 22.21  commissioner of commerce of each jurisdiction in which the 
 22.22  insurer is licensed to do business, by first class mail and by 
 22.23  telephone to the department of labor and industry of this state 
 22.24  if the insurer is or has been an insurer of workers' 
 22.25  compensation, by first class mail within this state and by 
 22.26  airmail outside this state to all agents of the insurer having a 
 22.27  duty under ~~section 60B.27~~ this chapter, by first class mail, if 
 22.28  the insurer is a surety company to every district court judge 
 22.29  exercising probate jurisdiction and the court administrator of 
 22.30  all courts of record in this state and upon receipt of such 
 22.31  notice it shall be the duty of those judges and court 
 22.32  administrators to notify and require every executor, 
 22.33  administrator, guardian, trustee, or other fiduciary having 
 22.34  filed a bond on which such company is surety, to forthwith file 
 22.35  a new bond with new sureties, and by first class mail within 
 22.36  this state and by airmail outside this state at the last known 
 23.1   address to all persons known or reasonably expected to have 
 23.2   claims against the insurer, including all policyholders.  The 
 23.3   liquidator also shall publish a notice three consecutive times 
 23.4   in a newspaper of general circulation in the county in which the 
 23.5   liquidation is pending or in Ramsey county, the last publication 
 23.6   to be not less than three months before the earliest deadline 
 23.7   specified in the notice under subdivision 2. 
 23.8      (b) Notice to agents shall inform them of their duties 
 23.9   under ~~section 60B.27~~ this chapter and inform them what 
 23.10  information they must communicate to policyholders.  Notice to 
 23.11  policyholders shall include notice of impairment and termination 
 23.12  of coverage under section 60B.22.  When it is applicable, notice 
 23.13  to policyholders shall include (1) notice of withdrawal of the 
 23.14  insurer from the defense of any case in which the policyholder 
 23.15  is interested, and (2) notice of the right to file a claim under 
 23.16  section 60B.40, subdivision 2~~, and (3) information about the~~ 
 23.17  ~~existence of section 79.28, relating to certain unpaid workers'~~ 
 23.18  ~~compensation awards~~. 
 23.19     (c) Within 15 days of the date of entry of the order, the 
 23.20  liquidator shall report to the court what notice has been 
 23.21  given.  The court may order such additional notice as it deems 
 23.22  appropriate. 
 23.23     Sec. 21.  [60B.365] [REINSURER'S LIABILITY.] 
 23.24     Subdivision 1.  [GENERALLY.] The amount recoverable by the 
 23.25  liquidator from reinsurers must not be reduced as a result of 
 23.26  the delinquency proceedings, regardless of any provision in the 
 23.27  reinsurance contract or other agreement, except as provided in 
 23.28  subdivision 2. 
 23.29     Subd. 2.  [PAYMENTS.] Payments by the reinsurer must be 
 23.30  made directly to the ceding insurer or its receiver, except 
 23.31  where the contract of insurance or reinsurance specifically 
 23.32  provides for another payee for the reinsurance in the event of 
 23.33  insolvency of the ceding insurer according to the applicable 
 23.34  requirements of statutes, rules, or orders of the domiciliary 
 23.35  state of the ceding insurer.  The receiver and reinsurer are 
 23.36  entitled to recover from a person who unsuccessfully makes a 
 24.1   claim directly against the reinsurer the receiver's attorneys' 
 24.2   fees and expenses incurred in preventing any collection by the 
 24.3   person. 
 24.4      Sec. 22.  Minnesota Statutes 1998, section 60B.39, 
 24.5   subdivision 2, is amended to read: 
 24.6      Subd. 2.  [CLAIMS UNDER TERMINATED POLICIES.] Any claim 
 24.7   that would have become absolute if there had been no termination 
 24.8   of coverage under section 60B.22, and which was not covered by 
 24.9   insurance acquired to replace the terminated coverage, shall be 
 24.10  allowed as if the coverage had remained in effect, unless at 
 24.11  least ten days before the insured event occurred either the 
 24.12  claimant had actual notice of the termination or notice was 
 24.13  mailed to the claimant as prescribed by section 60B.26, 
 24.14  subdivision 1, or ~~60B.27, subdivision 1~~ this chapter.  If 
 24.15  allowed the claim shall share in distributions under section 
 24.16  60B.44, subdivision 9.  
 24.17     Sec. 23.  Minnesota Statutes 1998, section 60B.44, 
 24.18  subdivision 4, is amended to read: 
 24.19     Subd. 4.  [LOSS CLAIMS; INCLUDING CLAIMS NOT COVERED BY A 
 24.20  GUARANTY ASSOCIATION.] All claims under policies or contracts of 
 24.21  coverage for losses incurred including third party claims, and 
 24.22  all claims against the insurer for liability for bodily injury 
 24.23  or for injury to or destruction of tangible property which are 
 24.24  not under policies or contracts.  All claims under life 
 24.25  insurance and annuity policies, whether for death proceeds, 
 24.26  annuity proceeds, or investment values, shall be treated as loss 
 24.27  claims.  That portion of any loss for which indemnification is 
 24.28  provided by other benefits or advantages recovered or 
 24.29  recoverable by the claimant shall not be included in this class, 
 24.30  other than benefits or advantages recovered or recoverable in 
 24.31  discharge of familial obligations of support or by way of 
 24.32  succession at death or as proceeds of life insurance, or as 
 24.33  gratuities.  No payment made by an employer to an employee shall 
 24.34  be treated as a gratuity.  Claims not covered by a guaranty 
 24.35  association are loss claims.  ~~If any portion of a claim is~~ 
 24.36  ~~covered by a reinsurance treaty or similar contractual~~ 
 25.1   ~~obligation, that claim shall be entitled to a pro rata share,~~ 
 25.2   ~~based upon the relationship the claim amount bears to all claims~~ 
 25.3   ~~payable under the treaty or contract, of the proceeds received~~ 
 25.4   ~~under that treaty or contractual obligation.~~  
 25.5      ~~Claims receiving pro rata payments shall not, as to any~~ 
 25.6   ~~remaining unpaid portion of their claim, be treated in a~~ 
 25.7   ~~different manner than if no such payment had been received.~~  
 25.8      Sec. 24.  Minnesota Statutes 1998, section 60B.44, is 
 25.9   amended by adding a subdivision to read: 
 25.10     Subd. 4a.  [UNEARNED PREMIUMS.] Claims under nonassessable 
 25.11  policies or contracts of coverage for unearned premiums or 
 25.12  subscription rates or other refunds. 
 25.13     Sec. 25.  Minnesota Statutes 1998, section 60B.44, is 
 25.14  amended by adding a subdivision to read: 
 25.15     Subd. 4b.  [FEDERAL GOVERNMENT.] Claims of the federal 
 25.16  government. 
 25.17     Sec. 26.  Minnesota Statutes 1998, section 60B.44, is 
 25.18  amended by adding a subdivision to read: 
 25.19     Subd. 4c.  [WAGES.] (a) Debts due to employees for services 
 25.20  performed, not to exceed $1,000 to each employee, that have been 
 25.21  earned within one year before the filing of the petition for 
 25.22  liquidation, subject to payment of applicable federal, state, or 
 25.23  local government taxes required by law to be withheld from the 
 25.24  debts.  Officers are not entitled to the benefit of this 
 25.25  priority.  In cases where there are no claims and no potential 
 25.26  claims of the federal government in the estate, these claims 
 25.27  will have priority over claims in subdivision 4. 
 25.28     (b) The priority in paragraph (a) is in lieu of other 
 25.29  similar priority authorized by law as to wages or compensation 
 25.30  of employees. 
 25.31     Sec. 27.  Minnesota Statutes 1998, section 60B.44, 
 25.32  subdivision 6, is amended to read: 
 25.33     Subd. 6.  [RESIDUAL CLASSIFICATION.] All other claims 
 25.34  including claims of ~~the federal or~~ any state or local 
 25.35  government, not falling within other classes under this 
 25.36  section.  Claims, including those of any governmental body for a 
 26.1   penalty or forfeiture, shall be allowed in this class only to 
 26.2   the extent of the pecuniary loss sustained from the act, 
 26.3   transaction, or proceeding out of which the penalty or 
 26.4   forfeiture arose, with reasonable and actual costs occasioned 
 26.5   thereby.  The remainder of such claims shall be postponed to the 
 26.6   class of claims under subdivision 9.  
 26.7      Sec. 28.  Minnesota Statutes 1998, section 60D.20, 
 26.8   subdivision 2, is amended to read: 
 26.9      Subd. 2.  [DIVIDENDS AND OTHER DISTRIBUTIONS.] (a) Subject 
 26.10  to the limitations and requirements of this subdivision, the 
 26.11  board of directors of any domestic insurer within an insurance 
 26.12  holding company system may authorize and cause the insurer to 
 26.13  declare and pay any dividend or distribution to its shareholders 
 26.14  as the directors deem prudent from the earned surplus of the 
 26.15  insurer.  An insurer's earned surplus, also known as unassigned 
 26.16  funds, shall be determined in accordance with the accounting 
 26.17  procedures and practices governing preparation of its annual 
 26.18  statement~~, minus 25 percent of earned surplus attributable to~~ 
 26.19  ~~net unrealized capital gains~~.  Dividends which are paid from 
 26.20  sources other than an insurer's earned surplus as of the end of 
 26.21  the immediately preceding quarter for which the insurer has 
 26.22  filed a quarterly or annual statement as appropriate, or are 
 26.23  extraordinary dividends or distributions may be paid only as 
 26.24  provided in paragraphs (d), (e), and (f). 
 26.25     (b) The insurer shall notify the commissioner within five 
 26.26  business days following declaration of a dividend declared 
 26.27  pursuant to paragraph (a) and at least ten days prior to its 
 26.28  payment.  The commissioner shall promptly consider the 
 26.29  notification filed pursuant to this paragraph, taking into 
 26.30  consideration the factors described in subdivision 4. 
 26.31     (c) The commissioner shall review at least annually the 
 26.32  dividends paid by an insurer pursuant to paragraph (a) for the 
 26.33  purpose of determining if the dividends are reasonable based 
 26.34  upon (1) the adequacy of the level of surplus as regards 
 26.35  policyholders remaining after the dividend payments, and (2) the 
 26.36  quality of the insurer's earnings and extent to which the 
 27.1   reported earnings include extraordinary items, such as surplus 
 27.2   relief reinsurance transactions and reserve destrengthening. 
 27.3      (d) No domestic insurer shall pay any extraordinary 
 27.4   dividend or make any other extraordinary distribution to its 
 27.5   shareholders until:  (1) 30 days after the commissioner has 
 27.6   received notice of the declaration of it and has not within the 
 27.7   period disapproved the payment; or (2) the commissioner has 
 27.8   approved the payment within the 30-day period. 
 27.9      (e) For purposes of this section, an extraordinary dividend 
 27.10  or distribution includes any dividend or distribution of cash or 
 27.11  other property, whose fair market value together with that of 
 27.12  other dividends or distributions made within the preceding 12 
 27.13  months exceeds the greater of (1) ten percent of the insurer's 
 27.14  surplus as regards policyholders ~~as of the 31st day of December~~ 
 27.15  ~~next preceding~~ on December 31 of the preceding year; or (2) the 
 27.16  net gain from operations of the insurer, if the insurer is a 
 27.17  life insurer, or the net income, if the insurer is not a life 
 27.18  insurer, not including realized capital gains, for the 12-month 
 27.19  period ending ~~the 31st day of December next preceding~~ on 
 27.20  December 31 of the preceding year, but does not include pro rata 
 27.21  distributions of any class of the insurer's own securities.  
 27.22     (f) Notwithstanding any other provision of law, an insurer 
 27.23  may declare an extraordinary dividend or distribution that is 
 27.24  conditional upon the commissioner's approval, and the 
 27.25  declaration shall confer no rights upon shareholders until:  (1) 
 27.26  the commissioner has approved the payment of such a dividend or 
 27.27  distribution; or (2) the commissioner has not disapproved the 
 27.28  payment within the 30-day period referred to above. 
 27.29     Sec. 29.  Minnesota Statutes 1998, section 60K.02, 
 27.30  subdivision 1, is amended to read: 
 27.31     Subdivision 1.  [REQUIREMENT.] No person shall act or 
 27.32  assume to act as an insurance agent in the solicitation or 
 27.33  procurement of applications for insurance, nor in the sale of 
 27.34  insurance or policies of insurance, nor in any manner aid as an 
 27.35  insurance agent in the negotiation of insurance by or with an 
 27.36  insurer, including resident agents or reciprocal or 
 28.1   interinsurance exchanges and fraternal benefit societies, until 
 28.2   that person obtains from the commissioner a license for that 
 28.3   purpose.  The license must specifically set forth the name of 
 28.4   the person authorized to act as an agent and the class or 
 28.5   classes of insurance for which that person is authorized to 
 28.6   solicit or countersign policies.  An insurance agent may qualify 
 28.7   for a license ~~in the following classes~~ to sell:  (1) life and 
 28.8   health; ~~and~~ (2) life and health and variable contracts; (3) 
 28.9   property and casualty; (4) travel baggage; (5) bail bonds; (6) 
 28.10  title insurance; and (7) farm property and liability.  
 28.11     No insurer shall appoint or reappoint a natural person, 
 28.12  partnership, or corporation to act as an insurance agent on its 
 28.13  behalf until that natural person, partnership, or corporation 
 28.14  obtains a license as an insurance agent.  
 28.15     Sec. 30.  Minnesota Statutes 1998, section 60K.03, 
 28.16  subdivision 2, is amended to read: 
 28.17     Subd. 2.  [RESIDENT AGENT.] The commissioner shall issue a 
 28.18  resident insurance agent's license to a qualified resident of 
 28.19  this state as follows:  
 28.20     (a) A person may qualify as a resident of this state if 
 28.21  that person resides in this state or the principal place of 
 28.22  business of that person is maintained in this state.  
 28.23  Application for a license claiming residency in this state for 
 28.24  licensing purposes constitutes an election of residency in this 
 28.25  state.  A license issued upon an application claiming residency 
 28.26  in this state is void if the licensee, while holding a resident 
 28.27  license in this state, also holds, or makes application for, a 
 28.28  resident license in, or thereafter claims to be a resident of, 
 28.29  any other state or jurisdiction or if the licensee ceases to be 
 28.30  a resident of this state; provided, however, if the applicant is 
 28.31  a resident of a community or trade area, the border of which is 
 28.32  contiguous with the state line of this state, the applicant may 
 28.33  qualify for a resident license in this state and at the same 
 28.34  time hold a resident license from the contiguous state. 
 28.35     (b) The commissioner shall subject each applicant who is a 
 28.36  natural person to a written examination as to the applicant's 
 29.1   competence to act as an insurance agent.  The examination must 
 29.2   be held at a reasonable time and place designated by the 
 29.3   commissioner. 
 29.4      (c) The examination shall be approved for use by the 
 29.5   commissioner and shall test the applicant's knowledge of the 
 29.6   lines of insurance, policies, and transactions to be handled 
 29.7   under the class of license applied for, of the duties and 
 29.8   responsibilities of the licensee, and pertinent insurance laws 
 29.9   of this state. 
 29.10     (d) The examination shall be given only after the applicant 
 29.11  has completed a program of classroom studies in a school, which 
 29.12  shall not include a school sponsored by, offered by, or 
 29.13  affiliated with an insurance company or its agents; except that 
 29.14  this limitation does not preclude a bona fide professional 
 29.15  association of agents, not acting on behalf of an insurer, from 
 29.16  offering courses.  The course of study shall consist of 30 hours 
 29.17  of classroom study devoted to the basic fundamentals of 
 29.18  insurance for those seeking a Minnesota license for the first 
 29.19  time, 15 hours devoted to specific life and health topics for 
 29.20  those seeking a life and health license, and 15 hours devoted to 
 29.21  specific property and casualty topics for those seeking a 
 29.22  property and casualty license.  Of the 30 hours of required 
 29.23  classroom study, at least three hours must be devoted to state 
 29.24  insurance laws, regulations, and rules.  The program of studies 
 29.25  or study course shall have been approved by the commissioner in 
 29.26  order to qualify under this paragraph.  If the applicant has 
 29.27  been previously licensed for the particular line of insurance in 
 29.28  the state of Minnesota, the requirement of a program of studies 
 29.29  or a study course shall be waived.  A certification of 
 29.30  compliance by the organization offering the course shall 
 29.31  accompany the applicant's license application.  This program of 
 29.32  studies in a school or a study course shall not apply to farm 
 29.33  property perils and farm liability applicants, or to agents 
 29.34  writing such other lines of insurance as the commissioner may 
 29.35  exempt from examination by order. 
 29.36     (e) The applicant must pass the examination with a grade 
 30.1   determined by the commissioner to indicate satisfactory 
 30.2   knowledge and understanding of the class or classes of insurance 
 30.3   for which the applicant seeks qualification.  The commissioner 
 30.4   shall inform the applicant as to whether or not the applicant 
 30.5   has passed.  Examination results are valid for a period of three 
 30.6   years from the date of the examination.  The applicant must pass 
 30.7   the examination with a grade determined by the commissioner. 
 30.8      (f) An applicant who has failed to pass an examination may 
 30.9   take subsequent examinations.  Examination fees for subsequent 
 30.10  examinations shall not be waived. 
 30.11     (g) Any applicant for a license covering the same class or 
 30.12  classes of insurance for which the applicant was licensed under 
 30.13  a similar license in this state, other than a temporary license, 
 30.14  within the three years preceding the date of the application 
 30.15  shall be exempt from the requirement of a written examination, 
 30.16  unless the previous license was revoked or suspended by the 
 30.17  commissioner.  An applicant whose license is not renewed under 
 30.18  section 60K.12 is exempt from the requirement of a written 
 30.19  examination.  
 30.20     Sec. 31.  Minnesota Statutes 1998, section 60K.03, 
 30.21  subdivision 3, is amended to read: 
 30.22     Subd. 3.  [NONRESIDENT AGENT.] The commissioner shall issue 
 30.23  a nonresident insurance agent's license to a qualified person 
 30.24  who is a resident of another state or country as follows: 
 30.25     (a) A person may qualify for a license under this section 
 30.26  as a nonresident only if that person holds a license in another 
 30.27  state, province of Canada, or other foreign country which, in 
 30.28  the opinion of the commissioner, qualifies that person for the 
 30.29  same activity as that for which a license is sought. 
 30.30     (b) The commissioner shall not issue a license to a 
 30.31  nonresident applicant until that person files with the 
 30.32  commissioner a designation of the commissioner and the 
 30.33  commissioner's successors in office as the applicant's true and 
 30.34  lawful attorney upon whom may be served all lawful process in an 
 30.35  action, suit, or proceeding instituted by or on behalf of an 
 30.36  interested person arising out of the applicant's insurance 
 31.1   business in this state.  This designation constitutes an 
 31.2   agreement that this service of process is of the same legal 
 31.3   force and validity as personal service of process in this state 
 31.4   upon that applicant.  
 31.5      Service of process upon a licensee in an action or 
 31.6   proceeding begun in a court of competent jurisdiction of this 
 31.7   state may be made in compliance with section 45.028, subdivision 
 31.8   2.  
 31.9      (c) A nonresident agent shall be held to the same knowledge 
 31.10  of insurance law, regulations, and rules as that required of a 
 31.11  resident agent according to subdivision 2, paragraph (d). 
 31.12     ~~(c)~~ (d) A nonresident license terminates automatically when 
 31.13  the resident license for that class of license in the state, 
 31.14  province, or foreign country in which the licensee is a resident 
 31.15  is terminated for any reason.  
 31.16     Sec. 32.  Minnesota Statutes 1998, section 60K.19, 
 31.17  subdivision 8, is amended to read: 
 31.18     Subd. 8.  [MINIMUM EDUCATION REQUIREMENT.] Each person 
 31.19  subject to this section shall complete a minimum of 30 credit 
 31.20  hours of courses accredited by the commissioner during each 
 31.21  24-month licensing period ~~after the expiration of the person's~~ 
 31.22  ~~initial licensing period~~, two hours of which must be devoted to 
 31.23  state law, regulations, and rules applicable to the line or 
 31.24  lines of insurance for which the agent is licensed.  ~~At least 15~~ 
 31.25  ~~of the 30 credit hours must be completed during the first 12~~ 
 31.26  ~~months of the 24-month licensing period.~~  Any person whose 
 31.27  initial licensing period extends more than six months shall 
 31.28  complete 15 hours of courses accredited by the commissioner 
 31.29  during the initial license period.  Any person teaching or 
 31.30  lecturing at an accredited course qualifies for 1-1/2 times the 
 31.31  number of credit hours that would be granted to a person 
 31.32  completing the accredited course.  No more than 15 credit hours 
 31.33  per licensing period may be credited to a person for courses 
 31.34  sponsored by, offered by, or affiliated with an insurance 
 31.35  company or its agents.  Courses sponsored by, offered by, or 
 31.36  affiliated with an insurance company or agent may restrict its 
 32.1   students to agents of the company or agency. 
 32.2      Sec. 33.  Minnesota Statutes 1998, section 61A.276, 
 32.3   subdivision 2, is amended to read: 
 32.4      Subd. 2.  [ISSUANCE.] The funding agreements may be issued 
 32.5   to:  (1) individuals; or (2) persons authorized by a state or 
 32.6   foreign country to engage in an insurance business or 
 32.7   subsidiaries or affiliates of these persons; or (3) entities 
 32.8   other than individuals and other than persons authorized to 
 32.9   engage in an insurance business, and subsidiaries and affiliates 
 32.10  of these persons, for the following purposes:  (i) to fund 
 32.11  benefits under any employee benefit plan as defined in the 
 32.12  Employee Retirement Income Security Act of 1974, as now or 
 32.13  hereafter amended, maintained in the United States or in a 
 32.14  foreign country; (ii) to fund the activities of any organization 
 32.15  exempt from taxation under section 501(c) of the Internal 
 32.16  Revenue Code of 1986, as amended through December 31, 1992, or 
 32.17  of any similar organization in any foreign country; (iii) to 
 32.18  fund any program of any state, foreign country or political 
 32.19  subdivision thereof, or any agency or instrumentality thereof; 
 32.20  ~~or~~ (iv) to fund any agreement providing for periodic payments in 
 32.21  satisfaction of a claim; or (v) a program of an institution that 
 32.22  has assets in excess of $25,000,000.  No funding agreement shall 
 32.23  be issued in an amount less than $1,000,000. 
 32.24     Sec. 34.  Minnesota Statutes 1998, section 61A.60, 
 32.25  subdivision 1, is amended to read: 
 32.26     Subdivision 1.  [NOTICE FORM; AGENT SALES.] The notice 
 32.27  required where sections 61A.53 to 61A.60 refer to this 
 32.28  subdivision is as follows: 
 32.29                          IMPORTANT NOTICE 
 32.30  
 32.31  DEFINITION   REPLACEMENT is any transaction where, in connection
 32.32               with the purchase of New Insurance or a New 
 32.33               Annuity, you LAPSE, SURRENDER, CONVERT to 
 32.34               Paid-up Insurance, Place on Extended Term, 
 32.35               or BORROW all or part of the policy loan 
 32.36               values on an existing insurance policy or an 
 33.1                annuity.  (See reverse side for DEFINITIONS.) 
 33.2    
 33.3    
 33.4   IF YOU       In connection with the purchase of this insurance 
 33.5   INTEND TO    or annuity, if you have REPLACED or intend to 
 33.6   REPLACE      REPLACE your present life insurance coverage 
 33.7   COVERAGE     or annuity(ies), you should be certain that you   
 33.8                understand all the relevant factors involved.
 33.9    
 33.10               You should BE AWARE that you may be required to
 33.11               provide <b>EVIDENCE OF INSURABILITY</b> and 
 33.13               (1)  If your HEALTH condition has CHANGED since 
 33.14               the application was taken on your present 
 33.15               policies, you may be required to pay ADDITIONAL 
 33.16               PREMIUMS under the NEW POLICY, or be DENIED 
 33.17               coverage. 
 33.19               (2)  Your present occupation or activities <b>may not</b>
 33.20  <b>             be covered or could require additional premiums. </b> 
 33.22               (3)  The INCONTESTABLE and SUICIDE CLAUSE will 
 33.23               begin anew in a new policy.  This could RESULT 
 33.24               in a <b>CLAIM under the new policy BEING DENIED</b> 
 33.25               that would otherwise have been paid.
 33.27               (4)  Current law ~~DOES~~ MAY NOT REQUIRE your present 
 33.28               insurer(s) to REFUND any premiums.
 33.30               (5)  It is to your advantage to OBTAIN INFORMATION
 33.31               regarding your existing policies or annuity 
 33.32               contracts  [FROM THE INSURER OR AGENT FROM WHOM 
 33.33               YOU PURCHASED THE POLICY OR ANNUITY CONTRACT.] 
 33.34   
 33.35               (If you are purchasing an annuity, clauses (1), 
 33.36               (2), and (3) above would not apply to the new 
 34.1                annuity contract.)
 34.3                THE INSURANCE OR ANNUITY I INTEND TO PURCHASE FROM 
 34.4                _______________________________________INSURANCE CO.
 34.5                MAY REPLACE OR ALTER EXISTING LIFE INSURANCE 
 34.6                POLICY(IES) OR ANNUITY CONTRACT(S). 
 34.8                The following policy(ies) or annuity contract(s) 
 34.9                may be replaced as a result of this transaction:
 34.11           <b> Insurer</b>                              <b> Insured</b> 
 34.12   <b>as it appears on the policy        as it appears on the policy</b> 
 34.13  <b> or contract </b>                       <b>or contract </b> 
 34.14  ______________________________     ______________________________
 34.15  ______________________________     ______________________________
 34.16  ______________________________     ______________________________
 34.17  ______________________________     ______________________________
 34.18   <b> Policy or contract number </b>             <b> Insured birthdate </b>
 34.19  ______________________________     ______________________________
 34.20  ______________________________     ______________________________
 34.21  ______________________________     ______________________________
 34.22  ______________________________     ______________________________
 34.23          The proposed policy or contract is:
 34.24          ______________________________________  $_______________
 34.25          type of policy- or contract-generic name   face amount
 34.27          ________________________________________________________
 34.28          signature of applicant                   date
 34.30          ________________________________________________________
 34.31          address of applicant        city              state
 34.33          I certify that this form was given to and completed by 
 34.35          ________________________________________________________
 34.36                      (applicant-please print or type)
 34.38          prior to taking an application and that I am leaving a 
 34.39          signed copy for the applicant.
 34.41               ___________________________________________________
 34.42               agent's signature                    date
 34.44               ___________________________________________________
 34.45                                address
 34.47               ___________________________________________________
 34.48                       city                       state
 35.1             <b>Note important statement on reverse side </b>
 35.2      Sec. 35.  Minnesota Statutes 1998, section 61B.19, 
 35.3   subdivision 3, is amended to read: 
 35.4      Subd. 3.  [LIMITATION OF COVERAGE.] Sections 61B.18 to 
 35.5   61B.32 do not provide coverage for: 
 35.6      (1) a portion of a policy or contract under which the 
 35.7   investment risk is borne by the policy or contract holder; 
 35.8      (2) a policy or contract of reinsurance, unless assumption 
 35.9   certificates have been issued and the insured has consented to 
 35.10  the assumption as provided under section 60A.09, subdivision 4a; 
 35.11     (3) a policy or contract issued by an assessment benefit 
 35.12  association operating under section 61A.39, or a fraternal 
 35.13  benefit society operating under chapter 64B; 
 35.14     (4) any obligation to nonresident participants of a covered 
 35.15  retirement plan or to the plan sponsor, employer, trustee, or 
 35.16  other party who owns the contract; in these cases, the 
 35.17  association is obligated under this chapter only to participants 
 35.18  in a covered plan who are residents of the state of Minnesota on 
 35.19  the date of impairment or insolvency; 
 35.20     (5) an annuity contract issued in connection with and for 
 35.21  the purpose of funding a structured settlement of a liability 
 35.22  claim, where the liability insurer remains liable; 
 35.23     (6) a portion of an unallocated annuity contract which is 
 35.24  not issued to or in connection with a specific employee, union, 
 35.25  or association of natural persons benefit plan or a governmental 
 35.26  lottery, including but not limited to, a contract issued to, or 
 35.27  purchased at the direction of, any governmental bonding 
 35.28  authority, such as a municipal guaranteed investment contract; 
 35.29     (7) a plan or program of an employer, association, or 
 35.30  similar entity to provide life, health, or annuity benefits to 
 35.31  its employees or members to the extent that the plan or program 
 35.32  is self-funded or uninsured, including benefits payable by an 
 35.33  employer, association, or similar entity under: 
 35.34     (i) a multiple employer welfare arrangement as defined in 
 35.35  the Employee Retirement Income Security Act of 1974, United 
 36.1   States Code, title 29, section 1002(40)(A), as amended; 
 36.2      (ii) a minimum premium group insurance plan; 
 36.3      (iii) a stop-loss group insurance plan; or 
 36.4      (iv) an administrative services only contract; 
 36.5      (8) any policy or contract issued by an insurer at a time 
 36.6   when it was not licensed or did not have a certificate of 
 36.7   authority to issue the policy or contract in this state; 
 36.8      (9) an unallocated annuity contract issued to an employee 
 36.9   benefit plan protected under the federal Pension Benefit 
 36.10  Guaranty Corporation; ~~and~~ 
 36.11     (10) a portion of a policy or contract to the extent that 
 36.12  it provides dividends or experience rating credits except to the 
 36.13  extent the dividends or experience rating credits have actually 
 36.14  become due and payable or have been credited to the policy or 
 36.15  contract before the date of impairment or insolvency, or 
 36.16  provides that a fee or allowance be paid to a person, including 
 36.17  the policy or contract holder, in connection with the service 
 36.18  to, or administration of, the policy or contract~~.~~; and 
 36.19     (11) a contractual agreement that establishes the member 
 36.20  insurer's obligations to provide a book value accounting 
 36.21  guaranty for defined contribution benefit plan participants by 
 36.22  reference to a portfolio of assets that is owned by the benefit 
 36.23  plan or its trustee, which in each case is not an affiliate of 
 36.24  the member insurer. 
 36.25     Sec. 36.  Minnesota Statutes 1998, section 62A.04, 
 36.26  subdivision 3, is amended to read: 
 36.27     Subd. 3.  [OPTIONAL PROVISIONS.] Except as provided in 
 36.28  subdivision 4, no such policy delivered or issued for delivery 
 36.29  to any person in this state shall contain provisions respecting 
 36.30  the matters set forth below unless such provisions are in the 
 36.31  words in which the same appear in this section.  The insurer 
 36.32  may, at its option, use in lieu of any such provision a 
 36.33  corresponding provision of different wording approved by the 
 36.34  commissioner which is not less favorable in any respect to the 
 36.35  insured or the beneficiary.  Any such provision contained in the 
 36.36  policy shall be preceded individually by the appropriate caption 
 37.1   appearing in this subdivision or, at the option of the insurer, 
 37.2   by such appropriate individual or group captions or subcaptions 
 37.3   as the commissioner may approve. 
 37.4      (1) A provision as follows: 
 37.5      CHANGE OF OCCUPATION:  If the insured be injured or 
 37.6   contract sickness after having changed occupations to one 
 37.7   classified by the insurer as more hazardous than that stated in 
 37.8   this policy or while doing for compensation anything pertaining 
 37.9   to an occupation so classified, the insurer will pay only such 
 37.10  portion of the indemnities provided in this policy as the 
 37.11  premiums paid would have purchased at the rates and within the 
 37.12  limits fixed by the insurer for such more hazardous occupation.  
 37.13  If the insured changes occupations to one classified by the 
 37.14  insurer as less hazardous than that stated in this policy, the 
 37.15  insurer, upon receipt of proof of such change of occupation will 
 37.16  reduce the premium rate accordingly, and will return the excess 
 37.17  pro rata unearned premium from the date of change of occupation 
 37.18  or from the policy anniversary date immediately preceding 
 37.19  receipt of such proof, whichever is the more recent.  In 
 37.20  applying this provision, the classification of occupational risk 
 37.21  and the premium rates shall be such as have been last filed by 
 37.22  the insurer prior to the occurrence of the loss for which the 
 37.23  insurer is liable or prior to date of proof of change in 
 37.24  occupation with the state official having supervision of 
 37.25  insurance in the state where the insured resided at the time 
 37.26  this policy was issued; but if such filing was not required, 
 37.27  then the classification of occupational risk and the premium 
 37.28  rates shall be those last made effective by the insurer in such 
 37.29  state prior to the occurrence of the loss or prior to the date 
 37.30  of proof of change of occupation. 
 37.31     (2) A provision as follows: 
 37.32     MISSTATEMENT OF AGE:  If the age of the insured has been 
 37.33  misstated, all amounts payable under this policy shall be such 
 37.34  as the premium paid would have purchased at the correct age. 
 37.35     (3) A provision as follows: 
 37.36     OTHER INSURANCE IN THIS INSURER:  If an accident or 
 38.1   sickness or accident and sickness policy or policies previously 
 38.2   issued by the insurer to the insured be in force concurrently 
 38.3   herewith, making the aggregate indemnity for ..... (insert type 
 38.4   of coverage or coverages) in excess of $..... (insert maximum 
 38.5   limit of indemnity or indemnities) the excess insurance shall be 
 38.6   void and all premiums paid for such excess shall be returned to 
 38.7   the insured or to the insured's estate, or, in lieu thereof: 
 38.8      Insurance effective at any one time on the insured under a 
 38.9   like policy or policies in this insurer is limited to the one 
 38.10  such policy elected by the insured, or the insured's beneficiary 
 38.11  or estate, as the case may be, and the insurer will return all 
 38.12  premiums paid for all other such policies. 
 38.13     (4) A provision as follows: 
 38.14     INSURANCE WITH OTHER INSURERS:  If there be other valid 
 38.15  coverage, not with this insurer, providing benefits for the same 
 38.16  loss on a provision of service basis or on an expense incurred 
 38.17  basis and of which this insurer has not been given written 
 38.18  notice prior to the occurrence or commencement of loss, the only 
 38.19  liability under any expense incurred coverage of this policy 
 38.20  shall be for such proportion of the loss as the amount which 
 38.21  would otherwise have been payable hereunder plus the total of 
 38.22  the like amounts under all such other valid coverages for the 
 38.23  same loss of which this insurer had notice bears to the total 
 38.24  like amounts under all valid coverages for such loss, and for 
 38.25  the return of such portion of the premiums paid as shall exceed 
 38.26  the pro rata portion for the amount so determined.  For the 
 38.27  purpose of applying this provision when other coverage is on a 
 38.28  provision of service basis, the "like amount" of such other 
 38.29  coverage shall be taken as the amount which the services 
 38.30  rendered would have cost in the absence of such coverage. 
 38.31     If the foregoing policy provision is included in a policy 
 38.32  which also contains the next following policy provision there 
 38.33  shall be added to the caption of the foregoing provision the 
 38.34  phrase "EXPENSE INCURRED BENEFITS."  The insurer may, at its 
 38.35  option, include in this provision a definition of "other valid 
 38.36  coverage," approved as to form by the commissioner, which 
 39.1   definition shall be limited in subject matter to coverage 
 39.2   provided by organizations subject to regulation by insurance law 
 39.3   or by insurance authorities of this or any other state of the 
 39.4   United States or any province of Canada, and by hospital or 
 39.5   medical service organizations, and to any other coverage the 
 39.6   inclusion of which may be approved by the commissioner.  In the 
 39.7   absence of such definition such term shall not include group 
 39.8   insurance, automobile medical payments insurance, or coverage 
 39.9   provided by hospital or medical service organizations or by 
 39.10  union welfare plans or employer or employee benefit 
 39.11  organizations.  For the purpose of applying the foregoing policy 
 39.12  provision with respect to any insured, any amount of benefit 
 39.13  provided for such insured pursuant to any compulsory benefit 
 39.14  statute (including any workers' compensation or employer's 
 39.15  liability statute) whether provided by a governmental agency or 
 39.16  otherwise shall in all cases be deemed to be "other valid 
 39.17  coverage" of which the insurer has had notice.  In applying the 
 39.18  foregoing policy provision no third party liability coverage 
 39.19  shall be included as "other valid coverage." 
 39.20     (5) A provision as follows: 
 39.21     INSURANCE WITH OTHER INSURERS:  If there be other valid 
 39.22  coverage, not with this insurer, providing benefits for the same 
 39.23  loss on other than an expense incurred basis and of which this 
 39.24  insurer has not been given written notice prior to the 
 39.25  occurrence or commencement of loss, the only liability for such 
 39.26  benefits under this policy shall be for such proportion of the 
 39.27  indemnities otherwise provided hereunder for such loss as the 
 39.28  like indemnities of which the insurer had notice (including the 
 39.29  indemnities under this policy) bear to the total amount of all 
 39.30  like indemnities for such loss, and for the return of such 
 39.31  portion of the premium paid as shall exceed the pro rata portion 
 39.32  for the indemnities thus determined. 
 39.33     If the foregoing policy provision is included in a policy 
 39.34  which also contains the next preceding policy provision there 
 39.35  shall be added to the caption of the foregoing provision the 
 39.36  phrase -- "OTHER BENEFITS."  The insurer may, at its option, 
 40.1   include in this provision a definition of "other valid 
 40.2   coverage," approved as to form by the commissioner, which 
 40.3   definition shall be limited in subject matter to coverage 
 40.4   provided by organizations subject to regulation by insurance law 
 40.5   or by insurance authorities of this or any other state of the 
 40.6   United States or any province of Canada, and to any other 
 40.7   coverage the inclusion of which may be approved by the 
 40.8   commissioner.  In the absence of such definition such term shall 
 40.9   not include group insurance, or benefits provided by union 
 40.10  welfare plans or by employer or employee benefit organizations.  
 40.11  For the purpose of applying the foregoing policy provision with 
 40.12  respect to any insured, any amount of benefit provided for such 
 40.13  insured pursuant to any compulsory benefit statute (including 
 40.14  any workers' compensation or employer's liability statute) 
 40.15  whether provided by a governmental agency or otherwise shall in 
 40.16  all cases be deemed to be "other valid coverage" of which the 
 40.17  insurer has had notice.  In applying the foregoing policy 
 40.18  provision no third party liability coverage shall be included as 
 40.19  "other valid coverage." 
 40.20     (6) A provision as follows: 
 40.21     RELATION OF EARNINGS TO INSURANCE:  If the total monthly 
 40.22  amount of loss of time benefits promised for the same loss under 
 40.23  all valid loss of time coverage upon the insured, whether 
 40.24  payable on a weekly or monthly basis, shall exceed the monthly 
 40.25  earnings of the insured at the time disability commenced or the 
 40.26  insured's average monthly earnings for the period of two years 
 40.27  immediately preceding a disability for which claim is made, 
 40.28  whichever is the greater, the insurer will be liable only for 
 40.29  such proportionate amount of such benefits under this policy as 
 40.30  the amount of such monthly earnings or such average monthly 
 40.31  earnings of the insured bears to the total amount of monthly 
 40.32  benefits for the same loss under all such coverage upon the 
 40.33  insured at the time such disability commences and for the return 
 40.34  of such part of the premiums paid during such two years as shall 
 40.35  exceed the pro rata amount of the premiums for the benefits 
 40.36  actually paid hereunder; but this shall not operate to reduce 
 41.1   the total monthly amount of benefits payable under all such 
 41.2   coverage upon the insured below the sum of $200 or the sum of 
 41.3   the monthly benefits specified in such coverages, whichever is 
 41.4   the lesser, nor shall it operate to reduce benefits other than 
 41.5   those payable for loss of time. 
 41.6      The foregoing policy provision may be inserted only in a 
 41.7   policy which the insured has the right to continue in force 
 41.8   subject to its terms by the timely payment of premiums (1) until 
 41.9   at least age 50, or, (2) in the case of a policy issued after 
 41.10  age 44, for at least five years from its date of issue.  The 
 41.11  insurer may, at its option, include in this provision a 
 41.12  definition of "valid loss of time coverage," approved as to form 
 41.13  by the commissioner, which definition shall be limited in 
 41.14  subject matter to coverage provided by governmental agencies or 
 41.15  by organizations subject to regulation by insurance law or by 
 41.16  insurance authorities of this or any other state of the United 
 41.17  States or any province of Canada, or to any other coverage the 
 41.18  inclusion of which may be approved by the commissioner or any 
 41.19  combination of such coverages.  In the absence of such 
 41.20  definition such term shall not include any coverage provided for 
 41.21  such insured pursuant to any compulsory benefit statute 
 41.22  (including any workers' compensation or employer's liability 
 41.23  statute), or benefits provided by union welfare plans or by 
 41.24  employer or employee benefit organizations. 
 41.25     (7) A provision as follows: 
 41.26     UNPAID PREMIUM:  Upon the payment of a claim under this 
 41.27  policy, any premium then due and unpaid or covered by any note 
 41.28  or written order may be deducted therefrom. 
 41.29     (8) A provision as follows: 
 41.30     CANCELLATION:  The insurer may cancel this policy at any 
 41.31  time by written notice delivered to the insured or mailed to the 
 41.32  insured's last address as shown by the records of the insurer, 
 41.33  stating when, not less than five days thereafter, such 
 41.34  cancellation shall be effective; and after the policy has been 
 41.35  continued beyond its original term the insured may cancel this 
 41.36  policy at any time by written notice delivered or mailed to the 
 42.1   insurer, effective upon receipt or on such later date as may be 
 42.2   specified in such notice.  In the event of cancellation, the 
 42.3   insurer will return promptly the unearned portion of any premium 
 42.4   paid.  ~~If~~ Regardless of whether it is the insurer or the insured 
 42.5   who cancels, ~~the earned premium shall be computed by the use of~~ 
 42.6   ~~the short-rate table last filed with the state official having~~ 
 42.7   ~~supervision of insurance in the state where the insured resided~~ 
 42.8   ~~when the policy was issued.  If the insurer cancels,~~ the earned 
 42.9   premium shall be computed pro rata, unless the mode of payment 
 42.10  is monthly or less, or if the unearned amount is for less than 
 42.11  one month.  Cancellation shall be without prejudice to any claim 
 42.12  originating prior to the effective date of cancellation. 
 42.13     (9) A provision as follows: 
 42.14     CONFORMITY WITH STATE STATUTES:  Any provision of this 
 42.15  policy which, on its effective date, is in conflict with the 
 42.16  statutes of the state in which the insured resides on such date 
 42.17  is hereby amended to conform to the minimum requirements of such 
 42.18  statutes. 
 42.19     (10) A provision as follows: 
 42.20     ILLEGAL OCCUPATION:  The insurer shall not be liable for 
 42.21  any loss to which a contributing cause was the insured's 
 42.22  commission of or attempt to commit a felony or to which a 
 42.23  contributing cause was the insured's being engaged in an illegal 
 42.24  occupation. 
 42.25     (11) A provision as follows: 
 42.26     NARCOTICS:  The insurer shall not be liable for any loss 
 42.27  sustained or contracted in consequence of the insured's being 
 42.28  under the influence of any narcotic unless administered on the 
 42.29  advice of a physician. 
 42.30     Sec. 37.  Minnesota Statutes 1998, section 62A.135, 
 42.31  subdivision 5, is amended to read: 
 42.32     Subd. 5.  [~~SUPPLEMENT TO ANNUAL STATEMENTS~~ SUPPLEMENTAL 
 42.33  FILINGS.] Each insurer that has fixed indemnity policies in 
 42.34  force in this state shall, ~~as a supplement to the annual~~ 
 42.35  ~~statement required by section 60A.13~~ upon request by the 
 42.36  commissioner, submit, in a form prescribed by the 
 43.1   commissioner, ~~the~~ experience data ~~for the calendar year~~ showing 
 43.2   its incurred claims, earned premiums, incurred to earned loss 
 43.3   ratio, and the ratio of the actual loss ratio to the expected 
 43.4   loss ratio for each fixed indemnity policy form in force in 
 43.5   Minnesota.  The experience data must be provided on both a 
 43.6   Minnesota only and a national basis.  If in the opinion of the 
 43.7   company's actuary, the deviation of the actual loss ratio from 
 43.8   the expected loss ratio for a policy form is due to unusual 
 43.9   reserve fluctuations, economic conditions, or other nonrecurring 
 43.10  conditions, the insurer should also file that opinion with 
 43.11  appropriate justification.  
 43.12     If the data submitted does not confirm that the insurer has 
 43.13  satisfied the loss ratio requirements of this section, the 
 43.14  commissioner shall notify the insurer in writing of the 
 43.15  deficiency.  The insurer shall have 30 days from the date of 
 43.16  receipt of the commissioner's notice to file amended rates that 
 43.17  comply with this section or a request for an exemption with 
 43.18  appropriate justification.  If the insurer fails to file amended 
 43.19  rates within the prescribed time and the commissioner does not 
 43.20  exempt the policy form from the need for a rate revision, the 
 43.21  commissioner shall order that the insurer's filed rates for the 
 43.22  nonconforming policy be reduced to an amount that would have 
 43.23  resulted in a loss ratio that complied with this section had it 
 43.24  been in effect for the reporting period of the supplement.  The 
 43.25  insurer's failure to file amended rates within the specified 
 43.26  time of the issuance of the commissioner's order amending the 
 43.27  rates does not preclude the insurer from filing an amendment of 
 43.28  its rates at a later time. 
 43.29     Sec. 38.  Minnesota Statutes 1998, section 62A.50, 
 43.30  subdivision 3, is amended to read: 
 43.31     Subd. 3.  [DISCLOSURES.] No long-term care policy shall be 
 43.32  offered or delivered in this state, whether or not the policy is 
 43.33  issued in this state, and no certificate of coverage under a 
 43.34  group long-term care policy shall be offered or delivered in 
 43.35  this state, unless a statement containing at least the following 
 43.36  information is delivered to the applicant at the time the 
 44.1   application is made: 
 44.2      (1) a description of the benefits and coverage provided by 
 44.3   the policy and the differences between this policy, a 
 44.4   supplemental Medicare policy and the benefits to which an 
 44.5   individual is entitled under parts A and B of Medicare; 
 44.6      (2) a statement of the exceptions and limitations in the 
 44.7   policy including the following language, as applicable, in bold 
 44.8   print:  "THIS POLICY DOES NOT COVER ALL NURSING CARE FACILITIES 
 44.9   OR NURSING HOME, HOME CARE, OR ADULT DAY CARE EXPENSES AND DOES 
 44.10  NOT COVER RESIDENTIAL CARE.  READ YOUR POLICY CAREFULLY TO 
 44.11  DETERMINE WHICH FACILITIES AND EXPENSES ARE COVERED BY YOUR 
 44.12  POLICY."; 
 44.13     (3) a statement of the renewal provisions including any 
 44.14  reservation by the insurer of the right to change premiums; 
 44.15     (4) a statement that the outline of coverage is a summary 
 44.16  of the policy issued or applied for and that the policy should 
 44.17  be consulted to determine governing contractual provisions; 
 44.18     (5) an explanation of the policy's loss ratio including at 
 44.19  least the following language:  "This means that, on the average, 
 44.20  policyholders may expect that $........ of every $100 in premium 
 44.21  will be returned as benefits to policyholders over the life of 
 44.22  the contract."; 
 44.23     (6) a statement of the out-of-pocket expenses, including 
 44.24  deductibles and copayments for which the insured is responsible, 
 44.25  and an explanation of the specific out-of-pocket expenses that 
 44.26  may be accumulated toward any out-of-pocket maximum as specified 
 44.27  in the policy; 
 44.28     (7) the following language, in bold print:  "YOUR PREMIUMS 
 44.29  CAN BE INCREASED IN THE FUTURE.  THE RATE SCHEDULE THAT LISTS 
 44.30  YOUR PREMIUM NOW CAN CHANGE."; 
 44.31     ~~(8) the following language, if applicable, in bold print:~~  
 44.32  ~~"IF YOU ARE NOT HOSPITALIZED PRIOR TO ENTERING A NURSING HOME OR~~ 
 44.33  ~~NEEDING HOME CARE, YOU WILL NOT BE ABLE TO COLLECT ANY BENEFITS~~ 
 44.34  ~~UNDER THIS PARTICULAR POLICY.";~~ 
 44.35     ~~(9)~~ (8) the following language in bold print, with any 
 44.36  provisions that are inapplicable to the particular policy 
 45.1   omitted or crossed out:  "THIS POLICY HAS A WAITING PERIOD OF 
 45.2   ..... (CALENDAR OR BENEFIT) DAYS FOR NURSING CARE SERVICES AND A 
 45.3   WAITING PERIOD OF ..... (CALENDAR OR BENEFIT) DAYS FOR HOME CARE 
 45.4   SERVICES.  THIS MEANS THAT THIS POLICY WILL NOT COVER YOUR CARE 
 45.5   FOR THE FIRST ..... (CALENDAR OR BENEFIT) DAYS AFTER YOU ENTER A 
 45.6   NURSING HOME, OR THE FIRST ..... (CALENDAR OR BENEFIT) DAYS 
 45.7   AFTER YOU BEGIN TO USE HOME CARE SERVICES.  YOU WOULD NEED TO 
 45.8   PAY FOR YOUR CARE FROM OTHER SOURCES FOR THOSE WAITING 
 45.9   PERIODS."; and 
 45.10     ~~(10)~~ (9) a signed and completed copy of the application for 
 45.11  insurance is left with the applicant at the time the application 
 45.12  is made. 
 45.13     Sec. 39.  Minnesota Statutes 1998, section 62A.61, is 
 45.14  amended to read: 
 45.15     62A.61 [DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO 
 45.16  DETERMINE USUAL AND CUSTOMARY FEES.] 
 45.17     (a) A health carrier that bases reimbursement to health 
 45.18  care providers upon a usual and customary fee must maintain in 
 45.19  its office a copy of a description of the methodology used to 
 45.20  calculate fees including at least the following: 
 45.21     (1) the frequency of the determination of usual and 
 45.22  customary fees; 
 45.23     (2) a general description of the methodology used to 
 45.24  determine usual and customary fees; and 
 45.25     (3) the percentile of usual and customary fees that 
 45.26  determines the maximum allowable reimbursement. 
 45.27     (b) A health carrier must provide a copy of the information 
 45.28  described in paragraph (a) to the commissioner of health or the 
 45.29  commissioner of commerce, upon request. 
 45.30     (c) The commissioner of health or the commissioner of 
 45.31  commerce, as appropriate, may use to enforce this section any 
 45.32  enforcement powers otherwise available to the commissioner with 
 45.33  respect to the health carrier.  The commissioner of health or 
 45.34  commerce, as appropriate, may require health carriers to provide 
 45.35  the information required under this section and may use any 
 45.36  powers granted under other laws relating to the regulation of 
 46.1   health carriers to enforce compliance. 
 46.2      (d) For purposes of this section, "health carrier" has the 
 46.3   meaning given in section 62A.011. 
 46.4      (e) "Usual and customary" means the normal charge, in the 
 46.5   absence of insurance, of the provider for a service or article, 
 46.6   but not more than the prevailing charge in the area for like 
 46.7   service or article.  A "like service" is the same nature and 
 46.8   duration, requires the same skill, and is performed by a 
 46.9   provider of similar training and experience.  A "like article" 
 46.10  is one that is identically or substantially equivalent.  "Area" 
 46.11  means the municipality or, in the case of a large city, a 
 46.12  subdivision of the city, in which the service or article is 
 46.13  actually provided or a greater area as is necessary to obtain a 
 46.14  representative cross-section of charges for like service or 
 46.15  article. 
 46.16     Sec. 40.  Minnesota Statutes 1998, section 62A.65, 
 46.17  subdivision 5, is amended to read: 
 46.18     Subd. 5.  [PORTABILITY AND CONVERSION OF COVERAGE.] (a) No 
 46.19  individual health plan may be offered, sold, issued, or with 
 46.20  respect to children age 18 or under renewed, to a Minnesota 
 46.21  resident that contains a preexisting condition limitation, 
 46.22  preexisting condition exclusion, or exclusionary rider, unless 
 46.23  the limitation or exclusion is permitted under this 
 46.24  subdivision and under chapter 62L, provided that, except for 
 46.25  children age 18 or under, underwriting restrictions may be 
 46.26  retained on individual contracts that are issued without 
 46.27  evidence of insurability as a replacement for prior individual 
 46.28  coverage that was sold before May 17, 1993.  The individual may 
 46.29  be subjected to an 18-month preexisting condition limitation, 
 46.30  unless the individual has maintained continuous coverage as 
 46.31  defined in section 62L.02.  The individual must not be subjected 
 46.32  to an exclusionary rider.  An individual who has maintained 
 46.33  continuous coverage may be subjected to a one-time preexisting 
 46.34  condition limitation of up to 12 months, with credit for time 
 46.35  covered under qualifying coverage as defined in section 62L.02, 
 46.36  at the time that the individual first is covered under an 
 47.1   individual health plan by any health carrier.  Credit must be 
 47.2   given for all qualifying coverage with respect to all 
 47.3   preexisting conditions, regardless of whether the conditions 
 47.4   were preexisting with respect to any previous qualifying 
 47.5   coverage.  The individual must not be subjected to an 
 47.6   exclusionary rider.  Thereafter, the individual must not be 
 47.7   subject to any preexisting condition limitation, preexisting 
 47.8   condition exclusion, or exclusionary rider under an individual 
 47.9   health plan by any health carrier, except an unexpired portion 
 47.10  of a limitation under prior coverage, so long as the individual 
 47.11  maintains continuous coverage as defined in section 62L.02. 
 47.12     (b) A health carrier must offer an individual health plan 
 47.13  to any individual previously covered under a group health plan 
 47.14  issued by that health carrier, regardless of the size of the 
 47.15  group, so long as the individual maintained continuous coverage 
 47.16  as defined in section 62L.02.  If the individual has available 
 47.17  any continuation coverage provided under sections 62A.146; 
 47.18  62A.148; 62A.17, subdivisions 1 and 2; 62A.20; 62A.21; 62C.142; 
 47.19  62D.101; or 62D.105, or continuation coverage provided under 
 47.20  federal law, the health carrier need not offer coverage under 
 47.21  this paragraph until the individual has exhausted the 
 47.22  continuation coverage.  The offer must not be subject to 
 47.23  underwriting, except as permitted under this paragraph.  A 
 47.24  health plan issued under this paragraph must be a qualified plan 
 47.25  as defined in section 62E.02 and must not contain any 
 47.26  preexisting condition limitation, preexisting condition 
 47.27  exclusion, or exclusionary rider, except for any unexpired 
 47.28  limitation or exclusion under the previous coverage.  The 
 47.29  individual health plan must cover pregnancy on the same basis as 
 47.30  any other covered illness under the individual health plan.  The 
 47.31  initial premium rate for the individual health plan must comply 
 47.32  with subdivision 3.  The premium rate upon renewal must comply 
 47.33  with subdivision 2.  In no event shall the premium rate exceed 
 47.34  90 percent of the premium charged for comparable individual 
 47.35  coverage by the Minnesota comprehensive health association, and 
 47.36  the premium rate must be less than that amount if necessary to 
 48.1   otherwise comply with this section.  An individual health plan 
 48.2   offered under this paragraph to a person satisfies the health 
 48.3   carrier's obligation to offer conversion coverage under section 
 48.4   62E.16, with respect to that person.  Coverage issued under this 
 48.5   paragraph must provide that it cannot be canceled or nonrenewed 
 48.6   as a result of the health carrier's subsequent decision to leave 
 48.7   the individual, small employer, or other group market.  Section 
 48.8   72A.20, subdivision 28, applies to this paragraph. 
 48.9      Sec. 41.  Minnesota Statutes 1998, section 62B.04, 
 48.10  subdivision 2, is amended to read: 
 48.11     Subd. 2.  [CREDIT ACCIDENT AND HEALTH INSURANCE.] (a) The 
 48.12  total amount of periodic indemnity payable by credit accident 
 48.13  and health insurance in the event of disability, as defined in 
 48.14  the policy, shall not exceed the aggregate of the periodic 
 48.15  scheduled unpaid installments of the indebtedness; and the 
 48.16  amount of each periodic indemnity payment shall not exceed the 
 48.17  original indebtedness divided by the number of periodic 
 48.18  installments.  If the credit transaction provides for a variable 
 48.19  rate of finance charge or interest, the initial rate or the 
 48.20  scheduled rates based on the initial index must be used in 
 48.21  determining the aggregate of the periodic scheduled unpaid 
 48.22  installments of the indebtedness. 
 48.23     (b) If for any reason a policy of credit disability 
 48.24  insurance will not or may not provide the policyholder or 
 48.25  certificate holder with coverage for the total amount of 
 48.26  indebtedness on the related loan or debt in the event of any one 
 48.27  instance of disability, the applicant must be given a written 
 48.28  disclosure on or accompanying the application.  If the 
 48.29  disclosure is on the application, it must be immediately above 
 48.30  the signature line, within a box and the word "WARNING" must be 
 48.31  in 14-point bold face capital letters.  The rest of the text 
 48.32  must be in capital letters and bold face 10-point print.  If the 
 48.33  disclosure is on a separate sheet, it must be on an 8-1/2 inch 
 48.34  by 11 inch sheet of paper with the word "WARNING" in 14-point 
 48.35  bold face capital letters with the remaining text in 10-point 
 48.36  bold faced capital letters.  If a separate disclosure is used, 
 49.1   it must be signed by the applicant with one copy provided to the 
 49.2   applicant and one copy maintained by the insurer for at least 
 49.3   the term of the policy or certificate, if coverage is issued.  
 49.4   The disclosure must state: 
 49.5      WARNING:  IF YOU BECOME DISABLED AS DEFINED IN THE 
 49.6   POLICY/CERTIFICATE, THIS DISABILITY INSURANCE POLICY/CERTIFICATE 
 49.7   MAY NOT COVER YOUR ENTIRE INDEBTEDNESS.  IF YOU BECOME DISABLED 
 49.8   AT A POINT WHERE THE NUMBER OF MONTHLY INSTALLMENT PAYMENTS 
 49.9   REMAINING EXCEEDS THE PERIOD OF COVERAGE BEING PROVIDED BY THIS 
 49.10  POLICY/CERTIFICATE, THE BENEFITS AVAILABLE WILL BE LESS THAN THE 
 49.11  AMOUNT NECESSARY TO PAY OFF YOUR LOAN.  IF YOU WANT COVERAGE FOR 
 49.12  THE FULL AMOUNT OF YOUR INDEBTEDNESS OR HAVE ANY QUESTIONS ABOUT 
 49.13  THE EXTENT OR NATURE OF YOUR COVERAGE, YOU SHOULD DISCUSS THEM 
 49.14  WITH YOUR AGENT AND/OR ENROLLER BEFORE SUBMITTING YOUR 
 49.15  APPLICATION.  
 49.16     (c) Any policy or certificate of credit disability 
 49.17  insurance which contains a critical period must make available 
 49.18  for any single instance of disability monthly indemnity benefit 
 49.19  payments for the term of the loan, 24 months, or the term of the 
 49.20  disability, whichever is less.  For the purposes of this 
 49.21  section, a critical period is when there is a limited number of 
 49.22  monthly benefit payments that may be paid to the beneficiary or 
 49.23  the policyholder or certificate holder as a result of any one 
 49.24  instance of disability.  
 49.25     (d) Unless the policy or certificate provides for such 
 49.26  coverage, nothing in this section shall be interpreted as 
 49.27  requiring an insurer to provide coverage for the final payment 
 49.28  of a balloon loan or for a period that exceeds the age 
 49.29  limitation in the policy or certificate or for amounts that 
 49.30  exceed the insurer's maximum liability limits. 
 49.31     Sec. 42.  Minnesota Statutes 1998, section 62D.12, 
 49.32  subdivision 2, is amended to read: 
 49.33     Subd. 2.  [COVERAGE CANCELLATION; NONRENEWAL.] No health 
 49.34  maintenance organization may cancel or fail to renew the 
 49.35  coverage of an enrollee except for (a) failure to pay the charge 
 49.36  for health care coverage; (b) termination of the health care 
 50.1   plan; (c) termination of the group plan; (d) enrollee moving out 
 50.2   of the area served, subject to section 62A.17, subdivisions 1 
 50.3   and 6, and section 62D.104; (e) enrollee moving out of an 
 50.4   eligible group, subject to section 62A.17, subdivisions 1 and 6, 
 50.5   and section 62D.104; (f) failure to make copayments required by 
 50.6   the health care plan; ~~or~~ (g) fraud or misrepresentation by the 
 50.7   enrollee with respect to eligibility for coverage or any other 
 50.8   material fact; or (h) other reasons established in rules 
 50.9   promulgated by the commissioner of health. 
 50.10     Sec. 43.  Minnesota Statutes 1998, section 62E.02, 
 50.11  subdivision 1, is amended to read: 
 50.12     Subdivision 1.  [APPLICATION.] For the purposes of sections 
 50.13  62E.01 to ~~62E.16~~ 62E.19, the terms and phrases defined in this 
 50.14  section have the meanings given them. 
 50.15     Sec. 44.  Minnesota Statutes 1998, section 62E.05, 
 50.16  subdivision 1, is amended to read: 
 50.17     Subdivision 1.  [CERTIFICATION.] Upon application by an 
 50.18  insurer, fraternal, or employer for certification of a plan of 
 50.19  health coverage as a qualified plan or a qualified Medicare 
 50.20  supplement plan for the purposes of sections 62E.01 to ~~62E.16~~ 
 50.21  62E.19, the commissioner shall make a determination within 90 
 50.22  days as to whether the plan is qualified.  All plans of health 
 50.23  coverage, except Medicare supplement policies, shall be labeled 
 50.24  as "qualified" or "nonqualified" on the front of the policy or 
 50.25  contract, or on the schedule page.  All qualified plans shall 
 50.26  indicate whether they are number one, two, or three coverage 
 50.27  plans. 
 50.28     Sec. 45.  Minnesota Statutes 1998, section 62E.09, is 
 50.29  amended to read: 
 50.30     62E.09 [DUTIES OF COMMISSIONER.] 
 50.31     The commissioner may: 
 50.32     (a) Formulate general policies to advance the purposes of 
 50.33  sections 62E.01 to ~~62E.16~~ 62E.19; 
 50.34     (b) Supervise the creation of the Minnesota comprehensive 
 50.35  health association within the limits described in section 
 50.36  62E.10; 
 51.1      (c) Approve the selection of the writing carrier by the 
 51.2   association, approve the association's contract with the writing 
 51.3   carrier, and approve the state plan coverage; 
 51.4      (d) Appoint advisory committees; 
 51.5      (e) Conduct periodic audits to assure the general accuracy 
 51.6   of the financial data submitted by the writing carrier and the 
 51.7   association; 
 51.8      (f) Contract with the federal government or any other unit 
 51.9   of government to ensure coordination of the state plan with 
 51.10  other governmental assistance programs; 
 51.11     (g) Undertake directly or through contracts with other 
 51.12  persons studies or demonstration programs to develop awareness 
 51.13  of the benefits of sections 62E.01 to 62E.16, so that the 
 51.14  residents of this state may best avail themselves of the health 
 51.15  care benefits provided by these sections; 
 51.16     (h) Contract with insurers and others for administrative 
 51.17  services; and 
 51.18     (i) Adopt, amend, suspend and repeal rules as reasonably 
 51.19  necessary to carry out and make effective the provisions and 
 51.20  purposes of sections 62E.01 to ~~62E.16~~ 62E.19.  
 51.21     Sec. 46.  Minnesota Statutes 1998, section 62E.13, 
 51.22  subdivision 6, is amended to read: 
 51.23     Subd. 6.  [CLAIMS PAYMENTS.] All claims shall be paid by 
 51.24  the writing carrier pursuant to the provisions of sections 
 51.25  62E.01 to ~~62E.16~~ 62E.19, and shall indicate that the claim was 
 51.26  paid by the state plan.  Each claim payment shall include 
 51.27  information specifying the procedure to be followed in the event 
 51.28  of a dispute over the amount of payment. 
 51.29     Sec. 47.  Minnesota Statutes 1998, section 62E.13, 
 51.30  subdivision 8, is amended to read: 
 51.31     Subd. 8.  [WRITING CARRIER AS AGENT.] The writing carrier 
 51.32  shall at all times when carrying out its duties under sections 
 51.33  62E.01 to ~~62E.16~~ 62E.19 be considered an agent of the 
 51.34  association and the commissioner with civil liability subject to 
 51.35  the provisions of section 3.751. 
 51.36     Sec. 48.  Minnesota Statutes 1998, section 62E.14, 
 52.1   subdivision 2, is amended to read: 
 52.2      Subd. 2.  [WRITING CARRIER'S RESPONSE.] Within 30 days of 
 52.3   receipt of the certificate described in subdivision 1, the 
 52.4   writing carrier shall either reject the application for failing 
 52.5   to comply with the requirements in subdivision 1 or forward the 
 52.6   eligible person a notice of acceptance and billing information.  
 52.7   Insurance shall be effective immediately upon receipt of the 
 52.8   first month's state plan premium, and shall be retroactive to 
 52.9   the date of the application, if the applicant otherwise complies 
 52.10  with the requirements of sections 62E.01 to ~~62E.16~~ 62E.19. 
 52.11     Sec. 49.  Minnesota Statutes 1998, section 62E.15, 
 52.12  subdivision 2, is amended to read: 
 52.13     Subd. 2.  [ASSOCIATION'S DUTY.] The association shall 
 52.14  devise and implement means of maintaining public awareness of 
 52.15  the provisions of sections 62E.01 to ~~62E.17~~ 62E.19 and shall 
 52.16  administer these sections in a manner which facilitates public 
 52.17  participation in the state plan. 
 52.18     Sec. 50.  Minnesota Statutes 1998, section 62I.07, 
 52.19  subdivision 1, is amended to read: 
 52.20     Subdivision 1.  [GENERAL ASSESSMENT.] Each member of the 
 52.21  association that is authorized to write property and casualty 
 52.22  insurance in the state shall participate in its losses and 
 52.23  expenses in the proportion that the direct written premiums of 
 52.24  the member on the kinds of insurance in that account bears to 
 52.25  the total aggregate direct written premiums written in this 
 52.26  state by all members on the kinds of insurance in that account.  
 52.27  The members' participation in the association shall be 
 52.28  determined annually on the direct written premiums written 
 52.29  during the preceding calendar year as reported on the annual 
 52.30  statements and other reports filed by the member with the 
 52.31  commissioner.  Direct written premiums mean that amount at page 
 52.32  14, column (2), lines ~~5~~ 5.1, 8, 9, 17, 21.2, 22, 23, 24, 25, 26, 
 52.33  and 27 of the annual statement filed annually with the 
 52.34  department of commerce under section 60A.13. 
 52.35     Sec. 51.  Minnesota Statutes 1998, section 62L.02, 
 52.36  subdivision 24, is amended to read: 
 53.1      Subd. 24.  [QUALIFYING COVERAGE.] "Qualifying coverage" 
 53.2   means health benefits or health coverage provided under: 
 53.3      (1) a health benefit plan, as defined in this section, but 
 53.4   without regard to whether it is issued to a small employer and 
 53.5   including blanket accident and sickness insurance, other than 
 53.6   accident-only coverage, as defined in section 62A.11; 
 53.7      (2) part A or part B of Medicare; 
 53.8      (3) medical assistance under chapter 256B; 
 53.9      (4) general assistance medical care under chapter 256D; 
 53.10     (5) MCHA; 
 53.11     (6) a self-insured health plan; 
 53.12     (7) the MinnesotaCare program established under section 
 53.13  256L.02; 
 53.14     (8) a plan provided under section 43A.316, 43A.317, or 
 53.15  471.617; 
 53.16     (9) the Civilian Health and Medical Program of the 
 53.17  Uniformed Services (CHAMPUS) or other coverage provided under 
 53.18  United States Code, title 10, chapter 55; 
 53.19     (10) coverage provided by a health care network cooperative 
 53.20  under chapter 62R or by a health provider cooperative under 
 53.21  section 62R.17; 
 53.22     (11) a medical care program of the Indian Health Service or 
 53.23  of a tribal organization; 
 53.24     (12) the federal Employees Health Benefits Plan, or other 
 53.25  coverage provided under United States Code, title 5, chapter 89; 
 53.26     (13) a health benefit plan under section 5(e) of the Peace 
 53.27  Corps Act, codified as United States Code, title 22, section 
 53.28  2504(e); ~~or~~ 
 53.29     (14) a health plan; or 
 53.30     ~~(14)~~ (15) a plan similar to any of the above plans provided 
 53.31  in this state or in another state as determined by the 
 53.32  commissioner.  
 53.33     Sec. 52.  Minnesota Statutes 1998, section 62L.03, 
 53.34  subdivision 5, is amended to read: 
 53.35     Subd. 5.  [CANCELLATIONS AND FAILURES TO RENEW.] (a) No 
 53.36  health carrier shall cancel, decline to issue, or fail to renew 
 54.1   a health benefit plan as a result of the claim experience or 
 54.2   health status of the persons covered or to be covered by the 
 54.3   health benefit plan.  For purposes of this subdivision, a 
 54.4   failure to renew does not include a uniform modification of 
 54.5   coverage at time of renewal, as described in subdivision 1. 
 54.6      (b) A health carrier may cancel or fail to renew a health 
 54.7   benefit plan: 
 54.8      (1) for nonpayment of the required premium; 
 54.9      (2) for fraud or misrepresentation by the small employer 
 54.10  with respect to eligibility for coverage or any other material 
 54.11  fact; 
 54.12     (3) if the employer fails to comply with the minimum 
 54.13  contribution percentage required under subdivision 3; or 
 54.14     (4) for any other reasons or grounds expressly permitted by 
 54.15  the respective licensing laws and regulations governing a health 
 54.16  carrier, including, but not limited to, service area 
 54.17  restrictions imposed on health maintenance organizations under 
 54.18  section 62D.03, subdivision 4, paragraph (m), to the extent that 
 54.19  these grounds are not expressly inconsistent with this chapter. 
 54.20     (c) A health carrier may fail to renew a health benefit 
 54.21  plan: 
 54.22     (1) if eligible employee participation during the preceding 
 54.23  calendar year declines to less than 75 percent, subject to the 
 54.24  waiver of coverage provision in subdivision 3; 
 54.25     (2) if the health carrier ceases to do business in the 
 54.26  small employer market under section 62L.09; or 
 54.27     (3) if a failure to renew is based upon the health 
 54.28  carrier's decision to discontinue the health benefit plan form 
 54.29  previously issued to the small employer, but only if the health 
 54.30  carrier permits each small employer covered under the prior form 
 54.31  to switch to its choice of any other health benefit plan offered 
 54.32  by the health carrier, without any underwriting restrictions 
 54.33  that would not have been permitted for renewal purposes. 
 54.34     (d) A health carrier need not renew a health benefit plan, 
 54.35  and shall not renew a small employer plan, if an employer ceases 
 54.36  to qualify as a small employer as defined in section 62L.02.  If 
 55.1   a health benefit plan, other than a small employer plan, 
 55.2   provides terms of renewal that do not exclude an employer that 
 55.3   is no longer a small employer, the health benefit plan may be 
 55.4   renewed according to its own terms.  If a health carrier issues 
 55.5   or renews a health plan to an employer that is no longer a small 
 55.6   employer, without interruption of coverage, the health plan is 
 55.7   subject to section 60A.082.  
 55.8      (e) A health carrier may cancel or fail to renew the 
 55.9   coverage of an individual employee or dependent under a health 
 55.10  benefit plan for fraud or misrepresentation by the eligible 
 55.11  employee or dependent with respect to eligibility for coverage 
 55.12  or any other material fact. 
 55.13     Sec. 53.  Minnesota Statutes 1998, section 62L.05, 
 55.14  subdivision 5, is amended to read: 
 55.15     Subd. 5.  [PLAN VARIATIONS.] (a) No health carrier shall 
 55.16  offer to a small employer a health benefit plan that differs 
 55.17  from the two small employer plans described in subdivisions 1 to 
 55.18  4, unless the health benefit plan complies with all provisions 
 55.19  of chapters 62A, 62C, 62D, 62E, 62H, 62N, 62Q, and 64B that 
 55.20  otherwise apply to the health carrier, except as expressly 
 55.21  permitted by paragraph (b). 
 55.22     (b) As an exception to paragraph (a), a health benefit plan 
 55.23  is deemed to be a small employer plan and to be in compliance 
 55.24  with paragraph (a) if it differs from one of the two small 
 55.25  employer plans described in subdivisions 1 to 4 only by 
 55.26  providing benefits in addition to those described in subdivision 
 55.27  4, provided that the health benefit plan has an actuarial value 
 55.28  that exceeds the actuarial value of the benefits described in 
 55.29  subdivision 4 by no more than two percent.  "Benefits in 
 55.30  addition" means additional units of a benefit listed in 
 55.31  subdivision 4 or one or more benefits not listed in subdivision 
 55.32  4. 
 55.33     Sec. 54.  Minnesota Statutes 1998, section 62L.14, 
 55.34  subdivision 7, is amended to read: 
 55.35     Subd. 7.  [COMPENSATION.] Public directors may be 
 55.36  reimbursed by the association for reasonable and necessary 
 56.1   expenses incurred by them in performing their duties as 
 56.2   directors~~, but shall not otherwise be compensated by the~~ 
 56.3   ~~association for their services~~ and may be compensated by the 
 56.4   association at a rate of up to $55 per day spent on authorized 
 56.5   association activities. 
 56.6      Sec. 55.  Minnesota Statutes 1998, section 62Q.185, is 
 56.7   amended to read: 
 56.8      62Q.185 [GUARANTEED RENEWABILITY; LARGE EMPLOYER GROUP 
 56.9   HEALTH COVERAGE.] 
 56.10     (a) No health plan company, as defined in section 62Q.01, 
 56.11  subdivision 4, shall refuse to renew a health benefit plan, as 
 56.12  defined in section 62L.02, subdivision 15, but issued to a large 
 56.13  employer, as defined in section 62Q.18, subdivision 1. 
 56.14     (b) This section does not require renewal if: 
 56.15     (1) the large employer has failed to pay premiums or 
 56.16  contributions as required under the terms of the health benefit 
 56.17  plan, or the health plan company has not received timely premium 
 56.18  payments unless the late payments were received within a grace 
 56.19  period provided under state law; 
 56.20     (2) the large employer has performed an act or practice 
 56.21  that constitutes fraud or misrepresentation of material fact 
 56.22  under the terms of the health benefit plan; 
 56.23     (3) the large employer has failed to comply with a material 
 56.24  plan provision relating to employer contribution or group 
 56.25  participation rules not prohibited by state law; 
 56.26     (4) the health plan company is ceasing to offer coverage in 
 56.27  the large employer market in this state in compliance with 
 56.28  United States Code, title 42, section 300gg-12(c), and 
 56.29  applicable state law; 
 56.30     (5) in the case of a health maintenance organization, there 
 56.31  is no longer any enrollee in the large employer's health benefit 
 56.32  plan who lives, resides, or works in the approved service area; 
 56.33  or 
 56.34     (6) in the case of a health benefit plan made available to 
 56.35  large employers only through one or more bona fide associations, 
 56.36  the membership of the large employer in the association ceases, 
 57.1   but only if such coverage is terminated uniformly without regard 
 57.2   to any health-related factor relating to any covered individual. 
 57.3      (c) This section does not prohibit a health plan company 
 57.4   from modifying the premium rate or from modifying the coverage 
 57.5   for purposes of renewal. 
 57.6      (d) This section does not require renewal of the coverage 
 57.7   of individual enrollees under the health benefit plan if the 
 57.8   individual enrollee has performed an act or practice that 
 57.9   constitutes fraud or misrepresentation of material fact under 
 57.10  the terms of the health benefit plan. 
 57.11     Sec. 56.  Minnesota Statutes 1998, section 62S.01, 
 57.12  subdivision 14, is amended to read: 
 57.13     Subd. 14.  [LOSS OF FUNCTIONAL CAPACITY.] "Loss of 
 57.14  functional capacity" means requiring the substantial assistance 
 57.15  of another person to perform the prescribed activities of daily 
 57.16  living. 
 57.17     Sec. 57.  Minnesota Statutes 1998, section 62S.05, 
 57.18  subdivision 2, is amended to read: 
 57.19     Subd. 2.  [PROHIBITED EXCLUSION.] A long-term care 
 57.20  insurance policy or certificate, other than a policy or 
 57.21  certificate issued to a group as defined in section 62S.01, 
 57.22  subdivision 15, clause (1), may not exclude coverage for a loss 
 57.23  or confinement that is the result of a preexisting condition 
 57.24  ~~unless the loss or confinement begins within~~ more than six 
 57.25  months following the effective date of coverage of an insured 
 57.26  person. 
 57.27     Sec. 58.  Minnesota Statutes 1998, section 65A.01, 
 57.28  subdivision 1, is amended to read: 
 57.29     Subdivision 1.  [DESIGNATION AND SCOPE.] The printed form 
 57.30  of a policy of fire insurance, as set forth in subdivisions 3 
 57.31  and 3a, shall be known and designated as the "Minnesota standard 
 57.32  fire insurance policy" to be used in the state of Minnesota.  No 
 57.33  policy or contract of fire insurance shall be made, issued or 
 57.34  delivered by any insurer including reciprocals or interinsurance 
 57.35  exchanges or any agent or representative thereof, on any 
 57.36  property in this state, unless it shall provide the specified 
 58.1   coverage and conform as to all provisions, stipulations, and 
 58.2   conditions, with such form of policy, except as provided in 
 58.3   sections 60A.08, subdivision 9; ~~60A.31 to 60A.351~~ 60A.352; 
 58.4   65A.06; 65A.29; 72A.20, subdivision 17; and other statutes 
 58.5   containing specific requirements that are inconsistent with the 
 58.6   form of this policy.  Any policy or contract otherwise subject 
 58.7   to the provisions of this subdivision, subdivisions 3 and 3a 
 58.8   which includes either on an unspecified basis as to coverage or 
 58.9   for a single premium, coverage against the peril of fire and 
 58.10  coverage against other perils may be issued without 
 58.11  incorporating the exact language of the Minnesota standard fire 
 58.12  insurance policy, provided:  Such policy or contract shall, with 
 58.13  respect to the peril of fire, afford the insured all the rights 
 58.14  and benefits of the Minnesota standard fire insurance policy and 
 58.15  such additional benefits as the policy provides; the provisions 
 58.16  in relation to mortgagee interests and obligations in said 
 58.17  Minnesota standard fire insurance policy shall be incorporated 
 58.18  therein without change; such policy or contract is complete as 
 58.19  to its terms of coverage; and, the commissioner is satisfied 
 58.20  that such policy or contract complies with the provisions hereof.
 58.21     Sec. 59.  Minnesota Statutes 1998, section 65A.27, 
 58.22  subdivision 4, is amended to read: 
 58.23     Subd. 4.  "Homeowner's insurance" means insurance coverage, 
 58.24  as provided in section 60A.06, subdivision 1, clause (1)(c), 
 58.25  normally written by the insurer as a standard homeowner's 
 58.26  package policy or as a standard residential renter's package 
 58.27  policy.  This definition includes, but is not limited to, 
 58.28  policies that are generally described as homeowner's policies, 
 58.29  mobile/manufactured homeowner's policies, dwelling owner 
 58.30  policies, condominium owner policies, and tenant policies. 
 58.31     Sec. 60.  Minnesota Statutes 1998, section 65A.29, 
 58.32  subdivision 4, is amended to read: 
 58.33     Subd. 4.  [FORM REQUIREMENTS.] Any notice or statement 
 58.34  required by subdivisions 1 to 3, or any other notice canceling a 
 58.35  homeowner's insurance policy must be written in language which 
 58.36  is easily readable and understandable by a person of average 
 59.1   intelligence and understanding.  The statement of reason must be 
 59.2   sufficiently specific to convey, clearly and without further 
 59.3   inquiry, the basis for the insurer's refusal to renew or to 
 59.4   write the insurance coverage. 
 59.5      The notice or statement must also inform the insured of: 
 59.6      (1) the possibility of coverage through the Minnesota 
 59.7   property insurance placement facility under sections 65A.31 to 
 59.8   65A.42; 
 59.9      (2) the right to object to the commissioner under 
 59.10  subdivision 9; and 
 59.11     (3) the right to the return of unearned premium in 
 59.12  appropriate situations under subdivision 10. 
 59.13     Sec. 61.  Minnesota Statutes 1998, section 65B.02, 
 59.14  subdivision 2, is amended to read: 
 59.15     Subd. 2.  [QUALIFIED APPLICANT.] "Qualified applicant" 
 59.16  means a person who: 
 59.17     (1) Is a resident of this state, 
 59.18     (2) Owns a motor vehicle registered in accordance with the 
 59.19  laws of this state, or has a valid driver's license, or is 
 59.20  required to file ~~proof of financial responsibility~~ a certificate 
 59.21  of insurance ~~with the commissioner of public safety in~~ 
 59.22  ~~accordance with the provisions of this chapter~~, and 
 59.23     (3) Has no unpaid premiums with respect to prior automobile 
 59.24  insurance. 
 59.25     Sec. 62.  Minnesota Statutes 1998, section 65B.44, 
 59.26  subdivision 1, is amended to read: 
 59.27     Subdivision 1.  [INCLUSIONS.] Basic economic loss benefits 
 59.28  shall provide reimbursement for all loss suffered through injury 
 59.29  arising out of the maintenance or use of a motor vehicle, 
 59.30  subject to any applicable deductibles, exclusions, 
 59.31  disqualifications, and other conditions, and shall provide a 
 59.32  ~~maximum~~ minimum of $40,000 for loss arising out of the injury of 
 59.33  any one person, consisting of: 
 59.34     (a) $20,000 for medical expense loss arising out of injury 
 59.35  to any one person; and 
 59.36     (b) a total of $20,000 for income loss, replacement 
 60.1   services loss, funeral expense loss, survivor's economic loss, 
 60.2   and survivor's replacement services loss arising out of the 
 60.3   injury to any one person. 
 60.4      Sec. 63.  Minnesota Statutes 1998, section 65B.48, 
 60.5   subdivision 5, is amended to read: 
 60.6      Subd. 5.  (a) Every owner of a motorcycle registered or 
 60.7   required to be registered in this state or operated in this 
 60.8   state by the owner or with the owner's permission shall provide 
 60.9   and maintain security for the payment of tort liabilities 
 60.10  arising out of the maintenance or use of the motorcycle in this 
 60.11  state.  Security may be provided by a contract of liability 
 60.12  insurance complying with section 65B.49, subdivision 3, or by 
 60.13  qualifying as a self insurer in the manner provided in 
 60.14  subdivision 3. 
 60.15     (b) At the time an application for motorcycle insurance 
 60.16  without personal injury protection coverage is completed, there 
 60.17  must be attached to the application a separate form containing a 
 60.18  written notice in at least 10-point bold type, if printed, or in 
 60.19  capital letters, if typewritten that states: 
 60.20     "Under Minnesota law, a policy of motorcycle coverage 
 60.21     issued in the State of Minnesota must provide liability 
 60.22     coverage only, and there is no requirement that the policy 
 60.23     provide personal injury protection (PIP) coverage in the 
 60.24     case of injury sustained by the insured.  No PIP coverage 
 60.25     provided by an automobile insurance policy you may have in 
 60.26     force will extend to provide coverage in the event of a 
 60.27     motorcycle accident." 
 60.28     Sec. 64.  Minnesota Statutes 1998, section 72A.125, 
 60.29  subdivision 3, is amended to read: 
 60.30     Subd. 3.  [COLLISION DAMAGE WAIVER.] A "collision damage 
 60.31  waiver" is a discharge of the responsibility of the renter or 
 60.32  leasee to return the motor vehicle in the same condition as when 
 60.33  it was first rented.  The waiver is a full and complete 
 60.34  discharge of the responsibility to return the vehicle in the 
 60.35  same condition as when it was first rented.  The waiver may not 
 60.36  contain any exclusions except those approved by the commissioner 
 61.1   ~~pursuant to the requirements contained in section 61A.02,~~ 
 61.2   ~~subdivisions 2 to 5~~. 
 61.3      Sec. 65.  Minnesota Statutes 1998, section 72A.20, 
 61.4   subdivision 29, is amended to read: 
 61.5      Subd. 29.  [HIV TESTS; CRIME VICTIMS AND EMERGENCY MEDICAL 
 61.6   SERVICE PERSONNEL.] No insurer regulated under chapter 61A ~~or~~, 
 61.7   62B, or 62S, or providing health, medical, hospitalization, 
 61.8   long-term care insurance, or accident and sickness insurance 
 61.9   regulated under chapter 62A, or nonprofit health ~~services~~ 
 61.10  service plan corporation regulated under chapter 62C, health 
 61.11  maintenance organization regulated under chapter 62D, or 
 61.12  fraternal benefit society regulated under chapter 64B, may: 
 61.13     (1) obtain or use the performance of or the results of a 
 61.14  test to determine the presence of the human immunodeficiency 
 61.15  virus (HIV) antibody performed on an offender under section 
 61.16  611A.19 or performed on a crime victim who was exposed to or had 
 61.17  contact with an offender's bodily fluids during commission of a 
 61.18  crime that was reported to law enforcement officials, in order 
 61.19  to make an underwriting decision, cancel, fail to renew, or take 
 61.20  any other action with respect to a policy, plan, certificate, or 
 61.21  contract; 
 61.22     (2) obtain or use the performance of or the results of a 
 61.23  test to determine the presence of the human immunodeficiency 
 61.24  virus (HIV) antibody performed on a patient pursuant to sections 
 61.25  144.761 to 144.7691, or performed on emergency medical services 
 61.26  personnel pursuant to the protocol under section 144.762, 
 61.27  subdivision 2, in order to make an underwriting decision, 
 61.28  cancel, fail to renew, or take any other action with respect to 
 61.29  a policy, plan, certificate, or contract; for purposes of this 
 61.30  clause, "patient" and "emergency medical services personnel" 
 61.31  have the meanings given in section 144.761; or 
 61.32     (3) ask an applicant for coverage or a person already 
 61.33  covered whether the person has:  (i) had a test performed for 
 61.34  the reason set forth in clause (1) or (2); or (ii) been the 
 61.35  victim of an assault or any other crime which involves bodily 
 61.36  contact with the offender. 
 62.1      A question that purports to require an answer that would 
 62.2   provide information regarding a test performed for the reason 
 62.3   set forth in clause (1) or (2) may be interpreted as excluding 
 62.4   this test.  An answer that does not mention the test is 
 62.5   considered to be a truthful answer for all purposes.  An 
 62.6   authorization for the release of medical records for insurance 
 62.7   purposes must specifically exclude any test performed for the 
 62.8   purpose set forth in clause (1) or (2) and must be read as 
 62.9   providing this exclusion regardless of whether the exclusion is 
 62.10  expressly stated.  This subdivision does not affect tests 
 62.11  conducted for purposes other than those described in clause (1) 
 62.12  or (2), including any test to determine the presence of the 
 62.13  human immunodeficiency virus (HIV) antibody if such test was 
 62.14  performed at the insurer's direction as part of the insurer's 
 62.15  normal underwriting requirements. 
 62.16     Sec. 66.  Minnesota Statutes 1998, section 72B.04, 
 62.17  subdivision 10, is amended to read: 
 62.18     Subd. 10.  [FEES.] A fee of $40 is imposed for each initial 
 62.19  license or temporary permit and $25 for each renewal thereof or 
 62.20  amendment thereto.  A fee of $20 is imposed for the registration 
 62.21  of each nonlicensed adjuster who is required to register under 
 62.22  section 72B.06.  All fees shall be transmitted to the 
 62.23  commissioner and shall be payable to the ~~state~~ 
 62.24  ~~treasurer~~ department of commerce.  ~~If a fee is paid for an~~ 
 62.25  ~~examination and if within one year from the date of that payment~~ 
 62.26  ~~no written request for a refund is received by the commissioner~~ 
 62.27  ~~or the examination for which the fee was paid is not taken, the~~ 
 62.28  ~~fee is forfeited to the state of Minnesota.~~ 
 62.29     Sec. 67.  Minnesota Statutes 1998, section 79A.01, 
 62.30  subdivision 10, is amended to read: 
 62.31     Subd. 10.  [COMMON CLAIMS FUND.] "Common claims fund," with 
 62.32  respect to group self-insurers, means the cash, cash 
 62.33  equivalents, or investment accounts maintained by the ~~mutual~~ 
 62.34  self-insurance group to pay its workers' compensation 
 62.35  liabilities.  
 62.36     Sec. 68.  Minnesota Statutes 1998, section 79A.01, is 
 63.1   amended by adding a subdivision to read: 
 63.2      Subd. 11.  [DIMINUTIVE APPLICANTS.] "Diminutive applicants" 
 63.3   to group self-insurance means applicants to existing 
 63.4   self-insurance groups whose equity and premium are both less 
 63.5   than five percent of the total group's equity and premium. 
 63.6      Sec. 69.  Minnesota Statutes 1998, section 79A.02, 
 63.7   subdivision 1, is amended to read: 
 63.8      Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
 63.9   the commissioner, there is established a workers' compensation 
 63.10  self-insurers' advisory committee of five members that are 
 63.11  employers authorized to self-insure in Minnesota.  Three of the 
 63.12  members and three alternates shall be elected by the 
 63.13  self-insurers' security fund board of trustees and two members 
 63.14  and two alternates shall be appointed by the commissioner.  
 63.15     Sec. 70.  Minnesota Statutes 1998, section 79A.02, 
 63.16  subdivision 4, is amended to read: 
 63.17     Subd. 4.  [RECOMMENDATIONS TO COMMISSIONER REGARDING 
 63.18  REVOCATION.] After each fifth anniversary from the date each 
 63.19  individual and group self-insurer becomes certified to 
 63.20  self-insure, the committee shall review all relevant financial 
 63.21  data filed with the department of commerce that is otherwise 
 63.22  available to the public and make a recommendation to the 
 63.23  commissioner about whether each self-insurer's certificate 
 63.24  should be revoked.  For group self-insurers who have been in 
 63.25  existence for five years or more and have been granted renewal 
 63.26  authority, a level of funding in the common claims fund must be 
 63.27  maintained at not less than the greater of either:  (1) one 
 63.28  year's claim losses paid in the most recent year; or (2) 
 63.29  one-third of the security deposit posted with the department of 
 63.30  commerce according to section 79A.04, subdivision 2.  This 
 63.31  provision supersedes any requirements under section 79A.03, 
 63.32  subdivision 10, and Minnesota Rules, part 2780.5000. 
 63.33     Sec. 71.  Minnesota Statutes 1998, section 79A.03, 
 63.34  subdivision 6, is amended to read: 
 63.35     Subd. 6.  [APPLICATIONS FOR GROUP SELF-INSURANCE.] (a) Two 
 63.36  or more employers may apply to the commissioner for the 
 64.1   authority to self-insure as a group, using forms available from 
 64.2   the commissioner.  This initial application shall be accompanied 
 64.3   by a copy of the bylaws or plan of operation adopted by the 
 64.4   group.  Such bylaws or plan of operation shall conform to the 
 64.5   conditions prescribed by law or rule.  The commissioner shall 
 64.6   approve or disapprove the bylaws within 60 days unless a 
 64.7   question as to the legality of a specific bylaw or plan 
 64.8   provision has been referred to the attorney general's office.  
 64.9   The commissioner shall make a determination as to the 
 64.10  application within 15 days after receipt of the requested 
 64.11  response from the attorney general's office. 
 64.12     (b) After the initial application and the bylaws or plan of 
 64.13  operation have been approved by the commissioner or at the time 
 64.14  of the initial application, the group shall submit the names of 
 64.15  employers that will be members of the group; an indemnity 
 64.16  agreement providing for joint and several liability for all 
 64.17  group members for any and all workers' compensation claims 
 64.18  incurred by any member of the group, as set forth in Minnesota 
 64.19  Rules, part 2780.9920, signed by an officer of each member; and 
 64.20  an accounting review performed by a certified public 
 64.21  accountant.  A certified financial audit may be filed in lieu of 
 64.22  an accounting review.  
 64.23     (c) When a group has obtained its authority to self-insure, 
 64.24  additional applicants who wish to join the group must apply for 
 64.25  approval by submitting, at least 45 days before joining the 
 64.26  group:  (1) an application; (2) an indemnity agreement providing 
 64.27  for joint and several liability as set forth in Minnesota Rules, 
 64.28  part 2780.9920, signed by an officer of the applicant; and (3) a 
 64.29  certified financial audit performed by a certified public 
 64.30  accountant.  An accounting review performed by a certified 
 64.31  public accountant may be filed in lieu of a certified audit. 
 64.32     New diminutive applicants to the group, as defined in 
 64.33  section 79A.01, subdivision 11, applying for membership in 
 64.34  groups in existence longer than one year, who have a combined 
 64.35  equity of all group members in excess of 15 times the last 
 64.36  retention limit selected by the group with the workers' 
 65.1   compensation reinsurance association, and have posted 125 
 65.2   percent of the group's total estimated future liability, must 
 65.3   submit the items in this paragraph at least ten days before 
 65.4   joining the group. 
 65.5      If the cumulative total of premium added to the group by 
 65.6   diminutive new members is greater than 50 percent in a fiscal 
 65.7   year of the group, all subsequent new members' applications must 
 65.8   be submitted at least 45 days before joining the group. 
 65.9      In all cases of new membership, evidence that cash premiums 
 65.10  equal to not less than 20 percent of the current year's modified 
 65.11  premium of each applicant have been paid into a common claims 
 65.12  fund, maintained by the group in a designated depository, must 
 65.13  be filed with the department at least ten days before joining 
 65.14  the group. 
 65.15     Sec. 72.  Minnesota Statutes 1998, section 79A.03, 
 65.16  subdivision 7, is amended to read: 
 65.17     Subd. 7.  [FINANCIAL STANDARDS.] A self-insurer group 
 65.18  ~~proposing to self-insure~~ shall have and maintain: 
 65.19     (a) A combined net worth of all of the members of an amount 
 65.20  at least equal to the greater of ten times the retention 
 65.21  selected with the workers' compensation reinsurance association 
 65.22  or one-third of the current annual modified premium of the 
 65.23  members.  
 65.24     (b) Sufficient assets, net worth, and liquidity to promptly 
 65.25  and completely meet all obligations of its members under chapter 
 65.26  176 or this chapter.  In determining whether a group is in sound 
 65.27  financial condition, consideration shall be given to the 
 65.28  combined net worth of the member companies; the consolidated 
 65.29  long-term and short-term debt to equity ratios of the member 
 65.30  companies; any excess insurance other than reinsurance with the 
 65.31  workers' compensation reinsurance association, purchased by the 
 65.32  group from an insurer licensed in Minnesota or from an 
 65.33  authorized surplus line carrier; other financial data requested 
 65.34  by the commissioner or submitted by the group; and the combined 
 65.35  workers' compensation experience of the group for the last four 
 65.36  years. 
 66.1      Sec. 73.  Minnesota Statutes 1998, section 79A.03, 
 66.2   subdivision 9, is amended to read: 
 66.3      Subd. 9.  [FILING REPORTS.] (a) Incurred losses, paid and 
 66.4   unpaid, specifying indemnity and medical losses by 
 66.5   classification, payroll by classification, and current estimated 
 66.6   outstanding liability for workers' compensation shall be 
 66.7   reported to the commissioner by each self-insurer on a calendar 
 66.8   year basis, in a manner and on forms available from the 
 66.9   commissioner.  Payroll information must be filed by April 1 of 
 66.10  the following year~~, and loss information and total workers'~~ 
 66.11  ~~compensation liability must be filed by August 1 of the~~ 
 66.12  ~~following year~~.  
 66.13     (b) Each self-insurer shall, under oath, attest to the 
 66.14  accuracy of each report submitted pursuant to paragraph (a).  
 66.15  Upon sufficient cause, the commissioner shall require the 
 66.16  self-insurer to submit a certified audit of payroll and claim 
 66.17  records conducted by an independent auditor approved by the 
 66.18  commissioner, based on generally accepted accounting principles 
 66.19  and generally accepted auditing standards, and supported by an 
 66.20  actuarial review and opinion of the future contingent 
 66.21  liabilities.  The basis for sufficient cause shall include the 
 66.22  following factors:  where the losses reported appear 
 66.23  significantly different from similar types of businesses; where 
 66.24  major changes in the reports exist from year to year, which are 
 66.25  not solely attributable to economic factors; or where the 
 66.26  commissioner has reason to believe that the losses and payroll 
 66.27  in the report do not accurately reflect the losses and payroll 
 66.28  of that employer.  If any discrepancy is found, the commissioner 
 66.29  shall require changes in the self-insurer's or workers' 
 66.30  compensation service company record keeping practices. 
 66.31     (c) ~~With the~~ An annual ~~loss~~ status report due August 1 by 
 66.32  each self-insurer shall ~~report to the commissioner any workers'~~ 
 66.33  ~~compensation claim from the previous year where the full,~~ 
 66.34  ~~undiscounted value is estimated to exceed $50,000,~~ be filed in a 
 66.35  manner and on forms prescribed by the commissioner.  
 66.36     (d) Each individual self-insurer shall, within four months 
 67.1   after the end of its fiscal year, annually file with the 
 67.2   commissioner its latest 10K report required by the Securities 
 67.3   and Exchange Commission.  If an individual self-insurer does not 
 67.4   prepare a 10K report, it shall file an annual certified 
 67.5   financial statement, together with such other financial 
 67.6   information as the commissioner may require to substantiate data 
 67.7   in the financial statement.  
 67.8      (e) Each member of the group shall, within ~~four~~ seven 
 67.9   months after the end of each fiscal year for that group, file 
 67.10  the most recent annual financial statement, reviewed by a 
 67.11  certified public accountant in accordance with the Statements on 
 67.12  Standards for Accounting and Review Services, Volume 2, the 
 67.13  American Institute of Certified Public Accountants Professional 
 67.14  Standards, or audited in accordance with generally accepted 
 67.15  auditing standards, together with such other financial 
 67.16  information the commissioner may require.  In addition, the 
 67.17  group shall file, within ~~four~~ seven months after the end of each 
 67.18  fiscal year for that group, combining financial statements of 
 67.19  the group members, compiled by a certified public accountant in 
 67.20  accordance with the Statements on Standards for Accounting and 
 67.21  Review Services, Volume 2, the American Institute of Certified 
 67.22  Public Accountants Professional Standards.  The combining 
 67.23  financial statements shall include, but not be limited to, a 
 67.24  balance sheet, income statement, statement of changes in net 
 67.25  worth, and statement of cash flow.  Each combining financial 
 67.26  statement shall include a column for each individual group 
 67.27  member along with a total column.  
 67.28     Where a group has 50 or more members, the group shall file, 
 67.29  in lieu of the combining financial statements, a combined 
 67.30  financial statement showing only the total column for the entire 
 67.31  group's balance sheet, income statement, statement of changes in 
 67.32  net worth, and statement of cash flow.  Additionally, the group 
 67.33  shall disclose, for each member, the total assets, net worth, 
 67.34  revenue, and income for the most recent fiscal year.  The 
 67.35  combining and combined financial statements may omit all 
 67.36  footnote disclosures. 
 68.1      (f) In addition to the financial statements required by 
 68.2   paragraphs (d) and (e), interim financial statements or 10Q 
 68.3   reports required by the Securities and Exchange Commission may 
 68.4   be required by the commissioner upon an indication that there 
 68.5   has been deterioration in the self-insurer's financial 
 68.6   condition, including a worsening of current ratio, lessening of 
 68.7   net worth, net loss of income, the downgrading of the company's 
 68.8   bond rating, or any other significant change that may adversely 
 68.9   affect the self-insurer's ability to pay expected losses.  Any 
 68.10  self-insurer that files an 8K report with the Securities and 
 68.11  Exchange Commission shall also file a copy of the report with 
 68.12  the commissioner within 30 days of the filing with the 
 68.13  Securities and Exchange Commission. 
 68.14     Sec. 74.  Minnesota Statutes 1998, section 79A.03, 
 68.15  subdivision 10, is amended to read: 
 68.16     Subd. 10.  [ANNUAL AUDIT AND REFUNDS.] (a) The accounts and 
 68.17  records of the group self-insurer's fund shall be audited 
 68.18  annually.  Audits shall be made by certified public accountants, 
 68.19  based on generally accepted accounting principles and generally 
 68.20  accepted auditing standards, and supported by actuarial review 
 68.21  and opinion of the future contingent liabilities, in order to 
 68.22  determine the solvency of the self-insurer's fund.  All audits 
 68.23  required by this subdivision shall be filed with the 
 68.24  commissioner 90 days after the close of the fiscal year for the 
 68.25  group self-insurer.  The commissioner may require a special 
 68.26  audit to be made at other times if the financial stability of 
 68.27  the fund or the adequacy of its monetary reserves is in question.
 68.28     (b) One hundred percent of any surplus money for a fund 
 68.29  year in excess of 125 percent of the amount necessary to fulfill 
 68.30  all obligations under chapter 176 for that fund year may be 
 68.31  declared refundable to a member at any time after 18 months 
 68.32  following the end of such fund year.  There can be no more than 
 68.33  one refund in any 12-month period.  When all claims of any one 
 68.34  fund year have been fully paid, as certified by an actuary, all 
 68.35  surplus money from that fund year may be declared refundable. 
 68.36     Sec. 75.  Minnesota Statutes 1998, section 79A.03, is 
 69.1   amended by adding a subdivision to read: 
 69.2      Subd. 13.  [ANNUAL REQUIREMENTS.] The financial 
 69.3   requirements set forth in subdivisions 3, 4, 5, and 7, must be 
 69.4   met on an annual basis. 
 69.5      Sec. 76.  Minnesota Statutes 1998, section 79A.21, 
 69.6   subdivision 2, is amended to read: 
 69.7      Subd. 2.  [REQUIRED DOCUMENTS.] All first-year applications 
 69.8   must be accompanied by the following: 
 69.9      (a) A detailed business plan including the risk profile of 
 69.10  the proposed membership, underwriting guidelines, marketing 
 69.11  plan, minimum financial criteria for each member, and financial 
 69.12  projections for the first year of operation.  
 69.13     (b) A plan describing the method in which premiums are to 
 69.14  be charged to the employer members.  The plan shall be 
 69.15  accompanied by copies of the member's workers' compensation 
 69.16  insurance policies in force at the time of application.  In 
 69.17  developing the premium for the group, the commercial 
 69.18  self-insurance group shall base its premium on the Minnesota 
 69.19  workers' compensation insurers association's manual of rules, 
 69.20  loss costs, and classifications approved for use in Minnesota by 
 69.21  the commissioner.  Each member applicant shall, on a form 
 69.22  approved by the commissioner, complete estimated payrolls for 
 69.23  the first 12-month period that the applicant will be 
 69.24  self-insured.  Premium volume discounts per the plan will be 
 69.25  permitted if they can be shown to be consistent with actuarial 
 69.26  standards.  
 69.27     (c) A schedule indicating actual or anticipated operational 
 69.28  expenses of the commercial self-insurance group.  No authority 
 69.29  to self-insure will be granted unless, over the term of the 
 69.30  policy year, at least 65 percent of total revenues from all 
 69.31  sources for the year are available for the payment of its claim 
 69.32  and assessment obligations.  For purposes of this calculation, 
 69.33  claim and assessment obligations include the cost of allocated 
 69.34  loss expenses as well as special compensation fund and 
 69.35  commercial self-insurance group security fund assessments but 
 69.36  exclude the cost of unallocated loss expenses. 
 70.1      (d) An indemnity agreement from each member who will 
 70.2   participate in the commercial self-insurance group, signed by an 
 70.3   officer of each member, providing for joint and several 
 70.4   liability for all claims and expenses of all of the members of 
 70.5   the commercial self-insurance group arising in any fund year in 
 70.6   which the member was a participant on a form approved by the 
 70.7   commissioner.  The indemnity agreement shall provide for 
 70.8   assessments according to the group's bylaws on an individual and 
 70.9   proportionate basis. 
 70.10     (e) A copy of the commercial self-insurance group bylaws. 
 70.11     (f) Evidence of the security deposit required under section 
 70.12  79A.24, accompanied by the actuarial certification study for the 
 70.13  minimum security deposit as required under section 79A.24.  
 70.14     (g) Each initial member of the commercial self-insurance 
 70.15  group shall submit to the commercial self-insurance group 
 70.16  accountant its most recent annual financial statement.  
 70.17  Financial statements for a period ending more than six months 
 70.18  prior to the date of the application must be accompanied by an 
 70.19  affidavit, signed by a company officer under oath, stating that 
 70.20  there has been no material lessening of the net worth nor other 
 70.21  adverse changes in its financial condition since the end of the 
 70.22  period.  Individual group members constituting at least ~~75~~ 50 
 70.23  percent of the group's annual premium shall submit reviewed or 
 70.24  audited financial statements.  The remaining members ~~may~~ must 
 70.25  submit compilation level statements.  Statements for a period 
 70.26  ending more than 12 months prior to the date of application 
 70.27  cannot be accepted. 
 70.28     (h) A compiled combined financial statement of all group 
 70.29  members prepared by the commercial self-insurance group's 
 70.30  accountant and a list of members included in such 
 70.31  statements.  An "Agreed Upon Procedures" report, as determined 
 70.32  by the commissioner, indicating combined net worth, total 
 70.33  assets, cash flow, and net income of the group members may be 
 70.34  filed in lieu of the compiled combined financial statement. 
 70.35     (i) A copy of each member's accountant's report letter from 
 70.36  the reports used in compiling the combined financial statements. 
 71.1      (j) A list of all members and the percentage of premium 
 71.2   each represents to the total group's annual premium for the 
 71.3   policy year.  
 71.4      Sec. 77.  Minnesota Statutes 1998, section 79A.23, 
 71.5   subdivision 1, is amended to read: 
 71.6      Subdivision 1.  [REQUIRED REPORTS TO COMMISSIONER.] Each 
 71.7   commercial self-insurance group shall submit the following 
 71.8   documents to the commissioner.  
 71.9      (a) An annual report shall be submitted by April 1 showing 
 71.10  the incurred losses, paid and unpaid, specifying indemnity and 
 71.11  medical losses by classification, payroll by classification, and 
 71.12  current estimated outstanding liability for workers' 
 71.13  compensation on a calendar year basis, in a manner and on forms 
 71.14  available from the commissioner.  In addition each group will 
 71.15  submit a quarterly interim loss report showing incurred losses 
 71.16  for all its membership. 
 71.17     (b) Each commercial self-insurance group shall submit 
 71.18  within 45 days of the end of each quarter:  
 71.19     (1) a schedule showing all the members who participate in 
 71.20  the group, their date of inception, and date of withdrawal, if 
 71.21  applicable; 
 71.22     (2) a separate section identifying which members were added 
 71.23  or withdrawn during that quarter; and 
 71.24     (3) an internal financial statement and copies of the 
 71.25  fiscal agent's statements supporting the balances in the common 
 71.26  claims fund. 
 71.27     (c) The commercial self-insurance group shall submit an 
 71.28  annual certified financial audit report of the commercial 
 71.29  self-insurance group fund by April 1 of the following year.  The 
 71.30  report must be accompanied by an expense schedule showing the 
 71.31  commercial self-insurance group's operational costs for the same 
 71.32  year including service company charges, accounting and actuarial 
 71.33  fees, fund administration charges, reinsurance premiums, 
 71.34  commissions, and any other costs associated with the 
 71.35  administration of the group program. 
 71.36     (d) An officer of the commercial self-insurance group 
 72.1   shall, under oath, attest to the accuracy of each report 
 72.2   submitted under paragraphs (a), (b), and (c).  Upon sufficient 
 72.3   cause, the commissioner shall require the commercial 
 72.4   self-insurance group to submit a certified audit of payroll and 
 72.5   claim records conducted by an independent auditor approved by 
 72.6   the commissioner, based on generally accepted accounting 
 72.7   principles and generally accepted auditing standards, and 
 72.8   supported by an actuarial review and opinion of the future 
 72.9   contingent liabilities.  The basis for sufficient cause shall 
 72.10  include the following factors: 
 72.11     (1) where the losses reported appear significantly 
 72.12  different from similar types of groups; 
 72.13     (2) where major changes in the reports exist from year to 
 72.14  year, which are not solely attributable to economic factors; or 
 72.15     (3) where the commissioner has reason to believe that the 
 72.16  losses and payroll in the report do not accurately reflect the 
 72.17  losses and payroll of the commercial self-insurance group.  
 72.18  If any discrepancy is found, the commissioner shall require 
 72.19  changes in the commercial self-insurance group's business plan 
 72.20  or service company recordkeeping practices. 
 72.21     (e) Each commercial self-insurance group shall submit by 
 72.22  September 15 a copy of the group's annual federal and state 
 72.23  income tax returns or provide proof that it has received an 
 72.24  exemption from these filings. 
 72.25     (f) With the annual loss report each commercial 
 72.26  self-insurance group shall report to the commissioner any 
 72.27  worker's compensation claim where the full, undiscounted value 
 72.28  is estimated to exceed $50,000, in a manner and on forms 
 72.29  prescribed by the commissioner. 
 72.30     (g) Each commercial self-insurance group shall submit by 
 72.31  May 1 a list of all members and the percentage of premium each 
 72.32  represents to the total group's premium for the previous 
 72.33  calendar year.  
 72.34     (h) Each commercial self-insurance group shall submit by 
 72.35  ~~May~~ August 1 the following documents prepared by the group's 
 72.36  certified public accountant:  
 73.1      (1) a compiled combined financial statement of group 
 73.2   members and a list of members included in this statement~~;~~.  An 
 73.3   "Agreed Upon Procedures" report, as determined by the 
 73.4   commissioner, indicating combined net worth, total assets, cash 
 73.5   flow, and net income of the group members may be filed in lieu 
 73.6   of the compiled combined financial statement; and 
 73.7      (2) a report that the statements which were combined have 
 73.8   met the requirements of subdivision 2.  
 73.9      (i) If any group member comprises over 25 percent of total 
 73.10  group premium, that member's financial statement must be 
 73.11  reviewed or audited, and, at the commissioner's option, must be 
 73.12  filed with the department of commerce by May 1 of the following 
 73.13  year. 
 73.14     (j) Each commercial self-insurance group shall submit a 
 73.15  copy of each member's accountant's report letter from the 
 73.16  reports used in compiling the combined financial statements.  
 73.17     Sec. 78.  Minnesota Statutes 1998, section 79A.23, 
 73.18  subdivision 2, is amended to read: 
 73.19     Subd. 2.  [REQUIRED REPORTS FROM MEMBERS TO GROUP.] Each 
 73.20  member of the commercial self-insurance group shall, by 
 73.21  ~~April~~ July 1, submit to the group its most recent annual 
 73.22  financial statement, together with other financial information 
 73.23  the group may require.  These financial statements submitted 
 73.24  must not have a fiscal year end date older than January 15 of 
 73.25  the group's calendar year end.  Individual group members 
 73.26  constituting at least 50 percent of the group's annual premium 
 73.27  shall submit to the group reviewed or audited financial 
 73.28  statements.  The remaining members ~~may~~ must submit compilation 
 73.29  level statements. 
 73.30     Sec. 79.  Minnesota Statutes 1998, section 256B.0644, is 
 73.31  amended to read: 
 73.32     256B.0644 [PARTICIPATION REQUIRED FOR REIMBURSEMENT UNDER 
 73.33  OTHER STATE HEALTH CARE PROGRAMS.] 
 73.34     A vendor of medical care, as defined in section 256B.02, 
 73.35  subdivision 7, and a health maintenance organization, as defined 
 73.36  in chapter 62D, must participate as a provider or contractor in 
 74.1   the medical assistance program, general assistance medical care 
 74.2   program, and MinnesotaCare as a condition of participating as a 
 74.3   provider in health insurance plans and programs or contractor 
 74.4   for state employees established under section 43A.18, the public 
 74.5   employees insurance program under section 43A.316, for health 
 74.6   insurance plans offered to local statutory or home rule charter 
 74.7   city, county, and school district employees, the workers' 
 74.8   compensation system under section 176.135, and insurance plans 
 74.9   provided through the Minnesota comprehensive health association 
 74.10  under sections 62E.01 to ~~62E.16~~ 62E.19.  The limitations on 
 74.11  insurance plans offered to local government employees shall not 
 74.12  be applicable in geographic areas where provider participation 
 74.13  is limited by managed care contracts with the department of 
 74.14  human services.  For providers other than health maintenance 
 74.15  organizations, participation in the medical assistance program 
 74.16  means that (1) the provider accepts new medical assistance, 
 74.17  general assistance medical care, and MinnesotaCare patients, (2) 
 74.18  for providers other than dental services providers, at least 20 
 74.19  percent of the provider's patients are covered by medical 
 74.20  assistance, general assistance medical care, and MinnesotaCare 
 74.21  as their primary source of coverage, or (3) for dental services 
 74.22  providers, at least ten percent of the provider's patients are 
 74.23  covered by medical assistance, general assistance medical care, 
 74.24  and MinnesotaCare as their primary source of coverage.  The 
 74.25  commissioner shall establish participation requirements for 
 74.26  health maintenance organizations.  The commissioner shall 
 74.27  provide lists of participating medical assistance providers on a 
 74.28  quarterly basis to the commissioner of employee relations, the 
 74.29  commissioner of labor and industry, and the commissioner of 
 74.30  commerce.  Each of the commissioners shall develop and implement 
 74.31  procedures to exclude as participating providers in the program 
 74.32  or programs under their jurisdiction those providers who do not 
 74.33  participate in the medical assistance program.  The commissioner 
 74.34  of employee relations shall implement this section through 
 74.35  contracts with participating health and dental carriers. 
 74.36     Sec. 80.  [REPEALER.] 
 75.1      (a) Minnesota Statutes 1998, sections 60A.11, subdivision 
 75.2   24a; 60B.36; 60B.44, subdivisions 3 and 5; 60K.08; 65A.29, 
 75.3   subdivision 12; and 79A.04, subdivision 8, are repealed. 
 75.4      (b) Minnesota Rules, part 2780.0500, item C, is repealed. 
 75.5      Sec. 81.  [EFFECTIVE DATES.] 
 75.6      Sections 3, 5 to 8, 20, 22, 24 to 26, 28, 30, 31, 34, 37, 
 75.7   38, 43 to 49, 53, 54, 56, 57, 59, 61, 62, 64, and 66 to 79 are 
 75.8   effective the day following final enactment.  Sections 13 to 15 
 75.9   are effective the day following final enactment and apply to 
 75.10  plans of merger approved on or after that date by the board of 
 75.11  directors of the first of the constituent corporations to grant 
 75.12  such approval.  Merging or consolidating insurance corporations 
 75.13  may, however, elect to have the changes made by sections 13 to 
 75.14  15 not apply to a merger or consolidation arising out of a joint 
 75.15  agreement entered into prior to January 1, 2000.  Section 1 is 
 75.16  effective the day following final enactment.  Section 50 is 
 75.17  effective the day following final enactment.  
 75.18     Section 32 is effective December 1, 1999, and applies to 
 75.19  all license renewals on or after that date.