1.1                          A bill for an act 
  1.2             relating to insurance; providing that nonrenewals on 
  1.3             homeowner's policies must be based on the total amount 
  1.4             paid by the insurer on claims and not the number of 
  1.5             claims; amending Minnesota Statutes 1996, section 
  1.6             65A.29, subdivision 8. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1996, section 65A.29, 
  1.9   subdivision 8, is amended to read: 
  1.10     Subd. 8.  [RULES.] (a) The commissioner may adopt rules 
  1.11  pursuant to chapter 14, to specify the grounds for nonrenewal, 
  1.12  reduction in limits of coverage, or elimination of coverage of a 
  1.13  homeowner's policy.  The rules must limit the grounds to the 
  1.14  following factors:  
  1.15     (1) reasons stated for cancellation in section 65A.01, 
  1.16  subdivision 3a; 
  1.17     (2) reasons stated in section 72A.20, subdivision 13; 
  1.18     (3) insured's loss experience, not to include natural 
  1.19  causes; and 
  1.20     (4) other factors deemed reasonable by the commissioner. 
  1.21     The rules may give consideration to the form and content of 
  1.22  the termination notice to the insured, a statement as to what 
  1.23  constitutes receipt of the termination notice, and the procedure 
  1.24  by which the insured may appeal a termination notice.  
  1.25     The rules adopted under this subdivision may provide for 
  1.26  imposition of a monetary penalty not greater than $500 per 
  2.1   occurrence upon insurers who are found to be in violation of the 
  2.2   law or the rules.  
  2.3      The rules may permit claims to be considered, but only 
  2.4   based upon the total amount that the insurer paid due to the 
  2.5   claims and not based upon the number of claims. 
  2.6      (b) In addition to any rules adopted under this 
  2.7   subdivision, an insured may appeal any nonrenewal under this 
  2.8   section to the commissioner of commerce.  If the commissioner 
  2.9   finds that the nonrenewal is unjustified, arbitrary, or 
  2.10  capricious, the commissioner shall order the insurer to 
  2.11  reinstate the insured's policy.  The commissioner's order may be 
  2.12  appealed pursuant to chapter 14.  The insured's policy shall 
  2.13  continue in force pending the conclusion of the appeal to the 
  2.14  commissioner.  The insurer must notify the insured of the 
  2.15  insured's right to appeal the nonrenewal to the commissioner in 
  2.16  the notice of nonrenewal required under subdivision 7. 
  2.17     Sec. 2.  [EFFECTIVE DATE.] 
  2.18     Section 1 is effective January 1, 1998, and applies to 
  2.19  policies issued or renewed on or after that date.