1.1                          A bill for an act 
  1.2             relating to insurance; regulating companies and 
  1.3             agents; regulating coverages; providing certain 
  1.4             notices and filing requirements; providing for a 
  1.5             study; making certain technical changes; amending 
  1.6             Minnesota Statutes 1996, sections 60A.02, subdivision 
  1.7             1a, and by adding a subdivision; 60A.052, subdivision 
  1.8             2, and by adding a subdivision; 60A.06, subdivisions 1 
  1.9             and 2; 60A.092, subdivision 6; 60A.10, subdivision 1; 
  1.10            60A.111, subdivision 1; 60A.13, subdivision 1; 
  1.11            60A.171, subdivision 7; 60A.19, subdivision 1; 60B.04, 
  1.12            by adding a subdivision; 60B.21, subdivision 2; 
  1.13            60B.25; 60B.44, subdivisions 2, 4, 6, and by adding 
  1.14            subdivisions; 60D.20, subdivision 2; 60K.02, 
  1.15            subdivision 1; 60K.03, subdivisions 2 and 3; 60K.14, 
  1.16            subdivision 4; 60K.19, subdivisions 7 and 8; 61A.32; 
  1.17            61A.60, subdivision 1; 61B.19, subdivision 3; 62A.04, 
  1.18            subdivision 3; 62A.096; 62A.135, subdivision 5; 
  1.19            62A.50, subdivision 3; 65A.01, subdivision 3, and by 
  1.20            adding a subdivision; 65A.27, subdivision 4; 65A.29, 
  1.21            subdivision 4; 65B.133, subdivision 5; 65B.14, 
  1.22            subdivision 5; 65B.44, subdivision 3; 65B.48, 
  1.23            subdivision 5; 72A.20, subdivisions 23 and 34; 79A.01, 
  1.24            subdivision 10, and by adding a subdivision; 79A.02, 
  1.25            subdivisions 1 and 4; 79A.03, subdivisions 6, 7, 9, 
  1.26            10, and by adding a subdivision; and 79A.21, 
  1.27            subdivision 2; Minnesota Statutes 1997 Supplement, 
  1.28            section 72B.04, subdivision 10; Laws 1996, chapter 
  1.29            446, article 1, section 72; proposing coding for new 
  1.30            law in Minnesota Statutes, chapters 60B; and 65B; 
  1.31            repealing Minnesota Statutes 1996, sections 60A.11, 
  1.32            subdivision 24a; 60B.36; 60B.44, subdivision 3; 
  1.33            65A.29, subdivision 12; and 79A.04, subdivision 8. 
  1.34  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.35     Section 1.  Minnesota Statutes 1996, section 60A.02, 
  1.36  subdivision 1a, is amended to read: 
  1.37     Subd. 1a.  [ASSOCIATION OR ASSOCIATIONS.] (a) "Association" 
  1.38  or "associations" means an organized body of people who have 
  1.39  some interest in common and that has at the onset a minimum of 
  2.1   100 persons; is organized and maintained in good faith for 
  2.2   purposes other than that of obtaining insurance; and has a 
  2.3   constitution and bylaws which provide that:  (1) the association 
  2.4   or associations hold regular meetings not less frequently than 
  2.5   annually to further purposes of the members; (2) except for 
  2.6   credit unions, the association or associations collect dues or 
  2.7   solicit contributions from members; (3) the members have voting 
  2.8   privileges and representation on the governing board and 
  2.9   committees, which provide the members with control of the 
  2.10  association including the purchase and administration of 
  2.11  insurance products offered to members; and (4) the members are 
  2.12  not, within the first 30 days of membership, directly solicited, 
  2.13  offered, or sold an insurance policy if the policy is available 
  2.14  as an association benefit. 
  2.15     (b) An association may apply to the commissioner for a 
  2.16  waiver of the 30-day waiting period to that association.  The 
  2.17  commissioner may grant the waiver upon a finding of ~~all~~ at least 
  2.18  three of the following:  (1) the association is in full 
  2.19  compliance with this subdivision; (2) sanctions have not been 
  2.20  imposed against the association as a result of significant 
  2.21  disciplinary action by the commissioner; ~~and~~ (3) at least 80 
  2.22  percent of the association's income comes from dues, 
  2.23  contributions, or sources other than income from the sale of 
  2.24  insurance; or (4) the association has been organized and 
  2.25  maintained for at least ten years. 
  2.26     Sec. 2.  Minnesota Statutes 1996, section 60A.02, is 
  2.27  amended by adding a subdivision to read: 
  2.28     Subd. 2b.  [FILED.] In cases where a law requires documents 
  2.29  to be filed with the commissioner, the documents will be 
  2.30  considered filed when they are received by the department of 
  2.31  commerce. 
  2.32     Sec. 3.  Minnesota Statutes 1996, section 60A.052, 
  2.33  subdivision 2, is amended to read: 
  2.34     Subd. 2.  [SUSPENSION OR REVOCATION OF AUTHORITY OR 
  2.35  CENSURE.] If the commissioner determines that one of the 
  2.36  conditions listed in subdivision 1 exists, the commissioner may 
  3.1   issue an order requiring the insurance company to show cause why 
  3.2   any or all of the following should not occur:  (1) revocation or 
  3.3   suspension of any or all certificates of authority granted to 
  3.4   the foreign or domestic insurance company or its agent; (2) 
  3.5   censuring of the insurance company; ~~or~~ (3) cancellation of all 
  3.6   or some of the company's insurance contracts then in force in 
  3.7   this state; or (4) the imposition of a civil penalty.  The order 
  3.8   shall be calculated to give reasonable notice of the time and 
  3.9   place for hearing thereon, and shall state the reasons for the 
  3.10  entry of the order.  All hearings shall be conducted in 
  3.11  accordance with chapter 14.  The insurer may waive its right to 
  3.12  the hearing.  If the insurer is under the supervision or control 
  3.13  of the insurance department of the insurer's state of domicile, 
  3.14  that insurance department, acting on behalf of the insurer, may 
  3.15  waive the insurer's right to the hearing.  After the hearing, 
  3.16  the commissioner shall enter an order disposing of the matter as 
  3.17  the facts require.  If the insurance company fails to appear at 
  3.18  a hearing after having been duly notified of it, the company 
  3.19  shall be considered in default, and the proceeding may be 
  3.20  determined against the company upon consideration of the order 
  3.21  to show cause, the allegations of which may be considered to be 
  3.22  true. 
  3.23     Sec. 4.  Minnesota Statutes 1996, section 60A.052, is 
  3.24  amended by adding a subdivision to read: 
  3.25     Subd. 4a.  [WITHDRAWAL OF INSURER FROM STATE.] No insurer 
  3.26  shall withdraw from this state until its direct liability to its 
  3.27  policyholders and obligees under all its insurance contracts 
  3.28  then in force in this state have been assumed by another 
  3.29  licensed insurer according to section 60A.09, subdivision 4a. 
  3.30     Sec. 5.  Minnesota Statutes 1996, section 60A.06, 
  3.31  subdivision 1, is amended to read: 
  3.32     Subdivision 1.  [STATUTORY LINES.] Insurance corporations 
  3.33  may be authorized to transact in any state or territory in the 
  3.34  United States, in the Dominion of Canada, and in foreign 
  3.35  countries, when specified in their charters or certificates of 
  3.36  incorporation, either as originally granted or as thereafter 
  4.1   amended, any of the following kinds of business, upon the stock 
  4.2   plan, or upon the mutual plan when the formation of such mutual 
  4.3   companies is otherwise authorized by law; and business trusts as 
  4.4   authorized by law of this state shall only be authorized to 
  4.5   transact in this state the following kind of business 
  4.6   hereinafter specified in clause (7) hereof when specified in 
  4.7   their "declaration of trust": 
  4.8      (1) To insure against loss or damage to property on land 
  4.9   and against loss of rents and rental values, leaseholds of 
  4.10  buildings, use and occupancy and direct or consequential loss or 
  4.11  damage caused by fire, smoke or smudge, water or other fluid or 
  4.12  substance, lightning, windstorm, tornado, cyclone, earthquake, 
  4.13  collapse and slippage, rain, hail, frost, snow, freeze, change 
  4.14  of temperature, weather or climatic conditions, excess or 
  4.15  deficiency of moisture, floods, the rising of waters, oceans, 
  4.16  lakes, rivers or their tributaries, bombardment, invasion, 
  4.17  insurrection, riot, civil war or commotion, military or usurped 
  4.18  power, electrical power interruption or electrical breakdown 
  4.19  from any cause, railroad equipment, motor vehicles or aircraft, 
  4.20  accidental injury to sprinklers, pumps, conduits or containers 
  4.21  or other apparatus erected for extinguishing fires, explosion, 
  4.22  whether fire ensues or not, except explosions on risks specified 
  4.23  in clause (3); provided, however, that there may be insured 
  4.24  hereunder the following:  (a) explosion of any kind originating 
  4.25  outside the insured building or outside of the building 
  4.26  containing the property insured, (b) explosion of pressure 
  4.27  vessels which do not contain steam or which are not operated 
  4.28  with steam coils or steam jackets; and (c) risks under home 
  4.29  owners multiple peril policies; 
  4.30     (2)(a) To insure vessels, freight, goods, wares, 
  4.31  merchandise, specie, bullion, jewels, profits, commissions, bank 
  4.32  notes, bills of exchange, and other evidences of debt, bottomry 
  4.33  and respondentia interest, and every insurance appertaining to 
  4.34  or connected with risks of transportation and navigation on and 
  4.35  under water, on land or in the air; 
  4.36     (b) To insure all personal property floater risks; 
  5.1      (3) To insure against any loss from either direct or 
  5.2   indirect damage to any property or interest of the assured or of 
  5.3   another, resulting from the explosion of or injury to (a) any 
  5.4   boiler, heater or other fired pressure vessel; (b) any unfired 
  5.5   pressure vessel; (c) pipes or containers connected with any of 
  5.6   said boilers or vessels; (d) any engine, turbine, compressor, 
  5.7   pump or wheel; (e) any apparatus generating, transmitting or 
  5.8   using electricity; (f) any other machinery or apparatus 
  5.9   connected with or operated by any of the previously named 
  5.10  boilers, vessels or machines; and including the incidental power 
  5.11  to make inspections of and to issue certificates of inspection 
  5.12  upon, any such boilers, apparatus, and machinery, whether 
  5.13  insured or otherwise; 
  5.14     (4) To make contracts of life and endowment insurance, to 
  5.15  grant, purchase, or dispose of annuities or endowments of any 
  5.16  kind; and, in such contracts, or in contracts supplemental 
  5.17  thereto to provide for additional benefits in event of death of 
  5.18  the insured by accidental means, total permanent disability of 
  5.19  the insured, or specific dismemberment or disablement suffered 
  5.20  by the insured, or acceleration of life or endowment or annuity 
  5.21  benefits in advance of the time they would otherwise be payable; 
  5.22     (5)(a) To insure against loss or damage by the sickness, 
  5.23  bodily injury or death by accident of the assured or dependents 
  5.24  or, through stop-loss insurance, those for whom the assured has 
  5.25  assumed a portion of the liability for the loss or damage, 
  5.26  including liability for payment of medical care costs or for 
  5.27  provisions of medical care; 
  5.28     (b) To insure against the legal liability, whether imposed 
  5.29  by common law or by statute or assumed by contract, of employers 
  5.30  for the death or disablement of, or injury to, employees; 
  5.31     (6) To guarantee the fidelity of persons in fiduciary 
  5.32  positions, public or private, or to act as surety on official 
  5.33  and other bonds, and for the performance of official or other 
  5.34  obligations; 
  5.35     (7) To insure owners and others interested in real estate 
  5.36  against loss or damage, by reason of defective titles, 
  6.1   encumbrances, or otherwise; 
  6.2      (8) To insure against loss or damage by breakage of glass, 
  6.3   located or in transit; 
  6.4      (9)(a) To insure against loss by burglary, theft, or 
  6.5   forgery; 
  6.6      (b) To insure against loss of or damage to moneys, coins, 
  6.7   bullion, securities, notes, drafts, acceptance or any other 
  6.8   valuable paper or document, resulting from any cause, except 
  6.9   while in the custody or possession of and being transported by 
  6.10  any carrier for hire or in the mail; 
  6.11     (c) To insure individuals by means of an all risk type of 
  6.12  policy commonly known as the "personal property floater" against 
  6.13  any kind and all kinds of loss of or damage to, or loss of use 
  6.14  of, any personal property other than merchandise; 
  6.15     (d) To insure against loss or damage by water or other 
  6.16  fluid or substance; 
  6.17     (10) To insure against loss from death of domestic animals 
  6.18  and to furnish veterinary service; 
  6.19     (11) To guarantee merchants and those engaged in business, 
  6.20  and giving credit, from loss by reason of giving credit to those 
  6.21  dealing with them; this shall be known as credit insurance; 
  6.22     (12) To insure against loss or damage to automobiles or 
  6.23  other vehicles or aircraft and their contents, by collision, 
  6.24  fire, burglary, or theft, and other perils of operation, and 
  6.25  against liability for damage to persons, or property of others, 
  6.26  by collision with such vehicles or aircraft, and to insure 
  6.27  against any loss or hazard incident to the ownership, operation, 
  6.28  or use of motor or other vehicles or aircraft; 
  6.29     (13) To insure against liability for loss or damage to the 
  6.30  property or person of another caused by the insured or by those 
  6.31  for whom the insured is responsible, including insurance of 
  6.32  medical, hospital, surgical, funeral or other related expense of 
  6.33  the insured or other person injured, irrespective of legal 
  6.34  liability of the insured, when issued with or supplemental to 
  6.35  policies of liability insurance; 
  6.36     (14) To insure against loss of or damage to any property of 
  7.1   the insured, resulting from the ownership, maintenance or use of 
  7.2   elevators, except loss or damage by fire; 
  7.3      (15) To insure against attorneys fees, court costs, witness 
  7.4   fees and incidental expenses incurred in connection with the use 
  7.5   of the professional services of attorneys at law.  
  7.6      Sec. 6.  Minnesota Statutes 1996, section 60A.06, 
  7.7   subdivision 2, is amended to read: 
  7.8      Subd. 2.  [OTHER LINES.] Any insurance corporation or 
  7.9   association heretofore or hereafter licensed to transact within 
  7.10  the state any of the kinds or classes of insurance specifically 
  7.11  authorized under the laws of this state may, when authorized by 
  7.12  its charter, transact within and without the state any lines of 
  7.13  insurance germane to its charter powers and not specifically 
  7.14  provided for under the laws of this state when these lines, or 
  7.15  combinations of lines, of insurance are not in violation of the 
  7.16  constitution or the laws of the state and, in the opinion of the 
  7.17  commissioner, not contrary to public policy, provided the 
  7.18  company or association shall first obtain authority of the 
  7.19  commissioner and meet ~~such requirements as to~~ capital or 
  7.20  surplus~~, or both,~~ and other solvency and policy form 
  7.21  requirements as the commissioner shall prescribe.  These 
  7.22  additional hazards may be insured against by attachment to, or 
  7.23  in extension of, any policy which the company may be authorized 
  7.24  to issue under the laws of this state.  This subdivision shall 
  7.25  apply to companies operating upon the stock or mutual plan, 
  7.26  reciprocal or interinsurance exchanges. 
  7.27     Sec. 7.  Minnesota Statutes 1996, section 60A.092, 
  7.28  subdivision 6, is amended to read: 
  7.29     Subd. 6.  [SINGLE ASSUMING INSURER; TRUST FUND 
  7.30  REQUIREMENTS.] In the case of a single assuming insurer, the 
  7.31  trust shall consist of a trusteed account representing the 
  7.32  assuming insurer's liabilities attributable to business written 
  7.33  in the United States and, in addition, ~~the assuming insurer~~ 
  7.34  ~~shall maintain~~ a trusteed surplus of not less than $20,000,000 
  7.35  or such additional amount as the commissioner deems necessary, 
  7.36  and the assuming insurer shall maintain ~~a~~ its surplus as regards 
  8.1   policyholders in an amount not less than $50,000,000 for 
  8.2   long-tail casualty reinsurers as provided under subdivision 3, 
  8.3   paragraph (a), clause (5). 
  8.4      Sec. 8.  Minnesota Statutes 1996, section 60A.10, 
  8.5   subdivision 1, is amended to read: 
  8.6      Subdivision 1.  [DOMESTIC COMPANIES.] (1)  [DEPOSIT AS 
  8.7   SECURITY FOR ALL POLICYHOLDERS REQUIRED.] No company in this 
  8.8   state, other than farmers' mutual, or real estate title 
  8.9   insurance companies, shall do business in this state unless it 
  8.10  has on deposit with the commissioner, for the protection of both 
  8.11  its resident and nonresident policyholders, securities to an 
  8.12  amount, the actual market value of which, exclusive of interest, 
  8.13  shall never be less than ~~$200,000 until July 1, 1986, $300,000~~ 
  8.14  ~~until July 1, 1987, $400,000 until July 1, 1988, and~~ $500,000 ~~on~~ 
  8.15  ~~and after July 1, 1988~~ or one-half the applicable financial 
  8.16  requirement set forth in section 60A.07, whichever is less.  The 
  8.17  securities shall be retained under the control of the 
  8.18  commissioner as long as any policies of the depositing company 
  8.19  remain in force. 
  8.20     (2)  [SECURITIES DEFINED.] For the purpose of this 
  8.21  subdivision, the word "securities" means bonds or other 
  8.22  obligations of, or bonds or other obligations insured or 
  8.23  guaranteed by, the United States, any state of the United 
  8.24  States, any municipality of this state, or any agency or 
  8.25  instrumentality of the foregoing. 
  8.26     (3)  [PROTECTION OF DEPOSIT FROM LEVY.] No judgment 
  8.27  creditor or other claimant may levy upon any securities held on 
  8.28  deposit with, or for the account of, the commissioner.  Upon the 
  8.29  entry of an order by a court of competent jurisdiction for the 
  8.30  rehabilitation, liquidation or conservation of any depositing 
  8.31  company as provided in chapter 60B, that company's deposit 
  8.32  together with any accrued income thereon shall be transferred to 
  8.33  the commissioner as rehabilitator, liquidator, or conservator. 
  8.34     Sec. 9.  Minnesota Statutes 1996, section 60A.111, 
  8.35  subdivision 1, is amended to read: 
  8.36     Subdivision 1.  [REPORT.] Annually, or more frequently if 
  9.1   determined by the commissioner to be necessary for the 
  9.2   protection of policyholders, each foreign~~, alien~~ and domestic 
  9.3   insurance company other than a life insurance company shall 
  9.4   report to the commissioner the ratio of its qualified assets to 
  9.5   its required liabilities.  
  9.6      Sec. 10.  Minnesota Statutes 1996, section 60A.13, 
  9.7   subdivision 1, is amended to read: 
  9.8      Subdivision 1.  [ANNUAL STATEMENTS REQUIRED.] Every 
  9.9   insurance company, including fraternal benefit societies, and 
  9.10  reciprocal exchanges, doing business in this state, shall 
  9.11  ~~transmit to~~ file with the commissioner, annually, on or before 
  9.12  March 1, the appropriate verified National Association of 
  9.13  Insurance Commissioners' annual statement blank, prepared in 
  9.14  accordance with the association's instructions handbook and 
  9.15  following those accounting procedures and practices prescribed 
  9.16  by the association's accounting practices and procedures manual, 
  9.17  unless the commissioner requires or finds another method of 
  9.18  valuation reasonable under the circumstances.  Another method of 
  9.19  valuation permitted by the commissioner must be at least as 
  9.20  conservative as those prescribed in the association's manual.  
  9.21  All companies required to file an annual statement under this 
  9.22  subdivision must also file with the commissioner a copy of their 
  9.23  annual statement on computer diskette.  All Minnesota domestic 
  9.24  insurers required to file annual statements under this 
  9.25  subdivision must also file quarterly statements with the 
  9.26  commissioner for the first, second, and third calendar quarter 
  9.27  on or before 45 days after the end of the applicable quarter, 
  9.28  prepared in accordance with the association's instruction 
  9.29  handbook.  All companies required to file quarterly statements 
  9.30  under this subdivision must also file a copy of their quarterly 
  9.31  statement on computer diskette.  In addition, the commissioner 
  9.32  may require the filing of any other information determined to be 
  9.33  reasonably necessary for the continual enforcement of these 
  9.34  laws.  The statement may be limited to the insurer's business 
  9.35  and condition in the United States unless the commissioner finds 
  9.36  that the business conducted outside the United States may 
 10.1   detrimentally affect the interests of policyholders in this 
 10.2   state.  The statements shall also contain a verified schedule 
 10.3   showing all details required by law for assessment and 
 10.4   taxation.  The statement or schedules shall be in the form and 
 10.5   shall contain all matters the commissioner may prescribe, and it 
 10.6   may be varied as to different types of insurers so as to elicit 
 10.7   a true exhibit of the condition of each insurer. 
 10.8      Sec. 11.  Minnesota Statutes 1996, section 60A.171, 
 10.9   subdivision 7, is amended to read: 
 10.10     Subd. 7.  The provisions of this section do not apply to 
 10.11  the termination of an agent's contract for insolvency, 
 10.12  abandonment, gross and willful misconduct, or failure to pay 
 10.13  over to the company money due to the company after receipt by 
 10.14  the agent of a written demand therefor, or after revocation of 
 10.15  the agent's license by the commissioner of commerce.  This 
 10.16  section does not apply to the termination of an agent's contract 
 10.17  if the agent is directly employed by the company ~~or if the agent~~ 
 10.18  ~~writes 80 percent or more of the agent's gross annual insurance~~ 
 10.19  ~~business for one company or any or all of its subsidiaries~~. 
 10.20     Sec. 12.  Minnesota Statutes 1996, section 60A.19, 
 10.21  subdivision 1, is amended to read: 
 10.22     Subdivision 1.  [REQUIREMENTS.] Any insurance company of 
 10.23  another state, upon compliance with all laws governing such 
 10.24  corporations in general and with the foregoing provisions so far 
 10.25  as applicable and the following requirements, shall be admitted 
 10.26  to do business in this state: 
 10.27     (1) It shall deposit with the commissioner a certified copy 
 10.28  of its charter or certificate of incorporation and its bylaws, 
 10.29  and a statement showing its financial condition and business, 
 10.30  verified by its president and secretary or other proper 
 10.31  officers; 
 10.32     (2) It shall furnish the commissioner satisfactory evidence 
 10.33  of its legal organization and authority to transact the proposed 
 10.34  business and that its capital, assets, deposits with the proper 
 10.35  official of its own state, amount insured, number of risks, 
 10.36  reserve and other securities, and guaranties for protection of 
 11.1   policyholders, creditors, and the public, comply with those 
 11.2   required of like domestic companies; 
 11.3      (3) By a duly executed instrument filed in the office of 
 11.4   the commissioner, it shall appoint the commissioner and 
 11.5   successors in office its lawful attorneys in fact and therein 
 11.6   irrevocably agree that legal process in any action or proceeding 
 11.7   against it may be served upon them with the same force and 
 11.8   effect as if personally served upon it, so long as any of its 
 11.9   liability exists in this state; 
 11.10     (4) It shall appoint, as its agents in this state, 
 11.11  residents thereof, and obtain from the commissioner a license to 
 11.12  transact business; 
 11.13     (5) Regardless of what lines of business an insurer of 
 11.14  another state is seeking to write in this state, the lines of 
 11.15  business it is licensed to write in its state of incorporation 
 11.16  shall be the basis for establishing the financial requirements 
 11.17  it must meet for admission in this state or for continuance of 
 11.18  its authority to write business in this state; 
 11.19     (6) No insurer of another state shall be admitted to do 
 11.20  business in this state for a line of business that it is not 
 11.21  authorized to write in its state of incorporation, unless the 
 11.22  statutes of that state prohibit all insurers from writing that 
 11.23  line of business. 
 11.24     Sec. 13.  Minnesota Statutes 1996, section 60B.04, is 
 11.25  amended by adding a subdivision to read: 
 11.26     Subd. 7.  [JURISDICTION.] If there is a delinquency 
 11.27  proceeding under this chapter, the provisions of this chapter 
 11.28  govern those proceedings, and all conflicting contractual 
 11.29  provisions contained in a contract between the insurer that is 
 11.30  subject to the delinquency proceeding and a third party, 
 11.31  including, but not limited to, the choice of law or arbitration 
 11.32  provisions, are subordinated to the provisions of this chapter. 
 11.33     Sec. 14.  Minnesota Statutes 1996, section 60B.21, 
 11.34  subdivision 2, is amended to read: 
 11.35     Subd. 2.  [FIXING OF RIGHTS.] Upon issuance of the order, 
 11.36  the rights and liabilities of any such insurer and of its 
 12.1   creditors, policyholders, shareholders, members, and all other 
 12.2   persons interested in its estate are fixed as of the date of 
 12.3   filing of the petition for liquidation, except as provided in 
 12.4   sections 60B.22, 60B.25, clause (22), and 60B.39. 
 12.5      Sec. 15.  Minnesota Statutes 1996, section 60B.25, is 
 12.6   amended to read: 
 12.7      60B.25 [POWERS OF LIQUIDATOR.] 
 12.8      The liquidator shall report to the court monthly, or at 
 12.9   other intervals specified by the court, on the progress of the 
 12.10  liquidation in whatever detail the court orders.  The liquidator 
 12.11  shall coordinate activities with those of each guaranty 
 12.12  association having an interest in the liquidation and shall 
 12.13  submit a report detailing how coordination will be achieved to 
 12.14  the court for its approval within 30 days following appointment, 
 12.15  or within the time which the court, in its discretion, may 
 12.16  establish.  Subject to the court's control, the liquidator may: 
 12.17     (1) Appoint a special deputy to act under sections 60B.01 
 12.18  to 60B.61 and determine the deputy's compensation.  The special 
 12.19  deputy shall have all powers of the liquidator granted by this 
 12.20  section.  The special deputy shall serve at the pleasure of the 
 12.21  liquidator. 
 12.22     (2) Appoint or engage employees and agents, actuaries, 
 12.23  accountants, appraisers, consultants, and other personnel deemed 
 12.24  necessary to assist in the liquidation without regard to chapter 
 12.25  14. 
 12.26     (3) Fix the compensation of persons under clause (2), 
 12.27  subject to the control of the court. 
 12.28     (4) Defray all expenses of taking possession of, 
 12.29  conserving, conducting, liquidating, disposing of, or otherwise 
 12.30  dealing with the business and property of the insurer.  If the 
 12.31  property of the insurer does not contain sufficient cash or 
 12.32  liquid assets to defray the costs incurred, the liquidator may 
 12.33  advance the costs so incurred out of the appropriation made to 
 12.34  the department of commerce.  Any amounts so paid shall be deemed 
 12.35  expense of administration and shall be repaid for the credit of 
 12.36  the department of commerce out of the first available money of 
 13.1   the insurer. 
 13.2      (5) Hold hearings, subpoena witnesses and compel their 
 13.3   attendance, administer oaths, examine any person under oath and 
 13.4   compel any person to subscribe to testimony after it has been 
 13.5   correctly reduced to writing, and in connection therewith 
 13.6   require the production of any books, papers, records, or other 
 13.7   documents which the liquidator deems relevant to the inquiry. 
 13.8      (6) Collect all debts and money due and claims belonging to 
 13.9   the insurer, wherever located, and for this purpose institute 
 13.10  timely action in other jurisdictions, in order to forestall 
 13.11  garnishment and attachment proceedings against such debts; do 
 13.12  such other acts as are necessary or expedient to collect, 
 13.13  conserve, or protect its assets or property, including sell, 
 13.14  compound, compromise, or assign for purposes of collection, upon 
 13.15  such terms and conditions as the liquidator deems best, any bad 
 13.16  or doubtful debts; and pursue any creditor's remedies available 
 13.17  to enforce claims. 
 13.18     (7) Conduct public and private sales of the property of the 
 13.19  insurer in a manner prescribed by the court. 
 13.20     (8) Use assets of the estate to transfer coverage 
 13.21  obligations to a solvent assuming insurer, if the transfer can 
 13.22  be arranged without prejudice to applicable priorities under 
 13.23  section 60B.44. 
 13.24     (9) Acquire, hypothecate, encumber, lease, improve, sell, 
 13.25  transfer, abandon, or otherwise dispose of or deal with any 
 13.26  property of the insurer at its market value or upon such terms 
 13.27  and conditions as are fair and reasonable, except that no 
 13.28  transaction involving property the market value of which exceeds 
 13.29  $10,000 shall be concluded without express permission of the 
 13.30  court.  The liquidator may also execute, acknowledge, and 
 13.31  deliver any deeds, assignments, releases, and other instruments 
 13.32  necessary or proper to effectuate any sale of property or other 
 13.33  transaction in connection with the liquidation.  In cases where 
 13.34  real property sold by the liquidator is located other than in 
 13.35  the county where the liquidation is pending, the liquidator 
 13.36  shall cause to be filed with the county recorder for the county 
 14.1   in which the property is located a certified copy of the order 
 14.2   of appointment. 
 14.3      (10) Borrow money on the security of the insurer's assets 
 14.4   or without security and execute and deliver all documents 
 14.5   necessary to that transaction for the purpose of facilitating 
 14.6   the liquidation. 
 14.7      (11) Enter into such contracts as are necessary to carry 
 14.8   out the order to liquidate, and affirm or disavow any contracts 
 14.9   to which the insurer is a party. 
 14.10     (12) Continue to prosecute and institute in the name of the 
 14.11  insurer or in the liquidator's own name any suits and other 
 14.12  legal proceedings, in this state or elsewhere, and abandon the 
 14.13  prosecution of claims the liquidator deems unprofitable to 
 14.14  pursue further.  If the insurer is dissolved under section 
 14.15  60B.23, the liquidator may apply to any court in this state or 
 14.16  elsewhere for leave to be substituted for the insurer as 
 14.17  plaintiff. 
 14.18     (13) Prosecute any action which may exist in behalf of the 
 14.19  creditors, members, policyholders, or shareholders of the 
 14.20  insurer against any officer of the insurer, or any other person. 
 14.21     (14) Remove any records and property of the insurer to the 
 14.22  offices of the commissioner or to such other place as is 
 14.23  convenient for the purposes of efficient and orderly execution 
 14.24  of the liquidation. 
 14.25     (15) Deposit in one or more banks in this state such sums 
 14.26  as are required for meeting current administration expenses and 
 14.27  dividend distributions. 
 14.28     (16) Deposit with the state board of investment for 
 14.29  investment pursuant to section 11A.24, all sums not currently 
 14.30  needed, unless the court orders otherwise. 
 14.31     (17) File any necessary documents for record in the office 
 14.32  of any county recorder or record office in this state or 
 14.33  elsewhere where property of the insurer is located. 
 14.34     (18) Assert all defenses available to the insurer as 
 14.35  against third persons, including statutes of limitations, 
 14.36  statutes of frauds, and the defense of usury.  A waiver of any 
 15.1   defense by the insurer after a petition for liquidation has been 
 15.2   filed shall not bind the liquidator. 
 15.3      (19) Exercise and enforce all the rights, remedies, and 
 15.4   powers of any creditor, shareholder, policyholder, or member, 
 15.5   including any power to avoid any transfer or lien that may be 
 15.6   given by law and that is not included within sections 60B.30 and 
 15.7   60B.32. 
 15.8      (20) Intervene in any proceeding wherever instituted that 
 15.9   might lead to the appointment of a receiver or trustee, and act 
 15.10  as the receiver or trustee whenever the appointment is offered. 
 15.11     (21) Enter into agreements with any receiver or 
 15.12  commissioner of any other state relating to the rehabilitation, 
 15.13  liquidation, conservation, or dissolution of an insurer doing 
 15.14  business in both states. 
 15.15     (22) Collect from an insured any unpaid earned premium or 
 15.16  retrospectively rated premium due the insurer based on the 
 15.17  termination of coverage under section 60B.22.  Premium on surety 
 15.18  business is considered earned at inception if no policy term can 
 15.19  be determined.  All other premium will be considered earned and 
 15.20  will be prorated over the determined policy term, regardless of 
 15.21  any provision in the bond, guaranty, contract, or other 
 15.22  agreement. 
 15.23     ~~(22)~~ (23) Exercise all powers now held or hereafter 
 15.24  conferred upon receivers by the laws of this state not 
 15.25  inconsistent with sections 60B.01 to 60B.61. 
 15.26     ~~(23)~~ (24) The enumeration in this section of the powers and 
 15.27  authority of the liquidator is not a limitation, nor does it 
 15.28  exclude the right to do such other acts not herein specifically 
 15.29  enumerated or otherwise provided for as are necessary or 
 15.30  expedient for the accomplishment of or in aid of the purpose of 
 15.31  liquidation. 
 15.32     ~~(24)~~ (25) The power of the liquidator of a health 
 15.33  maintenance organization includes the power to transfer coverage 
 15.34  obligations to a solvent and voluntary health maintenance 
 15.35  organization, insurer, or nonprofit health service plan, and to 
 15.36  assign provider contracts of the insolvent health maintenance 
 16.1   organization to an assuming health maintenance organization, 
 16.2   insurer, or nonprofit health service plan permitted to enter 
 16.3   into such agreements.  The liquidator is not required to meet 
 16.4   the notice requirements of section 62D.121.  Transferees of 
 16.5   coverage obligations or provider contracts shall have no 
 16.6   liability to creditors or obligees of the health maintenance 
 16.7   organization except those liabilities expressly assumed. 
 16.8      Sec. 16.  [60B.365] [REINSURER'S LIABILITY.] 
 16.9      Subdivision 1.  [GENERALLY.] The amount recoverable by the 
 16.10  liquidator from reinsurers must not be reduced as a result of 
 16.11  the delinquency proceedings, regardless of any provision in the 
 16.12  reinsurance contract or other agreement. 
 16.13     Subd. 2.  [REQUIRED CONTRACT PROVISIONS.] All reinsurance 
 16.14  contracts to which an insurer domiciled in this state is a 
 16.15  ceding party that do not contain the following provisions 
 16.16  required with respect to the obligation of reinsurers in the 
 16.17  event of insolvency of the reinsured in order to obtain credit 
 16.18  for reinsurance or other applicable statutes, must be construed 
 16.19  to contain the following provisions: 
 16.20     (1) in the event of insolvency and the appointment of a 
 16.21  receiver, the reinsurance obligation is payable to the receiver, 
 16.22  with reasonable provision for verification, without diminution 
 16.23  because of the insolvency or because the receiver has failed to 
 16.24  pay all or a portion of any claims.  Payments by the reinsurer 
 16.25  must be made directly to the ceding insurer or to its receiver; 
 16.26  and 
 16.27     (2) the receiver of a reinsured company shall give written 
 16.28  notice of the pendency of a claim against the reinsured company 
 16.29  indicating the policy or bond reinsured, within a reasonable 
 16.30  time after the claim is filed.  The receiver of a reinsured 
 16.31  company may arrange for the giving of notice of the pendency of 
 16.32  claims on reinsured policies by guaranty funds or by other 
 16.33  persons responsible for the adjustment and settlement of the 
 16.34  reinsured company's claims.  Failure to give notice does not 
 16.35  excuse the obligation of the reinsurer unless it is 
 16.36  substantially prejudiced by the failure of the receiver to give 
 17.1   notice.  The reinsurer may interpose, at its own expense, in the 
 17.2   proceeding where the claim is to be adjudicated, any defense or 
 17.3   defenses that it may consider available to the reinsured company 
 17.4   or its receiver. 
 17.5      Subd. 3.  [PAYMENTS.] Payments by the reinsurer must be 
 17.6   made directly to the ceding insurer or its receiver, except 
 17.7   where the contract of insurance or reinsurance specifically 
 17.8   provides for another payee for the reinsurance in the event of 
 17.9   insolvency of the ceding insurer according to the applicable 
 17.10  requirements of statutes, rules, or orders of the domiciliary 
 17.11  state of the ceding insurer.  The receiver and the reinsurer are 
 17.12  entitled to recover from a person who unsuccessfully makes a 
 17.13  claim directly against the reinsurer the receiver's attorneys' 
 17.14  fees and expenses incurred in preventing any collection by the 
 17.15  person. 
 17.16     Sec. 17.  Minnesota Statutes 1996, section 60B.44, 
 17.17  subdivision 2, is amended to read: 
 17.18     Subd. 2.  [ADMINISTRATION COSTS.] The costs and expenses of 
 17.19  administration, including but not limited to the following: The 
 17.20  actual and necessary costs of preserving or recovering the 
 17.21  assets of the insurer; compensation for all services rendered in 
 17.22  the liquidation; any necessary filing fees; the fees and mileage 
 17.23  payable to witnesses; and reasonable attorney's fees.  This 
 17.24  includes qualifying expenses incurred by the guaranty 
 17.25  association. 
 17.26     Sec. 18.  Minnesota Statutes 1996, section 60B.44, 
 17.27  subdivision 4, is amended to read: 
 17.28     Subd. 4.  [LOSS CLAIMS; INCLUDING CLAIMS NOT COVERED BY A 
 17.29  GUARANTY ASSOCIATION.] All claims under policies or contracts of 
 17.30  coverage for losses incurred including third party claims, and 
 17.31  all claims against the insurer for liability for bodily injury 
 17.32  or for injury to or destruction of tangible property which are 
 17.33  not under policies or contracts.  All claims under life 
 17.34  insurance and annuity policies, whether for death proceeds, 
 17.35  annuity proceeds, or investment values, shall be treated as loss 
 17.36  claims.  That portion of any loss for which indemnification is 
 18.1   provided by other benefits or advantages recovered or 
 18.2   recoverable by the claimant shall not be included in this class, 
 18.3   other than benefits or advantages recovered or recoverable in 
 18.4   discharge of familial obligations of support or by way of 
 18.5   succession at death or as proceeds of life insurance, or as 
 18.6   gratuities.  No payment made by an employer to an employee shall 
 18.7   be treated as a gratuity.  Claims not covered by a guaranty 
 18.8   association are loss claims.  ~~If any portion of a claim is~~ 
 18.9   ~~covered by a reinsurance treaty or similar contractual~~ 
 18.10  ~~obligation, that claim shall be entitled to a pro rata share,~~ 
 18.11  ~~based upon the relationship the claim amount bears to all claims~~ 
 18.12  ~~payable under the treaty or contract, of the proceeds received~~ 
 18.13  ~~under that treaty or contractual obligation.~~  
 18.14     ~~Claims receiving pro rata payments shall not, as to any~~ 
 18.15  ~~remaining unpaid portion of their claim, be treated in a~~ 
 18.16  ~~different manner than if no such payment had been received.~~  
 18.17     Sec. 19.  Minnesota Statutes 1996, section 60B.44, is 
 18.18  amended by adding a subdivision to read: 
 18.19     Subd. 4a.  [FEDERAL CLAIMS.] Claims of the federal 
 18.20  government. 
 18.21     Sec. 20.  Minnesota Statutes 1996, section 60B.44, is 
 18.22  amended by adding a subdivision to read: 
 18.23     Subd. 4b.  [WAGES.] (a) Debts due to employees for services 
 18.24  performed, not to exceed $1,000 to each employee, which have 
 18.25  been earned within one year before the filing of the petition 
 18.26  for liquidation, subject to payment of applicable federal, 
 18.27  state, or local government taxes required by law to be withheld 
 18.28  from the debts.  Officers are not entitled to the benefit of 
 18.29  this priority.  In cases where there are no claims and no 
 18.30  potential claims of the federal government in the estate, these 
 18.31  claims will have priority over claims in subdivision 4. 
 18.32     (b) The priority in paragraph (a) is in lieu of any other 
 18.33  similar priority authorized by law as to wages or compensation 
 18.34  of employees. 
 18.35     Sec. 21.  Minnesota Statutes 1996, section 60B.44, 
 18.36  subdivision 6, is amended to read: 
 19.1      Subd. 6.  [RESIDUAL CLASSIFICATION.] All other claims 
 19.2   including claims of ~~the federal or~~ any state or local 
 19.3   government, not falling within other classes under this 
 19.4   section.  Claims, including those of any governmental body for a 
 19.5   penalty or forfeiture, shall be allowed in this class only to 
 19.6   the extent of the pecuniary loss sustained from the act, 
 19.7   transaction, or proceeding out of which the penalty or 
 19.8   forfeiture arose, with reasonable and actual costs occasioned 
 19.9   thereby.  The remainder of such claims shall be postponed to the 
 19.10  class of claims under subdivision 9.  
 19.11     Sec. 22.  Minnesota Statutes 1996, section 60D.20, 
 19.12  subdivision 2, is amended to read: 
 19.13     Subd. 2.  [DIVIDENDS AND OTHER DISTRIBUTIONS.] (a) Subject 
 19.14  to the limitations and requirements of this subdivision, the 
 19.15  board of directors of any domestic insurer within an insurance 
 19.16  holding company system may authorize and cause the insurer to 
 19.17  declare and pay any dividend or distribution to its shareholders 
 19.18  as the directors deem prudent from the earned surplus of the 
 19.19  insurer.  An insurer's earned surplus, also known as unassigned 
 19.20  funds, shall be determined in accordance with the accounting 
 19.21  procedures and practices governing preparation of its annual 
 19.22  statement~~, minus 25 percent of earned surplus attributable to~~ 
 19.23  ~~net unrealized capital gains~~.  Dividends which are paid from 
 19.24  sources other than an insurer's earned surplus as of the end of 
 19.25  the immediately preceding quarter for which the insurer has 
 19.26  filed a quarterly or annual statement as appropriate, or are 
 19.27  extraordinary dividends or distributions may be paid only as 
 19.28  provided in paragraphs (d), (e), and (f). 
 19.29     (b) The insurer shall notify the commissioner within five 
 19.30  business days following declaration of a dividend declared 
 19.31  pursuant to paragraph (a) and at least ten days prior to its 
 19.32  payment.  The commissioner shall promptly consider the 
 19.33  notification filed pursuant to this paragraph, taking into 
 19.34  consideration the factors described in subdivision 4. 
 19.35     (c) The commissioner shall review at least annually the 
 19.36  dividends paid by an insurer pursuant to paragraph (a) for the 
 20.1   purpose of determining if the dividends are reasonable based 
 20.2   upon (1) the adequacy of the level of surplus as regards 
 20.3   policyholders remaining after the dividend payments, and (2) the 
 20.4   quality of the insurer's earnings and extent to which the 
 20.5   reported earnings include extraordinary items, such as surplus 
 20.6   relief reinsurance transactions and reserve destrengthening. 
 20.7      (d) No domestic insurer shall pay any extraordinary 
 20.8   dividend or make any other extraordinary distribution to its 
 20.9   shareholders until:  (1) 30 days after the commissioner has 
 20.10  received notice of the declaration of it and has not within the 
 20.11  period disapproved the payment; or (2) the commissioner has 
 20.12  approved the payment within the 30-day period. 
 20.13     (e) For purposes of this section, an extraordinary dividend 
 20.14  or distribution includes any dividend or distribution of cash or 
 20.15  other property, whose fair market value together with that of 
 20.16  other dividends or distributions made within the preceding 12 
 20.17  months exceeds the greater of (1) ten percent of the insurer's 
 20.18  surplus as regards policyholders ~~as of the 31st day of December~~ 
 20.19  ~~next preceding~~ on December 31 of the preceding year; or (2) the 
 20.20  net gain from operations of the insurer, if the insurer is a 
 20.21  life insurer, or the net income, if the insurer is not a life 
 20.22  insurer, not including realized capital gains, for the 12-month 
 20.23  period ending ~~the 31st day of December next preceding~~ on 
 20.24  December 31 of the preceding year, but does not include pro rata 
 20.25  distributions of any class of the insurer's own securities.  
 20.26     (f) Notwithstanding any other provision of law, an insurer 
 20.27  may declare an extraordinary dividend or distribution that is 
 20.28  conditional upon the commissioner's approval, and the 
 20.29  declaration shall confer no rights upon shareholders until:  (1) 
 20.30  the commissioner has approved the payment of such a dividend or 
 20.31  distribution; or (2) the commissioner has not disapproved the 
 20.32  payment within the 30-day period referred to above. 
 20.33     Sec. 23.  Minnesota Statutes 1996, section 60K.02, 
 20.34  subdivision 1, is amended to read: 
 20.35     Subdivision 1.  [REQUIREMENT.] No person shall act or 
 20.36  assume to act as an insurance agent in the solicitation or 
 21.1   procurement of applications for insurance, nor in the sale of 
 21.2   insurance or policies of insurance, nor in any manner aid as an 
 21.3   insurance agent in the negotiation of insurance by or with an 
 21.4   insurer, including resident agents or reciprocal or 
 21.5   interinsurance exchanges and fraternal benefit societies, until 
 21.6   that person obtains from the commissioner a license for that 
 21.7   purpose.  The license must specifically set forth the name of 
 21.8   the person authorized to act as an agent and the class or 
 21.9   classes of insurance for which that person is authorized to 
 21.10  solicit or countersign policies.  An insurance agent may qualify 
 21.11  for a license ~~in the following classes~~ to sell:  (1) life and 
 21.12  health; ~~and~~ (2) life and health and variable contracts; (3) 
 21.13  property and casualty; (4) travel baggage; (5) bail bonds; (6) 
 21.14  title insurance; and (7) farm property and liability.  
 21.15     No insurer shall appoint or reappoint a natural person, 
 21.16  partnership, or corporation to act as an insurance agent on its 
 21.17  behalf until that natural person, partnership, or corporation 
 21.18  obtains a license as an insurance agent.  
 21.19     Sec. 24.  Minnesota Statutes 1996, section 60K.03, 
 21.20  subdivision 2, is amended to read: 
 21.21     Subd. 2.  [RESIDENT AGENT.] The commissioner shall issue a 
 21.22  resident insurance agent's license to a qualified resident of 
 21.23  this state as follows:  
 21.24     (a) A person may qualify as a resident of this state if 
 21.25  that person resides in this state or the principal place of 
 21.26  business of that person is maintained in this state.  
 21.27  Application for a license claiming residency in this state for 
 21.28  licensing purposes constitutes an election of residency in this 
 21.29  state.  A license issued upon an application claiming residency 
 21.30  in this state is void if the licensee, while holding a resident 
 21.31  license in this state, also holds, or makes application for, a 
 21.32  resident license in, or thereafter claims to be a resident of, 
 21.33  any other state or jurisdiction or if the licensee ceases to be 
 21.34  a resident of this state; provided, however, if the applicant is 
 21.35  a resident of a community or trade area, the border of which is 
 21.36  contiguous with the state line of this state, the applicant may 
 22.1   qualify for a resident license in this state and at the same 
 22.2   time hold a resident license from the contiguous state. 
 22.3      (b) The commissioner shall subject each applicant who is a 
 22.4   natural person to a written examination as to the applicant's 
 22.5   competence to act as an insurance agent.  The examination must 
 22.6   be held at a reasonable time and place designated by the 
 22.7   commissioner. 
 22.8      (c) The examination shall be approved for use by the 
 22.9   commissioner and shall test the applicant's knowledge of the 
 22.10  lines of insurance, policies, and transactions to be handled 
 22.11  under the class of license applied for, of the duties and 
 22.12  responsibilities of the licensee, and pertinent insurance laws 
 22.13  of this state. 
 22.14     (d) The examination shall be given only after the applicant 
 22.15  has completed a program of classroom studies in a school, which 
 22.16  shall not include a school sponsored by, offered by, or 
 22.17  affiliated with an insurance company or its agents; except that 
 22.18  this limitation does not preclude a bona fide professional 
 22.19  association of agents, not acting on behalf of an insurer, from 
 22.20  offering courses.  The course of study shall consist of 30 hours 
 22.21  of classroom study devoted to the basic fundamentals of 
 22.22  insurance for those seeking a Minnesota license for the first 
 22.23  time~~,~~; three hours devoted to state laws, regulations, and rules 
 22.24  applicable to the line or lines of insurance for which licensure 
 22.25  is being applied; 15 hours devoted to specific life and health 
 22.26  topics for those seeking a life and health license~~,~~; and 15 
 22.27  hours devoted to specific property and casualty topics for those 
 22.28  seeking a property and casualty license.  The program of studies 
 22.29  or study course shall have been approved by the commissioner in 
 22.30  order to qualify under this paragraph.  If the applicant has 
 22.31  been previously licensed for the particular line of insurance in 
 22.32  the state of Minnesota, the requirement of a program of studies 
 22.33  or a study course shall be waived.  A certification of 
 22.34  compliance by the organization offering the course shall 
 22.35  accompany the applicant's license application.  This program of 
 22.36  studies in a school or a study course shall not apply to farm 
 23.1   property perils and farm liability applicants, or to agents 
 23.2   writing such other lines of insurance as the commissioner may 
 23.3   exempt from examination by order. 
 23.4      (e) The applicant must pass the examination with a grade 
 23.5   determined by the commissioner to indicate satisfactory 
 23.6   knowledge and understanding of the class or classes of insurance 
 23.7   for which the applicant seeks qualification.  The commissioner 
 23.8   shall inform the applicant as to whether or not the applicant 
 23.9   has passed.  Examination results are valid for a period of three 
 23.10  years from the date of the examination.  The applicant must pass 
 23.11  the examination with a grade determined by the commissioner. 
 23.12     (f) An applicant who has failed to pass an examination may 
 23.13  take subsequent examinations.  Examination fees for subsequent 
 23.14  examinations shall not be waived. 
 23.15     (g) Any applicant for a license covering the same class or 
 23.16  classes of insurance for which the applicant was licensed under 
 23.17  a similar license in this state, other than a temporary license, 
 23.18  within the three years preceding the date of the application 
 23.19  shall be exempt from the requirement of a written examination, 
 23.20  unless the previous license was revoked or suspended by the 
 23.21  commissioner.  An applicant whose license is not renewed under 
 23.22  section 60K.12 is exempt from the requirement of a written 
 23.23  examination.  
 23.24     Sec. 25.  Minnesota Statutes 1996, section 60K.03, 
 23.25  subdivision 3, is amended to read: 
 23.26     Subd. 3.  [NONRESIDENT AGENT.] The commissioner shall issue 
 23.27  a nonresident insurance agent's license to a qualified person 
 23.28  who is a resident of another state or country as follows: 
 23.29     (a) A person may qualify for a license under this section 
 23.30  as a nonresident only if that person holds a license in another 
 23.31  state, province of Canada, or other foreign country which, in 
 23.32  the opinion of the commissioner, qualifies that person for the 
 23.33  same activity as that for which a license is sought. 
 23.34     (b) The commissioner shall not issue a license to a 
 23.35  nonresident applicant until that person files with the 
 23.36  commissioner a designation of the commissioner and the 
 24.1   commissioner's successors in office as the applicant's true and 
 24.2   lawful attorney upon whom may be served all lawful process in an 
 24.3   action, suit, or proceeding instituted by or on behalf of an 
 24.4   interested person arising out of the applicant's insurance 
 24.5   business in this state.  This designation constitutes an 
 24.6   agreement that this service of process is of the same legal 
 24.7   force and validity as personal service of process in this state 
 24.8   upon that applicant.  
 24.9      Service of process upon a licensee in an action or 
 24.10  proceeding begun in a court of competent jurisdiction of this 
 24.11  state may be made in compliance with section 45.028, subdivision 
 24.12  2.  
 24.13     (c) A nonresident agent shall be held to the same knowledge 
 24.14  of insurance law, regulations, and rules as that required of a 
 24.15  resident agent according to subdivision 2, paragraph (d). 
 24.16     ~~(c)~~ (d) A nonresident license terminates automatically when 
 24.17  the resident license for that class of license in the state, 
 24.18  province, or foreign country in which the licensee is a resident 
 24.19  is terminated for any reason.  
 24.20     Sec. 26.  Minnesota Statutes 1996, section 60K.14, 
 24.21  subdivision 4, is amended to read: 
 24.22     Subd. 4.  [SUITABILITY OF INSURANCE.] In recommending the 
 24.23  purchase of any life, endowment, individual accident and 
 24.24  sickness, long-term care, annuity, life-endowment, or Medicare 
 24.25  supplement insurance to a customer, an agent must have 
 24.26  reasonable grounds for believing that the recommendation is 
 24.27  suitable for the customer and must make reasonable inquiries to 
 24.28  determine suitability.  The suitability of a recommended 
 24.29  purchase of insurance will be determined ~~by reference to the~~ 
 24.30  ~~totality of the particular customer's circumstances~~ upon the 
 24.31  basis of the facts disclosed by the customer as to the 
 24.32  customer's other insurance and financial situation and needs, 
 24.33  including, but not limited to, the customer's ~~income~~ financial 
 24.34  status, the customer's need for insurance, and the values, 
 24.35  benefits, and costs of the customer's existing insurance 
 24.36  program, if any, when compared to the values, benefits, and 
 25.1   costs of the recommended policy or policies. 
 25.2      Sec. 27.  Minnesota Statutes 1996, section 60K.19, 
 25.3   subdivision 7, is amended to read: 
 25.4      Subd. 7.  [CRITERIA FOR COURSE ACCREDITATION.] (a) The 
 25.5   commissioner may accredit a course only to the extent it is 
 25.6   designed to impart substantive and procedural knowledge of the 
 25.7   insurance field.  The burden of demonstrating that the course 
 25.8   satisfies this requirement is on the individual or organization 
 25.9   seeking accreditation.  The commissioner shall approve any 
 25.10  educational program approved by Minnesota Continuing Legal 
 25.11  Education relating to the insurance field.  The commissioner is 
 25.12  authorized to establish a procedure for renewal of course 
 25.13  accreditation. 
 25.14     (b) The commissioner shall approve or disapprove 
 25.15  professional designation examinations that are recommended for 
 25.16  approval by the advisory task force.  In order for an agent to 
 25.17  receive full continuing education credit for a professional 
 25.18  designation examination, the agent must pass the examination.  
 25.19  An agent may not receive credit for classroom instruction 
 25.20  preparing for the professional designation examination and also 
 25.21  receive continuing education credit for passing the professional 
 25.22  designation examination. 
 25.23     (c) The commissioner may not accredit a course:  
 25.24     (1) that is designed to prepare students for a license 
 25.25  examination; 
 25.26     (2) in mechanical office or business skills, including 
 25.27  typing, speedreading, use of calculators, or other machines or 
 25.28  equipment; 
 25.29     (3) in sales promotion, including meetings held in 
 25.30  conjunction with the general business of the licensed agent; 
 25.31     (4) in motivation, the art of selling, psychology, or time 
 25.32  management; or 
 25.33     (5) which can be completed by the student at home or 
 25.34  outside the classroom without the supervision of an instructor 
 25.35  approved by the department of commerce, except that home-study 
 25.36  courses may be accredited by the commissioner if the student is 
 26.1   a nonresident agent residing in a state which is not contiguous 
 26.2   to Minnesota.  
 26.3      (d) The commissioner has discretion to establish a pilot 
 26.4   program to explore delivery of accredited courses using new 
 26.5   delivery technology, including interactive technology.  This 
 26.6   pilot program expires August 1, 2001. 
 26.7      Sec. 28.  Minnesota Statutes 1996, section 60K.19, 
 26.8   subdivision 8, is amended to read: 
 26.9      Subd. 8.  [MINIMUM EDUCATION REQUIREMENT.] Each person 
 26.10  subject to this section shall complete a minimum of 30 credit 
 26.11  hours of courses accredited by the commissioner during each 
 26.12  24-month licensing period ~~after the expiration of the person's~~ 
 26.13  ~~initial licensing period~~, two hours of which must be devoted to 
 26.14  state law, regulations, and rules applicable to the line or 
 26.15  lines of insurance for which the agent is licensed.  At least 15 
 26.16  of the 30 credit hours must be completed during the first 12 
 26.17  months of the 24-month licensing period.  Any person whose 
 26.18  initial licensing period extends more than six months shall 
 26.19  complete 15 hours of courses accredited by the commissioner 
 26.20  during the initial license period.  Any person teaching or 
 26.21  lecturing at an accredited course qualifies for 1-1/2 times the 
 26.22  number of credit hours that would be granted to a person 
 26.23  completing the accredited course.  No more than 15 credit hours 
 26.24  per licensing period may be credited to a person for courses 
 26.25  sponsored by, offered by, or affiliated with an insurance 
 26.26  company or its agents.  Courses sponsored by, offered by, or 
 26.27  affiliated with an insurance company or agent may restrict its 
 26.28  students to agents of the company or agency. 
 26.29     Sec. 29.  Minnesota Statutes 1996, section 61A.32, is 
 26.30  amended to read: 
 26.31     61A.32 [DOMESTIC MUTUAL AND STOCK AND MUTUAL COMPANIES; 
 26.32  VOTING RIGHTS OF MEMBERS.] 
 26.33     Every person insured by a domestic mutual life insurance 
 26.34  company, and every participating policyholder of a domestic 
 26.35  stock and mutual life insurance company as defined in sections 
 26.36  61A.33 to 61A.36, shall be a member, entitled to one vote and 
 27.1   one vote additional for each $1,000 of insurance in excess of 
 27.2   the first $1,000; provided, that no member shall be entitled to 
 27.3   more than 100 votes; and, provided, further, that in the case of 
 27.4   group insurance on employees such group shall be deemed to be a 
 27.5   single member and the employer shall be deemed to be such member 
 27.6   for the purpose of voting, having not to exceed 100 votes, 
 27.7   provided, that in cases where the employees pay all or any part 
 27.8   of the premium, either directly or by payroll deductions, the 
 27.9   employees shall be allowed to choose their representative, who 
 27.10  shall exercise a voting power in proportion to the percentage of 
 27.11  premium paid by such employees.  Every member shall be notified 
 27.12  of its annual meetings by a written notice mailed to the 
 27.13  member's address, or by an imprint on the back of the policy, 
 27.14  premium notice, receipt or certificate of renewal, as follows: 
 27.15     "The insured is hereby notified that by virtue of this 
 27.16  policy the insured is a member of the .......... Insurance 
 27.17  Company, and that the annual meetings of said company are held 
 27.18  at its home office on the ..... day of ..... in each year, at 
 27.19  .......... o'clock."  
 27.20     The blanks shall be duly filled in print.  Any such member 
 27.21  may vote by proxy by filing written proxy appointment with the 
 27.22  secretary of the company at its home office at least five days 
 27.23  before the first meeting at which it is to be used.  Such proxy 
 27.24  appointment may be for a specified period of time not to exceed 
 27.25  one year.  A proxy may be revoked by a member at any time by 
 27.26  written notice to the secretary of the company or by executing a 
 27.27  new proxy appointment and filing it as required herein:  
 27.28  provided, however, that any member may always appear personally 
 27.29  and exercise rights as a member at any meeting of the company.  
 27.30     No person or group of persons other than the chief 
 27.31  executive officer of a domestic mutual life insurance company, 
 27.32  or the officer's designee, shall seek to obtain proxies from the 
 27.33  members of the domestic mutual life insurance company for the 
 27.34  purposes of affecting a change of control of the domestic mutual 
 27.35  life insurance company unless that person or group has filed 
 27.36  with the commissioner and has sent to the domestic mutual life 
 28.1   insurance company a statement containing the information 
 28.2   required by section 60D.17.  Section 60D.17, subdivisions 2 to 
 28.3   7, applies in the event of any such solicitation.  
 28.4      A domestic mutual life insurance company may by its 
 28.5   articles of incorporation or bylaws provide for a representative 
 28.6   system of voting in any meeting of members.  The articles or 
 28.7   bylaws may provide for the selection of representatives from 
 28.8   districts as therein specified, such representatives to 
 28.9   represent approximately equal numbers of members with power to 
 28.10  exercise all the voting powers, rights and privileges of the 
 28.11  members they represent with the same force and effect as might 
 28.12  be exercised by the members themselves.  In such a 
 28.13  representative system the votes cast by the representative shall 
 28.14  be one vote for each member, notwithstanding the amount of 
 28.15  insurance carried, and proxy voting shall not be permitted; 
 28.16  provided, however, that any member may always appear personally 
 28.17  and exercise rights as a member of the company at any meeting of 
 28.18  the membership.  
 28.19     Sec. 30.  Minnesota Statutes 1996, section 61A.60, 
 28.20  subdivision 1, is amended to read: 
 28.21     Subdivision 1.  [NOTICE FORM; AGENT SALES.] The notice 
 28.22  required where sections 61A.53 to 61A.60 refer to this 
 28.23  subdivision is as follows: 
 28.24                          IMPORTANT NOTICE 
 28.25  
 28.26  DEFINITION   REPLACEMENT is any transaction where, in connection
 28.27               with the purchase of New Insurance or a New 
 28.28               Annuity, you LAPSE, SURRENDER, CONVERT to 
 28.29               Paid-up Insurance, Place on Extended Term, 
 28.30               or BORROW all or part of the policy loan 
 28.31               values on an existing insurance policy or an 
 28.32               annuity.  (See reverse side for DEFINITIONS.) 
 28.35  IF YOU       In connection with the purchase of this insurance 
 28.36  INTEND TO    or annuity, if you have REPLACED or intend to 
 29.1   REPLACE      REPLACE your present life insurance coverage 
 29.2   COVERAGE     or annuity(ies), you should be certain that you   
 29.3                understand all the relevant factors involved.
 29.5                You should BE AWARE that you may be required to
 29.6                provide <h>EVIDENCE OF INSURABILITY</h> and 
 29.8                (1)  If your HEALTH condition has CHANGED since 
 29.9                the application was taken on your present 
 29.10               policies, you may be required to pay ADDITIONAL 
 29.11               PREMIUMS under the NEW POLICY, or be DENIED 
 29.12               coverage. 
 29.14               (2)  Your present occupation or activities <h>may not</h>
 29.15  <h>             be covered or could require additional premiums. </h> 
 29.17               (3)  The INCONTESTABLE and SUICIDE CLAUSE will 
 29.18               begin anew in a new policy.  This could RESULT 
 29.19               in a <h>CLAIM under the new policy BEING DENIED</h> 
 29.20               that would otherwise have been paid.
 29.22               (4)  Current law ~~DOES~~ MAY NOT REQUIRE your present 
 29.23               insurer(s) to REFUND any premiums.
 29.25               (5)  It is to your advantage to OBTAIN INFORMATION
 29.26               regarding your existing policies or annuity 
 29.27               contracts  [FROM THE INSURER OR AGENT FROM WHOM 
 29.28               YOU PURCHASED THE POLICY OR ANNUITY CONTRACT.] 
 29.30               (If you are purchasing an annuity, clauses (1), 
 29.31               (2), and (3) above would not apply to the new 
 29.32               annuity contract.)
 29.34               THE INSURANCE OR ANNUITY I INTEND TO PURCHASE FROM 
 29.35               _______________________________________INSURANCE CO.
 29.36               MAY REPLACE OR ALTER EXISTING LIFE INSURANCE 
 30.1                POLICY(IES) OR ANNUITY CONTRACT(S). 
 30.3                The following policy(ies) or annuity contract(s) 
 30.4                may be replaced as a result of this transaction:
 30.6            <h> Insurer</h>                              <h> Insured</h> 
 30.7    <h>as it appears on the policy        as it appears on the policy</h> 
 30.8   <h> or contract </h>                       <h>or contract </h> 
 30.9   ______________________________     ______________________________
 30.10  ______________________________     ______________________________
 30.11  ______________________________     ______________________________
 30.12  ______________________________     ______________________________
 30.13   <h> Policy or contract number </h>             <h> Insured birthdate </h>
 30.14  ______________________________     ______________________________
 30.15  ______________________________     ______________________________
 30.16  ______________________________     ______________________________
 30.17  ______________________________     ______________________________
 30.18          The proposed policy or contract is:
 30.19          ______________________________________  $_______________
 30.20          type of policy- or contract-generic name   face amount
 30.22          ________________________________________________________
 30.23          signature of applicant                   date
 30.25          ________________________________________________________
 30.26          address of applicant        city              state
 30.28          I certify that this form was given to and completed by 
 30.30          ________________________________________________________
 30.31                      (applicant-please print or type)
 30.33          prior to taking an application and that I am leaving a 
 30.34          signed copy for the applicant.
 30.36               ___________________________________________________
 30.37               agent's signature                    date
 30.39               ___________________________________________________
 30.40                                address
 30.42               ___________________________________________________
 30.43                       city                       state
 30.44            <h>Note important statement on reverse side </h>
 30.45     Sec. 31.  Minnesota Statutes 1996, section 61B.19, 
 30.46  subdivision 3, is amended to read: 
 30.47     Subd. 3.  [LIMITATION OF COVERAGE.] Sections 61B.18 to 
 30.48  61B.32 do not provide coverage for: 
 31.1      (1) a portion of a policy or contract under which the 
 31.2   investment risk is borne by the policy or contract holder; 
 31.3      (2) a policy or contract of reinsurance, unless assumption 
 31.4   certificates have been issued and the insured has consented to 
 31.5   the assumption as provided under section 60A.09, subdivision 4a; 
 31.6      (3) a policy or contract issued by an assessment benefit 
 31.7   association operating under section 61A.39, or a fraternal 
 31.8   benefit society operating under chapter 64B; 
 31.9      (4) any obligation to nonresident participants of a covered 
 31.10  retirement plan or to the plan sponsor, employer, trustee, or 
 31.11  other party who owns the contract; in these cases, the 
 31.12  association is obligated under this chapter only to participants 
 31.13  in a covered plan who are residents of the state of Minnesota on 
 31.14  the date of impairment or insolvency; 
 31.15     (5) an annuity contract issued in connection with and for 
 31.16  the purpose of funding a structured settlement of a liability 
 31.17  claim, where the liability insurer remains liable; 
 31.18     (6) a portion of an unallocated annuity contract which is 
 31.19  not issued to or in connection with a specific employee, union, 
 31.20  or association of natural persons benefit plan or a governmental 
 31.21  lottery, including but not limited to, a contract issued to, or 
 31.22  purchased at the direction of, any governmental bonding 
 31.23  authority, such as a municipal guaranteed investment contract; 
 31.24     (7) a plan or program of an employer, association, or 
 31.25  similar entity to provide life, health, or annuity benefits to 
 31.26  its employees or members to the extent that the plan or program 
 31.27  is self-funded or uninsured, including benefits payable by an 
 31.28  employer, association, or similar entity under: 
 31.29     (i) a multiple employer welfare arrangement as defined in 
 31.30  the Employee Retirement Income Security Act of 1974, United 
 31.31  States Code, title 29, section 1002(40)(A), as amended; 
 31.32     (ii) a minimum premium group insurance plan; 
 31.33     (iii) a stop-loss group insurance plan; or 
 31.34     (iv) an administrative services only contract; 
 31.35     (8) any policy or contract issued by an insurer at a time 
 31.36  when it was not licensed or did not have a certificate of 
 32.1   authority to issue the policy or contract in this state; 
 32.2      (9) an unallocated annuity contract issued to an employee 
 32.3   benefit plan protected under the federal Pension Benefit 
 32.4   Guaranty Corporation; ~~and~~ 
 32.5      (10) a portion of a policy or contract to the extent that 
 32.6   it provides dividends or experience rating credits except to the 
 32.7   extent the dividends or experience rating credits have actually 
 32.8   become due and payable or have been credited to the policy or 
 32.9   contract before the date of impairment or insolvency, or 
 32.10  provides that a fee or allowance be paid to a person, including 
 32.11  the policy or contract holder, in connection with the service 
 32.12  to, or administration of, the policy or contract~~.~~; and 
 32.13     (11) a contractual agreement that establishes the member 
 32.14  insurer's obligations to provide a book value accounting 
 32.15  guaranty for defined contribution benefit plan participants by 
 32.16  reference to a portfolio of assets that is owned by the benefit 
 32.17  plan or its trustee, which in each case is not an affiliate of 
 32.18  the member insurer. 
 32.19     Sec. 32.  Minnesota Statutes 1996, section 62A.04, 
 32.20  subdivision 3, is amended to read: 
 32.21     Subd. 3.  [OPTIONAL PROVISIONS.] Except as provided in 
 32.22  subdivision 4, no such policy delivered or issued for delivery 
 32.23  to any person in this state shall contain provisions respecting 
 32.24  the matters set forth below unless such provisions are in the 
 32.25  words in which the same appear in this section.  The insurer 
 32.26  may, at its option, use in lieu of any such provision a 
 32.27  corresponding provision of different wording approved by the 
 32.28  commissioner which is not less favorable in any respect to the 
 32.29  insured or the beneficiary.  Any such provision contained in the 
 32.30  policy shall be preceded individually by the appropriate caption 
 32.31  appearing in this subdivision or, at the option of the insurer, 
 32.32  by such appropriate individual or group captions or subcaptions 
 32.33  as the commissioner may approve. 
 32.34     (1) A provision as follows: 
 32.35     CHANGE OF OCCUPATION:  If the insured be injured or 
 32.36  contract sickness after having changed occupations to one 
 33.1   classified by the insurer as more hazardous than that stated in 
 33.2   this policy or while doing for compensation anything pertaining 
 33.3   to an occupation so classified, the insurer will pay only such 
 33.4   portion of the indemnities provided in this policy as the 
 33.5   premiums paid would have purchased at the rates and within the 
 33.6   limits fixed by the insurer for such more hazardous occupation.  
 33.7   If the insured changes occupations to one classified by the 
 33.8   insurer as less hazardous than that stated in this policy, the 
 33.9   insurer, upon receipt of proof of such change of occupation will 
 33.10  reduce the premium rate accordingly, and will return the excess 
 33.11  pro rata unearned premium from the date of change of occupation 
 33.12  or from the policy anniversary date immediately preceding 
 33.13  receipt of such proof, whichever is the more recent.  In 
 33.14  applying this provision, the classification of occupational risk 
 33.15  and the premium rates shall be such as have been last filed by 
 33.16  the insurer prior to the occurrence of the loss for which the 
 33.17  insurer is liable or prior to date of proof of change in 
 33.18  occupation with the state official having supervision of 
 33.19  insurance in the state where the insured resided at the time 
 33.20  this policy was issued; but if such filing was not required, 
 33.21  then the classification of occupational risk and the premium 
 33.22  rates shall be those last made effective by the insurer in such 
 33.23  state prior to the occurrence of the loss or prior to the date 
 33.24  of proof of change of occupation. 
 33.25     (2) A provision as follows: 
 33.26     MISSTATEMENT OF AGE:  If the age of the insured has been 
 33.27  misstated, all amounts payable under this policy shall be such 
 33.28  as the premium paid would have purchased at the correct age. 
 33.29     (3) A provision as follows: 
 33.30     OTHER INSURANCE IN THIS INSURER:  If an accident or 
 33.31  sickness or accident and sickness policy or policies previously 
 33.32  issued by the insurer to the insured be in force concurrently 
 33.33  herewith, making the aggregate indemnity for ..... (insert type 
 33.34  of coverage or coverages) in excess of $..... (insert maximum 
 33.35  limit of indemnity or indemnities) the excess insurance shall be 
 33.36  void and all premiums paid for such excess shall be returned to 
 34.1   the insured or to the insured's estate, or, in lieu thereof: 
 34.2      Insurance effective at any one time on the insured under a 
 34.3   like policy or policies in this insurer is limited to the one 
 34.4   such policy elected by the insured, or the insured's beneficiary 
 34.5   or estate, as the case may be, and the insurer will return all 
 34.6   premiums paid for all other such policies. 
 34.7      (4) A provision as follows: 
 34.8      INSURANCE WITH OTHER INSURERS:  If there be other valid 
 34.9   coverage, not with this insurer, providing benefits for the same 
 34.10  loss on a provision of service basis or on an expense incurred 
 34.11  basis and of which this insurer has not been given written 
 34.12  notice prior to the occurrence or commencement of loss, the only 
 34.13  liability under any expense incurred coverage of this policy 
 34.14  shall be for such proportion of the loss as the amount which 
 34.15  would otherwise have been payable hereunder plus the total of 
 34.16  the like amounts under all such other valid coverages for the 
 34.17  same loss of which this insurer had notice bears to the total 
 34.18  like amounts under all valid coverages for such loss, and for 
 34.19  the return of such portion of the premiums paid as shall exceed 
 34.20  the pro rata portion for the amount so determined.  For the 
 34.21  purpose of applying this provision when other coverage is on a 
 34.22  provision of service basis, the "like amount" of such other 
 34.23  coverage shall be taken as the amount which the services 
 34.24  rendered would have cost in the absence of such coverage. 
 34.25     If the foregoing policy provision is included in a policy 
 34.26  which also contains the next following policy provision there 
 34.27  shall be added to the caption of the foregoing provision the 
 34.28  phrase "EXPENSE INCURRED BENEFITS."  The insurer may, at its 
 34.29  option, include in this provision a definition of "other valid 
 34.30  coverage," approved as to form by the commissioner, which 
 34.31  definition shall be limited in subject matter to coverage 
 34.32  provided by organizations subject to regulation by insurance law 
 34.33  or by insurance authorities of this or any other state of the 
 34.34  United States or any province of Canada, and by hospital or 
 34.35  medical service organizations, and to any other coverage the 
 34.36  inclusion of which may be approved by the commissioner.  In the 
 35.1   absence of such definition such term shall not include group 
 35.2   insurance, automobile medical payments insurance, or coverage 
 35.3   provided by hospital or medical service organizations or by 
 35.4   union welfare plans or employer or employee benefit 
 35.5   organizations.  For the purpose of applying the foregoing policy 
 35.6   provision with respect to any insured, any amount of benefit 
 35.7   provided for such insured pursuant to any compulsory benefit 
 35.8   statute (including any workers' compensation or employer's 
 35.9   liability statute) whether provided by a governmental agency or 
 35.10  otherwise shall in all cases be deemed to be "other valid 
 35.11  coverage" of which the insurer has had notice.  In applying the 
 35.12  foregoing policy provision no third party liability coverage 
 35.13  shall be included as "other valid coverage." 
 35.14     (5) A provision as follows: 
 35.15     INSURANCE WITH OTHER INSURERS:  If there be other valid 
 35.16  coverage, not with this insurer, providing benefits for the same 
 35.17  loss on other than an expense incurred basis and of which this 
 35.18  insurer has not been given written notice prior to the 
 35.19  occurrence or commencement of loss, the only liability for such 
 35.20  benefits under this policy shall be for such proportion of the 
 35.21  indemnities otherwise provided hereunder for such loss as the 
 35.22  like indemnities of which the insurer had notice (including the 
 35.23  indemnities under this policy) bear to the total amount of all 
 35.24  like indemnities for such loss, and for the return of such 
 35.25  portion of the premium paid as shall exceed the pro rata portion 
 35.26  for the indemnities thus determined. 
 35.27     If the foregoing policy provision is included in a policy 
 35.28  which also contains the next preceding policy provision there 
 35.29  shall be added to the caption of the foregoing provision the 
 35.30  phrase -- "OTHER BENEFITS."  The insurer may, at its option, 
 35.31  include in this provision a definition of "other valid 
 35.32  coverage," approved as to form by the commissioner, which 
 35.33  definition shall be limited in subject matter to coverage 
 35.34  provided by organizations subject to regulation by insurance law 
 35.35  or by insurance authorities of this or any other state of the 
 35.36  United States or any province of Canada, and to any other 
 36.1   coverage the inclusion of which may be approved by the 
 36.2   commissioner.  In the absence of such definition such term shall 
 36.3   not include group insurance, or benefits provided by union 
 36.4   welfare plans or by employer or employee benefit organizations.  
 36.5   For the purpose of applying the foregoing policy provision with 
 36.6   respect to any insured, any amount of benefit provided for such 
 36.7   insured pursuant to any compulsory benefit statute (including 
 36.8   any workers' compensation or employer's liability statute) 
 36.9   whether provided by a governmental agency or otherwise shall in 
 36.10  all cases be deemed to be "other valid coverage" of which the 
 36.11  insurer has had notice.  In applying the foregoing policy 
 36.12  provision no third party liability coverage shall be included as 
 36.13  "other valid coverage." 
 36.14     (6) A provision as follows: 
 36.15     RELATION OF EARNINGS TO INSURANCE:  If the total monthly 
 36.16  amount of loss of time benefits promised for the same loss under 
 36.17  all valid loss of time coverage upon the insured, whether 
 36.18  payable on a weekly or monthly basis, shall exceed the monthly 
 36.19  earnings of the insured at the time disability commenced or the 
 36.20  insured's average monthly earnings for the period of two years 
 36.21  immediately preceding a disability for which claim is made, 
 36.22  whichever is the greater, the insurer will be liable only for 
 36.23  such proportionate amount of such benefits under this policy as 
 36.24  the amount of such monthly earnings or such average monthly 
 36.25  earnings of the insured bears to the total amount of monthly 
 36.26  benefits for the same loss under all such coverage upon the 
 36.27  insured at the time such disability commences and for the return 
 36.28  of such part of the premiums paid during such two years as shall 
 36.29  exceed the pro rata amount of the premiums for the benefits 
 36.30  actually paid hereunder; but this shall not operate to reduce 
 36.31  the total monthly amount of benefits payable under all such 
 36.32  coverage upon the insured below the sum of $200 or the sum of 
 36.33  the monthly benefits specified in such coverages, whichever is 
 36.34  the lesser, nor shall it operate to reduce benefits other than 
 36.35  those payable for loss of time. 
 36.36     The foregoing policy provision may be inserted only in a 
 37.1   policy which the insured has the right to continue in force 
 37.2   subject to its terms by the timely payment of premiums (1) until 
 37.3   at least age 50, or, (2) in the case of a policy issued after 
 37.4   age 44, for at least five years from its date of issue.  The 
 37.5   insurer may, at its option, include in this provision a 
 37.6   definition of "valid loss of time coverage," approved as to form 
 37.7   by the commissioner, which definition shall be limited in 
 37.8   subject matter to coverage provided by governmental agencies or 
 37.9   by organizations subject to regulation by insurance law or by 
 37.10  insurance authorities of this or any other state of the United 
 37.11  States or any province of Canada, or to any other coverage the 
 37.12  inclusion of which may be approved by the commissioner or any 
 37.13  combination of such coverages.  In the absence of such 
 37.14  definition such term shall not include any coverage provided for 
 37.15  such insured pursuant to any compulsory benefit statute 
 37.16  (including any workers' compensation or employer's liability 
 37.17  statute), or benefits provided by union welfare plans or by 
 37.18  employer or employee benefit organizations. 
 37.19     (7) A provision as follows: 
 37.20     UNPAID PREMIUM:  Upon the payment of a claim under this 
 37.21  policy, any premium then due and unpaid or covered by any note 
 37.22  or written order may be deducted therefrom. 
 37.23     (8) A provision as follows: 
 37.24     CANCELLATION:  The insurer may cancel this policy at any 
 37.25  time by written notice delivered to the insured or mailed to the 
 37.26  insured's last address as shown by the records of the insurer, 
 37.27  stating when, not less than five days thereafter, such 
 37.28  cancellation shall be effective; and after the policy has been 
 37.29  continued beyond its original term the insured may cancel this 
 37.30  policy at any time by written notice delivered or mailed to the 
 37.31  insurer, effective upon receipt or on such later date as may be 
 37.32  specified in such notice.  In the event of cancellation, the 
 37.33  insurer will return promptly the unearned portion of any premium 
 37.34  paid.  ~~If~~ Regardless of whether it is the insurer or the insured 
 37.35  who cancels, ~~the earned premium shall be computed by the use of~~ 
 37.36  ~~the short-rate table last filed with the state official having~~ 
 38.1   ~~supervision of insurance in the state where the insured resided~~ 
 38.2   ~~when the policy was issued.  If the insurer cancels,~~ the earned 
 38.3   premium shall be computed pro rata, unless the mode of payment 
 38.4   is monthly or less, or if the unearned amount is for more than 
 38.5   one month.  Cancellation shall be without prejudice to any claim 
 38.6   originating prior to the effective date of cancellation. 
 38.7      (9) A provision as follows: 
 38.8      CONFORMITY WITH STATE STATUTES:  Any provision of this 
 38.9   policy which, on its effective date, is in conflict with the 
 38.10  statutes of the state in which the insured resides on such date 
 38.11  is hereby amended to conform to the minimum requirements of such 
 38.12  statutes. 
 38.13     (10) A provision as follows: 
 38.14     ILLEGAL OCCUPATION:  The insurer shall not be liable for 
 38.15  any loss to which a contributing cause was the insured's 
 38.16  commission of or attempt to commit a felony or to which a 
 38.17  contributing cause was the insured's being engaged in an illegal 
 38.18  occupation. 
 38.19     (11) A provision as follows: 
 38.20     NARCOTICS:  The insurer shall not be liable for any loss 
 38.21  sustained or contracted in consequence of the insured's being 
 38.22  under the influence of any narcotic unless administered on the 
 38.23  advice of a physician. 
 38.24     Sec. 33.  Minnesota Statutes 1996, section 62A.096, is 
 38.25  amended to read: 
 38.26     62A.096 [NOTICE OF SUBROGATION CLAIM REQUIRED.] 
 38.27     (a) A person covered by a health carrier who makes a claim 
 38.28  against a collateral source for damages that include repayment 
 38.29  for medical and medically related expenses incurred for the 
 38.30  covered person's benefit shall provide timely notice, in 
 38.31  writing, to the health carrier of the pending or potential 
 38.32  claim.  Notwithstanding any other law to the contrary, the 
 38.33  statute of limitations applicable to the rights with respect to 
 38.34  reimbursement or subrogation by the health carrier against the 
 38.35  covered person does not commence to run until the notice has 
 38.36  been given. 
 39.1      (b) Upon receipt of payment on a subrogation claim, the 
 39.2   health carrier shall promptly provide written notice to the 
 39.3   covered person, or the person's attorney, indicating the amount 
 39.4   received, the date it was received, the person from whom it was 
 39.5   received, and a telephone number that the covered person or the 
 39.6   attorney may call for more information.  
 39.7      (c) For purposes of this section, "covered person" and "a 
 39.8   person covered" include a person formerly covered by the health 
 39.9   carrier. 
 39.10     Sec. 34.  Minnesota Statutes 1996, section 62A.135, 
 39.11  subdivision 5, is amended to read: 
 39.12     Subd. 5.  [~~SUPPLEMENT TO ANNUAL STATEMENTS~~ SUPPLEMENTAL 
 39.13  FILINGS.] Each insurer that has fixed indemnity policies in 
 39.14  force in this state shall, ~~as a supplement to the annual~~ 
 39.15  ~~statement required by section 60A.13~~ upon request by the 
 39.16  commissioner, submit, in a form prescribed by the 
 39.17  commissioner, ~~the~~ experience data ~~for the calendar year~~ showing 
 39.18  its incurred claims, earned premiums, incurred to earned loss 
 39.19  ratio, and the ratio of the actual loss ratio to the expected 
 39.20  loss ratio for each fixed indemnity policy form in force in 
 39.21  Minnesota.  The experience data must be provided on both a 
 39.22  Minnesota only and a national basis.  If in the opinion of the 
 39.23  company's actuary, the deviation of the actual loss ratio from 
 39.24  the expected loss ratio for a policy form is due to unusual 
 39.25  reserve fluctuations, economic conditions, or other nonrecurring 
 39.26  conditions, the insurer should also file that opinion with 
 39.27  appropriate justification.  
 39.28     If the data submitted does not confirm that the insurer has 
 39.29  satisfied the loss ratio requirements of this section, the 
 39.30  commissioner shall notify the insurer in writing of the 
 39.31  deficiency.  The insurer shall have 30 days from the date of 
 39.32  receipt of the commissioner's notice to file amended rates that 
 39.33  comply with this section or a request for an exemption with 
 39.34  appropriate justification.  If the insurer fails to file amended 
 39.35  rates within the prescribed time and the commissioner does not 
 39.36  exempt the policy form from the need for a rate revision, the 
 40.1   commissioner shall order that the insurer's filed rates for the 
 40.2   nonconforming policy be reduced to an amount that would have 
 40.3   resulted in a loss ratio that complied with this section had it 
 40.4   been in effect for the reporting period of the supplement.  The 
 40.5   insurer's failure to file amended rates within the specified 
 40.6   time of the issuance of the commissioner's order amending the 
 40.7   rates does not preclude the insurer from filing an amendment of 
 40.8   its rates at a later time. 
 40.9      Sec. 35.  Minnesota Statutes 1996, section 62A.50, 
 40.10  subdivision 3, is amended to read: 
 40.11     Subd. 3.  [DISCLOSURES.] No long-term care policy shall be 
 40.12  offered or delivered in this state, whether or not the policy is 
 40.13  issued in this state, and no certificate of coverage under a 
 40.14  group long-term care policy shall be offered or delivered in 
 40.15  this state, unless a statement containing at least the following 
 40.16  information is delivered to the applicant at the time the 
 40.17  application is made: 
 40.18     (1) a description of the benefits and coverage provided by 
 40.19  the policy and the differences between this policy, a 
 40.20  supplemental Medicare policy and the benefits to which an 
 40.21  individual is entitled under parts A and B of Medicare; 
 40.22     (2) a statement of the exceptions and limitations in the 
 40.23  policy including the following language, as applicable, in bold 
 40.24  print:  "THIS POLICY DOES NOT COVER ALL NURSING CARE FACILITIES 
 40.25  OR NURSING HOME, HOME CARE, OR ADULT DAY CARE EXPENSES AND DOES 
 40.26  NOT COVER RESIDENTIAL CARE.  READ YOUR POLICY CAREFULLY TO 
 40.27  DETERMINE WHICH FACILITIES AND EXPENSES ARE COVERED BY YOUR 
 40.28  POLICY."; 
 40.29     (3) a statement of the renewal provisions including any 
 40.30  reservation by the insurer of the right to change premiums; 
 40.31     (4) a statement that the outline of coverage is a summary 
 40.32  of the policy issued or applied for and that the policy should 
 40.33  be consulted to determine governing contractual provisions; 
 40.34     (5) an explanation of the policy's loss ratio including at 
 40.35  least the following language:  "This means that, on the average, 
 40.36  policyholders may expect that $........ of every $100 in premium 
 41.1   will be returned as benefits to policyholders over the life of 
 41.2   the contract."; 
 41.3      (6) a statement of the out-of-pocket expenses, including 
 41.4   deductibles and copayments for which the insured is responsible, 
 41.5   and an explanation of the specific out-of-pocket expenses that 
 41.6   may be accumulated toward any out-of-pocket maximum as specified 
 41.7   in the policy; 
 41.8      (7) the following language, in bold print:  "YOUR PREMIUMS 
 41.9   CAN BE INCREASED IN THE FUTURE.  THE RATE SCHEDULE THAT LISTS 
 41.10  YOUR PREMIUM NOW CAN CHANGE."; 
 41.11     ~~(8) the following language, if applicable, in bold print:~~  
 41.12  ~~"IF YOU ARE NOT HOSPITALIZED PRIOR TO ENTERING A NURSING HOME OR~~ 
 41.13  ~~NEEDING HOME CARE, YOU WILL NOT BE ABLE TO COLLECT ANY BENEFITS~~ 
 41.14  ~~UNDER THIS PARTICULAR POLICY.";~~ 
 41.15     ~~(9)~~ (8) the following language in bold print, with any 
 41.16  provisions that are inapplicable to the particular policy 
 41.17  omitted or crossed out:  "THIS POLICY HAS A WAITING PERIOD OF 
 41.18  ..... (CALENDAR OR BENEFIT) DAYS FOR NURSING CARE SERVICES AND A 
 41.19  WAITING PERIOD OF ..... (CALENDAR OR BENEFIT) DAYS FOR HOME CARE 
 41.20  SERVICES.  THIS MEANS THAT THIS POLICY WILL NOT COVER YOUR CARE 
 41.21  FOR THE FIRST ..... (CALENDAR OR BENEFIT) DAYS AFTER YOU ENTER A 
 41.22  NURSING HOME, OR THE FIRST ..... (CALENDAR OR BENEFIT) DAYS 
 41.23  AFTER YOU BEGIN TO USE HOME CARE SERVICES.  YOU WOULD NEED TO 
 41.24  PAY FOR YOUR CARE FROM OTHER SOURCES FOR THOSE WAITING 
 41.25  PERIODS."; and 
 41.26     ~~(10)~~ (9) a signed and completed copy of the application for 
 41.27  insurance is left with the applicant at the time the application 
 41.28  is made. 
 41.29     Sec. 36.  Minnesota Statutes 1996, section 65A.01, 
 41.30  subdivision 3, is amended to read: 
 41.31     Subd. 3.  [POLICY PROVISIONS.] On said policy following 
 41.32  such matter as provided in subdivisions 1 and 2, printed in the 
 41.33  English language in type of such size or sizes and arranged in 
 41.34  such manner, as is approved by the commissioner of commerce, the 
 41.35  following provisions and subject matter shall be stated in the 
 41.36  following words and in the following sequence, but with the 
 42.1   convenient placing, if desired, of such matter as will act as a 
 42.2   cover or back for such policy when folded, with the blanks below 
 42.3   indicated being left to be filled in at the time of the issuing 
 42.4   of the policy, to wit: 
 42.5      (Space for listing the amounts of insurance, rates and 
 42.6   premiums for the basic coverages provided under the standard 
 42.7   form of policy and for additional coverages or perils provided 
 42.8   under endorsements attached.  The description and location of 
 42.9   the property covered and the insurable value(s) of any 
 42.10  building(s) or structure(s) covered by the policy or its 
 42.11  attached endorsements; also in the above space may be stated 
 42.12  whether other insurance is limited and if limited the total 
 42.13  amount permitted.) 
 42.14     In consideration of the provisions and stipulations herein 
 42.15  or added hereto and of the premium above specified this company, 
 42.16  for a term of ..... from ..... (At 12:01 a.m. Standard Time) to 
 42.17  ..... (At 12:01 a.m. Standard Time) at location of property 
 42.18  involved, to an amount not exceeding the amount(s) above 
 42.19  specified does insure .....  and legal representatives 
 42.20  ........................................... 
 42.21     (In above space may be stated whether other insurance is 
 42.22  limited.) (And if limited the total amount permitted.) 
 42.23     Subject to form No.(s) ..... attached hereto. 
 42.24     This policy is made and accepted subject to the foregoing 
 42.25  provisions and stipulations and those hereinafter stated, which 
 42.26  are hereby made a part of this policy, together with such 
 42.27  provisions, stipulations and agreements as may be added hereto 
 42.28  as provided in this policy. 
 42.29     The insurance effected above is granted against all loss or 
 42.30  damage by fire originating from any cause, except as hereinafter 
 42.31  provided, also any damage by lightning and by removal from 
 42.32  premises endangered by the perils insured against in this 
 42.33  policy, to the property described hereinafter while located or 
 42.34  contained as described in this policy, or pro rata for five days 
 42.35  at each proper place to which any of the property shall 
 42.36  necessarily be removed for preservation from the perils insured 
 43.1   against in this policy, but not elsewhere.  The amount of said 
 43.2   loss or damage, except in case of total loss on buildings, to be 
 43.3   estimated according to the actual value of the insured property 
 43.4   at the time when such loss or damage happens. 
 43.5      If the insured property shall be exposed to loss or damage 
 43.6   from the perils insured against, the insured shall make all 
 43.7   reasonable exertions to save and protect same. 
 43.8      This entire policy shall be void if, whether before a loss, 
 43.9   the insured has willfully, or after a loss, the insured has 
 43.10  willfully and with intent to defraud, concealed or 
 43.11  misrepresented any material fact or circumstance concerning this 
 43.12  insurance or the subject thereof, or the interests of the 
 43.13  insured therein. 
 43.14     This policy shall not cover accounts, bills, currency, 
 43.15  deeds, evidences of debt, money or securities; nor, unless 
 43.16  specifically named hereon in writing, bullion, or manuscripts. 
 43.17     This company shall not be liable for loss by fire or other 
 43.18  perils insured against in this policy caused, directly or 
 43.19  indirectly by:  (a) enemy attack by armed forces, including 
 43.20  action taken by military, naval or air forces in resisting an 
 43.21  actual or immediately impending enemy attack; (b) invasion; (c) 
 43.22  insurrection; (d) rebellion; (e) revolution; (f) civil war; (g) 
 43.23  usurped power; (h) order of any civil authority except acts of 
 43.24  destruction at the time of and for the purpose of preventing the 
 43.25  spread of fire, providing that such fire did not originate from 
 43.26  any of the perils excluded by this policy. 
 43.27     Other insurance may be prohibited or the amount of 
 43.28  insurance may be limited by so providing in the policy or an 
 43.29  endorsement, rider or form attached thereto. 
 43.30     Unless otherwise provided in writing added hereto this 
 43.31  company shall not be liable for loss occurring: 
 43.32     (a) while the hazard is increased by any means within the 
 43.33  control or knowledge of the insured; or 
 43.34     (b) while the described premises, whether intended for 
 43.35  occupancy by owner or tenant, are vacant or unoccupied beyond a 
 43.36  period of 60 consecutive days; or 
 44.1      (c) as a result of explosion or riot, unless fire ensue, 
 44.2   and in that event for loss by fire only. 
 44.3      Any other peril to be insured against or subject of 
 44.4   insurance to be covered in this policy shall be by endorsement 
 44.5   in writing hereon or added hereto. 
 44.6      The extent of the application of insurance under this 
 44.7   policy and the contributions to be made by this company in case 
 44.8   of loss, and any other provision or agreement not inconsistent 
 44.9   with the provisions of this policy, may be provided for in 
 44.10  writing added hereto, but no provision may be waived except such 
 44.11  as by the terms of this policy is subject to change. 
 44.12     No permission affecting this insurance shall exist, or 
 44.13  waiver of any provision be valid, unless granted herein or 
 44.14  expressed in writing added hereto.  No provision, stipulation or 
 44.15  forfeiture shall be held to be waived by any requirements or 
 44.16  proceeding on the part of this company relating to appraisal or 
 44.17  to any examination provided for herein. 
 44.18     This policy shall be canceled at any time at the request of 
 44.19  the insured, in which case this company shall, upon demand and 
 44.20  surrender of this policy, refund the excess of paid premium 
 44.21  above the customary short rates for the expired time.  This 
 44.22  policy may be canceled at any time by this company by giving to 
 44.23  the insured ~~30 days'~~ a written notice of cancellation with or 
 44.24  without tender of the excess of paid premium above the pro rata 
 44.25  premium for the expired time, which excess, if not tendered, 
 44.26  shall be refunded on demand.  Notice of cancellation shall state 
 44.27  that said excess premium (if not tendered) will be refunded on 
 44.28  demand. 
 44.29     If loss hereunder is made payable, in whole or in part, to 
 44.30  a designated mortgagee or contract for deed vendor not named 
 44.31  herein as insured, such interest in this policy may be canceled 
 44.32  by giving to such mortgagee or vendor a ten days' written notice 
 44.33  of cancellation. 
 44.34     Notwithstanding any other provisions of this policy, if 
 44.35  this policy shall be made payable to a mortgagee or contract for 
 44.36  deed vendor of the covered real estate, no act or default of any 
 45.1   person other than such mortgagee or vendor or the mortgagee's or 
 45.2   vendor's agent or those claiming under the mortgagee or vendor, 
 45.3   whether the same occurs before or during the term of this 
 45.4   policy, shall render this policy void as to such mortgagee or 
 45.5   vendor nor affect such mortgagee's or vendor's right to recover 
 45.6   in case of loss on such real estate; provided, that the 
 45.7   mortgagee or vendor shall on demand pay according to the 
 45.8   established scale of rates for any increase of risks not paid 
 45.9   for by the insured; and whenever this company shall be liable to 
 45.10  a mortgagee or vendor for any sum for loss under this policy for 
 45.11  which no liability exists as to the mortgagor, vendee, or owner, 
 45.12  and this company shall elect by itself, or with others, to pay 
 45.13  the mortgagee or vendor the full amount secured by such mortgage 
 45.14  or contract for deed, then the mortgagee or vendor shall assign 
 45.15  and transfer to the company the mortgagee's or vendor's 
 45.16  interest, upon such payment, in the said mortgage or contract 
 45.17  for deed together with the note and debts thereby secured. 
 45.18     This company shall not be liable for a greater proportion 
 45.19  of any loss than the amount hereby insured shall bear to the 
 45.20  whole insurance covering the property against the peril involved.
 45.21     In case of any loss under this policy the insured shall 
 45.22  give immediate written notice to this company of any loss, 
 45.23  protect the property from further damage, and a statement in 
 45.24  writing, signed and sworn to by the insured, shall within 60 
 45.25  days be rendered to the company, setting forth the value of the 
 45.26  property insured, except in case of total loss on buildings the 
 45.27  value of said buildings need not be stated, the interest of the 
 45.28  insured therein, all other insurance thereon, in detail, the 
 45.29  purposes for which and the persons by whom the building insured, 
 45.30  or containing the property insured, was used, and the time at 
 45.31  which and manner in which the fire originated, so far as known 
 45.32  to the insured. 
 45.33     The insured, as often as may be reasonably required, shall 
 45.34  exhibit to any person designated by this company all that 
 45.35  remains of any property herein described, and, after being 
 45.36  informed of the right to counsel and that any answers may be 
 46.1   used against the insured in later civil or criminal proceedings, 
 46.2   the insured shall, within a reasonable period after demand by 
 46.3   this company, submit to examinations under oath by any person 
 46.4   named by this company, and subscribe the oath.  The insured, as 
 46.5   often as may be reasonably required, shall produce for 
 46.6   examination all records and documents reasonably related to the 
 46.7   loss, or certified copies thereof if originals are lost, at a 
 46.8   reasonable time and place designated by this company or its 
 46.9   representatives, and shall permit extracts and copies thereof to 
 46.10  be made.  
 46.11     In case the insured and this company, except in case of 
 46.12  total loss on buildings, shall fail to agree as to the actual 
 46.13  cash value or the amount of loss, then, on the written demand of 
 46.14  either, each shall select a competent and disinterested 
 46.15  appraiser and notify the other of the appraiser selected within 
 46.16  20 days of such demand.  In case either fails to select an 
 46.17  appraiser within the time provided, then a presiding judge of 
 46.18  the district court of the county wherein the loss occurs may 
 46.19  appoint such appraiser for such party upon application of the 
 46.20  other party in writing by giving five days' notice thereof in 
 46.21  writing to the party failing to appoint.  The appraisers shall 
 46.22  first select a competent and disinterested umpire; and failing 
 46.23  for 15 days to agree upon such umpire, then a presiding judge of 
 46.24  the above mentioned court may appoint such an umpire upon 
 46.25  application of party in writing by giving five days' notice 
 46.26  thereof in writing to the other party.  The appraisers shall 
 46.27  then appraise the loss, stating separately actual value and loss 
 46.28  to each item; and, failing to agree, shall submit their 
 46.29  differences, only, to the umpire.  An award in writing, so 
 46.30  itemized, of any two when filed with this company shall 
 46.31  determine the amount of actual value and loss.  Each appraiser 
 46.32  shall be paid by the selecting party, or the party for whom 
 46.33  selected, and the expense of the appraisal and umpire shall be 
 46.34  paid by the parties equally. 
 46.35     It shall be optional with this company to take all of the 
 46.36  property at the agreed or appraised value, and also to repair, 
 47.1   rebuild or replace the property destroyed or damaged with other 
 47.2   of like kind and quality within a reasonable time, on giving 
 47.3   notice of its intention so to do within 30 days after the 
 47.4   receipt of the proof of loss herein required. 
 47.5      There can be no abandonment to this company of any property.
 47.6      The amount of loss for which this company may be liable 
 47.7   shall be payable 60 days after proof of loss, as herein 
 47.8   provided, is received by this company and ascertainment of the 
 47.9   loss is made either by agreement between the insured and this 
 47.10  company expressed in writing or by the filing with this company 
 47.11  of an award as herein provided.  It is moreover understood that 
 47.12  there can be no abandonment of the property insured to the 
 47.13  company, and that the company will not in any case be liable for 
 47.14  more than the sum insured, with interest thereon from the time 
 47.15  when the loss shall become payable, as above provided. 
 47.16     No suit or action on this policy for the recovery of any 
 47.17  claim shall be sustainable in any court of law or equity unless 
 47.18  all the requirements of this policy have been complied with, and 
 47.19  unless commenced within two years after inception of the loss. 
 47.20     This company is subrogated to, and may require from the 
 47.21  insured an assignment of all right of recovery against any party 
 47.22  for loss to the extent that payment therefor is made by this 
 47.23  company; and the insurer may prosecute therefor in the name of 
 47.24  the insured retaining such amount as the insurer has paid. 
 47.25     Assignment of this policy shall not be valid except with 
 47.26  the written consent of this company. 
 47.27     IN WITNESS WHEREOF, this company has executed and attested 
 47.28  these presents. 
 47.29   
 47.30   ........................         ........................
 47.31        (Signature)                     (Signature)         
 47.32   ........................         ........................
 47.33       (Name of office)                (Name of office)     
 47.34     Sec. 37.  Minnesota Statutes 1996, section 65A.01, is 
 47.35  amended by adding a subdivision to read: 
 47.36     Subd. 3c.  [TIME REQUIREMENTS.] (a) In the event of a 
 48.1   policy less than 60 days old that is not being renewed, or a 
 48.2   policy that it is being canceled for nonpayment of premium, the 
 48.3   notice must be mailed to the insured so that it is received at 
 48.4   least ten days before the effective cancellation date, as shown 
 48.5   by a dated and signed certified mail receipt.  If a policy is 
 48.6   being canceled for underwriting considerations, the insured must 
 48.7   be informed of the source from which the information was 
 48.8   received. 
 48.9      (b) In the event of a mid-term cancellation, for reasons 
 48.10  listed in subdivision 3a, or according to policy provisions, the 
 48.11  insured must receive a 30-day notice. 
 48.12     (c) In the event of a nonrenewal, a 60-day notice must be 
 48.13  sent to the insured, containing the specific underwriting or 
 48.14  other reason for the indicated actions. 
 48.15     This subdivision does not apply to commercial policies 
 48.16  regulated under sections 60A.36 and 60A.37. 
 48.17     Sec. 38.  Minnesota Statutes 1996, section 65A.27, 
 48.18  subdivision 4, is amended to read: 
 48.19     Subd. 4.  "Homeowner's insurance" means insurance coverage, 
 48.20  as provided in section 60A.06, subdivision 1, clause (1)(c), 
 48.21  normally written by the insurer as a standard homeowner's 
 48.22  package policy or as a standard residential renter's package 
 48.23  policy.  This definition includes, but is not limited to, 
 48.24  policies that are generally described as homeowners' policies, 
 48.25  mobile/manufactured homeowners' policies, dwelling owner 
 48.26  policies, condominium owner policies, and tenant policies. 
 48.27     Sec. 39.  Minnesota Statutes 1996, section 65A.29, 
 48.28  subdivision 4, is amended to read: 
 48.29     Subd. 4.  [FORM REQUIREMENTS.] Any notice or statement 
 48.30  required by subdivisions 1 to 3, or any other notice canceling a 
 48.31  homeowner's insurance policy must be written in language which 
 48.32  is easily readable and understandable by a person of average 
 48.33  intelligence and understanding.  The statement of reason must be 
 48.34  sufficiently specific to convey, clearly and without further 
 48.35  inquiry, the basis for the insurer's refusal to renew or to 
 48.36  write the insurance coverage. 
 49.1      The notice or statement must also inform the insured of: 
 49.2      (1) the possibility of coverage through the Minnesota 
 49.3   property insurance placement facility under sections 65A.31 to 
 49.4   65A.42; 
 49.5      (2) the right to object to the commissioner under 
 49.6   subdivision 9; and 
 49.7      (3) the right to the return of unearned premium in 
 49.8   appropriate situations under subdivision 10. 
 49.9      Sec. 40.  Minnesota Statutes 1996, section 65B.133, 
 49.10  subdivision 5, is amended to read: 
 49.11     Subd. 5.  [LIMITATION ON CHARGEABLE TRAFFIC VIOLATIONS.] No 
 49.12  traffic violation is chargeable to a driver unless the driver is 
 49.13  convicted of, or forfeits bail for, the offense, or the driver's 
 49.14  license is revoked pursuant to section 169.123.  If a surcharge 
 49.15  is applied because bail is forfeited and if the driver is later 
 49.16  acquitted of the offense, the insurer shall rebate the 
 49.17  surcharge. A violation of section 169.685, subdivision 5 is not 
 49.18  chargeable.  No traffic violation is chargeable if the person's 
 49.19  only traffic violations within the preceding three-year period 
 49.20  are two or fewer petty misdemeanor violations of chapter 169. 
 49.21     Sec. 41.  Minnesota Statutes 1996, section 65B.14, 
 49.22  subdivision 5, is amended to read: 
 49.23     Subd. 5.  [VIOLATIONS.] "Violations" means all moving 
 49.24  traffic violations that are recorded by the department of public 
 49.25  safety on a household member's motor vehicle record, and 
 49.26  violations reported by a similar authority in another state or 
 49.27  moving traffic violations reported by the insured.  A person 
 49.28  shall be deemed to have no violations if the person's only 
 49.29  traffic violations within the preceding three-year period are 
 49.30  two or fewer petty misdemeanor violations of chapter 169. 
 49.31     Sec. 42.  Minnesota Statutes 1996, section 65B.44, 
 49.32  subdivision 3, is amended to read: 
 49.33     Subd. 3.  [DISABILITY AND INCOME LOSS BENEFITS.] Disability 
 49.34  and income loss benefits shall provide compensation for 85 
 49.35  percent of the injured person's loss of present and future gross 
 49.36  income from inability to work proximately caused by the nonfatal 
 50.1   injury subject to a maximum of ~~$250~~ $500 per week.  Loss of 
 50.2   income includes the costs incurred by a self-employed person to 
 50.3   hire substitute employees to perform tasks which are necessary 
 50.4   to maintain the income of the injured person, which are normally 
 50.5   performed by the injured person, and which cannot be performed 
 50.6   because of the injury.  
 50.7      If the injured person is unemployed at the time of injury 
 50.8   and is receiving or is eligible to receive unemployment benefits 
 50.9   under chapter 268, but the injured person loses eligibility for 
 50.10  those benefits because of inability to work caused by the 
 50.11  injury, disability and income loss benefits shall provide 
 50.12  compensation for the lost benefits in an amount equal to the 
 50.13  unemployment benefits which otherwise would have been payable, 
 50.14  subject to a maximum of ~~$250~~ $500 per week.  
 50.15     Compensation under this subdivision shall be reduced by any 
 50.16  income from substitute work actually performed by the injured 
 50.17  person or by income the injured person would have earned in 
 50.18  available appropriate substitute work which the injured person 
 50.19  was capable of performing but unreasonably failed to undertake. 
 50.20     For the purposes of this section "inability to work" means 
 50.21  disability which prevents the injured person from engaging in 
 50.22  any substantial gainful occupation or employment on a regular 
 50.23  basis, for wage or profit, for which the injured person is or 
 50.24  may by training become reasonably qualified.  If the injured 
 50.25  person returns to employment and is unable by reason of the 
 50.26  injury to work continuously, compensation for lost income shall 
 50.27  be reduced by the income received while the injured person is 
 50.28  actually able to work.  The weekly maximums may not be prorated 
 50.29  to arrive at a daily maximum, even if the injured person does 
 50.30  not incur loss of income for a full week.  
 50.31     For the purposes of this section, an injured person who is 
 50.32  "unable by reason of the injury to work continuously" includes, 
 50.33  but is not limited to, a person who misses time from work, 
 50.34  including reasonable travel time, and loses income, vacation, or 
 50.35  sick leave benefits, to obtain medical treatment for an injury 
 50.36  arising out of the maintenance or use of a motor vehicle. 
 51.1      The commissioner of commerce shall change the dollar 
 51.2   amounts in this subdivision on April 1, 2001, and each 
 51.3   subsequent year to include an increase in these figures in the 
 51.4   proportion that the Consumer Price Index (CPI-U), published by 
 51.5   the United States Bureau of Labor Statistics, has increased 
 51.6   during the whole calendar years since December 31, 1999.  Any 
 51.7   increase must be rounded to the nearest $25 of the statutory 
 51.8   amount.  The commissioner shall publish the adjusted figures in 
 51.9   the state register. 
 51.10     Sec. 43.  Minnesota Statutes 1996, section 65B.48, 
 51.11  subdivision 5, is amended to read: 
 51.12     Subd. 5.  (a) Every owner of a motorcycle registered or 
 51.13  required to be registered in this state or operated in this 
 51.14  state by the owner or with the owner's permission shall provide 
 51.15  and maintain security for the payment of tort liabilities 
 51.16  arising out of the maintenance or use of the motorcycle in this 
 51.17  state.  Security may be provided by a contract of liability 
 51.18  insurance complying with section 65B.49, subdivision 3, or by 
 51.19  qualifying as a self insurer in the manner provided in 
 51.20  subdivision 3. 
 51.21     (b) At the time an application for motorcycle insurance 
 51.22  without personal injury protection coverage is completed, there 
 51.23  must be attached to the application a separate form containing a 
 51.24  written notice in at least 10-point bold type, if printed, or in 
 51.25  capital letters, if typewritten that states: 
 51.26     "Under Minnesota law, a policy of motorcycle coverage 
 51.27     issued in the State of Minnesota must provide liability 
 51.28     coverage only, and there is no requirement that the policy 
 51.29     provide personal injury protection (PIP) coverage in the 
 51.30     case of injury sustained by the insured.  No PIP coverage 
 51.31     provided by an automobile insurance policy you may have in 
 51.32     force will extend to provide coverage in the event of a 
 51.33     motorcycle accident." 
 51.34     Sec. 44.  [65B.492] [TOTAL DISABILITY; WAIVER OF WAGE LOSS 
 51.35  REIMBURSEMENT.] 
 51.36     A plan of reparation security issued to or renewed with a 
 52.1   person who is totally disabled may contain a waiver of wage loss 
 52.2   reimbursement coverage, provided that the rate for any plan for 
 52.3   which this coverage has been excluded or reduced must be reduced 
 52.4   accordingly.  For purposes of this section, the term "total 
 52.5   disability" means the inability of an insured who is ill or 
 52.6   injured to engage in any paid employment or work.  The 
 52.7   reparation obligor may request the insured to provide written 
 52.8   certification of the disability by a licensed practicing 
 52.9   physician so long as the written certification is required no 
 52.10  more frequently than on an annual basis.  This section applies 
 52.11  to self-insurance. 
 52.12     Sec. 45.  Minnesota Statutes 1996, section 72A.20, 
 52.13  subdivision 23, is amended to read: 
 52.14     Subd. 23.  [DISCRIMINATION IN AUTOMOBILE INSURANCE 
 52.15  POLICIES.] (a) No insurer that offers an automobile insurance 
 52.16  policy in this state shall: 
 52.17     (1) use the employment status of the applicant as an 
 52.18  underwriting standard or guideline; or 
 52.19     (2) deny coverage to a policyholder for the same reason. 
 52.20     (b) No insurer that offers an automobile insurance policy 
 52.21  in this state shall: 
 52.22     (1) use the applicant's status as a tenant, as the term is 
 52.23  defined in section 566.18, subdivision 2, as an underwriting 
 52.24  standard or guideline; or 
 52.25     (2) deny coverage to a policyholder for the same reason; or 
 52.26     (3) make any discrimination in offering or establishing 
 52.27  rates, premiums, dividends, or benefits of any kind, or by way 
 52.28  of rebate, for the same reason.  
 52.29     (c) No insurer that offers an automobile insurance policy 
 52.30  in this state shall: 
 52.31     (1) use the failure of the applicant to have an automobile 
 52.32  policy in force during any period of time before the application 
 52.33  is made as an underwriting standard or guideline; or 
 52.34     (2) deny coverage to a policyholder for the same reason. 
 52.35     This provision does not apply if the applicant was required 
 52.36  by law to maintain automobile insurance coverage and failed to 
 53.1   do so. 
 53.2      An insurer may require reasonable proof that the applicant 
 53.3   did not fail to maintain this coverage.  The insurer is not 
 53.4   required to accept the mere lack of a conviction or citation for 
 53.5   failure to maintain this coverage as proof of failure to 
 53.6   maintain coverage.  The insurer must provide the applicant with 
 53.7   information identifying the documentation that is required to 
 53.8   establish reasonable proof that the applicant did not fail to 
 53.9   maintain the coverage. 
 53.10     (d) No insurer that offers an automobile insurance policy 
 53.11  in this state shall use an applicant's prior claims for benefits 
 53.12  paid under section 65B.44 as an underwriting standard or 
 53.13  guideline if the applicant was 50 percent or less negligent in 
 53.14  the accident or accidents causing the claims. 
 53.15     (e) No insurer that offers an automobile insurance policy 
 53.16  in this state shall use an applicant's traffic violations as an 
 53.17  underwriting standard or guideline if the applicant's only 
 53.18  traffic violations within the preceding three-year period are 
 53.19  two or fewer petty misdemeanor violations of chapter 169. 
 53.20     Sec. 46.  Minnesota Statutes 1996, section 72A.20, 
 53.21  subdivision 34, is amended to read: 
 53.22     Subd. 34.  [SUITABILITY OF INSURANCE FOR CUSTOMER.] In 
 53.23  recommending or issuing life, endowment, individual accident and 
 53.24  sickness, long-term care, annuity, life-endowment, or Medicare 
 53.25  supplement insurance to a customer, an insurer, either directly 
 53.26  or through its agent, must have reasonable grounds for believing 
 53.27  that the recommendation is suitable for the customer, upon the 
 53.28  basis of facts disclosed by the customer as to the customer's 
 53.29  other insurance and financial situation and needs, including, 
 53.30  but not limited to, the customer's financial status, the 
 53.31  customer's need for insurance, and the values, benefits, and 
 53.32  costs of the customer's existing insurance program, if any, when 
 53.33  compared to the values, benefits, and costs of the recommended 
 53.34  policy or policies.  
 53.35     In the case of group insurance marketed on a direct 
 53.36  response basis without the use of direct agent contact, this 
 54.1   subdivision is satisfied if the insurer has reasonable grounds 
 54.2   to believe that the insurance offered is generally suitable for 
 54.3   the group to whom the offer is made. 
 54.4      Sec. 47.  Minnesota Statutes 1997 Supplement, section 
 54.5   72B.04, subdivision 10, is amended to read: 
 54.6      Subd. 10.  [FEES.] A fee of $40 is imposed for each initial 
 54.7   license or temporary permit and $25 for each renewal thereof or 
 54.8   amendment thereto.  ~~A fee of $20 is imposed for the registration~~ 
 54.9   ~~of each nonlicensed adjuster who is required to register under~~ 
 54.10  ~~section 72B.06.~~  All fees shall be transmitted to the 
 54.11  commissioner and shall be payable to the ~~state treasurer~~ 
 54.12  department of commerce.  ~~If a fee is paid for an examination and~~ 
 54.13  ~~if within one year from the date of that payment no written~~ 
 54.14  ~~request for a refund is received by the commissioner or the~~ 
 54.15  ~~examination for which the fee was paid is not taken, the fee is~~ 
 54.16  ~~forfeited to the state of Minnesota.~~ 
 54.17     Sec. 48.  Minnesota Statutes 1996, section 79A.01, 
 54.18  subdivision 10, is amended to read: 
 54.19     Subd. 10.  [COMMON CLAIMS FUND.] "Common claims fund," with 
 54.20  respect to group self-insurers, means the cash, cash 
 54.21  equivalents, or investment accounts maintained by the ~~mutual~~ 
 54.22  self-insurance group to pay its workers' compensation 
 54.23  liabilities.  
 54.24     Sec. 49.  Minnesota Statutes 1996, section 79A.01, is 
 54.25  amended by adding a subdivision to read: 
 54.26     Subd. 11.  [DIMINUTIVE APPLICANTS.] "Diminutive applicants" 
 54.27  to group self-insurance means applicants to existing 
 54.28  self-insurance groups whose equity and premium are both less 
 54.29  than five percent of the total group's equity and premium. 
 54.30     Sec. 50.  Minnesota Statutes 1996, section 79A.02, 
 54.31  subdivision 1, is amended to read: 
 54.32     Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
 54.33  the commissioner, there is established a workers' compensation 
 54.34  self-insurers' advisory committee of five members that are 
 54.35  employers authorized to self-insure in Minnesota.  Three of the 
 54.36  members and three alternates shall be elected by the 
 55.1   self-insurers' security fund board of trustees and two members 
 55.2   and two alternates shall be appointed by the commissioner.  
 55.3      Sec. 51.  Minnesota Statutes 1996, section 79A.02, 
 55.4   subdivision 4, is amended to read: 
 55.5      Subd. 4.  [RECOMMENDATIONS TO COMMISSIONER REGARDING 
 55.6   REVOCATION.] After each fifth anniversary from the date each 
 55.7   individual and group self-insurer becomes certified to 
 55.8   self-insure, the committee shall review all relevant financial 
 55.9   data filed with the department of commerce that is otherwise 
 55.10  available to the public and make a recommendation to the 
 55.11  commissioner about whether each self-insurer's certificate 
 55.12  should be revoked.  For group self-insurers who have been in 
 55.13  existence for five years or more and have been granted renewal 
 55.14  authority, a level of funding in the common claims fund must be 
 55.15  maintained at not less than the greater of either:  (1) one 
 55.16  year's claim losses paid in the most recent year; or (2) 
 55.17  one-third of the security deposit posted with the department of 
 55.18  commerce according to section 79A.04, subdivision 2.  This 
 55.19  provision supersedes any requirements under section 79A.03, 
 55.20  subdivision 10, and Minnesota Rules, part 2780.5000. 
 55.21     Sec. 52.  Minnesota Statutes 1996, section 79A.03, 
 55.22  subdivision 6, is amended to read: 
 55.23     Subd. 6.  [APPLICATIONS FOR GROUP SELF-INSURANCE.] (a) Two 
 55.24  or more employers may apply to the commissioner for the 
 55.25  authority to self-insure as a group, using forms available from 
 55.26  the commissioner.  This initial application shall be accompanied 
 55.27  by a copy of the bylaws or plan of operation adopted by the 
 55.28  group.  Such bylaws or plan of operation shall conform to the 
 55.29  conditions prescribed by law or rule.  The commissioner shall 
 55.30  approve or disapprove the bylaws within 60 days unless a 
 55.31  question as to the legality of a specific bylaw or plan 
 55.32  provision has been referred to the attorney general's office.  
 55.33  The commissioner shall make a determination as to the 
 55.34  application within 15 days after receipt of the requested 
 55.35  response from the attorney general's office. 
 55.36     (b) After the initial application and the bylaws or plan of 
 56.1   operation have been approved by the commissioner or at the time 
 56.2   of the initial application, the group shall submit the names of 
 56.3   employers that will be members of the group; an indemnity 
 56.4   agreement providing for joint and several liability for all 
 56.5   group members for any and all workers' compensation claims 
 56.6   incurred by any member of the group, as set forth in Minnesota 
 56.7   Rules, part 2780.9920, signed by an officer of each member; and 
 56.8   an accounting review performed by a certified public 
 56.9   accountant.  A certified financial audit may be filed in lieu of 
 56.10  an accounting review.  
 56.11     (c) When a group has obtained its authority to self-insure, 
 56.12  additional applicants who wish to join the group must apply for 
 56.13  approval by submitting:  (1) an application; (2) an indemnity 
 56.14  agreement providing for joint and several liability as set forth 
 56.15  in Minnesota Rules, part 2780.9920, signed by an officer of the 
 56.16  applicant; and (3) a certified financial audit performed by a 
 56.17  certified public accountant at least 45 days before joining the 
 56.18  group.  An accounting review performed by a certified public 
 56.19  accountant may be filed in lieu of a certified audit. 
 56.20     New diminutive applicants to the group, as defined in 
 56.21  section 79A.01, subdivision 11, applying for membership in 
 56.22  groups in existence longer than one year, who have a combined 
 56.23  equity of all group members in excess of 15 times the last 
 56.24  retention limit selected by the group with the workers' 
 56.25  compensation reinsurance association, and have posted 125 
 56.26  percent of the group's total estimated future liability, must 
 56.27  submit the items in this paragraph at least ten days before 
 56.28  joining the group. 
 56.29     If the cumulative total of premium added to the group by 
 56.30  diminutive new members is greater than 50 percent in a fiscal 
 56.31  year of the group, all subsequent new members' applications must 
 56.32  be submitted at least 45 days before joining the group. 
 56.33     In all cases of new membership, evidence that cash premiums 
 56.34  equal to not less than 20 percent of the current year's modified 
 56.35  premium of each applicant have been paid into a common claims 
 56.36  fund, maintained by the group in a designated depository must be 
 57.1   filed with the department at least ten days before joining the 
 57.2   group. 
 57.3      Sec. 53.  Minnesota Statutes 1996, section 79A.03, 
 57.4   subdivision 7, is amended to read: 
 57.5      Subd. 7.  [FINANCIAL STANDARDS.] A self-insurer group 
 57.6   ~~proposing to self-insure~~ shall have and maintain: 
 57.7      (a) A combined net worth of all of the members of an amount 
 57.8   at least equal to the greater of ten times the retention 
 57.9   selected with the workers' compensation reinsurance association 
 57.10  or one-third of the current annual modified premium of the 
 57.11  members.  
 57.12     (b) Sufficient assets, net worth, and liquidity to promptly 
 57.13  and completely meet all obligations of its members under chapter 
 57.14  176 or this chapter.  In determining whether a group is in sound 
 57.15  financial condition, consideration shall be given to the 
 57.16  combined net worth of the member companies; the consolidated 
 57.17  long-term and short-term debt to equity ratios of the member 
 57.18  companies; any excess insurance other than reinsurance with the 
 57.19  workers' compensation reinsurance association, purchased by the 
 57.20  group from an insurer licensed in Minnesota or from an 
 57.21  authorized surplus line carrier; other financial data requested 
 57.22  by the commissioner or submitted by the group; and the combined 
 57.23  workers' compensation experience of the group for the last four 
 57.24  years. 
 57.25     Sec. 54.  Minnesota Statutes 1996, section 79A.03, 
 57.26  subdivision 9, is amended to read: 
 57.27     Subd. 9.  [FILING REPORTS.] (a) Incurred losses, paid and 
 57.28  unpaid, specifying indemnity and medical losses by 
 57.29  classification, payroll by classification, and current estimated 
 57.30  outstanding liability for workers' compensation shall be 
 57.31  reported to the commissioner by each self-insurer on a calendar 
 57.32  year basis, in a manner and on forms available from the 
 57.33  commissioner.  Payroll information must be filed by April 1 of 
 57.34  the following year~~, and loss information and total workers'~~ 
 57.35  ~~compensation liability must be filed by August 1 of the~~ 
 57.36  ~~following year~~.  
 58.1      (b) Each self-insurer shall, under oath, attest to the 
 58.2   accuracy of each report submitted pursuant to paragraph (a).  
 58.3   Upon sufficient cause, the commissioner shall require the 
 58.4   self-insurer to submit a certified audit of payroll and claim 
 58.5   records conducted by an independent auditor approved by the 
 58.6   commissioner, based on generally accepted accounting principles 
 58.7   and generally accepted auditing standards, and supported by an 
 58.8   actuarial review and opinion of the future contingent 
 58.9   liabilities.  The basis for sufficient cause shall include the 
 58.10  following factors:  where the losses reported appear 
 58.11  significantly different from similar types of businesses; where 
 58.12  major changes in the reports exist from year to year, which are 
 58.13  not solely attributable to economic factors; or where the 
 58.14  commissioner has reason to believe that the losses and payroll 
 58.15  in the report do not accurately reflect the losses and payroll 
 58.16  of that employer.  If any discrepancy is found, the commissioner 
 58.17  shall require changes in the self-insurer's or workers' 
 58.18  compensation service company record keeping practices. 
 58.19     (c) ~~With the~~ An annual ~~loss~~ status report due August 1, 
 58.20  by each self-insurer shall ~~report to the commissioner any~~ 
 58.21  ~~workers' compensation claim from the previous year where the~~ 
 58.22  ~~full, undiscounted value is estimated to exceed $50,000,~~ be 
 58.23  filed in a manner and on forms prescribed by the commissioner.  
 58.24     (d) Each individual self-insurer shall, within four months 
 58.25  after the end of its fiscal year, annually file with the 
 58.26  commissioner its latest 10K report required by the Securities 
 58.27  and Exchange Commission.  If an individual self-insurer does not 
 58.28  prepare a 10K report, it shall file an annual certified 
 58.29  financial statement, together with such other financial 
 58.30  information as the commissioner may require to substantiate data 
 58.31  in the financial statement.  
 58.32     (e) Each member of the group shall, within four months 
 58.33  after the end of each fiscal year for that group, file the most 
 58.34  recent annual financial statement, reviewed by a certified 
 58.35  public accountant in accordance with the Statements on Standards 
 58.36  for Accounting and Review Services, Volume 2, the American 
 59.1   Institute of Certified Public Accountants Professional 
 59.2   Standards, or audited in accordance with generally accepted 
 59.3   auditing standards, together with such other financial 
 59.4   information the commissioner may require.  In addition, the 
 59.5   group shall file, within four months after the end of each 
 59.6   fiscal year for that group, combining financial statements of 
 59.7   the group members, compiled by a certified public accountant in 
 59.8   accordance with the Statements on Standards for Accounting and 
 59.9   Review Services, Volume 2, the American Institute of Certified 
 59.10  Public Accountants Professional Standards.  The combining 
 59.11  financial statements shall include, but not be limited to, a 
 59.12  balance sheet, income statement, statement of changes in net 
 59.13  worth, and statement of cash flow.  Each combining financial 
 59.14  statement shall include a column for each individual group 
 59.15  member along with a total column.  
 59.16     Where a group has 50 or more members, the group shall file, 
 59.17  in lieu of the combining financial statements, a combined 
 59.18  financial statement showing only the total column for the entire 
 59.19  group's balance sheet, income statement, statement of changes in 
 59.20  net worth, and statement of cash flow.  Additionally, the group 
 59.21  shall disclose, for each member, the total assets, net worth, 
 59.22  revenue, and income for the most recent fiscal year.  The 
 59.23  combining and combined financial statements may omit all 
 59.24  footnote disclosures. 
 59.25     (f) In addition to the financial statements required by 
 59.26  paragraphs (d) and (e), interim financial statements or 10Q 
 59.27  reports required by the Securities and Exchange Commission may 
 59.28  be required by the commissioner upon an indication that there 
 59.29  has been deterioration in the self-insurer's financial 
 59.30  condition, including a worsening of current ratio, lessening of 
 59.31  net worth, net loss of income, the downgrading of the company's 
 59.32  bond rating, or any other significant change that may adversely 
 59.33  affect the self-insurer's ability to pay expected losses.  Any 
 59.34  self-insurer that files an 8K report with the Securities and 
 59.35  Exchange Commission shall also file a copy of the report with 
 59.36  the commissioner within 30 days of the filing with the 
 60.1   Securities and Exchange Commission. 
 60.2      Sec. 55.  Minnesota Statutes 1996, section 79A.03, 
 60.3   subdivision 10, is amended to read: 
 60.4      Subd. 10.  [ANNUAL AUDIT AND REFUNDS.] (a) The accounts and 
 60.5   records of the group self-insurer's fund shall be audited 
 60.6   annually.  Audits shall be made by certified public accountants, 
 60.7   based on generally accepted accounting principles and generally 
 60.8   accepted auditing standards, and supported by actuarial review 
 60.9   and opinion of the future contingent liabilities, in order to 
 60.10  determine the solvency of the self-insurer's fund.  All audits 
 60.11  required by this subdivision shall be filed with the 
 60.12  commissioner 90 days after the close of the fiscal year for the 
 60.13  group self-insurer.  The commissioner may require a special 
 60.14  audit to be made at other times if the financial stability of 
 60.15  the fund or the adequacy of its monetary reserves is in question.
 60.16     (b) One hundred percent of any surplus money for a fund 
 60.17  year in excess of 125 percent of the amount necessary to fulfill 
 60.18  all obligations under chapter 176 for that fund year may be 
 60.19  declared refundable to a member at any time after 18 months 
 60.20  following the end of such fund year.  There can be no more than 
 60.21  one refund in any 12-month period.  When all claims of any one 
 60.22  fund year have been fully paid, as certified by an actuary, all 
 60.23  surplus money from that fund year may be declared refundable. 
 60.24     Sec. 56.  Minnesota Statutes 1996, section 79A.03, is 
 60.25  amended by adding a subdivision to read: 
 60.26     Subd. 13.  [ANNUAL REQUIREMENTS.] The financial 
 60.27  requirements set forth in subdivisions 3, 4, 5, and 7 must be 
 60.28  met on an annual basis. 
 60.29     Sec. 57.  Minnesota Statutes 1996, section 79A.21, 
 60.30  subdivision 2, is amended to read: 
 60.31     Subd. 2.  [REQUIRED DOCUMENTS.] All first year applications 
 60.32  must be accompanied by the following: 
 60.33     (a) A detailed business plan including the risk profile of 
 60.34  the proposed membership, underwriting guidelines, marketing 
 60.35  plan, minimum financial criteria for each member, and financial 
 60.36  projections for the first year of operation.  
 61.1      (b) A plan describing the method in which premiums are to 
 61.2   be charged to the employer members.  The plan shall be 
 61.3   accompanied by copies of the member's workers' compensation 
 61.4   insurance policies in force at the time of application.  In 
 61.5   developing the premium for the group, the commercial 
 61.6   self-insurance group shall base its premium on the Minnesota 
 61.7   workers' compensation insurers association's manual of rules, 
 61.8   loss costs, and classifications approved for use in Minnesota by 
 61.9   the commissioner.  Each member applicant shall, on a form 
 61.10  approved by the commissioner, complete estimated payrolls for 
 61.11  the first 12-month period that the applicant will be 
 61.12  self-insured.  Premium volume discounts per the plan will be 
 61.13  permitted if they can be shown to be consistent with actuarial 
 61.14  standards.  
 61.15     (c) A schedule indicating actual or anticipated operational 
 61.16  expenses of the commercial self-insurance group.  No authority 
 61.17  to self-insure will be granted unless, over the term of the 
 61.18  policy year, at least 65 percent of total revenues from all 
 61.19  sources for the year are available for the payment of its claim 
 61.20  and assessment obligations.  For purposes of this calculation, 
 61.21  claim and assessment obligations include the cost of allocated 
 61.22  loss expenses as well as special compensation fund and 
 61.23  commercial self-insurance group security fund assessments but 
 61.24  exclude the cost of unallocated loss expenses. 
 61.25     (d) An indemnity agreement from each member who will 
 61.26  participate in the commercial self-insurance group, signed by an 
 61.27  officer of each member, providing for joint and several 
 61.28  liability for all claims and expenses of all of the members of 
 61.29  the commercial self-insurance group arising in any fund year in 
 61.30  which the member was a participant on a form approved by the 
 61.31  commissioner.  The indemnity agreement shall provide for 
 61.32  assessments according to the group's bylaws on an individual and 
 61.33  proportionate basis. 
 61.34     (e) A copy of the commercial self-insurance group bylaws. 
 61.35     (f) Evidence of the security deposit required under section 
 61.36  79A.24, accompanied by the actuarial certification study for the 
 62.1   minimum security deposit as required under section 79A.24.  
 62.2      (g) Each initial member of the commercial self-insurance 
 62.3   group shall submit to the commercial self-insurance group 
 62.4   accountant its most recent annual financial statement.  
 62.5   Financial statements for a period ending more than six months 
 62.6   prior to the date of the application must be accompanied by an 
 62.7   affidavit, signed by a company officer under oath, stating that 
 62.8   there has been no material lessening of the net worth nor other 
 62.9   adverse changes in its financial condition since the end of the 
 62.10  period.  Individual group members constituting at least 75 
 62.11  percent of the group's annual premium shall submit reviewed or 
 62.12  audited financial statements.  The remaining members may submit 
 62.13  compilation level statements.  Statements for a period ending 
 62.14  more than 12 months prior to the date of application cannot be 
 62.15  accepted. 
 62.16     (h) A compiled combined financial statement of all group 
 62.17  members prepared by the commercial self-insurance group's 
 62.18  accountant and a list of members included in such statements.  
 62.19     (i) A copy of each member's accountant's report letter from 
 62.20  the reports used in compiling the combined financial statements. 
 62.21     (j) A list of all members and the percentage of premium 
 62.22  each represents to the total group's annual premium for the 
 62.23  policy year.  
 62.24     Sec. 58.  Laws 1996, chapter 446, article 1, section 72, is 
 62.25  amended to read: 
 62.26     Sec. 72.  [REPEALER.] 
 62.27     (a) Minnesota Statutes 1994, sections 60A.40; 60B.27; 
 62.28  62I.20; 65A.25; and 72A.205, are repealed. 
 62.29     (b) Laws 1995, chapter 140, section 1, is repealed. 
 62.30     ~~(c) Section 51 is repealed effective August 1, 1998.~~ 
 62.31     Sec. 59.  [WARRANTY PRODUCTS AND EXTENDED SERVICE 
 62.32  CONTRACTS; STUDY.] 
 62.33     The commissioner of commerce shall conduct a study to 
 62.34  determine the appropriate regulatory framework for warranty 
 62.35  products and extended service contracts offered for sale in 
 62.36  Minnesota. 
 63.1      The commissioner shall make a written report to the 
 63.2   legislature on or before February 15, 1999, discussing the types 
 63.3   of warranty and extended service contracts available to 
 63.4   Minnesota consumers.  The report must also include 
 63.5   recommendations as to how these products should be regulated in 
 63.6   Minnesota, including a discussion as to when these products 
 63.7   should be regulated as insurance.  In examining these issues, 
 63.8   the commissioner may seek the advice of representatives from the 
 63.9   attorney general's office, the retail merchants industry, public 
 63.10  utilities, and the insurance industry. 
 63.11     Sec. 60.  [APPLICATION.] 
 63.12     Section 16 applies to all contracts entered into, renewed, 
 63.13  extended, or amended on or after its effective date and to 
 63.14  obligations arising from any business written or transaction 
 63.15  occurring covered by reinsurance after the effective date 
 63.16  according to any contract including those in existence before 
 63.17  the effective date. 
 63.18     Sec. 61.  [REPEALER.] 
 63.19     Minnesota Statutes 1996, sections 60A.11, subdivision 24a; 
 63.20  60B.36; 60B.44, subdivision 3; 65A.29, subdivision 12; and 
 63.21  79A.04, subdivision 8, are repealed. 
 63.22     Sec. 62.  [EFFECTIVE DATE.] 
 63.23     Sections 1, 2, 10, 13, 23, 27, 30, 32, 35, 36, 38, 47, and 
 63.24  58 are effective the day after final enactment. 
 63.25     Sections 17 to 21 are effective the day following final 
 63.26  enactment and apply to all insurers in liquidation on or after 
 63.27  that date and to all insolvencies occurring on or after that 
 63.28  date. 
 63.29     Sections 24, 25, and 28 are effective January 1, 1998. 
 63.30     Section 33 is effective August 1, 1998, and applies to 
 63.31  recoveries received on or after that date. 
 63.32     Sections 40, 41, and 45 are effective January 1, 1999. 
 63.33     Section 42 is effective January 1, 1999, and applies to 
 63.34  plans of reparation security issued, renewed, or continued as 
 63.35  defined in Minnesota Statutes, section 60A.02, subdivision 2a, 
 63.36  on or after that date.