1999 Minnesota Statutes

CHAPTER 60K. Insurance agents, licensing

     60K.01 Definitions. 

    Unless the language or context clearly indicates that a 
 different meaning is intended, the definitions in section 60A.01 
 are applicable to this chapter. 

    HIST: 1992 c 564 art 3 s 3 

     60K.02 Insurance agents; solicitors license. 

    Subdivision 1.    Requirement.  No person shall act or 
 assume to act as an insurance agent in the solicitation or 
 procurement of applications for insurance, nor in the sale of 
 insurance or policies of insurance, nor in any manner aid as an 
 insurance agent in the negotiation of insurance by or with an 
 insurer, including resident agents or reciprocal or 
 interinsurance exchanges and fraternal benefit societies, until 
 that person obtains from the commissioner a license for that 
 purpose.  The license must specifically set forth the name of 
 the person authorized to act as an agent and the class or 
 classes of insurance for which that person is authorized to 
 solicit or countersign policies.  An insurance agent may qualify 
 for a license to sell:  (1) life and health; (2) life and health 
 and variable contracts; (3) property and casualty; (4) travel 
 baggage; (5) bail bonds; (6) title insurance; and (7) farm 
 property and liability.  

    No insurer shall appoint or reappoint a natural person, 
 partnership, or corporation to act as an insurance agent on its 
 behalf until that natural person, partnership, or corporation 
 obtains a license as an insurance agent.  

    Subd. 2.    Partnerships and corporations.  A license 
 issued to a partnership or corporation must be solely in the 
 name of the entity to which it is issued; provided that each 
 partner, director, officer, stockholder, or employee of the 
 licensed entity who is personally engaged in the solicitation or 
 negotiation of a policy of insurance on behalf of the licensed 
 entity shall be personally licensed as an insurance agent.  

    Upon request by the commissioner, each partnership and 
 corporation licensed as an insurance agent shall provide the 
 commissioner with a list of the names of each partner, director, 
 officer, stockholder, and employee who is required to hold a 
 valid insurance agent's license.  

    Subd. 3.    Transition.  (a) Any agent who is qualified 
 for life or accident and health as of June 1, 1981, is qualified 
 for a life and health license under Laws 1981, chapter 307, and 
 is appointed by an insurer which has submitted a written 
 requisition for a license for that agent as of June 1, 1981.  

    (b) Any agent who is qualified for one or more lines of 
 insurance, excluding life or accident and health and farm 
 property liability as of June 1, 1981, is qualified for a 
 property and casualty license under Laws 1981, chapter 307, and 
 is appointed by any insurer which has submitted a written 
 requisition for a license for that agent as of June 1, 1981.  

    Subd. 4.    Criminal penalties.  A person who acts or 
 assumes to act as an insurance agent without a valid license 
 issued by the commissioner is guilty of a gross misdemeanor.  

    HIST: 1992 c 564 art 3 s 4; 1999 c 177 s 29 

     60K.03 License application. 

    Subdivision 1.    Procedure.  An application for a 
 license to act as an insurance agent shall be made to the 
 commissioner by the person who seeks to be licensed.  The 
 application for license shall be accompanied by a written 
 appointment from an admitted insurer authorizing the applicant 
 to act as its agent under one or both classes of license.  The 
 insurer must also submit its check payable to the state 
 treasurer for the amount of the appointment fee prescribed by 
 section 60A.14, subdivision 1, paragraph (c), clause (6), at the 
 time the agent becomes licensed.  The application and 
 appointment must be on forms prescribed by the commissioner.  

    If the applicant is a natural person, no license shall be 
 issued until that natural person has become qualified.  

    If the applicant is a partnership or corporation, no 
 license shall be issued until at least one natural person who is 
 a partner, director, officer, stockholder, or employee shall be 
 licensed as an insurance agent.  

    Subd. 2.    Resident agent.  The commissioner shall 
 issue a resident insurance agent's license to a qualified 
 resident of this state as follows:  

    (a) A person may qualify as a resident of this state if 
 that person resides in this state or the principal place of 
 business of that person is maintained in this state.  
 Application for a license claiming residency in this state for 
 licensing purposes constitutes an election of residency in this 
 state.  A license issued upon an application claiming residency 
 in this state is void if the licensee, while holding a resident 
 license in this state, also holds, or makes application for, a 
 resident license in, or thereafter claims to be a resident of, 
 any other state or jurisdiction or if the licensee ceases to be 
 a resident of this state; provided, however, if the applicant is 
 a resident of a community or trade area, the border of which is 
 contiguous with the state line of this state, the applicant may 
 qualify for a resident license in this state and at the same 
 time hold a resident license from the contiguous state. 

    (b) The commissioner shall subject each applicant who is a 
 natural person to a written examination as to the applicant's 
 competence to act as an insurance agent.  The examination must 
 be held at a reasonable time and place designated by the 
 commissioner. 

    (c) The examination shall be approved for use by the 
 commissioner and shall test the applicant's knowledge of the 
 lines of insurance, policies, and transactions to be handled 
 under the class of license applied for, of the duties and 
 responsibilities of the licensee, and pertinent insurance laws 
 of this state. 

    (d) The examination shall be given only after the applicant 
 has completed a program of classroom studies in a school, which 
 shall not include a school sponsored by, offered by, or 
 affiliated with an insurance company or its agents; except that 
 this limitation does not preclude a bona fide professional 
 association of agents, not acting on behalf of an insurer, from 
 offering courses.  The course of study shall consist of 30 hours 
 of classroom study devoted to the basic fundamentals of 
 insurance for those seeking a Minnesota license for the first 
 time, 15 hours devoted to specific life and health topics for 
 those seeking a life and health license, and 15 hours devoted to 
 specific property and casualty topics for those seeking a 
 property and casualty license.  Of the 30 hours of required 
 classroom study, at least three hours must be devoted to state 
 insurance laws, regulations, and rules.  The program of studies 
 or study course shall have been approved by the commissioner in 
 order to qualify under this paragraph.  If the applicant has 
 been previously licensed for the particular line of insurance in 
 the state of Minnesota, the requirement of a program of studies 
 or a study course shall be waived.  A certification of 
 compliance by the organization offering the course shall 
 accompany the applicant's license application.  This program of 
 studies in a school or a study course shall not apply to farm 
 property perils and farm liability applicants, or to agents 
 writing such other lines of insurance as the commissioner may 
 exempt from examination by order. 

    (e) The applicant must pass the examination with a grade 
 determined by the commissioner to indicate satisfactory 
 knowledge and understanding of the class or classes of insurance 
 for which the applicant seeks qualification.  The commissioner 
 shall inform the applicant as to whether or not the applicant 
 has passed.  Examination results are valid for a period of three 
 years from the date of the examination.  

    (f) An applicant who has failed to pass an examination may 
 take subsequent examinations.  Examination fees for subsequent 
 examinations shall not be waived. 

    (g) Any applicant for a license covering the same class or 
 classes of insurance for which the applicant was licensed under 
 a similar license in this state, other than a temporary license, 
 within the three years preceding the date of the application 
 shall be exempt from the requirement of a written examination, 
 unless the previous license was revoked or suspended by the 
 commissioner.  An applicant whose license is not renewed under 
 section 60K.12 is exempt from the requirement of a written 
 examination.  

    Subd. 3.    Nonresident agent.  The commissioner shall 
 issue a nonresident insurance agent's license to a qualified 
 person who is a resident of another state or country as follows: 

    (a) A person may qualify for a license under this section 
 as a nonresident only if that person holds a license in another 
 state, province of Canada, or other foreign country which, in 
 the opinion of the commissioner, qualifies that person for the 
 same activity as that for which a license is sought. 

    (b) The commissioner shall not issue a license to a 
 nonresident applicant until that person files with the 
 commissioner a designation of the commissioner and the 
 commissioner's successors in office as the applicant's true and 
 lawful attorney upon whom may be served all lawful process in an 
 action, suit, or proceeding instituted by or on behalf of an 
 interested person arising out of the applicant's insurance 
 business in this state.  This designation constitutes an 
 agreement that this service of process is of the same legal 
 force and validity as personal service of process in this state 
 upon that applicant.  

    Service of process upon a licensee in an action or 
 proceeding begun in a court of competent jurisdiction of this 
 state may be made in compliance with section 45.028, subdivision 
 2.  

    (c) A nonresident agent shall be held to the same knowledge 
 of state insurance law, regulations, and rules as that required 
 of a resident agent according to subdivision 2, paragraph (d). 

    (d) A nonresident license terminates automatically when the 
 resident license for that class of license in the state, 
 province, or foreign country in which the licensee is a resident 
 is terminated for any reason.  

    Subd. 4.    Term.  All licenses issued pursuant to this 
 section remain in force until voluntarily terminated by the 
 licensee, not renewed as prescribed in section 60K.06, or until 
 suspended or revoked by the commissioner.  A voluntary 
 termination occurs when the license is surrendered to the 
 commissioner with the request that it be terminated or when the 
 licensee dies, or when the licensee is dissolved or its 
 existence is terminated.  In the case of a nonresident license, 
 a voluntary termination also occurs upon the happening of the 
 event described in subdivision 3, paragraph (c).  

    Every licensed agent shall notify the commissioner within 
 30 days of a change of name, address, or information contained 
 in the application. 

    Subd. 5.    Subsequent appointments.  A person who holds 
 a valid agent's license from this state may solicit applications 
 for insurance on behalf of an admitted insurer with which the 
 licensee does not have a valid appointment on file with the 
 commissioner; provided that the licensee has permission from the 
 insurer to solicit insurance on its behalf and, provided 
 further, that the insurer upon receipt of the application for 
 insurance submits a written notice of appointment to the 
 commissioner accompanied by its check payable to the state 
 treasurer in the amount of the appointment fee prescribed by 
 section 60A.14, subdivision 1, paragraph (c), clause (6).  The 
 notice of appointment must be on a form prescribed by the 
 commissioner.  

    Subd. 6.    Amendment of license.  An application to the 
 commissioner to amend a license to reflect a change of name, or 
 to include an additional class of license, or for any other 
 reason, shall be on forms provided by the commissioner and shall 
 be accompanied by the applicant's surrendered license and a 
 check payable to the state treasurer for the amount of fee 
 specified in section 60K.06, subdivision 2, paragraph (a).  

    An applicant who surrenders an insurance license pursuant 
 to this subdivision retains licensed status until an amended 
 license is received.  

    Subd. 7.    Exceptions.  The following are exempt from 
 the general licensing requirements prescribed by this section:  

    (1) agents of township mutuals who are exempted pursuant to 
 section 60K.04; 

    (2) fraternal benefit society representatives exempted 
 pursuant to section 60K.05; 

    (3) any regular salaried officer or employee of a licensed 
 insurer, without license or other qualification, may act on 
 behalf of that licensed insurer in the negotiation of insurance 
 for that insurer, provided that a licensed agent must 
 participate in the sale of the insurance; 

    (4) employers and their officers or employees, and the 
 trustees or employees of any trust plan, to the extent that the 
 employers, officers, employees, or trustees are engaged in the 
 administration or operation of any program of employee benefits 
 for the employees of the employers or employees of their 
 subsidiaries or affiliates involving the use of insurance issued 
 by a licensed insurance company; provided that the activities of 
 the officers, employees and trustees are incidental to clerical 
 or administrative duties and their compensation does not vary 
 with the volume of insurance or applications for insurance; 

    (5) employees of a creditor who enroll debtors for credit 
 life, credit accident and health, or credit involuntary 
 unemployment insurance; provided the employees receive no 
 commission or fee for it; 

    (6) clerical or administrative employees of an insurance 
 agent who take insurance applications or receive premiums in the 
 office of their employer, if the activities are incidental to 
 clerical or administrative duties and the employee's 
 compensation does not vary with the volume of the applications 
 or premiums; 

    (7) rental vehicle companies and their employees in 
 connection with the offer of insurance authorized under section 
 72A.125; 

    (8) employees of a retailer who enroll purchasers for 
 credit insurance associated with a retail purchase; provided the 
 employees receive no commission, fee, bonus, or other form of 
 compensation for it; and 

    (9) representatives of prepaid legal service plans in 
 connection with the sale and marketing of these plans. 

    HIST: 1992 c 564 art 3 s 5; 1993 c 343 s 6; 1994 c 632 art 4 s 
 27-29; 1995 c 258 s 13; 1996 c 446 art 1 s 8; 1999 c 177 s 
 30,31; 1999 c 236 s 1 

     60K.04 Township mutual agents. 

    No agent for a township mutual shall be required to take an 
 examination to become eligible for an agent's license in farm 
 property perils and farm liability if it is certified by one or 
 more township mutual companies that the agent has been acting in 
 the capacity of an agent at least since January 1, 1971, and no 
 new examination shall be required for eligibility for a license 
 in farm property perils and farm liability for a licensed agent 
 in farm windstorm and hail insurance who was licensed prior to 
 January 1, 1971.  

    HIST: 1992 c 564 art 3 s 6 

     60K.05 Fraternal benefit society representatives. 

    Representatives of fraternal benefit societies who solicit 
 and negotiate insurance contracts shall be deemed to be 
 insurance agents and subject to the licensing requirements as 
 set forth in section 60K.03, subdivision 1; provided, that no 
 insurance agent's license shall be required of:  

    (1) any officer, employee, or secretary of a fraternal 
 benefit society or of any subordinate lodge or branch who 
 devotes substantially all of that person's time to activities 
 other than the solicitation or negotiation of insurance 
 contracts and who receives no commission or other compensation 
 directly dependent upon the number or amount of contracts 
 solicited or negotiated; or 

    (2) any agent or representative of a fraternal benefit 
 society who devotes, or intends to devote, less than 50 percent 
 of that person's time to the solicitation and procurement of 
 insurance contracts for that society.  Any person who in the 
 preceding calendar year has solicited and procured life 
 insurance in excess of $50,000 face amount, or, in the case of 
 any other kinds of insurance which the society may write, on the 
 persons of more than 25 individuals, and who has received or 
 will receive a commission or other compensation in the total 
 amount of $1,000 or more, shall be presumed to be devoting, or 
 intending to devote, 50 percent of that person's time to the 
 solicitation or procurement of insurance contracts for that 
 society.  

    HIST: 1992 c 564 art 3 s 7 

     60K.06 Fees. 

    Subdivision 1.    Renewal fees.  (a) Each agent licensed 
 pursuant to section 60K.03 shall pay in accordance with the 
 procedure adopted by the commissioner a renewal fee as 
 prescribed by subdivision 2.  

    (b) Every agent, corporation, limited liability company, 
 and partnership renewal license is valid for a period of 24 
 months.  The commissioner may stagger the implementation of the 
 24-month licensing program so that approximately one-half of the 
 licenses will expire on October 31 of each even-numbered year 
 and the other half on October 31 of each odd-numbered year. 
 Those licensees who will receive a 12-month license on November 
 1, 1994, because of the staggered implementation schedule, will 
 pay for the license a fee reduced by an amount equal to one-half 
 the fee for renewal of the license. 

    (c) Persons whose applications have been properly and 
 timely filed who have not received notice of denial of renewal 
 are approved for renewal and may continue to transact business 
 whether or not the renewed license has been received on or 
 before November 1.  Applications for renewal of a license are 
 timely filed if received by the commissioner on or before 
 October 15 of the year due, on forms duly executed and 
 accompanied by appropriate fees.  An application mailed is 
 considered timely filed if addressed to the commissioner, with 
 proper postage, and postmarked by October 15.  

    Subd. 2.    Licensing fees.  (a) In addition to the fees 
 and charges provided for examinations, each agent licensed 
 pursuant to section 60K.03 shall pay to the commissioner: 

    (1) a fee of $80 per license for an initial license issued 
 to an individual agent, and a fee of $80 for each renewal; 

    (2) a fee of $200 for an initial license issued to a 
 partnership, limited liability company, or corporation, and a 
 fee of $150 for each renewal; 

    (3) a fee of $75 for an initial amendment (variable 
 annuity) to a license, and a fee of $50 for each renewal; and 

    (4) a fee of $500 for an initial surplus lines agent's 
 license, and a fee of $500 for each renewal. 

    (b) Persons whose applications have been properly and 
 timely filed who have not received notice of denial of renewal 
 are approved for renewal and may continue to transact business 
 whether or not the renewed license has been received on or 
 before November 1 of the renewal year.  Applications for renewal 
 of a license are timely filed if received by the commissioner on 
 or before the 15th day preceding the license renewal date of the 
 applicant on forms duly executed and accompanied by appropriate 
 fees.  An application mailed is considered timely filed if 
 addressed to the commissioner, with proper postage, and 
 postmarked on or before the 15th day preceding the licensing 
 renewal date of the applicant. 

    (c) Initial licenses issued under this section must be 
 valid for a period not to exceed two years.  The commissioner 
 shall assign an expiration date to each initial license so that 
 approximately one-half of all licenses expire each year.  Each 
 initial license must expire on October 31 of the expiration year 
 assigned by the commissioner. 

    (d) All fees shall be retained by the commissioner and are 
 nonreturnable, except that an overpayment of any fee must be 
 refunded upon proper application. 

    Subd. 3.    Initial license expiration; fee reduction.  
 If an initial license issued under subdivision 2, paragraph (a), 
 expires less than 12 months after issuance, the license fee must 
 be reduced by an amount equal to one-half the fee for a renewal 
 of the license. 

    HIST: 1992 c 564 art 3 s 8; 1994 c 632 art 4 s 30; 1997 c 200 
 art 1 s 43; 1999 c 223 art 2 s 7 

     60K.07 Temporary licenses. 

    Subdivision 1. Repealed, 1997 c 222 s 60 

    Subd. 2.    Permissive temporary license.  The 
 commissioner may issue a temporary license to a person to act as 
 an insurance agent for a period not to exceed 90 days, which may 
 be extended as determined by the commissioner, without requiring 
 an examination if the commissioner considers a temporary license 
 necessary for the servicing of an insurance business in the 
 following cases:  

    (1) to an agent licensed as a resident agent in another 
 state where the commissioner determines that the foreign license 
 is substantially the equivalent of that being applied for from 
 the state of Minnesota and where the agent has been transferred 
 into this state with the intention of becoming a resident, 
 working as an insurance agent, and obtaining a resident license 
 from the state of Minnesota; 

    (2) to the surviving spouse or next of kin, or to the 
 administrator or executor, or to an employee of a deceased 
 licensed insurance agent, or to the spouse, next of kin, an 
 employee, or legal guardian of a disabled licensed insurance 
 agent; 

    (3) to the designee of a licensed insurance agent entering 
 upon active service in the armed forces of the United States; or 

    (4) in any other circumstance where the commissioner 
 considers that the public interest will best be served by the 
 issuance of a temporary license.  

    HIST: 1992 c 564 art 3 s 9 

  60K.08 Repealed, 1999 c 177 s 88 

     60K.09 Unfit person not to be employed by insurer. 

    No insurer, its officers, agents, or managers shall 
 knowingly make application to the commissioner for appointment 
 of a person as its agent where that person is known to the 
 insurer, its officers, agents, or managers making the 
 application, to be unfit or disqualified to be licensed as an 
 insurance agent, and immediately upon the discovery by the 
 insurer, its officers, agents, or managers having supervision of 
 the agent, of the unfitness or disqualification, the insurer, or 
 the officers agents, or managers shall forthwith inform the 
 commissioner in writing of their decision to terminate their 
 appointment of this agent; nor shall any insurer retain in its 
 employ any agent known by it to be disqualified or unfit to be 
 licensed as an insurance agent. 

    HIST: 1992 c 564 art 3 s 11 

     60K.10 Term of appointments. 

    All appointments of agents by insurers pursuant to this 
 section shall remain in force until terminated voluntarily by 
 the appointing insurer or the license of the agent has for any 
 reason been terminated during the appointment.  The original 
 appointing insurer, as well as any subsequent appointing 
 insurer, may terminate the appointment of an agent at any time 
 by giving written notice thereof to the commissioner and by 
 sending a copy thereof to the last known address of the agent.  
 The effective date of the termination shall be the date of 
 receipt of the notice by the commissioner unless another date is 
 specified by the insurer in the notice.  Within 30 days after 
 the insurer gives notice of termination to the commissioner, the 
 insurer shall furnish the agent with a current statement of the 
 agent's commission account. 

    Accompanying the notice of a termination given to the 
 commissioner by the insurer shall be a statement of the specific 
 reasons constituting the cause of termination.  Any document, 
 record, or statement relating to the agent which is disclosed or 
 furnished to the commissioner contemporaneously with, or 
 subsequent to, the notice of termination shall be deemed 
 confidential by the commissioner and a privileged 
 communication.  The document, record, or statement furnished to 
 the commissioner shall not be admissible in whole or in part for 
 any purpose in any action or proceeding against (1) the insurer 
 or any of its officers, employees, or representatives submitting 
 or providing the document, record, or statement, or (2) any 
 person, firm, or corporation furnishing in good faith to the 
 insurer the information upon which the reasons for termination 
 are based.  

    HIST: 1992 c 564 art 3 s 12 

     60K.11 Denial, revocation, suspension, and censure of 
  licenses. 

    Subdivision 1.    Grounds.  The commissioner may by 
 order take any or all of the following actions: 

    (1) deny, suspend, or revoke an insurance agent or agency 
 license; 

    (2) censure the licensee; or 

    (3) impose a civil penalty as provided for in section 
 45.027, subdivision 6. 

    In order to take this action the commissioner must find 
 that the order is in the public interest and that the applicant; 
 licensee; or in the case of an insurance agency, partner, 
 director, shareholder, officer, or agent of that insurance 
 agency: 

    (i) does not intend to or is not in good faith carrying on 
 the business of an insurance agent; 

    (ii) has filed an application for a license which is 
 incomplete in any material respect or contains any statement 
 which, in light of the circumstances under which it is made, 
 contains any misrepresentation, or is false, misleading, or 
 fraudulent; 

    (iii) has engaged in an act or practice, whether or not 
 such act or practice involves the business of insurance, which 
 demonstrates that the applicant or licensee is untrustworthy, 
 financially irresponsible, or otherwise incompetent or 
 unqualified to act as an insurance agent or agency; 

    (iv) has pled guilty, with or without explicitly admitting 
 guilt, pled nolo contendere, or been convicted of a felony, 
 gross misdemeanor, or misdemeanor involving moral turpitude, 
 including, but not limited to, assault or similar conduct; 

    (v) has violated or failed to comply with any of the 
 provisions of the insurance laws including chapter 45 or 
 chapters 60A to 72A or any rule or order under those chapters; 

    (vi) is permanently or temporarily enjoined by any court of 
 competent jurisdiction from engaging in or continuing any 
 conduct or practice involving any aspect of the insurance 
 business; 

    (vii) has violated or failed to comply with any order of 
 the insurance regulator of any other state or jurisdiction; 

    (viii) has had an insurance agent or agency license denied, 
 suspended, or revoked, has been censured or reprimanded, has 
 been the subject of any other discipline imposed by, or has paid 
 or has been required to pay a monetary penalty or fine to, 
 another state or jurisdiction; 

    (ix) has misrepresented the terms of any actual or proposed 
 insurance contract; 

    (x) has engaged in any fraudulent, coercive, deceptive, or 
 dishonest act or practice whether or not such act or practice 
 involves the business of insurance; 

    (xi) has improperly withheld, misappropriated, or converted 
 to the licensee's or applicant's own use any money belonging to 
 a policyholder, insurer, beneficiary, or other person; 

    (xii) has forged another's name to any document whether or 
 not the document relates to an application for insurance or a 
 policy of insurance; or 

    (xiii) has, while performing residential mortgage activity 
 regulated under chapter 58, violated any notification, 
 disclosure, or recordkeeping requirement, or any standard of 
 conduct, imposed by chapter 58.  

    Subd. 2.    Licensees.  If the commissioner determines 
 that one of the conditions listed in subdivision 1 exists, the 
 commissioner may issue an order requiring a licensee to show 
 cause why any or all of the following should not occur:  (1) the 
 license revocation or suspension; (2) censuring of the licensee; 
 or (3) the imposition of a civil penalty.  The order shall be 
 calculated to give reasonable notice of the time and place for 
 hearing on the matter, and shall state the reasons for the entry 
 of the order.  The commissioner may by order summarily suspend a 
 license pending final determination of any order to show cause.  
 If a license is suspended pending final determination of an 
 order to show cause, a hearing on the merits shall be held 
 within 30 days of the issuance of the order of suspension.  All 
 hearings shall be conducted in accordance with the provisions of 
 chapter 14.  After the hearing, the commissioner shall enter an 
 order disposing of the matter as the facts require.  If the 
 licensee fails to appear at a hearing after having been duly 
 notified of it, the licensee shall be considered in default, and 
 the proceeding may be determined against the licensee upon 
 consideration of the order to show cause, the allegations of 
 which may be considered to be true. 

    Subd. 3.    Applicants.  Whenever it appears to the 
 commissioner that a license application should be denied 
 pursuant to subdivision 1, the commissioner shall promptly give 
 a written notice to the applicant of the denial.  The notice 
 must state the grounds for the denial and give reasonable notice 
 of the rights of the applicant to request a hearing.  A hearing 
 must be held not later than 30 days after the request for the 
 hearing is received by the commissioner unless the applicant and 
 the department of commerce agree that the hearing may be held at 
 a later date.  If no hearing is requested within 30 days of 
 service of the notice, the denial will become final.  All 
 hearings shall be conducted in accordance with the provisions of 
 chapter 14.  After the hearing, the commissioner shall enter an 
 order making such disposition as the facts require.  If the 
 applicant fails to appear at a hearing after having been duly 
 notified of it, the person shall be considered in default, and 
 the proceeding may be determined against the applicant upon 
 consideration of the notice denying application, the allegations 
 of which may be considered to be true.  All fees accompanying 
 the application and appointment are considered earned and are 
 not refundable. 

    Subd. 4.    Actions against lapsed license.  If a 
 license lapses, is surrendered, withdrawn, terminated, or 
 otherwise becomes ineffective, the commissioner may institute a 
 proceeding under this subdivision within two years after the 
 license was last effective and enter a revocation or suspension 
 order as of the last date on which the license was in effect, or 
 impose a civil penalty as provided for in section 45.027, 
 subdivision 6. 

    Subd. 5.    Notification of action taken by other state. 
  An insurance agent shall notify the commissioner within 30 
 days of any fine imposed on that agent by another state or of a 
 suspension or revocation of license by the commissioner of 
 commerce of this state or the commissioner of insurance of any 
 other state.  

    Subd. 6.    Conditions for relicensure.  A revocation of 
 a license shall prohibit the licensee from making a new 
 application for a license for at least two years from the 
 effective date of the revocation.  Further, the commissioner 
 shall, as a condition of reapplication, require the applicant to 
 obtain a performance bond issued by an insurer authorized to 
 transact business in this state in the amount of $20,000 or a 
 greater amount the commissioner considers appropriate for the 
 protection of citizens of this state in the event the 
 commissioner grants the application.  The bond shall be filed 
 with the commissioner, with the state of Minnesota as obligee, 
 conditioned for the prompt payment to any aggrieved person 
 entitled to payment of any amounts received by the licensee or 
 to protect any aggrieved person from loss resulting from 
 fraudulent, deceptive, dishonest, or other prohibited practices 
 arising out of any transaction when the licensee was licensed or 
 performed acts for which a license is required under this 
 chapter.  The bond shall remain operative for as long as that 
 licensee is licensed.  The bond required by this subdivision 
 must provide coverage for all matters arising during the period 
 of licensure. 

    HIST: 1992 c 564 art 3 s 13; 1999 c 151 s 38 

     60K.12 Tax clearance certificate. 

    Subdivision 1.    Requirement for issuance or renewal of 
 license.  In addition to the provisions of section 60K.11, the 
 commissioner may not issue or renew a license if the 
 commissioner of revenue notifies the commissioner and the 
 licensee or applicant for a license that the licensee or 
 applicant owes the state delinquent taxes in the amount of $500 
 or more.  The commissioner may issue or renew the license only 
 if:  (1) the commissioner of revenue issues a tax clearance 
 certificate; and (2) the commissioner of revenue or the licensee 
 or applicant forwards a copy of the clearance certificate to the 
 commissioner.  The commissioner of revenue may issue a clearance 
 certificate only if the licensee or applicant does not owe the 
 state any uncontested delinquent taxes. 

    Subd. 2.    Definitions.  For purposes of this section, 
 the following terms have the meanings given them:  

    (1) "taxes" are all taxes payable to the commissioner of 
 revenue, including penalties and interest due on those taxes; 
 and 

    (2) "delinquent taxes" do not include a tax liability if 
 (i) an administrative or court action that contests the amount 
 or validity of the liability has been filed or served, (ii) the 
 appeal period to contest the tax liability has not expired, or 
 (iii) the licensee or applicant has entered into a payment 
 agreement to pay the liability and is current with the payments. 

    Subd. 3.    Contested case hearing.  In lieu of the 
 notice and hearing requirements of section 60K.11, when a 
 licensee or applicant is required to obtain a clearance 
 certificate under this section, a contested case hearing must be 
 held if the licensee or applicant requests a hearing in writing 
 to the commissioner of revenue within 30 days of the date of the 
 notice provided in subdivision 1.  The hearing must be held 
 within 45 days of the date the commissioner of revenue refers 
 the case to the office of administrative hearings.  
 Notwithstanding any law to the contrary, the licensee or 
 applicant must be served with 20 days' notice in writing 
 specifying the time and place of the hearing and the allegations 
 against the licensee or applicant.  The notice may be served 
 personally or by mail. 

    Subd. 4.    Identification required.  The commissioner 
 shall require all licensees or applicants to provide their 
 social security number and Minnesota business identification 
 number on all license applications.  Upon request of the 
 commissioner of revenue, the commissioner must provide to the 
 commissioner of revenue a list of all licensees and applicants, 
 including the name and address, social security number, and 
 business identification number.  The commissioner of revenue may 
 request a list of the licensees and applicants no more than once 
 each calendar year. 

    HIST: 1992 c 564 art 3 s 14 

     60K.13 Surrender, loss, or destruction of license. 

    Subdivision 1.    Notification.  The commissioner shall 
 promptly notify the licensee and all appointing insurers, where 
 applicable, of any suspension, revocation, or termination of the 
 licensee's agent's license by the commissioner.  Upon receipt of 
 the notice of suspension or revocation of a license, the 
 licensee shall immediately deliver it to the commissioner.  

    Subd. 2.    Return of license.  An agent whose resident 
 or nonresident license is terminated, as provided in section 
 60K.11, shall deliver the terminated license to the commissioner 
 by personal delivery or by mail within 30 days after the date of 
 termination.  

    Subd. 3.    Duplicate license.  The commissioner may 
 issue a duplicate license for any lost, stolen, or destroyed 
 license issued pursuant to this section upon an affidavit of the 
 licensee concerning the facts of the loss, theft, or 
 destruction, and the payment of a fee of $3 by money order or 
 cashier's check payable to the state treasurer.  

    HIST: 1992 c 564 art 3 s 15 

     60K.14 Prohibited acts; required acts. 

    Subdivision 1.    Personal solicitation of insurance 
 sales.  (a)    Definitions.  For the purposes of this 
 section, the following terms have the meanings given them:  

    (1) "agent" means a person, copartnership, or corporation 
 required to be licensed pursuant to section 60K.02; and 

    (2) "personal solicitation" means any contact by an agent, 
 or any person acting on behalf of an agent, made for the purpose 
 of selling or attempting to sell insurance, when either the 
 agent or a person acting for the agent contacts the buyer by 
 telephone or in person, except:  (i) an attempted sale in which 
 the buyer personally knows the identity of the agent, the name 
 of the general agency, if any, which the agent represents, and 
 the fact that the agent is an insurance agent; (ii) an attempted 
 sale in which the prospective purchaser of insurance initiated 
 the contact; or (iii) a personal contact which takes place at 
 the agent's place of business.  

    (b)    Disclosure requirement.  Before a personal 
 solicitation, the agent or person acting for an agent shall, at 
 the time of initial personal contact with the potential buyer, 
 clearly and expressly disclose in writing:  

    (1) the name and state insurance agent license number of 
 the person making the contact; 

    (2) the name of the agent, general agency, or insurer that 
 person represents; and 

    (3) the fact that the agent, agency, or insurer is in the 
 business of selling insurance.  

    If the initial personal contact is made by telephone, the 
 disclosures required by this subdivision need not be made in 
 writing. 

    (c)    False representation of government affiliation.  
 No agent or person acting for an agent shall make any 
 communication to a potential buyer that indicates or gives the 
 impression that the agent is acting on behalf of a government 
 agency.  

    Subd. 2.    Fees for services.  No person shall charge a 
 fee for any services rendered in connection with the 
 solicitation, negotiation, or servicing of any insurance 
 contract unless: 

    (1) before rendering the services, a written statement is 
 provided disclosing: 

    (i) the services for which fees are charged; 

    (ii) the amount of the fees; 

    (iii) that the fees are charged in addition to premiums; 
 and 

    (iv) that premiums include a commission; and 

    (2) all fees charged are reasonable in relation to the 
 services rendered. 

    Subd. 3.    Commissions or compensation.  No commission 
 or other compensation shall be paid or allowed by any person, 
 firm, or corporation to any other person, firm, or corporation 
 acting, or assuming to act, as an insurance agent without a 
 license therefor.  A duly licensed agent may pay commissions or 
 assign or direct that commissions be paid to a partnership of 
 which the agent is a member, employee, or agent, or to a 
 corporation of which the agent is an officer, employee, or 
 agent.  This subdivision does not prevent the payment or receipt 
 of renewal or other deferred commissions to or by any person 
 solely because the person has ceased to hold a license to act as 
 an insurance agent. 

    Subd. 4.    Suitability of insurance.  In recommending 
 the purchase of any life, endowment, individual accident and 
 sickness, long-term care, annuity, life-endowment, or Medicare 
 supplement insurance to a customer, an agent must have 
 reasonable grounds for believing that the recommendation is 
 suitable for the customer and must make reasonable inquiries to 
 determine suitability.  The suitability of a recommended 
 purchase of insurance will be determined by reference to the 
 totality of the particular customer's circumstances, including, 
 but not limited to, the customer's income, the customer's need 
 for insurance, and the values, benefits, and costs of the 
 customer's existing insurance program, if any, when compared to 
 the values, benefits, and costs of the recommended policy or 
 policies. 

    Subd. 5.    Premiums.  All premiums or other money 
 received by an agent from an insured or applicant for insurance 
 must be forthwith deposited directly in a business checking, 
 savings, or other similar account maintained by the agent or 
 agency, unless the money is forwarded directly to the designated 
 insurer. 

    Subd. 6.    Privacy of client.  Except as otherwise 
 provided by law, no insurance agent may disclose nor cause to be 
 disclosed to any other person the identity of a person insured 
 through the agent without the consent of the insured.  

    Subd. 7.    Disclosure of commissions.  Before selling 
 any health plan as defined in section 62A.011, subdivision 3, an 
 agent shall disclose in writing to the prospective purchaser the 
 amount of any commission or other compensation the agent will 
 receive as a direct result of the sale.  The disclosure may be 
 expressed in dollars or as a percentage of the premium.  The 
 amount disclosed need not include any anticipated renewal 
 commissions. 

    HIST: 1992 c 564 art 3 s 16; 1993 c 345 art 5 s 3; 1994 c 485 
 s 15; 1994 c 625 art 10 s 2; 1995 c 258 s 14 

     60K.15 Insurer's agent. 

    Any person who solicits insurance is the agent of the 
 insurer and not the agent of the insured. 

    HIST: 1992 c 564 art 3 s 17 

     60K.16 Liability for placing insurance in unauthorized 
  company. 

    Any person, regardless of whether that person is required 
 to be licensed as an insurance agent, who participates in any 
 manner in the sale of any insurance policy or certificate, or 
 any other contract providing benefits, for or on behalf of any 
 company which is required to be, but which is not authorized to 
 engage in the business of insurance in this state, other than 
 pursuant to sections 60A.195 to 60A.209, shall be personally 
 liable for all premiums, whether earned or unearned, paid by the 
 insured, and the premiums may be recovered by the insured.  In 
 addition, that person shall be personally liable for any loss 
 the insured has sustained or may sustain if the loss is one 
 resulting from a risk or hazard covered in the issued policy, 
 certificate, or contract or which would have been covered if the 
 policy, certificate, or contract had been issued to the 
 purchaser of the insurance. 

    HIST: 1992 c 564 art 3 s 18 

     60K.17 Agents; variable contracts. 

    Subdivision 1.    License required.  No person shall 
 sell or offer for sale a contract on a variable basis unless 
 prior to making any solicitation or sale the person has obtained 
 from the commissioner a license therefor.  The license shall 
 only be granted, upon the written requisition of an insurer, to 
 a qualified person who holds a current license authorizing the 
 person to solicit and sell life insurance and annuity contracts 
 in this state.  To become qualified, a person shall complete a 
 written application on a form prescribed by the commissioner and 
 shall take and pass an examination prescribed by the 
 commissioner.  

    Subd. 2.    Exceptions.  (a) Any regularly salaried 
 officer or employee of a licensed insurer may, without license 
 or other qualification, act on behalf of that licensed insurer 
 in the negotiation of a contract on a variable basis, provided 
 that a licensed agent must participate in the sale of any 
 contract. 

    (b) Any person who holds a valid license to solicit and 
 sell life insurance and annuity contracts may solicit and sell 
 contracts on a variable basis without acquiring a license under 
 this subdivision if the contract is based on an account which is 
 excluded from the definition of investment company under the 
 Investment Company Act of 1940, United States Code, title 15, 
 section 80a-3(11). 

    Subd. 3.    Rules.  The commissioner may by rule waive 
 or modify any of the requirements in this section or prescribe 
 additional requirements considered necessary for the proper sale 
 and solicitation of contracts on a variable basis. 

    HIST: 1992 c 564 art 3 s 19 

     60K.18 Altering existing policies; written binders 
  required. 

    An insurance agent having express authority to bind 
 coverage, who orally agrees on behalf of an insurer to provide 
 insurance coverage, or to alter an existing insurance agreement, 
 shall execute and deliver a written memorandum or binder 
 containing the terms of the oral agreement to the insured within 
 three business days from the time the oral agreement is entered. 

    HIST: 1992 c 564 art 3 s 20 

     60K.19 Continuing insurance education. 

    Subdivision 1.    Definition.  For the purposes of this 
 section, "course" means a course, program of instruction, or 
 seminar of continuing insurance education.  A "professional 
 designation examination" means a written, proctored, and graded 
 examination the passage of which leads to a bona fide insurance 
 or financial planning professional designation used by agents.  

    Subd. 2.    Applicability.  This section applies to all 
 natural persons licensed by this state to sell classes of 
 insurance for which licensing examinations are required.  

    Subd. 3.    Exemptions.  This section does not apply to: 

    (a) persons soliciting or selling solely on behalf of 
 companies organized and operating according to chapter 67A; or 

    (b) persons holding life and health, or property and 
 casualty licenses who, at the time of license renewal, certify 
 to the commissioner in writing that they will sell only credit 
 life, credit accident and health, credit involuntary 
 unemployment, and credit property insurance, during that year 
 and do in fact so limit their sale of insurance.  

    Subd. 4.    Continuing insurance education advisory task 
 force.  The commissioner of commerce may appoint a continuing 
 insurance education advisory task force consisting of 13 
 members.  All members must be residents of Minnesota.  Three 
 members must neither be employed by an insurance company nor 
 licensed as an insurance agent.  These three members are not 
 eligible to be chair and are compensated according to section 
 15.059, subdivision 6.  Each of the other ten members must be 
 actively engaged in some activity in the insurance industry in 
 this state and have a principal office located in this state.  
 These ten members serve without compensation, but are paid 
 reasonable and necessary expenses incurred in the performance of 
 their duties in the same amount and in the same manner as state 
 employees.  Three of these ten members must be employed in 
 capacities other than as licensed agents by insurance companies 
 authorized to do business in this state.  The remaining seven 
 members must be licensed insurance agents actively engaged in 
 the solicitation and sale of insurance and currently subject to 
 continuing education requirements.  Membership on the advisory 
 task force must represent, to the extent possible, the various 
 phases of the insurance industry and especially the several 
 classes of insurance.  

    The commissioner shall appoint the members of the task 
 force.  Before making appointments to the advisory task force, 
 the commissioner shall solicit nominations from the several 
 professional organizations representing persons selling 
 insurance in this state and from the organizations representing 
 companies authorized to do business in this state.  

    Subd. 5.    Powers of the advisory task force.  (a) 
 Applications for approval of individuals responsible for 
 monitoring course offerings must be submitted to the 
 commissioner on forms prescribed by the commissioner and must be 
 accompanied by a fee of not more than $100 payable to the state 
 of Minnesota for deposit in the general fund.  A fee of $10 for 
 each hour or fraction of one hour of course approval sought must 
 be forwarded with the application for course approval.  If the 
 advisory task force is created, it shall make recommendations to 
 the commissioner regarding the accreditation of courses 
 sponsored by institutions, both public and private, which 
 satisfy the criteria established by this section, the number of 
 credit hours to be assigned to the courses, and rules which may 
 be promulgated by the commissioner.  The advisory task force 
 shall seek out and encourage the presentation of courses.  

    (b) If the advisory task force is created, it shall make 
 recommendations and provide subsequent evaluations to the 
 commissioner regarding procedures for reporting compliance with 
 the minimum education requirement.  

    (c) The advisory task force shall recommend the approval or 
 disapproval of professional designation examinations that meet 
 the criteria established by this section and the number of 
 continuing education credit hours to be awarded for passage of 
 the examination.  In order to be approved, a professional 
 designation examination must:  

    (1) lead to a recognized insurance or financial planning 
 professional designation used by agents; and 

    (2) conclude with a written examination that is proctored 
 and graded.  

    Subd. 6.    Powers of the commissioner.  (a) The 
 commissioner shall make the final determination as to 
 accreditation and assignment of credit hours for courses.  

    (b) The commissioner shall adopt procedures for reporting 
 compliance with the minimum education requirement.  

    (c) The commissioner shall promulgate rules according to 
 chapter 14 to carry out the purposes of this section.  

    Subd. 7.    Criteria for course accreditation.  (a) The 
 commissioner may accredit a course only to the extent it is 
 designed to impart substantive and procedural knowledge of the 
 insurance field.  The burden of demonstrating that the course 
 satisfies this requirement is on the individual or organization 
 seeking accreditation.  The commissioner shall approve any 
 educational program approved by Minnesota Continuing Legal 
 Education relating to the insurance field.  The commissioner is 
 authorized to establish a procedure for renewal of course 
 accreditation. 

    (b) The commissioner shall approve or disapprove 
 professional designation examinations that are recommended for 
 approval by the advisory task force.  In order for an agent to 
 receive full continuing education credit for a professional 
 designation examination, the agent must pass the examination.  
 An agent may not receive credit for classroom instruction 
 preparing for the professional designation examination and also 
 receive continuing education credit for passing the professional 
 designation examination. 

    (c) The commissioner may not accredit a course:  

    (1) that is designed to prepare students for a license 
 examination; 

    (2) in mechanical office or business skills, including 
 typing, speedreading, use of calculators, or other machines or 
 equipment; 

    (3) in sales promotion, including meetings held in 
 conjunction with the general business of the licensed agent; or 

    (4) in motivation, the art of selling, psychology, or time 
 management. 

    Subd. 8.    Minimum education requirement.  Each person 
 subject to this section shall complete a minimum of 30 credit 
 hours of courses accredited by the commissioner during each 
 24-month licensing period, two hours of which must be devoted to 
 state law, regulations, and rules applicable to the line or 
 lines of insurance for which the agent is licensed.  Any person 
 whose initial licensing period extends more than six months 
 shall complete 15 hours of courses accredited by the 
 commissioner during the initial license period.  Any person 
 teaching or lecturing at an accredited course qualifies for 
 1-1/2 times the number of credit hours that would be granted to 
 a person completing the accredited course.  No more than 15 
 credit hours per licensing period may be credited to a person 
 for courses sponsored by, offered by, or affiliated with an 
 insurance company or its agents.  Courses sponsored by, offered 
 by, or affiliated with an insurance company or agent may 
 restrict its students to agents of the company or agency. 

    Subd. 9.    Waiver of requirements.  (a) The 
 commissioner may grant a waiver or an extension of time up to 90 
 days to complete the minimum education requirement to an 
 individual upon a showing of good cause.  It is the licensed 
 person's responsibility to request a waiver or extension on a 
 form prescribed by the commissioner.  As of the day the licensed 
 person properly files a request for a waiver or extension, the 
 license remains in effect until the commissioner notifies the 
 licensed person of the commissioner's decision.  The 
 commissioner may approve a waiver or extension subject to any 
 reasonable conditions.  The person's license remains in effect 
 during the compliance period determined by the commissioner.  If 
 the licensed person fails to comply with any reasonable 
 conditions imposed by the commissioner, the commissioner shall 
 terminate the license.  If the request for a waiver or extension 
 is denied by the commissioner, the licensed person shall have 30 
 days within which to satisfy the minimum education requirement 
 involved in the request for a waiver or extension.  If the 
 minimum education requirement is not satisfied within the 
 compliance period, the commissioner shall terminate the person's 
 license.  

    (b) Upon application on a form prescribed by the 
 commissioner, the commissioner may grant a waiver of the minimum 
 education requirement to a licensee who is no longer actively 
 engaged in the solicitation and sale of insurance.  A licensed 
 person seeking a waiver from the requirements of this section 
 may be required to submit information to the commissioner that 
 substantiates the person's retirement or inactive status.  A 
 licensed person receiving a waiver from the commissioner may 
 maintain and renew a license but may not solicit or sell new 
 insurance business while this waiver is in effect.  A licensee 
 may, for a fee, continue to service an insurance policy for 
 which the licensee is the agent of record, if the policy is in 
 force at the time the waiver is granted.  An insurer may not 
 terminate a service contract or refuse to pay compensation 
 because the waiver does not allow the licensee to solicit or 
 sell new insurance.  

    For the purposes of receiving renewal commissions and other 
 benefits or compensation from insurers, an agent receiving a 
 waiver under this paragraph is considered to be the holder of a 
 valid insurance agent license in this state.  

    Subd. 10.    Reporting.  (a) After completing the 
 minimum education requirement, each person subject to this 
 section shall file or cause to be filed a compliance report in 
 accordance with the procedures adopted by the commissioner.  The 
 compliance report must not claim credit for continuing education 
 not actually completed at the date of filing the report. 

    (b) An institution offering an accredited course shall 
 comply with the procedure for reporting compliance adopted by 
 the commissioner.  

    (c) If a person subject to this section completes a 
 nonaccredited course, that person may submit a written report to 
 the advisory committee accompanied by a fee of not more than $10 
 payable to the state of Minnesota for deposit in the general 
 fund.  This report must be accompanied by proof satisfactory to 
 the commissioner that the person has completed the minimum 
 education requirement for the annual period during which the 
 nonaccredited course was completed.  Upon the recommendation of 
 the advisory committee that the course satisfies the criteria 
 for course accreditation, the commissioner may approve the 
 nonaccredited course and shall so inform the person.  If the 
 nonaccredited course is approved by the commissioner, it may be 
 used to satisfy the minimum education requirement for the 
 person's next annual compliance period.  

    Subd. 11.    Enforcement.  If a person subject to this 
 section fails to complete the minimum education or reporting 
 requirement or to pay the prescribed fees for any annual period, 
 no license may be renewed or continued in force for that person 
 for any class of insurance beginning June 1 of the year due and 
 that person may not act as an insurance agent until the person 
 has demonstrated to the satisfaction of the commissioner that 
 all requirements of this section have been complied with or that 
 a waiver or extension has been obtained.  

    HIST: 1983 c 289 s 114 subd 1; 1983 c 328 s 6; 1984 c 552 s 3; 
 1984 c 578 s 2; 1984 c 592 s 34-36; 1984 c 655 art 1 s 92; 
 1Sp1985 c 10 s 53,54; 1986 c 444; 1987 c 337 s 8-10; 1989 c 231 
 s 1-5; 1992 c 513 art 3 s 25; 1992 c 564 art 1 s 19,20; 1993 c 
 343 s 7; 1994 c 632 art 4 s 31; 1996 c 439 art 1 s 7-9; 1997 c 
 187 art 3 s 14; 1999 c 177 s 32,33 

*   NOTE:  The amendment to subdivision 7 by Laws 1999, chapter 
*177, section 32, is effective July 1, 2000.  Laws 1999, chapter 
*177, section 89.

     60K.20 Social security numbers of licensed agents; 
  commissioner's authority to provide to NAIC. 

    The commissioner may provide the social security numbers of 
 licensed insurance agents to the National Association of 
 Insurance Commissioners. 

    HIST: 1997 c 222 s 7