1999 Minnesota Statutes

     62G.11 Financial requirements. 

    Subdivision 1.  The commissioner shall not issue a 
 certificate of authority to any legal service plan corporation 
 unless the legal service plan corporation meets all legal 
 requirements and, if organized on a capital stock basis, has 
 paid up capital stock of not less than $50,000 and an initial 
 surplus of not less than $50,000 or, if organized on a 
 membership basis, has an initial surplus of not less than 
 $100,000. 

    Subd. 2.  A legal service plan corporation shall establish 
 and maintain records for claims in process, incomplete and 
 unreported claims, allowances for subscription charges received 
 from subscribers but not yet earned, and all other accrued 
 liabilities, in accordance with section 60A.12, as it relates to 
 accident and health insurance companies. 

    Subd. 3.  If organized on a capital stock basis, a legal 
 service plan corporation may not reduce its capital. Both 
 capital stock and membership corporations shall maintain a 
 surplus, in addition to all reserves established, of not less 
 than the greater of the initial surplus reduced by $25,000 or 
 16-2/3 percent of the sum of all legal service claims incurred, 
 and administrative expenses in connection therewith, during the 
 previous calendar year.  The surplus shall not exceed 50 percent 
 of the sum of all legal service claims incurred, and the 
 administrative expenses in connection therewith, during the 
 previous calendar year unless that amount is less than the 
 initial surplus reduced by $25,000.  The percentage amounts 
 shall be determined from a financial statement and certified 
 audit filed annually and subject to verification and examination 
 by the commissioner. 

    Subd. 4.  If the surplus is less than the required minimum 
 or more than the required maximum, or if a legal service plan 
 corporation does not have the required reserves or its reserves 
 are not properly computed, a written plan proposed by the legal 
 service corporation and approved by the commissioner shall be 
 followed to correct the condition. If a legal service plan 
 corporation does not within a reasonable time propose measures 
 to correct its reserve or surplus, if a legal service plan 
 corporation violates the plan which has been approved, or if 
 there is evidence that an improper reserve or surplus status 
 cannot be corrected within a reasonable time, the commissioner 
 may take action against the legal service plan corporation under 
 chapter 60B, or under the suspension and penalty provisions of 
 sections 62G.01 to 62G.25. 

    HIST: 1978 c 785 s 11