2001 Minnesota Statutes

     61B.28 Miscellaneous provisions. 

    Subdivision 1.    Records.  Records must be kept of all 
 negotiations and meetings of the board of directors to discuss 
 the activities of the association in carrying out its powers and 
 duties under section 61B.23.  Records of the association with 
 respect to an impaired or insolvent insurer shall be made public 
 only upon the termination of a liquidation, rehabilitation, or 
 conservation proceeding involving the impaired or insolvent 
 insurer, upon the termination of the impairment or insolvency of 
 the insurer, or upon the order of a court of competent 
 jurisdiction.  Nothing in this subdivision limits the duty of 
 the association to report its activities under section 61B.27. 

    Subd. 2.    Reports.  (a) A report, recommendation, or 
 notification by the association, its board of directors, or 
 officers to the commissioner concerning a member insurer, 
 together with statements or documents furnished to the 
 commissioner with, or subsequent to, a report, recommendation, 
 or notification, is confidential and a privileged communication. 
 Reports, recommendations, notifications, statements, and 
 documents furnished to the commissioner are not admissible in 
 whole or in part for any purpose in an action or proceeding 
 against: 

    (1) the association or its member insurers, officers, 
 employees, or representatives submitting or providing the 
 report, recommendation, notification, statement, or document; or 

    (2) a person, firm, or entity who in good faith furnishes 
 to the association the information or document upon which the 
 association has relied in making its report, recommendation, or 
 notification to the commissioner. 

    (b) Notwithstanding the provisions of sections 13.711, 
 13.715, and 13.719, the commissioner may release to the 
 association's board of directors any or all nonpublic data 
 collected and maintained by the commissioner on a member insurer 
 or a potential member insurer. Information furnished to the 
 board of directors is private. 

    Subd. 3.    Association as creditor.  For the purpose of 
 carrying out its obligations under sections 61B.18 to 61B.32, 
 the association is considered to be a creditor of the impaired 
 or insolvent insurer to the extent of assets attributable to 
 covered policies, reduced by amounts which the association 
 recovers from the assets of the impaired or insolvent insurer as 
 subrogee under section 61B.23, subdivision 12.  Recoveries by 
 the association as subrogee under section 61B.23, subdivision 
 12, from assets other than from assets of the impaired or 
 insolvent insurer shall not reduce or act as an offset to the 
 association's claim as creditor of the impaired or insolvent 
 insurer.  Assets of the impaired or insolvent insurer 
 attributable to covered policies must be used to continue all 
 covered policies and pay all contractual obligations of the 
 impaired or insolvent insurer as required by sections 61B.18 to 
 61B.32.  Assets attributable to covered policies, as used in 
 this subdivision, are that proportion of the assets which the 
 reserves that should have been established for those policies 
 bear to the reserves that should have been established for all 
 policies of insurance written by the impaired or insolvent 
 insurer. 

    Subd. 3a.    Association access to insolvent insurer's 
 assets.  As a creditor of the impaired or insolvent insurer as 
 established in subdivision 3 of this section and consistent with 
 section 60B.46, the association and other similar associations 
 is entitled to receive a disbursement of assets out of the 
 marshalled assets, from time to time as the assets become 
 available to reimburse it, as a credit against contractual 
 obligations under sections 61B.18 to 61B.32.  If the liquidator 
 has not, within 120 days of a final determination of insolvency 
 of an insurer by the receivership court, made an application to 
 the court for the approval of a proposal to disburse assets out 
 of marshalled assets to guaranty associations having obligations 
 because of the insolvency, then the association shall be 
 entitled to make application to the receivership court for 
 approval of its own proposal to disburse these assets.  

    Subd. 4.    Prohibited sales practice.  No person, 
 including an insurer, agent, or affiliate of an insurer, shall 
 make, publish, disseminate, circulate, or place before the 
 public, or cause directly or indirectly, to be made, published, 
 disseminated, circulated, or placed before the public, in any 
 newspaper, magazine, or other publication, or in the form of a 
 notice, circular, pamphlet, letter, or poster, or over any radio 
 station or television station, or in any other way, an 
 advertisement, announcement, or statement, written or oral, 
 which uses the existence of the Minnesota life and health 
 insurance guaranty association for the purpose of sales, 
 solicitation, or inducement to purchase any form of insurance 
 covered by sections 61B.18 to 61B.32.  The notice required by 
 subdivision 8 is not a violation of this subdivision.  This 
 subdivision does not apply to the Minnesota life and health 
 insurance guaranty association or an entity that does not sell 
 or solicit insurance.  A person violating this section is guilty 
 of a misdemeanor. 

    Subd. 5.    Distribution to stockholders.  No 
 distribution to stockholders of an impaired domiciliary insurer 
 shall be made until the total amount of assessments levied by 
 the association with respect to the insurer have been fully 
 recovered by the association. 

    Subd. 6.    Reinstatement.  No insurer may be reinstated 
 to do business in this state until all payments of or on account 
 of the impaired insurer's contractual obligations by the 
 guaranty association, along with all expenses thereof and 
 interest on all such payments and expenses, shall have been 
 repaid to the guaranty association or a plan of repayment by the 
 impaired insurer shall have been approved by the association. 

    Subd. 7.    Notice concerning limitations and exclusions. 
  (a) No person, including an insurer, agent, or affiliate of 
 an insurer or agent, shall offer for sale in this state a 
 covered life insurance, annuity, or health insurance policy or 
 contract without delivering at the time of application for that 
 policy or contract a notice in the form specified in subdivision 
 8, or in a form approved by the commissioner under paragraph 
 (b), relating to coverage provided by the Minnesota life and 
 health insurance guaranty association.  The notice may be part 
 of the application.  A copy of the notice must be given to the 
 applicant.  The notice must be delivered to the applicant at the 
 time of application for the policy or contract, except that if 
 the application is not taken from the applicant in person, the 
 notice must be sent to the applicant within 72 hours after the 
 application is taken.  The person offering the policy or 
 contract shall document the fact that the notice was given at 
 the time of application or was sent within the specified time. 
 This does not require that the receipt of the notice be 
 acknowledged by the applicant. 

    (b) The association may prepare, and file with the 
 commissioner for approval, a form of notice as an alternative to 
 the form of notice specified in subdivision 8 describing the 
 general purposes and limitations of this chapter.  The form of 
 notice shall: 

    (1) state the name, address, and telephone number of the 
 Minnesota life and health insurance guaranty association; 

    (2) prominently warn the policy or contract holder that the 
 Minnesota life and health insurance guaranty association may not 
 cover the policy or, if coverage is available, it will be 
 subject to substantial limitations and exclusions and 
 conditioned on continued residence in the state; 

    (3) state that the insurer and its agents are prohibited by 
 law from using the existence of the Minnesota life and health 
 insurance guaranty association for the purpose of sales, 
 solicitation, or inducement to purchase any form of insurance; 

    (4) emphasize that the policy or contract holder should not 
 rely on coverage under the Minnesota life and health insurance 
 guaranty association when selecting an insurer; 

    (5) provide other information as directed by the 
 commissioner.  The commissioner may approve any form of notice 
 proposed by the association and, as to the approved form of 
 notice, the association may notify all member insurers by mail 
 that the form of notice is available as an alternative to the 
 notice specified in subdivision 8.  

    (c) A policy or contract not covered by the Minnesota Life 
 and Health Insurance Guaranty Association or the Minnesota 
 Insurance Guaranty Association must contain the following notice 
 in ten-point type, stamped in red ink or contrasting type on the 
 policy or contract and the application: 

    "THIS POLICY OR CONTRACT IS NOT PROTECTED BY THE MINNESOTA 
    LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION OR THE 
    MINNESOTA INSURANCE GUARANTY ASSOCIATION.  IN THE CASE OF 
    INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED.  ONLY THE 
    ASSETS OF THIS INSURER WILL BE AVAILABLE TO PAY YOUR CLAIM."

    This section does not apply to fraternal benefit societies 
 regulated under chapter 64B. 

    Subd. 8.    Form.  The form of notice referred to in 
 subdivision 7, paragraph (a), is as follows: 

                      ".................... 

                       .................... 

                       .................... 

                (insert name, current address, and 

                   telephone number of insurer) 

           NOTICE CONCERNING POLICYHOLDER RIGHTS IN AN 

          INSOLVENCY UNDER THE MINNESOTA LIFE AND HEALTH 

                INSURANCE GUARANTY ASSOCIATION LAW

    If the insurer that issued your life, annuity, or health 
 insurance policy becomes impaired or insolvent, you are entitled 
 to compensation for your policy from the assets of that insurer. 
 The amount you recover will depend on the financial condition of 
 the insurer. 

    In addition, residents of Minnesota who purchase life 
 insurance, annuities, or health insurance from insurance 
 companies authorized to do business in Minnesota are protected, 
 SUBJECT TO LIMITS AND EXCLUSIONS, in the event the insurer 
 becomes financially impaired or insolvent.  This protection is 
 provided by the Minnesota Life and Health Insurance Guaranty 
 Association. 

     Minnesota Life and Health Insurance Guaranty Association
                         (insert current
                  address and telephone number)

    The maximum amount the guaranty association will pay for 
 all policies issued on one life by the same insurer is limited 
 to $300,000.  Subject to this $300,000 limit, the guaranty 
 association will pay up to $300,000 in life insurance death 
 benefits, $100,000 in net cash surrender and net cash withdrawal 
 values for life insurance, $300,000 in health insurance 
 benefits, including any net cash surrender and net cash 
 withdrawal values, $100,000 in annuity net cash surrender and 
 net cash withdrawal values, $300,000 in present value of annuity 
 benefits for annuities which are part of a structured settlement 
 or for annuities in regard to which periodic annuity benefits, 
 for a period of not less than the annuitant's lifetime or for a 
 period certain of not less than ten years, have begun to be paid 
 on or before the date of impairment or insolvency, or if no 
 coverage limit has been specified for a covered policy or 
 benefit, the coverage limit shall be $300,000 in present value.  
 Unallocated annuity contracts issued to retirement plans, other 
 than defined benefit plans, established under section 401, 
 403(b), or 457 of the Internal Revenue Code of 1986, as amended 
 through December 31, 1992, are covered up to $100,000 in net 
 cash surrender and net cash withdrawal values, for Minnesota 
 residents covered by the plan provided, however, that the 
 association shall not be responsible for more than $7,500,000 in 
 claims from all Minnesota residents covered by the plan.  If 
 total claims exceed $7,500,000, the $7,500,000 shall be prorated 
 among all claimants.  These are the maximum claim amounts.  
 Coverage by the guaranty association is also subject to other 
 substantial limitations and exclusions and requires continued 
 residency in Minnesota.  If your claim exceeds the guaranty 
 association's limits, you may still recover a part or all of 
 that amount from the proceeds of the liquidation of the 
 insolvent insurer, if any exist.  Funds to pay claims may not be 
 immediately available.  The guaranty association assesses 
 insurers licensed to sell life and health insurance in Minnesota 
 after the insolvency occurs.  Claims are paid from this 
 assessment. 

    THE COVERAGE PROVIDED BY THE GUARANTY ASSOCIATION IS NOT A 
 SUBSTITUTE FOR USING CARE IN SELECTING INSURANCE COMPANIES THAT 
 ARE WELL MANAGED AND FINANCIALLY STABLE.  IN SELECTING AN 
 INSURANCE COMPANY OR POLICY, YOU SHOULD NOT RELY ON COVERAGE BY 
 THE GUARANTY ASSOCIATION. 

    THIS NOTICE IS REQUIRED BY MINNESOTA STATE LAW TO ADVISE 
 POLICYHOLDERS OF LIFE, ANNUITY, OR HEALTH INSURANCE POLICIES OF 
 THEIR RIGHTS IN THE EVENT THEIR INSURANCE CARRIER BECOMES 
 FINANCIALLY INSOLVENT.  THIS NOTICE IN NO WAY IMPLIES THAT THE 
 COMPANY CURRENTLY HAS ANY TYPE OF FINANCIAL PROBLEMS.  ALL LIFE, 
 ANNUITY, AND HEALTH INSURANCE POLICIES ARE REQUIRED TO PROVIDE 
 THIS NOTICE." 

    Additional language may be added to the notice if approved 
 by the commissioner prior to its use in the form.  This section 
 does not apply to fraternal benefit societies regulated under 
 chapter 64B. 

    Subd. 9.    Combination fixed-variable policy.  The 
 notice required in subdivision 8 must clearly describe what 
 portions of a combination fixed-variable policy are not covered 
 by the Minnesota life and health insurance guaranty 
 association.  The notice requirements specified in subdivision 
 7, paragraph (c), do not apply to a combination fixed-variable 
 policy. 

    Subd. 10.    Effect of notices.  The distribution, 
 delivery, contents, or interpretation of the notices described 
 in subdivision 7, 8, or 9 shall not mean that either the policy 
 or contract, or the owner or holder thereof, would be covered in 
 the event of the impairment or insolvency of a member insurer if 
 coverage is not otherwise provided by sections 61B.18 to 61B.32. 
 Failure to receive the notice does not give the policyholder, 
 contract holder, certificate holder, insured, owner, 
 beneficiaries, assignees, or payees any greater rights than 
 those provided by sections 61B.18 to 61B.32. 

    HIST: 1993 c 319 s 13; 1995 c 258 s 19,20; 1996 c 446 art 1 s 
 21; 1999 c 227 s 22; 2001 c 142 s 32-34