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    Subdivision 1. Definitions. For purposes of this section, the following terms have the
meanings given them:
(a) "fixed indemnity policy" is a policy form, other than an accidental death and
dismemberment policy, a disability income policy, or a long-term care policy as defined in section
62A.46, subdivision 2, that pays a predetermined, specified, fixed benefit for services provided.
Claim costs under these forms are generally not subject to inflation, although they may be
subject to changes in the utilization of health care services. For policy forms providing both
expense-incurred and fixed benefits, the policy form is a fixed indemnity policy if 50 percent or
more of the total claims are for predetermined, specified, fixed benefits;
(b) "guaranteed renewable" means that, during the renewal period (to a specified age)
renewal cannot be declined nor coverage changed by the insurer for any reason other than
nonpayment of premiums, fraud, or misrepresentation, but the insurer can revise rates on a class
basis upon approval by the commissioner;
(c) "noncancelable" means that, during the renewal period (to a specified age) renewal
cannot be declined nor coverage changed by the insurer for any reason other than nonpayment of
premiums, fraud, or misrepresentation and that rates cannot be revised by the insurer. This includes
policies that are guaranteed renewable to a specified age, such as 60 or 65, at guaranteed rates; and
(d) "average annualized premium" means the average of the estimated annualized premium
per covered person based on the anticipated distribution of business using all significant criteria
having a price difference, such as age, sex, amount, dependent status, mode of payment, and
rider frequency. For filing of rate revisions, the amount is the anticipated average assuming the
revised rates have fully taken effect.
    Subd. 2. Applicability. This section applies to individual or group policies, certificates, or
other evidence of coverage meeting the definition of a fixed indemnity policy, offered, issued, or
renewed, to provide coverage to a Minnesota resident.
    Subd. 3. Minimum loss ratio standards. Notwithstanding section 62A.02, subdivision 3,
relating to loss ratios, the minimum loss ratios for fixed indemnity policies are:
(1) as shown in the following table:

Type of Coverage
Renewal Provision

Guaranteed Renewable


(2) for policies or certificates where the average annualized premium is less than $1,000, the
average annualized premium less $30, multiplied by the required loss ratio in clause (1), divided
by the average annualized premium. However, in no event may the minimum loss ratio be less
than the required loss ratio from clause (1) minus ten percent.
The commissioner of commerce may adjust the constant dollar amounts provided in clause
(2) on January 1 of any year, based upon changes in the CPI-U, the Consumer Price Index for
all urban consumers, published by the United States Department of Labor, Bureau of Labor
Statistics. Adjustments must be in increments of $5 and must not be made unless at least that
amount of adjustment is required to each amount.
All rate filings must include a demonstration that the rates are not excessive. Rates are not
excessive if the anticipated loss ratio and the lifetime anticipated loss ratio meet or exceed the
minimum loss ratio standard in this subdivision.
    Subd. 4. Renewal provision. An insurer may only issue or renew an individual policy on a
guaranteed renewable or noncancelable basis.
    Subd. 5. Supplemental filings. Each insurer that has fixed indemnity policies in force
in this state shall, upon request by the commissioner, submit, in a form prescribed by the
commissioner, experience data showing its incurred claims, earned premiums, incurred to earned
loss ratio, and the ratio of the actual loss ratio to the expected loss ratio for each fixed indemnity
policy form in force in Minnesota. The experience data must be provided on both a Minnesota
only and a national basis. If in the opinion of the company's actuary, the deviation of the actual
loss ratio from the expected loss ratio for a policy form is due to unusual reserve fluctuations,
economic conditions, or other nonrecurring conditions, the insurer should also file that opinion
with appropriate justification.
If the data submitted does not confirm that the insurer has satisfied the loss ratio requirements
of this section, the commissioner shall notify the insurer in writing of the deficiency. The insurer
shall have 30 days from the date of receipt of the commissioner's notice to file amended rates
that comply with this section or a request for an exemption with appropriate justification. If the
insurer fails to file amended rates within the prescribed time and the commissioner does not
exempt the policy form from the need for a rate revision, the commissioner shall order that the
insurer's filed rates for the nonconforming policy be reduced to an amount that would have
resulted in a loss ratio that complied with this section had it been in effect for the reporting
period of the supplement. The insurer's failure to file amended rates within the specified time of
the issuance of the commissioner's order amending the rates does not preclude the insurer from
filing an amendment of its rates at a later time.
    Subd. 6. Penalties. Each sale of a policy that does not comply with the loss ratio requirements
of this section is subject to the penalties in sections 72A.17 to 72A.32.
    Subd. 7. Solicitations by mail or media advertisement. For purposes of this section, fixed
indemnity policies issued without the use of an agent as a result of solicitations of individuals
through the mail or mass media advertising, including both print and broadcast advertising,
must be treated as group policies.
History: 1991 c 325 art 21 s 5; 1995 c 258 s 24; 1996 c 446 art 1 s 26; 1999 c 177 s 38

Official Publication of the State of Minnesota
Revisor of Statutes