62I.06 POLICY FORMS; PREMIUM RATE.
Subdivision 1. Requirement.
The policies and contracts of coverage issued pursuant to this
chapter shall contain the usual and customary provisions of similar insurance policies issued by
private insurance companies. If a standard form is used in the private marketplace for any type of
coverage that is to be extended by the association, then the association shall use that form. If there
are varying types of forms used in the marketplace the association may choose to use a standard
policy form issued by a service organization or other entity who commonly prepares standardized
types of forms. If the board determines that neither of these alternatives is appropriate, then it
shall adopt a policy form based upon the terms and conditions of the policies used for this type of
coverage that are the most commonly used in the private market. As far as practical the board
shall attempt to adopt forms that are consistent with the practice in the private market. No policy
forms shall be used by the association unless it has been filed with the commissioner, and the
commissioner may disapprove the form within 30 days if the commissioner determines that
it is misleading, it violates public policy, or for any reason that the commissioner would be
empowered to reject a similar form filed by a private company.
Subd. 2. Cancellation.
If the insured fails to pay a stabilization reserve fund charge the
association may cancel the policy by mailing or delivering to the insured at the insured's address
shown on the policy at least ten days' written notice stating the date that the cancellation is
Subd. 3. Rates.
The rates, rating plan, rating rules, rating classification and territories
applicable to insurance written by the association and related statistics are subject to chapter 70A.
Rates shall be on an actuarially sound basis, giving consideration to the group retrospective rating
plan. The commissioner shall take all appropriate steps to make available, upon request of the
association, loss and expense experience of insurers previously writing or currently writing
insurance of any type the association offers or intends to offer.
Subd. 4. Approval.
All policies issued by the association are subject to the group
retrospective rating plan approved by the commissioner under which the final premium for the
insureds of the association, as a group, will be equal to the administrative expenses, loss and loss
adjustment expenses and taxes, plus a reasonable allowance for contingency and servicing. If the
board of directors feels it is appropriate and in the interest of fairness and equity, the insureds
of the association may be broken down into more than one group. The rating plan may provide
for varying rates within the rating plan for such groups as their relative burden to the group as
a whole would merit. Policyholders shall be given full credit for all investment income, net of
expenses and reasonable management fee on policyholder supplied funds. The standard premium,
before retrospective adjustment, for each policy issued by the association shall be established
for portions of the policy period coinciding with the association's fiscal year on the basis of the
association rates, rating plans, rating rules, rating classifications and territories then in effect.
The maximum premium for all policyholders of the association as a group shall be limited as
provided in sections
Subd. 5. Examinations.
The commissioner shall examine the business of the association as
often as is appropriate to insure that the group retrospective rating plan is operating in a manner
consistent with this chapter or other Minnesota laws. If it is found that the operation is deficient
or inconsistent with this chapter or other Minnesota laws the commissioner may order the
association to take corrective action.
Subd. 6. Deficits.
The association shall certify to the commissioner the estimated amount
of any deficit remaining after the stabilization reserve fund has been exhausted and payment of
the maximum final premium for all policyholders of the association. Within 60 days after the
certification, the commissioner shall authorize the association to recover the members' respective
shares of the deficit by assessing all members an amount sufficient to fully fund the obligations of
the association. The assessment of each member shall be determined in the manner provided in
. An assessment made pursuant to this section shall be deductible by the member
from past or future premium taxes due the state.
Subd. 7. Amendments to rating plan.
In addition to the usual manner of amending the
rating plan set forth in this section and section
, the following procedure may also be used:
(1) Any person may, by written petition served upon the commissioner of commerce request
that a hearing be held to amend the rating plan, or any part of the rating plan.
(2) The commissioner shall forward a copy of the petition to the chief administrative
law judge within three business days of its receipt. The chief administrative law judge shall,
within three business days of receipt of the copy of the petition or a request for hearing by the
commissioner, set a hearing date, assign an administrative law judge to hear the matter, and notify
the commissioner of the hearing date and the administrative law judge assigned to hear the matter.
The hearing date must be set not less than 60 days nor more than 90 days from the date of receipt
of the petition by the commissioner or the date of the commissioner's request for hearing if the
commissioner is the person requesting a hearing.
(3) The commissioner shall publish a notice of the hearing in the State Register at least 30
days before the hearing date. The notice should be similar to that used for rulemaking under the
Administrative Procedure Act. Approval of the notice by the administrative law judge is not
(4) The hearing and all matters which occur after the hearing are a contested case under
chapter 14. Within 45 days from the commencement of the hearing and within 15 days of the
completion of the hearing the administrative law judge shall submit a report to the commissioner
of commerce. The parties, or the administrative law judge, if the parties cannot agree, shall adjust
all time requirements under the contested case procedure to conform with the 45-day requirement.
(5) The commissioner shall render a decision within ten business days of the receipt of the
administrative law judge's report.
(6) If all parties to the proceeding agree, any of the previous requirements may be waived or
(7) A petition for a hearing to amend the rating plan or any part of the rating plan received by
the commissioner within 180 days of the date of the commissioner's decision in a prior proceeding
to amend the rating plan is invalid and requires no action provided the petition involves the same
rates as the previous hearing. If the petition involves matters in addition to those dealt with in the
previous hearing, then the additional matters shall be treated as a separate petition for hearing
and a hearing may be held on those matters.
History: 1986 c 455 s 25