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Minnesota Legislature

Office of the Revisor of 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.
History: 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