1999 Minnesota Statutes

     62C.09 Financial requirements. 

    Subdivision 1.  The commissioner shall not issue a 
 certificate of authority to any service plan corporation 
 hereafter organized unless the corporation has met all legal 
 requirements and, if organized on a capital stock basis unless 
 the corporation has paid up capital stock of not less than 
 $200,000 and an initial surplus of not less than $200,000, or, 
 if organized on a membership basis, unless the corporation has 
 an initial surplus of not less than $400,000. 

    Subd. 2.  A service plan corporation in existence on August 
 1, 1971, or hereafter formed shall establish and maintain 
 reserves for claims in process, incomplete and unreported 
 claims, retroactive cost adjustments to providers, 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 service 
 plan corporation shall never reduce its capital, and 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 $100,000 or 
 16-2/3 percent of the sum of all health service claims incurred, 
 and administrative expenses in connection therewith, during the 
 most recent calendar year.  Corporations whose service plans are 
 limited to the provision of dental services or vision care 
 service only and all of whose service plan contracts have limits 
 for specified benefits and limits for average maximum benefits 
 of not greater than $1,000 per year per insured, shall maintain 
 a surplus, in addition to all reserves established, of not less 
 than the greater of the initial surplus reduced by $100,000 or 
 ten percent of the sum of all health service claims incurred, 
 and administrative expenses in connection therewith, during the 
 previous calendar year; but the minimum shall not be required to 
 exceed the financial requirements for surplus required for 
 insurance companies operating upon the stock plan under section 
 60A.07, subdivision 5a as to those companies described in 
 section 60A.06, subdivision 1, clause 5(a).  The surplus shall 
 not exceed 33-1/3 percent of the sum of all health service 
 claims incurred, and administrative expenses in connection 
 therewith, during the most current calendar year unless such 
 amount is less than the initial surplus reduced by $100,000.  
 The percentage amounts shall be determined from a financial 
 statement and certified audit filed annually and subject to 
 verification of an examination by the commissioner. 

    Subd. 4.  If the surplus is less than the required minimum 
 or more than the required maximum, or if a service plan 
 corporation does not have the required reserves or its reserves 
 are not properly computed, operations shall be adjusted to 
 correct the condition, according to a written plan proposed by 
 the corporation and approved by the commissioner.  If a service 
 plan corporation does not propose measures to correct its 
 reserve or surplus within a reasonable time, if a 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 such corporation under chapter 60B, or under the 
 suspension and penalty provisions of Laws 1971, chapter 568. 

    HIST: 1971 c 568 s 9; 1977 c 261 s 1; 1977 c 405 s 1