Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1994, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 485-H.F.No. 1094
An act relating to insurance; regulating fees, data
collection, coverages, notice provisions, enforcement
provisions, the Minnesota joint underwriting
association and the liquor liability assigned risk
plan; enacting the NAIC model regulation relating to
reporting requirements for licensees seeking to do
business with certain unauthorized multiple employer
welfare arrangements; making various technical
changes; amending Minnesota Statutes 1992, sections
45.024, subdivision 2; 59A.12, by adding a
subdivision; 60A.02, by adding a subdivision; 60A.03,
subdivision 5; 60A.052, subdivision 2; 60A.082;
60A.085; 60A.14, subdivision 1; 60A.19, subdivision 4;
60A.206, subdivision 3; 60A.21, subdivision 2; 60A.36,
by adding a subdivision; 60K.06; 60K.14, subdivision
4; 61A.07; 61A.071; 61A.074, subdivision 1; 61A.08;
61A.09, subdivision 1; 61A.092, by adding a
subdivision; 61A.12, subdivision 1; 61A.282,
subdivision 2; 62A.047; 62A.148; 62A.153; 62A.43,
subdivision 4; 62E.05; 62E.19, subdivision 1; 62H.01;
62I.02; 62I.03; 62I.07; 62I.13, subdivisions 1 and 2;
62I.20; 65A.01, subdivision 1; 65A.29, subdivision 7;
65B.49, subdivision 3; 72A.20, subdivision 29, and by
adding a subdivision; 72A.201, subdivision 9; 72A.41,
subdivision 1; 72B.03, subdivision 1; 72B.04,
subdivision 2; 176.181, subdivision 2; and 340A.409,
subdivisions 2 and 3; Minnesota Statutes 1993
Supplement, section 61A.02, subdivision 2; Laws 1993,
chapter 372, section 8; proposing coding for new law
in Minnesota Statutes, chapters 45; 61A; 62A; and 62H;
repealing Minnesota Statutes 1992, sections 72A.45;
and 72B.07; Minnesota Rules, parts 2780.4800;
2783.0010; 2783.0020; 2783.0030; 2783.0040; 2783.0050;
2783.0060; 2783.0070; 2783.0080; 2783.0090; and
2783.0100.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. [45.015] [PROOF OF MAILING.]
In any provision of law related to the duties and
responsibilities entrusted to the commissioner, and unless a
different method is specified, when a person is required to
provide notice or perform a similar act, this action may be
accomplished by mail, and proof of mailing is sufficient to
prove compliance with the requirement.
Sec. 2. Minnesota Statutes 1992, section 45.024,
subdivision 2, is amended to read:
Subd. 2. [DELEGATION.] The commissioner of commerce may
delegate to a deputy commissioner, assistant commissioner, or
director the exercise of the commissioner's statutory powers and
duties, including the authority to decide and issue final orders
in contested cases, rulemaking proceedings, and other hearings
held under chapter 14.
This delegation is in addition to, and does not in any way
limit, the commissioner's authority to delegate pursuant to
section 15.06, subdivision 6, or any other law.
Sec. 3. Minnesota Statutes 1992, section 59A.12, is
amended by adding a subdivision to read:
Subd. 5. Whenever an insurer, after having been advised
that an insurance policy has been financed by a premium finance
agreement, returns an unearned premium on such a policy, the
insurer shall deliver or mail to the policyholder a notice that
includes the following information: the amount of premium paid,
the term of the policy, the date coverage began and ceased, the
amount of the unearned premium, the name of the party receiving
the funds, and a statement of the obligation of the premium
finance company to return within 30 days of receipt of the
unearned premium any amount of the unearned premium in excess of
the amount owed by the policyholder to the premium finance
company.
Sec. 4. Minnesota Statutes 1992, section 60A.02, is
amended by adding a subdivision to read:
Subd. 28. [GROUP INSURANCE.] "Group insurance" means that
form of insurance coverage sponsored by:
(1) an employer covering not less than two employees and
which may include the employees' dependents, consisting of
husband, wife, children, and actual dependents residing in the
household, written under a master policy issued to any employer,
or group of employers who have joined into an arrangement for
the purposes of providing the employees insurance for their
individual benefit. Employees' dependents, consisting of
husband, wife, children, and actual dependents residing in the
same household, are not employees for purposes of this
definition except for a spouse employed on a regular full-time
basis by the same employer. This clause does not apply to
chapter 62L;
(2) an association to provide insurance to its members; or
(3) a creditor to provide life insurance to insure its
debtors in connection with real estate mortgage loans, in an
amount not to exceed the actual or scheduled amount of their
indebtedness.
Sec. 5. Minnesota Statutes 1992, section 60A.03,
subdivision 5, is amended to read:
Subd. 5. [EXAMINATION FEES AND EXPENSES.] When any
visitation, examination, or appraisal is made by order of the
commissioner, the company being examined, visited, or appraised,
including, but not limited to, fraternals, township mutuals,
reciprocal exchanges, nonprofit service plan corporations,
health maintenance organizations, vendors of risk management
services licensed under section 60A.23, or self-insurance plans
or pools established under section 176.181 or 471.982, shall pay
to the department of commerce the necessary expenses of the
persons engaged in the examination, visit, appraisal, or desk
audits of annual statements and records performed by the
department other than on the company premises plus the per diem
salary fees of the employees of the department of commerce who
are conducting or participating in the examination, visitation,
appraisal, or desk audit. The per diem salary fees may be based
upon the approved examination fee schedules of the National
Association of Insurance Commissioners or otherwise determined
by the commissioner. All of these fees and expenses must be
paid into the department of commerce revolving fund.
Sec. 6. Minnesota Statutes 1992, section 60A.052,
subdivision 2, is amended to read:
Subd. 2. [SUMMARY SUSPENSION OR REVOCATION OF AUTHORITY OR
CENSURE.] If the commissioner determines that one of the
conditions listed in subdivision 1 exists, the commissioner may
issue an order requiring the insurance company to show cause why
any or all of the following should not occur: (1) revocation or
suspension of any or all certificates of authority granted to
the foreign or domestic insurance company or its agent; (2)
censuring of the insurance company; or (3) the imposition of a
civil penalty. The order shall be calculated to give reasonable
notice of the time and place for hearing thereon, and shall
state the reasons for the entry of the order. The commissioner
may by order summarily suspend or revoke a certificate pending
final determination of any order to show cause. If a
certificate is suspended or revoked pending final determination
of an order to show cause, a hearing on the merits shall be held
within 30 days of the issuance of the summary order. All
hearings shall be conducted in accordance with chapter 14. The
insurer may waive its right to the hearing. If the insurer is
under the supervision or control of the insurance department of
the insurer's state of domicile, that insurance department,
acting on behalf of the insurer, may waive the insurer's right
to the hearing. After the hearing, the commissioner shall enter
an order disposing of the matter as the facts require. If the
insurance company fails to appear at a hearing after having been
duly notified of it, the company shall be considered in default,
and the proceeding may be determined against the company upon
consideration of the order to show cause, the allegations of
which may be considered to be true.
Sec. 7. Minnesota Statutes 1992, section 60A.082, is
amended to read:
60A.082 [GROUP INSURANCE; BENEFITS CONTINUED IF INSURER
CHANGED.]
A person covered under group life, group accidental death
and dismemberment, group disability income or group medical
expense insurance, shall not be denied benefits to which the
person is otherwise entitled solely because of a change in the
insurance company writing the coverage or in the group contract
applicable to the person. In the case of one or more carriers
replacing or remaining in place after one or more plans have
been discontinued, each carrier shall accept any person who was
covered under the discontinued plan or plans without denial of
benefits to which other persons in the group covered by that
carrier are entitled. "Insurance company" shall include a
service plan corporation under chapter 62C or 62D.
For purposes of satisfying any preexisting condition
limitation, the insurance company shall credit the period of
time the person was covered by the prior plan, if the person has
maintained continuous coverage.
The commissioner shall promulgate rules to carry out this
section. Nothing in this section shall preclude an employer,
union or association from reducing the level of benefits under
any group insurance policy or plan.
Sec. 8. Minnesota Statutes 1992, section 60A.085, is
amended to read:
60A.085 [CANCELLATION OF GROUP COVERAGE; NOTIFICATION TO
COVERED PERSONS.]
(a) No cancellation of any group life, group accidental
death and dismemberment, group disability income, or group
medical expense policy, plan, or contract is effective unless
the insurer has made a good faith effort to notify all covered
persons of the cancellation at least 30 days before the
effective cancellation date. For purposes of this section, an
insurer has made a good faith effort to notify all covered
persons if the insurer has notified all the persons included on
the list required by paragraph (b) at the home address given and
only if the list has been updated within the last 12 months.
(b) At the time of the application for coverage subject to
paragraph (a), the insurer shall obtain an accurate list of the
names and home addresses of all persons to be covered. The
insurer shall obtain an update of the list at least once during
each subsequent 12-month period while the policy, plan, or
contract is in force.
(c) Paragraph (a) does not apply if the group policy, plan,
or contract is replaced by a substantially similar policy, plan,
or contract.
Sec. 9. Minnesota Statutes 1992, section 60A.14,
subdivision 1, is amended to read:
Subdivision 1. [FEES OTHER THAN EXAMINATION FEES.] In
addition to the fees and charges provided for examinations, the
following fees must be paid to the commissioner for deposit in
the general fund:
(a) by township mutual fire insurance companies:
(1) for filing certificate of incorporation $25 and
amendments thereto, $10;
(2) for filing annual statements, $15;
(3) for each annual certificate of authority, $15;
(4) for filing bylaws $25 and amendments thereto, $10.
(b) by other domestic and foreign companies including
fraternals and reciprocal exchanges:
(1) for filing certified copy of certificate of articles of
incorporation, $100;
(2) for filing annual statement, $225;
(3) for filing certified copy of amendment to certificate
or articles of incorporation, $100;
(4) for filing bylaws, $75 or amendments thereto, $75;
(5) for each company's certificate of authority, $575,
annually.
(c) the following general fees apply:
(1) for each certificate, including certified copy of
certificate of authority, renewal, valuation of life policies,
corporate condition or qualification, $25;
(2) for each copy of paper on file in the commissioner's
office 50 cents per page, and $2.50 for certifying the same;
(3) for license to procure insurance in unadmitted foreign
companies, $575;
(4) for receiving and forwarding each notice, proof of
loss, summons, complaint or other process served upon the
commissioner of commerce, as attorney for service of process
upon any nonresident agent or insurance company, including
reciprocal exchanges, $15 plus the cost of effectuating service
by certified mail, which amount must be paid by the party
serving the notice and may be taxed as other costs in the
action;
(5) for valuing the policies of life insurance companies,
one cent per $1,000 of insurance so valued, provided that the
fee shall not exceed $13,000 per year for any company. The
commissioner may, in lieu of a valuation of the policies of any
foreign life insurance company admitted, or applying for
admission, to do business in this state, accept a certificate of
valuation from the company's own actuary or from the
commissioner of insurance of the state or territory in which the
company is domiciled;
(6) (5) for receiving and filing certificates of policies
by the company's actuary, or by the commissioner of insurance of
any other state or territory, $50;
(7) for issuing an initial license to an individual agent,
$30 per license, for issuing an initial agent's license to a
partnership or corporation, $100, and for issuing an amendment
(variable annuity) to a license, $50, and for renewal of
amendment, $25;
(8) (6) for each appointment of an agent filed with the
commissioner, a domestic insurer shall remit $5 and all other
insurers shall remit $3;
(9) for renewing an individual agent's license, $30 per
year per license, and for renewing a license issued to a
corporation or partnership, $60 per year;
(10) for issuing and renewing a surplus lines agent's
license, $250;
(11) for issuing duplicate licenses, $10;
(12) for issuing licensing histories, $20;
(13) (7) for filing forms and rates, $50 per filing;
(14) (8) for annual renewal of surplus lines insurer
license, $300.
The commissioner shall adopt rules to define filings that
are subject to a fee.
Sec. 10. Minnesota Statutes 1992, section 60A.19,
subdivision 4, is amended to read:
Subd. 4. [FEES SERVICE OF PROCESS.] The commissioner shall
be entitled to charge and receive a fee prescribed by section
60A.14, subdivision 1, paragraph (c), clause (4), for each
notice, proof of loss, summons, or other process served under
the provisions of this subdivision and subdivision 3, to be paid
by the persons serving the same. The service of process
authorized by this section shall be made in compliance with
section 45.028, subdivision 2.
Sec. 11. Minnesota Statutes 1992, section 60A.206,
subdivision 3, is amended to read:
Subd. 3. [STANDARDS TO BE MET BY INSURERS.] (a) The
commissioner shall recognize the insurer as an eligible surplus
lines insurer when satisfied that the insurer is in a stable,
unimpaired financial condition and that the insurer is qualified
to provide coverage in compliance with sections 60A.195 to
60A.209. If filed with full supporting documentation before
July 1 of any year, applications submitted under subdivision 2
shall be acted upon by the commissioner before December 31 of
the year of submission.
(b) The commissioner shall not authorize an insurer as an
eligible surplus lines insurer unless the insurer continuously
maintains capital and surplus of at least $3,000,000 and
transaction of business by the insurer is not hazardous,
financially or otherwise, to its policyholders, its creditors,
or the public. Each alien surplus lines insurer shall have
current financial data filed with the National Association of
Insurance Commissioners Nonadmitted Insurers Information Office.
(c) Eligible surplus lines insurers domiciled within the
United States shall file an annual statement and an annual
financial audit, under the terms and conditions of section
60A.13, subdivisions 1, 3a, and 6, and are subject to the
penalties of section 72A.061, and are subject to section 60A.03,
subdivision 5, in regard to those requirements. The
commissioner also has the powers provided in section 60A.13,
subdivision 2, in regard to eligible surplus lines insurers.
(d) Eligible surplus lines insurers domiciled outside the
United States shall file an annual statement on the standard
nonadmitted insurers information office financial reporting
format as prescribed by the National Association of Insurance
Commissioners and an annual financial audit performed by an
independent accounting firm.
Sec. 12. Minnesota Statutes 1992, section 60A.21,
subdivision 2, is amended to read:
Subd. 2. [SERVICE OF PROCESS UPON UNAUTHORIZED INSURER.]
(1) Any of the following acts in this state effected by mail or
otherwise by an unauthorized foreign or alien insurer: (a) the
issuance or delivery of contracts of insurance to residents of
this state or to corporations authorized to do business therein;
(b) the solicitation of applications for such contracts; (c) the
collection of premiums, membership fees, assessments, or other
considerations for such contracts; or (d) any other transaction
of insurance business, is equivalent to and shall constitute an
appointment by such insurer of the commissioner of commerce and
the commissioner's successor or successors in office to be its
true and lawful attorney upon whom may be served all lawful
process in any action, suit, or proceeding instituted by or on
behalf of an insured or beneficiary arising out of any such
contract of insurance and any such act shall be signification of
its agreement that such service of process is of the same legal
force and validity as personal service of process in this state
upon such insurer.
(2) Such service of process shall be made in compliance
with section 45.028, subdivision 2 and the payment of a filing
fee as prescribed by section 60A.14, subdivision 1, paragraph
(c), clause (4).
(3) Service of process in any such action, suit, or
proceeding shall in addition to the manner provided in clause
(2) of this subdivision be valid if served upon any person
within this state who, in this state on behalf of such insurer,
is: (a) soliciting insurance, or (b) making, issuing, or
delivering any contract of insurance, or (c) collecting or
receiving any premium, membership fee, assessment, or other
consideration for insurance; and if a copy of such process is
sent within ten days thereafter by certified mail by the
plaintiff or plaintiff's attorney to the defendant at the last
known principal place of business of the defendant and the
defendant's receipt, or the receipt issued by the post office
with which the letter is certified showing the name of the
sender of the letter and the name and address of the person to
whom the letter is addressed, and the affidavit of the plaintiff
or plaintiff's attorney showing a compliance herewith are filed
with the administrator of the court in which such action is
pending on or before the date the defendant is required to
appear or within such further time as the court may allow.
(4) No plaintiff or complainant shall be entitled to a
judgment by default under this subdivision until the expiration
of 30 days from the date of the filing of the affidavit of
compliance.
(5) Nothing in this subdivision contained shall limit or
abridge the right to serve any process, notice, or demand upon
any insurer in any other manner now or hereafter permitted by
law.
(6) The provisions of this section shall not apply to
surplus line insurance lawfully effectuated under Minnesota law,
or to reinsurance, nor to any action or proceeding against an
unauthorized insurer arising out of:
(a) Wet marine and transportation insurance;
(b) Insurance on or with respect to subjects located,
resident, or to be performed wholly outside this state, or on or
with respect to vehicles or aircraft owned and principally
garaged outside this state;
(c) Insurance on property or operations of railroads
engaged in interstate commerce; or
(d) Insurance on aircraft or cargo of such aircraft, or
against liability, other than employer's liability, arising out
of the ownership, maintenance, or use of such aircraft, where
the policy or contract contains a provision designating the
commissioner as its attorney for the acceptance of service of
lawful process in any action or proceeding instituted by or on
behalf of an insured or beneficiary arising out of any such
policy, or where the insurer enters a general appearance in any
such action.
Sec. 13. Minnesota Statutes 1992, section 60A.36, is
amended by adding a subdivision to read:
Subd. 5. [RESCISSION.] (a) No insurer may rescind or void
a contract of liability or property insurance unless there was
material misrepresentation, material omission, or fraud made by
or with the knowledge of the insured in obtaining the contract
or in pursuing a claim under the policy.
(b) No misrepresentation or omission shall be material
unless knowledge by the insurer of the facts misrepresented or
omitted would have led to a refusal by the insurer to make such
a contract. In determining the question of materiality,
evidence of the practice of the insurer with respect to the
acceptance or rejection of similar risks shall be admissible.
(c) For purposes of this section, a representation is a
statement as to past or present fact, made to an insurer or the
insurer's agent by the applicant as an inducement for issuing a
contract of commercial liability or property insurance. A
misrepresentation is a false representation, and the facts
misrepresented are those facts which make the representation
false.
(d) This subdivision does not limit the right to cancel the
policy prospectively for the reasons stated in subdivision 1,
clause (2).
Sec. 14. Minnesota Statutes 1992, section 60K.06, is
amended to read:
60K.06 [RENEWAL FEE FEES.]
Subdivision 1. [RENEWAL FEES.] (a) Each agent licensed
pursuant to section 60K.03 shall annually pay in accordance with
the procedure adopted by the commissioner a renewal fee as
prescribed by section 60A.14, subdivision 1, paragraph (c),
clause (10).
(b) Every agent, corporation, and partnership license
expires on October 31 of the year for which period a license is
issued.
(c) Persons whose applications have been properly and
timely filed who have not received notice of denial of renewal
are approved for renewal and may continue to transact business
whether or not the renewed license has been received on or
before November 1. Applications for renewal of a license are
timely filed if received by the commissioner on or before
October 15 of the year due, on forms duly executed and
accompanied by appropriate fees. An application mailed is
considered timely filed if addressed to the commissioner, with
proper postage, and postmarked by October 15.
(d) The commissioner may issue licenses for agents,
corporations, or partnerships for a three-year period. If
three-year licenses are issued, the fee is three times the
annual license fee.
Subd. 2. [LICENSING FEES.] (a) In addition to the fees and
charges provided for examinations, each agent licensed pursuant
to section 60K.03 shall pay to the commissioner:
(1) for issuing an initial license to an individual agent,
$30 per year;
(2) for issuing an initial agent's license to a partnership
or corporation, $100 per year;
(3) for issuing an amendment (variable annuity) to a
license, $50 per year;
(4) for renewing an amendment, $25 per year;
(5) for renewing an individual agent's license, $30 per
year;
(6) for renewing a license issued to a corporation or
partnership, $60 per year;
(7) for issuing and renewing a surplus lines agent's
license, $250 per year;
(8) for issuing duplicate licenses, $10.
(b) Every agent, corporation, and partnership license
expires on October 31.
(c) Persons whose applications have been properly and
timely filed who have not received notice of denial of renewal
are approved for renewal and may continue to transact business
whether or not the renewed license has been received on or
before November 1. Applications for renewal of a license are
timely filed if received by the commissioner on or before
October 15 of the year due, on forms duly executed and
accompanied by appropriate fees. An application mailed is
considered timely filed if addressed to the commissioner, with
proper postage, and postmarked by October 15.
(d) All fees shall be retained by the commissioner and
shall be nonreturnable, except that an overpayment of any fee
shall be the subject of a refund upon proper application.
Sec. 15. Minnesota Statutes 1992, section 60K.14,
subdivision 4, is amended to read:
Subd. 4. [SUITABILITY OF INSURANCE.] In recommending the
purchase of any life, endowment, individual accident and
sickness, long-term care, annuity, life-endowment, or Medicare
supplement insurance to a customer, an agent must have
reasonable grounds for believing that the recommendation is
suitable for the customer and must make reasonable inquiries to
determine suitability. The suitability of a recommended
purchase of insurance will be determined by reference to the
totality of the particular customer's circumstances, including,
but not limited to, the customer's income, the customer's need
for insurance, and the values, benefits, and costs of the
customer's existing insurance program, if any, when compared to
the values, benefits, and costs of the recommended policy or
policies.
Sec. 16. Minnesota Statutes 1993 Supplement, section
61A.02, subdivision 2, is amended to read:
Subd. 2. [APPROVAL REQUIRED.] No policy or certificate of
life insurance or annuity contract, issued to an individual,
group, or multiple employer trust, nor any rider of any kind or
description which is made a part thereof shall be issued or
delivered in this state, or be issued by a life insurance
company organized under the laws of this state, until the form
of the same has been approved by the commissioner. In making a
determination under this section, the commissioner may require
the insurer to provide rates and advertising materials related
to policies or contracts, certificates, or similar evidence of
coverage issued or delivered in this state.
This section applies to a policy, certificate of insurance,
or similar evidence of coverage issued to a Minnesota resident
or issued to provide coverage to a Minnesota resident. This
section does not apply to a certificate of insurance or similar
evidence of coverage that meets the conditions of section
61A.093, subdivision 2.
Sec. 17. Minnesota Statutes 1992, section 61A.07, is
amended to read:
61A.07 [PROHIBITED PROVISIONS.]
No policy of life insurance shall be issued or delivered in
this state, or be issued by a life insurance company organized
under the laws of this state, if it contains a provision:
(1) for forfeiture of the policy for failure to repay any
loan on the policy or to pay interest on such loan while the
total indebtedness on the policy is less than the loan value
thereof; or for forfeiture for failure to repay any such loan or
to pay interest thereon, unless such provision contain a
stipulation that no such forfeiture shall occur until at least
one month after notice shall have been mailed by the company to
the last known address of the insured and of the assignee, if
any, notice of whose address and contract of the assignment has
been filed with the company, at its home office; or
(2) in a life policy or annuity contract, limiting the time
within which any action at law or in equity may be commenced to
less than five years after the cause of action shall accrue; or
(3) by which the policy shall purport to be issued or to
take effect more than six months before the original application
for the insurance was made; or
(4) for any mode of settlement at maturity of less value
than the amount insured on the face of the policy plus any
dividend additions, less any indebtedness to the company on the
policy, and less any premium that may be deducted by the terms
of the policy.
Sec. 18. Minnesota Statutes 1992, section 61A.071, is
amended to read:
61A.071 [APPLICATIONS.]
No individual life insurance policy, except mass marketed
life insurance as defined in section 72A.13, subdivision 2
except life insurance marketed on a direct response basis, shall
be issued or delivered in this state to a person age 65 or older
unless a signed and completed copy of the application for
insurance is left with the applicant at the time application is
made. However, where an individual life policy is marketed on a
direct response basis, a copy of any application signed by the
applicant shall be delivered to the insured along with, or as
part of, the policy.
Sec. 19. Minnesota Statutes 1992, section 61A.074,
subdivision 1, is amended to read:
Subdivision 1. [CORPORATION OR TRUSTEE.] A corporation or
the trustee of a trust providing life, annuity, health,
disability, retirement, or similar benefits to employees of one
or more corporations, and acting in a fiduciary capacity with
respect to the employees, retired employees, or their dependents
or beneficiaries, has an insurable interest in the lives of
employees for whom the benefits are to be provided. The written
consent of the insured is required if the insurance purchased
under this subdivision is payable to the corporation or to the
trustee.
Sec. 20. Minnesota Statutes 1992, section 61A.08, is
amended to read:
61A.08 [EXCEPTIONS.]
Sections 61A.02, 61A.03, 61A.07, 61A.23, and 61A.25 shall
not, except as expressly provided in this chapter, apply to
annuities, industrial or group term policies, or to corporations
or associations operating on the assessment or fraternal plan,
and in every case where a contract provides for both insurance
and annuities, sections 61A.02, 61A.03 and 61A.07 shall apply
only to that part of the contract which provides for insurance,
but every contract issued prior to the operative date specified
in section 61A.245 containing a provision for a deferred annuity
on the life of the insured only, unless paid for by a single
premium, shall provide that, in event of the nonpayment of any
premium after three full years' premium shall have been paid,
the annuity shall automatically become converted into a paid-up
annuity for that proportion of the original annuity as the
number of completed years' premiums paid bears to the total
number of premiums required under the contract.
Sec. 21. Minnesota Statutes 1992, section 61A.09,
subdivision 1, is amended to read:
Subdivision 1. No group life insurance policy or group
annuity shall be issued for delivery in this state until the
form thereof and the form of any certificates issued thereunder
have been filed in accordance with and subject to the provisions
of section 61A.02. Each person insured under such a group life
insurance policy (excepting policies which insure the lives of
debtors of a creditor or vendor to secure payment of
indebtedness) shall be furnished a certificate of insurance
issued by the insurer and containing the following:
(a) Name and location of the insurance company;
(b) A statement as to the insurance protection to which the
certificate holder is entitled, including any changes in such
protection depending on the age of the person whose life is
insured;
(c) Any and all provisions regarding the termination or
reduction of the certificate holder's insurance protection;
(d) A statement that the master group policy may be
examined at a reasonably accessible place;
(e) The maximum rate of contribution to be paid by the
certificate holder;
(f) Beneficiary and method required to change such
beneficiary;
(g) In the case of a group term insurance policy if the
policy provides that insurance of the certificate holder will
terminate, in case of a policy issued to an employer, by reason
of termination of the certificate holder's employment, or in
case of a policy issued to an organization of which the
certificate holder is a member, by reason of termination of
membership, a provision to the effect that in case of
termination of employment or membership, or in case of
termination of the group policy, the certificate holder shall be
entitled to have issued by the insurer, without evidence of
insurability, upon application made to the insurer within 31
days after the termination of employment or membership, and upon
payment of the premium applicable to the class of risk to which
that person belongs and to the form and amount of the policy at
that person's then attained age, a policy of life insurance
only, in any one of the forms customarily issued by the insurer
except term insurance, in an amount equal to the amount of the
life insurance protection under such group insurance policy at
the time of such termination; and shall contain a further
provision to the effect that upon the death of the certificate
holder during such 31-day period and before any such individual
policy has become effective, the amount of insurance for which
the certificate holder was entitled to make application shall be
payable as a death benefit by the insurer.
This section applies to a policy, certificate of insurance,
or similar evidence of coverage issued to a Minnesota resident
or issued to provide coverage to a Minnesota resident. This
section does not apply to a certificate of insurance or similar
evidence of coverage that meets the conditions of section
61A.093, subdivision 2.
Sec. 22. Minnesota Statutes 1992, section 61A.092, is
amended by adding a subdivision to read:
Subd. 6. [APPLICATION.] This section applies to a policy,
certificate of insurance, or similar evidence of coverage issued
to a Minnesota resident or issued to provide coverage to a
Minnesota resident. This section does not apply to a
certificate of insurance or similar evidence of coverage that
meets the conditions of section 61A.093, subdivision 2.
Sec. 23. [61A.093] [CERTIFICATE OF INSURANCE.]
Subdivision 1. [COVERAGE.] A certificate of insurance or
similar evidence of coverage issued to a Minnesota resident
shall provide coverage for all benefits required to be covered
in group policies in Minnesota by this chapter.
This subdivision supersedes any inconsistent provision of
this chapter.
A policy of life insurance that is issued or delivered in
this state and that covers a person residing in another state
may provide coverage or contain provisions that are less
favorable to that person than required by this chapter. Less
favorable coverages or provisions must meet the requirements
that the state in which the person resides would have required
had the policy been issued or delivered in that state.
Subd. 2. [NONAPPLICATION.] Subdivision 1 does not apply to
certificates issued in regard to a master policy issued outside
the state of Minnesota if all of the following are true:
(1) the policyholder or certificate holder exists primarily
for purposes other than to obtain insurance;
(2) the policyholder or certificate holder is not a
Minnesota corporation and does not have its principal office in
Minnesota;
(3) the policy or certificate covers fewer than 25 persons
who are residents of Minnesota and the Minnesota residents
represent less than 25 percent of all covered persons; and
(4) on request of the commissioner, the issuer files with
the commissioner a copy of the policy and a copy of each form of
certificate.
Subd. 3. [RELATION TO OTHER LAW.] Section 60A.08,
subdivision 4, shall not be construed as requiring a certificate
of insurance or similar evidence of insurance that meets the
conditions of subdivision 2 to comply with this chapter.
Sec. 24. Minnesota Statutes 1992, section 61A.12,
subdivision 1, is amended to read:
Subdivision 1. [PROCEEDS OF LIFE POLICY OR ANNUITY, WHO
ENTITLED TO.] When any insurance is effected in favor of
another, the beneficiary shall be entitled to its proceeds
against the creditors and representatives of the person
effecting the same. All premiums paid for insurance in fraud of
creditors, with interest thereon, shall inure to their benefit
from the proceeds of the policy, if the company be specifically
notified thereof, in writing, before payment.
Sec. 25. Minnesota Statutes 1992, section 61A.282,
subdivision 2, is amended to read:
Subd. 2. [LENDING OF SECURITIES.] A company may loan
securities held by it under this chapter to a broker-dealer
registered under the Securities and Exchange Act of 1934 or to a
bank which is a member of the Federal Reserve System., under the
following conditions:
(a) The market value of loaned securities outstanding at
any one time, excluding securities held in a separate account
established pursuant to section 61A.14, subdivision 1, or
61A.275, shall not exceed 50 40 percent of the company's capital
and surplus admitted assets as of the December 31 immediately
preceding.
(b) The company is limited to no more than two percent of
its admitted assets as of the December 31 immediately preceding
being subject to lending of securities with any one borrower.
(c) Each loan must be evidenced by a written agreement
which provides:
(a) (1) that the loan will be fully collateralized by cash
or obligations issued or guaranteed by the United States or an
agency or an instrumentality thereof, and that the collateral
will be adjusted each business day during the term of the loan
to maintain the required collateral in the event of market value
changes in the loaned securities or collateral;
(b) (2) that the loan may be terminated by the company at
any time, and that the borrower must return the loaned
securities or their equivalent within five business days after
termination;
(c) (3) that the company has the right to retain the
collateral or to use the collateral to purchase securities
equivalent to the loaned securities if the borrower defaults
under the terms of the agreement; and
(d) (4) that the borrower remains liable for any losses and
expenses, not covered by the collateral, which are incurred by
the company due to default.
Sec. 26. Minnesota Statutes 1992, section 62A.047, is
amended to read:
62A.047 [CHILDREN'S HEALTH SUPERVISION SERVICES AND
PRENATAL CARE SERVICES.]
A policy of individual or group health and accident
insurance regulated under this chapter, or individual or group
subscriber contract regulated under chapter 62C, health
maintenance contract regulated under chapter 62D, or health
benefit certificate regulated under chapter 64B, issued,
renewed, or continued to provide coverage to a Minnesota
resident, must provide coverage for child health supervision
services and prenatal care services. The policy, contract, or
certificate must specifically exempt reasonable and customary
charges for child health supervision services and prenatal care
services from a deductible, copayment, or other coinsurance or
dollar limitation requirement. For individual policies, This
section does not prohibit the use of policy waiting periods or
preexisting condition limitations for these services. Minimum
benefits may be limited to one visit payable to one provider for
all of the services provided at each visit cited in this section
subject to the schedule set forth in this section. Nothing in
this section applies to a commercial health insurance policy
issued as a companion to a health maintenance organization
contract, a policy designed primarily to provide coverage
payable on a per diem, fixed indemnity, or nonexpense incurred
basis, or a policy that provides only accident coverage.
"Child health supervision services" means pediatric
preventive services, appropriate immunizations, developmental
assessments, and laboratory services appropriate to the age of a
child from birth to age six as defined by Standards of Child
Health Care issued by the American Academy of Pediatrics.
Reimbursement must be made for at least five child health
supervision visits from birth to 12 months, three child health
supervision visits from 12 months to 24 months, once a year from
24 months to 72 months.
"Prenatal care services" means the comprehensive package of
medical and psychosocial support provided throughout the
pregnancy, including risk assessment, serial surveillance,
prenatal education, and use of specialized skills and
technology, when needed, as defined by Standards for
Obstetric-Gynecologic Services issued by the American College of
Obstetricians and Gynecologists.
Sec. 27. [62A.105] [COVERAGES; TRANSFERS TO SUBSTANTIALLY
SIMILAR PRODUCTS.]
Subdivision 1. [SCOPE.] No individual policy of accident
and sickness regulated under this chapter or subscriber contract
regulated under chapter 62C shall be issued, renewed, or
continued to provide coverage to a Minnesota resident unless it
satisfies the requirements of subdivision 2.
Subd. 2. [REQUIREMENT.] If an issuer of policies or plans
referred to in subdivision 1 ceases to offer a particular policy
or subscriber contract to the general public or otherwise stops
adding new insureds to the group of covered persons, the issuer
shall allow any covered person to transfer to another
substantially similar policy or contract currently being sold by
the issuer. The issuer shall permit the transfer without any
preexisting condition limitation, waiting period, or other
restriction of any type other than those which applied to the
insured under the prior policy or contract. This section does
not apply to persons who were covered under an individual policy
or contract prior to July 1, 1994.
Sec. 28. [62A.136] [DENTAL AND VISION PLANS.]
The following provisions do not apply to health plans
providing dental or vision coverage only: sections 62A.041,
62A.047, 62A.149, 62A.151, 62A.152, 62A.154, 62A.155, 62A.26,
62A.28, and 62A.30.
Sec. 29. Minnesota Statutes 1992, section 62A.148, is
amended to read:
62A.148 [GROUP INSURANCE; PROVISION OF BENEFITS FOR
DISABLED EMPLOYEES.]
No employer or insurer of that employer shall terminate,
suspend or otherwise restrict the participation in or the
receipt of benefits otherwise payable under any program or
policy of group insurance to any covered employee who becomes
totally disabled while employed by the employer solely on
account of absence caused by such total disability. This
includes coverage of dependents of the employee. If the
employee is required to pay all or any part of the premium for
the extension of coverage, payment shall be made to the
employer, by the employee.
Sec. 30. Minnesota Statutes 1992, section 62A.153, is
amended to read:
62A.153 [FREE STANDING AMBULATORY SURGICAL CENTERS
OUTPATIENT MEDICAL AND SURGICAL SERVICES.]
No policy or plan of health, medical, hospitalization, or
accident and sickness insurance regulated under this chapter, or
subscriber contract provided by a nonprofit health service plan
corporation regulated under chapter 62C that provides coverage
for services in a hospital shall be issued, renewed, continued,
delivered, issued for delivery or executed in this state, or
approved for issuance or renewal in this state by the
commissioner of commerce unless the policy, plan or contract
specifically provides coverage for a health care treatment
or service rendered by a free standing ambulatory surgical
center or facilities offering ambulatory medical service 24
hours a day seven days a week, which are not part of a hospital,
but have been reviewed and approved by the state commissioner of
health to provide the treatment or service, surgery on an
outpatient basis at a facility equipped to perform these
services, whether or not the facility is part of a hospital.
Coverage shall be on the same basis as coverage provided for the
same health care treatment or service rendered by in a hospital.
Sec. 31. Minnesota Statutes 1992, section 62A.43,
subdivision 4, is amended to read:
Subd. 4. [OTHER POLICIES NOT PROHIBITED.] The prohibition
in this section or the requirements of section 62A.31,
subdivision 1, against the sale of duplicate Medicare supplement
coverage does do not preclude the sale of insurance coverage,
such as travel, accident and sickness coverage, the effect or
purpose of which is not to supplement Medicare coverage.
Notwithstanding this provision, if the commissioner determines
that the coverage being sold is in fact Medicare supplement
insurance, the commissioner shall notify the insurer in writing
of the determination. If the insurer does not thereafter comply
with sections 62A.31 to 62A.44, the commissioner may, pursuant
to chapter 14, revoke or suspend the insurer's authority to sell
accident and health insurance in this state or impose a civil
penalty not to exceed $10,000, or both.
Sec. 32. [62A.49] [HOME CARE SERVICES COVERAGE.]
Subdivision 1. [GENERALLY.] Section 62A.48 does not
prohibit the sale of policies, certificates, subscriber
contracts, or other evidences of coverage that provide home care
services only. This does not, however, remove the requirement
that home care service benefits must be provided as part of a
long-term care policy pursuant to that section. Home care
services only policies may be sold, provided that they meet the
requirements set forth in sections 62A.46 to 62A.56, except that
they do not have to meet those conditions that relate to
long-term care in nursing facilities. Disclosures and
representations regarding these policies must be adjusted
accordingly to remove references to coverage for nursing home
care.
Subd. 2. [PROVIDER NETWORKS AND MANAGED CARE.] Home health
care services issued pursuant to this section may be provided
through a limited provider network and may employ managed care
practices. If these methods are used, they must be adequately
disclosed within the policy and any advertisements or
representations regarding coverage. Policies may not be sold in
areas where there are not sufficient providers to meet the needs
of the policyholders located in that area.
Sec. 33. [62A.615] [PREEXISTING CONDITIONS; LIMITATIONS ON
CANCELLATIONS, RESCISSIONS, OR RESTRICTIONS ON COVERAGE.]
No insurer may cancel or rescind a health insurance policy
for a preexisting condition of which the application or other
information provided by the insured reasonably gave the insurer
notice. No insurer may restrict coverage for a preexisting
condition of which the application or other information provided
by the insured reasonably gave the insurer notice unless the
coverage is restricted at the time the policy is issued and the
restriction is disclosed in writing to the insured at the time
the policy is issued.
Sec. 34. Minnesota Statutes 1992, section 62E.05, is
amended to read:
62E.05 [CERTIFICATION OF QUALIFIED PLANS.]
Upon application by an insurer, fraternal, or employer for
certification of a plan of health coverage as a qualified plan
or a qualified medicare supplement plan for the purposes of
sections 62E.01 to 62E.16, the commissioner shall make a
determination within 90 days as to whether the plan is
qualified. All plans of health coverage, except Medicare
supplement policies, shall be labeled as "qualified" or
"nonqualified" on the front of the policy or evidence of
insurance. All qualified plans shall indicate whether they are
number one, two, or three coverage plans.
Sec. 35. Minnesota Statutes 1992, section 62E.19,
subdivision 1, is amended to read:
Subdivision 1. [EMPLOYER LIABILITY.] An employer is liable
to the association for the costs of any preexisting conditions
of the employer's former employees or their dependents during
the first six months of coverage under the state comprehensive
health insurance plan under the following conditions:
(1)(i) the employer has terminated or laid off employees
and is required to meet the notice requirements under section
268.976, subdivision 3;
(2) (ii) the employer has failed to provide, arrange for,
or make available continuation health insurance coverage
required to be provided under federal or state law to employees
or their dependents; and
(3) (iii) the employer's former employees or their
dependents enroll in the state comprehensive health insurance
plan with a waiver of the preexisting condition limitation under
section 62E.14, subdivision 4a or 5; or
(4) (2)(i) the employer has terminated or allowed the
employer's plan of health insurance coverage to lapse within 90
days prior to the date of termination or layoff of an employee;
and
(5) (ii) the employer's former employees or their
dependents enroll in the state comprehensive health insurance
plan with a waiver of the preexisting condition limitation under
section 62E.14, subdivision 4a or 5.
The employer shall pay a special assessment to the
association for the costs of the preexisting conditions. The
special assessment may be assessed before the association makes
the annual determination of each contributing member's liability
as required under this chapter. The association may enforce the
obligation to pay the special assessment by action, as a claim
in an insolvency proceeding, or by any other method not
prohibited by law.
If the association makes the special assessment permitted
by this subdivision, the association may also make any
assessment of contributing members otherwise permitted by law,
without regard to the special assessment permitted by this
subdivision. Contributing members must pay the assessment,
subject to refund or adjustment in the event of receipt by the
association of any portion of the special assessment.
Sec. 36. Minnesota Statutes 1992, section 62H.01, is
amended to read:
62H.01 [JOINT SELF-INSURANCE EMPLOYEE HEALTH PLAN.]
Any two or more employers, excluding the state and its
political subdivisions as described in section 471.617,
subdivision 1, who are authorized to transact business in
Minnesota may jointly self-insure employee health, dental, or
short-term disability benefits, or other benefits permitted
under the Employee Retirement Income Security Act of 1974,
United States Code, title 29, sections 1001 et seq. Joint plans
must have a minimum of 100 covered employees and meet all
conditions and terms of sections 62H.01 to 62H.08. Joint plans
covering employers not resident in Minnesota must meet the
requirements of sections 62H.01 to 62H.08 as if the portion of
the plan covering Minnesota resident employees was treated as a
separate plan. A plan may cover employees resident in other
states only if the plan complies with the applicable laws of
that state.
A multiple employer welfare arrangement as defined in
United States Code, title 29, section 1002(40)(a), is subject to
this chapter to the extent authorized by the Employee Retirement
Income Security Act of 1974, United States Code, title 29,
sections 1001 et seq.
Sec. 37. [62H.10] [DEFINITIONS.]
Subdivision 1. [SCOPE.] For purposes of sections 62H.10 to
62H.17, the terms in this section have the meanings given them.
Subd. 2. [AGENT.] "Agent" means an agent as defined under
section 60A.02, subdivision 7.
Subd. 3. [ARRANGEMENT.] "Arrangement" means a fund, trust,
plan, program, or other mechanism by which a person provides, or
attempts to provide, health care benefits to individuals.
Subd. 4. [BROKER.] "Broker" means an agent engaged in
brokerage business pursuant to section 60K.08.
Subd. 5. [COLLECTIVELY BARGAINED ARRANGEMENT.]
"Collectively bargained arrangement" means an arrangement which
provides or represents that it is providing health care benefits
or coverage under or pursuant to one or more collective
bargaining agreements.
Subd. 6. [COMMISSIONER.] "Commissioner" means the
commissioner of commerce.
Subd. 7. [EMPLOYEE LEASING ARRANGEMENT.] "Employee leasing
arrangement" means a labor leasing, staff leasing, employee
leasing, contract labor, extended employee staffing or supply,
or other arrangement, under contract or otherwise, whereby one
business or entity leases or obtains all or a significant number
of its workers from another business or entity.
Subd. 8. [EMPLOYEE WELFARE BENEFIT PLAN.] "Employee
welfare benefit plan" means a plan, fund, or program established
or maintained by an employer or by an employee organization, or
by both, to the extent that the plan, fund, or program was
established or is maintained for the purpose of providing for
its participants or their beneficiaries, through the purchase of
insurance or otherwise, medical, surgical, or hospital care or
benefits, or benefits in the event of sickness, accident,
disability, death, or unemployment.
Subd. 9. [FULLY INSURED BY A LICENSED INSURER.] "Fully
insured by a licensed insurer" means that, for all of the health
care benefits or coverage provided or offered by or through an
arrangement:
(1) a licensed insurer is directly obligated by contract to
provide all of the coverage to or under the arrangement;
(2) the licensed insurer assumes all of the risk for
payment of all covered services or benefits; and
(3) the liability of the licensed insurer for payment of
the covered services or benefits is directly to the individual
employee, member, or dependent receiving the health care
services.
Subd. 10. [LICENSED INSURER.] "Licensed insurer" means an
insurer having a certificate of authority to transact insurance
in this state.
Subd. 11. [REPORTABLE MEWA.] "Reportable MEWA" means a
person that provides health care benefits or coverage to the
employees of two or more employers. Reportable MEWA does not
include:
(1) a licensed insurer;
(2) an arrangement which is fully insured by a licensed
insurer;
(3) a collectively bargained arrangement;
(4) an employee welfare benefit plan established or
maintained by a rural electric cooperative or a rural telephone
cooperative;
(5) an employee leasing arrangement; or
(6) a joint self-insurance employee health plan, which
includes but is not limited to multiple employee welfare
arrangements and multiple employer welfare arrangements (MEWAs),
having a certificate of authority to transact insurance in this
state pursuant to chapter 62H.
Subd. 12. [RURAL ELECTRIC COOPERATIVE.] "Rural electric
cooperative" means:
(1) an organization that is exempt from tax under United
States Code, title 26, section 501(a), and which is engaged
primarily in providing electric service on a mutual or
cooperative basis; or
(2) an organization described in United States Code, title
26, section 501(c), paragraph (4) or (6), which is exempt from
tax under United States Code, title 26, section 501(a), and at
least 80 percent of the members of which are organizations
described in clause (1).
Subd. 13. [RURAL TELEPHONE COOPERATIVE.] "Rural telephone
cooperative" means an organization described in United States
Code, title 26, section 501(c), paragraph (4) or (6), which is
exempt from tax under United States Code, title 26, section
501(a), and at least 80 percent of the members of which are
organizations engaged primarily in providing telephone service
to rural areas of the United States on a mutual, cooperative, or
other basis.
Subd. 14. [THIRD PARTY ADMINISTRATOR.] "Third party
administrator" means a vendor of risk management services or an
entity administering a self-insurance or insurance plan under
section 60A.23.
Sec. 38. [62H.11] [AGENTS AND BROKERS PROHIBITED FROM
ASSISTING REPORTABLE MEWAS PRIOR TO FILING.]
(a) No agent or broker may solicit, advertise, or market in
this state health benefits or coverage from, or accept an
application for, or place coverage for a person who resides in
this state with, a reportable MEWA unless the agent or broker
first files with the commissioner the information required under
section 62H.16.
(b) No agent or broker may solicit another agent or broker
to enter into an arrangement to solicit, advertise, or market
services, health benefits, or coverage of a reportable MEWA
unless the agent or broker first files with the commissioner the
information required under section 62H.16.
Sec. 39. [62H.12] [AGENTS AND BROKERS PROHIBITED FROM
ASSISTING EMPLOYEE LEASING ARRANGEMENTS PRIOR TO FILING.]
(a) No agent or broker may solicit, advertise, or market in
this state the services, health benefits, or coverage of an
employee leasing arrangement or a person or arrangement which
represents itself as an employee leasing arrangement unless the
agent or broker first files with the commissioner the
information required under section 62H.16.
(b) No agent or broker may solicit another agent or broker
to enter into an arrangement to solicit, advertise, or market
the services, health benefits, or coverage of an employee
leasing arrangement unless the agent or broker first files with
the commissioner the information required under section 62H.16.
Sec. 40. [62H.13] [AGENTS AND BROKERS PROHIBITED FROM
ASSISTING COLLECTIVELY BARGAINED ARRANGEMENTS PRIOR TO FILING.]
(a) No agent or broker may solicit, advertise, or market in
this state health benefits or coverage from, or accept an
application for, or place coverage for a person who resides in
this state with, a collectively bargained arrangement or an
arrangement that represents itself as a collectively bargained
arrangement unless the agent or broker first files with the
commissioner the information required under section 62H.16.
(b) No agent or broker may solicit another agent or broker
to enter into an arrangement to solicit, advertise, or market
the health benefits or coverage of a collectively bargained
arrangement unless the agent or broker first files with the
commissioner the information required under section 62H.16.
Sec. 41. [62H.14] [THIRD PARTY ADMINISTRATORS AND LICENSED
INSURERS PROHIBITED FROM ASSISTING REPORTABLE MEWAS PRIOR TO
FILING.]
(a) No third party administrator may solicit or effect
coverage of, underwrite for, collect charges or premium for, or
adjust or settle claims of a resident of this state for, or
enter into any agreement to perform any of those functions for,
a reportable MEWA that provides coverage to residents of this
state unless the third party administrator first files with the
commissioner the information required under section 62H.16.
(b) No licensed insurer may solicit or effect coverage of,
underwrite for, collect charges or premiums for, adjust or
settle claims of a resident of this state for, or enter into any
agreement to perform any of those functions for a reportable
MEWA that provides coverage to residents of this state unless
the insurer first files with the commissioner the information
required under section 62H.16.
(c) A licensed insurer that issues or has issued any
insurance coverage to a reportable MEWA that covers residents of
this state, including, but not limited to, specific or aggregate
stop-loss coverage, shall file with the commissioner the
information required under section 62H.16 within 30 days after
the coverage is issued or within 30 days after the date the
reportable MEWA first provides coverage to a resident of this
state, whichever is later.
Sec. 42. [62H.15] [LACK OF KNOWLEDGE NOT A DEFENSE.]
(a) Lack of knowledge or intent to deceive with respect to
the organization or status of insurance coverage of a reportable
MEWA, employee leasing firm, or collectively bargained
arrangement is not a defense to a violation of sections 62H.10
to 62H.17.
(b) A filing under sections 62H.10 to 62H.17 is solely for
the purpose of providing information to the commissioner.
Sections 62H.10 to 62H.17 and a filing under those sections do
not authorize or license a reportable MEWA, employee leasing
firm, collectively bargained arrangement, or any other
arrangement to engage in business in this state if otherwise
prohibited by law.
Sec. 43. [62H.16] [INFORMATION REQUIRED TO BE FILED AND
KEPT CURRENT.]
(a) An agent, broker, third party administrator, or insurer
required to file under sections 62H.10 to 62H.17 shall file with
the commissioner all of the following information on a form
prescribed by the commissioner:
(1) a copy of the organizational documents of the
reportable MEWA, employee leasing firm, or collectively
bargained arrangement, including the articles of incorporation
and bylaws, partnership agreement, or trust instrument;
(2) a copy of each insurance or reinsurance contract that
purports to insure or guarantee all or any portion of benefits
or coverage offered by the reportable MEWA, employee leasing
firm, or collectively bargained arrangement to a person who
resides in this state;
(3) copies of the benefit plan description and other
materials intended to be distributed to potential purchasers;
and
(4) the names and addresses of all persons performing or
expected to perform the functions of a third party administrator
for the reportable MEWA, employee leasing firm, or collectively
bargained arrangement.
(b) A filing under sections 62H.10 to 62H.17 is ineffective
and is not in compliance with those sections if it is incomplete
or inaccurate in a material respect.
(c) A person who has made a filing under sections 62H.10 to
62H.17 shall amend the filing within 30 days of the date the
person becomes aware, or exercising due diligence should have
become aware, of any material change to the information required
to be filed. The amended filing must accurately reflect the
material change to the information originally filed.
Sec. 44. [62H.17] [LIABILITY FOR VIOLATION.]
If an arrangement that is an unauthorized insurer fails to
pay a claim or loss in this state within the provisions of its
contract, a person who violates sections 62H.10 to 62H.17 with
respect to the arrangement is liable to the insured for the full
amount of the claim or loss in the manner provided by the
provisions of the insurance contract.
Sec. 45. Minnesota Statutes 1992, section 62I.02, is
amended to read:
62I.02 [MINNESOTA JOINT UNDERWRITING ASSOCIATION.]
Subdivision 1. [CREATION.] The Minnesota joint
underwriting association is created to provide insurance
coverage to any person or entity unable to obtain insurance
through ordinary methods if the insurance is required by
statute, ordinance, or otherwise required by law, or is
necessary to earn a livelihood or conduct a business and serves
a public purpose, including, but not limited to, liquor
liability. Prudent business practice or mere desire to have
insurance coverage is not a sufficient standard for the
association to offer insurance coverage to a person or entity.
For purposes of this subdivision, directors' and officers'
liability insurance is considered to be a business necessity and
not merely a prudent business practice. The association shall
be specifically authorized to provide insurance coverage to day
care providers, foster parents, foster homes, developmental
achievement centers, group homes, and rehabilitation facilities
for mentally, emotionally, or physically handicapped persons,
and citizen participation groups established pursuant to the
housing and community redevelopment act of 1974, Public Law
Number 93-383. Because the activities of certain persons or
entities present a risk that is so great, the association shall
not offer insurance coverage to any person or entity the board
of directors of the association determines is outside the
intended scope and purpose of the association because of the
gravity of the risk of offering insurance coverage. The
association shall not offer environmental impairment liability
or product liability insurance. The association shall not offer
coverage for activities that are conducted substantially outside
the state of Minnesota unless the insurance is required by
statute, ordinance, or otherwise required by law. Every insurer
authorized to write property and casualty insurance and personal
injury liability insurance in this state shall be a member of
the association as a condition to obtaining and retaining a
license to write insurance in this state.
Subd. 2. [DIRECTOR.] The association shall have a board of
directors composed of 11 persons chosen as follows: five
persons elected by members of the association at a meeting
called by the commissioner; three public members, as defined in
section 214.02, appointed by the commissioner; and three
members, appointed by the commissioner representing groups to
whom coverage has been extended by the association. The terms
of the members shall be four years. Terms may be staggered so
that no more than six members are appointed or elected every two
years. Members may serve until their successors are appointed
or elected. If at any time no coverage is currently extended by
the association, then either additional public members may be
appointed to fill these three positions or, at the option of the
commissioner, representatives from groups who had previously
been covered by the association may serve as directors.
Subd. 3. [REAUTHORIZATION.] The authorization to issue
insurance to day care providers, foster parents, foster homes,
developmental activity centers, group homes, and rehabilitation
facilities for mentally, emotionally, or physically handicapped
persons, and citizen participation groups established pursuant
to the housing and community redevelopment act of 1974, Public
Law Number 93-383, is valid for a period of two years from the
date it was made. The commissioner may reauthorize the issuance
of insurance for these groups and other classes of business for
additional two-year periods pursuant to sections 62I.21 and
62I.22. This subdivision is not a limitation on the number of
times the commissioner may reauthorize the issuance of insurance.
Subd. 4. [LIQUOR LIABILITY.] Policies and contracts of
coverage issued under this section for the purposes of providing
liquor liability insurance must contain the usual and customary
provisions of liability insurance policies, and must contain at
least the minimum coverage required by section 340A.409,
subdivision 1, or the local governing unit.
Subd. 5. [ACCOUNTS.] For the purposes of administration
and assessment, the association shall be divided into two
separate accounts: (1) the property and casualty insurance
account; and (2) the personal injury liability insurance account.
Sec. 46. Minnesota Statutes 1992, section 62I.03, is
amended to read:
62I.03 [DEFINITION.]
Subdivision 1. [SCOPE.] As used in sections 62I.01 to
62I.22 the following terms have the meanings given them in this
section.
Subd. 2. [ASSOCIATION.] "Association" means the Minnesota
joint underwriting association.
Subd. 3. [COMMISSIONER.] "Commissioner" means the
commissioner of commerce.
Subd. 4. [DIRECT WRITTEN PREMIUMS.] "Direct written
premiums" means that amount at column (2), lines 5, 8, 9, 17,
21.2, 22, 23, 24, 25, 26, and 27, page 14, of the annual
statement filed annually with the department of commerce
pursuant to section 60A.13.
Subd. 5. [DEFICIT.] "Deficit" means, for a particular
policy year, that amount by which total paid and outstanding
losses and loss adjustment expenses exceed premium revenue,
including retrospective premium revenue.
Subd. 6. [NET DIRECT PREMIUMS.] For purposes of liquor
liability insurance, "net direct premiums" means gross direct
premiums written on personal injury liability insurance,
including the liability component of multiple peril package
policies as computed by the commissioner, less return premiums
for the unused or unabsorbed portions of premium deposits.
Subd. 7. [PERSONAL INJURY LIABILITY INSURANCE.] "Personal
injury liability insurance" means insurance described in section
60A.06, subdivision 1, clause (13).
Sec. 47. Minnesota Statutes 1992, section 62I.07, is
amended to read:
62I.07 [MEMBERSHIP ASSESSMENTS.]
Subdivision 1. [GENERAL ASSESSMENT.] Each member of the
association that is authorized to write property and casualty
insurance in the state shall participate in its losses and
expenses in the proportion that the direct written premiums of
the member on the kinds of insurance in that account bears to
the total aggregate direct written premiums written in this
state by all members on the kinds of insurance in that account.
The members' participation in the association shall be
determined annually on the direct written premiums written
during the preceding calendar year as reported on the annual
statements and other reports filed by the member with the
commissioner.
Subd. 2. [PERSONAL INJURY LIABILITY INSURANCE ASSESSMENT.]
A member of the association shall participate in its writings,
expenses, servicing allowance, management fees, and losses in
the proportion that the net direct premiums of the member,
excluding that portion of premiums attributable to the operation
of the association, written during the preceding calendar year
on the kinds of insurance in that account bears to the aggregate
net direct premiums written in this state by all members on the
kinds of insurance in that account. The member's participation
in the association shall be determined annually on the basis of
net direct premiums written during the preceding calendar year,
as reported in the annual statements and other reports filed by
the member with the commissioner.
Sec. 48. Minnesota Statutes 1992, section 62I.13,
subdivision 1, is amended to read:
Subdivision 1. [GENERALLY.] To be eligible to participate
in the association, an applicant must apply for coverage through
the market assistance program, as required by section 62I.08.
Except as provided by subdivision 4, the market assistance
program has 30 days from the receipt of the application to
secure an offer of coverage for the applicant. If the market
assistance program is able to secure an offer of coverage for
the applicant and if the offer of coverage would not be
considered a refusal for purposes of the association, then
coverage may not be extended by the association. Eligibility
for coverage by the association is also subject to the terms and
conditions of subdivisions 2 and 3.
Sec. 49. Minnesota Statutes 1992, section 62I.13,
subdivision 2, is amended to read:
Subd. 2. [MINIMUM OF QUALIFICATIONS.] Anyone who is unable
to obtain insurance in the private market and who so certifies
to the association in the application is eligible to make
written application to the association for coverage. Payment of
the applicable premium or required portion of it must be paid
prior to coverage by the association. An offer of coverage at a
rate in excess of the rate that would be charged by the
association for similar coverage and risk shall be deemed to be
a refusal of coverage for purposes of eligibility for
participation in the association. It shall not be deemed to be
a written notice of refusal if the rate for coverage offered is
less than five percent in excess of the joint underwriting
association rates for similar coverage and risk or 20 percent in
excess of the joint underwriting association rates for liquor
liability coverages. However, the offered rate must also be the
rate that the insurer has filed with the department of commerce
if the insurer is required to file its rates with the
department. If the insurer is not required to file its rates
with the department, the offered rate must be the rate generally
charged by the insurer for similar coverage and risk.
Sec. 50. Minnesota Statutes 1992, section 62I.20, is
amended to read:
62I.20 [MERGER OF OTHER PLANS.]
Upon application by the governing body of the liquor
liability assigned risk plan authorized by section 340A.409 or
the joint underwriting association authorized by chapter 62F to
be merged with the association, the commissioner shall, if the
commissioner deems it appropriate, hold a public hearing in
regard to the merger. The commissioner upon motion or upon the
motion of any insured under plans shall hold a hearing. Unless
it can be shown that the rights of the insured would be
adversely affected by the merger or that it would be less
efficient or more costly to merge the plans, the commissioner
shall consent to the merger. The commissioner shall also
consent to the merger at any time there are less than ten
insureds in any plan.
Sec. 51. Minnesota Statutes 1992, section 65A.01,
subdivision 1, is amended to read:
Subdivision 1. [DESIGNATION AND SCOPE.] The printed form
of a policy of fire insurance, as set forth in subdivisions 3
and 3a, shall be known and designated as the "Minnesota standard
fire insurance policy" to be used in the state of Minnesota. No
policy or contract of fire insurance shall be made, issued or
delivered by any insurer including reciprocals or interinsurance
exchanges or any agent or representative thereof, on any
property in this state, unless it shall provide the specified
coverage and conform as to all provisions, stipulations, and
conditions, with such form of policy, except as provided
in section sections 60A.08, subdivision 9; 60A.30 to 60A.35;
65A.06; 65A.29; 72A.20, subdivision 17; and other statutes
containing specific requirements that are inconsistent with the
form of this policy. Any policy or contract otherwise subject
to the provisions of this subdivision, subdivisions 3 and 3a
which includes either on an unspecified basis as to coverage or
for a single premium, coverage against the peril of fire and
coverage against other perils may be issued without
incorporating the exact language of the Minnesota standard fire
insurance policy, provided: Such policy or contract shall, with
respect to the peril of fire, afford the insured all the rights
and benefits of the Minnesota standard fire insurance policy and
such additional benefits as the policy provides; the provisions
in relation to mortgagee interests and obligations in said
Minnesota standard fire insurance policy shall be incorporated
therein without change; such policy or contract is complete as
to its terms of coverage; and, the commissioner is satisfied
that such policy or contract complies with the provisions hereof.
Sec. 52. Minnesota Statutes 1992, section 65A.29,
subdivision 7, is amended to read:
Subd. 7. [RENEWAL; NOTICE REQUIREMENT.] No insurer shall
refuse to renew, or reduce limits of coverage, or eliminate any
coverage in a homeowner's insurance policy unless it mails or
delivers to the insured, at the address shown in the policy, at
least 60 days advance notice of its intention. The notice must
contain the specific underwriting or other reason or reasons for
the indicated action.
Proof of mailing this notice to the insured at the address
shown in the policy is sufficient proof that the notice required
by this section has been given.
Sec. 53. Minnesota Statutes 1992, section 65B.49,
subdivision 3, is amended to read:
Subd. 3. [RESIDUAL LIABILITY INSURANCE.] (1) Each plan of
reparation security shall also contain stated limits of
liability, exclusive of interest and costs, with respect to each
vehicle for which coverage is thereby granted, of not less than
$30,000 because of bodily injury to one person in any one
accident and, subject to said limit for one person, of not less
than $60,000 because of injury to two or more persons in any one
accident, and, if the accident has resulted in injury to or
destruction of property, of not less than $10,000 because of
such injury to or destruction of property of others in any one
accident.
(2) Under residual liability insurance the reparation
obligor shall be liable to pay, on behalf of the insured, sums
which the insured is legally obligated to pay as damages because
of bodily injury and property damage arising out of the
ownership, maintenance or use of a motor vehicle if the injury
or damage occurs within this state, the United States of
America, its territories or possessions, or Canada. A
reparation obligor shall also be liable to pay sums which
another reparation obligor is entitled to recover under the
indemnity provisions of section 65B.53, subdivision 1.
(3) Every plan of reparation security shall be subject to
the following provisions which need not be contained therein:
(a) The liability of the reparation obligor with respect to
the residual liability coverage required by this clause shall
become absolute whenever injury or damage occurs; such liability
may not be canceled or annulled by any agreement between the
reparation obligor and the insured after the occurrence of the
injury or damage; no statement made by the insured or on the
insured's behalf and no violation of said policy shall defeat or
void said policy.
(b) The satisfaction by the insured of a judgment for such
injury or damage shall not be a condition precedent to the right
or duty of the reparation obligor to make payment on account of
such injury or damage.
(c) The reparation obligor shall have the right to settle
any claim covered by the residual liability insurance policy,
and if such settlement is made in good faith, the amount thereof
shall be deductible from the limits of liability for the
accident out of which such claim arose.
(d) Except as provided in subdivision 5a, a residual
liability insurance policy shall be excess of a nonowned vehicle
policy whether the nonowned vehicle is borrowed or rented, or
used for business or pleasure. A nonowned vehicle is one not
used or provided on a regular basis.
Sec. 54. Minnesota Statutes 1992, section 72A.20,
subdivision 29, is amended to read:
Subd. 29. [HIV TESTS; CRIME VICTIMS.] No insurer regulated
under chapter 61A or 62B, or providing health, medical,
hospitalization, or accident and sickness insurance regulated
under chapter 62A, or nonprofit health services corporation
regulated under chapter 62C, health maintenance organization
regulated under chapter 62D, or fraternal benefit society
regulated under chapter 64B, may:
(1) obtain or use the performance of or the results of a
test to determine the presence of the human immune deficiency
virus (HIV) antibody performed on an offender under section
611A.19 or performed on a crime victim who was exposed to or had
contact with an offender's bodily fluids during commission of a
crime that was reported to law enforcement officials, in order
to make an underwriting decision, cancel, fail to renew, or take
any other action with respect to a policy, plan, certificate, or
contract; or
(2) ask an applicant for coverage or a person already
covered whether the person has: (i) had a test performed for
the reason set forth in clause (1); or (ii) been the victim of
an assault or any other crime which involves bodily contact with
the offender.
A question that purports to require an answer that would
provide information regarding a test performed for the reason
set forth in clause (1) may be interpreted as excluding this
test. An answer that does not mention the test is considered to
be a truthful answer for all purposes. An authorization for the
release of medical records for insurance purposes must
specifically exclude any test performed for the purpose set
forth in clause (1) and must be read as providing this exclusion
regardless of whether the exclusion is expressly stated. This
subdivision does not affect tests conducted for purposes other
than those described in clause (1), including any test to
determine the presence of the human deficiency virus (HIV)
antibody if such test was performed at the insurer's direction
as part of the insurer's normal underwriting requirements.
Sec. 55. Minnesota Statutes 1992, section 72A.20, is
amended by adding a subdivision to read:
Subd. 30. [RECORDS RETENTION.] An insurer shall retain
copies of all underwriting documents, policy forms, and
applications for three years from the effective date of the
policy. This subdivision does not relieve the insurer of its
obligation to produce these documents to the department after
the retention period has expired in connection with an
enforcement action or administrative proceeding against the
insurer from whom the documents are requested, if the insurer
has retained the documents. Records required to be retained by
this section may be retained in paper, photograph, microprocess,
magnetic, mechanical, or electronic media, or by any process
which accurately reproduces or forms a durable medium for the
reproduction of a record.
Sec. 56. Minnesota Statutes 1992, section 72A.201,
subdivision 9, is amended to read:
Subd. 9. [STANDARDS FOR COMMUNICATIONS WITH THE
DEPARTMENT.] In addition to the acts specified elsewhere in this
section and section 72A.20, the following acts by an insurer,
adjuster, or a self-insured or self-insurance administrator
constitute unfair settlement practices:
(1) failure to respond, within 15 working days after
receipt of an inquiry from the commissioner, about a claim, to
the commissioner;
(2) failure, upon request by the commissioner, to make
specific claim files available to the commissioner;
(3) failure to include in the claim file all written
communications and transactions emanating from, or received by,
the insurer, as well as all notes and work papers relating to
the claim. All written communications and notes referring to
verbal communications must be dated by the insurer;
(4) failure to submit to the commissioner, when requested,
any summary of complaint data reasonably required;
(5) failure to compile and maintain a file on all
complaints. If the complaint deals with a loss, the file must
contain adequate information so as to permit easy retrieval of
the entire file. If the complaint alleges that the company, or
agent of the company, or any agent producing business written by
the company is engaged in any unfair, false, misleading,
dishonest, fraudulent, untrustworthy, coercive, or financially
irresponsible practice, or has violated any insurance law or
rule, the file must indicate what investigation or action was
taken by the company. The complaint file must be maintained for
at least four years after the date of the complaint.
For purposes of clause (1) the term insurer includes an
agent of the insurer. The insurer must have been sent a copy of
any communication to an agent to be held in violation of this
provision.
Sec. 57. Minnesota Statutes 1992, section 72A.41,
subdivision 1, is amended to read:
Subdivision 1. It is unlawful for any company to enter
into a contract of insurance as an insurer or to transact
insurance business in this state, as set forth in subdivision 2,
without a certificate of authority from the commissioner;
provided that this subdivision does not apply to: (a) contracts
of insurance procured by agents under the authority of sections
60A.195 to 60A.209; (b) contracts of reinsurance and contracts
of ocean or wet marine and transportation insurance; (c)
transactions in this state involving a policy lawfully
solicited, written and delivered outside of this state covering
only subjects of insurance not resident, located, or expressly
to be performed in this state at the time of issuance and which
transactions are subsequent to the issuance of the policy; (d)
transactions in this state involving group or blanket insurance
and group annuities where the master policy of such groups was
lawfully issued and delivered in a state in which the company
was authorized to do an insurance business where, except for
group annuities, the insurer complies with section 72A.13. The
commissioner may require the insurer which has issued such
master policy to submit any information as the commissioner
reasonably requires in order to determine if probable cause
exists to convene a hearing to determine whether the total
charges for the insurance to the persons insured are
unreasonable in relation to the benefits provided under the
policy; (e) transactions in this state involving a policy of
insurance or annuity issued prior to July 1, 1967; or (f) (e)
contract of insurance procured under the authority of section
60A.19, subdivision 8; or (g) (f) transactions in this state
involving contracts of insurance covering property or risks not
located in this state.
Sec. 58. Minnesota Statutes 1992, section 72B.03,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENT; EXCEPTIONS.] Except as
otherwise provided, no person shall act as an independent
adjuster, public adjuster, or public adjuster solicitor for
money, a commission, or any other thing of value, unless such
person shall first obtain from the commissioner a license. No
license shall be required for a person:
(a) Undergoing a training or education program under the
guidance of a licensed adjuster and who is registered with the
commissioner for a one year temporary permit;
(b) (1) a person acting in a catastrophe or emergency
situation, and who has registered with the commissioner for that
purpose;
(c) (2) a nonresident adjuster who occasionally is in this
state to adjust a single loss; provided, however, that if a
nonresident adjusts more than six losses in this state in one
year the adjuster must qualify for and receive a nonresident's
license as provided in sections 72B.01 to 72B.14, and provided
the adjuster's domiciliary state affords a like privilege.
Sec. 59. Minnesota Statutes 1992, section 72B.04,
subdivision 2, is amended to read:
Subd. 2. [QUALIFICATIONS.] An applicant for licensing as
an adjuster under sections 72B.01 to 72B.14 shall be at least 18
years of age, and shall have one year's training and experience
in adjusting insurance claims for damage or loss from risks in
the field stated in the application. The applicant shall be
competent and trustworthy and shall not have been engaged in any
practice which would be grounds for suspension or revocation of
a license under sections 72B.01 to 72B.14 within the three years
next preceding the date of the application.
An applicant for licensing as a public adjuster solicitor
under sections 72B.01 to 72B.14 shall be at least 18 years of
age, shall be competent and trustworthy, and shall not have been
engaged in any practice which would be grounds for suspension or
revocation of a license under sections 72B.01 to 72B.14 within
the three years next preceding the date of the application.
In the case of any applicant who has been convicted of a
felony within the ten years next preceding the date of the
application, and who in the judgment of the commissioner, meets
the other qualifications, the commissioner may impose the
additional requirement of the filing of a bond in accordance
with the requirements of section 72B.08, subdivision 8.
Sec. 60. Minnesota Statutes 1992, section 176.181,
subdivision 2, is amended to read:
Subd. 2. [COMPULSORY INSURANCE; SELF-INSURERS.] (1) Every
employer, except the state and its municipal subdivisions,
liable under this chapter to pay compensation shall insure
payment of compensation with some insurance carrier authorized
to insure workers' compensation liability in this state, or
obtain a written order from the commissioner of commerce
exempting the employer from insuring liability for compensation
and permitting self-insurance of the liability. The terms,
conditions and requirements governing self-insurance shall be
established by the commissioner pursuant to chapter 14. The
commissioner of commerce shall also adopt, pursuant to clause
(2)(c), rules permitting two or more employers, whether or not
they are in the same industry, to enter into agreements to pool
their liabilities under this chapter for the purpose of
qualifying as group self-insurers. With the approval of the
commissioner of commerce, any employer may exclude medical,
chiropractic and hospital benefits as required by this chapter.
An employer conducting distinct operations at different
locations may either insure or self-insure the other portion of
operations as a distinct and separate risk. An employer
desiring to be exempted from insuring liability for compensation
shall make application to the commissioner of commerce, showing
financial ability to pay the compensation, whereupon by written
order the commissioner of commerce, on deeming it proper, may
make an exemption. An employer may establish financial ability
to pay compensation by: (1) providing financial statements of
the employer to the commissioner of commerce; or (2) filing a
surety bond or bank letter of credit with the commissioner of
commerce in an amount equal to the anticipated annual
compensation costs of the employer, but in no event less than
$100,000. Upon ten days' written notice the commissioner of
commerce may revoke the order granting an exemption, in which
event the employer shall immediately insure the liability. As a
condition for the granting of an exemption the commissioner of
commerce may require the employer to furnish security the
commissioner of commerce considers sufficient to insure payment
of all claims under this chapter, consistent with subdivision
2b. If the required security is in the form of currency or
negotiable bonds, the commissioner of commerce shall deposit it
with the state treasurer. In the event of any default upon the
part of a self-insurer to abide by any final order or decision
of the commissioner of labor and industry directing and awarding
payment of compensation and benefits to any employee or the
dependents of any deceased employee, then upon at least ten days
notice to the self-insurer, the commissioner of commerce may by
written order to the state treasurer require the treasurer to
sell the pledged and assigned securities or a part thereof
necessary to pay the full amount of any such claim or award with
interest thereon. This authority to sell may be exercised from
time to time to satisfy any order or award of the commissioner
of labor and industry or any judgment obtained thereon. When
securities are sold the money obtained shall be deposited in the
state treasury to the credit of the commissioner of commerce and
awards made against any such self-insurer by the commissioner of
commerce shall be paid to the persons entitled thereto by the
state treasurer upon warrants prepared by the commissioner of
commerce and approved by the commissioner of finance out of the
proceeds of the sale of securities. Where the security is in
the form of a surety bond or personal guaranty the commissioner
of commerce, at any time, upon at least ten days notice and
opportunity to be heard, may require the surety to pay the
amount of the award, the payments to be enforced in like manner
as the award may be enforced.
(2)(a) No association, corporation, partnership, sole
proprietorship, trust or other business entity shall provide
services in the design, establishment or administration of a
group self-insurance plan under rules adopted pursuant to this
subdivision unless it is licensed, or exempt from licensure,
pursuant to section 60A.23, subdivision 8, to do so by the
commissioner of commerce. An applicant for a license shall
state in writing the type of activities it seeks authorization
to engage in and the type of services it seeks authorization to
provide. The license shall be granted only when the
commissioner of commerce is satisfied that the entity possesses
the necessary organization, background, expertise, and financial
integrity to supply the services sought to be offered. The
commissioner of commerce may issue a license subject to
restrictions or limitations, including restrictions or
limitations on the type of services which may be supplied or the
activities which may be engaged in. The license is for a
two-year period.
(b) To assure that group self-insurance plans are
financially solvent, administered in a fair and capable fashion,
and able to process claims and pay benefits in a prompt, fair
and equitable manner, entities licensed to engage in such
business are subject to supervision and examination by the
commissioner of commerce.
(c) To carry out the purposes of this subdivision, the
commissioner of commerce may promulgate administrative rules,
including emergency rules, pursuant to sections 14.001 to 14.69.
These rules may:
(i) establish reporting requirements for administrators of
group self-insurance plans;
(ii) establish standards and guidelines consistent with
subdivision 2b to assure the adequacy of the financing and
administration of group self-insurance plans;
(iii) establish bonding requirements or other provisions
assuring the financial integrity of entities administering group
self-insurance plans;
(iv) establish standards, including but not limited to
minimum terms of membership in self-insurance plans, as
necessary to provide stability for those plans;
(v) establish standards or guidelines governing the
formation, operation, administration, and dissolution of
self-insurance plans; and
(vi) establish other reasonable requirements to further the
purposes of this subdivision. The rules may not require
excessive cash payments to a common claims fund by group
self-insurers. However, a level of funding in the common claims
fund must always be maintained at not less than one year's claim
losses paid in the most recent year.
Sec. 61. Minnesota Statutes 1992, section 340A.409,
subdivision 2, is amended to read:
Subd. 2. [MARKET ASSISTANCE.] The commissioner of commerce
shall advise licensees and municipalities subject to the
financial responsibility requirements of subdivision 1 of those
persons offering insurance coverage. The commissioner of
commerce shall establish a program to assist licensees in
obtaining insurance coverage. The program shall include a
committee appointed by the commissioner of commerce that is
representative of insurance carriers and producers, liquor
vendors, and the public. No less than one-half of the committee
members shall represent casualty insurers and surplus lines
agents or brokers. The commissioner of commerce or the
commissioner's designated representative shall serve as an ex
officio member of the committee. The committee shall review and
act upon all properly executed applications. If the committee
finds that it cannot assist in securing insurance coverage, it
shall notify the applicant in writing with a full explanation
and recommendation for enhancing its ability to secure
insurance. The commissioner of commerce shall, if necessary,
establish an assigned risk plan pursuant to subdivision 3. The
market assistance plan of the Minnesota joint underwriting
association shall assist licensees in obtaining insurance
coverage.
Sec. 62. Minnesota Statutes 1992, section 340A.409,
subdivision 3, is amended to read:
Subd. 3. [ASSIGNED RISK PLAN MINNESOTA JOINT UNDERWRITING
ASSOCIATION.] (a) The purpose of the assigned risk plan is
to Minnesota joint underwriting association shall provide
coverage required by subdivision 1 to persons rejected under
this subdivision.
(b) An insurer who offers liquor liability insurance that
refuses to write the coverage required by subdivision 1 shall
furnish the applicant with a written notice of refusal. The
rejected applicant shall file a copy of the notice of refusal
with the commissioner of public safety at the time of
application for coverage to the assigned risk plan and the
market assistance program.
A written notice of refusal must be provided to any
applicant who has requested only liquor liability insurance if
the insurer chooses to only offer liquor liability insurance in
combination with other types of insurance.
A written notice of refusal must be provided by an insurer
to any applicant who receives an offer of coverage from that
insurer that is in excess of the rate charged by the assigned
risk plan for similar coverage and risk. A notice is not
required if the rate for the coverage offered is less than 20
percent in excess of the assigned risk plan rates, provided that
the offered rate is the rate that the insurer has filed with the
commissioner of commerce if the insurer is required to file its
rates with the commissioner. If the insurer is not required to
file its rates with the commissioner, the offered rate must be
the rate generally charged by the insurer for similar coverage
and risk.
A notice of refusal is not required to be filed if there is
not an insurer offering liquor liability insurance in the state.
To be eligible to participate in the assigned risk plan an
applicant must apply for coverage through the market assistance
program. Application to the market assistance program must be
made no later than the time of application to the assigned risk
plan. If the market assistance program is unable to secure
coverage then coverage may be extended by the assigned risk plan.
(c) The commissioner of commerce may enter into service
contracts as necessary or beneficial to accomplish the purposes
of the assigned risk plan including servicing of policies or
contracts of coverage, data management, and assessment
collections. Services related to the administration of policies
or contracts of coverages must be performed by one or more
qualified insurance companies licensed pursuant to section
60A.06, subdivision 1, clause (13), or a qualified vendor of
risk management services. A qualified insurer or vendor of risk
management services must possess sufficient financial,
professional, administrative, and personnel resources to provide
the services required for operation of the plan. The cost of
all services contracted for are an obligation of the assigned
risk plan.
(d) The commissioner of commerce may assess all insurers
licensed under section 60A.06, subdivision 1, clause (13), an
amount sufficient to fully fund the obligations of the assigned
risk plan if the commissioner determines that the assets of the
assigned risk plan are insufficient to meet its obligations.
The assessment of each insurer must be in a proportion equal to
the proportion which the amount of insurance written as reported
on page 14 of the annual statement under line 5, commercial
multiperil, and line 17, other liability, during the preceding
calendar year by that insurer bears to the total written by all
such carriers for such lines.
(e) Policies and contracts of coverage issued under this
subdivision must contain the usual and customary provisions of
liability insurance policies, and must contain at least the
minimum coverage required by subdivision 1 or the local
governing unit.
(f) Assigned risk policies and contracts of coverage are
subject to premium tax pursuant to section 60A.15.
(g) Insureds served by the assigned risk plan must be
charged premiums based upon a rating plan approved by the
commissioner of commerce. Assigned risk premiums must be on an
actuarially sound basis. The rating plan approved by the
commissioner shall provide for surcharge factors based upon
claims reported and losses paid. The commissioner of commerce
shall fix the compensation received by the agent of record.
(h) The rating plan may be amended by rule pursuant to
chapter 14 or by the following expedited procedures:
(1) Any person may, by written petition served upon the
commissioner, request that a hearing be held to amend 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 a 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 no less than 60 days nor more than 90
days from the date of receipt of the petition by the
commissioner.
(3) The commissioner of commerce 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 by
the administrative law judge of the notice prior to publication
is not required.
(4) The hearing and all matters taking place 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 modified.
(7) A petition for a hearing to amend 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.
(i) (b) A liquor vendor shall be denied or terminated from
coverage through the assigned risk plan Minnesota joint
underwriting association if the liquor vendor disregards safety
standards, laws, rules, or ordinances pertaining to the offer,
sale, or other distribution of liquor.
The commissioner may by rule establish other conditions for
denial or termination from coverage through the assigned risk
plan.
(j) The commissioner of commerce shall adopt rules needed
to implement this subdivision. The rules may include:
(1) appeal procedures from actions of the assigned risk
plan;
(2) formation of an advisory committee composed of
insurers, vendors of risk management services and licensees, to
advise the commissioner of commerce regarding operation of the
plan; and
(3) applicable rating plans and rating standards.
Sec. 63. [LIQUOR LIABILITY ASSIGNED RISK PLAN OBLIGATIONS
AND LIABILITIES.]
The Minnesota joint underwriting association shall assume
the obligations of existing contracts and existing liabilities
of the liquor liability assigned risk plan.
Sec. 64. Laws 1993, chapter 372, section 8, is amended to
read:
Sec. 8. [EFFECTIVE DATE.]
Sections 1 and 2 apply to all franchise contracts or
franchise transfer agreements entered into or renewed on or
after the effective date, and apply as of July 1, 1993, to
franchise contracts in effect on the effective date that have no
expiration date.
Sections 4 to 7 apply to all agreements for private label
purchases entered into or renewed on or after July 1, 1993, and
to all private label purchases occurring on or after that date.
Sec. 65. [REVISOR INSTRUCTIONS.]
(a) The revisor shall recodify Minnesota Statutes, section
72A.20, subdivision 4a, as section 72A.201, subdivision 4a.
(b) The revisor shall recodify Minnesota Statutes, section
60A.30 as section 60A.351 and section 60A.31 as section 60A.352
and correct internal references in Minnesota Statutes and
Minnesota Rules.
Sec. 66. [REPEALER.]
(a) Minnesota Statutes 1992, sections 72A.45; and 72B.07,
are repealed.
(b) Minnesota Rules, parts 2780.4800; 2783.0010; 2783.0020;
2783.0030; 2783.0040; 2783.0050; 2783.0060; 2783.0070;
2783.0080; 2783.0090; and 2783.0100, are repealed. The rates
set pursuant to these rules shall continue to apply until
changed pursuant to Minnesota Statutes, section 62I.06.
Sec. 67. [EFFECTIVE DATE.]
Sections 61 to 63 and 66, paragraph (b), are effective the
day following final enactment.
Section 64 is effective July 1, 1993.
Presented to the governor April 20, 1994
Signed by the governor April 22, 1994, 1:45 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes