Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1995, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 258-S.F.No. 440
An act relating to insurance; regulating coverages,
notice provisions, enforcement provisions, and
licensees; the comprehensive health association;
increasing the lifetime benefit limit; making
technical changes; providing for certain breast cancer
coverage; prohibiting certain rate differentials
within the same town or city; amending Minnesota
Statutes 1994, sections 60A.06, subdivision 3;
60A.085; 60A.111, subdivision 2; 60A.124; 60A.23,
subdivision 8; 60A.26; 60A.951, subdivisions 2 and 5;
60A.954, subdivision 1; 60A.955; 60K.03, subdivision
7; 60K.14, subdivision 1; 61A.03, subdivision 1;
61A.071; 61A.092, subdivisions 3 and 6; 61B.28,
subdivisions 8 and 9; 62A.042; 62A.10; 62A.135;
62A.136; 62A.14; 62A.141; 62A.31, subdivisions 1h and
1i; 62A.46, subdivision 2, and by adding a
subdivision; 62A.48, subdivisions 1 and 2; 62A.50,
subdivision 3; 62C.14, subdivisions 5 and 14; 62D.02,
subdivision 8; 62E.02, subdivision 7; 62E.12; 62F.02,
subdivision 2; 62I.09, subdivision 2; 62L.02,
subdivision 16; 62L.03, subdivision 5; 65A.01, by
adding a subdivision; 65B.06, subdivision 3; 65B.08,
subdivision 1; 65B.09, subdivision 1; 65B.10,
subdivision 3; 65B.61, subdivision 1; 72A.20,
subdivision 13, and by adding a subdivision; 72B.05;
79.251, subdivision 5, and by adding a subdivision;
79.34, subdivision 2; 79.35; 79A.01, by adding a
subdivision; 79A.02, subdivision 4; 79A.03, by adding
a subdivision; 176.181, subdivision 2; 299F.053,
subdivision 2; 515A.3-112; and 515B.3-113; proposing
coding for new law in Minnesota Statutes, chapters
60A; and 62A; repealing Minnesota Statutes 1994,
sections 61A.072, subdivision 3; and 65B.07,
subdivision 5.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1994, section 60A.06,
subdivision 3, is amended to read:
Subd. 3. [LIMITATION ON COMBINATION POLICIES.] (a) Unless
specifically authorized by subdivision 1, clause (4), it is
unlawful to combine in one policy coverage permitted by
subdivision 1, clauses (4) and (5)(a). This subdivision does
not prohibit the simultaneous sale of these products, but the
sale must involve two separate and distinct policies.
(b) This subdivision does not apply to group policies.
(c) This subdivision does not apply to policies permitted
by subdivision 1, clause (4), that contain benefits providing
acceleration of life, endowment, or annuity benefits in advance
of the time they would otherwise be payable, or to long-term
care policies as defined in section 62A.46, subdivision 2.
Sec. 2. Minnesota Statutes 1994, 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 regulated under
chapter 62A or 62C 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.
(c) Paragraph (a) does not apply if the group policy, plan,
or contract is replaced, or if the insurer has reasonable
evidence to indicate that it will be replaced, by a
substantially similar policy, plan, or contract.
(d) In no event shall this section extend coverage under a
group policy, plan, or contract more than 120 days beyond the
date coverage would otherwise cancel based on the terms of the
group policy, plan, or contract.
(e) If coverage under the group policy, plan, or contract
is extended by this section, then the time period during which
affected members may exercise any conversion privilege provided
for in the group policy, plan, or contract is extended for the
same length of time, plus 30 days.
Sec. 3. Minnesota Statutes 1994, section 60A.111,
subdivision 2, is amended to read:
Subd. 2. [PLAN.] If the commissioner determines that the
required liabilities of any company are greater than its
qualified assets and that the combined financial resources of
the insurance company members of any insurance holding company
system of which the company is a member are not adequate to
counterbalance that fact, the commissioner may require the
company to submit to the commissioner for approval a plan by
which the company undertakes to bring the ratio of its required
liabilities to its qualified assets to its required liabilities,
expressed as a percentage, up to at least 110 percent within a
reasonable period, usually not exceeding five years.
Sec. 4. Minnesota Statutes 1994, section 60A.124, is
amended to read:
60A.124 [INDEPENDENT AUDIT.]
The audit report of the independent certified public
accountant that performs the audit of an insurer's annual
statement as required under section 60A.13 60A.129,
subdivision 3a 3, paragraph (a), should contain a statement as
to whether anything, in connection with their audit, came to
their attention that caused them to believe that the insurer
failed to adopt and consistently apply the valuation procedure
as required by sections 60A.122 and 60A.123.
Sec. 5. Minnesota Statutes 1994, section 60A.23,
subdivision 8, is amended to read:
Subd. 8. [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS
WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1) [SCOPE.] This
subdivision applies to any vendor of risk management services
and to any entity which administers, for compensation, a
self-insurance or insurance plan. This subdivision does not
apply (a) to an insurance company authorized to transact
insurance in this state, as defined by section 60A.06,
subdivision 1, clauses (4) and (5); (b) to a service plan
corporation, as defined by section 62C.02, subdivision 6; (c) to
a health maintenance organization, as defined by section 62D.02,
subdivision 4; (d) to an employer directly operating a
self-insurance plan for its employees' benefits; or (e) to an
entity which administers a program of health benefits
established pursuant to a collective bargaining agreement
between an employer, or group or association of employers, and a
union or unions; or (f) to an entity which administers a
self-insurance or insurance plan if a licensed Minnesota insurer
is providing insurance to the plan and if the licensed insurer
has appointed the entity administering the plan as one of its
licensed agents within this state.
(2) [DEFINITIONS.] For purposes of this subdivision the
following terms have the meanings given them.
(a) "Administering a self-insurance or insurance plan"
means (i) processing, reviewing or paying claims, (ii)
establishing or operating funds and accounts, or (iii) otherwise
providing necessary administrative services in connection with
the operation of a self-insurance or insurance plan.
(b) "Employer" means an employer, as defined by section
62E.02, subdivision 2.
(c) "Entity" means any association, corporation,
partnership, sole proprietorship, trust, or other business
entity engaged in or transacting business in this state.
(d) "Self-insurance or insurance plan" means a plan
providing life, medical or hospital care, accident, sickness or
disability insurance, as an employee fringe benefit for the
benefit of employees or members of an association, or a plan
providing liability coverage for any other risk or hazard, which
is or is not directly insured or provided by a licensed insurer,
service plan corporation, or health maintenance organization.
(e) "Vendor of risk management services" means an entity
providing for compensation actuarial, financial management,
accounting, legal or other services for the purpose of designing
and establishing a self-insurance or insurance plan for an
employer.
(3) [LICENSE.] No vendor of risk management services or
entity administering a self-insurance or insurance plan may
transact this business in this state unless it is licensed to do
so by the commissioner. 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 may be granted only when the commissioner
is satisfied that the entity possesses the necessary
organization, background, expertise, and financial integrity to
supply the services sought to be offered. The commissioner may
issue a license subject to restrictions or limitations upon the
authorization, including the type of services which may be
supplied or the activities which may be engaged in. The license
fee is $100. All licenses are for a period of two years.
(4) [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.]
To assure that self-insurance or insurance plans are financially
solvent, are administered in a fair and equitable fashion, and
are processing claims and paying benefits in a prompt, fair, and
honest manner, vendors of risk management services and entities
administering insurance or self-insurance plans are subject to
the supervision and examination by the commissioner. Vendors of
risk management services, entities administering insurance or
self-insurance plans, and insurance or self-insurance plans
established or operated by them are subject to the trade
practice requirements of sections 72A.19 to 72A.30. In lieu of
an unlimited guarantee from a parent corporation for a vendor of
risk management services or an entity administering insurance or
self-insurance plans, the commissioner may accept a fidelity
surety bond in a form satisfactory to the commissioner in an
amount equal to 120 percent of the total amount of claims
handled by the applicant in the prior year. If at any time the
total amount of claims handled during a year exceeds the amount
upon which the bond was calculated, the administrator shall
immediately notify the commissioner. The commissioner may
require that the bond be increased accordingly.
(5) [RULEMAKING AUTHORITY.] To carry out the purposes of
this subdivision, the commissioner may adopt rules, including
emergency rules, pursuant to sections 14.001 to 14.69. These
rules may:
(a) establish reporting requirements for administrators of
insurance or self-insurance plans;
(b) establish standards and guidelines to assure the
adequacy of financing, reinsuring, and administration of
insurance or self-insurance plans;
(c) establish bonding requirements or other provisions
assuring the financial integrity of entities administering
insurance or self-insurance plans; or
(d) establish other reasonable requirements to further the
purposes of this subdivision.
Sec. 6. [60A.235] [STANDARDS FOR DETERMINING WHETHER
CONTRACTS ARE HEALTH PLAN CONTRACTS OR STOP LOSS CONTRACTS.]
Subdivision 1. [FINDINGS AND PURPOSE.] The purpose of this
section is to establish a standard for the determination of
whether an insurance policy or other evidence or coverage should
be treated as a policy of accident and sickness insurance or a
stop loss policy for the purpose of the regulation of the
business of insurance. The laws regulating the business of
insurance in Minnesota impose distinctly different requirements
upon accident and sickness insurance policies and stop loss
policies. In particular, the regulation of accident and
sickness insurance in Minnesota includes measures designed to
reform the health insurance market, to minimize or prohibit
selective rating or rejection of employee groups or individual
group members based upon health conditions, and to provide
access to affordable health insurance coverage regardless of
preexisting health conditions. The health care reform
provisions enacted in Minnesota will only be effective if they
are applied to all insurers and health carriers who in
substance, regardless of purported form, engage in the business
of issuing health insurance coverage to employees of an employee
group. This section applies to insurance companies and health
carriers and the policies or other evidence of coverage that
they issue. This section does not apply to employers or the
benefit plans they establish for their employees.
Subd. 2. [DEFINITIONS.] For purposes of this section, the
terms defined in this subdivision have the meanings given.
(a) "Attachment point" means the claims amount beyond which
the insurance company or health carrier incurs a liability for
payment.
(b) "Direct coverage" means coverage under which an
insurance company or health carrier assumes a direct obligation
to an individual, under the policy or evidence of coverage, with
respect to health care expenses incurred by the individual or a
member of the individual's family.
(c) "Expected claims" means the amount of claims that, in
the absence of a stop loss policy or other insurance or evidence
of coverage, are projected to be incurred under an
employer-sponsored plan covering health care expenses.
(d) "Expected plan claims" means the expected claims less
the projected claims in excess of the specific attachment point,
adjusted to be consistent with the employer's aggregate contract
period.
(e) "Health plan" means a health plan as defined in section
62A.011 and includes group coverage regardless of the size of
the group.
(f) "Health carrier" means a health carrier as defined in
section 62A.011.
Subd. 3. [HEALTH PLAN POLICIES ISSUED AS STOP LOSS
COVERAGE.] (a) An insurance company or health carrier issuing or
renewing an insurance policy or other evidence of coverage, that
provides coverage to an employer for health care expenses
incurred under an employer-sponsored plan provided to the
employer's employees, retired employees, or their dependents,
shall issue the policy or evidence of coverage as a health plan
if the policy or evidence of coverage:
(1) has a specific attachment point for claims incurred per
individual that is lower than $10,000; or
(2) has an aggregate attachment point that is lower than
the sum of:
(i) 140 percent of the first $50,000 of expected plan
claims;
(ii) 120 percent of the next $450,000 of expected plan
claims; and
(iii) 110 percent of the remaining expected plan claims.
(b) Where the insurance policy or evidence of coverage
applies to a contract period of more than one year, the dollar
amounts set forth in paragraph (a), clauses (1) and (2), must be
multiplied by the length of the contract period expressed in
years.
(c) The commissioner may adjust the constant dollar amounts
provided in paragraph (a), clauses (1) and (2), on January 1 of
any year, based upon changes in the medical component of the
Consumer Price Index (CPI). Adjustments must be in increments
of $100 and must not be made unless at least that amount of
adjustment is required. The commissioner shall publish any
change in these dollar amounts at least three months before
their effective date.
(d) A policy or evidence of coverage issued by an insurance
company or health carrier that provides direct coverage of
health care expenses of an individual including a policy or
evidence of coverage administered on a group basis is a health
plan regardless of whether the policy or evidence of coverage is
denominated as stop loss coverage.
Subd. 4. [COMPLIANCE.] (a) An insurance company or health
carrier that is required to issue a policy or evidence of
coverage as a health plan under this section shall, even if the
policy or evidence of coverage is denominated as stop loss
coverage, comply with all the laws of this state that apply to
the health plan, including, but not limited to, chapters 62A,
62C, 62D, 62E, 62L, and 62Q.
(b) With respect to an employer who had been issued a
policy or evidence of coverage denominated as stop loss coverage
before the effective date of this section, compliance with this
section is required as of the first renewal date occurring on or
after the effective date of this section.
Sec. 7. [60A.236] [STOP LOSS REGULATION.]
A contract providing stop loss coverage, issued or renewed
to a small employer, as defined in section 62L.02, subdivision
26, or to a plan sponsored by a small employer, must include a
claim settlement period no less favorable to the small employer
or plan than coverage of all claims incurred during the contract
period regardless of when the claims are paid.
Sec. 8. Minnesota Statutes 1994, section 60A.26, is
amended to read:
60A.26 [SUSPENSION OF INSURERS, NOTICE TO OTHER STATES;
NOTIFICATIONS AND REPORTS.]
Subdivision 1. [OTHER STATES.] The commissioner of
commerce shall notify the insurance departments of all other
states whenever, under any law then in effect, the commissioner
suspends the right of a foreign or domestic insurer to transact
business in this state.
Subd. 2. [NAIC.] The commissioner of commerce shall report
public regulatory actions, investigative information, and
complaints to the appropriate reporting system or database of
the National Association of Insurance Commissioners.
Sec. 9. Minnesota Statutes 1994, section 60A.951,
subdivision 2, is amended to read:
Subd. 2. [AUTHORIZED PERSON.] "Authorized person" means
the county attorney, sheriff, or chief of police responsible for
investigations in the county where the suspected insurance fraud
occurred; the superintendent of the bureau of criminal
apprehension; the commissioner of commerce; the commissioner of
labor and industry; the attorney general; or any duly
constituted criminal investigative department or agency of the
United States.
Sec. 10. Minnesota Statutes 1994, section 60A.951,
subdivision 5, is amended to read:
Subd. 5. [INSURER.] "Insurer" means insurance company,
risk retention group as defined in section 60E.02, service plan
corporation as defined in section 62C.02, health maintenance
organization as defined in section 62D.02, integrated service
network as defined in section 62N.02, fraternal benefit society
regulated under chapter 64B, township mutual company regulated
under chapter 67A, joint self-insurance plan or multiple
employer trust regulated under chapter 60F, 62H, or section
471.617, subdivision 2, and persons administering a
self-insurance plan as defined in section 60A.23, subdivision 8,
clause (2), paragraphs (a) and (d), and the workers'
compensation reinsurance association established in section
79.34.
Sec. 11. Minnesota Statutes 1994, section 60A.954,
subdivision 1, is amended to read:
Subdivision 1. [ESTABLISHMENT.] An insurer shall
institute, implement, and maintain an antifraud plan. For the
purpose of this section, the term insurer does not include
reinsurers, the workers' compensation reinsurance association,
self-insurers, and excess insurers. Within 30 days after
instituting or modifying an antifraud plan, the insurer shall
notify the commissioner in writing. The notice must include the
name of the person responsible for administering the plan. An
antifraud plan shall establish procedures to:
(1) prevent insurance fraud, including: internal fraud
involving the insurer's officers, employees, or agents; fraud
resulting from misrepresentations on applications for insurance;
and claims fraud;
(2) report insurance fraud to appropriate law enforcement
authorities; and
(3) cooperate with the prosecution of insurance fraud cases.
Sec. 12. Minnesota Statutes 1994, section 60A.955, is
amended to read:
60A.955 [CLAIM FORMS TO CONTAIN FRAUD WARNING.]
All insurance claim forms issued by an insurer for use in
submitting a claim for payment or a claim for any other benefit
pursuant to a policy shall clearly contain a warning
substantially as follows: "A person who submits an application
or files a claim with intent to defraud or helps commit a fraud
against an insurer is guilty of a crime." An insurer may comply
with this section by including the warning on an addendum
attached to the application or claim form. The absence of the
required warning does not constitute a defense in a prosecution
for a violation of chapter 609 or any other chapter of Minnesota
Statutes.
Sec. 13. Minnesota Statutes 1994, section 60K.03,
subdivision 7, is amended to read:
Subd. 7. [EXCEPTIONS.] The following are exempt from the
general licensing requirements prescribed by this section:
(1) agents of township mutuals who are exempted pursuant to
section 60K.04;
(2) fraternal benefit society representatives exempted
pursuant to section 60K.05;
(3) any regular salaried officer or employee of a licensed
insurer, without license or other qualification, may act on
behalf of that licensed insurer in the negotiation of insurance
for that insurer, provided that a licensed agent must
participate in the sale of the insurance;
(4) employers and their officers or employees, and the
trustees or employees of any trust plan, to the extent that the
employers, officers, employees, or trustees are engaged in the
administration or operation of any program of employee benefits
for the employees of the employers or employees of their
subsidiaries or affiliates involving the use of insurance issued
by a licensed insurance company; provided that the activities of
the officers, employees and trustees are incidental to clerical
or administrative duties and their compensation does not vary
with the volume of insurance or applications for insurance;
(5) employees of a creditor who enroll debtors for credit
life, credit accident and health, or credit involuntary
unemployment insurance; provided the employees receive no
commission or fee for it;
(6) clerical or administrative employees of an insurance
agent who take insurance applications or receive premiums in the
office of their employer, if the activities are incidental to
clerical or administrative duties and the employee's
compensation does not vary with the volume of the applications
or premiums; and
(7) rental vehicle companies and their employees in
connection with the offer of rental vehicle personal accident
insurance under section 72A.125; and
(8) employees of a retailer who enroll purchasers for
credit insurance associated with a retail purchase; provided the
employees receive no commission, fee, bonus, or other form of
compensation for it.
Sec. 14. Minnesota Statutes 1994, section 60K.14,
subdivision 1, is amended to read:
Subdivision 1. [PERSONAL SOLICITATION OF INSURANCE SALES.]
(a) [DEFINITIONS.] For the purposes of this section, the
following terms have the meanings given them:
(1) "agent" means a person, copartnership, or corporation
required to be licensed pursuant to section 60K.02; and
(2) "personal solicitation" means any contact by an agent,
or any person acting on behalf of an agent, made for the purpose
of selling or attempting to sell insurance, when either the
agent or a person acting for the agent contacts the buyer by
telephone or in person, except: (i) an attempted sale in which
the buyer personally knows the identity of the agent, the name
of the general agency, if any, which the agent represents, and
the fact that the agent is an insurance agent; (ii) an attempted
sale in which the prospective purchaser of insurance initiated
the contact; or (iii) a personal contact which takes place at
the agent's place of business.
(b) [DISCLOSURE REQUIREMENT.] Before a personal
solicitation, the agent or person acting for an agent shall, at
the time of initial personal contact or communication with the
potential buyer, clearly and expressly disclose in writing:
(1) the name and state insurance agent license number of
the person making the contact or communication;
(2) the name of the agent, general agency, or insurer that
person represents; and
(3) the fact that the agent, agency, or insurer is in the
business of selling insurance.
If the initial personal contact is made by telephone, the
disclosures required by this subdivision need not be made in
writing.
(c) [FALSE REPRESENTATION OF GOVERNMENT AFFILIATION.] No
agent or person acting for an agent shall make any communication
to a potential buyer that indicates or gives the impression that
the agent is acting on behalf of a government agency.
Sec. 15. Minnesota Statutes 1994, section 61A.03,
subdivision 1, is amended to read:
Subdivision 1. [GENERALLY.] No policy of life insurance
may be issued in this state or by a life insurance company
organized under the laws of this state unless it contains the
following provisions:
(a) [PREMIUM.] A provision that all premiums are payable in
advance either at the home office of the company, or to an agent
of the company, upon delivery of a receipt signed by one or more
officers named in the policy and countersigned by the agent, but
a policy may contain a provision that the policy itself is a
receipt for the first premium;
(b) [GRACE PERIOD.] A provision for a one month grace
period for the payment of every premium after the first, during
which the insurance will continue in force. The provision may
subject the late payment to a finance charge and contain a
stipulation that if the insured dies during the grace period,
the overdue premium will be deducted in any settlement under the
policy;
(c) [ENTIRE CONTRACT.] A provision that the policy
constitutes the entire contract between the parties and is
incontestable after it has been in force during the lifetime of
the insured for two years from its date, except for nonpayment
of premiums and except for violations of the conditions of the
policy relating to naval and military services in time of war;
that at the option of the company, provisions relative to
benefits in the event of total and permanent disability and
provisions which grant additional insurance specifically against
death by accident, may be excepted; and that a special form of
policy may be issued on the life of a person employed in an
occupation classified by the company as extra hazardous or as
leading to hazardous employment, which provides that service in
certain designated occupations may reduce the company's
liability under the policy to a certain designated amount not
less than the full policy reserve;
(d) [REPRESENTATIONS AND WARRANTIES.] A provision that, in
the absence of fraud, all statements made by the insured are
representations and not warranties, and that no statement voids
the policy unless it is contained in a written application and a
copy of the application is endorsed upon or attached to the
policy when issued;
(e) [MISSTATEMENT OF AGE.] A provision that if the age of
the insured is understated the amount payable under the policy
will be the amount the premium would have purchased at the
correct age;
(f) [DIVIDENDS ON PARTICIPATING POLICIES.] A provision that
the policy will participate in the surplus of the company and
that, beginning not later than the end of the third policy year,
the company will annually determine and account for the portion
of the divisible surplus accruing on the policy, and that the
owner of the policy has the right, each year after the fifth, to
have the current dividend arising from the participation paid in
cash. If the policy provides other dividend options, it must
specify which option is effective if the owner of the policy
does not elect an option. The provision may condition any
dividends payable during the first five years of the policy upon
the payment of the next ensuing annual premium. This provision
is not required in nonparticipating policies, in policies issued
on under-average lives, or in insurance in exchange for lapsed
or surrendered policies;
(g) [POLICY LOANS.] A provision (1) that after three full
years' premiums have been paid, the company at any time while
the policy is in force, will advance, on proper assignment of
the policy, and on the sole security thereof, at a specified
rate of interest, not to exceed eight percent per annum, or at
an adjustable rate of interest as otherwise provided for in this
section, a sum equal to, or, at the option of the owner of the
policy, less than the loan value thereof; (2) that the loan
value is the cash surrender value thereof at the end of the
current policy year; (3) that the loan, unless made to pay
premiums, may be deferred for not more than six months after the
application for it is made; (4) that the company will deduct
from the loan value any existing indebtedness on the policy and
any unpaid balance of the premium for current policy year, and
may collect interest in advance on the loan to the end of the
current policy year; (5) that the failure to repay an advance or
to pay interest does not void the policy unless the total
indebtedness thereon to the company equals or exceeds the loan
value at the time of the failure, nor until one month after
notice has been mailed by the company to the last known address
of the insured and of the assignee of record at the home office
of the company; and (6) that no condition other than those
provided in this section will be exacted as a prerequisite to an
advance. This provision is not required in term insurance;
(h) [REINSTATEMENT.] A provision that if, in event of
default in premium payments, the nonforfeiture value of the
policy is applied to the purchase of other insurance, and if
that insurance is in force and the original policy has not been
surrendered to the company and canceled, the policy may be
reinstated within three years after the default upon evidence of
insurability satisfactory to the company and payment of arrears
of premiums with interest;
(i) [PAYMENT OF CLAIMS.] A provision that, when a policy
becomes a claim by the death of the insured, settlement will be
made within two months after receipt of due proof of death;
(j) [SETTLEMENT OPTION.] A table showing the amount of
installments in which the policy may provide its proceeds may be
payable;
(k) [DESCRIPTION OF POLICY.] A title on the face and on the
back of the policy briefly and correctly describing the policy
in bold letters stating its general character, dividend periods,
and other particulars, so that the holder will not be able to
mistake the nature and scope of the contract;
(l) [FORM NUMBER.] A form number in the lower left-hand
corner of the first page of each form, including riders and
endorsements.
Any of the foregoing provisions or portions thereof
relating to premiums not applicable to single premium policies
must not be incorporated therein.
Sec. 16. Minnesota Statutes 1994, section 61A.071, is
amended to read:
61A.071 [APPLICATIONS.]
No individual life insurance policy, 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. This
requirement will not apply to life insurers who mail a copy of
the signed, completed application to the applicant within 24
hours of receiving the application. 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. 17. Minnesota Statutes 1994, section 61A.092,
subdivision 3, is amended to read:
Subd. 3. [NOTICE OF OPTIONS.] Upon termination of or
layoff from employment of a covered employee, the employer shall
inform the employee of:
(1) the employee's right to elect to continue the coverage;
(2) the amount the employee must pay monthly to the
employer to retain the coverage;
(3) the manner in which and the office of the employer to
which the payment to the employer must be made; and
(4) the time by which the payments to the employer must be
made to retain coverage.
The employee has 60 days within which to elect coverage.
The 60-day period shall begin to run on the date coverage would
otherwise terminate or on the date upon which notice of the
right to coverage is received, whichever is later.
If the covered employee or covered dependent dies during
the 60-day election period and before the covered employee makes
an election to continue or reject continuation, then the covered
employee will be considered to have elected continuation of
coverage. The estate of the former employee or covered
dependent would then be entitled to a death benefit equal to the
amount of insurance that could have been continued less any
unpaid premium owing as of the date of death.
Notice must be in writing and sent by first class mail to
the employee's last known address which the employee has
provided to the employer.
A notice in substantially the following form is
sufficient: "As a terminated or laid off employee, the law
authorizes you to maintain your group insurance benefits, in an
amount equal to the amount of insurance in effect on the date
you terminated or were laid off from employment, for a period of
up to 18 months. To do so, you must notify your former employer
within 60 days of your receipt of this notice that you intend to
retain this coverage and must make a monthly payment of
$............ at ............. by the ............. of each
month."
Sec. 18. Minnesota Statutes 1994, section 61A.092,
subdivision 6, is amended 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: (1) a
certificate of insurance or similar evidence of coverage that
meets the conditions of section 61A.093, subdivision 2; or (2) a
group life insurance policy that contains a provision permitting
the certificate holder, upon termination or layoff from
employment, to retain the coverage provided under the group
policy by paying premiums directly to the insurer, provided that
the employer shall give the employee notice of the employee's
and each related certificate holder's right to continue the
insurance by paying premiums directly to the insurer. A related
certificate holder is an insured spouse of the employee.
Sec. 19. Minnesota Statutes 1994, section 61B.28,
subdivision 8, is amended to read:
Subd. 8. [FORM.] The form of notice referred to in
subdivision 7, paragraph (a), is as follows:
"....................
....................
....................
(insert name, current address, and
telephone number of insurer)
NOTICE CONCERNING POLICYHOLDER RIGHTS IN AN
INSOLVENCY UNDER THE MINNESOTA LIFE AND HEALTH
INSURANCE GUARANTY ASSOCIATION LAW
If the insurer that issued your life, annuity, or health
insurance policy becomes impaired or insolvent, you are entitled
to compensation for your policy from the assets of that insurer.
The amount you recover will depend on the financial condition of
the insurer.
In addition, residents of Minnesota who purchase life
insurance, annuities, or health insurance from insurance
companies authorized to do business in Minnesota are protected,
SUBJECT TO LIMITS AND EXCLUSIONS, in the event the insurer
becomes financially impaired or insolvent. This protection is
provided by the Minnesota Life and Health Insurance Guaranty
Association.
Minnesota Life and Health Insurance Guaranty Association
(insert current
address and telephone number)
The maximum amount the guaranty association will pay for
all policies issued on one life by the same insurer is limited
to $300,000. Subject to this $300,000 limit, the guaranty
association will pay up to $300,000 in life insurance death
benefits, $100,000 in net cash surrender and net cash withdrawal
values for life insurance, $300,000 in health insurance
benefits, including any net cash surrender and net cash
withdrawal values, $100,000 in annuity net cash surrender and
net cash withdrawal values, $300,000 in present value of annuity
benefits for annuities which are part of a structured settlement
or for annuities in regard to which periodic annuity benefits,
for a period of not less than the annuitant's lifetime or for a
period certain of not less than ten years, have begun to be paid
on or before the date of impairment or insolvency, or if no
coverage limit has been specified for a covered policy or
benefit, the coverage limit shall be $300,000 in present value.
Unallocated annuity contracts issued to retirement plans, other
than defined benefit plans, established under section 401,
403(b), or 457 of the Internal Revenue Code of 1986, as amended
through December 31, 1992, are covered up to $100,000 in net
cash surrender and net cash withdrawal values, for Minnesota
residents covered by the plan provided, however, that the
association shall not be responsible for more than $7,500,000 in
claims from all Minnesota residents covered by the plan. If
total claims exceed $7,500,000, the $7,500,000 shall be prorated
among all claimants. These are the maximum claim amounts.
Coverage by the guaranty association is also subject to other
substantial limitations and exclusions and requires continued
residency in Minnesota. If your claim exceeds the guaranty
association's limits, you may still recover a part or all of
that amount from the proceeds of the liquidation of the
insolvent insurer, if any exist. Funds to pay claims may not be
immediately available. The guaranty association assesses
insurers licensed to sell life and health insurance in Minnesota
after the insolvency occurs. Claims are paid from this
assessment.
THE COVERAGE PROVIDED BY THE GUARANTY ASSOCIATION IS NOT A
SUBSTITUTE FOR USING CARE IN SELECTING INSURANCE COMPANIES THAT
ARE WELL MANAGED AND FINANCIALLY STABLE. IN SELECTING AN
INSURANCE COMPANY OR POLICY, YOU SHOULD NOT RELY ON COVERAGE BY
THE GUARANTY ASSOCIATION.
THIS NOTICE IS REQUIRED BY MINNESOTA STATE LAW TO ADVISE
POLICYHOLDERS OF LIFE, ANNUITY, OR HEALTH INSURANCE POLICIES OF
THEIR RIGHTS IN THE EVENT THEIR INSURANCE CARRIER BECOMES
FINANCIALLY INSOLVENT. THIS NOTICE IN NO WAY IMPLIES THAT THE
COMPANY CURRENTLY HAS ANY TYPE OF FINANCIAL PROBLEMS. ALL LIFE,
ANNUITY, AND HEALTH INSURANCE POLICIES ARE REQUIRED TO PROVIDE
THIS NOTICE."
Additional language may be added to the notice if approved
by the commissioner prior to its use in the form. This section
does not apply to fraternal benefit societies regulated under
chapter 64B.
Sec. 20. Minnesota Statutes 1994, section 61B.28,
subdivision 9, is amended to read:
Subd. 9. [COMBINATION FIXED-VARIABLE POLICY.] The notice
required in subdivision 8 must clearly describe what portions of
a combination fixed-variable policy are not covered by the
Minnesota life and health insurance guaranty association. The
notice requirements specified in subdivision 8 7, paragraph (c),
do not apply to a combination fixed-variable policy.
Sec. 21. [62A.023] [NOTICE OF RATE CHANGE.]
A health insurer or service plan corporation must send
written notice to its policyholders and contract holders at
their last known address at least 30 days in advance of the
effective date of a proposed rate change. This notice
requirement does not apply to individual certificate holders
covered by group insurance policies or group subscriber
contracts.
Sec. 22. Minnesota Statutes 1994, section 62A.042, is
amended to read:
62A.042 [FAMILY COVERAGE; COVERAGE OF NEWBORN INFANTS.]
Subdivision 1. [INDIVIDUAL FAMILY POLICIES; RENEWALS.] (a)
No policy of individual accident and sickness insurance which
provides for insurance for more than one person under section
62A.03, subdivision 1, clause (3), and no individual health
maintenance contract which provides for coverage for more than
one person under chapter 62D, shall be renewed to insure or
cover any person in this state or be delivered or issued for
delivery to any person in this state unless the policy or
contract includes as insured or covered members of the family
any newborn infants, including dependent grandchildren who
reside with a covered grandparent, immediately from the moment
of birth and thereafter which insurance or contract shall
provide coverage for illness, injury, congenital malformation,
or premature birth.
(b) The coverage under paragraph (a) includes benefits for
inpatient or outpatient expenses arising from medical and dental
treatment up to age 18, including orthodontic and oral surgery
treatment, involved in the management of birth defects known as
cleft lip and cleft palate. If orthodontic services are
eligible for coverage under a dental insurance plan and another
policy or contract, the dental plan shall be primary and the
other policy or contract shall be secondary in regard to the
coverage required under paragraph (a). Payment for dental or
orthodontic treatment not related to the management of the
congenital condition of cleft lip and cleft palate shall not be
covered under this provision.
Subd. 2. [GROUP POLICIES; RENEWALS.] (a) No group accident
and sickness insurance policy and no group health maintenance
contract which provide for coverage of family members or other
dependents of an employee or other member of the covered group
shall be renewed to cover members of a group located in this
state or delivered or issued for delivery to any person in this
state unless the policy or contract includes as insured or
covered family members or dependents any newborn infants,
including dependent grandchildren who reside with a covered
grandparent, immediately from the moment of birth and thereafter
which insurance or contract shall provide coverage for illness,
injury, congenital malformation, or premature birth.
(b) The coverage under paragraph (a) includes benefits for
inpatient or outpatient expenses arising from medical and dental
treatment up to age 18, including orthodontic and oral surgery
treatment, involved in the management of birth defects known as
cleft lip and cleft palate. If orthodontic services are
eligible for coverage under a dental insurance plan and another
policy or contract, the dental plan shall be primary and the
other policy or contract shall be secondary in regard to the
coverage required under paragraph (a). Payment for dental or
orthodontic treatment not related to the management of the
congenital condition of cleft lip and cleft palate shall not be
covered under this provision.
Sec. 23. Minnesota Statutes 1994, section 62A.10, is
amended to read:
62A.10 [GROUP INSURANCE.]
Subdivision 1. [REQUIREMENTS.] Group accident and health
insurance is hereby declared to be that form of accident and
health insurance covering may be issued to cover groups of not
less than two employees nor less than ten members, and which may
include the employee's or member's dependents, consisting of
husband, wife, children, and actual dependents residing in the
household, written under a. The master policy may be issued to
any governmental corporation, unit, agency, or department
thereof, or to any corporation, copartnership, individual,
employer, or to any association as defined by section 60A.02,
subdivision 1a, where officers, members, employees, or classes
or divisions thereof, may be insured for their individual
benefit.
Subd. 2. [GROUP ACCIDENTAL DEATH AND GROUP DISABILITY
INCOME POLICIES.] Group accidental death insurance and group
disability income insurance policies may be issued in connection
with first real estate mortgage loans to cover groups of not
less than ten debtors of a creditor written under a master
policy issued to a creditor to insure its debtors in connection
with first real estate mortgage loans, in amounts not to exceed
the actual or scheduled amount of their indebtedness. No other
accident and health coverages may be issued in connection with
first real estate mortgage loans on a group basis to a
debtor-creditor group.
Subd. 3. [AUTHORITY TO ISSUE.] Any insurer authorized to
write accident and health insurance in this state shall have
power to issue group accident and health policies.
Subd. 2 4. [POLICY FORMS.] No policy of group accident and
health insurance may be issued or delivered in this state unless
the same has been approved by the commissioner in accordance
with section 62A.02, subdivisions 1 to 6. These forms shall
contain the standard provisions relating and applicable to
health and accident insurance and shall conform with the other
requirements of law relating to the contents and terms of
policies of accident and sickness insurance in so far as they
may be applicable to group accident and health insurance, and
also the following provisions:
(1) [ENTIRE CONTRACT.] A provision that the policy and the
application of the creditor, employer, or executive officer or
trustee of any association, and the individual applications, if
any, of the debtors, employees, or members, insured, shall
constitute the entire contract between the parties, and that all
statements made by the creditor, employer, or any executive
officer or trustee in on behalf of the group to be insured,
shall, in the absence of fraud, be deemed representations and
not warranties, and that no such statement shall be used in
defense to a claim under the policy, unless it is contained in
the written application;
(2) [MASTER POLICY-CERTIFICATES.] A provision that the
insurer will issue a master policy to the creditor, employer, or
to the executive officer or trustee of the association; and the
insurer shall also issue to the creditor, the employer, or to
the executive officer or trustee of the association, for
delivery to the debtor, employee, or member, who is insured
under the policy, an individual certificate setting forth a
statement as to the insurance protection to which the debtor,
employee, or member is entitled and to whom payable, together
with a statement as to when and where the master policy, or a
copy thereof, may be seen for inspection by the individual
insured; this. The individual certificate may contain the names
of, and insure the dependents of, the employee, or member, as
provided for herein;
(3) [NEW INSUREDS.] A provision that to the group or class
thereof originally insured may be added, from time to time, all
new employees of the employer or, members of the association, or
debtors of the creditor eligible to and applying for insurance
in that group or class and covered or to be covered by the
master policy.
(4) [CONVERSION PRIVILEGE.] In the case of accidental death
insurance and disability income insurance issued to debtors of a
creditor, the policy must contain a conversion privilege
permitting an insured debtor to convert, without evidence of
insurability, to an individual policy within 30 days of the date
the insured debtor's group coverage is terminated, and not
replaced with other group coverage, for any reason other than
nonpayment of premiums. The individual policy must provide the
same amount of insurance and be subject to the same terms and
conditions as the group policy and the initial premium for the
individual policy must be the same premium the insured debtor
was paying under the group policy. This provision does not
apply to a group policy which provides that the certificate
holder may, upon termination of coverage under the group policy
for any reason other than nonpayment of premium, retain coverage
provided under the group policy by paying premiums directly to
the insurer.
Sec. 24. Minnesota Statutes 1994, section 62A.135, is
amended to read:
62A.135 [NONCOMPREHENSIVE FIXED INDEMNITY POLICIES; MINIMUM
LOSS RATIOS.]
(a) This section applies to individual or group policies,
certificates, or other evidence of coverage designed primarily
to provide coverage for hospital or medical expenses on a per
diem, fixed indemnity, or nonexpense incurred basis offered,
issued, or renewed, to provide coverage to a Minnesota resident.
(b) Notwithstanding section 62A.02, subdivision 3, relating
to loss ratios, policies must return to Minnesota policyholders
in the form of aggregate benefits under the policy, for each
year, on the basis of incurred claims experience and earned
premiums in Minnesota and in accordance with accepted actuarial
principles and practices:
(1) at least 75 percent of the aggregate amount of premiums
earned in the case of group policies; and
(2) at least 65 percent of the aggregate amount of premiums
earned in the case of individual policies.
(c) An insurer may only issue or renew an individual policy
on a guaranteed renewable or noncancelable basis.
(d) Noncomprehensive policies, certificates, or other
evidence of coverage subject to the provisions of this section
are also subject to the requirements, penalties, and remedies
applicable to medicare supplement policies, as set forth in
section 62A.36, subdivisions 1a, 1b, and 2.
The first supplement to the annual statement required to be
filed pursuant to this paragraph must be for the annual
statement required to be submitted on or after January 1, 1993.
Subdivision 1. [DEFINITIONS.] For purposes of this
section, the following terms have the meanings given them:
(a) "fixed indemnity policy" is a policy form, other than a
long-term care policy as defined in section 62A.46, subdivision
2, that pays a predetermined, specified, fixed benefit for
services provided. Claim costs under these forms are generally
not subject to inflation, although they may be subject to
changes in the utilization of health care services. For policy
forms providing both expense-incurred and fixed benefits, the
policy form is a fixed indemnity policy if 50 percent or more of
the total claims are for predetermined, specified, fixed
benefits;
(b) "guaranteed renewable" means that, during the renewal
period (to a specified age) renewal cannot be declined nor
coverage changed by the insurer for any reason other than
nonpayment of premiums, fraud, or misrepresentation, but the
insurer can revise rates on a class basis upon approval by the
commissioner;
(c) "noncancelable" means that, during the renewal period
(to a specified age) renewal cannot be declined nor coverage
changed by the insurer for any reason other than nonpayment of
premiums, fraud, or misrepresentation and that rates cannot be
revised by the insurer. This includes policies that are
guaranteed renewable to a specified age, such as 60 or 65, at
guaranteed rates; and
(d) "average annualized premium" means the average of the
estimated annualized premium per covered person based on the
anticipated distribution of business using all significant
criteria having a price difference, such as age, sex, amount,
dependent status, mode of payment, and rider frequency. For
filing of rate revisions, the amount is the anticipated average
assuming the revised rates have fully taken effect.
Subd. 2. [APPLICABILITY.] This section applies to
individual or group policies, certificates, or other evidence of
coverage meeting the definition of a fixed indemnity policy,
offered, issued, or renewed, to provide coverage to a Minnesota
resident.
Subd. 3. [MINIMUM LOSS RATIO STANDARDS.] Notwithstanding
section 62A.02, subdivision 3, relating to loss ratios, the
minimum loss ratios for fixed indemnity policies are:
(1) as shown in the following table:
Type of Coverage Renewal Provision
Guaranteed Renewable Noncancelable
Group 75% 70%
Individual 65% 60%
or
(2) for policies or certificates where the average
annualized premium is less than $1,000, the average annualized
premium less $30, multiplied by the required loss ratio in
clause (1), divided by the average annualized premium. However,
in no event may the minimum loss ratio be less than the required
loss ratio from clause (1) minus ten percent.
The commissioner of commerce may adjust the constant dollar
amounts provided in clause (2) on January 1 of any year, based
upon changes in the CPI-U, the consumer price index for all
urban consumers, published by the United States Department of
Labor, Bureau of Labor Statistics. Adjustments must be in
increments of $5 and must not be made unless at least that
amount of adjustment is required to each amount.
All rate filings must include a demonstration that the
rates are not excessive. Rates are not excessive if the
anticipated loss ratio and the lifetime anticipated loss ratio
meet or exceed the minimum loss ratio standard in this
subdivision.
Subd. 4. [RENEWAL PROVISION.] An insurer may only issue or
renew an individual policy on a guaranteed renewable or
noncancelable basis.
Subd. 5. [SUPPLEMENT TO ANNUAL STATEMENTS.] Each insurer
that has fixed indemnity policies in force in this state shall,
as a supplement to the annual statement required by section
60A.13, submit, in a form prescribed by the commissioner, the
experience data for the calendar year showing its incurred
claims, earned premiums, incurred to earned loss ratio, and the
ratio of the actual loss ratio to the expected loss ratio for
each fixed indemnity policy form in force in Minnesota. The
experience data must be provided on both a Minnesota only and a
national basis. If in the opinion of the company's actuary, the
deviation of the actual loss ratio from the expected loss ratio
for a policy form is due to unusual reserve fluctuations,
economic conditions, or other nonrecurring conditions, the
insurer should also file that opinion with appropriate
justification.
If the data submitted does not confirm that the insurer has
satisfied the loss ratio requirements of this section, the
commissioner shall notify the insurer in writing of the
deficiency. The insurer shall have 30 days from the date of
receipt of the commissioner's notice to file amended rates that
comply with this section or a request for an exemption with
appropriate justification. If the insurer fails to file amended
rates within the prescribed time and the commissioner does not
exempt the policy form from the need for a rate revision, the
commissioner shall order that the insurer's filed rates for the
nonconforming policy be reduced to an amount that would have
resulted in a loss ratio that complied with this section had it
been in effect for the reporting period of the supplement. The
insurer's failure to file amended rates within the specified
time of the issuance of the commissioner's order amending the
rates does not preclude the insurer from filing an amendment of
its rates at a later time.
Subd. 6. [PENALTIES.] Each sale of a policy that does not
comply with the loss ratio requirements of this section is
subject to the penalties in sections 72A.17 to 72A.32.
Subd. 7. [SOLICITATIONS BY MAIL OR MEDIA ADVERTISEMENT.]
For purposes of this section, fixed indemnity policies issued
without the use of an agent as a result of solicitations of
individuals through the mail or mass media advertising,
including both print and broadcast advertising, must be treated
as group policies.
Sec. 25. Minnesota Statutes 1994, section 62A.136, is
amended to read:
62A.136 [DENTAL AND VISION PLANS PLAN COVERAGE.]
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.21, subdivision 2b; 62A.26,; 62A.28,; and
62A.30.
Sec. 26. Minnesota Statutes 1994, section 62A.14, is
amended to read:
62A.14 [HANDICAPPED CHILDREN.]
Subdivision 1. [INDIVIDUAL FAMILY POLICIES.] An individual
hospital or medical expense insurance policy delivered or issued
for delivery in this state more than 120 days after May 16,
1969, or an individual health maintenance contract delivered or
issued for delivery in this state after August 1, 1984, which
provides that coverage of a dependent child shall terminate upon
attainment of the limiting age for dependent children specified
in the policy or contract shall also provide in substance that
attainment of such limiting age shall not operate to terminate
the coverage of such child while the child is and continues to
be both (a) incapable of self-sustaining employment by reason of
mental retardation, mental illness or disorder, or physical
handicap and (b) chiefly dependent upon the policyholder for
support and maintenance, provided proof of such incapacity and
dependency is furnished to the insurer or health maintenance
organization by the policyholder or enrollee within 31 days of
the child's attainment of the limiting age and subsequently as
may be required by the insurer or organization but not more
frequently than annually after the two-year period following the
child's attainment of the limiting age.
Subd. 2. [GROUP POLICIES.] A group hospital or medical
expense insurance policy delivered or issued for delivery in
this state more than 120 days after May 16, 1969, or a group
health maintenance contract delivered or issued for delivery in
this state after August 1, 1984, which provides that coverage of
a dependent child of an employee or other member of the covered
group shall terminate upon attainment of the limiting age for
dependent children specified in the policy or contract shall
also provide in substance that attainment of such limiting age
shall not operate to terminate the coverage of such child while
the child is and continues to be both (a) incapable of
self-sustaining employment by reason of mental retardation,
mental illness or disorder, or physical handicap and (b) chiefly
dependent upon the employee or member for support and
maintenance, provided proof of such incapacity and dependency is
furnished to the insurer or organization by the employee or
member within 31 days of the child's attainment of the limiting
age and subsequently as may be required by the insurer or
organization but not more frequently than annually after the
two-year period following the child's attainment of the limiting
age.
Sec. 27. Minnesota Statutes 1994, section 62A.141, is
amended to read:
62A.141 [COVERAGE FOR HANDICAPPED DEPENDENTS.]
No group policy or group plan of health and accident
insurance regulated under this chapter, chapter 62C, or 62D,
which provides for dependent coverage may be issued or renewed
in this state after August 1, 1983, unless it covers the
handicapped dependents of the insured, subscriber, or enrollee
of the policy or plan. For purposes of this section, a
handicapped dependent is a person that is and continues to be
both: (1) incapable of self-sustaining employment by reason of
mental retardation, mental illness or disorder, or physical
handicap; and (2) chiefly dependent upon the policyholder for
support and maintenance. Consequently, the policy or plan shall
not contain any provision concerning preexisting condition
limitations, insurability, eligibility, or health underwriting
approval concerning handicapped dependents.
If ordered by the commissioner of commerce, the insurer of
a Minnesota-domiciled nonprofit association which is composed
solely of agricultural members may restrict coverage under this
section to apply only to Minnesota residents.
Sec. 28. [62A.310] [BREAST CANCER COVERAGE.]
Subdivision 1. [SCOPE OF COVERAGE.] This section applies
to all health plans as defined in section 62A.011.
Subd. 2. [REQUIRED COVERAGE.] Every health plan included
in subdivision 1 must provide to each covered person who is a
resident of Minnesota coverage for the treatment of breast
cancer by high-dose chemotherapy with autologous bone marrow
transplantation and for expenses arising from the treatment.
Subd. 3. [GREATER COINSURANCE OR COPAYMENT PROHIBITED.]
Coverage under this section shall not be subject to any greater
coinsurance or copayment than that applicable to any other
coverage provided by the health plan.
Subd. 4. [GREATER DEDUCTIBLE PROHIBITED.] Coverage under
this section shall not be subject to any greater deductible than
that applicable to any other coverage provided by the health
plan.
Sec. 29. Minnesota Statutes 1994, section 62A.31,
subdivision 1h, is amended to read:
Subd. 1h. [LIMITATIONS ON DENIALS, CONDITIONS, AND PRICING
OF COVERAGE.] No issuer of Medicare supplement policies,
including policies that supplement Medicare issued by health
maintenance organizations or those policies governed by section
1833 or 1876 of the federal Social Security Act, United States
Code, title 42, section 1395, et seq., in this state may impose
preexisting condition limitations or otherwise deny or condition
the issuance or effectiveness of any Medicare supplement
insurance policy form available for sale in this state, nor may
it discriminate in the pricing of such a policy, because of the
health status, claims experience, receipt of health care, or
medical condition, or age of an applicant where an application
for such insurance is submitted during the six-month period
beginning with the first month in which an individual first
enrolled for benefits under Medicare Part B. This paragraph
applies regardless of whether the individual has attained the
age of 65 years. If an individual who is enrolled in Medicare
Part B due to disability status is involuntarily disenrolled due
to loss of disability status, the individual is eligible for the
six-month enrollment period provided under this subdivision if
the individual later becomes eligible for and enrolls again in
Medicare Part B.
Sec. 30. Minnesota Statutes 1994, section 62A.31,
subdivision 1i, is amended to read:
Subd. 1i. [REPLACEMENT COVERAGE.] If a Medicare supplement
policy or certificate replaces another Medicare supplement
policy or certificate, the issuer of the replacing policy or
certificate shall waive any time periods applicable to
preexisting conditions, waiting periods, elimination periods,
and probationary periods in the new Medicare supplement
policy or certificate for benefits to the extent the time was
spent under the original policy or certificate. For purposes of
this subdivision, "Medicare supplement policy or certificate"
means all coverage described in section 62A.011, subdivision 4,
clause (10).
Sec. 31. Minnesota Statutes 1994, section 62A.46,
subdivision 2, is amended to read:
Subd. 2. [LONG-TERM CARE POLICY.] "Long-term care policy"
means an individual or group policy, certificate, subscriber
contract, or other evidence of coverage that provides benefits
for prescribed long-term care, including nursing facility
services and home care services, pursuant to the requirements of
sections 62A.46 to 62A.56. A long-term care policy must contain
a designation specifying whether the policy is a long-term care
policy AA or A and a caption stating that the commissioner has
established two categories of long-term care insurance and the
minimum standards for each.
Sections 62A.46, 62A.48, and 62A.52 to 62A.56 do not apply
to a long-term care policy issued to (a) an employer or
employers or to the trustee of a fund established by an employer
where only employees or retirees, and dependents of employees or
retirees, are eligible for coverage or (b) to a labor union or
similar employee organization. The associations exempted from
the requirements of sections 62A.31 to 62A.44 under 62A.31,
subdivision 1, clause (c) shall not be subject to the provisions
of sections 62A.46 to 62A.56 until July 1, 1988.
Sec. 32. Minnesota Statutes 1994, section 62A.46, is
amended by adding a subdivision to read:
Subd. 13. [BENEFIT DAY.] "Benefit day" means each day of
confinement in a nursing facility or each visit for home care
services. For purposes of section 62A.48, subdivision 1, if the
policyholder receives more than one home care service visit
within a 24-hour period, each visit constitutes one benefit day.
Sec. 33. Minnesota Statutes 1994, section 62A.48,
subdivision 1, is amended to read:
Subdivision 1. [POLICY REQUIREMENTS.] No individual or
group policy, certificate, subscriber contract, or other
evidence of coverage of nursing home care or other long-term
care services shall be offered, issued, delivered, or renewed in
this state, whether or not the policy is issued in this state,
unless the policy is offered, issued, delivered, or renewed by a
qualified insurer and the policy satisfies the requirements of
sections 62A.46 to 62A.56. A long-term care policy must cover
prescribed long-term care in nursing facilities and at least the
prescribed long-term home care services in section 62A.46,
subdivision 4, clauses (1) to (5), provided by a home health
agency. Coverage under a long-term care policy AA must
include: a maximum lifetime benefit limit of at least $100,000
for services, and nursing facility and home care coverages must
not be subject to separate lifetime maximums. Coverage under a
long-term care policy A must include: a maximum minimum
lifetime benefit limit of at least $50,000 $25,000 for services,
and nursing facility and home care coverages must not be subject
to separate lifetime maximums. Prior hospitalization may not be
required under a long-term care policy.
Coverage under either The policy designation must cover
preexisting conditions during the first six months of coverage
if the insured was not diagnosed or treated for the particular
condition during the 90 days immediately preceding the effective
date of coverage. Coverage under either the policy designation
may include a waiting period of up to 90 days before benefits
are paid, but there must be no more than one waiting period per
benefit period; for purposes of this sentence, "days" means can
mean calendar or benefit days. If benefit days are used, an
appropriate premium reduction and disclosure must be made. No
policy may exclude coverage for mental or nervous disorders
which have a demonstrable organic cause, such as Alzheimer's and
related dementias. No policy may require the insured to be
homebound or house confined to receive home care services. The
policy must include a provision that the plan will not be
canceled or renewal refused except on the grounds of nonpayment
of the premium, provided that the insurer may change the premium
rate on a class basis on any policy anniversary date. A
provision that the policyholder may elect to have the premium
paid in full at age 65 by payment of a higher premium up to age
65 may be offered. A provision that the premium would be waived
during any period in which benefits are being paid to the
insured during confinement in a nursing facility must be
included. A nongroup policyholder may return a policy within 30
days of its delivery and have the premium refunded in full, less
any benefits paid under the policy, if the policyholder is not
satisfied for any reason.
No individual long-term care policy shall be offered or
delivered in this state until the insurer has received from the
insured a written designation of at least one person, in
addition to the insured, who is to receive notice of
cancellation of the policy for nonpayment of premium. The
insured has the right to designate up to a total of three
persons who are to receive the notice of cancellation, in
addition to the insured. The form used for the written
designation must inform the insured that designation of one
person is required and that designation of up to two additional
persons is optional and must provide space clearly designated
for listing between one and three persons. The designation
shall include each person's full name, home address, and
telephone number. Each time an individual policy is renewed or
continued, the insurer shall notify the insured of the right to
change this written designation.
The insurer may file a policy form that utilizes a plan of
care prepared as provided under section 62A.46, subdivision 5,
clause (1) or (2).
Sec. 34. Minnesota Statutes 1994, section 62A.48,
subdivision 2, is amended to read:
Subd. 2. [PER DIEM COVERAGE.] If benefits are provided on
a per diem basis, the minimum daily benefit for care in a
nursing facility must be the lesser of $60 or actual charges
under a long-term care policy AA or the lesser of $40 or actual
charges under a long-term care policy A and the minimum benefit
per visit for home care under a long-term care policy AA or A
must be the lesser of $25 or actual charges. The home care
services benefit must cover at least seven paid visits per week.
Sec. 35. Minnesota Statutes 1994, section 62A.50,
subdivision 3, is amended to read:
Subd. 3. [DISCLOSURES.] No long-term care policy shall be
offered or delivered in this state, whether or not the policy is
issued in this state, and no certificate of coverage under a
group long-term care policy shall be offered or delivered in
this state, unless a statement containing at least the following
information is delivered to the applicant at the time the
application is made:
(1) a description of the benefits and coverage provided by
the policy and the differences between this policy, a
supplemental Medicare policy and the benefits to which an
individual is entitled under parts A and B of Medicare and the
differences between policy designations A and AA;
(2) a statement of the exceptions and limitations in the
policy including the following language, as applicable, in bold
print: "THIS POLICY DOES NOT COVER ALL NURSING CARE FACILITIES
OR NURSING HOME, HOME CARE, OR ADULT DAY CARE EXPENSES AND DOES
NOT COVER RESIDENTIAL CARE. READ YOUR POLICY CAREFULLY TO
DETERMINE WHICH FACILITIES AND EXPENSES ARE COVERED BY YOUR
POLICY.";
(3) a statement of the renewal provisions including any
reservation by the insurer of the right to change premiums;
(4) a statement that the outline of coverage is a summary
of the policy issued or applied for and that the policy should
be consulted to determine governing contractual provisions;
(5) an explanation of the policy's loss ratio including at
least the following language: "This means that, on the average,
policyholders may expect that $........ of every $100 in premium
will be returned as benefits to policyholders over the life of
the contract.";
(6) a statement of the out-of-pocket expenses, including
deductibles and copayments for which the insured is responsible,
and an explanation of the specific out-of-pocket expenses that
may be accumulated toward any out-of-pocket maximum as specified
in the policy;
(7) the following language, in bold print: "YOUR PREMIUMS
CAN BE INCREASED IN THE FUTURE. THE RATE SCHEDULE THAT LISTS
YOUR PREMIUM NOW CAN CHANGE.";
(8) the following language, if applicable, in bold print:
"IF YOU ARE NOT HOSPITALIZED PRIOR TO ENTERING A NURSING HOME OR
NEEDING HOME CARE, YOU WILL NOT BE ABLE TO COLLECT ANY BENEFITS
UNDER THIS PARTICULAR POLICY."; and
(9) a signed and completed copy of the application for
insurance is left with the applicant at the time the application
is made.
Sec. 36. [62A.616] [COVERAGE FOR NURSING HOME CARE FOR
TERMINALLY ILL AND OTHER SERVICES.]
An insurer may offer a health plan that covers nursing home
care for the terminally ill, personal care attendants, and
hospice care. For the purposes of this section, "terminally
ill" means a diagnosis certified by a physician that a person
has less than six months to live.
Sec. 37. Minnesota Statutes 1994, section 62C.14,
subdivision 5, is amended to read:
Subd. 5. [HANDICAPPED DEPENDENTS.] A subscriber's
individual contract or any group contract delivered or issued
for delivery in this state and providing that coverage of a
dependent child of the subscriber or a dependent child of a
covered group member shall terminate upon attainment of a
specified age shall also provide in substance that attainment of
that age shall not terminate coverage while the child is (a)
incapable of self-sustaining employment by reason of mental
retardation, mental illness or disorder, or physical handicap,
and (b) chiefly dependent upon the subscriber or employee for
support and maintenance, provided proof of incapacity and
dependency is furnished by the subscriber within 31 days of
attainment of the age, and subsequently as required by the
corporation, but not more frequently than annually after a two
year period following attainment of the age.
Sec. 38. Minnesota Statutes 1994, section 62C.14,
subdivision 14, is amended to read:
Subd. 14. No subscriber's individual contract or any group
contract which provides for coverage of family members or other
dependents of a subscriber or of an employee or other group
member of a group subscriber, shall be renewed, delivered, or
issued for delivery in this state unless such contract includes
as covered family members or dependents any newborn infants,
including dependent grandchildren, immediately from the moment
of birth and thereafter which insurance shall provide coverage
for illness, injury, congenital malformation or premature birth.
Sec. 39. Minnesota Statutes 1994, section 62D.02,
subdivision 8, is amended to read:
Subd. 8. "Health maintenance contract" means any contract
whereby a health maintenance organization agrees to provide
comprehensive health maintenance services to enrollees, provided
that the contract may contain reasonable enrollee copayment
provisions. An individual or group health maintenance contract
may contain the copayment and deductible provisions specified in
this subdivision. Copayment and deductible provisions in group
contracts shall not discriminate on the basis of age, sex, race,
length of enrollment in the plan, or economic status; and during
every open enrollment period in which all offered health benefit
plans, including those subject to the jurisdiction of the
commissioners of commerce or health, fully participate without
any underwriting restrictions, copayment and deductible
provisions shall not discriminate on the basis of preexisting
health status. In no event shall the sum of the annual
copayment copayments and deductible exceed the maximum
out-of-pocket expenses allowable for a number three
qualified insurance policy plan under section 62E.06, nor shall
that sum exceed $5,000 per family. The annual deductible must
not exceed $1,000 per person. The annual deductible must not
apply to preventive health services as described in Minnesota
Rules, part 4685.0801, subpart 8. Where sections 62D.01 to
62D.30 permit a health maintenance organization to contain
reasonable copayment provisions for preexisting health status,
these provisions may vary with respect to length of enrollment
in the plan. Any contract may provide for health care services
in addition to those set forth in subdivision 7.
Sec. 40. Minnesota Statutes 1994, section 62E.02,
subdivision 7, is amended to read:
Subd. 7. [DEPENDENT.] "Dependent" means a spouse or
unmarried child under the age of 19 years, a dependent child who
is a student under the age of 25 and financially dependent upon
the parent, or a dependent child of any age who is disabled.
Sec. 41. Minnesota Statutes 1994, section 62E.12, is
amended to read:
62E.12 [MINIMUM BENEFITS OF COMPREHENSIVE HEALTH INSURANCE
PLAN.]
The association through its comprehensive health insurance
plan shall offer policies which provide the benefits of a number
one qualified plan and a number two qualified plan, except that
the maximum lifetime benefit on these plans shall be
$1,000,000 $1,500,000, and an extended basic plan and a basic
Medicare plan as described in sections 62A.31 to 62A.44 and
62E.07. The requirement that a policy issued by the association
must be a qualified plan is satisfied if the association
contracts with a preferred provider network and the level of
benefits for services provided within the network satisfies the
requirements of a qualified plan. If the association uses a
preferred provider network, payments to nonparticipating
providers must meet the minimum requirements of section 72A.20,
subdivision 15. They shall offer health maintenance
organization contracts in those areas of the state where a
health maintenance organization has agreed to make the coverage
available and has been selected as a writing carrier.
Notwithstanding the provisions of section 62E.06 the state plan
shall exclude coverage of services of a private duty nurse other
than on an inpatient basis and any charges for treatment in a
hospital located outside of the state of Minnesota in which the
covered person is receiving treatment for a mental or nervous
disorder, unless similar treatment for the mental or nervous
disorder is medically necessary, unavailable in Minnesota and
provided upon referral by a licensed Minnesota medical
practitioner.
Sec. 42. Minnesota Statutes 1994, section 62F.02,
subdivision 2, is amended to read:
Subd. 2. [DIRECTORS.] The association shall have a board
of directors composed of 11 persons chosen annually for a term
of four years as follows: five persons elected by members of
the association at a meeting called by the commissioner; three
members who are health care providers appointed by the
commissioner prior to the election by the association; and three
public members, as defined in section 214.02, appointed by the
governor prior to the election by the association.
Sec. 43. Minnesota Statutes 1994, section 62I.09,
subdivision 2, is amended to read:
Subd. 2. [TERMS AND VACANCIES.] In the event of a member's
inability to continue to serve, the commissioner shall appoint a
replacement. The committee shall elect a chair and vice-chair
from among the members. The term of each member is one year
commencing four years beginning on June 1, except that the first
members to be appointed to the committee shall serve from the
date of their appointment until June 1 immediately following
their appointment.
Sec. 44. Minnesota Statutes 1994, section 62L.02,
subdivision 16, is amended to read:
Subd. 16. [HEALTH CARRIER.] "Health carrier" means an
insurance company licensed under chapter 60A to offer, sell, or
issue a policy of accident and sickness insurance as defined in
section 62A.01; a health service plan licensed under chapter
62C; a health maintenance organization licensed under chapter
62D; a community integrated services network and an integrated
service network operating under chapter 62N; a fraternal benefit
society operating under chapter 64B; a joint self-insurance
employee health plan operating under chapter 62H; and a multiple
employer welfare arrangement, as defined in United States Code,
title 29, section 1002(40), as amended. For purposes of
sections 62L.01 to 62L.12, but not for purposes of sections
62L.13 to 62L.22, "health carrier" includes a community
integrated service network or integrated service network
licensed under chapter 62N. Any use of this definition in
another chapter by reference does not include a community
integrated service network or integrated service network, unless
otherwise specified. For the purpose of this chapter, companies
that are affiliated companies or that are eligible to file a
consolidated tax return must be treated as one health carrier,
except that any insurance company or health service plan
corporation that is an affiliate of a health maintenance
organization located in Minnesota, or any health maintenance
organization located in Minnesota that is an affiliate of an
insurance company or health service plan corporation, or any
health maintenance organization that is an affiliate of another
health maintenance organization in Minnesota, may treat the
health maintenance organization as a separate health carrier.
Sec. 45. Minnesota Statutes 1994, section 62L.03,
subdivision 5, is amended to read:
Subd. 5. [CANCELLATIONS AND FAILURES TO RENEW.] (a) No
health carrier shall cancel, decline to issue, or fail to renew
a health benefit plan as a result of the claim experience or
health status of the persons covered or to be covered by the
health benefit plan. A health carrier may cancel or fail to
renew a health benefit plan:
(1) for nonpayment of the required premium;
(2) for fraud or misrepresentation by the small employer,
or, with respect to coverage of an individual eligible employee
or dependent, fraud or misrepresentation by the eligible
employee or dependent, with respect to eligibility for coverage
or any other material fact;
(3) if eligible employee participation during the preceding
calendar year declines to less than 75 percent, subject to the
waiver of coverage provision in subdivision 3;
(4) if the employer fails to comply with the minimum
contribution percentage required under subdivision 3;
(5) if the health carrier ceases to do business in the
small employer market under section 62L.09;
(6) if a failure to renew is based upon the health
carrier's decision to discontinue the health benefit plan form
previously issued to the small employer, but only if the health
carrier permits each small employer covered under the prior form
to switch to its choice of any other health benefit plan offered
by the health carrier, without any underwriting restrictions
that would not have been permitted for renewal purposes; or
(7) for any other reasons or grounds expressly permitted by
the respective licensing laws and regulations governing a health
carrier, including, but not limited to, service area
restrictions imposed on health maintenance organizations under
section 62D.03, subdivision 4, paragraph (m), to the extent that
these grounds are not expressly inconsistent with this chapter.
(b) A health carrier need not renew a health benefit plan,
and shall not renew a small employer plan, if an employer ceases
to qualify as a small employer as defined in section 62L.02. If
a health benefit plan, other than a small employer plan,
provides terms of renewal that do not exclude an employer that
is no longer a small employer, the health benefit plan may be
renewed according to its own terms. If a health carrier issues
or renews a health plan to an employer that is no longer a small
employer, without interruption of coverage, the health plan is
subject to section 60A.082. Between July 1, 1994, and June 30,
1995, a health benefit plan in force during this time may be
renewed, if the number of employees exceeds two, but does not
exceed 49 employees.
Sec. 46. Minnesota Statutes 1994, section 65A.01, is
amended by adding a subdivision to read:
Subd. 3b. [RESCISSION AND VOIDABILITY.] This policy must
not be rescinded or voided except where the insured has
willfully and with intent to defraud concealed or misrepresented
a material fact or circumstance concerning this insurance or the
subject of this insurance or the interests of the insured in
this insurance. This provision must not operate to defeat a
claim by a third party or a minor child of the named insured for
damage or loss for which the policy provides coverage.
Sec. 47. Minnesota Statutes 1994, section 65B.06,
subdivision 3, is amended to read:
Subd. 3. With respect to all automobiles not included in
subdivisions 1 and 2, the facility shall provide:
(1) Only the insurance the minimum limits of coverage
required by law section 65B.49, subdivisions 2, 3, 3a, and 4a,
or higher limits of liability coverage as recommended by the
governing committee and approved by the commissioner;
(2) for the equitable distribution of qualified applicants
for this coverage among the members in accord with the
applicable participation ratio, or among these insurance
companies as selected under the provisions of the plan of
operation; and
(3) for a school district or contractor transporting school
children under contract with a school district, that amount of
automobile liability insurance coverage, not to exceed
$1,000,000, required by the school district by resolution or
contract, or that portion of such $1,000,000 of coverage for
which the school district or contractor applies and for which it
is eligible under section 65B.10.
Sec. 48. Minnesota Statutes 1994, section 65B.08,
subdivision 1, is amended to read:
Subdivision 1. [FILING.] As agent for members, the
facility shall file with the commissioner all manuals of
classification, all manuals of rules and rates, all rating
plans, and any modifications of same, proposed for use for
private passenger nonfleet automobile insurance placed through
the facility. The classifications, rules and rates and any
amendments thereto shall be subject to prior written approval by
the commissioner. Rates, surcharge points, and increased limits
factors filed by the facility shall not be excessive,
inadequate, or unfairly discriminatory. No other entity,
service or organization shall make filings for the facility or
the members to apply to insurance placed through the facility.
Sec. 49. Minnesota Statutes 1994, section 65B.09,
subdivision 1, is amended to read:
Subdivision 1. [AGENTS' RESPONSIBILITY.] Every person
licensed under chapter 60K sections 60K.02 and 60K.03 who is
authorized to solicit, negotiate or effect automobile insurance
on behalf of any member shall:
(1) offer to place coverage through the facility for any
qualified applicant who is ineligible or unacceptable for
coverage in the insurer or insurers for whom the agent is
authorized to solicit, negotiate or effect automobile
insurance. Provided, that the failure of an agent to make such
an offer to a qualified applicant shall not subject the agent to
any liability to the applicant;
(2) forward to the facility all applications and any
deposit premiums which are required by the plan of operation,
rules and procedures of the facility, if the qualified applicant
accepts the offer to have coverage placed through the facility;
(3) be entitled to receive compensation for placing
insurance through the facility at the uniform rates of
compensation as provided in the plan of operation, and all
members shall pay such compensation.
Sec. 50. Minnesota Statutes 1994, section 65B.10,
subdivision 3, is amended to read:
Subd. 3. [REVIEW OF INSUREDS.] At least annually, every
member shall review every private passenger nonfleet applicant
which it insures through the facility and determine whether or
not such applicant is acceptable for voluntary insurance at a
rate lower than the facility rate. If such applicant is
acceptable, the member shall make an offer to insure the
applicant under voluntary coverage at such lower rate.
Sec. 51. Minnesota Statutes 1994, section 65B.61,
subdivision 1, is amended to read:
Subdivision 1. Basic economic loss benefits shall be
primary with respect to benefits, except for those paid or
payable under a workers' compensation law, which any person
receives or is entitled to receive from any other source as a
result of injury arising out of the maintenance or use of a
motor vehicle. Where workers' compensation benefits paid or
payable are primary, the reparation obligor shall make an
appropriate rebate or reduction in the premiums of the plan of
reparation security. The amount of the rebate or rate reduction
shall be not less than the amount of the projected reduction in
benefits and claims for which the reparation obligor will be
liable on that class of risks. The projected reduction or
rebate in benefits and claims shall be based upon sound
actuarial principles.
Sec. 52. Minnesota Statutes 1994, section 72A.20,
subdivision 13, is amended to read:
Subd. 13. [REFUSAL TO RENEW.] Refusing to renew, declining
to offer or write, or charging differential rates for an
equivalent amount of homeowner's insurance coverage, as defined
by section 65A.27, for property located in a town or statutory
or home rule charter city, in which the insurer offers to sell
or writes homeowner's insurance, solely because:
(a) of the geographic area in which the property is
located;
(b) of the age of the primary structure sought to be
insured;
(c) the insured or prospective insured was denied coverage
of the property by another insurer, whether by cancellation,
nonrenewal or declination to offer coverage, for a reason other
than those specified in section 65A.01, subdivision 3a, clauses
(a) to (e); or
(d) the property of the insured or prospective insured has
been insured under the Minnesota FAIR plan act, shall constitute
an unfair method of competition and an unfair and deceptive act
or practice.
This subdivision prohibits an insurer from filing or
charging different rates for different zip code areas within the
same town or statutory or home rule charter city.
This subdivision shall not prohibit the insurer from
applying underwriting or rating standards which the insurer
applies generally in all other locations in the state and which
are not specifically prohibited by clauses (a) to (d). Such
underwriting or rating standards shall specifically include but
not be limited to standards based upon the proximity of the
insured property to an extraordinary hazard or based upon the
quality or availability of fire protection services or based
upon the density or concentration of the insurer's risks.
Clause (b) shall not prohibit the use of rating standards based
upon the age of the insured structure's plumbing, electrical,
heating or cooling system or other part of the structure, the
age of which affects the risk of loss. Any insurer's failure to
comply with section 65A.29, subdivisions 2 to 4, either (1) by
failing to give an insured or applicant the required notice or
statement or (2) by failing to state specifically a bona fide
underwriting or other reason for the refusal to write shall
create a presumption that the insurer has violated this
subdivision.
Sec. 53. Minnesota Statutes 1994, section 72A.20, is
amended by adding a subdivision to read:
Subd. 34. [SUITABILITY OF INSURANCE FOR CUSTOMER.] In
recommending or issuing life, endowment, individual accident and
sickness, long-term care, annuity, life-endowment, or Medicare
supplement insurance to a customer, an insurer, either directly
or through its agent, must have reasonable grounds for believing
that the recommendation is suitable for the customer.
In the case of group insurance marketed on a direct
response basis without the use of direct agent contact, this
subdivision is satisfied if the insurer has reasonable grounds
to believe that the insurance offered is generally suitable for
the group to whom the offer is made.
Sec. 54. Minnesota Statutes 1994, section 72B.05, is
amended to read:
72B.05 [NONRESIDENTS.]
A nonresident person may become licensed under sections
72B.01 to 72B.14, provided that the person meets all of the
requirements of sections 72B.01 to 72B.14, and complies with
their provisions, and, on a form prescribed by the commissioner,
appoints the commissioner as the attorney upon whom may be
served all legal process issued in connection with any action or
proceeding brought or pending in this state against or involving
the licensee and relating to transactions under the license; the
appointment shall be irrevocable and shall continue so long as
any such action or proceeding could arise or exist.
Duplicate copies Service of process shall be served upon
the commissioner, accompanied by payment of the fee specified in
section 60A.14, subdivision 1(3)(d). Upon receiving such
service, the commissioner shall promptly forward a copy thereof
by registered or certified mail, with return receipt requested,
to the nonresident licensee at that person's last known
address. Process served upon the commissioner in this manner
shall for all purposes constitute personal service thereof upon
the licensee must be made in compliance with section 45.028,
subdivision 2.
Sec. 55. Minnesota Statutes 1994, section 79.251,
subdivision 5, is amended to read:
Subd. 5. [ASSESSMENTS.] The commissioner shall assess all
insurers licensed pursuant to section 60A.06, subdivision 1,
clause (5), paragraph (b) 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 shall be in a proportion equal to the proportion which
the amount of compensation insurance written in this state
during the preceding calendar year by that insurer bears to the
total compensation insurance written in this state during the
preceding calendar year by all licensed insurers.
Amounts assessed under this subdivision are considered a
liability of the assigned risk plan, to be repaid upon
dissolution of the plan.
Sec. 56. Minnesota Statutes 1994, section 79.251, is
amended by adding a subdivision to read:
Subd. 8. [DISSOLUTION.] Upon the dissolution of the
assigned risk plan, the commissioner shall proceed to wind up
the affairs of the plan, settle its accounts, and dispose of its
assets. The assets and property of the assigned risk plan must
be applied and distributed in the following order of priority:
(1) to the establishment of reserves for claims under
policies and contracts of coverage issued by the assigned risk
plan before termination;
(2) to the payment of all debts and liabilities of the
assigned risk plan, including the repayment of loans and
assessments;
(3) to the establishment of reserves considered necessary
by the commissioner for contingent liabilities or obligations of
the assigned risk plan other than claims arising under policies
and contracts of coverage; and
(4) to the state of Minnesota.
If the commissioner determines that the assets of the
assigned risk plan are insufficient to meet its obligations
under clauses (1), (2), and (3), excluding the repayment of
assessments, the commissioner shall assess all insurers licensed
pursuant to section 60A.06, subdivision 1, clause (5), paragraph
(b), an amount sufficient to fully fund these obligations.
Sec. 57. Minnesota Statutes 1994, section 79.34,
subdivision 2, is amended to read:
Subd. 2. [LOSSES; RETENTION LIMITS.] The reinsurance
association shall provide and each member shall accept
indemnification for 100 percent of the amount of ultimate loss
sustained in each loss occurrence relating to one or more claims
arising out of a single compensable event, including aggregate
losses related to a single event or occurrence which constitutes
a single loss occurrence, under chapter 176 on and after October
1, 1979, in excess of $300,000 or $100,000 a low, a high, or a
super retention limit, at the option of the member. In case of
occupational disease causing disablement on and after October 1,
1979, each person suffering disablement due to occupational
disease is considered to be involved in a separate loss
occurrence. The lower retention limit shall be increased to the
nearest $10,000, on January 1, 1982 and on each January 1
thereafter by the percentage increase in the statewide average
weekly wage, as determined in accordance with section 176.011,
subdivision 20. On January 1, 1982 and on each January 1
thereafter, the higher retention limit shall be increased by the
amount necessary to retain a $200,000 difference between the two
retention limits. On January 1, 1995, the lower retention limit
is $250,000, which shall also be known as the 1995 base
retention limit. On each January 1 thereafter, the cumulative
annual percentage changes in the statewide average weekly wage
after October 1, 1994, as determined in accordance with section
176.011, subdivision 20, shall first be multiplied by the 1995
base retention limit, the result of which shall then be added to
the 1995 base retention limit. The resulting figure shall be
rounded to the nearest $10,000, yielding the low retention limit
for that year, provided that the low retention limit shall not
be reduced in any year. The high retention limit shall be two
times the low retention limit and shall be adjusted when the low
retention limit is adjusted. The super retention period shall
be four times the low retention period and shall be adjusted
when the low retention limit is adjusted. Ultimate loss as used
in this section means the actual loss amount which a member is
obligated to pay and which is paid by the member for workers'
compensation benefits payable under chapter 176 and shall not
include claim expenses, assessments, damages or penalties. For
losses incurred on or after January 1, 1979, any amounts paid by
a member pursuant to sections 176.183, 176.221, 176.225, and
176.82 shall not be included in ultimate loss and shall not be
indemnified by the reinsurance association. A loss is incurred
by the reinsurance association on the date on which the accident
or other compensable event giving rise to the loss occurs, and a
member is liable for a loss up to its retention limit in effect
at the time that the loss was incurred, except that members
which are determined by the reinsurance association to be
controlled by or under common control with another member, and
which are liable for claims from one or more employees entitled
to compensation for a single compensable event, including
aggregate losses relating to a single loss occurrence, may
aggregate their losses and obtain indemnification from the
reinsurance association for the aggregate losses in excess of
the higher highest retention limit selected by any of the
members in effect at the time the loss was incurred. Each
member is liable for payment of its ultimate loss and shall be
entitled to indemnification from the reinsurance association for
the ultimate loss in excess of the member's retention limit in
effect at the time of the loss occurrence.
A member that chooses the higher high or super retention
limit shall retain the liability for all losses below the higher
chosen retention limit itself and shall not transfer the
liability to any other entity or reinsure or otherwise contract
for reimbursement or indemnification for losses below its
retention limit, except in the following cases: (a) when the
reinsurance or contract is with another member which, directly
or indirectly, through one or more intermediaries, control or
are controlled by or are under common control with the member;
(b) when the reinsurance or contract provides for reimbursement
or indemnification of a member if and only if the total of all
claims which the member pays or incurs, but which are not
reimbursable or subject to indemnification by the reinsurance
association for a given period of time, exceeds a dollar value
or percentage of premium written or earned and stated in the
reinsurance agreement or contract; (c) when the reinsurance or
contract is a pooling arrangement with other insurers where
liability of the member to pay claims pursuant to chapter 176 is
incidental to participation in the pool and not as a result of
providing workers' compensation insurance to employers on a
direct basis under chapter 176; (d) when the reinsurance or
contract is limited to all the claims of a specific insured of a
member which are reimbursed or indemnified by a reinsurer which,
directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with the
insured of the member so long as any subsequent contract or
reinsurance of the reinsurer relating to the claims of the
insured of a member is not inconsistent with the bases of
exception provided under clauses (a), (b) and (c); or (e) when
the reinsurance or contract is limited to all claims of a
specific self-insurer member which are reimbursed or indemnified
by a reinsurer which, directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under
common control with the self-insurer member so long as any
subsequent contract or reinsurance of the reinsurer relating to
the claims of the self-insurer member are not inconsistent with
the bases for exception provided under clauses (a), (b) and (c).
Whenever it appears to the commissioner of labor and
industry that any member that chooses the higher high or super
retention limit has participated in the transfer of liability to
any other entity or reinsured or otherwise contracted for
reimbursement or indemnification of losses below its retention
limit in a manner inconsistent with the bases for exception
provided under clauses (a), (b), (c), (d), and (e), the
commissioner may, after giving notice and an opportunity to be
heard, order the member to pay to the state of Minnesota an
amount not to exceed twice the difference between the
reinsurance premium for the higher and lower high or super
retention limit, as appropriate, and the low retention limit
applicable to the member for each year in which the prohibited
reinsurance or contract was in effect. Any member subject to
this penalty provision shall continue to be bound by its
selection of the higher high or super retention limit for
purposes of membership in the reinsurance association.
Sec. 58. Minnesota Statutes 1994, section 79.35, is
amended to read:
79.35 [DUTIES; RESPONSIBILITIES; POWERS.]
The reinsurance association shall do the following on
behalf of its members:
(a) Assume 100 percent of the liability as provided in
section 79.34;
(b) Establish procedures by which members shall promptly
report to the reinsurance association each claim which, on the
basis of the injury sustained, may reasonably be anticipated to
involve liability to the reinsurance association if the member
is held liable under chapter 176. Solely for the purpose of
reporting claims, the member shall in all instances consider
itself legally liable for the injury. The member shall advise
the reinsurance association of subsequent developments likely to
materially affect the interest of the reinsurance association in
the claim;
(c) Maintain relevant loss and expense data relative to all
liabilities of the reinsurance association and require each
member to furnish statistics in connection with liabilities of
the reinsurance association at the times and in the form and
detail as may be required by the plan of operation;
(d) Calculate and charge to members a total premium
sufficient to cover the expected liability which the reinsurance
association will incur in excess of the higher retention limit
but less than the prefunded limit, together with incurred or
estimated to be incurred operating and administrative expenses
for the period to which this premium applies and actual claim
payments to be made by members, during the period to which this
premium applies, for claims in excess of the prefunded limit in
effect at the time the loss was incurred. Each member shall be
charged a premium established by the board as sufficient to
cover the reinsurance association's incurred liabilities and
expenses between the member's selected retention limit and the
prefunded limit. The prefunded limit shall be $2,500,000 on and
after October 1, 1979, provided that the prefunded limit shall
be increased on January 1, 1983 and on each January 1 thereafter
by the percentage increase in the statewide average weekly wage,
to the nearest $100,000, as determined in accordance with
section 176.011, subdivision 20 times the lower retention limit
established in section 79.34, subdivision 2. Each member shall
be charged a proportion of the total premium calculated for its
selected retention limit in an amount equal to its proportion of
the exposure base of all members during the period to which the
reinsurance association premium will apply. The exposure base
shall be determined by the board and is subject to the approval
of the commissioner of labor and industry. In determining the
exposure base, the board shall consider, among other things,
equity, administrative convenience, records maintained by
members, amenability to audit, and degree of risk
refinement. Each member exercising the lower retention option
shall also be charged a premium established by the board as
sufficient to cover incurred or estimated to be incurred claims
for the liability the reinsurance association is likely to incur
between the lower and higher retention limits for the period to
which the premium applies. Each member shall also be charged a
premium determined by the board to equitably distribute excess
or deficient premiums from previous periods including any excess
or deficient premiums resulting from a retroactive change in the
prefunded limit. The premiums charged to members shall not be
unfairly discriminatory as defined in section 79.074. All
premiums shall be approved by the commissioner of labor and
industry;
(e) Require and accept the payment of premiums from members
of the reinsurance association;
(f) Receive and distribute all sums required by the
operation of the reinsurance association;
(g) Establish procedures for reviewing claims procedures
and practices of members of the reinsurance association. If the
claims procedures or practices of a member are considered
inadequate to properly service the liabilities of the
reinsurance association, the reinsurance association may
undertake, or may contract with another person, including
another member, to adjust or assist in the adjustment of claims
which create a potential liability to the association. The
reinsurance association may charge the cost of the adjustment
under this paragraph to the member, except that any penalties or
interest incurred under sections 176.183, 176.221, 176.225, and
176.82 as a result of actions by the reinsurance association
after it has undertaken adjustment of the claim shall not be
charged to the member but shall be included in the ultimate loss
and listed as a separate item; and
(h) Provide each member of the reinsurance association with
an annual report of the operations of the reinsurance
association in a form the board of directors may specify.
Sec. 59. Minnesota Statutes 1994, section 79A.01, is
amended by adding a subdivision to read:
Subd. 10. [COMMON CLAIMS FUND.] "Common claims fund," with
respect to group self-insurers, are the cash, cash equivalents,
or investment accounts maintained by the group to pay its
workers' compensation liabilities.
Sec. 60. Minnesota Statutes 1994, section 79A.02,
subdivision 4, is amended to read:
Subd. 4. [RECOMMENDATIONS TO COMMISSIONER REGARDING
REVOCATION.] After each fifth anniversary from the date each
individual and group self-insurer becomes certified to
self-insure, the committee shall review all relevant financial
data filed with the department of commerce that is otherwise
available to the public and make a recommendation to the
commissioner about whether each self-insurer's certificate
should be revoked. For group self-insurers who have been in
existence for five years or more and have been granted renewal
authority, a level of funding in the common claims fund must be
maintained at not less than the greater of either: (1) one
year's claim losses paid in the most recent year; or (2)
one-third of the security deposit posted with the department of
commerce according to section 79A.04, subdivision 2.
Sec. 61. Minnesota Statutes 1994, section 79A.03, is
amended by adding a subdivision to read:
Subd. 4a. [EXCEPTIONS.] Notwithstanding the requirements
of subdivisions 3 and 4, the commissioner, pursuant to a review
of an existing self-insurer's financial data, may continue a
self-insurer's authority to self-insure for one year if, in the
commissioner's judgment based on all factors relevant to the
self-insurer's financial status, the self-insurer will be able
to meet its obligations under this chapter for the following
year. The relevant factors to be considered must include, but
must not be limited to, the liquidity ratios, leverage ratios,
and profitability ratios of the self-insurer. Where a
self-insurer's authority to self-insure is continued under this
subdivision, the self-insurer may be required to post security
in the amount equal to two times the amount of security required
under section 79A.04, subdivision 2.
Sec. 62. Minnesota Statutes 1994, 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 providing financial statements of the
employer to the commissioner of commerce. 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. 63. Minnesota Statutes 1994, section 299F.053,
subdivision 2, is amended to read:
Subd. 2. [AUTHORIZED PERSON.] "Authorized person" means:
(a) the state fire marshal when authorized or charged with
the investigation of fires at the place where the fire actually
took place;
(b) superintendent of the bureau of criminal apprehension;
(c) the prosecuting attorney responsible for prosecutions
in the county where the fire occurred;
(d) the sheriff or chief of police responsible for
investigation in the county where the fire occurred;
(e) the county attorney responsible for the prosecution in
the county where the fire occurred;
(f) the Federal Bureau of Investigation or any other
federal agency;
(g) the United States attorney's office when authorized or
charged with investigation or prosecution of a case involving a
fire loss; or
(h) the chief administrative officer of the municipal arson
squad; or
(i) the commissioner of commerce.
Sec. 64. Minnesota Statutes 1994, section 515A.3-112, is
amended to read:
515A.3-112 [INSURANCE.]
(a) Commencing not later than the time of the first
conveyance of a unit to a unit owner other than a declarant, the
association shall maintain, to the extent reasonably available:
(1) Property insurance on the common elements and units,
exclusive of land, excavations, foundations, and other items
normally excluded from property policies, insuring against all
risks of direct physical loss. The total amount of insurance
after application of any deductibles shall be not less than 80
percent of the full insurable replacement cost of the insured
property. The association or its authorized agent may enter a
unit at reasonable times upon reasonable notice for the purpose
of making appraisals for insurance purposes.
(2) Comprehensive general liability insurance, in an amount
determined by the board of directors but not less than any
amount specified in the declaration, covering all occurrences
commonly insured against for death, bodily injury, and property
damage arising out of or in connection with the use, ownership,
or maintenance of the common elements.
(b) If the insurance described in subsection (a) is not
maintained, the association shall immediately cause notice of
that fact to be sent postage prepaid by United States mail to
all unit owners at their respective units and other addresses
provided to the association. The declaration may require the
association to carry any other insurance, and the association in
any event may carry any other insurance it deems appropriate to
protect the association or the unit owners.
(c) Insurance policies carried pursuant to subsection (a)
shall provide that:
(1) Each unit owner and holder of a vendor's interest in a
contract for deed is an insured person under the policy with
respect to liability arising out of ownership of an undivided
interest in the common elements;
(2) The insurer waives its right to subrogation under the
policy against any unit owner of the condominium or members of
the unit owner's household and against the association and
members of the board of directors;
(3) No act or omission by any unit owner or holder of an
interest as security for an obligation, unless acting within the
scope of authority on behalf of the association, shall void the
policy or be a condition to recovery under the policy; and
(4) If, at the time of a loss under the policy, there is
other insurance in the name of a unit owner covering the same
property covered by the policy, the policy is primary insurance
not contributing with the other insurance.
(d) Any loss covered by the property policy under
subsection (a)(1) shall be adjusted with the association, but
the insurance proceeds for that loss shall be payable to any
insurance trustee designated for that purpose, or otherwise to
the association. The insurance trustee or the association shall
hold any insurance proceeds in trust for unit owners and holders
of an interest as security for an obligation as their interests
may appear. The proceeds shall be disbursed first for the
repair or restoration of the damaged common elements and units,
and unit owners and holders of an interest as security for an
obligation are not entitled to receive payment of any portion of
the proceeds unless there is a surplus of proceeds after the
common elements and units have been completely repaired or
restored, or the condominium is terminated.
(e) An insurance policy issued to the association does not
prevent a unit owner from obtaining insurance for personal
benefit.
(f) An insurer that has issued an insurance policy under
this section shall issue certificates or memoranda of insurance,
upon request, to any unit owner, or holder of an interest as
security for an obligation. The insurance may not be canceled
until 30 60 days after notice of the proposed cancellation has
been mailed to the association and to each unit owner and holder
of an interest as security for an obligation to whom
certificates of insurance have been issued.
(g) Any portion of the condominium damaged or destroyed
shall be promptly repaired or replaced by the association unless
(1) the condominium is terminated and the association votes not
to repair or replace all or part thereof, (2) repair or
replacement would be illegal under any state or local health or
safety statute or ordinance, or (3) 80 percent of the unit
owners, including every owner and first mortgagee of a unit or
assigned limited common element which will not be rebuilt, vote
not to rebuild. The cost of repair or replacement of a unit or
the common area in excess of insurance proceeds and reserves
shall be a common expense. If less than the entire condominium
is repaired or replaced, (1) the insurance proceeds attributable
to the damaged common elements shall be used to restore the
damaged area to a condition compatible with the remainder of the
condominium, (2) the insurance proceeds attributable to units
and limited common elements which are not rebuilt shall be
distributed to the owners of those units and the holders of an
interest as security for an obligation of those units and the
owners and holders of an interest as security for an obligation
of the units to which those limited common elements were
assigned, as their interests may appear, and (3) the remainder
of the proceeds shall be distributed to all the unit owners and
holders of an interest as security for an obligation as their
interests may appear in proportion to their common element
interest. In the event the unit owners vote not to rebuild a
unit, that unit's entire common element interest, votes in the
association, and common expense liability are automatically
reallocated upon the vote as if the unit had been condemned
under section 515A.1-107(a), and the association shall promptly
prepare, execute and record an amendment to the declaration
reflecting the reallocations. Notwithstanding the provisions of
this subsection, if the condominium is terminated, insurance
proceeds not used for repair or replacement shall be distributed
in the same manner as sales proceeds pursuant to section
515A.2-120.
(h) The provisions of this section may be varied or waived
in the case of a condominium all of the units of which are
restricted to nonresidential use.
Sec. 65. Minnesota Statutes 1994, section 515B.3-113, is
amended to read:
515B.3-113 [INSURANCE.]
(a) Commencing not later than the time of the first
conveyance of a unit to a unit owner other than a declarant, the
association shall maintain, to the extent reasonably available:
(1) subject to subsection (b), property insurance (i) on
the common elements and, in a planned community, also on
property that must become common elements, (ii) for broad form
covered causes of loss, and (iii) in a total amount of not less
than the full insurable replacement cost of the insured
property, less deductibles, at the time the insurance is
purchased and at each renewal date, exclusive of items normally
excluded from property policies; and
(2) commercial general liability insurance against claims
and liabilities arising in connection with the ownership,
existence, use or management of the property in an amount, if
any, specified by the common interest community instruments or
otherwise deemed sufficient in the judgment of the board,
insuring the board, the association, the management agent, and
their respective employees, agents and all persons acting as
agents. The declarant shall be included as an additional
insured in its capacity as a unit owner or board member. The
unit owners shall be included as additional insureds but only
for claims and liabilities arising in connection with the
ownership, existence, use or management of the common elements.
The insurance shall cover claims of one or more insured parties
against other insured parties.
(b) In the case of a common interest community that
contains units sharing or having contiguous walls, siding or
roofs, the insurance maintained under subsection (a)(1) shall
include the units and the common elements. The insurance need
not cover improvements and betterments to the units installed by
unit owners, but if improvements and betterments are covered,
any increased cost may be assessed by the association against
the units affected. The association may, in the case of a claim
for damage to a unit or units, (i) pay the deductible amount as
a common expense, (ii) assess the deductible amount against the
units affected in any reasonable manner, or (iii) require the
unit owners of the units affected to pay the deductible amount
directly.
(c) If the insurance described in subsections (a) and (b)
is not reasonably available, the association shall promptly
cause notice of that fact to be hand delivered or sent prepaid
by United States mail to all unit owners. The declaration may
require the association to carry any other insurance, and the
association in any event may carry any other insurance it
considers appropriate to protect the association, the unit
owners or officers, directors or agents of the association.
(d) Insurance policies carried pursuant to subsections (a)
and (b) shall provide that:
(1) each unit owner and secured party is an insured person
under the policy with respect to liability arising out of the
unit owner's interest in the common elements or membership in
the association;
(2) the insurer waives its right to subrogation under the
policy against any unit owner of the condominium or members of
the unit owner's household and against the association and
members of the board of directors;
(3) no act or omission by any unit owner or secured party,
unless acting within the scope of authority on behalf of the
association, shall void the policy or be a condition to recovery
under the policy; and
(4) if at the time of a loss under the policy there is
other insurance in the name of a unit owner covering the same
property covered by the policy, the association's policy is
primary insurance.
(e) Any loss covered by the property policy under
subsection (a)(1) shall be adjusted by and with the association.
The insurance proceeds for that loss shall be payable to the
association, or to an insurance trustee designated by the
association for that purpose. The insurance trustee or the
association shall hold any insurance proceeds in trust for unit
owners and secured parties as their interests may appear. The
proceeds shall be disbursed first for the repair or restoration
of the damaged common elements and units. Unit owners and
secured parties are not entitled to receive any portion of the
proceeds unless there is a surplus of proceeds after the common
elements and units have been completely repaired or restored or
the common interest community is terminated.
(f) Unit owners may obtain insurance for personal benefit
in addition to insurance carried by the association.
(g) An insurer that has issued an insurance policy under
this section shall issue certificates or memoranda of insurance,
upon request, to any unit owner or secured party. The insurance
may not be canceled until 30 60 days after notice of the
proposed cancellation has been mailed to the association, each
unit owner and each secured party for an obligation to whom
certificates of insurance have been issued.
(h) Any portion of the common interest community which is
damaged or destroyed as the result of a loss covered by the
association's insurance shall be promptly repaired or replaced
by the association unless (i) the common interest community is
terminated and the association votes not to repair or replace
all or part thereof, (ii) repair or replacement would be illegal
under any state or local health or safety statute or ordinance,
or (iii) 80 percent of the unit owners, including every owner
and holder of a first mortgage on a unit or assigned limited
common element which will not be rebuilt, vote not to rebuild.
The cost of repair or replacement of the common elements in
excess of insurance proceeds and reserves shall be paid as a
common expense, and the cost of repair of a unit in excess of
insurance proceeds shall be paid by the respective unit owner.
(i) If less than the entire common interest community is
repaired or replaced, (i) the insurance proceeds attributable to
the damaged common elements shall be used to restore the damaged
area to a condition compatible with the remainder of the common
interest community, (ii) the insurance proceeds attributable to
units and limited common elements which are not rebuilt shall be
distributed to the owners of those units, including units to
which the limited common elements were assigned, and the secured
parties of those units, as their interests may appear, and (iii)
the remainder of the proceeds shall be distributed to all the
unit owners and secured parties as their interests may appear in
proportion to their common element interest in the case of a
condominium or in proportion to their common expense liability
in the case of a planned community or cooperative.
(j) If the unit owners and holders of first mortgages vote
not to rebuild a unit, that unit's entire common element
interest, votes in the association, and common expense liability
are automatically reallocated upon the vote as if the unit had
been condemned under section 515B.1-107, and the association
shall promptly prepare, execute and record an amendment to the
declaration reflecting the reallocations. Notwithstanding the
provisions of this subsection, if the common interest community
is terminated, insurance proceeds not used for repair or
replacement shall be distributed in the same manner as sales
proceeds pursuant to section 515B.2-119.
(k) The provisions of this section may be varied or waived
in the case of a common interest community in which all units
are restricted to nonresidential use.
Sec. 66. [REPORT ON MANDATED INSURANCE DISCLOSURES AND
NOTICES.]
The commissioner of commerce shall report to the
legislature by February 1, 1996, on the status of insurance
disclosures and notices that are required by law to be
distributed with insurance applications, marketing materials, or
claim forms. The report shall include recommendations on the
disclosures or notices that are no longer necessary and a
recommendation for consolidation of all legally required
disclosures or notices on a single disclosure form.
Sec. 67. [REPEALER.]
Minnesota Statutes 1994, sections 61A.072, subdivision 3;
and 65B.07, subdivision 5, are repealed.
Sec. 68. [EFFECTIVE DATES.]
Sections 1 to 4, 6 to 13, 16 to 18, 20, 22 to 25, 29, 31 to
35, 38, 40, 42, 43, 46, 53, 54, 56, 59 to 63, and 67 are
effective the day following final enactment.
Section 14 is effective January 1, 1997.
Section 39 is effective July 1, 1995.
Section 44 is effective retroactive to January 1, 1995.
Sections 57 and 58 are effective January 1, 1996.
Sections 26, 27, and 37 are effective January 1, 1996, and
apply to coverage issued or renewed on or after that date.
Section 28 is effective the day following final enactment
and applies to health plans offered, issued, sold, or renewed to
provide coverage to a Minnesota resident on or after that date.
Section 41 is effective July 1, 1995, and applies to
coverage issued or renewed on or after that date.
Section 45 is effective retroactive to July 1, 1994.
Presented to the governor May 30, 1995
Signed by the governor June 1, 1995, 11:40 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes