Source: https://www.revisor.mn.gov/statutes/cite/61B/full
Timestamp: 2020-08-14 17:43:48
Document Index: 772434043

Matched Legal Cases: ['art 3', 'art 3', 'art 1', 'art 8', 'art 2', 'art 2', 'art 3', 'art 2', 'art 1', 'art 2', 'art 3']

﻿ Ch. 61B MN Statutes
61B.19 subd. 1 has been amended by Chapter 80, Article 2, Section 2
61B.19 subd. 2 has been amended by Chapter 80, Article 2, Section 3
61B.19 subd. 3 has been amended by Chapter 80, Article 2, Section 4
61B.19 subd. 4 has been amended by Chapter 80, Article 2, Section 5
61B.20 subd. 10 has been amended by Chapter 80, Article 2, Section 6
61B.20 subd. 13 has been amended by Chapter 80, Article 2, Section 7
61B.20 subd. 16 has been amended by Chapter 80, Article 2, Section 8
61B.21 subd. 1 has been amended by Chapter 80, Article 2, Section 9
61B.22 subd. 1 has been amended by Chapter 80, Article 2, Section 10
61B.23 subd. 1 has been amended by Chapter 80, Article 2, Section 11
61B.23 subd. 3 has been amended by Chapter 80, Article 2, Section 12
61B.23 subd. 4 has been amended by Chapter 80, Article 2, Section 13
61B.23 subd. 8a has been amended by Chapter 80, Article 2, Section 14
61B.23 subd. 12 has been amended by Chapter 80, Article 2, Section 15
61B.23 subd. 13 has been amended by Chapter 80, Article 2, Section 16
61B.23 subd. 14 has been amended by Chapter 80, Article 2, Section 17
61B.24 subd. 3 has been amended by Chapter 80, Article 2, Section 18
61B.24 subd. 5 has been amended by Chapter 80, Article 2, Section 19
61B.24 subd. 6 has been amended by Chapter 80, Article 2, Section 20
61B.24 subd. 7 has been amended by Chapter 80, Article 2, Section 21
61B.24 subd. 8 has been amended by Chapter 80, Article 2, Section 22
61B.24 subd. 10 has been amended by Chapter 80, Article 2, Section 23
61B.26 has been amended by Chapter 80, Article 2, Section 24
61B.27 has been amended by Chapter 80, Article 2, Section 25
61B.28 subd. 3 has been amended by Chapter 80, Article 2, Section 26
61B.28 subd. 3a has been amended by Chapter 80, Article 2, Section 27
61B.28 subd. 4 has been amended by Chapter 80, Article 2, Section 28
61B.28 subd. 6 has been amended by Chapter 80, Article 2, Section 29
61B.28 subd. 7 has been amended by Chapter 80, Article 2, Section 30
61B.28 subd. 8 has been amended by Chapter 80, Article 2, Section 31
61B.33 has been added by Chapter 80, Article 2, Section 32
CHAPTER 61B. LIFE AND HEALTH GUARANTY ASSOCIATION
61B.01 [Repealed, 1993 c 319 s 20]
61B.02 [Repealed, 1993 c 319 s 20]
61B.03 [Repealed, 1993 c 319 s 20]
61B.04 [Repealed, 1993 c 319 s 20]
61B.05 [Repealed, 1993 c 319 s 20]
61B.06 [Repealed, 1993 c 319 s 20]
61B.07 [Repealed, 1993 c 319 s 20]
61B.08 [Repealed, 1993 c 319 s 20]
61B.09 [Repealed, 1993 c 319 s 20]
61B.10 [Repealed, 1993 c 319 s 20]
61B.11 [Repealed, 1993 c 319 s 20]
61B.12 [Repealed, 1993 c 319 s 20]
61B.13 [Repealed, 1993 c 319 s 20]
61B.14 [Repealed, 1993 c 319 s 20]
61B.15 [Repealed, 1993 c 319 s 20]
61B.16 [Repealed, 1993 c 319 s 20]
61B.18 CITATION.
61B.21 MINNESOTA LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION.
61B.22 BOARD OF DIRECTORS.
61B.24 ASSESSMENTS.
61B.25 PLAN OF OPERATION.
61B.29 EXAMINATION; ANNUAL REPORT.
61B.30 TAX EXEMPTIONS.
61B.31 INDEMNIFICATION.
Sections 61B.18 to 61B.32 may be cited as the "Minnesota Life and Health Insurance Guaranty Association Act."
1993 c 319 s 3
(a) The purpose of sections 61B.18 to 61B.32 is to protect, subject to certain limitations, the persons specified in subdivision 2 against failure in the performance of contractual obligations, under life insurance policies, health insurance policies, annuity contracts, and supplemental contracts specified in subdivision 2, because of the impairment or insolvency of the member insurer that issued the policies or contracts.
(b) To provide this protection, an Association of Insurers has been created and exists to pay benefits and to continue coverages, as limited in sections 61B.18 to 61B.32. Members of the association are subject to assessment to provide funds to carry out the purpose of sections 61B.18 to 61B.32.
(1) persons who are owners of or certificate holders under these policies or contracts, or, (i) in the case of unallocated annuity contracts, to the persons who are participants in a covered retirement plan, or (ii) in the case of structured settlement annuities, to persons who are payees in respect of their liability claims (or beneficiaries of such payees who are deceased) and who:
(B) are not residents, but only under all of the following conditions: the insurers that issued the policies or contracts are domiciled in the state of Minnesota; those insurers never held a license or certificate of authority in the states in which those persons reside; those states have associations similar to the association created by sections 61B.18 to 61B.32; and those persons are not eligible for coverage by those associations; and
(2) persons who, regardless of where they reside, except for nonresident certificate holders under group policies or contracts, are the beneficiaries, assignees, or payees of the persons covered under clause (1).
(b) Sections 61B.18 to 61B.32 provide coverage to the persons specified in paragraph (a) for direct, nongroup life, health, annuity, and supplemental policies or contracts, for subscriber contracts issued by a nonprofit health service plan corporation operating under chapter 62C, for certificates under direct group policies and contracts, and for unallocated annuity contracts issued by member insurers, except as limited by sections 61B.18 to 61B.32. Except as expressly excluded under subdivision 3, annuity contracts and certificates under group annuity contracts include, but are not limited to, guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement annuities, annuities issued to or in connection with government lotteries, and any immediate or deferred annuity contracts. Covered unallocated annuity contracts include those that fund a qualified defined contribution retirement plan under sections 401, 403(b), and 457 of the Internal Revenue Code of 1986, as amended through December 31, 1992.
Subd. 3.Limitation of coverage.
Subd. 4.Limitation of benefits.
Subd. 5.Limited liability.
The liability of the association is strictly limited by the express terms of the covered policies and contracts and by the provisions of sections 61B.18 to 61B.32 and is not affected by the contents of any brochures, illustrations, advertisements, or oral statements by agents, brokers, or others used or made in connection with their sale. This limitation on liability does not prevent an insured from proving liability that is greater than the express terms of the covered policy or contract. The insured must bring an action to claim the greater liability no later than one year after entry of an order of rehabilitation, conservation, or liquidation. The association is not liable for any extra-contractual claims, such as claims relating to bad faith in payment of claims and claims relating to marketing practices, exemplary, or punitive damages. The association is not liable for attorney fees or interest other than as provided for by the terms of the policies or contracts, subject to the other limits of sections 61B.18 to 61B.32.
[Repealed, 2009 c 37 art 3 s 25]
Subd. 7.Construction.
(a) Sections 61B.18 to 61B.32 shall be liberally construed to effect the purpose of sections 61B.18 to 61B.32. Subdivision 1 is an aid and guide to interpretation.
(b) Participants in an employer-sponsored plan, which is funded in whole or in part by a covered policy, as specified in subdivision 4, clause (3), shall only be required to verify their status as residents and the amount of money in the unallocated annuity that represents their funds. Both these matters may be verified by the employer sponsoring the plan from plan records. Payments made to a plan shall be deemed to be made on behalf of the resident participant and are not the funds of the plan, the plan trustee, or any nonresident plan participant, and to the extent of such payments, discharge the association's obligation.
1993 c 319 s 4; 1994 c 426 s 11; 1999 c 177 s 36; 2001 c 142 s 1-4; 2009 c 37 art 3 s 15; 2010 c 275 art 1 s 10,11
The definitions in this section apply to sections 61B.18 to 61B.32.
"Account" means either of the two accounts created under section 61B.21, subdivision 1.
Subd. 3.Annuity contracts.
Subd. 4.Association.
"Association" means the Minnesota Life and Health Insurance Guaranty Association.
Subd. 6.Contractual obligation.
"Contractual obligation" means an obligation under a policy or contract or certificate under a group policy or contract, or portion of the policy or contract or certificate, for which coverage is provided under section 61B.19, subdivision 2.
Subd. 7.Covered policy.
"Covered policy" means a policy or contract to which sections 61B.18 to 61B.32 apply, as provided in section 61B.19, subdivision 2.
Subd. 8.Current contractual obligation.
Subd. 9.Direct life insurance.
"Direct life insurance" means life insurance as described in section 60A.06, subdivision 1, clause (4), and does not include credit life insurance regulated under chapter 62B.
Subd. 10.Health insurance.
Subd. 11.Impaired insurer.
"Impaired insurer" means a member insurer that is not an insolvent insurer, and:
(1) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction. The order of rehabilitation or conservation referred to in this subdivision is the initial order granting a petition, application, or other request to begin a rehabilitation or conservatorship; or
(2) is determined by the commissioner to be potentially unable to fulfill its contractual obligations and the commissioner has notified the association of the determination.
Subd. 12.Insolvent insurer.
"Insolvent insurer" means a member insurer that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency. The order of liquidation referred to in this subdivision is the initial order granting a petition, application, or other request to begin a liquidation.
Subd. 13.Member insurer.
"Member insurer" means an insurer licensed or holding a certificate of authority to transact in this state any kind of insurance for which coverage is provided under section 61B.19, subdivision 2, and includes an insurer whose license or certificate of authority in this state may have been suspended, revoked, not renewed, or voluntarily withdrawn. The term does not include:
(3) a fraternal benefit society;
(5) a mutual assessment company or an entity that operates on an assessment basis;
(7) a community integrated service network; or
(8) an entity similar to those listed in clauses (1) to (7).
Subd. 13a.Moody's Corporate Bond Yield Average.
"Person" means an individual, corporation, partnership, unincorporated association, limited liability company, governmental body or entity, or voluntary organization.
Subd. 15.Premiums.
"Premiums" means amounts or considerations by whatever name called received on covered policies or contracts less premiums, considerations, and deposits returned, and less dividends and experience credits on those covered policies or contracts to the extent not guaranteed in advance. The term does not include amounts received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under section 61B.19, subdivision 3, except that assessable premium shall not be reduced on account of section 61B.19, subdivision 4, relating to limitations with respect to any one life, any one individual, and any one contract holder. Premiums subject to assessment under section 61B.24, include all amounts received on any unallocated annuity contract issued to a contract holder resident in this state if the contract is not otherwise excluded from coverage under section 61B.19, subdivision 3; provided that "premiums" shall not include any premiums in excess of the liability limit on any unallocated annuity contract specified in section 61B.19, subdivision 4.
Subd. 16.Resident.
"Resident" means a person who resides in Minnesota at the time a member insurer is initially determined by the commissioner or a court to be an impaired or insolvent insurer and to whom a contractual obligation is owed. A person may be a resident of only one state, which in the case of a person other than a natural person is its principal place of business, and which, in the case of a trust, is the principal place of business of the settlor or entity which established the trust. Citizens of the United States who are either (i) residents of foreign countries, or (ii) residents of United States possessions, territories, or protectorates that do not have an association similar to the association created by sections 61B.19 to 61B.32, are considered residents of this state if the insurer that issued the covered policies or contracts was domiciled in this state.
Subd. 16a.State.
Subd. 16b.Structured settlement annuity.
Subd. 17.Supplemental contract.
"Supplemental contract" means a written agreement entered into for the distribution of policy or contract proceeds.
Subd. 18.Unallocated annuity contract.
"Unallocated annuity contract" means an annuity contract, funding agreement, or group annuity certificate that is not issued to and owned by an individual, except to the extent of annuity benefits guaranteed to an individual by an insurer under the contract or certificate.
1993 c 319 s 5; 1994 c 625 art 8 s 3; 1996 c 446 art 2 s 10; 1997 c 225 art 2 s 62; 2001 c 142 s 5-13; 2003 c 19 s 1
Subdivision 1.Functions.
Subd. 2.Supervision by commissioner of commerce.
The association is under the immediate supervision of the commissioner and is subject to the applicable provisions of the insurance laws of this state.
1993 c 319 s 6; 1997 c 187 art 3 s 15; 1998 c 386 art 2 s 23
The board of directors of the association consists of nine members serving terms as established in the plan of operation under section 61B.25. Members of the board must be elected by member insurers, subject to the approval of the commissioner, for the terms of office specified in their nominations. Vacancies on the board shall be filled for the remaining period of the term by a majority vote of the remaining board members, subject to approval of the commissioner. In approving selections or in appointing members to the board, the commissioner shall consider whether all member insurers are fairly represented.
Members of the board may be reimbursed from the assets of the association for reasonable and necessary expenses incurred by them as members of the board, but shall not otherwise be compensated by the association for their services.
Subd. 3.Committees and meetings.
Except as otherwise required under the plan of operation:
(a) The board of directors may designate three or more directors as an executive committee, which, to the extent determined by unanimous affirmative action of the entire board, has and shall exercise the authority of the board in the management of the business of the association. This executive committee shall act only in the interval between meetings of the board, and is subject at all times to the control and direction of the board.
(b) The board of directors may create additional committees, which have and shall exercise the specific authority and responsibility as determined by the unanimous affirmative action of the entire board.
(c) Any action that may be taken at a meeting of the board of directors or of a lawfully constituted executive committee may be taken without a meeting if authorized by a writing or writings signed by all the directors or by all of the members of the committee, as the case may be. This action is effective on the date on which the last signature is placed on the writing or writings, or on an earlier effective date established in the writing or writings.
(d) Members of the board of directors or of a lawfully constituted executive committee may participate in a meeting of the board or committee by means of conference telephone or similar communications equipment through which all persons participating in the meeting can hear each other. Participation in a meeting as provided in this paragraph constitutes presence in person at the meeting.
Board meetings are not subject to chapter 13D.
1993 c 319 s 7; 2001 c 142 s 14
Subdivision 1.Impaired domestic insurer.
(1) guarantee, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured, any or all of the policies or contracts of the impaired insurer;
Subd. 2.Impaired insurer not paying claims.
Subd. 3.Insolvent insurer.
(1) guaranty, assume, or reinsure, or cause to be guaranteed, assumed, or reinsured, the policies or contracts of the insolvent insurer;
Subd. 4.Payments; alternative policies.
When proceeding under subdivision 2, paragraph (a), clause (2), or subdivision 3, clause (4), the association shall, with respect to life and health insurance policies and annuities:
(2) with respect to individual policies, not later than the earlier of the next renewal date, if any, under those policies or one year, but in no event less than 30 days, from the date on which the association becomes obligated with respect to those policies.
(b) Make diligent efforts to provide all known insureds or annuitants for individual policies or group policy owners with respect to group policies 30 days' notice of the termination pursuant to paragraph (a) of the benefits provided.
(c) With respect to individual policies, make available to each known insured or annuitant, or owner if other than the insured or annuitant, and with respect to an individual formerly insured or formerly an annuitant under a group policy who is not eligible for replacement group coverage, make available substitute coverage on an individual basis in accordance with paragraph (d), if the insureds or annuitants had a right under law or the terminated policy or annuity to convert coverage to individual coverage or to continue an individual policy or annuity in force until a specified age or for a specified time, during which the insurer had no right unilaterally to make changes in any provision of the policy or annuity or had a right only to make changes in premium by class.
(d)(1) In providing the substitute coverage required under paragraph (c), the association may offer either to reissue the terminated coverage or to issue an alternative policy.
(2) Alternative or reissued policies must be offered without requiring evidence of insurability, and must not provide for any waiting period or exclusion that would not have applied under the terminated policy.
(3) The association may reinsure any alternative or reissued policy.
(e)(1) Alternative policies adopted by the association are subject to the approval of the commissioner. The association may adopt alternative policies of various types for future issuance without regard to any particular impairment or insolvency.
(2) Alternative policies must contain at least the minimum statutory provisions required in this state and provide benefits that are not unreasonable in relation to the premium charged. The association shall set the premium in accordance with a table of rates which it shall adopt. The premium must reflect the amount of insurance to be provided and the age and class of risk of each insured, but must not reflect any changes in the health of the insured after the original policy was last underwritten.
(3) Any alternative policy issued by the association must provide coverage of a type similar to that of the policy issued by the impaired or insolvent insurer, as determined by the association.
(f) If the association elects to reissue terminated coverage at a premium rate different from that charged under the terminated policy, the premium must be set by the association in accordance with the amount of insurance provided and the age and class of risk, subject to approval of the commissioner or by a court of competent jurisdiction.
(g) The association's obligations with respect to coverage under any policy of the impaired or insolvent insurer or under any reissued or alternative policy ceases on the date the coverage or policy is replaced by another similar policy by the policyholder, the insurer, or the association and the preexisting condition limitations have been satisfied.
Subd. 4a.Board discretion.
The board of directors of the association has discretion and may exercise reasonable business judgment to determine the means by which the association is to provide the benefits of sections 61B.18 to 61B.32 in an economical and efficient manner.
Subd. 4b.Benefits provided under a plan.
Where the association has arranged or offered to provide the benefits of sections 61B.18 to 61B.32 to a covered person under a plan or arrangement that fulfills the association's obligations under sections 61B.18 to 61B.32, the person is not entitled to benefits from the association in addition to or other than those provided under the plan or arrangement.
Subd. 4c.Coverage of policies with indexed interest or similar provisions.
In carrying out its duties in connection with guaranteeing, assuming, or reinsuring policies or contracts under sections 61B.18 to 61B.32, the association may, subject to approval of the receivership court, issue substitute coverage for a policy or contract that provides an interest rate, crediting rate, or similar factor determined by use of an index, or other external reference stated in the policy or contract employed in calculating returns or changes in value by issuing an alternative policy or contract in accordance with the following provisions:
(1) in lieu of the index or other external reference provided for in the original policy or contract, the alternative policy or contract provides for (i) a fixed interest rate or (ii) payment of dividends with minimum guarantees or (iii) a different method for calculating interest or changes in value;
(2) there is no requirement for evidence of insurability, waiting period or other exclusion that would not have applied under the replaced policy or contract; and
Subd. 5.Obligations terminated.
Nonpayment of all unpaid premiums within 31 days after the date required under the terms of a guaranteed, assumed, alternative, or reissued policy or contract or substitute coverage terminates the association's obligations under the policy, contract, or coverage under sections 61B.18 to 61B.32 with respect to the policy, contract, or coverage, except with respect to claims incurred or net cash surrender value that may be due in accordance with sections 61B.18 to 61B.32. The association will not terminate the policy or contract for nonpayment of premium until 31 days after the association sends a written cancellation notice by first class mail to the insured's last known address.
Subd. 6.Postliquidation premiums.
Premiums due for coverage after entry of any order of liquidation of an insolvent insurer belong to and are payable at the direction of the association, and the association is liable for unearned premiums due policy or contract owners arising after the entry of the order.
Subd. 7.Coverage by another state.
The association has no liability under this section for a covered policy of a foreign or alien insurer whose domiciliary jurisdiction or state of entry provides protection, by statutes or rule, for residents of this state, which protection is substantially similar to that provided by sections 61B.18 to 61B.32, for residents of other states. Recovery provided for under sections 61B.18 to 61B.32 is reduced by the amount of recovery under the coverage provided by another state or jurisdiction. If another state or jurisdiction providing substantially similar coverage as provided by sections 61B.18 to 61B.32 denies coverage, the association shall provide coverage if the policyholder or contract holder is otherwise eligible, and the association is then subrogated to the rights of the person receiving benefits with respect to the other state or jurisdiction. If a person receiving benefits from the association has a claim remaining against another state or jurisdiction, whether or not such state or jurisdiction provides substantially similar protection within the meaning of this section, then such person's remaining claim has priority over any subrogation rights of the association with respect to that other state or jurisdiction.
Subd. 8.Liens and moratoriums.
(a) In carrying out its duties under subdivision 2 or 3, the association may request that there be imposed policy liens, contract liens, moratoriums on payments, or other similar means. The liens, moratoriums, or similar means may be imposed if the commissioner:
(1) finds: (i) that the amounts that can be assessed under sections 61B.18 to 61B.32 are less than the amounts necessary to assure full and prompt performance of the impaired insurer's contractual obligations; (ii) that economic or financial conditions as they affect member insurers are sufficiently adverse to cause the imposition of policy or contract liens, moratoriums, or similar means to be in the public interest; (iii) that there is a reasonable likelihood that a plan of rehabilitation will be developed or other appropriate arrangements made for the orderly provision for covered contractual obligations of the impaired or insolvent insurer, and that the imposition of policy or contract liens, moratoriums, or similar means is necessary and appropriate to support the development of the plan of rehabilitation or other appropriate arrangements; (iv) that the imposition of policy or contract liens, moratoriums, or similar means is necessary and appropriate to ensure the equitable treatment of all policyholders of impaired or insolvent insurers protected by the guaranty association; (v) that the imposition of policy or contract liens, moratoriums, or similar means is necessary and appropriate to encourage recovery of the maximum possible amount from the remaining assets of the impaired or insolvent insurer's estate; or (vi) that the imposition of policy or contract liens, moratoriums, or similar means is necessary and appropriate in order for the association to participate in any multistate plan of rehabilitation, conservation, or liquidation of the impaired or insolvent insurer, and the commissioner considers the plan to be in the best interests of the impaired or insolvent insurer's policyholders or the association's member insurers;
(2) finds, in the case of a moratorium, that current contractual obligations are being, and will continue to be, promptly paid; and
(3) approves the specific policy liens, contract liens, moratoriums, or similar means to be used.
(b) Before being obligated under subdivision 2 or 3, the association may request that there be imposed temporary moratoriums or liens on payments of cash values and policy loans. The temporary moratoriums and liens may be imposed if approved by the commissioner.
(c) A moratorium, lien, or other means imposed pursuant to this subdivision may be for: (i) a specific term; or (ii) an indefinite term which shall continue in effect until the commissioner, at the request of the association or, on the commissioner's own motion after notice to the association, finds that the reason or reasons for the moratorium, lien, or other means no longer exists.
Subd. 8a.Deposits in this state for insolvent or impaired insurer.
A deposit in this state, held pursuant to law or required by the commissioner for the benefit of creditors, including policy owners, not turned over to the domiciliary liquidator upon the entry of a final order of liquidation or order approving a rehabilitation plan of an insurer domiciled in this state or in a reciprocal state, pursuant to section 60B.54, shall be promptly paid to the association. The association is entitled to retain a portion of any amount so paid to it equal to the percentage determined by dividing the aggregate amount of policy owners claims related to that insolvency for which the association has provided statutory benefits by the aggregate amount of all policy owners' claims in this state related to that insolvency. The association shall remit to the domiciliary receiver the amount so paid to the association and not retained pursuant to this subdivision. Any amount retained by the association shall be treated as a distribution of estate assets pursuant to section 60B.46 or similar provision of the state of domicile of the impaired or insolvent insurer.
Subd. 9.Failure to act.
If the association fails to act within a reasonable period of time as provided in subdivision 2, paragraph (a), clause (2); 3; or 4, the commissioner has the powers and duties of the association with respect to impaired or insolvent insurers including, but not limited to, the power to make assessments.
Subd. 10.Assistance to commissioner.
The association may give assistance and advice to the commissioner, upon request, concerning rehabilitation, payment of claims, continuance of coverage, or the performance of other contractual obligations of an impaired or insolvent insurer.
Subd. 11.Standing in court.
The association has standing to appear or intervene before any court or agency in this state with jurisdiction over an impaired or insolvent insurer concerning which the association is or may become obligated under sections 61B.18 to 61B.32 or with jurisdiction over any person or property against whom the association may have rights through subrogation or otherwise. This standing extends to all matters germane to the powers and duties of the association, including proposals for reinsuring, modifying, or guaranteeing the policies or contracts of the impaired or insolvent insurer and the determination of the policies or contracts and contractual obligations. The association may appear or intervene before a court or agency in another state with jurisdiction over an impaired or insolvent insurer for which the association is or may become obligated or with jurisdiction over any person or property against whom the association may have rights through subrogation or otherwise, provided, however, in the case of any such appearance or intervention, the association shall not submit for adjudication its obligations to provide coverage under the Minnesota Life and Health Insurance Guaranty Association Act without the prior approval of the commissioner.
Subd. 12.Assignments; subrogation rights.
(a) A person receiving benefits under sections 61B.18 to 61B.32 shall be considered to have assigned the rights under, and any causes of action against any person for losses arising under, resulting from or otherwise relating to, the covered policy or contract to the association to the extent of the benefits received because of sections 61B.18 to 61B.32, whether the benefits are payments of or on account of contractual obligations, continuation of coverage, or provision of substitute or alternative coverages. The association may require an assignment to it of those rights and causes of action by a payee, policy or contract owner, beneficiary, insured, or annuitant as a condition precedent to the receipt of rights or benefits conferred by sections 61B.18 to 61B.32 upon that person. The assignment and subrogation rights of the association include any rights that a person may have as a beneficiary of a plan covered under the Employee Retirement Income Security Act of 1974, United States Code, title 29, section 1003, as amended.
(c) In addition to paragraphs (a) and (b), the association has all common law rights of subrogation and other equitable or legal remedies that would have been available to the impaired or insolvent insurer or person receiving benefits under sections 61B.18 to 61B.32 including without limitation, in the case of a structured settlement annuity, any rights of the owner, beneficiary or payee of the annuity, to the extent of benefits received pursuant to sections 61B.18 to 61B.32, against a person originally or by succession responsible for the losses arising from the personal injury relating to the annuity or payment thereof, excepting any such person responsible solely by reason of serving as an assignee in respect of a qualified assignment under section 130 of the Internal Revenue Code of 1986, as amended.
(d) If the preceding provisions of this subdivision are invalid or ineffective with respect to any person or claim for any reason, the amount payable by the association with respect to the related covered obligations shall be reduced by the amount realized by any other person with respect to the person or claim that is attributable to the policies or portion thereof covered by the association.
(e) If the association has provided benefits with respect to a covered obligation and a person recovers amounts as to which the association has rights as described in the preceding paragraphs of this subdivision, the person shall pay to the association the portion of the recovery attributable to the policies or portion thereof covered by the association.
Subd. 13.Permissive powers.
(3) borrow money to effect the purposes of sections 61B.18 to 61B.32 and any notes or other evidence of indebtedness of the association not in default are legal investments for domestic insurers and may be carried as admitted assets;
(6) exercise, for the purposes of sections 61B.18 to 61B.32 and to the extent approved by the commissioner, the powers of a domestic life or health insurer, but in no case may the association issue insurance policies or annuity contracts other than those issued to perform its obligations under sections 61B.18 to 61B.32;
(10) request information from a person seeking coverage from the association in order to aid the association in determining its obligations under sections 61B.18 to 61B.32 with respect to the person, and the person shall promptly comply with the request.
Subd. 14.Association election to succeed to rights of insolvent or impaired insurer under indemnity reinsurance contracts.
(a) At any time within one year after the date on which the association becomes responsible for the obligations of a member insurer the coverage date, the association may elect to succeed to the rights and obligations of the member insurer, that accrue on or after the coverage date and that relate to contracts covered in whole or in part by the association, under any one or more indemnity reinsurance agreements entered into by the member insurer as a ceding insurer and selected by the association. However, the association may not exercise an election with respect to a reinsurance agreement if the receiver, rehabilitator, or liquidator of the member insurer has previously and expressly disaffirmed the reinsurance agreement. The election shall be effected by a notice to the receiver, rehabilitator, or liquidator, and to the affected reinsurers. If the association makes an election, clauses (1) through (4) apply with respect to the agreements selected by the association:
(1) the association is responsible for all unpaid premiums due under the agreements for periods both before and after the coverage date, and is responsible for the performance of all other obligations to be performed after the coverage date, in each case that relates to contracts covered in whole or in part by the association and the association may charge contracts covered in part by the association, through reasonable allocation methods, the costs for reinsurance in excess of the obligations of the association;
(2) the association is entitled to any amounts payable by the reinsurer under the agreements with respect to losses or events that occur in periods after the coverage date and that relate to contracts covered by the association in whole or in part, provided that, upon receipt of any such amounts, the association is obliged to pay to the beneficiary under the policy or contract on account of which the amounts were paid a portion of the amount equal to the excess of:
(d) Except as otherwise expressly provided in this subdivision, nothing in this subdivision alters or modifies the terms and conditions of the indemnity reinsurance agreements of the insolvent member insurer. Nothing in this subdivision abrogates or limits any rights of any reinsurer to claim that it is entitled to rescind a reinsurance agreement. Nothing in this subdivision gives a policy owner or beneficiary an independent cause of action against an indemnity reinsurer that is not otherwise set forth in the indemnity reinsurance agreement.
Subd. 15.Venue; appeal bond.
Except as otherwise provided in section 61B.24, subdivision 10, or 61B.26, paragraph (c), venue in a suit against the association arising under sections 61B.18 to 61B.32 shall be in Ramsey County. The association shall not be required to give an appeal bond in an appeal that relates to a cause of action arising under sections 61B.18 to 61B.32.
1993 c 319 s 8; 2001 c 142 s 15-25; 2002 c 379 art 1 s 27
For the purpose of providing the funds necessary to carry out the powers and duties of the association, the board of directors shall assess the member insurers, separately for each account or subaccount, at the times and for the amounts as the board finds necessary. Assessments are due not less than 30 days after prior written notice to the member insurers and accrue interest on and after the due date at the then applicable rate determined under section 549.09, subdivision 1, paragraph (c).
Subd. 2.Classes of assessments.
(1) class A assessments must be made for the purpose of meeting administrative and legal costs and other expenses and examinations conducted under the authority of section 61B.27. Class A assessments may be made whether or not related to a particular impaired or insolvent insurer; and
(2) class B assessments must be made to the extent necessary to carry out the powers and duties of the association under section 61B.23 with regard to an impaired or an insolvent insurer.
Subd. 3.Formula for determination.
(b) The amount of any class B assessment must be allocated for assessment purposes among the accounts or subaccounts pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard considered by the board in its sole discretion as being fair and reasonable under the circumstances.
(c) Class B assessments against member insurers for each subaccount or account must be in the proportion that the average annual premiums received on business in this state by each assessed member insurer on policies or contracts covered by each subaccount or account for the three most recent calendar years for which information is available preceding the calendar year in which the insurer became impaired or insolvent, as the case may be, bears to the average annual premiums received on business in this state by all assessed member insurers on policies or contracts covered by that subaccount or account for those same calendar years. If the impaired insurer becomes insolvent, the date of impairment must be used to determine the assessment. Premiums for purposes of calculating average annual premium for calendar years prior to 1993 shall be determined in accordance with Minnesota Statutes 1992, sections 61B.01 to 61B.16.
(d) Assessments for funds to meet the requirements of the association with respect to an impaired or insolvent insurer must not be made until necessary to implement the purposes of sections 61B.18 to 61B.32. Classification of assessments under subdivision 2 and computation of assessments under this subdivision must be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible.
Subd. 4.Abatement or deferment.
The association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is abated, or deferred in whole or in part, the amount by which the assessment is abated or deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments as provided in this section. Once the conditions which caused a deferral have been removed or rectified, the member insurer shall pay all assessments that were deferred pursuant to a repayment plan approved by the association.
Subd. 5.Maximum assessment.
(a) The total of all assessments upon a member insurer for each subaccount of the life and annuity account and for the health account shall not in any one calendar year exceed two percent of that member insurer's average annual premiums as calculated in subdivision 3, paragraph (c), on policies or contracts covered by that account or subaccount. If two or more assessments are made with respect to insurers that become impaired or insolvent in different calendar years, average annual premiums for purposes of the assessment percentage limitation are based upon the higher of the three-year averages calculated under subdivision 3, paragraph (c). If an impaired insurer becomes insolvent, the date of impairment must be used to determine the assessment. If the maximum assessment for any subaccount of the life and annuity account in any one calendar year will not provide an amount sufficient to carry out the responsibilities of the association, then pursuant to subdivision 3, the board of directors shall assess based on the other subaccounts of the life and annuity account for the necessary additional amount, subject to the maximum of two percent stated above for each subaccount.
(d) If assessments under this section are inadequate to pay all obligations of the impaired insurer that are or become due and owing, then the association shall prepare a plan approved by the commissioner for prioritization of payments. If the association adopts general principles in the plan of operations, the association shall use the general principles in preparing the plan required under this paragraph. No formerly impaired or insolvent insurer may be reinstated until all payments of or on account of the insurer's contractual obligations by the guaranty association, along with all expenses thereof and interest on all such payments and expenses, shall have been repaid to the guaranty association or a plan of repayment by the insurer shall have been approved by the commissioner.
The board may, by an equitable method as established in the plan of operation, refund to member insurers, in proportion to the contribution of each insurer to that account or subaccount, the amount by which the assets of the account or subaccount exceed the amount the board finds is necessary to carry out during the coming year the obligations of the association with regard to that account or subaccount, including assets accruing from assignment, subrogation, net realized gains, and income from investments. A reasonable amount may be retained in any account or subaccount to provide funds for the continuing expenses of the association and for future losses.
Subd. 7.Premium rates and dividends.
A member insurer may, in determining its premium rates and policy owner dividends as to any kind of insurance within the scope of sections 61B.18 to 61B.32, consider the amount reasonably necessary to meet its assessment obligations under sections 61B.18 to 61B.32.
Subd. 8.Certificate of contribution.
The association shall issue to each insurer paying an assessment under sections 61B.18 to 61B.32, other than a class A assessment, a certificate of contribution, in a form prescribed by the commissioner, for the amount of the assessment so paid. All outstanding certificates must be of equal dignity and priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the insurer in its financial statement as an asset in the form and for the amount, if any, and period of time as the commissioner may approve.
Subd. 9.Survival of obligation.
In the event a member insurer engages in any reorganization, including any merger, consolidation, restructuring, incorporation, or reincorporation, the member's obligations under this chapter shall survive the reorganization with respect to assessments for impairments or insolvencies occurring before the date of the reorganization.
Subd. 10.Procedure for protests regarding assessments.
(e) If the protest or appeal on the assessment is upheld, the amount paid in error or excess shall be returned to the member company. Interest on a refund due a protesting member shall be paid at the rate actually earned by the association.
Subd. 11.Member insurers' duty to provide information to association.
The association may request information of member insurers in order to aid in the exercise of its power under this section and member insurers shall promptly comply with a request.
1993 c 319 s 9; 2001 c 142 s 26-29
Subdivision 1.Adoption and amendment.
The purpose of the plan of operation is to assure the fair, reasonable, and equitable administration of the association under sections 61B.18 to 61B.32. Amendments to the plan of operation must be submitted to the commissioner and become effective upon the commissioner's written approval or 30 days after submission if the commissioner has not disapproved. If the association fails to submit suitable amendments to the plan, the commissioner shall, after notice and hearing, adopt reasonable rules necessary or advisable to implement sections 61B.18 to 61B.32. The rules shall continue in force until modified by the commissioner or superseded by amendments submitted by the association and approved by the commissioner.
Subd. 2.Compliance.
All member insurers shall comply with the plan of operation.
The plan of operation must, in addition to requirements specified in sections 61B.18 to 61B.32:
(2) establish the amount and method of reimbursing members of the board of directors under section 61B.22;
(3) establish regular places and times for meetings including telephone conference calls of the board of directors or of the executive committee;
(6) establish any additional procedures for assessments under section 61B.24; and
Subd. 4.Delegation of powers and duties.
The plan of operation may provide that any or all powers and duties of the association, except those under sections 61B.23, subdivision 13, clause (3), and 61B.24, are delegated to a corporation, association, or other organization which performs or will perform functions similar to those of this association, or its equivalent, in two or more states. The corporation, association, or organization shall be reimbursed for any payments made on behalf of the association and shall be paid for its performance of any function of the association. A delegation under this subdivision shall take effect only with the approval of both the board of directors and the commissioner, and may be made only to a corporation, association, or organization which extends protection not substantially less favorable and effective than that provided by sections 61B.18 to 61B.32.
1993 c 319 s 10
(3) when an impairment is declared and the amount of the impairment is determined, serve a demand upon the impaired insurer to make good the impairment within a reasonable time; notice to the impaired insurer shall constitute notice to its shareholders, if any; the failure of the insurer to promptly comply with the commissioner's demand shall not excuse the association from the performance of its powers and duties under sections 61B.18 to 61B.32; and
(b) The commissioner may suspend or revoke, after notice and hearing, the certificate of authority to transact insurance in this state of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative, the commissioner may levy a forfeiture on any member insurer which fails to pay an assessment when due. A forfeiture shall not exceed five percent of the unpaid assessment per month, but no forfeiture shall be less than $100 per month.
1993 c 319 s 11; 2001 c 142 s 30
The association is subject to examination and regulation by the commissioner. The board of directors shall submit to the commissioner before May 1 each year, a financial report in a form approved by the commissioner and a report of its activities during the association's preceding fiscal year. Upon request of a member insurer, the association must provide the member insurer with a copy of the report.
1993 c 319 s 14; 2001 c 142 s 35
Subdivision 1.State fees and taxes.
The association is exempt from payment of all taxes imposed under chapter 297I and all fees and all other taxes levied by this state or its subdivisions, except taxes levied on real property.
Subd. 2.Federal and foreign state taxes.
The association may seek exemption from payment of all fees and taxes levied by the federal or any other state government or its subdivision.
1993 c 319 s 15; 2000 c 394 art 2 s 12
The association has authority to indemnify certain persons against certain expenses and liabilities as provided in section 302A.521, including the power to purchase and maintain insurance on behalf of these persons as provided by section 302A.521, subdivision 7. In applying section 302A.521 for this purpose, the term "member insurers" shall be substituted for the terms "shareholders" and "stockholders" and the term "association" shall be substituted for the term "corporation."
1993 c 319 s 16; 2005 c 69 art 3 s 13
All proceedings in which the insolvent insurer is a party in a court in this state must be stayed 60 days from the date an order of liquidation, rehabilitation, or conservation is final to permit proper legal action by the association on matters germane to its powers or duties. As to judgment under a decision, order, verdict, or finding based on default, the association may apply to have the judgment set aside by the same court that made the judgment and may defend against the suit on the merits.
1993 c 319 s 17