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HF 2805

3rd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to insurance; modernizing insurance regulation; amending mutual
holding company laws; enacting the interstate insurance product regulation
compact; making miscellaneous insurance law changes; requiring a report;
amending Minnesota Statutes 2004, sections 60A.075, subdivision 1; 60A.077,
subdivisions 1, 3, by adding a subdivision; 60A.207; 60D.19, subdivision
1; 60K.56, subdivisions 5, 6; 64B.13; Minnesota Statutes 2005 Supplement,
sections 66A.02, subdivisions 2, 3; 66A.07, subdivision 2; proposing coding for
new law in Minnesota Statutes, chapter 60A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

MUTUAL HOLDING COMPANY CHANGES

Section 1.

Minnesota Statutes 2004, section 60A.075, subdivision 1, is amended to
read:


Subdivision 1.

Definitions.

(a) For the purposes of this section, the terms in this
subdivision have the meanings given them.

(b) "Converting mutual insurer" means a Minnesota domestic mutual insurance
company seeking to reorganize according to this section.

(c) "Converting mutual holding company" means a Minnesota domestic mutual
insurance holding company seeking to reorganize according to this section.

(d) "Converting mutual company" means a converting mutual insurer or a converting
mutual holding company seeking to convert according to this section.

(e) "Reorganized company" means a converting mutual insurer or a converting
mutual holding company, as the case may be, that has reorganized according to this section.

(f) "Eligible member" means:

(1) for converting mutual insurers, a policyholder whose policy is in force as of the
record date. Unless otherwise provided in the plan, a person deleted text begin insureddeleted text end new text begin coverednew text end under a
group policy is not an eligible member, deleted text begin unlessdeleted text end new text begin except that a person insured under a group
life insurance policy is an eligible member if,
new text end on the record date:

(i) the person is insured deleted text begin or covereddeleted text end under a group life policy deleted text begin or group annuity
contract
deleted text end under which deleted text begin funds aredeleted text end new text begin cash value hasnew text end accumulated and new text begin been new text end allocated to the
deleted text begin respective covereddeleted text end new text begin insurednew text end persons;new text begin and
new text end

deleted text begin (ii) the person has the right to direct the application of the funds so allocated;
deleted text end

deleted text begin (iii)deleted text end new text begin (ii)new text end the group policyholder makes no contribution to the premiums deleted text begin or depositsdeleted text end
for the new text begin group new text end policy deleted text begin or contractdeleted text end ; and

deleted text begin (iv) the converting mutual company has the names and addresses of the persons
covered under the group life policy or group annuity contract;
deleted text end

(2) for converting mutual holding companies, a person who is a member of the
converting mutual holding company, as defined by the converting mutual holding
company's articles of incorporation and bylaws, determined as of the record date.

(g) "Plan of conversion" or "plan" means a plan adopted by a converting mutual
company's board of directors under this section.

(h) "Policy" means a policy or contract of insurance, including an annuity contract,
issued by a converting mutual insurer or issued by a deleted text begin stockdeleted text end new text begin reorganizednew text end insurance company
subsidiary of a mutual holding companynew text begin , but excluding individual noncontributory
insurance policies for which the premiums are paid by a financial institution, association,
employer, or other institutional entity
new text end .

(i) "Active participating policy" means an individual policy of a converting mutual
company or its subsidiary that: (1) is a participating policy; (2) is among a class of similar
policies that have been credited with policy dividends at any time within the 12 months
preceding the effective date of the conversion or that will, under the then current dividend
scale, be credited with policy dividends if in force on a future policy anniversary; (3) gives
rise to membership interests in the converting mutual company; and (4) is in force on the
effective date or some other reasonable date identified in the plan.

(j) "Commissioner" means the commissioner of commerce.

(k) "Effective date of a conversion" means the date determined according to
subdivision 6.

(l) "Record date" means the date that the converting mutual company's board
of directors adopts a plan of conversion, unless another date is specified in the plan of
conversion and approved by the commissioner.

(m) "Membership interests" means all rights as members of the converting
mutual company, including, but not limited to, the rights to vote and to participate in
any distributions of distributable net worth, whether or not incident to the company's
liquidation.

(n) "Distributable net worth" means the value of the converting mutual company
as of the record date of the conversion, or other date approved by the commissioner,
determined as set forth in the plan and approved by the commissioner. The commissioner
may approve a valuation method based on any of the following: (1) the surplus as regards
policyholders of a converting mutual insurer determined according to statutory accounting
principles, which may be adjusted to reflect the current market values of assets and
liabilities, together with any other adjustments that are appropriate in the circumstances;
(2) the net equity of a converting mutual holding company or a converting mutual insurer
determined according to generally accepted accounting principles, which may be adjusted
to reflect the current market values of assets and liabilities, together with any other
adjustments that are appropriate in the circumstances; (3) the fair market value of the
converting mutual company determined by an independent, qualified person; or (4) any
other reasonable valuation method.

(o) "Permitted issuer" means: (1) a corporation organized and owned by the
converting mutual company or by any other insurance company or insurance holding
company for the purpose of purchasing and holding securities representing a majority of
voting control of the reorganized company; (2) a stock insurance company owned by the
converting mutual company or by any other insurance company or insurance holding
company into which the converting mutual company will be merged; or (3) any other
corporation approved by the commissioner.

Sec. 2.

Minnesota Statutes 2004, section 60A.077, subdivision 1, is amended to read:


Subdivision 1.

Formation.

(a) A domestic mutual insurance company, upon
approval of the commissioner, may reorganize by forming an insurance holding company
based upon a mutual plan and continuing the corporate existence of the reorganizing
insurance company as a stock insurance company. The commissioner, if satisfied that the
interests of the policyholders are properly protected and that the plan of reorganization is
fair and equitable to the policyholders, may approve the proposed plan of reorganization
and may require as a condition of approval the modifications of the proposed plan of
reorganization as the commissioner finds necessary for the protection of the policyholders'
interests. The commissioner shall retain jurisdiction over the mutual insurance holding
company according to this section and chapter 60D to assure that policyholder and
member interests are protected.

(b) All of the initial voting shares of the capital stock of the reorganized insurance
company must be issued to the mutual insurance holding company or to an intermediate
stock holding company. The membership interests of the policyholders of the reorganized
insurance company become membership interests in the mutual insurance holding
company. "Membership interests" means those interests described in section 60A.075,
subdivision 1
, paragraph deleted text begin (h)deleted text end new text begin (m)new text end . Policyholders of the reorganized insurance company
shall be members of the mutual insurance holding company and their voting rights must
be determined in accordance with the articles of incorporation and bylaws of the mutual
insurance holding company. new text begin Policyholders of any other insurance company subsidiary
of a mutual insurance holding company shall not be members of the mutual insurance
holding company unless otherwise specified in the articles of incorporation or bylaws of
the mutual insurance holding company. For purposes of this paragraph, "other insurance
company subsidiary" means an insurance company subsidiary of a mutual insurance
holding company that has not reorganized under this chapter or a comparable statute in
another jurisdiction.
new text end The mutual insurance holding company shall, at all times, directly
or through one or more intermediate stock holding companies, control a majority of the
voting shares of the capital stock of the reorganized insurance company, taking into
account any potential dilution resulting from convertible securities.

(c) A majority of the board of directors of a mutual insurance holding company
must be disinterested directors. For purposes of this section, a director is disinterested if
(i) the director is not or has not within the past two years been an officer or employee of
the mutual insurance holding company or any subsidiary or predecessor corporation, and
(ii) the director does not hold, directly or indirectly, a material ownership interest in any
subsidiary of the mutual insurance holding company. An ownership interest is material
if it represents more than one-half of one percent of the voting securities of the issuer,
or a larger percentage as the commissioner may approve.

Sec. 3.

Minnesota Statutes 2004, section 60A.077, subdivision 3, is amended to read:


Subd. 3.

Plan of reorganization; approval by commissioner.

(a) A reorganizing or
merging insurer or a merging mutual insurance holding company shall, by the affirmative
vote of a majority of its board of directors, adopt a plan of reorganization or merger
consistent with the requirements of this section and file the plan with the commissioner.
At any time before the approval of a plan by the commissioner, the company, by the
affirmative vote of a majority of its directors, may amend or withdraw the plan. The plan
must provide for the following:

(1) in the case of a reorganization under subdivision 1, establishing a mutual
insurance holding company with at least one stock insurance company subsidiary, or in
the case of a reorganization under subdivision 2, a description of the terms and conditions
of the proposed merger;

(2) analyzing the benefits and risks attendant to the proposed reorganization,
including the rationale for the reorganization and analysis of the comparative benefits and
risks of a demutualization under section 60A.075;

(3) protecting the immediate and long-term interests of existing policyholders;

(4) ensuring immediate membership in the mutual insurance holding company of all
existing policyholders of the reorganizing domestic insurance company;

(5) describing a plan providing for membership interests of future policyholders;

(6) describing the number of members of the board of directors of the mutual
insurance holding company required to be policyholders;

(7) describing the mutual insurance holding company's plan for distributions to
members or other uses of accumulated mutual holding company earnings;

(8) describing the nature and content of the annual report and financial statement
to be sent new text begin or otherwise made available new text end to each member;

(9) new text begin describing a plan to send or otherwise make available to members the annual
report and financial statement;
new text end

new text begin (10) new text end a copy of the proposed mutual insurance holding company's articles of
incorporation and bylaws specifying all membership rights;

deleted text begin (10)deleted text end new text begin (11)new text end the names, addresses, and occupational information of all corporate officers
and members of the proposed mutual insurance holding company board of directors;

deleted text begin (11)deleted text end new text begin (12)new text end information sufficient to demonstrate that the financial condition of the
reorganizing or merging company will not be materially diminished upon reorganization,
including information concerning any subsidiaries of the reorganizing or merging insurers
that will become subsidiaries of the mutual insurance holding company or an intermediate
holding company as part of the reorganization;

deleted text begin (12)deleted text end new text begin (13)new text end a copy of the articles of incorporation and bylaws for any proposed
insurance company subsidiary or intermediate holding company subsidiary;

deleted text begin (13)deleted text end new text begin (14)new text end describing any plans for an initial sale or subscription of stock or other
securities of the reorganized insurance company or any intermediate holding company; and

deleted text begin (14)deleted text end new text begin (15)new text end any other information requested by the commissioner or required by rule.

(b) The commissioner may approve the plan upon finding that the requirements of
this section have been fully met and the plan will protect the immediate and long-term
interests of policyholders.

(c) The commissioner may retain, at the reorganizing or merging mutual company's
expense, any qualified experts not otherwise a part of the commissioner's staff to assist in
reviewing the plan.

(d) The commissioner may, but need not, conduct a public hearing regarding the
proposed plan. The hearing must be held within 30 days after submission of a completed
plan of reorganization to the commissioner. The commissioner shall give the reorganizing
mutual company at least 20 days' notice of the hearing. At the hearing, the reorganizing
mutual company, its policyholders, and any other person whose interest may be affected
by the proposed reorganization, may present evidence, examine and cross-examine
witnesses, and offer oral and written arguments or comments according to the procedure
for contested cases under chapter 14. The persons participating may conduct discovery
proceedings in the same manner as prescribed for the district courts of this state. All
discovery proceedings must be concluded no later than three days before the scheduled
commencement of the public hearing.

Sec. 4.

Minnesota Statutes 2004, section 60A.077, is amended by adding a subdivision
to read:


new text begin Subd. 13. new text end

new text begin Conversion. new text end

new text begin (a) With the approval of the commissioner, a domestic
insurance company that previously reorganized under this section into a stock subsidiary
of a mutual insurance holding company may convert back into a mutual insurance
company. It shall effect the conversion by merging with its parent mutual insurance
holding company (a "parent mutual"), but only if the parent mutual owns or controls,
directly or indirectly, all of the voting shares of capital stock of the reorganized insurance
company. The reorganized subsidiary, as the surviving company, shall continue its
corporate existence as a domestic mutual insurance company (a "remutualized company").
A conversion under this subdivision may, but need not, occur in connection with the
simultaneous or subsequent merger of the remutualized company with a domestic or
foreign mutual insurance company. Section 61A.37 is not applicable to a conversion
under this subdivision.
new text end

new text begin (b) The conversion can be effected by the parent mutual pursuant to a plan of
conversion adopted as follows:
new text end

new text begin (1) The parent mutual shall, by the affirmative vote of a majority of its board of
directors, adopt a plan of conversion consistent with the requirements of this subdivision.
new text end

new text begin (2) The parent mutual, by the affirmative vote of a majority of its board of directors,
may amend the plan at any time before approval of the plan by the commissioner and may
withdraw the plan at any time before the effective date of the plan.
new text end

new text begin (3) The duties of the board of directors of the parent mutual, in considering or acting
upon a proposed plan of conversion or related transaction, shall be as set forth in section
302A.251 and, to the extent not inconsistent with that section, the parent mutual's articles
of incorporation and bylaws.
new text end

new text begin (c) The parent mutual shall file with the commissioner an application for approval
of, and permission to carry out the reorganization according to, the plan of conversion.
The application must include the following:
new text end

new text begin (1) the plan of conversion;
new text end

new text begin (2) the form of notice of meeting for eligible members to vote on the plan;
new text end

new text begin (3) the form of any proxies to the solicited from eligible members;
new text end

new text begin (4) the proposed articles of incorporation and bylaws of the remutualized company;
new text end

new text begin (5) information required under chapter 60D if the plan results in a change of control
of the remutualizing company;
new text end

new text begin (6) if required by the commissioner, an independent actuarial opinion on matters
affecting the structure or fairness of the plan; and
new text end

new text begin (7) other information or documentation required by the commissioner or required by
rule.
new text end

new text begin (d) The commissioner shall determine, within 30 days of submission of the
application, whether the application is complete.
new text end

new text begin (e) If the plan of conversion proposes a simultaneous merger of the remutualized
company with a foreign or domestic mutual insurance company, the commissioner may
conduct concurrent proceedings under this subdivision and section 60A.16.
new text end

new text begin (f) The commissioner may retain, at the parent mutual's expense, qualified experts
not otherwise a part of the commissioner's staff, including without limitation, actuaries,
accountants, investment bankers, and attorneys, to assist in reviewing the plan and
supplemental materials and valuations.
new text end

new text begin (g) The commissioner may, but need not, conduct a public hearing regarding the
proposed plan of conversion. If a hearing is to be held, the commissioner shall designate a
date for the public hearing promptly upon determining that the application is complete
and that the forms of notice are adequate. The public hearing must be held on one or
more days, the first beginning within 90 days after the date on which the commissioner
determines the application is complete, unless the parent mutual requests, and the
commissioner agrees to, a longer period for the purpose of preparing and distributing the
notices required by this paragraph and by paragraph (i), clause (1). The hearing shall be in
the nature of a legislative hearing and shall not constitute or be considered a contested
case under chapter 14. The hearing may be conducted by the commissioner or by a
person designated by the commissioner, which designee may be an administrative law
judge. The parent mutual shall provide its eligible members with at least 45 days' notice
of the hearing, the notice to be in the form, and provided in a manner, approved by the
commissioner. The purpose of the hearing is to receive comments and information for
the purpose of aiding the commissioner in making a decision on the plan of conversion.
Persons wishing to make comments and submit information may submit written
statements before the public hearing and may appear and be heard at the hearing. The
commissioner's order or determination must be issued within 45 days after the closing of
the record of the hearing by the commissioner or the hearing officer, as applicable, which
record must not be closed until the record includes certification of the vote on the plan
of conversion by the eligible members of the parent mutual. The commissioner shall
issue a written decision detailing the reasons why the parent mutual company's plan
of conversion is approved or disapproved.
new text end

new text begin (h) The commissioner shall approve the application and permit the conversion
according to the plan if the commissioner finds that:
new text end

new text begin (1) the provisions of this subdivision have been fully met; and
new text end

new text begin (2) the plan is not unfair or inequitable to the members of the parent mutual.
new text end

new text begin The commissioner's order approving or disapproving a plan of conversion is a final agency
decision subject to appeal according to sections 14.63 to 14.68.
new text end

new text begin (i)(1) No later than 90 days following the date of the public hearing, if any, or the
date the commissioner determines the application is complete if no hearing is held, the
parent mutual shall give all eligible members notice of a regular or special meeting of the
members called for the purpose of considering the plan and any corporate actions that
are a part of, or are reasonably attendant to, the accomplishment of the plan, including
without limitation, any proposed merger of the remutualizing company with a domestic or
foreign mutual insurance company.
new text end

new text begin (2) A copy of the plan or a summary of the plan must accompany the notice. The
notice must be mailed to each eligible member's last known address, as shown on the
parent mutual's records, not less than 45 days before the date of the meeting, unless the
commissioner directs a later date for mailing. If the meeting to vote upon the plan is held
coincident with the parent mutual's annual meeting of members, only one combined notice
of meeting is required. The notice of the meeting of eligible members may be combined
with the notice of hearing described in paragraph (g).
new text end

new text begin (3) If the parent mutual complies substantially and in good faith with the notice
requirements of this section, the parent mutual's failure to give any member or members
required notice does not impair the validity of an action taken under this section.
new text end

new text begin (j)(1) The plan must be adopted upon receiving the affirmative vote of a majority of
the votes cast by eligible members.
new text end

new text begin (2) Eligible members may vote in person or by proxy. The form of any proxy must
be filed with and approved by the commissioner.
new text end

new text begin (k)(1) Following approval by the eligible members, the parent mutual shall file a
copy of the converting subsidiary's amended or restated articles of incorporation with the
commissioner, together with a certified copy of the minutes of the meeting of the members
of the parent mutual at which the plan was adopted and a certified copy of the plan. The
commissioner shall review and, if appropriate, approve the amended or restated articles.
After approval by the commissioner, the parent mutual shall file the articles with the
secretary of state as provided by section 60A.07, subdivision 1d, and chapter 302A.
new text end

new text begin (2) The conversion is effective on the date of filing an amendment or restatement of
the articles of incorporation with the secretary of state, or on a later date if the plan so
specifies.
new text end

new text begin (l) Upon the effective date of the conversion in accordance with this subdivision:
new text end

new text begin (1) The corporate existence of the parent mutual is continued in the converted
subsidiary. All the rights, privileges, powers, franchises, and interests of the parent
mutual in and to all property and things in action belonging to the parent company are
considered transferred to and vested in the converted subsidiary without any deed or
transfer. Simultaneously, the converted subsidiary is considered to have assumed all the
obligations and liabilities of the parent mutual.
new text end

new text begin (2) The directors and officers of the parent mutual, unless otherwise specified in the
plan of conversion, shall serve as directors and officers of the converted subsidiary until
new directors and officers of the converted subsidiary are duly elected according to the
articles of incorporation and bylaws of the converted subsidiary.
new text end

new text begin (3) All policies issued by the converted subsidiary in force on the effective date
of the conversion remain in force subject to the terms of those policies, except that the
membership interests in the parent mutual shall become membership interests in the
converted subsidiary, and member voting rights in the converted subsidiary shall be
exclusively governed by the converted subsidiary??a??a??s articles and bylaws.
new text end

new text begin (4) Except as otherwise provided in the plan of conversion, the converted subsidiary
is no longer subject to the requirements of subdivisions 1 to 12 of this section or to the
terms of the original plan of reorganization.
new text end

new text begin (5) At the effective time of the merger, all of the voting shares of capital stock of the
converted subsidiary shall be deemed to be redeemed and canceled.
new text end

new text begin (6) Any provisions of the original plan of reorganization pertaining to the protection
of reasonable policyholder dividend expectations may be continued, modified, or
extinguished as provided under the plan of conversion and approved by the commissioner.
new text end

new text begin (m) No director, officer, agent, employee of the parent mutual or the converting
subsidiary, or any other person shall receive a fee, commission, or other valuable
consideration, other than the person's usual regular salary and compensation, for in any
manner aiding, promoting, or assisting in the conversion except as set forth in the plan
approved by the commissioner. This provision does not prohibit the payment of reasonable
fees and compensation to attorneys, accountants, investment bankers, and actuaries for
services performed in the independent practice of their professions.
new text end

new text begin (n) All the costs and expenses connected with a plan of conversion must be paid
for or reimbursed by the parent mutual or converted subsidiary except where the plan
provides otherwise.
new text end

new text begin (o)(1) An action challenging the validity of or arising out of acts taken or proposed
to be taken according to this section must be commenced within 180 days after the
effective date of the conversion.
new text end

new text begin (2) The parent mutual, the converted subsidiary, or any defendant in an action
described in clause (1) may petition the court in the action to order a party to give security
for the reasonable attorney fees that may be incurred by a party to the action. The amount
of security may be increased or decreased in the discretion of the court having jurisdiction
if a showing is made that the security provided is or may become inadequate or excessive.
new text end

new text begin (p) For purposes of this subdivision, the following terms have the meanings given.
new text end

new text begin (1) "Eligible member" means a person who is a member of the parent mutual, as
defined by the parent mutual??a??a??s articles of incorporation and bylaws, determined as of
the record date.
new text end

new text begin (2) "Membership interests" means all rights as members of the parent mutual,
including, but not limited to, the rights to vote.
new text end

new text begin (3) "Plan of conversion" or "plan" means a plan adopted by a parent mutual??a??a??s board
of directors under this section.
new text end

new text begin (4) "Record date" means the date that the parent mutual??a??a??s board of directors adopts a
plan of conversion, unless another date is specified in the plan of conversion and approved
by the commissioner.
new text end

new text begin (5) "Converted subsidiary" means a converting subsidiary that has converted into a
mutual insurance company under this subdivision.
new text end

new text begin (6) "Converting subsidiary" means a Minnesota domestic insurance company that
previously reorganized under this section that is seeking to convert back into a mutual
insurance company in accordance with this subdivision.
new text end

Sec. 5.

Minnesota Statutes 2005 Supplement, section 66A.02, subdivision 2, is
amended to read:


Subd. 2.

Mutual holding companies.

For purposes of sections 66A.01 to 66A.07
and 66A.21, deleted text begin the termdeleted text end new text begin unless the context clearly suggests otherwise, new text end "domestic mutual
insurance company" is deemed to include domestic mutual insurance holding companies
organized under section 60A.077 and deleted text begin the termdeleted text end "member" is deemed to include members of
a domestic mutual insurance holding company as specified in section 60A.077, subdivision
1
, paragraph (b). For purposes of section 60A.07, subdivisions 1, 1a, deleted text begin 1b,deleted text end 1c, 1d, and 1e, a
domestic mutual insurance holding company is deemed to be an insurance corporation.

Sec. 6.

Minnesota Statutes 2005 Supplement, section 66A.02, subdivision 3, is
amended to read:


Subd. 3.

Terms.

For purposes of applying chapter 302A to domestic mutual
insurance companies, members of a domestic mutual insurance company must be treated
in the same manner as shareholders of a stock corporation, except as otherwise provided
in this chapter. Every member of the mutual insurance company shall be deemed to hold
one share of the company for purposes of applying provisions of chapter 302A relating
to voting. Mutual insurance companies are not included in the definitions of "closely
held corporation," "publicly held corporation," or "issuing public corporation." The term
"distribution" does not include dividends paid on participating policies issued by the
mutual insurance company or any new text begin reorganized new text end insurance company subsidiary in the case
of a mutual insurance holding company.

Sec. 7.

Minnesota Statutes 2005 Supplement, section 66A.07, subdivision 2, is
amended to read:


Subd. 2.

Life insurance companies.

(a) Unless otherwise approved by the
commissioner of commerce, a domestic mutual life insurance company member is any
person who is listed on the records of the company as the owner of an in-force policy, and
each member is entitled to one vote regardless of the number of policies owned by the
member or the amounts of coverage provided to the member. new text begin For purposes of this section,
new text end "policy" means a policy or contract of insurance, including an annuity contract issued by
the companynew text begin , but excluding individual noncontributory insurance policies for which the
premiums are paid by a financial institution, association, employer, or other institutional
entity
new text end . Except as otherwise provided in the company's certificate or bylaws, a person
deleted text begin insureddeleted text end new text begin coverednew text end under a group policy is not a member by virtue of such coverage, deleted text begin unlessdeleted text end new text begin
except that a person insured under a group life insurance policy is a member if:
new text end (1) the
person is insured deleted text begin or covereddeleted text end under a group life policy deleted text begin or group annuity contractdeleted text end under
which deleted text begin funds aredeleted text end new text begin cash value hasnew text end accumulated and new text begin been new text end allocated to the deleted text begin respective covereddeleted text end new text begin
insured
new text end persons; new text begin and new text end (2)deleted text begin the person has the right to direct the application of the funds so
allocated; (3)
deleted text end the group policyholder makes no contribution to the premiums or deposits
for the policy deleted text begin or contract; and (4) the company has the names and addresses of the persons
covered under the group life policy or group annuity contract
deleted text end .

(b) Every member new text begin of a mutual life insurance company new text end must be notified of its annual
meetings by a written notice mailed to the member's address, or by an imprint on the front
or back of the policy, premium notice, receipt, or certificate of renewal, substantially
as follows:

"The policyowner is hereby notified that by virtue of his or her ownership of this
policy, the policyowner is a member of the .......... Insurance Company, and that the annual
meetings of said company are held at its home office on the .... day of .... in each year,
at .... o'clock."

For mutual new text begin life new text end insurance holding companies, the notice of the annual meeting
may be modified to reflect that the policyowner, by virtue of his or her ownership of a
policy issued by a subsidiary insurance company reorganized under section 60A.077, is a
member of the mutual insurance holding company. Notice given in this manner is deemed
to comply with the requirements of section 302A.435.

Sec. 8. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 7 are effective the day following final enactment.
new text end

ARTICLE 2

INTERSTATE INSURANCE PRODUCT REGULATION COMPACT

Section 1.

new text begin [60A.99] INTERSTATE INSURANCE PRODUCT REGULATION
COMPACT.
new text end

new text begin Subdivision 1. new text end

new text begin Enactment and form. new text end

new text begin The Interstate Insurance Product Regulation
Compact is enacted into law and entered into with all other states legally joining in it in
substantially the following form:
new text end

new text begin Article I. Purposes
new text end

new text begin The purposes of this Compact are, through means of joint and cooperative action
among the Compacting States:
new text end

new text begin 1. To promote and protect the interest of consumers of individual and group annuity,
life insurance, disability income and long-term care insurance products;
new text end

new text begin 2. To develop uniform standards for insurance products covered under the Compact;
new text end

new text begin 3. To establish a central clearinghouse to receive and provide prompt review of
insurance products covered under the Compact and, in certain cases, advertisements related
thereto, submitted by insurers authorized to do business in one or more Compacting States;
new text end

new text begin 4. To give appropriate regulatory approval to those product filings and
advertisements satisfying the applicable uniform standard;
new text end

new text begin 5. To improve coordination of regulatory resources and expertise between state
insurance departments regarding the setting of uniform standards and review of insurance
products covered under the Compact;
new text end

new text begin 6. To create the Interstate Insurance Product Regulation Commission; and
new text end

new text begin 7. To perform these and such other related functions as may be consistent with the
state regulation of the business of insurance.
new text end

new text begin Article II. Definitions
new text end

new text begin For purposes of this Compact:
new text end

new text begin 1. "Advertisement" means any material designed to create public interest in
a Product, or induce the public to purchase, increase, modify, reinstate, borrow on,
surrender, replace or retain a policy, as more specifically defined in the Rules and
Operating Procedures of the Commission.
new text end

new text begin 2. "Bylaws" mean those bylaws established by the Commission for its governance,
or for directing or controlling the Commission's actions or conduct.
new text end

new text begin 3. "Compacting State" means any State which has enacted this Compact legislation
and which has not withdrawn pursuant to Article XIV, Section 1, or been terminated
pursuant to Article XIV, Section 2.
new text end

new text begin 4. "Commission" means the "Interstate Insurance Product Regulation Commission"
established by this Compact.
new text end

new text begin 5. "Commissioner" means the chief insurance regulatory official of a State including,
but not limited to commissioner, superintendent, director or administrator.
new text end

new text begin 6. "Domiciliary State" means the state in which an Insurer is incorporated or
organized; or, in the case of an alien Insurer, its state of entry.
new text end

new text begin 7. "Insurer" means any entity licensed by a State to issue contracts of insurance for
any of the lines of insurance covered by this Act.
new text end

new text begin 8. "Member" means the person chosen by a Compacting State as its representative
to the Commission, or his or her designee.
new text end

new text begin 9. "Noncompacting State" means any State which is not at the time a Compacting
State.
new text end

new text begin 10. "Operating Procedures" mean procedures promulgated by the Commission
implementing a Rule, Uniform Standard, or a provision of this Compact.
new text end

new text begin 11. "Product" means the form of a policy or contract, including any application,
endorsement, or related form which is attached to and made a part of the policy or
contract, and any evidence of coverage or certificate, for an individual or group annuity,
life insurance, disability income or long-term care insurance product that an Insurer is
authorized to issue.
new text end

new text begin 12. "Rule" means a statement of general or particular applicability and future effect
promulgated by the Commission, including a Uniform Standard developed pursuant to
Article VII of this Compact, designed to implement, interpret, or prescribe law or policy
or describing the organization, procedure, or practice requirements of the Commission,
which shall have the force and effect of law in the Compacting States.
new text end

new text begin 13. "State" means any state, district, or territory of the United States of America.
new text end

new text begin 14. "Third Party Filer" means an entity that submits a Product filing to the
Commission on behalf of an Insurer.
new text end

new text begin 15. "Uniform Standard" means a standard adopted by the Commission for a
Product line, pursuant to Article VII of this Compact, and shall include all of the Product
requirements in aggregate; provided, that each Uniform Standard shall be construed,
whether express or implied, to prohibit the use of any inconsistent, misleading or
ambiguous provisions in a Product and the form of the Product made available to the public
shall not be unfair, inequitable or against public policy as determined by the Commission.
new text end

new text begin Article III. Establishment of the Commission and Venue
new text end

new text begin 1. The Compacting States hereby create and establish a joint public agency known
as the "Interstate Insurance Product Regulation Commission." Pursuant to Article IV,
the Commission will have the power to develop Uniform Standards for Product lines,
receive and provide prompt review of Products filed therewith, and give approval to those
Product filings satisfying applicable Uniform Standards; provided, it is not intended for
the Commission to be the exclusive entity for receipt and review of insurance product
filings. Nothing herein shall prohibit any Insurer from filing its product in any State
wherein the Insurer is licensed to conduct the business of insurance; and any such filing
shall be subject to the laws of the State where filed.
new text end

new text begin 2. The Commission is a body corporate and politic, and an instrumentality of the
Compacting States.
new text end

new text begin 3. The Commission is solely responsible for its liabilities except as otherwise
specifically provided in this Compact.
new text end

new text begin 4. Venue is proper and judicial proceedings by or against the Commission shall be
brought solely and exclusively in a Court of competent jurisdiction where the principal
office of the Commission is located.
new text end

new text begin Article IV. Powers of the Commission
new text end

new text begin The Commission shall have the following powers:
new text end

new text begin 1. To promulgate Rules, pursuant to Article VII of this Compact, which shall have
the force and effect of law and shall be binding in the Compacting States to the extent and
in the manner provided in this Compact;
new text end

new text begin 2. To exercise its rule-making authority and establish reasonable Uniform Standards
for Products covered under the Compact, and Advertisement related thereto, which
shall have the force and effect of law and shall be binding in the Compacting States,
but only for those Products filed with the Commission, provided, that a Compacting
State shall have the right to opt out of such Uniform Standard pursuant to Article VII, to
the extent and in the manner provided in this Compact, and, provided further, that any
Uniform Standard established by the Commission for long-term care insurance products
may provide the same or greater protections for consumers as, but shall not provide less
than, those protections set forth in the National Association of Insurance Commissioners'
Long-Term Care Insurance Model Act and Long-Term Care Insurance Model Regulation,
respectively, adopted as of 2001. The Commission shall consider whether any subsequent
amendments to the NAIC Long-Term Care Insurance Model Act or Long-Term Care
Insurance Model Regulation adopted by the NAIC require amending of the Uniform
Standards established by the Commission for long-term care insurance products;
new text end

new text begin 3. To receive and review in an expeditious manner Products filed with the
Commission, and rate filings for disability income and long-term care insurance Products,
and give approval of those Products and rate filings that satisfy the applicable Uniform
Standard, where such approval shall have the force and effect of law and be binding on the
Compacting States to the extent and in the manner provided in the Compact;
new text end

new text begin 4. To receive and review in an expeditious manner Advertisement relating to
long-term care insurance products for which Uniform Standards have been adopted by
the Commission, and give approval to all Advertisement that satisfies the applicable
Uniform Standard. For any product covered under this Compact, other than long-term
care insurance products, the Commission shall have the authority to require an insurer
to submit all or any part of its Advertisement with respect to that product for review or
approval prior to use, if the Commission determines that the nature of the product is such
that an Advertisement of the product could have the capacity or tendency to mislead the
public. The actions of the Commission as provided in this section shall have the force
and effect of law and shall be binding in the Compacting States to the extent and in the
manner provided in the Compact;
new text end

new text begin 5. To exercise its rule-making authority and designate Products and Advertisement
that may be subject to a self-certification process without the need for prior approval
by the Commission;
new text end

new text begin 6. To promulgate Operating Procedures, pursuant to Article VII of this Compact,
which shall be binding in the Compacting States to the extent and in the manner provided
in this compact;
new text end

new text begin 7. To bring and prosecute legal proceedings or actions in its name as the
Commission; provided, that the standing of any state insurance department to sue or be
sued under applicable law shall not be affected;
new text end

new text begin 8. To issue subpoenas requiring the attendance and testimony of witnesses and the
production of evidence;
new text end

new text begin 9. To establish and maintain offices;
new text end

new text begin 10. To purchase and maintain insurance and bonds;
new text end

new text begin 11. To borrow, accept or contract for services of personnel, including, but not limited
to, employees of a Compacting State;
new text end

new text begin 12. To hire employees, professionals or specialists, and elect or appoint officers, and
to fix their compensation, define their duties and give them appropriate authority to carry
out the purposes of the Compact, and determine their qualifications; and to establish the
Commission's personnel policies and programs relating to, among other things, conflicts
of interest, rates of compensation and qualifications of personnel;
new text end

new text begin 13. To accept any and all appropriate donations and grants of money, equipment,
supplies, materials and services, and to receive, utilize and dispose of the same; provided
that at all times the Commission shall strive to avoid any appearance of impropriety;
new text end

new text begin 14. To lease, purchase, accept appropriate gifts or donations of, or otherwise to own,
hold, improve or use, any property, real, personal or mixed; provided that at all times the
Commission shall strive to avoid any appearance of impropriety;
new text end

new text begin 15. To sell, convey, mortgage, pledge, lease, exchange, abandon or otherwise
dispose of any property, real, personal or mixed;
new text end

new text begin 16. To remit filing fees to Compacting States as may be set forth in the Bylaws,
Rules or Operating Procedures;
new text end

new text begin 17. To enforce compliance by Compacting States with Rules, Uniform Standards,
Operating Procedures and Bylaws;
new text end

new text begin 18. To provide for dispute resolution among Compacting States;
new text end

new text begin 19. To advise Compacting States on issues relating to Insurers domiciled or doing
business in Noncompacting jurisdictions, consistent with the purposes of this Compact;
new text end

new text begin 20. To provide advice and training to those personnel in state insurance departments
responsible for product review, and to be a resource for state insurance departments;
new text end

new text begin 21. To establish a budget and make expenditures;
new text end

new text begin 22. To borrow money;
new text end

new text begin 23. To appoint committees, including advisory committees comprising Members,
state insurance regulators, state legislators or their representatives, insurance industry
and consumer representatives, and such other interested persons as may be designated
in the Bylaws;
new text end

new text begin 24. To provide and receive information from, and to cooperate with law enforcement
agencies;
new text end

new text begin 25. To adopt and use a corporate seal; and
new text end

new text begin 26. To perform such other functions as may be necessary or appropriate to achieve
the purposes of this Compact consistent with the state regulation of the business of
insurance.
new text end

new text begin Article V. Organization of the Commission
new text end

new text begin 1. Membership, Voting and Bylaws
new text end

new text begin a. Each Compacting State shall have and be limited to one Member. Each Member
shall be qualified to serve in that capacity pursuant to applicable law of the Compacting
State. Any Member may be removed or suspended from office as provided by the law
of the State from which he or she shall be appointed. Any vacancy occurring in the
Commission shall be filled in accordance with the laws of the Compacting State wherein
the vacancy exists. Nothing herein shall be construed to affect the manner in which a
Compacting State determines the election or appointment and qualification of its own
Commissioner.
new text end

new text begin b. Each Member shall be entitled to one vote and shall have an opportunity
to participate in the governance of the Commission in accordance with the Bylaws.
Notwithstanding any provision herein to the contrary, no action of the Commission with
respect to the promulgation of a Uniform Standard shall be effective unless two-thirds of
the Members vote in favor thereof.
new text end

new text begin c. The Commission shall, by a majority of the Members, prescribe Bylaws to govern
its conduct as may be necessary or appropriate to carry out the purposes, and exercise the
powers, of the Compact, including, but not limited to:
new text end

new text begin i. Establishing the fiscal year of the Commission;
new text end

new text begin ii. Providing reasonable procedures for appointing and electing members, as well as
holding meetings, of the Management Committee;
new text end

new text begin iii. Providing reasonable standards and procedures: (i) for the establishment and
meetings of other committees, and (ii) governing any general or specific delegation of any
authority or function of the Commission;
new text end

new text begin iv. Providing reasonable procedures for calling and conducting meetings of the
Commission that consist of a majority of Commission members, ensuring reasonable
advance notice of each such meeting and providing for the right of citizens to attend each
such meeting with enumerated exceptions designed to protect the public's interest, the
privacy of individuals, and insurers' proprietary information, including trade secrets. The
Commission may meet in camera only after a majority of the entire membership votes to
close a meeting en toto or in part. As soon as practicable, the Commission must make
public (i) a copy of the vote to close the meeting revealing the vote of each Member with
no proxy votes allowed, and (ii) votes taken during such meeting;
new text end

new text begin v. Establishing the titles, duties and authority and reasonable procedures for the
election of the officers of the Commission;
new text end

new text begin vi. Providing reasonable standards and procedures for the establishment of the
personnel policies and programs of the Commission. Notwithstanding any civil service
or other similar laws of any Compacting State, the Bylaws shall exclusively govern the
personnel policies and programs of the Commission;
new text end

new text begin vii. Promulgating a code of ethics to address permissible and prohibited activities of
commission members and employees; and
new text end

new text begin viii. Providing a mechanism for winding up the operations of the Commission and
the equitable disposition of any surplus funds that may exist after the termination of the
Compact after the payment and/or reserving of all of its debts and obligations.
new text end

new text begin d. The Commission shall publish its bylaws in a convenient form and file a copy
thereof and a copy of any amendment thereto, with the appropriate agency or officer in
each of the Compacting States.
new text end

new text begin 2. Management Committee, Officers and Personnel
new text end

new text begin a. A Management Committee comprising no more than 14 members shall be
established as follows:
new text end

new text begin i. One member from each of the six Compacting States with the largest premium
volume for individual and group annuities, life, disability income and long-term care
insurance products, determined from the records of the NAIC for the prior year;
new text end

new text begin ii. Four members from those Compacting States with at least two percent of the
market based on the premium volume described above, other than the six Compacting
States with the largest premium volume, selected on a rotating basis as provided in the
Bylaws; and
new text end

new text begin iii. Four members from those Compacting States with less than two percent of the
market, based on the premium volume described above, with one selected from each of
the four zone regions of the NAIC as provided in the Bylaws.
new text end

new text begin b. The Management Committee shall have such authority and duties as may be set
forth in the Bylaws, including but not limited to:
new text end

new text begin i. Managing the affairs of the Commission in a manner consistent with the Bylaws
and purposes of the Commission;
new text end

new text begin ii. Establishing and overseeing an organizational structure within, and appropriate
procedures for, the Commission to provide for the creation of Uniform Standards and
other Rules, receipt and review of product filings, administrative and technical support
functions, review of decisions regarding the disapproval of a product filing, and the review
of elections made by a Compacting State to opt out of a Uniform Standard; provided that a
Uniform Standard shall not be submitted to the Compacting States for adoption unless
approved by two-thirds of the members of the Management Committee;
new text end

new text begin iii. Overseeing the offices of the Commission; and
new text end

new text begin iv. Planning, implementing, and coordinating communications and activities with
other state, federal and local government organizations in order to advance the goals
of the Commission.
new text end

new text begin c. The Commission shall elect annually officers from the Management Committee,
with each having such authority and duties, as may be specified in the Bylaws.
new text end

new text begin d. The Management Committee may, subject to the approval of the Commission,
appoint or retain an executive director for such period, upon such terms and conditions
and for such compensation as the Commission may deem appropriate. The executive
director shall serve as secretary to the Commission, but shall not be a Member of the
Commission. The executive director shall hire and supervise such other staff as may be
authorized by the Commission.
new text end

new text begin 3. Legislative and Advisory Committees
new text end

new text begin a. A legislative committee comprising state legislators or their designees shall be
established to monitor the operations of, and make recommendations to, the Commission,
including the Management Committee; provided that the manner of selection and term of
any legislative committee member shall be as set forth in the Bylaws. Prior to the adoption
by the Commission of any Uniform Standard, revision to the Bylaws, annual budget or
other significant matter as may be provided in the Bylaws, the Management Committee
shall consult with and report to the legislative committee.
new text end

new text begin b. The Commission shall establish two advisory committees, one of which shall
comprise consumer representatives independent of the insurance industry, and the other
comprising insurance industry representatives.
new text end

new text begin c. The Commission may establish additional advisory committees as its Bylaws may
provide for the carrying out of its functions.
new text end

new text begin 4. Corporate Records of the Commission
new text end

new text begin The Commission shall maintain its corporate books and records in accordance
with the Bylaws.
new text end

new text begin 5. Qualified Immunity, Defense, and Indemnification
new text end

new text begin a. The Members, officers, executive director, employees, and representatives of
the Commission shall be immune from suit and liability, either personally or in their
official capacity, for any claim for damage to or loss of property or personal injury or
other civil liability caused by or arising out of any actual or alleged act, error or omission
that occurred, or that the person against whom the claim is made had a reasonable
basis for believing occurred within the scope of Commission employment, duties or
responsibilities; provided, that nothing in this paragraph shall be construed to protect any
such person from suit and/or liability for any damage, loss, injury or liability caused by
the intentional or willful and wanton misconduct of that person.
new text end

new text begin b. The Commission shall defend any Member, officer, executive director, employee,
or representative of the Commission in any civil action seeking to impose liability arising
out of any actual or alleged act, error, or omission that occurred within the scope of
Commission employment, duties, or responsibilities, or that the person against whom
the claim is made had a reasonable basis for believing occurred within the scope of
Commission employment, duties, or responsibilities; provided, that nothing herein shall
be construed to prohibit that person from retaining his or her own counsel; and provided
further, that the actual or alleged act, error, or omission did not result from that person's
intentional or willful and wanton misconduct.
new text end

new text begin c. The Commission shall indemnify and hold harmless any Member, officer,
executive director, employee, or representative of the Commission for the amount of any
settlement or judgment obtained against that person arising out of any actual or alleged
act, error, or omission that occurred within the scope of Commission employment, duties,
or responsibilities, or that such person had a reasonable basis for believing occurred
within the scope of Commission employment, duties, or responsibilities, provided, that the
actual or alleged act, error, or omission did not result from the intentional or willful and
wanton misconduct of that person.
new text end

new text begin Article VI. Meetings and Acts of the Commission
new text end

new text begin 1. The Commission shall meet and take such actions as are consistent with the
provisions of this Compact and the Bylaws.
new text end

new text begin 2. Each Member of the Commission shall have the right and power to cast a vote to
which that Compacting State is entitled and to participate in the business and affairs of the
Commission. A Member shall vote in person or by such other means as provided in the
Bylaws. The Bylaws may provide for Members' participation in meetings by telephone or
other means of communication.
new text end

new text begin 3. The Commission shall meet at least once during each calendar year. Additional
meeting shall be held as set forth in the Bylaws.
new text end

new text begin Article VII. Rules and Operating Procedures: Rulemaking Functions
new text end

new text begin of the Commission and Opting Out of Uniform Standards
new text end

new text begin 1. Rulemaking Authority. The Commission shall promulgate reasonable Rules,
including Uniform Standards, and Operating Procedures in order to effectively and
efficiently achieve the purposes of this Compact. Notwithstanding the foregoing, in the
event the Commission exercises its rulemaking authority in a manner that is beyond the
scope of the purposes of this Act, or the powers granted hereunder, then such an action by
the Commission shall be invalid and have no force and effect.
new text end

new text begin 2. Rulemaking Procedure. Rules and Operating Procedures shall be made pursuant
to a rulemaking process that conforms to the Model State Administrative Procedure Act of
1981 as amended, as may be appropriate to the operations of the Commission. Before
the Commission adopts a Uniform Standard, the Commission shall give written notice
to the relevant state legislative committee(s) in each Compacting State responsible for
insurance issues of its intention to adopt the Uniform Standard. The Commission in
adopting a Uniform Standard shall consider fully all submitted materials and issue a
concise explanation of its decision.
new text end

new text begin 3. Effective Date and Opt Out of a Uniform Standard. A Uniform Standard shall
become effective 90 days after its promulgation by the Commission or such later date
as the Commission may determine; provided, however, that a Compacting State may
opt out of a Uniform Standard as provided in this Article. "Opt out" shall be defined as
any action by a Compacting State to decline to adopt or participate in a promulgated
Uniform Standard. All other Rules and Operating Procedures, and amendments thereto,
shall become effective as of the date specified in each Rule, Operating Procedure, or
amendment.
new text end

new text begin 4. Opt Out Procedure. A Compacting State may opt out of a Uniform Standard,
either by legislation or regulation duly promulgated by the Insurance Department under
the Compacting State's Administrative Procedure Act. If a Compacting State elects to opt
out of a Uniform Standard by regulation, it must (a) give written notice to the Commission
no later than ten business days after the Uniform Standard is promulgated, or at the time
the State becomes a Compacting State and (b) find that the Uniform Standard does not
provide reasonable protections to the citizens of the State, given the conditions in the State.
The Commissioner shall make specific findings of fact and conclusions of law, based on a
preponderance of the evidence, detailing the conditions in the State which warrant a
departure from the Uniform Standard and determining that the Uniform Standard would
not reasonably protect the citizens of the State. The Commissioner must consider and
balance the following factors and find that the conditions in the State and needs of the
citizens of the State outweigh: (i) the intent of the legislature to participate in, and the
benefits of, an interstate agreement to establish national uniform consumer protections for
the Products subject to this Act; and (ii) the presumption that a Uniform Standard adopted
by the Commission provides reasonable protections to consumers of the relevant Product.
new text end

new text begin Notwithstanding the foregoing, a Compacting State may, at the time of its enactment
of this Compact, prospectively opt out of all Uniform Standards involving long-term care
insurance products by expressly providing for such opt out in the enacted Compact, and
such an opt out shall not be treated as a material variance in the offer or acceptance of
any State to participate in this Compact. Such an opt out shall be effective at the time
of enactment of this Compact by the Compacting State and shall apply to all existing
Uniform Standards involving long-term care insurance products and those subsequently
promulgated.
new text end

new text begin 5. Effect of Opt Out. If a Compacting State elects to opt out of a Uniform Standard,
the Uniform Standard shall remain applicable in the Compacting State electing to opt out
until such time the opt out legislation is enacted into law or the regulation opting out
becomes effective.
new text end

new text begin Once the opt out of a Uniform Standard by a Compacting State becomes effective
as provided under the laws of that State, the Uniform Standard shall have no further
force and effect in that State unless and until the legislation or regulation implementing
the opt out is repealed or otherwise becomes ineffective under the laws of the State. If a
Compacting State opts out of a Uniform Standard after the Uniform Standard has been
made effective in that State, the opt out shall have the same prospective effect as provided
under Article XIV for withdrawals.
new text end

new text begin 6. Stay of Uniform Standard. If a Compacting State has formally initiated the
process of opting out of a Uniform Standard by regulation, and while the regulatory
opt out is pending, the Compacting State may petition the Commission, at least 15 days
before the effective date of the Uniform Standard, to stay the effectiveness of the Uniform
Standard in that State. The Commission may grant a stay if it determines the regulatory
opt out is being pursued in a reasonable manner and there is a likelihood of success. If a
stay is granted or extended by the Commission, the stay or extension thereof may postpone
the effective date by up to 90 days, unless affirmatively extended by the Commission;
provided, a stay may not be permitted to remain in effect for more than one year unless the
Compacting State can show extraordinary circumstances which warrant a continuance of
the stay, including, but not limited to, the existence of a legal challenge which prevents the
Compacting State from opting out. A stay may be terminated by the Commission upon
notice that the rulemaking process has been terminated.
new text end

new text begin 7. Not later than 30 days after a Rule or Operating Procedure is promulgated,
any person may file a petition for judicial review of the Rule or Operating Procedure;
provided, that the filing of such a petition shall not stay or otherwise prevent the Rule or
Operating Procedure from becoming effective unless the court finds that the petitioner
has a substantial likelihood of success. The court shall give deference to the actions of
the Commission consistent with applicable law and shall not find the Rule or Operating
Procedure to be unlawful if the Rule or Operating Procedure represents a reasonable
exercise of the Commission's authority.
new text end

new text begin Article VIII. Commission Records and Enforcement
new text end

new text begin 1. The Commission shall promulgate Rules establishing conditions and procedures
for public inspection and copying of its information and official records, except such
information and records involving the privacy of individuals and insurers' trade secrets.
The Commission may promulgate additional Rules under which it may make available to
federal and state agencies, including law enforcement agencies, records and information
otherwise exempt from disclosure, and may enter into agreements with such agencies to
receive or exchange information or records subject to nondisclosure and confidentiality
provisions.
new text end

new text begin 2. Except as to privileged records, data and information, the laws of any Compacting
State pertaining to confidentiality or nondisclosure shall not relieve any Compacting
State Commissioner of the duty to disclose any relevant records, data or information to
the Commission; provided, that disclosure to the Commission shall not be deemed to
waive or otherwise affect any confidentiality requirement; and further provided, that,
except as otherwise expressly provided in this Act, the Commission shall not be subject
to the Compacting State's laws pertaining to confidentiality and nondisclosure with
respect to records, data and information in its possession. Confidential information
of the Commission shall remain confidential after such information is provided to any
Commissioner.
new text end

new text begin 3. The Commission shall monitor Compacting States for compliance with duly
adopted Bylaws, Rules, including Uniform Standards, and Operating Procedures.
The Commission shall notify any noncomplying Compacting State in writing of
its noncompliance with Commission Bylaws, Rules or Operating Procedures. If a
noncomplying Compacting State fails to remedy its noncompliance within the time
specified in the notice of noncompliance, the Compacting State shall be deemed to be in
default as set forth in Article XIV.
new text end

new text begin 4. The Commissioner of any State in which an Insurer is authorized to do business,
or is conducting the business of insurance, shall continue to exercise his or her authority
to oversee the market regulation of the activities of the Insurer in accordance with the
provisions of the State's law. The Commissioner's enforcement of compliance with the
Compact is governed by the following provisions:
new text end

new text begin a. With respect to the Commissioner's market regulation of a Product or
Advertisement that is approved or certified to the Commission, the content of the
Product or Advertisement shall not constitute a violation of the provisions, standards or
requirements of the Compact except upon a final order of the Commission, issued at the
request of a Commissioner after prior notice to the Insurer and an opportunity for hearing
before the Commission.
new text end

new text begin b. Before a Commissioner may bring an action for violation of any provision,
standard or requirement of the Compact relating to the content of an Advertisement not
approved or certified to the Commission, the Commission, or an authorized Commission
officer or employee, must authorize the action. However, authorization pursuant to this
paragraph does not require notice to the Insurer, opportunity for hearing or disclosure of
requests for authorization or records of the Commission's action on such requests.
new text end

new text begin Article IX. Dispute Resolution
new text end

new text begin The Commission shall attempt, upon the request of a Member, to resolve any
disputes or other issues that are subject to this Compact and which may arise between two
or more Compacting States, or between Compacting States and Noncompacting States,
and the Commission shall promulgate an Operating Procedure providing for resolution of
such disputes.
new text end

new text begin Article X. Product Filing and Approval
new text end

new text begin 1. Insurers and Third Party Filers seeking to have a Product approved by the
Commission shall file the Product with, and pay applicable filing fees to, the Commission.
Nothing in this Act shall be construed to restrict or otherwise prevent an insurer from
filing its Product with the insurance department in any State wherein the insurer is licensed
to conduct the business of insurance, and such filing shall be subject to the laws of the
States where filed.
new text end

new text begin 2. The Commission shall establish appropriate filing and review processes and
procedures pursuant to Commission Rules and Operating Procedures. Notwithstanding
any provision herein to the contrary, the Commission shall promulgate Rules to establish
conditions and procedures under which the Commission will provide public access to
Product filing information. In establishing such Rules, the Commission shall consider
the interests of the public in having access to such information, as well as protection of
personal medical and financial information and trade secrets, that may be contained in a
Product filing or supporting information.
new text end

new text begin 3. Any Product approved by the Commission may be sold or otherwise issued in
those Compacting States for which the Insurer is legally authorized to do business.
new text end

new text begin Article XI. Review of Commission Decisions Regarding Filings
new text end

new text begin 1. Not later than 30 days after the Commission has given notice of a disapproved
Product or Advertisement filed with the Commission, the Insurer or Third Party Filer
whose filing was disapproved may appeal the determination to a review panel appointed
by the Commission. The Commission shall promulgate Rules to establish procedures for
appointing such review panels and provide for notice and hearing. An allegation that the
Commission, in disapproving a Product or Advertisement filed with the Commission,
acted arbitrarily, capriciously, or in a manner that is an abuse of discretion or otherwise
not in accordance with the law, is subject to judicial review in accordance with Article
III, Section 4.
new text end

new text begin 2. The Commission shall have authority to monitor, review and reconsider Products
and Advertisement subsequent to their filing or approval upon a finding that the product
does not meet the relevant Uniform Standard. Where appropriate, the Commission may
withdraw or modify its approval after proper notice and hearing, subject to the appeal
process in Section 1 above.
new text end

new text begin Article XII. Finance
new text end

new text begin 1. The Commission shall pay or provide for the payment of the reasonable expenses
of its establishment and organization. To fund the cost of its initial operations, the
Commission may accept contributions and other forms of funding from the National
Association of Insurance Commissioners, Compacting States, and other sources.
Contributions and other forms of funding from other sources shall be of such a nature
that the independence of the Commission concerning the performance of its duties shall
not be compromised.
new text end

new text begin 2. The Commission shall collect a filing fee from each Insurer and Third Party Filer
filing a product with the Commission to cover the cost of the operations and activities
of the Commission and its staff in a total amount sufficient to cover the Commission's
annual budget.
new text end

new text begin 3. The Commission's budget for a fiscal year shall not be approved until it has been
subject to notice and comment as set forth in Article VII of this Compact.
new text end

new text begin 4. The Commission shall be exempt from all taxation in and by the Compacting
states.
new text end

new text begin 5. The Commission shall not pledge the credit of any Compacting State, except by
and with the appropriate legal authority of that Compacting State.
new text end

new text begin 6. The Commission shall keep complete and accurate accounts of all its internal
receipts, including grants and donations, and disbursements of all funds under its control.
The internal financial accounts of the Commission shall be subject to the accounting
procedures established under its Bylaws. The financial accounts and reports including the
system of internal controls and procedures of the Commission shall be audited annually by
an independent certified public accountant. Upon the determination of the Commission,
but no less frequently than every three years, the review of the independent auditor shall
include a management and performance audit of the Commission. The Commission shall
make an Annual Report to the Governor and legislature of the Compacting States, which
shall include a report of the independent audit. The Commission's internal accounts shall
not be confidential and such materials may be shared with the Commissioner of any
Compacting State upon request provided, however, that any work papers related to any
internal or independent audit and any information regarding the privacy of individuals and
insurers' proprietary information, including trade secrets, shall remain confidential.
new text end

new text begin 7. No Compacting State shall have any claim to or ownership of any property
held by or vested in the Commission or to any Commission funds held pursuant to the
provisions of this Compact.
new text end

new text begin Article XIII. Compacting States, Effective Date and Amendment
new text end

new text begin 1. Any State is eligible to become a Compacting State.
new text end

new text begin 2. The Compact shall become effective and binding upon legislative enactment
of the Compact into law by two Compacting States; provided, the Commission shall
become effective for purposes of adopting Uniform Standards for, reviewing, and giving
approval or disapproval of, Products filed with the Commission that satisfy applicable
Uniform Standards only after 26 States are Compacting States or, alternatively, by States
representing greater than 40 percent of the premium volume for life insurance, annuity,
disability income and long-term care insurance products, based on records of the NAIC
for the prior year. Thereafter, it shall become effective and binding as to any other
Compacting State upon enactment of the Compact into law by that State.
new text end

new text begin 3. Amendments to the Compact may be proposed by the Commission for enactment
by the Compacting States. No amendment shall become effective and binding upon the
Commission and the Compacting States unless and until all Compacting States enact
the amendment into law.
new text end

new text begin Article XIV. Withdrawal, Default and Termination
new text end

new text begin 1. Withdrawal
new text end

new text begin a. Once effective, the Compact shall continue in force and remain binding upon each
and every Compacting State; provided, that a Compacting State may withdraw from the
Compact ("Withdrawing State") by enacting a statute specifically repealing the statute
which enacted the Compact into law.
new text end

new text begin b. The effective date of withdrawal is the effective date of the repealing statute.
However, the withdrawal shall not apply to any product filings approved or self-certified,
or any Advertisement of such products, on the date the repealing statute becomes effective,
except by mutual agreement of the Commission and the Withdrawing State unless the
approval is rescinded by the Withdrawing State as provided in Paragraph e of this section.
new text end

new text begin c. The Commissioner of the Withdrawing State shall immediately notify the
Management Committee in writing upon the introduction of legislation repealing this
Compact in the Withdrawing State.
new text end

new text begin d. The Commission shall notify the other Compacting States of the introduction of
such legislation within ten days after its receipt of notice thereof.
new text end

new text begin e. The Withdrawing State is responsible for all obligations, duties and liabilities
incurred through the effective date of withdrawal, including any obligations, the
performance of which extend beyond the effective date of withdrawal, except to the extent
those obligations may have been released or relinquished by mutual agreement of the
Commission and the Withdrawing State. The Commission'new text begin s approval of Products and
Advertisement prior to the effective date of withdrawal shall continue to be effective and
be given full force and effect in the Withdrawing State, unless formally rescinded by
the Withdrawing State in the same manner as provided by the laws of the Withdrawing
State for the prospective disapproval of products or advertisement previously approved
under state law.
new text end
new text end

new text begin f. Reinstatement following withdrawal of any Compacting State shall occur upon
the effective date of the Withdrawing State reenacting the Compact.
new text end

new text begin 2. Default
new text end

new text begin a. If the Commission determines that any Compacting State has at any time defaulted
("Defaulting State") in the performance of any of its obligations or responsibilities under
this Compact, the Bylaws or duly promulgated Rules or Operating Procedures, then, after
notice and hearing as set forth in the Bylaws, all rights, privileges and benefits conferred
by this Compact on the Defaulting State shall be suspended from the effective date of
default as fixed by the Commission. The grounds for default include, but are not limited
to, failure of a Compacting State to perform its obligations or responsibilities, and any
other grounds designated in Commission Rules. The Commission shall immediately
notify the Defaulting State in writing of the Defaulting State's suspension pending a cure
of the default. The Commission shall stipulate the conditions and the time period within
which the Defaulting State must cure its default. If the Defaulting State fails to cure the
default within the time period specified by the Commission, the Defaulting State shall
be terminated form the Compact and all rights, privileges and benefits conferred by this
Compact shall be terminated from the effective date of termination.
new text end

new text begin b. Product approvals by the Commission or product self-certifications, or any
Advertisement in connection with such product, that are in force on the effective date of
termination shall remain in force in the Defaulting State in the same manner as if the
Defaulting State had withdrawn voluntarily pursuant to Section 1 of this article.
new text end

new text begin c. Reinstatement following termination of any Compacting State requires a
reenactment of the Compact.
new text end

new text begin 3. Dissolution of Compact
new text end

new text begin a. The Compact dissolves effective upon the date of the withdrawal or default of the
Compacting State which reduces membership in the Compact to one Compacting State.
new text end

new text begin b. Upon the dissolution of this Compact, the Compact becomes null and void and
shall be of no further force or effect, and the business and affairs of the Commission shall
be wound up and any surplus funds shall be distributed in accordance with the Bylaws.
new text end

new text begin Article XV. Severability and Construction
new text end

new text begin 1. The provisions of this Compact shall be severable; and if any phrase, clause,
sentence, or provision is deemed unenforceable, the remaining provisions of the Compact
shall be enforceable.
new text end

new text begin 2. The provisions of this Compact shall be liberally construed to effectuate its
purposes.
new text end

new text begin Article XVI. Binding Effect of Compact and Other Laws
new text end

new text begin 1. Other Laws
new text end

new text begin a. Nothing herein prevents the enforcement of any other law of a Compacting State,
except as provided in Paragraph b of this section.
new text end

new text begin b. For any Product approved or certified to the Commission, the Rules, Uniform
Standards, and any other requirements of the Commission shall constitute the exclusive
provisions applicable to the content, approval, and certification of such Products. For
Advertisement that is subject to the Commission's authority, any Rule, Uniform Standard,
or other requirement of the Commission which governs the content of the Advertisement
shall constitute the exclusive provision that a Commissioner may apply to the content of
the Advertisement. Notwithstanding the foregoing, no action taken by the Commission
shall abrogate or restrict: (i) the access of any person to state courts; (ii) remedies available
under state law related to breach of contract, tort, or other laws not specifically directed
to the content of the Product; (iii) state law relating to the construction of insurance
contracts; or (iv) the authority of the attorney general of the state, including but not limited
to maintaining any actions or proceedings, as authorized by law.
new text end

new text begin c. All insurance products filed with individual States shall be subject to the laws
of those States.
new text end

new text begin 2. Binding Effect of this Compact
new text end

new text begin a. All lawful actions of the Commission, including all Rules and Operating
Procedures promulgated by the Commission, are binding upon the Compacting States.
new text end

new text begin b. All agreements between the Commission and the Compacting States are binding
in accordance with their terms.
new text end

new text begin c. Upon the request of a party to a conflict over the meaning or interpretation of
Commission actions, and upon a majority vote of the Compacting States, the Commission
may issue advisory opinions regarding the meaning or interpretation in dispute.
new text end

new text begin d. In the event any provision of this Compact exceeds the constitutional limits
imposed on the legislature of any Compacting State, the obligations, duties, powers
or jurisdiction sought to be conferred by that provision upon the Commission shall
be ineffective as to that Compacting State, and those obligations, duties, powers, or
jurisdiction shall remain in the Compacting State and shall be exercised by the agency
thereof to which those obligations, duties, powers, or jurisdiction are delegated by law in
effect at the time this Compact becomes effective.
new text end

new text begin Subd. 2. new text end

new text begin Commission representative. new text end

new text begin The commissioner of commerce is the
representative of this state to the commission.
new text end

Sec. 2.

new text begin [60A.991] CONSULTATION AND REPORTING.
new text end

new text begin (a) The commissioner of commerce must, to the extent practical, consult with the
chairs of legislative committees with jurisdiction over insurance issues on matters relating
to the work of the Interstate Insurance Product Regulation Commission on:
new text end

new text begin (1) topics that the commission may select for study; and
new text end

new text begin (2) major issues of insurance policy on which the commissioner of commerce
anticipates taking a position on the commission on behalf of the state.
new text end

new text begin (b) The commissioner of commerce must report in the manner required by section
3.195 and also to the chairs and ranking minority members of legislative committees with
jurisdiction over insurance issues by October 15 each year. The report must summarize
commission activities, decisions, and plans.
new text end

ARTICLE 3

MISCELLANEOUS INSURANCE REGULATORY CHANGES

Section 1.

Minnesota Statutes 2004, section 60A.207, is amended to read:


60A.207 POLICIES TO INCLUDE NOTICE.

Each policy, cover note, or instrument evidencing surplus lines insurance from an
eligible surplus lines insurer which is delivered to an insured or a representative of an
insured shall have printed, typed, or stamped deleted text begin in red inkdeleted text end upon its face in not less than 10
point type, the following notice: "THIS INSURANCE IS ISSUED PURSUANT TO THE
MINNESOTA SURPLUS LINES INSURANCE ACT. THE INSURER IS AN ELIGIBLE
SURPLUS LINES INSURER BUT IS NOT OTHERWISE LICENSED BY THE STATE
OF MINNESOTA. IN CASE OF INSOLVENCY, PAYMENT OF CLAIMS IS NOT
GUARANTEED." This notice shall not be covered or concealed in any manner.

Sec. 2.

Minnesota Statutes 2004, section 60D.19, subdivision 1, is amended to read:


Subdivision 1.

Registration.

Every insurer that is authorized to do business in this
state and that is a member of an insurance holding company system shall register with the
commissioner, except a foreign insurer subject to registration requirements and standards
adopted by statute or regulation in the jurisdiction of its domicile that are substantially
similar to those contained in:

(1) this section;

(2) section 60D.20, subdivisions 1, paragraph (a); 2; and 4; and

(3) either section 60D.20, subdivision 1, paragraph (b), or a provision such as the
following: Each registered insurer shall keep current the information required to be
disclosed in its registration statement by reporting all material changes or additions within
15 days after the end of the month in which it learns of each such change or addition.

Any insurer that is subject to registration under this section shall register within 15
days after it becomes subject to registration, and annually thereafter by deleted text begin Marchdeleted text end new text begin Junenew text end 1 of
each year for the previous calendar year, unless the commissioner for good cause shown
extends the time for registration, and then within such extended time. The commissioner
may require any insurer authorized to do business in the state that is a member of a
holding company system, and that is not subject to registration under this section, to
furnish a copy of the registration statement, the summary specified in subdivision 3 or
other information filed by the insurance company with the insurance regulatory authority
of domiciliary jurisdiction.

Sec. 3.

Minnesota Statutes 2004, section 60K.56, subdivision 5, is amended to read:


Subd. 5.

Criteria for course accreditation.

(a) The commissioner may accredit a
course only to the extent it is designed to impart substantive and procedural knowledge of
the insurance field. The burden of demonstrating that the course satisfies this requirement
is on the individual or organization seeking accreditation. The commissioner shall approve
any educational program approved by Minnesota Continuing Legal Education relating to
the insurance field. The commissioner is authorized to establish a procedure for renewal
of course accreditation.

(b) The commissioner shall approve or disapprove professional designation
examinations that are recommended for approval by the advisory task force. In order
for an insurance producer to receive full continuing education credit for a professional
designation examination, the producer must pass the examination. A producer may
not receive credit for classroom instruction preparing for the professional designation
examination and also receive continuing education credit for passing the professional
designation examination.

(c) The commissioner may not accredit a course:

(1) that is designed to prepare students for a license examination;

deleted text begin (2) in mechanical office or business skills, including typing, speedreading, use of
calculators, or other machines or equipment;
deleted text end

deleted text begin (3)deleted text end new text begin (2)new text end in sales promotiondeleted text begin , including meetings held in conjunction with the general
business of the licensed agent
deleted text end ; or

deleted text begin (4)deleted text end new text begin (3)new text end in motivation, the art of selling, new text begin or new text end psychologydeleted text begin , or time managementdeleted text end .

Sec. 4.

Minnesota Statutes 2004, section 60K.56, subdivision 6, is amended to read:


Subd. 6.

Minimum education requirement.

Each person subject to this section
shall complete a minimum of 30 credit hours of courses accredited by the commissioner
during each 24-month licensing period. Any person whose initial licensing period extends
more than six months shall complete 15 hours of courses accredited by the commissioner
during the initial license period. Any person teaching or lecturing at an accredited
course qualifies for three times the number of credit hours that would be granted to a
person completing the accredited course. No more than one-half of the credit hours per
licensing period required under this section may be credited to a person for attending any
combination of courses either sponsored by, offered by, or affiliated with an insurance
company or its agents; or offered using new delivery technology, including computer,
interactive technology, and the Internet. new text begin A licensee may obtain up to five hours of the credit
hours per licensing period from classes in the area of professional development including,
but not limited to, best practices, ethics, privacy protection, personal and safety awareness,
customer/client software applications, agency management, claims settlement, business
perpetuation, and disaster planning.
new text end Courses sponsored by, offered by, or affiliated with an
insurance company or agent may restrict its students to agents of the company or agency.

Sec. 5.

Minnesota Statutes 2004, section 64B.13, is amended to read:


64B.13 REINSURANCE.

(a) A domestic society may, by a reinsurance agreement, cede any individual risk
or risks in whole or in part to an insurer, other than another fraternal benefit society,
having the power to make such reinsurance and authorized to do business in this state,
or if not so authorized, one which is approved by the commissioner, but no such society
may reinsure substantially all of its insurance in force without the written permission of
the commissioner. It may take credit for the reserves on the ceded risks to the extent
reinsured, but no credit shall be allowed as an admitted asset or as a deduction from
liability to a ceding society for reinsurance made, ceded, renewed, or otherwise becoming
effective after August 1, 1985, unless the reinsurance is payable by the assuming insurer
on the basis of the liability of the ceding society under the contract or contracts reinsured
without diminution because of the insolvency of the ceding society.

(b) Notwithstanding the limitation in paragraph (a), a society may reinsure the risks
of another society in a consolidation or merger approved by the commissioner under
section 64B.14new text begin , or under such other circumstances as approved by the commissioner
including reinsurance of an affiliated insurance company
new text end
.