Bill Text: MN HF504 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Reinsurance association prefunded limit eliminated.
Sponsorship: Bipartisan Bill
Status: (Passed) 2013-04-25 - Secretary of State Chapter 15 04/22/13 [HF504 Detail]
Download: Minnesota-2013-HF504-Introduced.html
1.2relating to workers' compensation reinsurance; eliminating the reinsurance
1.3association prefunded limit;amending Minnesota Statutes 2012, section 79.35.
1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.5 Section 1. Minnesota Statutes 2012, section 79.35, is amended to read:
1.679.35 DUTIES; RESPONSIBILITIES; POWERS.
1.7The reinsurance association shall do the following on behalf of its members:
1.8(1) assume 100 percent of the liability as provided in section79.34 ;
1.9(2) establish procedures by which members shall promptly report to the reinsurance
1.10association each claim which, on the basis of the injury sustained, may reasonably be
1.11anticipated to involve liability to the reinsurance association if the member is held liable
1.12under chapter 176. Solely for the purpose of reporting claims, the member shall in
1.13all instances consider itself legally liable for the injury. The member shall advise the
1.14reinsurance association of subsequent developments likely to materially affect the interest
1.15of the reinsurance association in the claim;
1.16(3) maintain relevant loss and expense data relative to all liabilities of the reinsurance
1.17association and require each member to furnish statistics in connection with liabilities of
1.18the reinsurance association at the times and in the form and detail as may be required
1.19by the plan of operation;
1.20(4) calculate and charge to members a total premium sufficient to cover the expected
1.21liability which the reinsurance association will incur, together with incurred or estimated
1.22to be incurred operating and administrative expenses for the period to which this premium
1.23appliesand actual claim payments to be made by members, during the period to which
1.24this premium applies, for claims in excess of the prefunded limit in effect at the time the
2.1loss was incurred. Each member shall be charged a premium established by the board as
2.2sufficient to cover the reinsurance association's incurred liabilities and expensesbetween
2.3 in excess of the member's selected retention limitand the prefunded limit. The prefunded
2.4limit shall be 20 times the lower retention limit established in section
79.34, subdivision
2.52
2.6selected retention limit in an amount equal to its proportion of the exposure base of all
2.7members during the period to which the reinsurance association premium will apply. The
2.8exposure base shall be determined by the board and is subject to the approval of the
2.9commissioner of labor and industry. In determining the exposure base, the board shall
2.10consider, among other things, equity, administrative convenience, records maintained by
2.11members, amenability to audit, and degree of risk refinement. Each member shall also be
2.12charged a premium determined by the board to equitably distribute excess or deficient
2.13premiums from previous periods including any excess or deficient premiums resulting
2.14from a retroactive change in the prefunded limit. The premiums charged to members
2.15shall not be unfairly discriminatory as defined in section79.074 . All premiums shall be
2.16approved by the commissioner of labor and industry;
2.17(5) require and accept the payment of premiums from members of the reinsurance
2.18association;
2.19(6) receive and distribute all sums required by the operation of the reinsurance
2.20association;
2.21(7) establish procedures for reviewing claims procedures and practices of members
2.22of the reinsurance association. If the claims procedures or practices of a member are
2.23considered inadequate to properly service the liabilities of the reinsurance association, the
2.24reinsurance association may undertake, or may contract with another person, including
2.25another member, to adjust or assist in the adjustment of claims which create a potential
2.26liability to the association. The reinsurance association may charge the cost of the
2.27adjustment under this paragraph to the member, except that any penalties or interest
2.28incurred under sections176.183 ,
176.221 ,
176.225 , and
176.82 as a result of actions by the
2.29reinsurance association after it has undertaken adjustment of the claim shall not be charged
2.30to the member but shall be included in the ultimate loss and listed as a separate item; and
2.31(8) provide each member of the reinsurance association with an annual report of the
2.32operations of the reinsurance association in a form the board of directors may specify.
2.33EFFECTIVE DATE.This section is effective January 1, 2015.
1.3association prefunded limit;amending Minnesota Statutes 2012, section 79.35.
1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.5 Section 1. Minnesota Statutes 2012, section 79.35, is amended to read:
1.679.35 DUTIES; RESPONSIBILITIES; POWERS.
1.7The reinsurance association shall do the following on behalf of its members:
1.8(1) assume 100 percent of the liability as provided in section
1.9(2) establish procedures by which members shall promptly report to the reinsurance
1.10association each claim which, on the basis of the injury sustained, may reasonably be
1.11anticipated to involve liability to the reinsurance association if the member is held liable
1.12under chapter 176. Solely for the purpose of reporting claims, the member shall in
1.13all instances consider itself legally liable for the injury. The member shall advise the
1.14reinsurance association of subsequent developments likely to materially affect the interest
1.15of the reinsurance association in the claim;
1.16(3) maintain relevant loss and expense data relative to all liabilities of the reinsurance
1.17association and require each member to furnish statistics in connection with liabilities of
1.18the reinsurance association at the times and in the form and detail as may be required
1.19by the plan of operation;
1.20(4) calculate and charge to members a total premium sufficient to cover the expected
1.21liability which the reinsurance association will incur, together with incurred or estimated
1.22to be incurred operating and administrative expenses for the period to which this premium
1.23applies
1.24
2.1
2.2sufficient to cover the reinsurance association's incurred liabilities and expenses
2.3 in excess of the member's selected retention limit
2.4
2.5
2.6selected retention limit in an amount equal to its proportion of the exposure base of all
2.7members during the period to which the reinsurance association premium will apply. The
2.8exposure base shall be determined by the board and is subject to the approval of the
2.9commissioner of labor and industry. In determining the exposure base, the board shall
2.10consider, among other things, equity, administrative convenience, records maintained by
2.11members, amenability to audit, and degree of risk refinement. Each member shall also be
2.12charged a premium determined by the board to equitably distribute excess or deficient
2.13premiums from previous periods including any excess or deficient premiums resulting
2.14from a retroactive change in the prefunded limit. The premiums charged to members
2.15shall not be unfairly discriminatory as defined in section
2.16approved by the commissioner of labor and industry;
2.17(5) require and accept the payment of premiums from members of the reinsurance
2.18association;
2.19(6) receive and distribute all sums required by the operation of the reinsurance
2.20association;
2.21(7) establish procedures for reviewing claims procedures and practices of members
2.22of the reinsurance association. If the claims procedures or practices of a member are
2.23considered inadequate to properly service the liabilities of the reinsurance association, the
2.24reinsurance association may undertake, or may contract with another person, including
2.25another member, to adjust or assist in the adjustment of claims which create a potential
2.26liability to the association. The reinsurance association may charge the cost of the
2.27adjustment under this paragraph to the member, except that any penalties or interest
2.28incurred under sections
2.29reinsurance association after it has undertaken adjustment of the claim shall not be charged
2.30to the member but shall be included in the ultimate loss and listed as a separate item; and
2.31(8) provide each member of the reinsurance association with an annual report of the
2.32operations of the reinsurance association in a form the board of directors may specify.
2.33EFFECTIVE DATE.This section is effective January 1, 2015.
