Minnesota's insurance law is spread across several chapters of Minnesota Statutes:

• 60A (general powers and insurers)
• 60K (producer licensing)
• 72A (unfair practices)
• 45.027 (enforcement)

The Department of Commerce's rules in chapter 2795 add the agent conduct standards. The Minnesota questions on every exam come from the same core: the Commissioner of Commerce, licensing and appointments, CE, premium handling, unfair practices, claims, fraud and the guaranty associations. This guide covers those rules with citations. General concepts are in the national Insurance Regulation guide.

About the exam

Minnesota's licensing exams are delivered by PSI. The passing score is 70.

Before and after the exam (Minn. Stat. 60K.36, 60K.361)

• Prelicensing: 20 hours per major line of authority. Courses can't be sponsored by or affiliated with an insurer or its producers. Bona fide producer associations may offer them.
• Designation exemptions from prelicensing:
  • Health applicants holding RHU, CEBS, REBC or HIA.
  • P&C applicants holding AAI, ARM, CIC or CPCU. These P&C applicants still take the exam.
• Exam results are valid for 3 years.
• A candidate who fails or misses the exam must reapply and pay again.
• Limited lines (credit, title, travel, bail bonds) need no exam.

The regulator

• The Department of Commerce regulates insurance. Its head is the Commissioner of Commerce, who is appointed by the Governor (60A.03).
• Every licensed insurer is examined at least once every 5 years, at the insurer's expense (60A.031, 60A.03).
• Enforcement (45.027):
  • Civil penalties up to $10,000 per violation, unless another penalty applies.
  • A cease and desist order becomes permanent if no hearing is requested within 30 days. A requested hearing is held within 10 days.
  • The Commissioner may also sue in Ramsey County district court.
• An unfair practices hearing under 72A.22 is held at least 20 days after notice.

Insurers

• Domestic = organized in Minnesota. Foreign = organized in another state. Alien = domiciled outside the U.S. (60A.02).
• Fraternal benefit societies are nonprofit, with no capital stock, and operate on a lodge system (64B.01).
• Transacting insurance without a certificate of authority is unlawful. An unlicensed insurer can't sue in Minnesota courts to enforce that business (72A.41).
• Surplus lines: the broker must tell the insured the insurer isn't licensed in Minnesota and that loss payment isn't guaranteed if it becomes insolvent (60A.198).
• Managing general agents for Minnesota risks must be licensed (60H.03).

Producer licensing

Who needs a license

• Selling, soliciting or negotiating without a license is a gross misdemeanor (60K.32, 60K.33).
• The license itself creates no authority to represent an insurer.
• Exempt: insurer officers and employees who receive no commission and whose duties are clerical, administrative, underwriting, loss control or claims (60K.34).
• Anyone who helps an unauthorized insurer sell a policy is personally liable for the premiums and losses (60K.47).

Lines (60K.38): life, accident and health, property, casualty, variable life and annuity, personal lines, and limited lines (credit, farm property and liability, title, travel, bail bonds).

Getting licensed (60K.37 and following)

• Applicants must be at least 18.
• Resident applicants consent to a criminal history check with fingerprints.
• Applying appoints the Commissioner as agent for service of process.
• A business entity designates a responsible licensed producer. The entity license doesn't let its employees act as producers.
• A Minnesota resident license is void if the person gets a resident license in, or claims residency in, another state.
• Nonresidents are licensed reciprocally (60K.39). The nonresident license ends automatically when the home license ends. A move must be reported within 10 days.
• Moving to Minnesota: apply within 90 days and no course or exam is needed for lines already held (60K.40).
• Assumed names must be filed with the Secretary of State before use (60K.41).
• Temporary license: up to 180 days, no exam. It can go to a surviving spouse or representative of a deceased or disabled producer, or to the designee of a producer entering the armed forces. A sponsor may be required (60K.42).

Renewal and CE

• Licenses run 24 months and expire on the last day of the birth month (60K.55).
• CE: 24 hours per licensing period, including 3 hours of ethics. No more than half may come from insurer-sponsored courses (60K.56).
  • The Commissioner may grant an extension of up to 90 days for good cause.
  • A noncompliant producer can't renew and can't act as a producer until compliance is shown.
  • Township mutual-only producers are exempt.
  • Nonresidents meet Minnesota CE through home-state CE (60K.53).
• Late renewal: reinstatement without an exam within 12 months, with a penalty of twice the renewal fee (60K.38).
• Report a change of name or address within 10 days (60K.38).
• Reporting (60K.54):
  • Another jurisdiction's administrative action: within 30 days of final disposition.
  • Criminal charges: within 30 days of the indictment or complaint.
  • A conviction or plea to a felony or gross misdemeanor: within 10 days.

Training for specific products

• Long-term care: a life or health license, a one-time 8-hour course and 4 hours every 24 months. Insurers must confirm the training (60K.365).
• Annuities: a one-time 4-credit course called "Best Interest Standards of Conduct for Annuity Sales." The insurer verifies it (72A.2033).

Discipline (60K.43, 60K.44)

• Grounds include forgery, using notes on the exam, implying you act for a government agency, ignoring a child support order, and fraud.
• A denied applicant may demand a hearing within 30 days. After a summary suspension, a hearing is held within 30 days.
• After revocation, no new application for 2 years. A performance bond of at least $20,000 may be required.
• No license is issued or renewed while delinquent state taxes of $500 or more are owed.
• Surrender the license immediately when it's suspended or revoked (60K.45).

Appointments and terminations

• A producer is the insurer's agent, not the insured's, when doing licensed acts (60K.49).
• The appointment is filed within 15 days of the first application. The Commissioner verifies eligibility within 30 days.
• An insurer that lets an unappointed agent do business pays $25 per sale, up to $300 per agent (72A.07).
• Termination (60K.51):
  • Notify the Commissioner within 30 days, for cause or not.
  • Send the producer a copy within 15 days. The producer may comment within 30 days.
  • Good-faith reporters are immune.
  • The insurer also furnishes a commission account statement within 30 days.
• An insurer can't terminate or penalize an agent solely for contacting a government agency about a problem with the insurer (72A.20, subd. 20).

Producer conduct (60K.46; Minn. R. 2795)

Disclosure and suitability

• On first contact, a producer discloses his or her name, whom he or she represents and that he or she sells insurance. Disclosures in writing aren't required for phone contacts.
• Fees require a prior written statement. The fees must be reasonable.
• Recommendations must be suitable after reasonable inquiry.

Premium handling

• Premiums go promptly into a business account unless forwarded to the insurer (60K.46). They're held in a fiduciary capacity. A client whose funds are held gets an itemized monthly statement (Rule 2795.1300).
• Refunds (Rule 2795.1700):
  • Make the refund or start refund procedures within 10 days of a request.
  • Forward a refund received from the insurer within 5 days.

Records and office

• Financial records are kept 6 years. A separate complaint file per agent is also kept 6 years (Rules 2795.1400, 2795.1500).
• Policies are delivered within 30 working days unless the insured agrees otherwise (Rule 2795.0400).
• Every resident agent keeps a registered office in Minnesota (Rule 2795.1100).
• The license is displayed in the office. Ads mentioning licensing need a disclaimer that it isn't a state endorsement (Rule 2795.1200).
• Loans from clients must be in writing, with lawful terms (Rule 2795.0300).

Other

• A producer may not reveal an insured's identity without consent.
• Renewal commissions may go to someone licensed at the time of sale (60K.48).

Unfair practices (Minn. Stat. 72A.20)

Rebating (72A.071)

• Inducements not in the policy are prohibited.
• Noncash gifts are allowed up to the lesser of 5% of premium or $250 per policy year.
• Raffles are allowed with prizes up to the lesser of 5% of premium or $500, free to enter and open to the public.
• Value-added services related to the coverage, such as loss control, are allowed.
• Free insurance as an inducement is not allowed.

Records: insurers keep underwriting files 3 years from the policy date and claim files 3 years from payment or denial (72A.20, subd. 30).

Readability (72C): policy forms need a Flesch score of more than 40. A filed form is deemed approved after 60 days.

Claims practices (72A.201)

• A denial must be in writing and cite the specific policy provision.
• Complaint files are kept 4 years.

Fraud

• An insurer or insurance professional who reasonably believes fraud is occurring must report it to the Bureau of Criminal Apprehension (BCA). Good-faith reporters are immune (60A.952).
• Intentionally failing to report is a misdemeanor (60A.953).
• Insurers maintain an antifraud plan (60A.954).
• Insurance fraud includes selling for an insurer you know is insolvent (609.611).
  • Restitution is mandatory.
  • The limitations period runs from discovery but not past 7 years.

Privacy

Insurers and agents give a notice of information practices (72A.494). After an adverse underwriting decision, they give the specific reason in writing with a summary of access and correction rights (72A.499).

Guaranty associations

• Using the association's existence to sell is prohibited (61B.28).
• Policies not protected by either association carry a 10-point notice saying so.

Common exam traps

• The regulator is the Commissioner of Commerce.
• Licenses renew every 24 months at the end of the birth month. CE is 24 hours with 3 ethics.
• Name or address change: 10 days. Felony conviction: 10 days. Other-state action: 30 days.
• Appointment: 15 days. Termination: 30 days. Producer copy: 15 days.
• Gifts: lesser of 5% or $250.
• Fraud reports go to the BCA.
• Life and health guaranty: $500,000 death benefit and $130,000 cash value.