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S.F. No. 2313 - NAIC Model Regulation Conformance (First Engrossment)
 
Author: Senator Paul J. Utke
 
Prepared By: Christopher B. Stang, Senate Counsel (651/296-0539)
 
Date: March 25, 2019



 

This bill is intended to conform Minnesota law with certain NAIC Model Regulations.

Article 1 — Annual Financial Reporting and Audit

Section 1 modifies definitions related to audit functions of insurers. “Internal audit function” means persons who provide independent objective assurance to improve the effectiveness of risk management, control, and governance processes.

Section 2 provides that the audit committee of an insurer is responsible for overseeing the internal audit function and granting persons performing it suitable authority and resources to fulfill their responsibilities.

Section 3 establishes internal audit function requirements. Exemption for defined small insurers specified.

Section 4 allows for a grace period to come into compliance when an insurer or group of insurers no longer qualifies for an exemption.

Article 2 — Insurance Company Holding Systems

Section 1 defines “groupwide supervisor”.

Section 2 defines “internationally active insurance group”.

Section 3 authorizes the commissioner of commerce to act as the groupwide supervisor for any internationally active insurance group. The commissioner may acknowledge another regulatory official as groupwide supervisor in specified circumstances. Factors for the commissioner to consider when making a determination or acknowledgement are set forth. Determination or acknowledgment also required in the event of material change in internationally active insurance group. Commissioner authorized to collect information relevant to determination or acknowledgment of groupwide supervisor. Groupwide supervision activities set forth.

Article 3 —  Risk-Based Capital Trend Test for Health Organization

Section 1 states an excess of capital over the amount produced by the risk-based capital requirements are desirable in the business of health insurance.

Section 2 modifies the definition of “company action level event”.

Article 4 — Corporate Governance Annual Disclosure

Section 1 [Corporate Governance Annual Disclosure]

Subdivision 1 sets forth the scope of the regulation. Nothing in this section shall be construed to prescribe governance standards beyond that required under applicable state corporate law.

Subdivision 2 establishes definitions for purposes of the regulation.

Subdivision 3 requires an insurer to submit annually a Corporate Governance Annual Disclosure (CGAD) that contains the information specified in Subdivision 4. For purposes of completing the CGAD the insurer may provide info at different corporate levels depending upon how it has structured its system of corporate governance.

Subdivision 4 specifies the contents of the CGAD. Must contain the material info necessary to permit the commissioner to gain an understanding of governance structure and policies, including info related to oversight, policies of the most senior governing entity, and the direction of senior management.

Subdivision 5 makes the information obtained by the commissioner under this section confidential. Information may be used by the commissioner in furtherance of regulatory or legal action. Commissioner not allowed to testify in private civil action related to CGAD information.

Subdivision 6 allows the commissioner to retain third-party professionals as reasonably necessary to assist in reviewing the CGAD.

Subdivision 7 specifies a fine of $1,000 a day for failing to timely file the CGAD.

This section is effective January 1, 2020.

Article 5 — Medicare Supplement Insurance

This article is intended to conform Medicare Supplement Insurance statutes to changes made by the federal Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

Section 1 establishes a definition of “newly eligible individual”.

Sections 2-12 carry through the requirement that the Medicare Part B deductible will no longer be covered for those becoming newly eligible for Medicare as of Jan 1, 2020.

Section 13 makes the act immediately effective, and the coverage requirements apply to Medicare supplement policies issued after Jan 1, 2020 to a newly eligible individual.

 
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