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ARTICLES OF AGREEMENT
JANUARY 1, 1975
FEBRUARY 24, 2004
MINNESOTA AUTOMOBILE ASSIGNED CLAIMS
ARTICLES OF AGREEMENT
The purpose of these Articles of
Agreement is to form and provide for the operation of the Minnesota Automobile Assigned
Claims Bureau and Plan.
This organization shall be known as the Minnesota
Automobile Assigned Claims Bureau, an unincorporated nonprofit association. Its functions
are to be carried out by the operation of a Minnesota Automobile Assigned Claims Plan.
The objective shall be the implementation of and the
administration of those Sections of the Minnesota No-Fault Automobile Insurance Act, which
pertain to the Assigned Claims Bureau and Plan.
These Articles of Agreement are subject to approval by
the Minnesota Commissioner of Commerce (hereinafter referred to as the Commissioner) and
shall become effective
January 1, 1975.
The principle office of the Bureau shall be within the
State of Minnesota.
Membership in the Bureau shall consist of each
reparation obligor providing basic economic loss insurance in this state.
Termination of Membership. Membership of any member shall terminate when such member no
longer provides basic economic loss insurance in the state of Minnesota. Any member whose
membership in the Bureau has been terminated shall, nevertheless, continue to be governed
by these Articles of Agreement in order to complete its obligation incurred during its
term of membership with regard to any assessments, losses, expenses, obligations, or
contracts under the program.
The plan shall be administered by a
Governing Committee and an Administrator in accordance with the
provisions of the Plan of Operation. The Governing Committee
(hereinafter referred to as the Committee) shall consist of seven
members. The Committee shall consist of four individuals selected by the
insurer members, one individual selected by the self-insurer members,
and two public members appointed by the governor. All members shall
serve two-year terms.
Duties of the Governing Committee
The Committee shall meet at least annually and as often
as may be required to perform the general duties of administration of the Plan. The
Committee shall be empowered to appoint an Administrator, budget expenses, levy
assessments, disburse funds and perform all duties essential to the proper administration
of the Plan.
Annually, the Administrator shall prepare an operating budget in the prescribed manner for
submission to the Committee. Such budget shall be approved by the Committee and furnished
to the companies which are Bureau members on request. Any expenditure in excess of or not
included in the annual budget, shall be subject to the approval of the Committee. The
Committee shall furnish to all members of the Bureau a written report of operations
annually in such form and detail as the Committee may determine.
A financial report will be prepared annually for submission to the Commissioner for his
examination and approval.
The Committee shall elect from its membership a
chairperson and a vice-chairperson. The chairperson shall preside over all meetings of
this Committee and all meetings of the members of the Minnesota Automobile Assigned Claims
Bureau. The vice-chairperson shall perform the functions of the chairperson in the event
the chairperson is unable to perform his/her tasks. The chairperson and vice-chairperson
shall perform such other duties as may be incidental to their offices, or as shall be
required of them by these rules or by the Committee.
Designation of Servicing Insurers
A minimum of three (3) Servicing Insurers shall be
designated by the Committee.
It will be the responsibility of the designated Servicing Insurers to make adequate
provision for the equitable payment of assigned claims. It will be the responsibility of
the designated Servicing Insurers to establish adequate internal procedures for the
maintenance of statistics that will properly reflect the payments and expenses related to
the claims assigned. Such statistics will be provided to the Committee as requested.
Assignment of Claims
The Administrator of the Plan shall assign claims to
the Servicing Insurers in accordance with procedure determined by the Committee, as
approved by the Commissioner.
Cost of Administration
All cost of administration of the Plan including
administrative costs, cost of claims payments and all related claims expense shall be
borne by the members of the Bureau on a pro rata basis. Assessments on all members shall
be made at the discretion of the Committee to meet the cost of administration and to
reimburse the Servicing Insurers for their expense of assigned claims payments and related
reasonable claims expense.
The Committee shall annually appoint a properly
qualified firm to conduct an annual audit of the operations of the Plan, the scope of
which shall be determined by the Committee, and to perform such other functions as may be
directed by the Committee. Members of the Bureau shall, at all reasonable times, make
books and records available to the Committee or its representative for the purpose of
reviewing any matter coming within the scope of these Articles of Agreement.
A In General
1. Each person serving on the Committee or any sub-committee thereof,
each member or servicing carrier of the Bureau and their employees, and each officer,
employee and/or consultant of the Bureau (hereinafter jointly referred to as
"persons"), shall be indemnified by the Bureau against all costs and expenses
actually and necessarily incurred by them or it in connection with the defense of any
action, suit or proceeding in which they or it is made a party by reason of their or its
status in one of the above categories, except in relation to matters as to which they or
it have been judged in such action, suit or proceeding to be liable by reason of
misconduct in the performance of their or its duties. Indemnification hereunder shall not
be exclusive of the rights to which such persons may be entitled as a matter of law.
2. Any person who shall seek indemnification hereunder shall promptly notify the Bureau of
any action, suite or proceeding, or any threat thereof, in writing at its main office. The
Bureau shall have the right to and may defend and/or dispose of any such pending or
threatened action, suit or proceeding when its Committee has determined that said action
is in the best interest of the members of the Bureau. In every instance where a claim is
made, including claims in the nature of bad faith or punitive damages, the Bureau shall
have the right to defend such action in any way it deems to be in the best interests of
3. The cost and expense of fulfilling the obligations of the Bureau hereunder, including
reasonable attorneys' fees and court costs, shall be apportioned among all the members of
the Bureau in accordance with the basis of apportionment as provided in Section 9 of the
Bureau's Plan of Operation and as set forth in its Articles.
B. Claims of Bad Faith or for Punitive Damages
1. Each insurer which serves as a servicing insurance carrier of the Bureau or any
predecessor or successor organization of the Bureau and the carrier's employees
(hereinafter collectively referred to as "the servicing carrier"), shall be
indemnified by the Bureau against all costs and expenses reasonably incurred by or imposed
upon such servicing carrier in connection with or resulting from any settlement or award,
by court or by jury, on a claim of bad faith or punitive damages arising out of the
conduct of a servicing carrier in connection with a claim assigned to it through the
Provided, however, that settlements or awards in the nature of bad faith or punitive
damages claims will only be reimbursed by the members of the Bureau in those situations in
which the servicing carrier has acted for a purpose which it reasonably believed to be in
the best interests and objectives of the Bureau and in connection with which it had no
reasonable cause to believe that its conduct was unlawful or improper. Nor shall any
settlement or award of punitive damages or bad faith claims be reimbursed in cases where
the servicing carrier has acted fraudulently or with reckless disregard of a claimant's
2. In every instance where a claim of bad faith or for punitive damages is asserted, the
Bureau shall have the right to defend and/or dispose of such action as is set forth in
3. No settlement of a punitive damages or bad faith claim shall be made without the
approval of the Bureau's Committee prior to the time the settlement is entered into or
4. The forgoing right to indemnity shall include reimbursement of the expenses paid in
settling any such action, suit or proceeding, including reasonable attorneys' fees and
In the event any member fails, by reason of insolvency,
to pay its proportion of any expense or of any loss incurred by the Bureau or Plan under
the program, such unpaid loss or expense shall be paid by the remaining members, each
contributing on a pro rata basis, deleting therefrom the proportion of defaulting member.
The Bureau shall be subrogated to the rights of the remaining members in any liquidation
proceedings and shall have full authority on their behalf to exercise such rights in any
action or proceeding.
Legal action may be maintained by or against the Bureau or Plan.
Citation to Commissioner
Failure of any member to comply with these Articles of Agreement or with any rules
prescribed thereunder by the Committee or to pay any assessment levied within 30 days of
notice thereof, shall be grounds for citation of such member to the Commissioner.
Right of Appeal
Any person or member aggrieved by any ruling, order, decision, action, or refusal to act
on the part of the Plan may appeal to the Committee. The Committee shall promptly notify
the person or member as to the ruling on the appeal.
A ruling, action or decision of the Committee may be appealed to the Commissioner within
30 days. A final action or order of the Commissioner is subject to judicial review in the
manner provided by chapter 14 of the Minnesota Statutes. In lieu of an appeal to the
Commissioner, judicial review of the Committee's ruling, action, or decision may be
The Governing Committee shall have the authority to amend the Minnesota Automobile
Assigned Claims Plan by a two-thirds affirmative vote at a regular or special meeting of
the members of the Governing Committee at which a quorum is present. Any such amendment
shall be subject to the approval of the Commissioner of Commerce within 30 days,
otherwise, the amendment shall be deemed approved.
The Governing Committee shall have the authority to adopt, amend and repeal such Bylaws or
rules, as it deems appropriate to carry out its duties and responsibilities. Any such
change shall be subject to the approval of the Commissioner of Commerce within 30 days,
otherwise, the amendment shall be deemed approved.
Sunday, October 18, 2010
©2001 Minnesota Automobile Assigned Claims Bureau
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