2016 Legislative Wrap-Up

2016 LEGISLATIVE WRAP-UP   The 2016 MN Legislative session started late, started slowly, even though there was a flurry of bills that were pre-filed, and ultimately came to a messy, contentious end around midnight on Sunday, May 22nd. Fortunately, there were no major insurance issues in play as the session wrapped-up, and since a budget was passed last year, there was nothing that HAD to be done this year, Sure, they passed some bills with bipartisan support, but, since they were all there and they had some money to spare, there were some things that they COULD have done that would have benefitted the industry and Minnesotans. The 90th MN Legislature is scheduled to convene on January 3rd, 2017.

WHAT BILLS MADE THE CUT?  We covered MANY industry-related bill introductions in the Agent Focus this year. Given the short session, most of them did not even receive a hearing. Of those bills that, very few made their way through the process to become law. Here are a few bills that did:

HF3014  Autocycle Bill – prompted by the Polaris Slingshot, the bill defines a new type of vehicle that is a cross between a motorcycle and an automobile. Instead of handlebars and foot pegs, the three-wheeled autocycle has a steering wheel, foot pedals and seats (side-by-side) like a car. The new law allows operators to drive them without a motorcycle endorsement on their driver’s license. The bill was signed by Governor Dayton on May 19th and became effective May 20th.  

HF 3384 Life Insurers PBR Bill - An initiative of the domestic life insurers and agents, the Principle Based Reserves Bill updates the way that life insurers are required to calculate reserves by adopting the NAIC’s Standard Valuation Law. The new method of reserving accommodates today’s more complex insurance products and allows Minnesota-based insurers to be more competitive with insurers from (most) other states that have already adopted the NAIC model. The bill received the Governor’s approval on 6/1/2016. 

HF 2749 Omnibus Supplemental Budget Bill - Provides supplemental appropriations in numerous areas, including an appropriation to the Department of Commerce of $500,000 in fiscal year 2017 for additional actuarial work to prepare for implementation of principle-based reserves.

HF 2478  Workers’ Compensation Advisory Council Bill – Adopts various recommendations of the WCAC and the Department of Labor and Industry. Received Governor’s approval on 5/12/2016 and is effective August 1, 2016. 

HF 2955   ADA Lawsuit Bill - A bill presented in response to the rash of Americans with Disabilities Act (ADA) lawsuits against small businesses across MN that are found to be out of compliance with Federal accessibility laws. The original bill intended to provide a reasonable response period and right to cure potential violation prior to the commencement of litigation, but the bill, as passed, is not as favorable and does not provide an opportunity to preclude litigation by bringing the barrier into compliance. Signed by Governor Dayton on 5/22/2016 and effective on May 23.

What Didn’t Happen?  Many would say that NOTHING happened and legislators could have gone home 12 weeks ago. You saw a brief description of the bills of interest that were introduced. Here are a few noteworthy bills that (in some cases, thankfully) became casualties along the way:

SF 2770   MN Fair and Affordable Auto Insurance Act – An effort by Commissioner Mike Rothman to dramatically change the way auto insurance is priced and rated in Minnesota. The bill called for a retroactive rate roll-back of at least 20% (back to Jan 1, 2016) and would have prohibited an auto insurer from refusing to renew an auto policy on the basis of a claim, regardless of the dollar value of the claim. The bill also provided for a Good Driver premium reduction of at least 20% for insured drivers that: 1) have been licensed to drive for the past 3 years, 2) have had no chargeable accidents over $500 for the past 3 years; and 3) have had no serious violations in the past 10 years. Furthermore, the bill changes the way auto insurance is rated by limiting the factors insurers are allowed to use, in order of importance: 1) the drivers “safety record” 2) the number of miles driven annually, and 3) the number of years of driving experience. Any factors other than those above (for example, insurance score, garage location) or those subsequently approved by the Commissioner would be deemed unfair discrimination. The bill did receive a hearing by the Senate Commerce Committee, but House leadership indicated they had no interest in the bill this session, so that is as far as it went. . .so far. Depending on what happens this fall, we can probably expect to hear more on this from the Governor and Commissioner in the future. 

SF 2304  Homeowners Insurance Disclosure Bill – An initiative of the builders and remodelers associations (and the same attorneys that brought the Cedar Bluffs Townhomes suit) that would have required all applicants, at the time of application for homeowners insurance, to be provided with a written statement that lists ALL additional optional coverage available from the insurer to the applicant. In addition to the unreasonable burden placed on agents, the bill sought to regulate the way claims are handled and called for an increase in the amount of training that public adjusters receive. Ultimately, when asked what problem this bill is attempting to address, the proponents stated that homeowners often think they have coverage when they don’t. Although they said it is all about the consumer, it appeared to be more about how replacement cost and matching claims are handled and how that affects what is available to those in the home construction and repair industry and the attorneys that represent claimants. PIA, and other industry stakeholders met with representatives of the home building and repair industry and Senator Vicki Jensen (D-Owatonna) and Representative Bob Loonan (R-Shakopee) to discuss the reasons why this would not work. PIA provided a 30+ page agent manual listing most (but not all) optional coverages and their description as an example of such disclosure. The bill never received a hearing. 

SF 2791 Commerce Fraud Bureau Search Warrant Authorization – would have added the Commerce Department’s Fraud Bureau to the statutory list of law enforcement agencies that are authorized to apply for or execute search warrants. The bill passed the Senate unanimously but was not brought up for a vote in the House. 

SF 3444  Commerce Fraud Unit Expansion – A bill appropriating $250,000 to the Commerce Department for the addition of two civil insurance fraud investigators. The Department favored the bill, noting that additional staff was required to enforce new civil penalties enacted last year. The bill was laid over for possible inclusion in the Omnibus Supplemental Budget Bill, but we did not see it in there.   

WILL THERE BE A SPECIAL SESSION?  As we mentioned in an earlier Agent Focus, the MN Legislature adjourned sine die by May 23rd, as constitutionally required, but this year’s session came to an end without accomplishing a couple of their top, agreed-to priorities – specifically, a bonding bill and transportation funding. The House made it pretty clear that they did not want to provide additional funding for light rail, while the Senate scuttled the transportation bill by endorsing light rail onto it. So, the question remains whether there will be a special session to tackle these two issues? (Special sessions are not uncommon – there have been 50 of them since Minnesota attained statehood in 1858, with some years having two or even three special sessions.) Governor Dayton has indicated that he will not sign the House and Senate-passed tax relief bill without an agreement for a special session. (If Governor Dayton does NOT act on the tax relief bill by Monday, it is automatically pocket-vetoed.) This week, Governor Dayton laid out a lengthy list of demands that he wants prior to calling a special session. One of those demands is funding for light rail. So, the question remains. . .

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