The 2012 Legislative Session will not be remembered for a great deal of legislation. In fact, the 2011-12 biennial session saw the enactment of the fewest new laws since 1869. Nor will the year's session be remembered for the partisan bickering that led to a government shut-down last year. The last days of the session saw surprising bi-partisan support for both a state bonding bill and legislation to build a new Minnesota Vikings football stadium. Most likely, the Vikings stadium will be viewed as this legislature's chief accomplishment this year.
The insurance industry had high hopes for the legislative session. However, the do-little mood at the capitol prevailed and several initiatives were significantly scaled back, and others were vetoed by the governor. The following highlights the fate of legislative proposals of interest to the MIIAB membership.
After seven years of heated debated on the issue of no-fault reform, some reform legislation was passed and signed into law by the governor. For several years the legislature has debated such issues as a repeal of the no-fault law, a pay to play bill that would limit benefits for uninsured or underinsured drivers, introducing managed care to no-fault medical, employing workers' compensation fee schedules and other major reforms. However, with a divided government and ongoing opposition to any major reform from chiropractors and trial lawyers, the industry settled for a much smaller reform package this year.
The new no-fault reform law will specifically forbid the use of runners or cappers having direct contact with persons injured in an automobile accident on behalf of a provider. It also changes the criminal code statute dealing with the use of runners or cappers to remove the requirement that a runner must know the provider is engaging in fraud to be in violation of the law. It also attempts to prevent misleading advertisements such as those that use fictitious names, imply endorsement by law enforcement or make promises of specific financial gain by filing a claim.
The final compromise represents a great deal of work by the Insurance Federation and the Minnesota Chiropractors Association. The compromise bill was sponsored by Jim Abeler, a chiropractor in the House, and Paul Gazelka, an insurance agent in the Senate. The new law, Minnesota 2012 Session Law Chapter 255, takes effect August 1, 2012.
Roofer Rebate Prohibitions
This bill sponsored by the Insurance Federation of Minnesota and endorsed by the MIIAB was an attempt to address the huge Minnesota weather claims losses of the last several years. As introduced, the bill would have allowed insurance companies to add a separate two-percent deductible for wind and hail or allow insurers to assess a premium surcharge for weather related claims. The bill would have also placed restrictions on residential roofers and repair contractors that would have drastically limited their ability to represent homeowners in negotiations with insurers over weather claims.
However, after considerable opposition to these provisions, the bill was significantly scaled back. Changes to allow underwriting for weather claims was very unpopular with several legislators including some who are insurance agents. It was also opposed by the Department of Commerce. The restrictions on roofers and remodelers, although signed off on by the state builders association, drew considerable opposition from independent contractors who organized quickly to pack a House hearing room. Their presence was felt and the contractor restrictions in the bill were abridged.
As passed and signed into law by the governor, the bill expands the "storm chaser" legislation passed over the last several years. It would extend the current prohibition on a contractor promising to pay a deductible in connection with work to include home repair or improvement services. Current law applies only to roofing and siding. The new law also allows the Department of Labor and Industry to enforce the provisions of the storm chaser statutes. The new law, Minnesota 2012 Session Law Chapter 248 is effective August 1, 2012.
Home Solicitation Sales
Homeowners' would have the ability to rescind contracts for home improvements made from door to door sales under this new law. Consumers could cancel contracts within 72 hours for roofing, siding and other storm damage repairs if the contact was entered into as a result of home solicitation. This is identical to "storm chaser" language passed by the industry last year but that legislation applied only if an insurance claim had been denied. This would extend the 72 hour rescission period to any door to door sale. Minnesota 2102 Session Law Chapter 234, effective August 1, 2012.
Notices and Auto ID Cards
Insurers will be allowed to provide mandated auto insurance ID cards in an electronic format but only if the insured agrees. Insurers will also be able to deliver the required notice of the P/C guaranty fund to policyholder at the time of policy delivery. The legislation was an initiative of the Insurance Federation of Minnesota to modernize statutory notice requirements. The law will also make it easier for insurers to access accident reports that are used for claims investigation.
This is Minnesota 2012 Session Laws, Chapter 185. The guaranty fund notice changes and the accident report authorization revisions took effect immediately. The electronic ID card delivery authorization takes effect on August 1st.
Defensive Driver Refresher Course
Under current law, seniors wishing to receive a mandated 10% auto insurance premium discount must take an eight-hour course, and then follow up with four-hour refresher courses every three years. This new law applies to drivers who have allowed their three-year discount to lapse. Drivers who let their discount lapse will only be required to take the four-hour refresher course, rather than having to start over with the initial eight-hour course. Minnesota 2012 Session Laws, Chapter 141 is effective immediately.
Health Care Reform Deadlock Continues
The political divide over health care reform continued at the state capitol and once again neither side could claim victory. Legislation to establish a Minnesota health insurance exchange did not advance. Last year, legislation sponsored by the Agents Coalition for Health Care Reform, (the MIIAB is a member) called for a minimal and agent friendly exchange but failed to gain momentum. This year, the insurance exchange proposal came from Governor Dayton. The governor's exchange bill was based upon the recommendations of the Health Insurance Exchange Advisory Task Force that is administered by the Department of Commerce. The bill was not received favorably by the Republican controlled legislature and failed to pass out of a single legislative committee.
On the other hand, Republican attempts at health care reform were passed by the legislature only to meet a swift gubernatorial veto. One vetoed proposal would have established a "Health Care Compact", which would grant states the authority to regulate their own health care. Each state could suspend federal laws, regulations and rules regarding health care requirements and take primary responsibility to regulate health care in their respective states. It would allow Minnesota to control federal programs such as Medicaid. While the compact would require Congressional approval that is highly doubtful, the governor didn't want to have anything to do with this American Legislative Exchange proposal.
The governor also vetoed another Republican proposal calling for the creation of a premium aggregator. This proposal, which had the support of the Minnesota Association of Health Underwriters, would have established unified personal health premium accounts that would basically be trust accounts for the payment of health insurance premiums. These accounts could accept contributions from employers, individuals, spouses, dependents, other family members, charities and state and local governments. This was seen as an alternative to a state based health insurance exchange. Neither veto by Dayton was unexpected.
So as we head into the fall elections, the question of Minnesota's involvement in federal health care reform is still undecided. However, the Governor and Commerce Commissioner Rothman will continue their efforts through the Health Insurance Exchange Task Force to develop an exchange for the state. As throughout the country, this debate will ultimately be decided by the Supreme Court and our national-state elections this fall or both.
Fire Safety Surcharge
The surcharge assessed on every homeowner's, commercial fire and commercial non-liability insurance policy will be reduced from .065 percent to .05 percent beginning July 1, 2013. New legislation will also remove an ongoing transfer from the fire safety account to the states general revenues. This transfer was enacted to help the legislature and the governor address the state's budget deficits over the last few years. Any current unallocated balance in the fund will be sent to the general revenue fund but no longer in the future, assuming the governor and the state legislature can control themselves. To prevent such a "raid" of the fund in the future, the law specifies legislative intent for the fire safety account. It states "The legislature intends that all money in the fire safety account be appropriated to the commissioner of public safety to fund the state fire marshal's office and activities and programs related to fire safety". Minnesota Session Law Chapter 289 is effective July 1, 2012. The change in surcharge will take effect for policies sold after July 1, 2013.
This legislation amends current statutory definitions of "late model", "high value", and "older model vehicles", designed to assure that more vehicles are repaired instead of totaled. The new law ties salvage to vehicle damage that exceeds 80 percent of the vehicle's cash value. Current law is 70 percent. The new law also removes the valuation of the replacement of airs bags from the damage threshold. This bill was jointly sponsored by the Insurance Federation of Minnesota and the Alliance of Automotive Service Providers (repair shops). The industry felt that repairing vehicles instead of totaling them would improve policyholder satisfaction. Minnesota 2012 Session Laws Chapter 267 is effective August 1, 2012.
Fire Sprinklers - Single Family Dwellings
Once again, Governor Dayton vetoed an attempt to prohibit state and local building/fire codes from requiring the installation of fire sprinklers, system components or automatic fire-extinguishing equipment in any new or existing single family home. The governor last year vetoed a similar proposal sponsored by the building industry. Installation of fire suppression sprinklers is required under the International Residential Building Code and is being considered by the Commissioner of Labor and Industry. In his veto message the governor pledged that the administration will consider carefully all sides of this issue before making a final decision about fire sprinklers and state building codes.
Dominic J. Sposeto