Legislation is pending that would impose a $5 surcharge on auto insurance and homeowner's insurance policies sold in Minnesota.  The surcharge would be assessed annually per policy.  The funds raised through these surcharges would be direct to state accounts for public pensions.  The homeowners' surcharge would be deposited in a Fire Pension account for retired firefighters and the auto insurance surcharge would be deposited in a Police Pension account for police pensions.

The great recession hit public pension accounts very hard and the public commitment is insufficient to fund police and firefighter pensions in the future.  The public pensions are projected to experience a $64 million a year shortfall for the next twenty-five years.  Firefighter and police unions have attempted to address some of this shortfall by reducing retiree benefits, increased contributions and raising penalties for early retirement.  But these efforts still will fall short.  Hence the surcharges which are expected to raise $23 million a year. 

The insurance industry is opposed to these surcharges and the placing of this public responsibility on the state's homeowners and automobile owners.  They are also concerned that once enacted, the $5 could be increased to $10, $15 or even $25 per policy.  Minnesotans who own their homes and automobiles should not be responsible for the liabilities of the state and public at large. 

The MIIAB is joining the industry in this effort to defeat this ill conceived legislation.  We encourage you to contact your state legislators and perhaps pass this information on to your policyholders.  This campaign is using a special web address which directs you to a page on the Insurance Federation of Minnesota web site.  The web page will give you more information on the surcharge and assist you in contacting your legislators.  The web address is:  www.donttaxmetwice.com

For those of you on social media, you can also check out the Insurance Federation "cause page" on Facebook at:    https://www.facebook.com/DontTaxMeTwice

Click Here for a one-page fact sheet and legislative contact request you can use with your staff and policyholders

This surcharge proposal has considerable support in the legislature and the police and firefighter unions have done a good job of making the case that firefighting is tied to homeowners and police work is tied to auto accidents.   However, there is considerable opposition forming in the general public who oppose this attempt to shift public pension responsibility to private citizens. 

The MIIAB asks that you respond to this alert and contact your legislators immediately.  We also suggest you share this request and the aforementioned web address with your staff, colleagues and customers.  Thank you.    

Dominic Sposeto

MIIAB Lobbyist