June 2, 2014

2014 Legislative Session Wrap-Up

The Minnesota State Legislature adjourned late Friday night May 16th three days before their constitutional deadline. This ended the "mini-session" which began rather late, February 25th. The legislature accomplished much during this short session.

The legislature addressed the state's projected $1 billion dollar state budget surplus by enacting two separate tax bills which returned over half of this surplus to individual taxpayers in the form of tax relief. It should be noted that they had enacted over $2 billion in revenue increases in 2013. The legislature also provided $263 million in additional state appropriations and passed an $850 million bonding bill to repair or construct state buildings, roads and bridges.
This session will primarily be remembered for its commitment to the capitol complex including capitol restoration and a new senate office building as well as passage of a medical marijuana law. It was also an active year for insurance legislation. Following is a summary of the major issues of interest.

Access to Driving Records 
When the Department of Public Service rather surprisingly announced they were ending access to bulk motor vehicle and drivers' records in December, our association joined a coalition of interest groups affected by this decision. We participated in several meetings with department staff to attempt to alter this decision without success. The governor and DPS did agree to continue to provide access to bulk data, but with a rather complex and more expensive system. 
The coalition decided to call this issue to the attention of the state legislature. After several attempts to reach a compromise with the Governor's office and DPS, legislators took over and passed legislation keeping access to bulk data and prescribing fees for this access.

The Governor gave long consideration to vetoing this proposal since it was not consistent with his department's position. However, he eventually decided to sign the bill, but line-item veto a DPS funding provision contained in the bill. The veto relates to a direct appropriation to the legislative auditor for oversight of stored and transmitted DPS data. It should not affect our access or cost.
Under the new legislation, vendors will be able to access bulk data after completing a subscriber agreement with the Department. All vendors must conduct audits by independent professional audit agencies and share these audits with the department. Bulk data recipients would pay a monthly fee and an additional one cent per record fee for subsequent daily updates.

Vendors have indicated that the new subscriber system, audits and increased record expenses will result in increases in cost for agents seeking this information. Of course, agents as authorized users of the data could go direct to the department to receive driving records, but the cost could be prohibitive. MIIAB encourages you to discuss procedures and costs with your current driving record provider.

Continuing Education 
MIIAB working with the state association of realtors successfully pursued legislation to expand agent/realtor continuing education programs. A live course simulcast to remote locations or a live course offered online would be acceptable for CE credit under the new law effective August 1, 2014. Online simulcast courses would have to include a process to authenticate the person's identity and monitor actual "seat time". They will be classified as classroom CE instead of Internet courses and therefore will not require a final examination. 
No-fault Auto & Insurance Fraud 
The numerous hours of work by the Senate Commerce Subcommittee on Insurance Reform paid off with the passage of a fairly non-controversial insurance fraud bill dealing mostly with no-fault claims. The subcommittee was chaired by MIIAB member Senator Vicki Jensen and fellow insurance agent Senator Paul Gazelka. Without their efforts, the House would not have taken up this issue.

After several stops, starts and revisions, Senator Jensen created a "compromise" proposal that was adopted by the House and signed into law by the Governor. The bill provides immunity from liability to insurance agents and insurance support organizations for reporting information related to insurance fraud. The new law sets no-fault reimbursement limits for drugs dispensed outside the state, repackaged or compounded drugs.

The new law also brings some much needed increases in statutory benefits. No-fault maximum disability and income loss benefits will increase from $250 to $500 per week and the benefit for funeral and burial expenses will rise from $2000 to $5000. The law also increases the weekly benefit payable to survivors of a family member who died in an insured accident from $200 to $500 a week and extends coverage to an actual dependent (other than spouse or child) who lived with the decedent at the time of death.

The proposal establishes a task force under the Department of Public Safety to tackle the high incidence of persons without auto insurance. The Task Force on Motor Vehicle Insurance Coverage will review and evaluate approaches to coverage verification and recommend legislation to create and fund a program to assure compliance with state law. The task force will submit its recommendations by February 1, 2015 in time to be debated by the state legislature next year.

Zero Paid Claims 
The legislature expanded current law relating to non paid claims inquiries under which an insurer may not impose a surcharge on homeowners insurance solely due to a policyholder inquiry. An inquiry is defined as a phone call or other communication that does not result in a paid claim. It now includes conversations regarding general terms and conditions offered under a policy including questions concerning filing a claim and whether a claim may be covered. The prohibition on surcharges would also apply to the removal of any claims free discounts.

Secure Retirement Accounts 
Under a proposal sponsored by the AARP and state employee unions, the state would establish a secure retirement account for persons who are not eligible for qualified plans or automatic payroll deduction plans. The Minnesota life insurance industry was quick to point out the already numerous existing options available for persons willing to contribute small amounts for their retirement including the President's myRA program. Although it was very clear that this state operated program was not necessary, the AARP and unions were able to obtain $400.000 for a study of this issue. A report with recommendations will be delivered to the legislature next year.

Long Term Care Insurance Tax Credit 
The House Majority Leader, Erin Murphy introduced a proposal to eliminate the state's $100 long term care insurance credit and use these funds (nearly $8 million) to fund a Minnesota Regenerative Medical Center. Through the efforts of the long term care industry, the credit repeal was removed from the bill. The project went on to be funded from state general revenues.

This is the second year in a row that repeal of the LTC insurance tax credit has been discussed at the state capitol. The department of revenue is not a fan of the credit and they believe it is failing to encouraging low to middle income Minnesotans to buy LTC insurance. It will be back under discussion again next session.

The state legislature will convene on Tuesday, January 6, 2015 for a major budget year session. Before then, voters will select a new House of Representatives and possibly a new governor. Republicans need only seven changes in the 134 House seats to take control of the chamber. A shift in the House, and the possibility of a new governor could dramatically alter the politics at the capitol in 2015.
Dominic Sposeto
MIIAB Lobbyist


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