The Legislative and Political Newsletter of the 
MN Independent Insurance Agents & Brokers Association

June 15, 2015
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MIIAB 2015 Legislative Session Report

Once again, our experiment with divided government resulted in another special session and the predictable political bickering and finger pointing that this entails.  In the final hours of the session the Legislature barely reached agreement on the various appropriations bills that fund state government, but their budget was not acceptable to DFL Governor Dayton, who vetoed three of these spending bills.  Dayton called the legislature back into special session to pass those bills. 


The state legislature failed to enact legislation relating to their two key issues.  Perhaps the biggest failure was their inability to pass significant funding for transportation projects even though both Republicans and Democrats claimed this as a top session priority.  The legislature also failed to gain an agreement on an omnibus tax bill.  Republicans wanted reductions in commercial taxes along with credits and deductions that returned some of state budget surplus to individual taxpayers.  Democrats wanted an increase in gas taxes to fund transportation programs and property tax reductions. 


The legislature decided with a state surplus there was no need to adjust taxes.  They left nearly $1 billion of the state's budget surplus in the state treasury and plan to readdress the debate on transportation and taxes when the legislature reconvenes in March of 2016. 


For the MIIA, it was a fairly good session, primarily because most of our issues were not related to state spending.  Here are the major pieces of state legislation we worked on this session. 


Transportation Network Companies. Probably the most visible insurance issue of the session was the so-called "Uber bill" which establishes insurance requirements for transportation network companies and their drivers.  Transportation network companies (TNC) and/or TNC drivers that receive connections to riders through these networks and use personal vehicles must have different levels of coverage depending on whether there is a passenger in the vehicle.  While the drive is "available" to receive transportation though the network, which means the TNC application is turned on, they need insurance coverage of $50,000-$100,000-$30,000 for liability for injury and property damage.  While the driver is "engaged" in a prearranged ride (the passenger is actually present in the vehicle) coverage for liability for injury and property damage must be not less than $1.5 million.  


The new law clarifies that coverage does not exist for drivers under their private passenger auto policies including liability for damage, uninsured and underinsured motorist coverage, medical expense, economic loss, comp. or collision.   The standard exclusion for livery or business use applies not only when a passenger is in the TC driver's vehicle but also when the driver is awaiting a rider assignment or after the passenger is dropped off if the transportation network device is still in operation (hence awaiting another rider).   


The law however does not preclude an insurer from providing coverage for the TN driver's through additional coverage or policy riders.    An insurer may choose to do so either by contract or endorsement to the driver's private passenger insurance.  Effective July 1, 2015.   Minnesota 2015 Session Laws, Chapter 48 (Senate File 1679)


Minnesotans' Right to Advice.   The Agent's Coalition for Health Care Reform and the Minnesota Health Underwriter, brought forth a bill which we entitled the "Minnesotans' right to advice".  This legislation was authored by Senator Vicki Jensen and Rep. Greg Davids, both licensed producers.   The new law allows consumers to select the agent of their choice.  The bill was offered in response to the problems many producers were having getting recognized and paid for the time and effort they put into enrolling clients through MNsure, the state's health insurance exchange.


The new law places in statute the definition of "agent of record" and "agent of record agreements" and allows policyholders to select their insurance agent.  It also requires the state's health plans to recognize valid AORs and award the appropriate compensation to the agent.  They must do so within 30 days of the receipt of the AOR request.  Nothing in the law requires a health plan to pay commissions or services fees unless the rate for the health insurance has been approved by the commissioner of commerce with costs associated with producer compensation within the filed rate.


Another provision would allow policyholders who purchased insurance through MNsure, the state's health insurance exchange, to retroactively appoint an insurance agent or navigator for up to six months after enrollment.  This provision applies to MNsure policies with effective coverage beginning January 1, 2015 to July 31, 2015.  Effective May 17, 2015.  Minnesota 2015 Session Laws, Chapter 58, (Senate File 1265) 


Self-Storage Rental Insurance. Legislation was passed that authorizes self-storage rental facilities to sell property insurance to their renters.  The legislation is similar to laws in other states which authorize this type of specialty insurance.   The MIIAB worked with the self-storage industry to assure storage facility renters are informed that their homeowners or renters insurance will cover personal property stored in these facilities.  The law contains the following disclosure that must be provider to all storage facility renters:  "Your renters' or homeowners' policy may provide the insurance you need.  Check with your insurance agent to determine if your personal property stored at a location other than your home or business is covered".  Effective August 1, 2015.  Minnesota 2015 Session Laws, Chapter 34, (House File 177)


Electronic Proof of Auto Insurance. A new law allows proof of auto insurance to be maintained electronically upon a device, such as a cell phone.  Previously the law required a physical insurance identification card.  The use of such a device does not constitute consent for law enforcement to review other information contained on the device.   Effective Immediately.  Minnesota 2105 Session Laws, Chapter 53 (House File 307)   


Insurance Auto Fraud.  A jobs and economic development appropriation bill which one of the three state funding bills enacted during the special session  contained key provisions of the insurance industry's no-fault auto anti-fraud proposal.  The bill authorizes the commissioner of commerce to assess administrative penalties of up to $20,000 against a person or persons who are found to have engaged in insurance fraud.  The commissioner was also given the authority to bar payment from insurance companies to a person convicted of fraud.  After five years the convicted person may apply to district court to have this penalty removed.   Lastly, the legislation establishes a Task Force on No-fault Auto Insurance Issues that will look at the arbitration process, independent medical examinations, health care standards and provider oversight.  The Task Force must report back to the legislature in 2016.  Special Session (House File 3) 


Long Term Care Insurance.   Legislation sponsored by NAIFA and the LTC insurance industry to reduce the required inflation protection for long term partnership policies sold in Minnesota was enacted.  The inflation protection requirement was reduced from three percent to one to make policies more consistent with current inflation rates and also to make them more affordable.  Policies written before the initiation of LTC partnership policies in Minnesota, those issued before July 2006, that meet all the requirements for partnership status shall now qualify for partnership status provided benefits have not be paid.  An insured may make a written inquiry to their insurance company to determine whether the policy meets partnership status.  The company must respond to the inquiry with 30 days.  Effective July 1, 2015.  Minnesota 2105 Session Laws, Chapter 59 (Senate File 997)


The legislature also directed the commissioner of commerce to make recommendations on actuarially justified rate increases for long term care policies sold prior to January 2002.  The Department of Commerce has been quite reluctant to grant many of the significant premium increases that have been requested by Minnesota LTC insurers.      


Residency Tests for State Income Tax.  The Minnesota Department of Revenue has aggressively been pursing Minnesota snowbirds who attempt to avoid Minnesota state income tax by claiming to be a resident of another state.  Recent court cases have brought into question the criteria that the department uses to determine state residency.   One of those criteria is the location of your insurance and financial adviser.  Some insurance producers in other states have been marketing this "criteria" as a reason to change insurance professionals.  The MIIA worked closely with NAIFA to eliminate this criteria.  We had made considerable progress on this effort with the state legislature and the department of revenue.  Language to remove the location of your insurance professional from the residency test was successfully added to both the House and Senate Omnibus Tax bills. 


However, the legislature's inability to reach a compromise on key tax provisions (tax refunds, gas taxes, federal conformity, and other changes to tax law) resulted in no tax bill being adopted this year.  Therefore, our language was never enacted.  We will plan to work on this issue again when the legislature reconvenes in 2016. 


MNsure.  The Republican efforts to repeal MNsure and instead employ the federal health insurance exchange failed to gain passage as did the Senate Democrats' proposal to make MNsure a state agency.  So for now, MNsure stands pretty much unchanged. 

However, legislation was adopted that directs the Commissioner of Commerce and the Commissioner of Human Services to develop two proposals.  The first would allow small employers to receive the federal, small business health care tax credit whether they buy health insurance through the exchange (SHOP program) or outside the exchange (private market).  The second proposal would allow individuals that purchase qualified health insurance outside of MNsure to receive advanced premium credits and cost-sharing reductions currently restricted to MNsure policies only.  Both of these proposals once developed would need the approval of the federal government, through an ACA waiver, prior to their implementation. 


A provision in the health and human services appropriation bill prohibits MNsure from certifying, selecting, or offering products and policies of coverage that do not meet the definition of health or dental plan in state law.  Earlier this year, the MNsure board debated offering other insurance products as a means of gaining income.  This should stop that discussion in its tracks.  


This appropriation bill also contained a provision recommended by Governor Dayton, to create a Task Force on Health Care Financing to look at sustainable financing, coverages and purchasing for all insurance state operated programs including MNsure, MinnesotaCare, and Medicaid.  The task force will be convened by the governor and consist of 7 members of the House, 7 members of the Senate and 11 members  who are public or private health care experts.  Minnesota Session Laws Chapter 71, Article 12.  (House File 1458).


To many, the 2016 session of the state legislature will be most remembered for what was not enacted.  The legislature passed just 77 new laws, 82 if you add those passed during the special session.  This is the lowest number of bills passed in a full legislative session in the history of the state.  It wasn't for a lack of ideas.  Legislators introduced 4,503 bills. 


The least prolific session in state history can't be totally attributed to divided state government.  The last time the legislature was controlled by Republicans with a Democrat governor in 2011, government was shut down and a special session was needed to pass the entire state budget.  Even then, the legislature passed 106 new laws. 


Dominic Sposeto

MIIAB Lobbyist