SF 2770

as introduced - 89th Legislature (2015 - 2016) Posted on 03/18/2016 11:47am

A bill for an act
relating to insurance; regulating automobile insurance rates and coverages;
amending Minnesota Statutes 2014, sections 65B.17, subdivision 1; 70A.04, by
adding a subdivision; 72A.20, subdivision 23; proposing coding for new law
in Minnesota Statutes, chapter 65B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 65B.17, subdivision 1, is amended to read:

Subdivision 1.

General regulations.

No insurer shall fail to renew an automobile
insurance policy unless it shall mail or deliver to the named insured, at the address shown
in the policy, at least 60 days' advance notice of its intention not to renew. The notice must
contain the specific underwriting or other reason or reasons for the nonrenewal. When the
failure to renew is based upon a termination of the agency contract, the notice must so
state. This section does not apply:

(a) if the insurer has manifested its willingness to renew; or

(b) in case of nonpayment of the renewal premium,

provided that, notwithstanding the failure of an insurer to comply with this section,
the policy terminates on the effective date of any other automobile insurance policy
procured by the insured, with respect to any automobile designated in both policies.
Renewal of a policy does not constitute a waiver or estoppel with respect to grounds for
cancellation which existed before the effective date of the renewal. No insurer shall
fail to renew an automobile policy solely because of the age of the insured. No insurer
shall refuse to renew an automobile insurance policy for reasons which are arbitrary or
capricious. new text begin No insurer shall refuse to renew an automobile insurance policy on the basis
of the claim submitted during the experience period regardless of the dollar value of the
claim. new text end No insurer shall refuse to renew an automobile insurance policy in violation of
rules adopted pursuant to subdivision 2. An insurer may refuse to renew an automobile
insurance policy in case of nonpayment of dues to an association or organization, other
than an insurance association or organization, where payment of dues is a prerequisite
to obtaining or continuing such insurance; provided, however, that this provision for
nonrenewal for failure to pay dues shall not be applicable to persons who are retired at age
62 years of age or older or who are disabled, according to Social Security standards.

Sec. 2.

new text begin [65B.287] GOOD DRIVER PREMIUM REDUCTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Requirements. new text end

new text begin An insurer must provide an appropriate premium
reduction of at least 20 percent on its policies of private passenger vehicle insurance, as
defined in section 65B.001, subdivision 2, issued, delivered, or renewed in this state, to
insureds who meet the criteria in subdivision 2.
new text end

new text begin Subd. 2. new text end

new text begin Qualifications. new text end

new text begin (a) A person is qualified to receive the premium reduction
in subdivision 1 if the person meets all of the following requirements:
new text end

new text begin (1) has been licensed to drive a private passenger vehicle for the previous three years;
new text end

new text begin (2) during the previous three years has not had a chargeable accident where total
payment exceeds $500 or engaged in any violation, pursuant to the chargeable accident
and violations definitions in Minnesota Rules, part 2770.7700, subparts 2 and 13,
regardless of whether the insurer is nonrenewing the policy; and
new text end

new text begin (3) during the period beginning on January 1, 2017, or the date ten years before the
date of application for the issuance or renewal of the premium reduction required by this
section, whichever is later, and ending on the date of the application for the issuance or
renewal of the premium reduction, the person has not been convicted of any of the acts
listed in Minnesota Rules, part 2770.7900, subpart 2.
new text end

new text begin (b) A person who claims that he or she meets the criteria in paragraph (a) based
entirely or partially on a driver's license or driving experience acquired anywhere other
than the United States or Canada is rebuttably presumed to be qualified to receive the
premium reduction in subdivision 1 if the person has been licensed to drive in the United
States or Canada for at least the previous 18 months and meets the criteria in paragraph
(a) for that period.
new text end

Sec. 3.

Minnesota Statutes 2014, section 70A.04, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Automobile insurance policy rates and premiums. new text end

new text begin (a) Rates and
premiums for a policy of private passenger vehicle insurance, as defined in section
65B.001, subdivision 2, must be determined by application of the following factors in
decreasing order of importance:
new text end

new text begin (1) the insured's driving safety record;
new text end

new text begin (2) the number of miles the insured drives annually;
new text end

new text begin (3) the number of years of the insured's driving experience; and
new text end

new text begin (4) other factors the commissioner may adopt by rule that have a substantial
relationship to the risk of loss.
new text end

new text begin (b) The use of any criterion without the commissioner's approval constitutes unfair
discrimination.
new text end

Sec. 4.

Minnesota Statutes 2014, section 72A.20, subdivision 23, is amended to read:

Subd. 23.

Discrimination in automobile insurance policies.

(a) No insurer that
offers an automobile insurance policy in this state shall:

(1) use the employment status new text begin or the occupation new text end of the applicant as an underwriting
standard or guideline; deleted text begin or
deleted text end

(2) deny coverage to a policyholder for the same reason deleted text begin . deleted text end new text begin ; or
new text end

new text begin (3) make any discrimination in offering or establishing rates, premiums, dividends,
or benefits of any kind, or by way of rebate, for the same reason.
new text end

(b) No insurer that offers an automobile insurance policy in this state shall:

(1) use the applicant's status as a residential tenant, as the term is defined in section
504B.001, subdivision 12, as an underwriting standard or guideline; or

(2) deny coverage to a policyholder for the same reason; or

(3) make any discrimination in offering or establishing rates, premiums, dividends,
or benefits of any kind, or by way of rebate, for the same reason.

(c) No insurer that offers an automobile insurance policy in this state shall:

(1) use the failure of the applicant to have an automobile policy in force during any
period of time before the application is made as an underwriting standard or guideline; or

(2) deny coverage to a policyholder for the same reason.

Paragraph (c) does not apply if the applicant was required by law to maintain
automobile insurance coverage and failed to do so.

An insurer may require reasonable proof that the applicant did not fail to maintain
this coverage. The insurer is not required to accept the mere lack of a conviction or citation
for failure to maintain this coverage as proof of failure to maintain coverage. The insurer
must provide the applicant with information identifying the documentation that is required
to establish reasonable proof that the applicant did not fail to maintain the coverage.

(d) No insurer that offers an automobile insurance policy in this state shall use an
applicant's prior claims for benefits paid under section 65B.44 as an underwriting standard
or guideline if the applicant was 50 percent or less negligent in the accident or accidents
causing the claims.

(e) No insurer shall refuse to issue any standard or preferred policy of motor vehicle
insurance or make any discrimination in the acceptance of risks, in rates, premiums,
dividends, or benefits of any kind, or by way of rebate:

(1) between persons of the same class, or

(2) on account of race, or

(3) on account of physical disability if the disability is compensated for by special
training, equipment, prosthetic device, corrective lenses, or medication and if the
physically disabled person:

(i) is licensed by the Department of Public Safety to operate a motor vehicle in
this state, and

(ii) operates only vehicles that are equipped with auxiliary devices and equipment
necessary for safe and effective operation by the disabled person, deleted text begin or
deleted text end

(4) on account of marital deleted text begin dissolution. deleted text end new text begin status, or
new text end

new text begin (5) on account of the applicant's level of education.
new text end

Sec. 5. new text begin AUTOMOBILE INSURANCE AFFORDABILITY.
new text end

new text begin The commissioner of commerce shall study the issue of automobile insurance
affordability and make specific recommendations to the house of representatives and
senate policy committees with jurisdiction over commerce. The study must include an
analysis of the prices that insurers are currently charging policyholders, including those in
selected low- and moderate-income zip codes. The study must also analyze the impact
that the use of socioeconomic indicators such as education, occupation, marital status,
gender, homeownership, credit scores, insurance scores, and prior insurance coverage has
on premium setting. The recommendations must, at a minimum, be designed to:
new text end

new text begin (1) improve access to affordable coverage for traditionally underserved communities,
including rural areas, and consumers, minorities, and low- and moderate-income persons;
and
new text end

new text begin (2) identify the specific cost drivers of automobile insurance rates and suggest
appropriate modifications or restrictions on their use.
new text end

Sec. 6. new text begin INSURANCE RATE ROLLBACK.
new text end

new text begin (a) For any coverage for a policy of private passenger vehicle insurance and issued
or renewed on or after January 1, 2016, every insurer shall reduce its charges to levels
which are at least 20 percent less than the charges for the same coverage which were in
effect on January 1, 2016.
new text end

new text begin (b) Between January 1, 2016, and January 1, 2017, rates and premiums reduced
pursuant to paragraph (a) may be only increased if the commissioner finds, after a hearing,
that an insurer is substantially threatened with insolvency.
new text end

new text begin (c) Commencing January 1, 2016, insurance rates subject to this section must be
approved by the commissioner prior to their use.
new text end

new text begin (d) For those who apply for a policy of private passenger vehicle insurance for the
first time on or after January 1, 2016, the rate shall be 20 percent less than the rate which
was in effect on January 1, 2016, for similarly situated risks.
new text end

new text begin (e) Any separate affiliate of an insurer, established on or after January 1, 2016, is
subject to the provisions of this section and must reduce its charges to levels which are at
least 20 percent less than the insurer's charges in effect on that date.
new text end