Tax, Budget Issues Dominate Maine Session

July 13, 2005

With tax and budget issues dominating the discourse, the 122nd Maine Legislature adjourned its active yet successful session last week, according to the Property Casualty Insurers Association of America (PCI).

“Insurers had a productive legislative session,” said Frank O’Brien, vice president, regional manager and counsel for PCI. “The persistent efforts of insurance industry advocates, regulators and agents paid off in the passage of legislation that will help promote a healthy, competitive market and in the rejection of legislation that would hinder the industry.” The following is a summary of some of those key insurance-related bills.

Tax Legislation
Tax increases were on the legislative agenda and insurers were at the forefront of this fight. LD 1021, which would have increased the premium tax from 2 percent to 2.5 percent to fund retiree health insurance benefits for police and firefighters, failed to pass, but was carried over for possible further consideration next year. The measure was supported by an underlying Legislative Task Force Report recommendation that it was important that firefighters and police officers be able to receive health insurance benefits when they retire, and that these benefits should be portable from job to job. The ensuing legislation recommended a 50 percent increase in the state’s insurance premium (currently at 2 percent) to fund the proposal. Considered a signature issue, this legislation’s carry over was considered a major victory for insurers.

Automobile Insurance
Last year, the Supreme Court expanded the scope of uninsured motorist coverage to include, under certain circumstances involving wrongful death cases, non-resident family members. LD 122 requires state regulators to study legal and policy issues regarding uninsured vehicle coverage under motor vehicle insurance policies. This effort will begin soon.

Other automobile-related bills passed and include the following:

* LD 311 prohibits an insurer or its agent or employee from requiring that appraisals or repairs to motor vehicle glass or motor vehicles with collision damage be made or not be made in a specified place of business. Insurers may recommend particular establishments as long as the insured is advised that they do not have to use that specific facility.

* LD 528 relates to the current statute that requires a company insuring a motor vehicle registered in Maine to immediately notify the Secretary of State when that insurance coverage is cancelled, terminated or lapses. This bill amends the section by adding a new subsection that provides a company insuring a fleet of three or more vehicles with commercial fleet automobile coverage is exempt from the requirements of this section with respect to that fleet.

* LD 634, companion legislation to LD 528, allows the Secretary of State a 15-day period in which to reconcile the cancellation, termination or lapse of motor vehicle coverage with the evidence of insurance for reinstatement of coverage or new coverage.

Other insurance-related bills include:

* LD 543 prohibits an insurer’s right to cancel or nonrenew a homeowners insurance policy based on the homeowners ownership of a particular breed of dog. This bill failed to pass.

* LD 65 and LD 136 attempted to expand the cancellation and nonrenewal laws to cover multi-unit apartment houses and other commercial contracts. These bills failed to pass.

* LD 385 passed and provides that an ambulance service may not be required to procure liability insurance coverage that exceeds the liability limits, specified in current statutes, while acting as an emergency medical service.

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