AIA: Auto Issues Top the Agenda for Minn. Legislative Session

February 9, 2006

Repeal or reform of the Minnesota’s auto insurance no-fault law, “no pay/no play” legislation and consumer privacy top the list of legislative priorities for the American Insurance Association (AIA) in the North Star State this session.

“It is time to address the problems with Minnesota’s no-fault system for the benefit of consumers and the long-term health of the state’s auto insurance market,” said Steve Schneider, AIA vice president, Midwest Region. “Fixing the broken, and increasingly expensive, system will be our top priority this year in Minnesota.”

Chief among the problems in Minnesota’s no-fault system is the low medical cost threshold for lawsuits – just $4,000 – that has created an incentive for unscrupulous medical providers and trial lawyers to exploit the system and go to court. The goal of a no-fault system is to avoid a courtroom battle but Minnesotans, in essence, pay for both a no-fault and a traditional tort system. A joint Senate Commerce and House Commerce & Financial Institutions Committee will meet Feb. 28 to discuss the issue.

“Additional market reforms such as enacting ‘no pay/no play’ legislation would be beneficial, too. ‘No pay/no play’ is a term that refers to prohibiting uninsured motorists from filing lawsuits in motor vehicle crash cases for things such as pain and suffering damages. It is unfair for an uninsured motorist, who is driving illegally, to sue someone and reap a financial windfall by collecting non-economic damages,” added Schneider.

The 2006 session may also see onerous privacy-related proposals that could unduly restrict insurers’ ability to perform normal business operations with customers and prospective customers. Restricting access to certain personal identifying information or credit-related information in the name of preventing identity theft is often more of a hurdle than a help for consumers and businesses.

“There are already strict federal and state laws governing how a person’s information can be used and who has access to it, and severe penalties for misuse. Insurers do a very good job protecting their customers’ information and any further restrictions on an insurer’s ability to conduct business could chill the marketplace,” stated Schneider.

Minnesota’s Legislature reconvenes March 1 and is scheduled to adjourn May 22.

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