Capitol Notes Legislative Update 9/21/20

The Legislative and Political Newsletter of the

MN Independent Insurance Agents & Brokers Association

Robyn Rowen, J.D.

MIIAB Legislative Regulatory Counsel and Lobbyist

September 21, 2020

MN Senate Removes DOC Commissioner Kelley

Last Friday, the Minnesota, Republican controlled-Senate voted to reject DOC Commissioner Kelley’s confirmation. The vote was 33-31 with three Republicans abstaining and one Republican voting to confirm Kelley. Two Iron Range DFL Senators voted with the Republicans to remove Kelley over Kelley’s opposition to the replacement of Line 3.

The debate over whether the Senate should reject or confirm Kelley was largely partisan and very contentious. Republicans argued that Kelley demonstrated a lack of leadership in his continued opposition to Line 3 which they believe is needed to protect Minnesotans and to generate jobs. Republicans also criticized Kelley over his failure to reform the culture of the DOC’s Insurance Division, especially the market conduct area. The DFL argued that Kelley has been protecting consumers and that his removal is another example of the Republicans trying to undermine the Governor’s efforts to fight COVID-19. Kelley’s removal was effective immediately.

On Monday, Governor Walz appointed current Insurance Division Deputy Commissioner, Grace Arnold, as Acting Commissioner. This is just a temporary appointment, however. It is unclear at this time when the Governor will appoint a new Commissioner or even a more permanent acting Commissioner. Obviously, the election will be a factor in any decision making—if the Republicans retain control of the Senate, Walz’s choice would likely be different than if the DFL takes over.

Acting Commissioner Arnold joined the DOC in March of 2019. Before joining the DOC, Arnold led the development of individual and family plans at Bright Health, a Minneapolis-based health insurer. Prior to her time at Bright Health, Arnold held a variety of positions at the Center for Consumer Information and Insurance Oversight of the Centers for Medicare and Medicaid Services, most recently as Chief of Staff to the Chief Technology Officer. In that role, she helped lead the technology turnaround of ‪healthcare.gov. Arnold has a master’s degree in public health from George Washington University and holds an undergraduate degree in biology from Macalester College.

Arnold has been great to work with as Deputy Commissioner, and I have no doubt this will continue in her new role leading the DOC. She is a collaborative problem solver, and she understands and appreciates the critical role independent agents play in protecting consumers.

On-Line Producer Licensing Testing

Another important, albeit less dramatic development, is the DOC’s decision to move forward with on-line insurance producer licensing exams. Prior to his Departure, Commissioner Kelley authorized his staff to begin work with Pearson to allow agents to take their licensing exams on-line. Assistant Commissioner Peter Brickwedde, expects it will still be several months before the on-line testing goes live. To date,over 17 states have on-line testing and nine more states will have on-line testing in place by the end of the year. Pearson seems to be one of the last vendors to move to an on-line format.

According to Assistant Commissioner Brickwedde, the current testing backlog has leveled off. Pearson is administering about 460 tests per week. The DOC is closely monitoring testing availability, so if you are having any issues scheduling a test for new agents, please let us know.

Legislative Developments

Section 179 Conformity

If the Legislature and Governor Walz can agree on bonding and tax bills, Walz will call the Legislature back to St. Paul for a 5th Special SessionOn Monday, September 21. One outstanding issue that could impact MIIAB members is full federal conformity with 179 business expensing. In 2019, Minnesota conformed its tax law to numerous elements of the federal Tax Cuts and Jobs Act of 2017. Minnesota did not, however, adopt many of the expensing provisions including Section 179. Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if an agency buys (or lease) a piece of qualifying equipment, the agency can deduct the full purchase price from its gross income. As a result of excluding Section 179 from last year’s conformity bill, Minnesota only allows for a fraction of investments to be immediately expensed, thus putting local small businesses and farmers at a disadvantage.

We are teaming up with other business groups to urge Legislators to pass a tax bill and include full Section 179 conformity. Stay tune for updates as the situation is extremely fluid.

Possible Expansion of the Workers’ Compensation COVID-19 Presumption

We have received some questions about the viability of bills introduced during a special session. A recent example is HF 9 which was introduced during last week’s special session. HF 9 was introduced by the House Majority Leader, Ryan Winkler (DFL, Golden Valley) and would add employees of school district, charter schools, higher education institutions, and school bus drivers to the list of workers eligible to receive workers compensation coverage for contracting COVID-19. You will recall the Legislature created the same rebuttable presumption for health care workers and first responders back in May.

Bills introduced during a special session are only viable during the special session. This means that if a bill doesn’t pass during the special session it dies when the Legislature adjourns the special session. HF 9, therefore, died on the same day it was introduced because the special session only lasted a day. However, even though these bills may not be viable and may just be introduced for political reasons, they can signal likely legislative priorities for next session. Given that the author of HF 9 is currently the second most powerful member of the MN House, the fact that Governor Walz is a former teacher, and the likely involvement of the teachers union, HF 9 is likely to resurface in 2020, if not before.

Special Session bills such as HF 9 also presents a great opportunity to educate legislators and candidates about insurance markets and the potential impact of expanding the rebuttable COVID-19 presumption without a financial back-stop for insurers or municipalities outside of the craziness of the legislative session. If you are interested in getting involved in this critical election, please let us know.