American Property Casualty Insurance Association
  • Staff Contact: Jeffrey Brewer     
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  • January 17, 2017
  • Minnesota Administrative Law Judge Says State Insurance Regulator Exceeded His Authority with Multistate Insurance Diversity Survey Requirement
  • MINNEAPOLIS — Administrative Law Judge Eric Lipman entered an Order December 7, 2016 prohibiting the Minnesota Department of Commerce from requiring insurers licensed in Minnesota to respond to the Multistate Insurance Diversity Survey. The Judge agreed with PCI that the department exceeded its authority by requiring and publishing survey responses. The following statement can be attributed to PCI Senior Vice President, Secretary and General Counsel Randi Cigelnik.


    “We are pleased that Administrative Law Judge Eric Lipman agreed that the Minnesota Department of Commerce exceeded its authority by requiring insurers to respond to the Multistate Insurance Diversity Survey. This is an important victory in the fight against regulatory overreach.


    “PCI argued that laws cited by the department for authority—general powers and subpoena powers—do not authorize collection and publication of board and vendor diversity statistics. Absent legal authority, a commissioner may not take any action and as Judge Lipman stated ‘particular duties are entrusted to the Commissioner; not particular companies.’ PCI halted a troubling pattern of data requirements imposed upon insurers without any of the process and protections.


    “This successful challenge demonstrates that the industry can access the courts for protection from overreaching regulation that is not grounded in the law. Judge Lipman clearly focused on the scope of the department's powers and limitations. He noted that while the commissioner has the power to enforce all state laws relating to insurance; that does not permit the commissioner to make any demand that he wishes from those who sell insurance. The decision sets forth a framework that PCI may use to challenge regulatory overreach in other jurisdictions.


    “Expanding diversity in industry jobs and on boards is essential for meeting the needs of insurers’ diverse customer base. Many insurers have been acknowledged as leaders in workforce and supplier diversity by the media, associations and organizations, as well as the California Department of Insurance and we support continued voluntary efforts to diversify the industry.


    “Regulatory overreach, which has been increasingly frequent at the state, federal and international levels, is not limited to any one issue, regulatory action or jurisdiction. While we often support the outcomes that regulators are trying to reach, such as diversity, we are concerned that many insurance regulators are over-stepping their legal authority and placing an unnecessary burden on industry.


    “Some of the areas were we have seen regulators seek to implement new rules and requirements include post-storm claims handling such as with Hurricane Sandy and Irene regulations. There have been efforts to advance a climate change agenda through California’s thermal coal divestment and data call. We are concerned about the direction of the NAIC and some regulators on issues associated with big data. As an example, the NAIC’s Big Data Working Group’s revised charges could create new data requirements that could ultimately limit the consumer benefits of big data by stifling innovation and advances in customer service.


    “Over-regulation undermines an agency’s valid consumer protection purpose and unnecessarily increases costs for consumers.”

  • PCI promotes and protects the viability of a competitive private insurance market for the benefit of consumers and insurers. PCI is composed of nearly 1,000 member companies, representing the broadest cross section of insurers of any national trade association. PCI members write $202 billion in annual premium, 35 percent of the nation's property casualty insurance. Member companies write 42 percent of the U.S. automobile insurance market, 27 percent of the homeowners market, 33 percent of the commercial property and liability market and 34 percent of the private workers compensation market.
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