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Policy groups tell task force Minnesota should restructure Fair Plan, guard against surplus‑lines growth
Summary
Researchers recommended that Minnesota reform its insurer‑of‑last‑resort (Fair Plan) governance and financing, integrate climate risk into supervision, and increase transparency and public oversight as surplus‑lines growth and third‑party litigation financing raise concerns about market stability and consumer protection.
Policy researchers told the task force that Minnesota’s insurer‑of‑last‑resort model and growing use of surplus lines pose long‑term risks unless paired with reforms to finance, governance and mitigation incentives.
Jordan Hettler of Climate Cabinet Education urged states to integrate climate resilience into insurers' pricing and underwriting and to include climate stress tests in supervision frameworks. Hettler cited Colorado’s HB 1182 as an example of requiring insurers to account for community mitigation measures in models.
Moira Burse of the Climate and Community Institute presented the task force with findings from a new report studying fair plans and insurers of last resort. The report found that many fair plans are governed predominantly by industry representatives, lack democratic accountability, and are not structured to address widespread climate‑driven market failures. Burse proposed six improvement categories, including climate‑aware modeling, retaining surpluses for mitigation grants, expanded coverage options and more transparent governance.
Industry witnesses and agents raised the role of surplus lines — non‑admitted carriers that do not contribute to state guarantee funds — and warned that rapid growth in that market can leave policyholders exposed if new entrants are undercapitalized. Researchers and industry agreed that a shrinking fair plan could be a warning sign that policyholders are shifting into less regulated markets.
Task force members asked for papers and models; presenters said they would provide the Climate Cabinet/CCI report and related studies for staff review. The chair also requested testimony from the Reinsurance Association of America at a future meeting to address market capacity and reinsurance availability.
