Lawmakers in Minnesota are reviewing a bill to establish the Minnesota Lifeline Insurance Program, aimed at offering low-cost auto insurance to eligible low-income drivers.
Supporters argue the plan will lower the number of uninsured drivers and improve road safety. Critics claim it will shift costs to standard policyholders and disrupt the insurance market.
The program would offer only the minimum required coverage. It would be funded through premiums. Anna Odegaard, senior advocacy and campaign strategist for the Midwest at the Fines and Fees Justice Center, explained that pricing would exclude nondriving factors like ZIP code and marital status.
Safe driving would be required, building a lower-risk group and helping contain premium increases. Since it would operate as a residual market, no profit margin would be included in rates.
The plan would also allow drivers to decline Minnesota’s mandatory personal injury protection (PIP) coverage, if all household drivers have full health insurance.
PIP makes up about one-third of a minimum-limit policy’s cost, according to Odegaard.
Aaron Cocking, president and CEO of the Insurance Federation of Minnesota, said the industry opposes the bill.
He stated the standard market would end up subsidizing the program when it runs a deficit. In that case, auto insurers would absorb the shortfall, creating added costs and fairness concerns for the broader market.
That’s because when the program runs a deficit, which it will, costs will be assessed to auto insurers, adding costs to the standard market and raising serious financial and fairness issues
Cocking also criticized the 25% cap on premium variation, warning it could lead to rural drivers subsidizing urban ones despite different risk levels.
He added that since the policy excludes physical damage coverage, it wouldn’t meet lienholder insurance requirements, reducing its usefulness for many drivers.
He noted the industry has raised the same concerns since the bill first appeared six years ago, with little change.
The insurance industry has raised these concerns since this bill surfaced six years ago, and unfortunately, the bill has not improved much with age.
“Simply put, subsidized rates for one group of policyholders will lead to higher premiums for other insured drivers. That’s not good policy, and it’s surely not good for the 90% of drivers who have insurance,” Cocking said.
The bill would require the program to appoint a licensed online producer within a year. This producer would maintain the website and process applications, receiving commissions for online policies.
By Feb. 1 each year, the program would report to the commerce commissioner with the number of applications, policies issued or rejected, and active policies.
By March 1, the commissioner would issue a separate report covering outreach, marketing, and program costs. This report could also include recommendations for changes.
To fund outreach and marketing, insurers would charge a 10-cent per vehicle surcharge every six months on all policies with comprehensive coverage.
Finally, the bill allocates $20,000 from the general fund in fiscal years 2026 and 2027 for actuary consulting services.
