State lawmakers said July 27 they have no plans to return Colorado to no-fault auto insurance, but they questioned the savings claimed by state regulators in switching to a system that puts the financial burden for accidents on the driver at fault.
Rep. Fran Coleman, D-Denver, said claims by Insurance Commissioner David Rivera that the average insurance premium for liability coverage has dropped an average of 25 percent and full coverage costs 15 percent less cannot be substantiated. She said there is no way to compare the old system with the new system.
She asked Rivera to come back before the Interim Committee on Auto Insurance later this year with new figures that more accurately compare the two systems.
Colorado in 2003 switched from a system in which all drivers were required to have coverage for treatment of any injuries resulting from auto accidents to a system in which just the driver at fault pays. Insurance industry officials said the switch away from the no-fault system has saved Colorado drivers by dropping coverage most didn’t need.
Coleman said there are no plans to go back to no-fault auto insurance, but she said the new system has gaps that need to be addressed, including questions about whether hospitals are getting paid properly for treating accident victims.
Sen. Tom Wiens, R-Castle Rock, said policy-makers have no way of knowing if consumers have saved money because of the switch.
“We’re getting a presentation here that shows the average decrease this and maximum increase of this and all these other decreases as if we have some raging success here, but you’re not really giving us anything to compare how the value of the policy has decreased,” Wiens told Rivera.
Wiens said an average decrease of 15 percent for full coverage does not reflect the fact that lawmakers eliminated personal injury protection, decreasing the value of an insurance policy by 65 percent.
Rivera said the no-fault system failed to live up to its promises to expedite payments to injured parties or reduce insurance costs. He said thresholds for taking cases to court were eroded by inflation and the benefits provided were too generous, allowing people involved in accidents to get treated at spas and aroma therapy centers and sue for damages.
Rivera said after the system changed, the initial rate filing by insurance companies decreased by an average of 14 percent. He declined to identify the companies.
He said of the top 15 carriers, eight have kept liability rates stable, while the other seven increased rates, five less than 5 percent and two less than 10 percent.
Rivera said savings on auto insurance premiums may have been partially offset by increases in health insurance premiums.
A coalition of Colorado health care providers says state hospitals are losing more than $80 million a year in revenue as a result of the changes and are demanding that the state enforce laws that require prompt payment of bills.
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