Colorado Bill Gives Regulator Authority to Demand Insurance Compensation

Colorado Governor Bill Ritter has signed a bill that will allow the state Department of Regulatory Agencies (DORA), and its Division of Insurance the legal authority to demand that insurance companies or agents compensate customers fully when they have been wronged by unlawful business practices.

According to DORA, House Bill 1228, which takes effect in August, will ensure consumers get money owed to them when insurance companies or agents conduct business unfairly. The Division said the bill was backed by the insurance industry as well as the DORA.

Currently, when policy holders have difficulty getting insurance companies to pay, the Division of Insurance does not have the leverage to compel payment. But once House Bill 1228 takes effect
in August, the commissioner of insurance will be able to demand repayment of premiums, payment of benefits, or that agents fulfill expectations when a policy is misrepresented. These payments can
run anywhere from $500 to hundreds of thousands of dollars. In addition to having to pay restitution, insurance companies will also be held financially responsible if an insurance agent selling their policies acts unscrupulously.

“This bill helps to create a level playing field for consumers and businesses,” said Rico Munn, DORA executive director.

Commissioner of Insurance Marcy Morrison said, “The citizens of this state always benefit when all parties to a problem are willing to
come together and recognize the need to find a solution and make it happen.”

Without the legislation, the Division is able to fine, suspend, or revoke a license of an insurance provider. However none of these measures help consumers get their money, she explained. When a complaint is investigated by the Division and it is discovered that the consumer is owed money, then the insurer is notified and negotiations begin.

With the new bill, when a consumer files a complaint with the Division that they have been wronged by an insurer or agent, the Division will hold a hearing and consider both parties’ positions. If it is decided that the consumer was knowingly wronged by an insurer, the commissioner of insurance will demand the insurer or agent pay the consumer in full without further negotiation or delay.

Source: DOI

Topics Carriers Agencies Legislation Talent Colorado