Fate of Colo. No-Fault Law up in Air

May 3, 2002

The fate of Colorado’s no-fault auto insurance law is up in the air as the state legislature fast approaches its May 8 adjournment date. The no-fault law will sunset on July 1 unless legislation is enacted to extend it.

National Association of Independent Insurers (NAII) Northwest Regional Manager Michael Harrold said there are a number of legislative vehicles pending that could extend the no fault law.

“There is great deal of debate over whether no-fault should be extended,” Harrold said. “The present system is broken and past attempts to fix the problem have failed. The NAII has come to the conclusion that Colorado consumers would best be served by returning to a traditional tort system.”

Harrold remarked there are at least four bills still alive that could extend the no-fault system, but several of the bills contain controversial provisions that make it unlikely for a consensus to be reached between the Democrat-controlled Senate and the Republican-controlled House. And carefully watching the political maneuvering is Gov. Bill Owens.

The bills that have provisions extending the no fault sunset include:

Senate Bill 90 was amended in the Senate last week to extend the no-fault law until 2012. The Senate bill also imposed a costly appeal procedure on the managed care option in the no-fault law. But yesterday (April 30), the House State Affairs Committee gutted all of the provisions of SB 90 and changed the no-fault sunset to July 1, 2003

SB 227, which was introduced just last week by Senate Majority Leader Stan Matsunaka, extends the no-fault sunset for two years, to July 1, 2004. SB 227 was voted out of the Senate Business Labor and Finance Committee on April 30 and now goes to the Senate floor.

HB 1136, as originally introduced, extended the sunset of the Colorado Division of Insurance. Last week the Senate Business, Labor and Finance Committee amended the bill to include a two-year sunset of the no-fault law. The committee also amended the bill to require the prior approval of insurance rates by the insurance commissioner and added a further controversial provision that would require insurers to report to the Insurance Division whenever a bad faith claim is filed against the company. If HB 1136 passes the Senate in its amended form, it is highly unlikely that the House would concur in the changes made in the Senate.

Finally, HB 1460 was introduced on April 30 and extends the no-fault sunset to Jan. 1, 2004. The House Business Affairs and Labor Committee is expected to hear the bill on May 3.

“It is likely that the legislature will pass one of the bills extending the no-fault law,” Harrold commented. “But extending the sunset doesn’t move Colorado any closer to reforming its auto insurance system. The House and Senate view the problem differently, as do other competing interests in Colorado, thus making it difficult to envision a political consensus being reached on substantive reforms. Ultimately, the governor is going to have an important and perhaps decisive role to play in determining the fate of Colorado’s no-fault law. Whether he chooses to play that role this session or at some point down the road remains to be seen.”

Topics Colorado

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