Another Insurance Association Joins Fight to Defeat Colorado Auto Rate Bill

April 17, 2008

Another insurance association is joining in the fight to defeat Colorado House Bill 1389. The Fair Accountable Insurance Rates Act is expected to be heard in the House Business Affairs and Labor Committee on Thursday, April 17.

According to the American Insurance Association, changing the insurance rating system from file-and-use to prior approval for auto insurance, thereby reducing competition in the auto insurance market and potentially increasing costs for Colorado consumers. This echoes sentiments shared by the Property Casualty Insurers Association of America (PCI), which last week expressed opposition to the bill.

HB 1389, introduced by Rep. Morgan Carroll, would repeal the file-and-use rating law and replace it, instead, with prior approval where the insurance commissioner must approve all rates before they go into effect, AIA indicated. USAA, a member of AIA, is expected to testify on behalf of the property-casualty insurance industry at the hearing.

“Adopting a prior approval system would be a step backward for Colorado and could potentially increase costs for Colorado consumers,” said Regional Vice President Fred C. Bosse, AIA Southwest Region. “Colorado’s file-and-use system is working effectively for the benefit of both consumers and insurers with more than 200 companies doing business in the state. In fact, according to a recent study conducted by BBC Research for Colorado Governor Ritter, auto rates have dropped by 35 percent over the past five years. Free market forces should be allowed to remain in this state so insurers can offer policyholders fair and affordable insurance rates and a wide selection of coverages and products.”

“Less stringent rating laws by no means imply that regulators have given up oversight of insurance companies,” Bosse continued. “The Colorado Commissioner of Insurance can still disapprove rates after they are in effect if they are deemed to be inadequate, excessive or unfairly discriminatory. The Colorado Division of Insurance also has the oversight of licensing requirements, solvency regulation, market conduct surveillance and monitoring consumer complaints.”

Currently 36 states and the District of Columbia have less restrictive personal lines rating laws in place, with neighboring states New Mexico, Oklahoma, Nebraska and Texas recently modernizing their personal auto and/or homeowners insurance rate regulatory systems with a file-and-use system.

Source: AIA

Topics Auto Colorado

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