NAII Urges Support of Colo. No-Fault Reforms

With the fate of the Colorado’s no-fault auto insurance system hanging in the balance, the National Association of Independent Insurers (NAII) is urging the Legislature to adopt reform legislation (HB 1225) that will help stabilize auto insurance costs while giving consumers a variety of coverage options.

Motorists in Colorado are currently paying the 11th highest auto insurance rates in the country primarily due to the broad medical coverage afforded drivers under the state’s no-fault system. As costs have spiraled out of control, the average personal injury protection (PIP) claim cost has increased from $5,000 in 1988 to $7,800 in 2001 and auto insurance premiums have jumped. In response to the increased costs and a failed attempt at legislative reform last year, Governor Bill Owens challenged lawmakers to enact sweeping reforms to the system this session.

“In order to maintain a no-fault law, the General Assembly must take action,” said Michael Harrold, NAII senior director of state government affairs. ” With the state’s no-fault system scheduled to sunset July 1, legislators have the opportunity to address the excessive costs that have driven PIP costs up more than 50 percent since 2001. The bill before the legislature provides a balanced approach and addresses the major cost drivers in the system.”

Following last year’s legislative session, the Colorado No-Fault Auto Insurance Reform Task Force was formed at the request of Gov. Owens to make recommendations to the Legislature. Under the leadership of NAII’s Local Counsel Bill Imig and after six months of work, the task force’s recommendations formed the foundation from which HB 1225 was drafted. “The bill achieves several critical ends. It provides insurers with real and effective control over medical treatments and costs, and gives medical providers guidance as to what is expected of them. The medical protocols also serve to encourage individuals to get well rather than stay sick. The bill will also help to curb lawsuits by replacing the very low monetary threshold of $2,500 with a more effective verbal threshold,” said Harrold.

HB 1225 achieves the following:

·Preserves the current levels of no-fault coverage
·Does not shift costs to the health insurance system
·Establishes new standards of medical necessity and treatment guidelines
·Eliminates availability of nonmedical treatment modes
·Stabilizes auto insurance costs
·Gives auto insurance consumers choice in coverage types
·Preserves availability of alternative medical care, such as chiropractic, at the choice of the consumer

The bill is scheduled to be considered by the full House on Feb. 25.