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Power Steering

Last session legislators gambled on a new program that lobbyists claimed would make Colorado's roads safer. Don't bet on it.

If you liked Envirotest, you'll love Insure-Rite.
Envirotest is the company that lobbied hard to persuade Colorado lawmakers in the early Nineties to change the state's system of auto-emissions testing. The company then won a lucrative contract to set up testing stations, despite submitting the highest bid. Grousing about Envirotest's $25 fee (the old fee was $10) and about the effectiveness of the company's tests has not abated in this, the third year of the company's contract. Meanwhile, Envirotest rakes in millions.

Insure-Rite doesn't check for pollutants. But the company itself has emitted enough hot air to convince the Colorado Legislature to start a computer-database program supposedly aimed at reducing the number of uninsured motorists in the state. And Insure-Rite is eager to bid on the contract for the program, which the company thought up itself.

Even before the program begins, Coloradans are paying for it: On September 1 of this year, the state started collecting an extra dollar per vehicle registration, or $3.6 million a year. If Insure-Rite wins the Colorado contract--right now few other bidders are on the horizon--and the terms are similar to those in the company's existing contract in Utah, then the company will start putting 67 cents of every one of those dollars in its pocket. That could amount to more than $2 million a year in gross revenue to the company. If the contract terms are like those in Utah, Insure-Rite would also get 75 cents from the state for each warning letter it sends out. Those terms have to be settled in a bidding process. But all told, the contract could be worth more than $3 million annually to the lucky winner.

It was and is illegal in Colorado to be an uninsured motorist. But there's no hard evidence that Insure-Rite's technique--determining from a comparison of insurance-company rolls and state records which drivers are uninsured and then sending them warning letters not backed up by any enforcement powers--actually reduces the number of uninsured motorists on the road. The only other state in the country that has hired a private company to run this type of program is Utah, and the company is Insure-Rite. And in Utah, the company has faced complaints from consumers who say that legally insured motorists are being unfairly hassled by the warning letters, and from insurance companies that say the number of uninsured motorists hasn't dropped by even 1 percent.

Whether Insure-Rite can help solve the problem of uninsured motorists is highly debatable, but the company's political skill is unquestioned.

The company got its Utah contract through the formidable efforts of Utah lawmaker Kelly Atkinson, who not only has gotten money from Insure-Rite but has traveled to Colorado at the company's expense to lobby for it. And Insure-Rite's strategy here has worked. After failed attempts in Colorado during the 1995 and 1996 legislative sessions, Insure-Rite persuaded House Majority Leader Norma Anderson to carry its water in 1997. Anderson acknowledges that all of the research into the proposed program was furnished to her by Insure-Rite and its lobbyists. And lawmakers heard not only emotional testimony from people who were victims of accidents caused by uninsured motorists but also promises from Insure-Rite's lobbyists that the company's letter-writing program would work wonders. Perhaps enticing to some lawmakers is that the program more or less amounts to a tax but still may fall outside Amendment 1 restrictions. In Utah, 33 cents of every dollar per registration goes into that state's general fund. Colorado lawmakers couldn't resist. A bill setting up the program passed on the last day of the 1997 session.

Anderson and Republican cohort Elsie Lacy, who carried the bill in the Senate, insist that the program will be valuable, though they can't back up their claims. In fact, they now say they trumpeted figures that they knew were probably out of whack.

Suspicions confirmed, say critics. To them, the idea cooked up by Insure-Rite sounds like little more than a moneymaking scheme at the expense of vehicle owners.

"Everybody's got a story about getting hit by an uninsured motorist," says state senator Ed Perlmutter, a Golden Democrat who voted against the bill. "But if this doesn't do anything to help and hassles a lot of law-abiding citizens, we are going to look like a bunch of idiots."

Insure-Rite was born one day in 1992, when future company president Richard Kasteler paid a visit to Kelly Atkinson at the Utah statehouse. "When Richard walked into my office and told me about it," Atkinson recalls, "it was like, duh! How stupid are we for not figuring this out before?"

At the time, Atkinson was House Democratic whip in Utah. Kasteler sketched out a plan to compare insurance companies' lists of drivers with the state's list of vehicle owners to identify which drivers had no insurance, and told Atkinson he could set up a company to do just that.

Atkinson became the concept's biggest cheerleader and even made Utah history when he taped a TV commercial for the Insure-Rite bill. It was the first time lobbying on a particular legislative bill had gone out over the airwaves.

The insurance industry fought the measure, claiming that lists of customers need to remain confidential because they are the companies' bread and butter. "I spend a lot of money and time keeping my lists safe, and now I'm just supposed to send them to some other company?" says Kay Browning, an agent for State Farm in Salt Lake City.

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