Watching the Sunset

A look at auto-insurance legislation in Colorado.

Media coverage of the most recent Colorado legislative session concentrated on a handful of grabby issues: the failed attempt to pass a growth package, a pro-marriage proposal popularly characterized as the "Dr. Laura bill," and so on. But plenty of other goings-on took place at the State Capitol, including an overlooked procedure guaranteeing that no-fault insurance will be on next season's agenda.

The spur to this move was Colorado's uninsured-motorist database. Based on a plan developed in 1997 by two Republicans, Lakewood representative Norma Anderson and Aurora senator Elsie Lacy, the law, which went into effect on New Year's Day 1999, established a computer database that could be checked by officers after they stopped a vehicle; if the driver was not shown to have insurance, his license would be confiscated, and he would be given a week to purchase the required coverage. But almost from the beginning, the measure, which is funded by registration fees paid by Colorado drivers, prompted grumbles from an unexpected quarter: the insurance industry.

On the surface, the heavy enforcement of mandatory insurance would seem right up insurers' alleys, but, says Rocky Mountain Insurance Information Association executive director Carole Walker, "We feel that to force people to buy insurance doesn't really work, because it doesn't address why some people don't get it, which is the expense. Colorado has the fifteenth-highest auto-insurance rates in the country."

Colorado Senate president Stan Matsunaka.
Colorado Senate president Stan Matsunaka.

Walker has a kindred spirit on this topic in Colorado Senate President Stan Matsunaka, a Loveland Democrat who describes the law as "a complete waste of money. It costs $4 million, and I don't think it does anything. When you get your car registered, you have to show proof of insurance, which ends up doing the same thing the database does." To that end, Matsunaka and his colleagues arranged for the database law to sunset, or expire, at the end of the next legislative session. But Matsunaka and company also included the entire no-fault act in the bill, meaning that it, too, will sunset at the 2002 session's conclusion unless further action is taken to extend it.

In essence, then, Matsunaka is forcing the legislature to consider two very large questions. "Does our insurance system work at all?" he asks. "And if it doesn't, how can we make it work better?"

Representative Jon Witwer, an Evergreen Republican and a doctor, wonders the same thing, and to that end, he sponsored a joint resolution to form "an interim committee to evaluate certain aspects of the Colorado Auto Accident Reparations Act," including such possibilities as ditching no-fault entirely, keeping it as an option, and/or creating a catastrophic fund for persons still in need of care even after their insurance coverage has been exhausted (see story, page 36). "To me, it's something we really need to study, since it's so complex," he says. "And my personal philosophy is to have input from every group of people, no holds barred, because in the long run, the legislation that comes out of it will be better."

The resolution was promptly shot down, however, in the face of opposition from the insurance lobby and the Colorado Trial Lawyers Association. Bill Imig, Colorado counsel for the National Association of Independent Insurers, representing the former, says a committee wasn't necessary because a number of similar studies have already been done; CTLA director of legal services Dave Diepenbrock, speaking for the latter, says the resolution "would have looked at abolishing, or nearly abolishing, the responsibility of bad drivers on Colorado roads, and we would have opposed that if it turned into a bill."

Even so, the sunsetting of the No Fault Act means a potential blizzard of auto-insurance proposals, many of which have been around the block a time or two. The insurance industry, which is eager to reduce policy costs, suggests several alternatives, including:

• Replacing Colorado's monetary threshold regarding lawsuits with a verbal threshold similar to the one used in Michigan.

• Reducing the amount of personal-injury protection, or PIP, Colorado motorists are required to buy. (Insurance companies see Colorado's PIP requirement of $130,000 as unnecessarily high -- an opinion that's not shared by many health-care providers.)

• Implementing "auto choice," a program once touted by former senator Bob Dole that would let people sign up for reduced-price coverage in exchange for promising not to sue for pain and suffering after an accident.

• Passing a program referred to by a slang term borrowed from Hollywood insiders: "No Pay, No Play." The idea restricts anyone who doesn't have auto insurance from being able to sue for pain and suffering.

Other prospects include letting insurance buyers pick either no-fault or the standard tort process, in which the person at fault for an accident is responsible for all damage, and the aforementioned catastrophic fund. Attorney Steve Shapiro, a boardmember of the Brain Injury Association of Colorado, which has been looking into this last program's pros and cons for five years, believes the initiative could be seen by the insurance business as a bargaining chip. "If the industry thought it could get a verbal threshold, they might support a catastrophic fund," he says.

There's also a chance -- a good one, in fact -- that members of the legislature may decide to put off grappling with these options and pass a bill allowing no-fault to continue as is, either because of acrimony and argument or because of a simple disinterest in confronting special interests every bit as powerful as those on various sides of the growth problem. But Senate president Matsunaka is hoping that something will be done.

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