In what best could be called “Survivor: The Colorado Legislative Session,” there were many twists, turns and surprises along the road to adjournment recently, however the insurance industry successfully worked to preserve the state’s stable marketplace, according to the Property Casualty Insurers Association of America (PCI).
“With the first Democrat controlled Legislature in 40 years, the insurance industry played defense for most of the session,” said Michael Harrold, assistant vice president and regional manager for PCI. “Even when a bill was killed, the issue would arise, like a phoenix, in another committee or chamber. Ultimately, the combination of a coordinated and united industry lobbying effort, key strategic alliances, a new Democratic majority that struggled within its own ranks not to legislatively overreach, and the ever present threat of a Republican governor’s veto pen, the industry survived a session that saw most anti-insurance bills or issues either killed, softened through amendment, or put off to another day.”
Colorado’s insurance scoring law, which is based on the National Conference of Insurance Legislators (NCOIL) model act, remains intact after three attempts to ban insurers use of credit information. Two bills were killed in committee, and then a late bill banning the use of credit was introduced and assigned to the committee which the Senate president, a fierce foe of insurance scoring, was a member. That third bill made it out of committee but died on the Senate floor. The issue will remain alive through the summer and into next session, because a health insurance study resolution (SJR 36) awkwardly includes a call for the study of the use of credit scoring in insurance underwriting.
Another example of the topsy-turvy nature of the 2005 session includes identity theft legislation that would allow a consumer to put a freeze on his or her credit information. Senate Bill 137 morphed from being one of the nation’s worst bills on this subject from an insurance perspective to being one that excluded insurance from its provisions. Senate Bill 137 provided an insurance exemption for rating and underwriting in relation to credit reports as it passed the Senate. However, as the House passed the bill, it imposed a freeze requirement on all consumer reports, which included credit reports, loss history reports and motor vehicle records. In the final days of the session a conference committee restored the exemption for insurance rating, underwriting and claims handling and the bill was sent to the governor with those insurance exemptions intact.
Lawmakers also rejected three separate bills that would have prohibited the workers’ compensation guaranty fund from seeking reimbursement from large employers. As a result of the Reliance insolvency in 2001, Colorado like many other states is facing increased unfunded liabilities. To address this situation, the Colorado fund has imposed an assessment on several large employers, which led to their repeated efforts to remove the law’s net worth provision.
Workers’ compensation legislation, HB 1018 originally would have allowed injured employees their choice of provider, and then was amended to require that employers offer injured workers the choice of three health care providers. The bill had its own phoenix-like qualities as it was considered on the House floor, given late status and referred back to committee, and then narrowly defeated when it was considered a second time on the House floor. This bill would have upended a long-standing law that enables the employer to designate the physician who is to provide care to the injured worker. It ignored the efficiency and cost savings to the workers compensation system of having a designated medical provider treat workplace injuries.
After much legislative arm wrestling, a bill raising disability benefit levels (HB 1113) was returned to a form with which the industry could live. Another workers’ compensation bill (SB 134) requires that all expert testimony in a workers’ compensation case be presented through deposition. As a practical matter, that means that the employer must present its main defense to the claim before the claim has been presented in a hearing. “Requiring the defendant to go first in a legal proceeding violates the fundamental standards of fairness and due process, will give claimants an unfair advantage, and will cause workers compensation costs to go up,” said Harrold, who noted that PCI and others have asked Gov. Owens to veto the bill.
Gov. Bill Owens (R) did veto legislation (SB 25) that would have put in place automatic inflation adjustments for the cap on non-economic damages. The bill would have increased the cap on non-economic damages from $366,000 to $440,000 next year and allowed for additional increases on an annual basis. The cap on non-economic damage has been very effective at keeping Colorado’s tort reform system in balance.
Other bills that failed to pass included legislation that would have: converted the Colorado workers’ compensation fund, Pinnacol Assurance, to a nonprofit insurance company (SB 54); made insurers a proper party defendant when insured is sued in a damages action for negligence (HB 1095); increased the costs awarded to a plaintiff whose final judgment is less than the amount previously offered in settlement by the plaintiff (HB 1111); changed the impairment rating used to determine permanent partial disability benefits for an employee who is injured on the job (HB 1112); rolled back past construction defects reforms (HB 1295); enacted the NCOIL market conduct model law (HB 1301); and diluted Colorado’s requirement that a certificate of expert review be filed at the inception of a professional malpractice lawsuit (HB 1348).
Compared to the past few legislative sessions, there was little legislation directed at Colorado’s auto insurance system. Legislation to return to a no-fault system (HB 1150) was killed without receiving serious consideration. Auto insurers successfully amended legislation (HB 1250) that would have required up front disclosures about medical payments coverage. The disclosure as originally written may have frightened consumers into purchasing unnecessary coverage. The bill was changed so that the notice was more balanced and would be included in the Summary Disclosure Form that all insureds receive.
“Expected assaults on Colorado’s still fledgling tort auto insurance system turned out to be the issue that wasn’t in the 2005 legislative session,” said Harrold. That was due in large part to an understanding that was reached early in the session by Democratic leaders that the issue merited further study, which will be achieved by the passage of a resolution (HJR 1026) calling for an interim study of the automobile insurance system. “Preserving the current tort auto insurance system that replaced the broken and wasteful no fault system and which has enabled Colorado drivers to save money by purchasing only the coverage they need remains one of our highest priorities,” said Harrold.