Rocky Mountain Low

A new Colorado House bill would saddle insurers with requirements to disclose more financial data and restrict rating methods.

Insurers and Colorado lawmakers are squaring off over a bill that would require P&C and medical malpractice insurers to disclose information related to expenses, claims and payouts, as well as restrict rating methods used within the state. According to insurers, the bill would place extra administrative, technology and cost burdens on carriers. "This would make Colorado one of the most regulated states for insurers to sell insurance," says Kelly Campbell, regional manager for the Des Plaines, Ill.-based Property Casualty Insurance Association of America (PCI). "It creates a disincentive ... to create new products ... and for insurers to continue doing business in Colorado."

Disturbed by rising rates for automobile insurance, workers' compensation and homeowners insurance, lawmakers began pursuing the bill in February. "Colorado has done a better job than most states in counting damages," says House Speaker Andrew Romanoff (D-Denver). "We want to make sure those reforms are reflected in lower rates and lower increases in rates."

Problem? What Problem?

State Farm Insurance (Bloomington, Ill.; $50.2 billion net worth in 2005), Denver-based medical malpractice insurer Copic ($390 million in total assets) and PCI all have spoken out against the bill. "Colorado is a healthy and competitive market," asserts PCI's Campbell. "Over the last two and a half years, we have seen auto rates drop between 10 and 30 percent in Colorado, homeowners rates are stabilizing and Colorado is one of six states that does not have a medical malpractice crisis. This bill is a solution in search of a problem."

The bill would require P&C and medical malpractice insurers to file with the state commissioner all information on new or closed claims, the severity of the injury and the amount of damages associated with claims of more than $100,000, and incurred loss projections and expenses. "Our biggest concern is the redundancy of the information the bill is asking for," relates Kathy Brown, VP of corporate marketing and communications for Copic. "This will create additional costs from a reporting standpoint. You are going to have to have additional technology for programming and database functionality."

Further, the bill asks for information that insurers are not allowed to release under HIPAA guidelines. "This is a gray area," Brown continues. "I don't know many patients who are going to want their specific loss information made public."

Another concern for national insurers is that the bill places restrictions on how premiums are calculated, prohibiting an insurer from including rate filing factors that are not included for the same product line in all other states. While House Speaker Romanoff told I&T at press time that he is working to revise the bill, including changes to the rate filing requirements, carriers' concerns extend beyond the potential increase in risk exposure that could result from rating restrictions; they also fear that the requirement would create an anticompetitive market. "You wouldn't necessarily want your competitors to be able to drill down to every line item in your rate setting," explains Brown. --Maria Woehr