The state insurance commissioner and a state lawmaker released dueling data Wednesday over whether consumers have benefited from the state’s switch from no-fault auto insurance to a tort system.
Democratic Rep. Morgan Carroll released a report she said showed that 40 percent of Colorado’s 200 major car insurance companies raised their rates after the 2003 switch.
Furthermore, she contends, only 15 companies reduced their rates by the 15 percent that the industry touted as the minimum savings consumers would see if lawmakers approved the switch.
The analysis by Carroll, a member of the legislative committee studying the auto insurance system, set off another contentious round in a two-year debate over whether the new system is saving consumers money.
Insurance Commissioner David Rivera presented conflicting numbers to the committee. His report shows that the companies with 90 percent of market share in Colorado dropped their rates between 15 percent and 60 percent.
Carroll accused Rivera of cherry-picking data, while Rivera’s office called Carroll’s analysis flawed.
This past summer, the interim committee asked Rivera to investigate companies that hadn’t decreased their rates by at least 15 percent. He declined.
On Wednesday, he said his job, as defined by law, is to ensure that the companies justify their rates, that their rates are not excessive, that there is no discrimination and that insurers can make enough money to cover their claims.
“Our job isn’t to make sure that companies that told the legislature that they’re going to have a 20 percent rate decrease had a 20 percent rate decrease,” Rivera said.
In 2003, the state switched from a no-fault system – in which car-accident injuries were paid for no matter who caused the accident – to a tort system, in which the at-fault driver pays the damages. The switch meant drivers no longer have to carry additional medical insurance.
But Rivera’s report doesn’t say whether the figures used to cite decreases between 15 percent and 60 percent are based on policies with the same level of medical coverage that consumers had under the no-fault system.
In fact, in a different section of the report, Rivera says his state Division of Insurance “is not aware of a current policy being offered to consumers with benefits that are exactly and identically the same.” He says a person increasing medical coverage to levels comparable to those provided under no-fault “will eliminate all of the ‘conversion’ savings and, in fact, cause his rates to slightly increase.”
Just ask Carol Farina, a retired nurse from Lakewood. She said she hasn’t seen any savings because she buys additional medical coverage. She now pays $486.23 every six months. Under no-fault, she paid $405.20. If she hadn’t taken the additional medical, she would have saved about $20.
“It leaves the consumer more vulnerable, and it lets the company off the hook,” she said. “And I’m paying more.”
In a recent letter, Carroll and Democratic Rep. Fran Coleman called on Rivera to investigate companies that did not reduce their rates by at least 15 percent.
In refusing, Rivera said anyone could pull division records to see why a rate was set.
So that’s what Carroll did. She reviewed the rate filings, provided by Rivera’s office, of 200 major car insurance companies between 2002 and 2005.
She found that 37 of the 200 didn’t file a rate reduction after the new system took effect July 1, 2003. Eighty other companies filed rate increases after July 1, her report shows.
But Steve Witmer, American Family Insurance spokesman, said the company’s 16.4 percent hike listed in Carroll’s report as effective July 26, 2003, never kicked in. After the change to tort July 1, 2003, its rates dropped almost 30 percent.
Victoria Lusk, chief actuary for the division, said the filings have inconsistencies and do not necessarily translate in whole to increases or decreases on a consumer’s premium.
“It is just plain old dirty data,” she said. “(It took) a lot of staff time trying to scrub good information out of, frankly, dirty data.”
Staff writer Chris Frates can be reached at 303-820-1633 or cfrates@denverpost.com.
