Colo. Premiums Drop After No-Fault

By Michael Ha

NU Online News Service, Dec. 29, 1:50 p.m.EST?Most Colorado drivers saved up to 27 percent on theirauto premiums after the state switched from no-fault to atort-based auto insurance system last July, according to anindustry study.[@@]

The report, conducted by the Des Plaines, Ill.-based NationalAssociation of Independent Insurers, along with the Rocky MountainInsurance Information Association in Englewood, Colo., examined 13companies representing roughly two-thirds of the personal autoinsurance marketplace in the state.

In the report, NAII noted that last July, Colorado's 30-year-oldno-fault auto insurance system was allowed to sunset, revertingback to a tort-based system. "This followed several years of failedefforts to reform the no-fault system," noted Michael Harrold,senior state government affairs director at NAII.

The NAII study found that as a result of the sunset of no-fault,the statewide average auto premium for a liability-only policy fell27 percent. The average annual cost of a liability-only policy,which meets all the state legal requirements and includes optionaluninsured motorist coverage, is now $503 compared to $691 withno-fault requirements and Uninsured Motorist/Underinsured Motoristcoverage.

Commenting on the report, Commissioner Doug Dean at the ColoradoDivision of Insurance, department of regulatory agencies, said thisis "great news" for Colorado insurance consumers. He added that thefindings were "very much in line with what we expected to see."

Mr. Dean noted that NAII's report figures are supported by ratefilings at the Colorado division of insurance.

"It is great news for all of the Colorado insurance consumersthat the auto insurance premiums have gone down significantly andauto insurance is now more affordable," he said.

He also observed that current data from the National Associationof Insurance Commissioners found Colorado motorists are paying the10th-highest auto insurance rates in the country.

"But that ranking should drop," Mr. Dean forecast, "becauseno-fault states tend to be some of the higher-ranked states. Sincewe have seen premiums go down significantly, we think our overallranking of what we pay for auto insurance will drop in comingyears."

NAII's Mr. Harrold commented that the transition to a tort-basedauto insurance system has been "extremely beneficial" to Coloradoconsumers. "Our analysis of the Colorado market demonstrates thatthe promise of rate relief has been accomplished. In addition,consumers have more choice regarding the type and amount ofcoverage they purchase," he said.