A bill that would require some Colorado insurers to get prior regulatory approval for rate changes was revised to exclude auto coverage before a state House committee approved it.

The amendment was supported by insurance industry associations.

Christian Rataj, western state affairs manager for the National Association of Mutual Insurance Companies (NAMIC), said the bill was initially introduced as a health insurance matter. "And then someone just decided in the Legislature to add auto," he said. "That was what perplexed NAMIC and others in the industry."

Noting that Colorado's auto market is currently healthy, Mr. Rataj said, "If it's not broken, don't fix it."

He added that, under the current use and file system, "the auto insurance rate and approval system was working to the benefit of insurance consumers. Rates went down by 35 percent over the last five years. There are over 200 carriers in the state...New carriers are continually coming to the state because it has an environment where new insurers can compete. So we didn't understand what the reason was for changing a system that was working."

Kelly Campbell, regional manager for the Property Casualty Insurers Association of America (PCI), expressed satisfaction with the amendment. In a statement, she said, "With this development, the committee is preserving the state's competitive marketplace for auto insurance."

"Although we oppose the notion that government control of rates works better than market forces, nevertheless we are pleased that the committee at least narrowed the scope of the bill."

Mr. Rataj said auto insurance was the only p-c line that would have been changed under the bill before it was amended.

After it was amended, the bill passed through the House Business Affairs and Labor Committee by a 7-4 vote, according to PCI, and it will now be considered by the House Appropriations Committee.

Meanwhile, legislators in Georgia last month passed a bill that would change that state's insurance rate-setting process from a prior approval system to a "use and file" system.

Under the bill, the new structure would be similar to file and use, but with some key differences. Neil Alldredge, vice president of state and regulatory affairs for NAMIC, said: "It's sort of a little different animal. It's 'use and file,' actually, so there is no approval from the department at all on auto except for the minimum limit policies that are sold to comply with mandatory auto coverage in the state." Those minimum limit policies, Mr. Alldredge said, would still be subject to approval.

Mr. Alldredge noted that Georgia Insurance and Safety Fire Commissioner John Oxendine opposed this bill. "Part of the argument was that the state mandates...that people buy auto insurance, and so, from the commissioner's perspective, that means he believes the state then has an obligation to control its price."

Georgia Governor Sonny Perdue is expected to sign the bill, Mr. Alldredge said.

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Colorado Defeats Prior Approval Proposal for Auto Insurance

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