The state of Colorado has seen a double-digit drop in auto liability premium costs since repealing its no-fault insurance law and establishing a tort system in 2003, according to a new study.
Injury claim costs dropped immediately after repeal, according to the report by the Insurance Research Council.
Between 2002 and 2004, the IRC study said, average liability premium costs dropped from $559 to $476, a 15 percent difference. The study noted that nationwide, this number increased 9 percent over the same time period.
IRC said that from 1999 to 2002, the average injury payment per vehicle increased almost 50 percent, topping out at $306. In 2004, the first full year after no-fault was repealed, the figure dropped to $223.
In a statement, Elizabeth A. Sprinkel, senior vice president of the IRC, said: "These numbers show how consumers benefited from the repeal of Colorado's no-fault insurance law. While injury claim costs in Colorado were still higher than the national average immediately after repeal, they were much closer to the norm."
Ms. Sprinkel told NU Online that Colorado had been a no-fault state since 1974. She said the study did not look into why injury loss costs began to climb significantly higher in 1999 as opposed to any prior years under the no-fault system.
A chart accompanying the results of the study shows a gradual decline in average injury loss costs from 1996 to 1999 (from $226 to $209) and then a sharp climb from 1999 to 2002 (from $209 to $306).
Ms. Sprinkel said the data used by IRC was obtained from the National Association of Insurance Commissioners and from A.M. Best. "At this point, it's not our own data where we're able to look beneath the surface," she said.
Mike Barry, spokesman for the Insurance Information Institute (I.I.I.), pointed to a study conducted by the Property Casualty Insurers Association of America (PCI) which shows that premiums have continued to decline in Colorado since 2004.
The PCI study also relates this decline to the repeal of the no-fault system. PCI notes that large auto insurers responding to a Rocky Mountain Insurance Information Association survey indicated that average annual auto liability and physical damage premiums for new business fell 32.3 percent from May 2003 to May 2007.
Regarding the conclusions that could be drawn from the IRC study, Ms. Sprinkel said that insurance is highly unique to individual states, and the study is more of a statement about no-fault in Colorado specifically as opposed to a comment on no-fault as a whole.
"That's certainly what we're able to say about the data," said Ms. Sprinkel. "Whether somebody has some other data that would indicate otherwise, that may be, but based on the data we have, it looks like a statement on Colorado no-fault."
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