AAI Says Colo. No-Fault Reform Needs Work

February 18, 2003

A bill being considered by a Colorado legislative panel aimed at reforming the state’s no-fault auto insurance law is a good first step, but doesn’t go far enough to enact the changes needed to fix this broken system, according to the Alliance of American Insurers (AAI). The bill, HB 1225, was heard by the Colorado House Business Affairs Committee Feb. 11 and held over.

“While the Alliance supports many of the measure’s major points, the reforms set forth in HB 1225 still fall short of what is needed to make a meaningful, positive, impact on the Colorado no-fault insurance system,” Peter Gorman, vice president of the Alliance’s western region, said. “The Alliance is committed to full-fledged reform, and will work to get further amendments as the bill progresses through this session.”

According to Gorman, positive changes included in HB 1225 would remove certain coverages from mandatory first-party benefits, such as the mandate that consumers purchase and pay for essential services coverage and wage loss coverage. “It also strengthens the threshold for bringing third-party liability lawsuits and would eliminate mandatory coverage for non-medical treatments, such as massage therapy, aromatherapy, thus reforming the most liberal ‘open checkbook’ insurance system in the country,” he said.

“Unfortunately, these cost savings are undercut by the fact that insurers must still provide, and policyholders must still pay for, extremely high benefit levels – more than $100,000 of mandatory first-party benefits,” Gorman added.

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