News Briefs

CALIFORNIA

ACIC OPPOSES PROPOSED CDI REGULATIONS: The Association of California Insurance Companies recently testified on proposed Department of Insurance regulations. According to Jeff Fuller, executive vice president and general counsel of ACIC, if passed, the regulations would increase the cost of insurance for Californians while preventing insurers from accurately pricing the repair and replacement of damaged property. “Not only are these regulations detrimental to consumers and insurers, the department lacks the authority to impose some of the key provisions,” Fuller said. In one section, the proposed regulations would impose restrictions on insurers’ use of databases that contain extensive information that help to establish the value of insurance claims. The regulations would allow insurers to use the databases only if the owners of those databases provide the Department of Insurance full access to this information, according to Fuller. He noted that some of the information may be proprietary, and insurers are not able to assure that this information will be made available to the department. Therefore, the regulations would jeopardize insurers’ use of databases that help achieve fair settlement of claims, he said. In another section, Fuller explained that the regulations would prevent insurers from depreciating labor for actual cash value claims. The Department of Insurance is proposing that insurers, in determining the cost of a loss, separate the materials from labors costs. The materials could be depreciated, but the labor would not. Actual cash value means just that, the value of an item-such as a damaged wall-today, Fuller said. “This would raise the cost of premiums for policyholders. In addition, the department lacks the authority to impose this provision. Only the Legislature can mandate policy coverages, not the commissioner,” he said. “Insurers are opposed to these regulations because we want to do everything possible to keep costs down and to accurately and efficiently evaluate the cost of claims. These regulations would prevent us from achieving both of these goals.”

ORE. SAYS EMPLOYERS WILL PAY $33.4M LESS IN WORKERS’ COMP FEES: Employers will pay $33.4 million less in state workers’ compensation fees in Oregon next year. Employers also can expect average workers’ compensation insurance rates to remain at the same level in 2006, according to the Oregon Department of Consumer and Business Services. The fees include worker safety programs and inspections. This marks the fourth straight year without an increase in the so-called average “pure” premium rate employers pay for Oregon workers’ compensation insurance. The state had posted 12 consecutive years of rate reductions before leveling off, setting a national record that has resulted in cumulative cost-savings worth billions of dollars to Oregon employers, officials said. Cory Streisinger, director of the state consumer and business services agency, also noted that benefits for permanently disabled workers in Oregon have increased dramatically since workers’ compensation reforms began in the 1990s. Oregon’s workers’ compensation rates are released each fall for the following year. In neighboring Washington state, officials recently proposed an average premium increase of 3.8 percent for next year. California rates are also significantly higher than Oregon, officials said. Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

COLORADO AUTO INSURANCE RATES BEING REVIEWED: Despite claims by the Colorado’s insurance commissioner, several House Democrats don’t think that auto insurance rates have declined since the state moved from no-fault to a tort system. Insurance Commissioner David Rivera told an interim legislative committee looking at auto insurance rates that since the state went to a tort system last summer, premiums dropped anywhere from 24 to 51 percent, depending upon the chosen amount of coverage. Rivera said motorists who purchased protection against their own vehicles saved about $265 a year. Those who opted for the minimum liability coverage saved even more, approximately $300, he said. However, Rep. Morgan Carroll, D-Aurora, criticized those numbers. Carroll said the figures are based on the largest 24 companies operating in the state, which represent approximately half of the state’s drivers. The Legislature allowed the state’s no-fault system to expire in 2003 because of concerns over ever-increasing rates. Lawmakers were told that rates would stabilize or decrease, if the state stopped requiring all Colorado drivers to have personal injury protection on their policies. Under the new system, drivers who are at fault are left with the tab of paying for the treatment of anyone injured in an accident. Carroll said she studied auto insurance rates based on raw data from Rivera’s office, and determined that of the 200 companies operating in Colorado, 80 increased rates and 48 others made no rate changes despite the reduction in coverage prompted by the tort system. Carroll said that 61 of the companies filed rate reductions after July 1, 2003, when the tort system went into effect, but 30 of those did so only after increasing their rates just before that date. American National General Insurance Co. increased its rates before July 2003, by 31 percent, and then lowered it 14.9 percent after that date. Federal Insurance Co. increased its rates 43.4 percent before no-fault ended, and then lowered its rates 4.5 percent after the tort system started. Carroll called on Rivera to look more closely at the rates to see if the companies were taking advantage of the change in state law to increase their profits. He agreed it is difficult to compare rates under the no-fault and tort systems because they don’t match. A typical driver with full coverage under the old system, with $50,000 in PIP coverage, would pay about $1,130 a year. Under the new system, full coverage policies with $50,000 in medical pay coverage, premiums would be about $100 higher.