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Proposed Colorado Consumer Insurance Board Unnecessary Taxpayer Burden, Says NAMIC

INDIANAPOLIS (Feb. 13, 2006)—The National Association of Mutual Insurance Companies (NAMIC) will oppose legislation in Colorado creating a Consumer Insurance Board, calling it “a redundant and inappropriate use of state revenue.”

118 NAMIC member companies write 49 percent of the homeowners insurance and 39 percent of the automobile insurance in Colorado.

“Colorado insurance consumers and taxpayers should not be forced to pay for the creation of a Consumer Insurance Board that is not needed" stated NAMIC West Region State Affairs Manager Christian John Rataj. “The current fiscal impact of CO HB 1043 is estimated in excess of $250,000 in 2006 and well above $800,000 in 2007.”

NAMIC will join other members of the insurance industry in drafting and submitting a fact sheet for the members of the House Business Affairs and Labor Committee.

In essence, HB 1043 would create a Consumer Insurance Board to provide policy guidance to the Commissioner of Insurance, gather and prepare information for hearings regarding proposed insurance legislation and regulations, annually review the performance of the Insurance Commissioner, and contract with employees outside of the Division of Insurance to assist the board in carrying out its duties.

"These tasks are already performed by the Division of Insurance and other state regulatory agencies that are expressly authorized to consider arguments made by consumer interest groups when drafting insurance regulations,” argued Rataj. “To authorize the use of the State's General Fund to pay for the creation and operation of an independent consumer insurance board is a waste of limited state resources."

Proponents of the legislation have argued that Colorado needs an independent Consumer Insurance Board to assist the Commissioner in promoting the needs and interests of consumers and business entities in the state. "The very nature of representative democracy requires state legislators to advocate for their constituents; thus there is no real need for the creation of an independent Consumer Insurance Board," claimed Rataj.

NAMIC is also concerned that the structure and composition of the Consumer Insurance Board will actually harm the insurance consumer.

"The bill allots only one of the 11 seats on the board to a member of the insurance community; however, it authorizes two members of the health care industry to be members of the board. This disproportionate allocation of membership is unreasonable and likely to lead to protracted legislative conflict that is not in the best interest of the end user,” Rataj asserted.

“The bill also specifically authorizes the Consumer Insurance Board to annually review the performance of the Insurance Commissioner. Allowing the board to review the Commissioner's performance would afford the board an opportunity to exert undue influence over the policy decisions of the Division of Insurance," said Rataj.

Versions of HB 1043 have been offered in previous years, under a host of different titles; all have been repeatedly rejected by the state legislature.

The philosopher Thomas Hobbes stated in his political treatise, The Leviathan, that “unnecessary laws are not good laws, but traps for money.” HB 1043 is a perfect example of a "trap for money," argued Rataj.

For further information, contact
Rick Nelson, APR, CAE
(317) 875-5250 Tel
(317) 879-8408 Fax

Posted: Monday, February 13, 2006 12:00:00 AM. Modified: Monday, February 13, 2006 2:19:50 PM.

317.875.5250 - Indianapolis  |  202.628.1558 - Washington, D.C.

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