AGO 89-3.
Case Date | October 16, 1989 |
Court | Colorado |
Colorado Attorney General Opinions
1989.
AGO 89-3.
October 16, 1989Department of Law
Attorney General Opinion FORMAL OPINION
of DUANE WOODARD
Attorney General Opinion No. 89-3
AG Alpha No. RG IN AGARF
Steven V. Berson
Executive Director
Colorado Department of Regulatory
Agencies
1525 Sherman Street, Room 110
Denver, CO
80203 Automobile Insurance
Premium Rates and Underwriting GuidelinesDear Mr. Berson:
This opinion letter is in response to your August 15, 1989 letter
in which you ask six questions concerning the Insurance Division's powers to
regulate automobile insurance premiums and insurance company underwriting
guidelines.
QUESTIONS PRESENTED AND CONCLUSIONS
Your letter raises the following six questions:
Can the Division of Insurance require insurance companies across
the board to cut automobile insurance rates by 20 percent?
No.
Can the Division of Insurance require that all insurance
companies not raise automobile insurance premium rates for 2 years?
No.
Can the Division of Insurance require that all insurance
companies receive prior approval from the Division of Insurance before they
raise automobile insurance rates?
Yes.
Can the Division of Insurance mandate an end to penalties such as
increased premium rates or termination of coverage for persons who are involved
in accidents which are not their fault?
No. Unless the insurance company cannot meet the conditions set
by statute.
Can the Division of Insurance mandate that insurance premium
rates be based on driving record and miles driven and that premium rates cannot
be based on neighborhood location?
No.
Can the Division of Insurance prohibit insurance companies from
charging higher rates (surcharges) for drivers with good records who have not
had automobile insurance for a period of time but who wish to be insured again?
No, unless the insurer is unable to demonstrate that the fact
that the insured has gone uninsured for period of time will have a probable
effect upon losses incurred by the insurance company.
ANALYSIS
Colorado's insurance rating statute Sections 10-4-401 to 419,
C.R.S. (1987) addresses property and casualty insurance premiums. The statute
divides all property and casualty insurance lines into two categories -- type I
and type II. Type I coverage consists of worker's compensation, medical
malpractice coverage written by joint underwriting associations and assigned
risk motor vehicle insurance. See Section 10-4-401(3)(a), C.R.S.
(1987). Type I coverage is a "prior approval" coverage. This means that the
insurer, before changing his rates, must file the new proposed rates with the
Division of Insurance (hereinafter "the Division") and get its approval before
implementing them.
All other types of property/casualty coverage are classified as
type II insurance. Automobile insurance with the exception of assigned risk
motor vehicle coverage is a type II coverage. Type II insurance coverage is a
"file and use" coverage which means that the insurer must only file its
proposed rates with the Division before putting them into effect.
See Section 10-4-401(3) and (4), C.R.S. (1987). There is no
requirement with regard to type II coverage that the insurer obtain the
Division's approval before implementing new rates.
Sections 10-4-405 and 406, C.R.S. (1987) establish a procedure
pursuant to which the Division can review all type I rates before they are
implemented by the insurer. Type II coverages are not subject to Sections
10-4-405 and 406. See Section 10-4-401(3)(b), C.R.S. (1987).
However, under Section 10-4-418, C.R.S. (1987) the Commissioner of Insurance
(hereinafter "the Commissioner") either on his own motion or in response to a
complaint, can commence an agency proceeding for the purpose of determining
whether an insurer's automobile insurance rates are in violation of the
insurance statutes.
Under Section 10-4-403, C.R.S. (1987) both type I and type II
rates are subject to the requirement that they be neither excessive nor...
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