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Second Regular Session

Sixty-first General Assembly

LLS NO. 98­0655.01 JLB SENATE BILL 98­162

STATE OF COLORADO

BY SENATOR Johnson

BUSINESS AFFAIRS & LABOR

APPROPRIATIONS

A BILL FOR AN ACT

CONCERNING THE REGULATION OF THE BUSINESS OF INSURANCE, AND, IN CONNECTION THEREWITH, AUTHORIZING THE OFFICE OF CONSUMER COUNSEL TO REPRESENT CONSUMERS OF AUTOMOBILE INSURANCE AND HEALTH CARE COVERAGE IN PROCEEDINGS BEFORE THE INSURANCE COMMISSIONER AND MAKING AN APPROPRIATION.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.)

Authorizes the consumer counsel to represent consumers of automobile insurance and health care coverage policies in proceedings before the insurance commissioner.

Changes the name of the utility consumers' board to the utility and insurance consumers' board. Requires members of such board to represent the interests of insurance consumers. Specifies that the consumer counsel may also have experience in insurance issues as well as utility issues.

Authorizes the consumer counsel to appear in specified proceedings before the insurance commissioner, either by initiating a complaint or by intervening in pending proceedings, and to examine records of the insurance commissioner subject to applicable confidentiality requirements. Limits the period of time within which the insurance commissioner must hold a hearing on any complaint filed by the consumer counsel.

Provides for funding the consumer counsel's insurance­related functions from the division of insurance cash fund. Makes an appropriation from such fund for the implementation of this act.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1. 40­6.5­101, Colorado Revised Statutes, is amended BY THE ADDITION OF THE FOLLOWING NEW SUBSECTIONS to read:

40­6.5­101.  Definitions. As used in this article, unless the context otherwise requires:

(2.3)  "INSURANCE COMMISSIONER" MEANS THE COMMISSIONER OF INSURANCE SERVING PURSUANT TO SECTION 23 OF ARTICLE IV OF THE STATE CONSTITUTION.

(2.5)  "INSURANCE CONSUMER" MEANS ANY PERSON WHO PURCHASES OR IS COVERED UNDER AUTOMOBILE INSURANCE ISSUED UNDER PART 6 OR 7 OF ARTICLE 4 OF TITLE 10, C.R.S., OR ANY PERSON WHO PURCHASES OR IS COVERED UNDER A HEALTH BENEFIT PLAN ISSUED UNDER PART 6 OF ARTICLE 8 OR ARTICLE 16, OR BOTH, OF TITLE 10, C.R.S.

(2.7)  "INSURANCE ENTITY" MEANS ANY ENTITY REGULATED UNDER THE PROVISIONS OF TITLE 10, C.R.S., THAT ISSUES AUTOMOBILE INSURANCE UNDER PART 6 OR 7 OF ARTICLE 4 OF TITLE 10, C.R.S., OR HEALTH BENEFIT PLANS UNDER PART 6 OF ARTICLE 8 OR ARTICLE 16, OR BOTH, OF TITLE 10, C.R.S. "INSURANCE ENTITY" DOES NOT INCLUDE AN INSURANCE PRODUCER, AS DEFINED IN SECTION 10­2­103 (6), C.R.S.

SECTION 2.  40­6.5­102 (3) (a) and (3) (b), the introductory portion to 40­6.5­102 (3) (c), and 40­6.5­102 (3) (c) (II), Colorado Revised Statutes, are amended to read:

40­6.5­102.  Office of consumer counsel ­ creation ­ appointment ­ attorney general to represent. (3) (a)  The office of consumer counsel shall be under the policy guidance of the utility AND INSURANCE consumers' board, which board is hereby created. The board shall exercise its powers and perform its duties and functions specified in this article under the department of regulatory agencies and the executive director thereof as if the same were transferred to the department by a type 1 transfer, as such transfer is defined in the "Administrative Organization Act of 1968", article 1 of title 24, C.R.S.

(b)  The board shall consist of eleven members appointed by the governor. Such members shall be appointed to represent residential, small business, and agricultural utility consumers AND INSURANCE CONSUMERS. Such members shall, to the extent possible, be persons with expertise or experience in consumer related utility OR INSURANCE matters, utilities OR INSURANCE management, economics, accounting, financing, engineering, planning, or utilities OR INSURANCE law. In making appointments to the board, the governor shall ensure that the membership of the board represents the different geographic areas of the state. Of the members of the board appointed for terms beginning July 1, 1993, five of such members shall be appointed for terms of two years and six shall be appointed for terms of four years. Thereafter, Members of the board shall be appointed for terms of four years. The governor shall not appoint any member of the board if such person has any conflict of interest with such person's duties as a member of the board. The governor may remove any board member for misconduct, incompetence, or neglect of duty. Board members shall serve without compensation, but members who reside outside the counties of Denver, Jefferson, Adams, Arapahoe, Boulder, and Douglas shall be entitled to reimbursement for reasonable actual expenses to attend board meetings in Denver. The board shall meet at least six times per year.

(c)  It is the duty of the board to represent the public interest of Colorado utility users, and, specifically the interests of residential, agricultural, and small business users, AND INSURANCE CONSUMERS by providing general policy guidance and oversight for the office of consumer counsel and the consumer counsel in the performance of their statutory duties and responsibilities as specified in this article. The powers and duties of the board shall include, but not be limited to, the following:

(II)  Gathering data and information and formulating policy positions to advise the office of consumer counsel in preparing analysis and testimony in legislative hearings on proposed legislation affecting the interests of residential, small business, and agricultural utility users AND INSURANCE CONSUMERS;

SECTION 3.  40­6.5­103, Colorado Revised Statutes, is amended to read:

40­6.5­103.  Qualifications ­ conflict of interest. The consumer counsel shall have at least five years of experience in consumer related utility issues OR INSURANCE ISSUES, OR BOTH, or in the operation, management, or regulation of utilities OR INSURANCE ENTITIES as either an attorney, an engineer, an economist, an accountant, a financial analyst, or an administrator or any combination thereof. No person owning stocks or bonds in a corporation OR INSURANCE ENTITY subject in whole or in part to regulation by the commission OR THE INSURANCE COMMISSIONER or who has any pecuniary interest in such corporation OR INSURANCE ENTITY shall be appointed as consumer counsel.

SECTION 4.  Article 6.5 of title 40, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read:

40­6.5­104.5.  Representation by consumer counsel ­ insurance entities. (1)  THE CONSUMER COUNSEL MAY APPEAR AS A PARTY OF RIGHT TO REPRESENT THE INTERESTS OF INSURANCE CONSUMERS IN PROCEEDINGS BEFORE THE INSURANCE COMMISSIONER, AND ANY JUDICIAL REVIEW THEREOF, IN ANY MATTER THAT INVOLVES SUBSTANTIAL ISSUES CONCERNING RATES, TERMS, COMPANY SOLVENCY, FINANCIAL MISMANAGEMENT, AVAILABILITY OF INSURANCE, OR ANY OTHER MATTER RELATED TO THE IMPACT OF THE INSURANCE INDUSTRY ON THE INSURANCE CONSUMER IN COLORADO; IN ANY PROCEEDING CONCERNING THE AUTHORITY OF A COMPANY TO WRITE INSURANCE IN COLORADO; IN ANY PROCEEDING CONCERNING LICENSING OF ADJUSTERS, INSURANCE AGENTS, AND INSURANCE BROKERS; IN ANY RULE­MAKING PROCEEDING BEFORE THE INSURANCE COMMISSIONER; AND IN ANY PROCEEDING CONCERNING AGENCY ACTIONS COMMENCED UNDER PART 11 OF ARTICLE 3 OF TITLE 10, C.R.S.

(2) (a)  THE CONSUMER COUNSEL SHALL BE NOTIFIED BY THE DIVISION OF INSURANCE OF ALL ANNUAL REPORTS AND RATE FILINGS SUBMITTED TO THE INSURANCE COMMISSIONER BY ANY INSURANCE ENTITY OR ITS DESIGNEE PURSUANT TO STATUTE OR REGULATION. IF THE CONSUMER COUNSEL DESIRES A COMPLETE COPY OF ANY SUCH ANNUAL REPORT OR RATE FILING, THE CONSUMER COUNSEL SHALL MAKE WRITTEN REQUEST FOR A COMPLETE COPY TO THE INSURANCE ENTITY SUBMITTING SUCH REPORT OR RATE FILING. THE INSURANCE ENTITY SHALL COMPLY WITH ANY WRITTEN REQUEST MADE PURSUANT TO THIS SUBSECTION (2). THE CONSUMER COUNSEL SHALL SEND A COPY OF ANY WRITTEN REQUEST MADE PURSUANT TO THIS SUBSECTION (2) TO THE DIVISION OF INSURANCE.

(b)  RATING ORGANIZATIONS, AS DEFINED IN SECTION 10­4­402 (3), C.R.S., SHALL SUBMIT ALL RATE FILINGS FILED WITH THE INSURANCE COMMISSIONER TO THE CONSUMER COUNSEL WITHIN THREE DAYS AFTER FILING WITH THE INSURANCE COMMISSIONER.

(3)  THE CONSUMER COUNSEL SHALL HAVE ACCESS TO ALL RECORDS MAINTAINED OR OBTAINED BY THE INSURANCE COMMISSIONER AND SHALL KEEP CONFIDENTIAL THOSE RECORDS REQUIRED TO BE KEPT CONFIDENTIAL PURSUANT TO SECTION 10­3­414, C.R.S.

(4)  THE CONSUMER COUNSEL MAY INITIATE A COMPLAINT OR INTERVENE IN A PROCEEDING BEFORE THE INSURANCE COMMISSIONER CONCERNING:

(a)  THE REGULATED RATES FOR INSURANCE POLICIES OFFERED BY ANY INSURANCE ENTITY THAT MAY BE EXCESSIVE, INADEQUATE, OR UNFAIRLY DISCRIMINATORY;

(b)  THE TERMS AND CONDITIONS OF INSURANCE POLICIES OFFERED BY ANY INSURANCE ENTITY IN ORDER TO DETERMINE WHETHER SUCH TERMS AND CONDITIONS ARE IN VIOLATION OF ANY PROVISION OF TITLE 10, C.R.S.;

(c)  ANY FINANCIAL MISCONDUCT OR IMPROPRIETY BY ANY INSURANCE ENTITY THAT MAY AFFECT THE FISCAL SOLVENCY OR SOUNDNESS OF SUCH ENTITY.

(5)  THE CONSUMER COUNSEL MAY BE GRANTED AUTHORITY BY THE INSURANCE COMMISSIONER TO INSPECT THE BOOKS AND RECORDS OF INSURANCE ENTITIES DOING BUSINESS IN THIS STATE WHEN SUCH AUTHORITY IS NECESSARY TO REPRESENT THE INTERESTS OF INSURANCE CONSUMERS OR TO ASSIST THE INSURANCE COMMISSIONER. SUCH AUTHORITY SHALL NOT EXCEED THAT VESTED IN THE INSURANCE COMMISSIONER BY STATUTE OR REGULATION.

(6)  THE CONSUMER COUNSEL SHALL NOT REPRESENT THE INTERESTS OF ANY INDIVIDUAL INSURANCE PURCHASER OR BENEFICIARY.

(7)  IN THE EVENT A COMPLAINT IS FILED BY THE CONSUMER COUNSEL PURSUANT TO SUBSECTION (4) OF THIS SECTION, THE INSURANCE COMMISSIONER SHALL SET AND HOLD A HEARING ON ANY SUCH MATTER WITHIN NINE MONTHS AFTER THE DATE ON WHICH ANY SUCH COMPLAINT IS FILED.

SECTION 5.  40­6.5­107, Colorado Revised Statutes, is amended to read:

40­6.5­107.  Financing of office. At each regular session, the general assembly shall determine the amounts to be expended by the office of consumer counsel for the direct and indirect costs of administration in performing its duties and responsibilities required by this article and shall appropriate to the office of consumer counsel from the public utilities commission fixed utility fund, created in section 40­2­114, AND THE DIVISION OF INSURANCE CASH FUND, CREATED IN SECTION 10­1­103 (3), C.R.S., the full amount so determined. No general fund moneys shall be appropriated to the office of consumer counsel for the performance of its duties and responsibilities under this article.

SECTION 6.  40­6.5­108, Colorado Revised Statutes, is amended to read:

40­6.5­108.  Office of consumer counsel subject to termination. (1)  Unless continued by the general assembly, the office of consumer counsel and the utility AND INSURANCE consumers' board shall terminate on July 1, 1998.

(2)  The provisions of section 24­34­104, C.R.S., concerning the termination schedule for regulatory bodies of the state unless extended as provided in that section, are applicable to the office of consumer counsel and the utility AND INSURANCE consumers' board.

SECTION 7.  24­34­104 (27.5) (f), Colorado Revised Statutes, is amended to read:

24­34­104. General assembly review of regulatory agencies and functions for termination, continuation, or reestablishment. (27.5) (f)  The following division and board in the department of regulatory agencies shall terminate July 1, 1998: The utility AND INSURANCE consumers' board and the office of consumer counsel, created in article 6.5 of title 40, C.R.S.

SECTION 8.  24­1­122 (2) (a.5), Colorado Revised Statutes, is amended to read:

24­1­122.  Department of regulatory agencies ­ creation. (2)  The department of regulatory agencies shall consist of the following divisions:

(a.5)  The office of consumer counsel and the utility AND INSURANCE consumers' board, created by article 6.5 of title 40, C.R.S. The office of consumer counsel and its powers, duties, and functions are transferred by a type 1 transfer to the department of regulatory agencies as a division thereof. The utility AND INSURANCE consumers' board shall exercise its powers and perform its duties and functions under the department as if the same were transferred to the department by a type 1 transfer and allocated to the office of consumer counsel.

SECTION 9.  Appropriation. In addition to any other appropriation, there is hereby appropriated, out of any moneys in the division of insurance cash fund created in section 10­1­103 (3), Colorado Revised Statutes, not otherwise appropriated, to the department of regulatory agencies for allocation to the office of consumer counsel, for the fiscal year beginning July 1, 1998, the sum of ____________ dollars ($    ) and ___ FTE, or so much thereof as may be necessary, for the implementation of this act.

SECTION 10.  Effective date. This act shall take effect July 1, 1998.

SECTION 11.  Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.