Chalk up another win for the insurance industry as the legislature deletes any incentive for speedy lump sum payments to bereaved beneficiaries of life insurance policies.
The present law is found in CRS 10-7-112. It originally passed in 1983 as SB 145 by Sen. Les Fowler, R-Boulder, and Rep. Jim Moore, R-Lakewood. The bill didn't start out in order to aid consumers, but just the opposite. In 1983, the bereaved could take a $100,000 lump sum payout and easily reinvest it at 10 or 11 percent.
SB 145 required life insurers to pay eight percent from the date of death of the insured to the date of claim settlement. In 1992, the figure of eight percent was added on to other policies, beginning the thirty-first day after request for payment.
All the 1983 and 1992 sponsors had to do was point to CRS 5-12-101, which provides "If there is no agreement or provision of law for a different rate, the interest on money shall be at the rate of eight percent per annum, compounded annually." So the figure of eight percent was in the Colorado statutes long before SB 145 passed in 1983.
As the cost of money dropped and as amounts consumers could earn through treasury notes and certificates of deposit dropped, insurance companies discovered that at eight percent, there was actually an INCENTIVE for them to get matters with the bereaved settled as soon as possible. That brought about HB 1344 by Rep. Keith King, R-Colo. Springs and Sen. Ron Teck, R-Grand Junction.
The bill provides the new amount of interest to be paid to the bereaved, after 30 days from a request for payment will be "two percentage points above the federal discount rate..." That rate is no higher than four to five percent. Instead of having to pay eight percent interest, the insurance companies can invest the money that should have been paid to the bereaved, and make MORE money for the company.
It wouldn't take more than a few thousand policies and a story by the company to the bereaved that "the check is in the mail", to make a nice profit. A number of legislators in the House saw this for what it was, and the bill only passed by one vote, 33 to 32.
House Republicans who voted against the bill were Reps. Berry, Clapp, Gotlieb, Kaufman, Kester, Lawrence, Morrison, Smith and Tool. Democrats who voted FOR the bill were Rep. Miller and Vigil.
In the Senate, the story was different. The close call in the House forced the insurance lobbyists to work the Senate extra hard. The bill passed with only one "No" vote, Sen. Bill Thiebaut, D-Pueblo.
The House repassed the bill 36 to 28. Four of the "no" votes, Reps. Berry, Gotlieb, Kaufman, and Morrison voted "yes" to send the bill to the governor. Rep. Allen, who voted "yes" the first time, voted "no" on the final vote.
Prediction: If we ever get inflation again and the cost of money to insurance companies rises to eight percent or higher, the insurance lobby will be back to the legislature to amend the law back to its original position.
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The legislature has adjourned, so let's bring closure to a number of the 1999 bills written about in this column.
Statesman, Jan 22d. Naturopathic physicians really got the shaft. HB 1051 by Rep. Russ George, R-Rifle, and Sen. Jim Dyer, D-Durango, would have set up a licensing and regulatory system in the Dept. of Regulatory Agencies for naturopaths with three years of premedical undergraduate study and a four year naturopathic medical college program. The bill passed the House 48 to 16, only to die in Senate Health Committee (HEWI) on a four to three vote, after testimony in opposition by "naturopaths" who did not have the seven years of education.
Statesman, Jan 29th. HB 1199 by Rep. Mark Paschall, R-Arvada, which would have allowed a covenant form of marriage (no divorce except under certain agreed to conditions), died on March 1, 32 to 31, even though the final version was reduced to covenant marriage pre-counseling and post-counseling.
Statesman, April 16th. HB 1335 by Rep. Bill Swenson, R-Longmont, passed the House and Senate in a breeze. The bill concerned financial incentives for biotechnology (refund of sales and use taxes) and the legislative declaration stated (for the first time in my memory) that passage of the bill be a living testament to a deceased legislator, Tony Grampsas.
Statesman, April 16th. HB 1358 by Rep. Jack Taylor, R-Steamboat Springs, the "lottery video slot machines at racetracks" bill died a quiet, uneventful death in House Finance Committee on May 5th.
Statesman, April 23rd. The final total of non-appropriation "late bills" was 42 late Senate bills and 75 late House bills. The 117 total is a record for the decade of the 1990s, 14 more than the previous high. There were 13 bills by Democrats and 104 by Republicans.
Statesman, April 30th. Those five criminal law bills that needed approval by way of a "final fiscal note" showing they wouldn't cost more than the savings realized by HB 1168, are now legitimate measures. The five bills, HB 1095, 1235, 1260, and SB 48 and 119, originally contained an unlawful delegation by the legislature to a legislative council staff member to decide whether a bill signed by the governor is a law based on the final fiscal note.
Four of the bills had the unlawful delegation removed during passage through the legislature. The fifth measure, SB 119 had already been sent to the governor. An amendment in the Senate to the revisor's bill, HB 1360, removed the "final fiscal note" from SB 119 on May 3rd, and the bill repassed by the House as amended, on May 4th.
A future column will provide closure on the bills providing new occupational regulation, plus the bingo and consumer protection act measures.
Jerry Kopel writes a column for the Statesman based on 22 years past experience as a state legislator.
Copyright 2015 Jerry Kopel & David Kopel