A Bill for an Act
Page 1, Line 101Concerning measures to facilitate the implementation of
Page 1, Line 102fair access to insurance requirements plans.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)
The bill clarifies that the fair access to insurance requirements plan association (association) is not:
- A department, unit, agency, political subdivision, or instrumentality of the state; or
- An insurance company or a person engaged in the business of insurance.
The bill also grants a member insurer, the association and its agents or employees, the board of directors of the association, and the commissioner of the division of insurance or the commissioner's representatives immunity for any action taken by them in the performance of their powers and duties. The bill specifies that the only causes of action and remedies available to a policyholder of a fair access to insurance requirements plan policy against the association is for breach of contract or breach of the common law covenant of good faith and fair dealing.
Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 2, Line 2SECTION 1. In Colorado Revised Statutes, 10-4-1804, amend (1), (2), and (3)(b); and add (1.5) as follows:
Page 2, Line 310-4-1804. Fair access to insurance requirements plan
Page 2, Line 4association - creation - participation required. (1) There is created the
Page 2, Line 5fair access to insurance requirements plan association, or FAIR plan
Page 2, Line 6association, which is a nonprofit, unincorporated
publicPage 2, Line 7member insurers are and remain members of the association as a
Page 2, Line 8condition of each member insurer's authority to transact insurance
Page 2, Line 9business in this state. The association shall perform its functions under a
Page 2, Line 10plan of operation established and approved under section 10-4-1807 and
Page 2, Line 11shall exercise its powers through a board of directors established under section 10-4-1805.
Page 2, Line 12(1.5) The FAIR plan association is not a department, unit,
Page 2, Line 13agency, political subdivision, or instrumentality of the state.
Page 2, Line 14All debts, claims, obligations, and liabilities incurred by the
Page 2, Line 15association are the debts, claims, obligations, and liabilities of
Page 2, Line 16the association only, and are not the debts or pledges of credit
Page 2, Line 17of the state or the state's agencies, instrumentalities, officers,
Page 2, Line 18or employees. The funds of the association are not part of the
Page 2, Line 19general fund of the state, and the state shall not budget for or provide general fund appropriations to the association.
Page 3, Line 1(2) The FAIR plan association is established to provide property
Page 3, Line 2insurance coverage, including commercial property insurance, when such
Page 3, Line 3coverage is not available from admitted companies. The FAIR plan
Page 3, Line 4association is not an insurance company or a person engaged in the business of insurance.
Page 3, Line 5(3) The FAIR plan association shall:
Page 3, Line 6(b) Assess and share among member insurers, on a fair and
Page 3, Line 7equitable basis, all expenses, income, and losses based on each member
Page 3, Line 8insurer's written premium for property and commercial property insurance
Page 3, Line 9and in the same proportion that a member insurer's premiums
Page 3, Line 10written bear to the aggregate premiums written in the state by
Page 3, Line 11all member insurers of the association during the preceding calendar year, consistent with this part 18.
Page 3, Line 12SECTION 2. In Colorado Revised Statutes, 10-4-1806, add (4) as follows:
Page 3, Line 1310-4-1806. FAIR plan - plan requirements - insurer
Page 3, Line 14requirements. (4) Nothing in this section subjects the FAIR plan to any premium tax assessed pursuant to this title 10.
Page 3, Line 15SECTION 3. In Colorado Revised Statutes, add 10-4-1810.5 as follows:
Page 3, Line 1610-4-1810.5. Immunity - exceptions - remedies. (1) A member
Page 3, Line 17insurer, the FAIR plan association and its agents or employees,
Page 3, Line 18the board of directors, and the commissioner or the
Page 3, Line 19commissioner's representatives are immune for any action taken
Page 3, Line 20by them in the performance of their powers and duties under this
Page 3, Line 21part 18.
Page 4, Line 1(2) (a) The exclusive causes of action and remedies
Page 4, Line 2available to a policyholder of a FAIR plan policy against the
Page 4, Line 3association is for breach of contract or breach of the common law covenant of good faith and fair dealing.
Page 4, Line 4(b) A claim for breach of the common law covenant of
Page 4, Line 5good faith and fair dealing against the association requires
Page 4, Line 6proof that the association acted unreasonably and that the
Page 4, Line 7association knew or recklessly disregarded that the association's actions were unreasonable.
Page 4, Line 8(c) Damages in an action for a breach of the covenant of
Page 4, Line 9good faith and fair dealing are limited to compensatory
Page 4, Line 10damages for economic and noneconomic losses. A court may
Page 4, Line 11award punitive damages only if the association's breach was
Page 4, Line 12accompanied by circumstances of fraud, malice, or willful and wanton conduct.
Page 4, Line 13(d) If a policyholder successfully proves that the
Page 4, Line 14association breached the covenant of good faith and fair
Page 4, Line 15dealing, the policyholder is entitled to attorney fees and costs.
Page 4, Line 16If the court finds that an action brought pursuant to this
Page 4, Line 17section was frivolous, as provided in article 17 of title 13, the court shall award costs and attorney fees to the association.
Page 4, Line 18SECTION 4. Safety clause. The general assembly finds,
Page 4, Line 19determines, and declares that this act is necessary for the immediate
Page 4, Line 20preservation of the public peace, health, or safety or for appropriations for
Page 4, Line 21the support and maintenance of the departments of the state and state institutions.