The Colorado Division of Insurance regulates the insurance industry and assists consumers with insurance issues. It handles (on average) 2000 telephone inquiries and over 4000 consumer complaints every month. The Division’s recent annual health insurance report to the Colorado legislature revealed some significant trends in the state’s insurance industry. The report also proved false some commonly held perceptions about the salaries of insurance industry executives and the profits of insurance companies.
Insurance Commissioner James Riesberg was interviewed by Health Care Advocacy Program and Outreach Coordinator, Catherine Strode. He explained the trends tracked in the report and how this information can be used to help Colorado’s consumers.
What is the purpose of the report and what did it tell you?
“The purpose is to take a look at numbers – because we have a lot of numbers coming into the department – and see if there is anything we can learn from them. I’m not sure that the average consumer would have a strong interest in pouring through those numbers. What they can discover however, and what we discover is, what are trends – and what is happening throughout our state. We know for example that early this year a report was put out that the number of uninsured had jumped to 829,000 people in Colorado, which was a much larger number than the number we had been using previously. Does that mean then that there is less insurance being sold? Or the fact that you have more people that are uninsured? What’s happening then in the insurance market per se and why might some of that be happening? What we have discovered in this report is that the number of companies who are providing coverage has decreased slightly. So that might be part of the reason why some people are uninsured. We know that the premium dollars collected have risen which means then, that if there are fewer policies being sold, there is a general increase in the cost of premiums. That then could also have an impact on why some people who might previously have been insured, are not now, because they eventually got priced out of the market.”
When you say the number of companies insuring Coloradoans has decreased, are these large group or small group employers?
“All of the above. We look at the number who are in small group coverage (under 50 employees), and we look at the number in large group coverage (over 50 employees). On individual lives we dropped from 1.4 million to 1.3 million. In large groups we dropped from 7.5 million to 6.7 million. In small group we dropped from 1.4 million to 1.2 million. So that tells us something about the rate of premium increases.”
What distinguished Colorado from the nation in this report?
“A couple of things. 52.5 % of employers were offering insurance in Colorado. The national average in 2008 was 49.2%; and in 2011 it was 44.6%. So the number of employers who are offering it in Colorado is still much better than the national average. That was the one that jumped out at me. So employers are willing and wanting to participate.”
Were there any other key points in the report?
“There’s a perception among many people in our state that one of the reasons for the high cost of premiums is the salaries that have been paid to executives in the insurance industry. And I think one of the things that this report brings out is that executive compensation was .37%. And this perception, that premiums are being driven by all of these people making all of this money in this industry, are not born out. The profit that was shown was 4.43 % in this report- of all of the companies – all combined. That’s not a lot of profit to be running the kinds of companies and insuring the lives. That’s an important part of this report that debunks the perception that they’re just overcome with profit and they’re not paying their claims because they’re tucking this money away somewhere. Grocery stores work on about 2 % (profit) and that’s because of the large volume that they have. I think that’s an important thing that came up. The dividends to stockholders were 3.5%. Somebody has to be supporting these companies but their profits we’re only 4.43%; and executive compensation was .37%.”