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DENVER – The Colorado Chamber of Commerce in partnership with the American Property Casualty Insurance Association (APCIA) today released a report assessing the impact of removing noneconomic damage caps in Colorado. The report estimates that removing such caps would result in a $2.1 billion annual loss in state GDP and 15,500 jobs.
Noneconomic damage caps are the portion of damages awarded in civil cases that attempt to compensate for an injured person’s emotional distress and suffering related to an accident. These are separate from economic damages, which seek to restore an injured person to their original financial condition. Removing noneconomic damage caps has recently been the focus of several ballot initiatives and legislative proposals in Colorado.
“At the Colorado Chamber, we’re working to position our state as a leader in economic growth and opportunity,” Colorado Chamber President and CEO Loren Furman said. “Efforts to remove noneconomic damage caps would directly impact our competitiveness as a state, making us an even more expensive place to live and do business. This $2.1 billion cost would be felt by everyone, from increased prices of goods and services to reduced business activity. We will continue to oppose measures that threaten our economic climate and the livelihoods of Coloradans.”
The economic and fiscal losses laid out in the report represent a reduction in economic output due to excessive civil justice costs of $357 per person and $921 per household. In addition, the reduction in business activity would result in a loss of tax revenue to the tune of $101.9 million for the state and $78.3 million to local governments. The report was prepared by the Perryman Group, which has extensive experience in studying the economic impact of imbalances in the civil justice system across the country.
“Colorado businesses and consumers are already struggling to make ends meet given inflation-fueled escalating prices. Removing the caps on non-economic damages will make everything worse,” said Lyn Elliott, APCIA vice president for state government relations. “Removing these caps will incentivize more lawsuits and encourage excessive verdicts which will only intensify Colorado’s declining legal and fiscal environment. Unleashing more cost increases makes things harder for small businesses and consumers already overwhelmed and making difficult decisions.”
The report also addressed excessive noneconomic damage awards often in the tens or hundreds of millions of dollars. The report found that these types of verdicts can have devastating impacts to businesses and the global insurance market and would impose substantial short- and long-term harms to Coloradans. In addition, removing noneconomic damage caps could negatively affect the state’s economic development, decreasing opportunities and growth over time.
APCIA also recently commissioned a study analyzing the impact of removing damage caps on insurance premiums, finding an estimated increase of up to $1.187 billion. That study can be viewed here.
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The Colorado Chamber of Commerce champions free enterprise, a healthy business environment and economic prosperity for all Coloradans. It is the only business association that works to improve the business climate for all sizes of business from a statewide, multi-industry perspective. What the Colorado Chamber accomplishes is good for all businesses, and that’s good for the state’s economy. It was created in 1965 based on the merger with the Colorado Manufacturers’ Association.
The American Property Casualty Insurance Association (APCIA) is the primary national trade association for home, auto, and business insurers. APCIA promotes and protects the viability of private competition for the benefit of consumers and insurers, with a legacy dating back 150 years. APCIA members represent all sizes, structures, and regions—protecting families, communities, and businesses in the U.S. and across the globe.