A Colorado insurance group is raising concerns about a proposed bill aimed at reforming the state’s home insurance market. Although lawmakers have made some changes to the legislation, the Rocky Mountain Insurance Information Association believes more adjustments are necessary before it becomes law.
Carole Walker, the group’s executive director, emphasized that while progress has been made, the bill still needs work. She warned that Colorado could face serious challenges, similar to those in California, due to high risks from hail and wildfires. Walker pointed out that lawmakers’ efforts to lower insurance prices could discourage companies from operating in the state.
The proposed legislation reflects a growing national issue with insurance markets under strain from rising disaster-related losses. Colorado is particularly affected, ranking second in the nation for hail claims and having many homes in areas at risk for wildfires.
One controversial aspect of the bill was a requirement for insurers to lower rates by 5% if their loss ratio was below 75% over three years. This provision faced backlash from the industry, with concerns that it would push smaller companies out of the market. Lawmakers ultimately decided to remove this mandate during the amendment process.
Other changes include the elimination of a prior-approval requirement for rate adjustments and modifications to how the state would fund wildfire reinsurance and mitigation programs. These initiatives would be financed through consumer fees rather than taxes approved by voters, which is a unique approach for Colorado.
Walker also raised concerns about a proposed 1% fee on all property insurance policies to fund the reinsurance program. She noted that the bill’s language is unclear regarding whether the program can sell reinsurance, which could conflict with private market operations.
Insurers are advocating for an opt-in option for participation in the reinsurance program. Currently, they would be required to provide coverage in high-risk areas and lower premiums, conditions that some find burdensome.
Despite these issues, there is a shared understanding of the importance of a home-hardening program. This initiative would offer grants to homeowners for installing impact-resistant roofs and improving wildfire defenses. Homeowners who complete these projects could have the enterprise fee waived.
Walker also called for changes to regulations on additional living expenses, which currently have a time limit without a financial cap. With the legislative session ending on May 7, she expects the bill to pass, supported by key state leaders including Governor Jared Polis and House Speaker Julie McCluskie.
As this situation evolves, stakeholders are encouraged to share their thoughts on the proposed legislation, highlighting the importance of balancing affordability and the stability of the insurance market in Colorado.