A key Colorado insurance trade group says proposed legislation aimed at reforming the state’s home insurance market still needs significant changes, despite lawmakers removing some of the industry’s most contested provisions.
Carole Walker, executive director of the Rocky Mountain Insurance Information Association, said that while progress has been made, more work is needed before the bill is finalized.
“Colorado is just a few bad public policy decisions away from being California because we have a high catastrophe risk for both hail and wildfire and at the same time a push to try to fix it by bringing down prices artificially,” Walker said.
“Lawmakers and regulators think they’re doing the right thing, but it just signals to insurance companies that it’s a harder place to do business.”
The proposed legislation follows a growing national trend of insurance market strain driven by rising catastrophe losses. Colorado is among the hardest-hit states. It ranks second nationally in hail-related claims and has a large number of homes in wildfire-prone areas.
One provision that drew industry backlash would have required insurers with a loss ratio below 75% over three years to reduce their rates by 5%. Walker said the proposal would have forced smaller insurers out of the market and caused larger ones to limit their presence. Lawmakers ultimately removed the loss ratio mandate during the amendment process.
Other changes include removing a prior-approval requirement and altering how the state would fund a wildfire reinsurance and mitigation “enterprise.” These enterprises, unique to Colorado’s political system, allow the state to fund programs through consumer fees rather than voter-approved taxes.
Walker expressed concern about the reinsurance enterprise, which would be funded by a 1% fee on all property insurance policies. She said the law remains unclear on whether the enterprise can sell reinsurance, which could conflict with private market operations.
Insurers are also seeking an opt-in feature for participation in the reinsurance program. Under the current plan, companies would be required to write coverage in high-risk areas and reduce premiums, conditions some consider burdensome.
Despite these concerns, Walker said there is consensus on the importance of the home-hardening program. This initiative would provide grants to homeowners for installing impact-resistant roofs and undertaking wildfire mitigation. Those completing such projects could have the enterprise fee waived.
“We want to make sure that if you’re putting on that new roof, and if you’re doing wildfire mitigation, that it is meaningful mitigation that meets the science-based standards,” Walker said, referring to guidelines from the Insurance Institute for Business & Home Safety.
Walker also called for changes to Colorado’s regulations on additional living expenses, which currently impose a time limit without a financial cap.
With the legislative session set to end May 7, Walker said she expects the bill to pass, backed by state leadership including Gov. Jared Polis, House Speaker Julie McCluskie and Insurance Commissioner Michael Conway.
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