Colorado lawmakers have rejected a proposal by Democratic Gov. Jared Polis to create a state-operated reinsurance program for wildfires, leaving the state to contend with rising insurance premiums and increasing wildfire threats. The rejected bill, H.B. 1302, aimed to establish a reinsurance pool to help insurance companies manage massive losses from wildfires. The program would have required insurers operating in Colorado’s high-risk fire areas to access the state’s reinsurance pool. It was to be financed through a half-percent fee on homeowners insurance policies, with an exemption for properties deemed “wildfire prepared.”
The bill faced significant resistance in the Democratic-controlled state Senate despite passing in the state House in April. On Tuesday, the Senate Finance Committee voted 2-6 against the measure, with three Democrats joining three Republicans in opposition. Lawmakers expressed concerns about adding more costs to homeownership, which contributed to the bill’s defeat.
The rejection sends Colorado back to the drawing board as it struggles with the challenges of rising insurance costs, policy cancellations, and an increasing threat of wildfires. The proposed reinsurance program was seen as a potential solution to stabilize the property insurance market, but its fate now hangs in the balance.
Reinsurance acts as insurance for insurance companies, providing financial protection when disaster costs exceed a certain threshold. By creating a state-operated reinsurance program, Colorado aimed to mitigate the financial impact of wildfires on insurance providers and, by extension, homeowners. However, the measure’s failure indicates that finding a solution will require further negotiation and potentially alternative approaches.
