Colorado Lawmakers Push for Insurance Transparency on Wildfire Risk Assessments
DENVER, CO — A new bill in the Colorado legislature aims to increase transparency from insurance companies regarding how they assess a homeowner’s risk from wildfires and determine insurance premiums.
House Bill 1182, introduced by state lawmakers, would require insurers to share detailed information about their risk models and scoring methods with homeowners and the state. The bill also mandates explanations of how these assessments affect the cost of insurance. Furthermore, it would compel companies to consider individual or community-level investments in wildfire mitigation during those evaluations and provide homeowners with a process to appeal their property’s risk assessment.
The legislation comes in response to escalating insurance costs, a trend significantly influenced by climate change-related weather events. These events have made Colorado a more expensive state for insurance coverage. According to the state-run division of insurance, insurance premiums for single-family homes in Colorado rose by 52% between January 2019 and October 2022. Some higher-value properties, such as multi-story condominium complexes, have seen their insurance costs double or even triple.
Rep. Brianna Titone, D-Arvada, a key sponsor of House Bill 1182, emphasized that homeowners are proactively seeking to reduce their risks through home-hardening measures and creating defensible spaces. Defensible space involves clearing or reducing vegetation around a home. “I think a lot of homeowners are guessing a lot of times what they can do,” Titone said. “And the insurance companies are not really clearly communicating with the homeowners as to what they think they should do.”
“That’s very frustrating to a homeowner who may have spent a lot of time and money investing in this,” Titone continued. “But do the insurance companies think that even matters? And how can we convince them that it does.”
The issue is particularly acute in Colorado’s High Country, where the constant threat of wildfires has made mitigation a central concern. Summit County Commissioner Tamara Pogue stated that she hears about property insurance expenses almost daily, with rate increases of 300% to 400% not being unusual for homeowners. “Property insurance is part of housing affordability,” Pogue said. “You have to have it, you have to pay for it.”
Summit County has actively supported wildfire mitigation through various efforts, including funding seasonal Forest Service employees and enforcing defensible space requirements for new developments. The county has also allocated millions from a voter-approved fund to aid neighborhoods in sharing the costs of fuel reduction, tree removal, and improvements to evacuation routes and other mitigation strategies. Summit County was the first in Colorado to establish a dedicated funding mechanism for wildfire mitigation, approving a property tax increase in 2008 and another in 2018. Pogue noted those efforts have proven successful in reducing the risk of fire.
For instance, a small wildfire that ignited last summer near a neighborhood in Breckenridge was quickly contained due to fuel mitigation work that had been performed in the area 18 months earlier. “I think that homeowners should be given credit for that effectiveness and for the dollars they have invested in that mitigation and right now, in the (insurance) system, there is no consistent way that work is taken into account,” Pogue said. “We should, as a community, be able to recoup some of those benefits here.”
Insurance industry reforms have been a priority for Gov. Jared Polis, who has advocated for greater transparency in risk assessment and price determinations. The industry faced criticism during a December meeting of Western state governors, and Polis reiterated his call for insurance relief in his State of the State address last month. “The rising cost of insurance isn’t relegated to homeowners alone,” Polis said. “It gets passed on to renters, too.”
Carole Walker, executive director of the Rocky Mountain Insurance Association (RMIA), stated that insurance companies back individual and community mitigation efforts as a way to reduce homeowner risk and potentially lower premiums. However, Walker cautioned lawmakers against passing policies that could further burden insurance companies operating in the state. She pointed to California, where an exodus of insurers occurred due to legislation that capped rates artificially and banned insurers from using predictive risk models.
Colorado is already the third-least profitable state for insurers, trailing only Louisiana and Texas. According to RMIA, the state ranks second in the country for hail risk and third for wildfire risk. “Colorado is a high catastrophe risk state for insurance companies,” Walker said. “It’s a cautionary tale. We need to be careful in Colorado, we’re just a few bad public policy decisions away from being California.” The association, which represents companies in Colorado, Wyoming, Utah, and New Mexico, is seeking amendments to the bill to ensure homeowners’ mitigation work aligns with industry standards. Walker indicated that insurers are open to establishing an appeal process and sharing ways homeowners can reduce their risk but expressed concern about being compelled to disclose models protected under intellectual property laws. Any disclosure requirements, she specified, must be easy for insurers to follow, emphasizing that the biggest concern is legislation that makes doing business in Colorado unviable. “The stakes are very high on this,” Walker said.
House Bill 1182 is also sponsored by Rep. Kyle Brown, D-Louisville, and Sens. Lisa Cutter, D-Littleton, and Cleave Simpson, R-Alamosa. The bill is scheduled for a hearing and vote before the House Business Affairs and Labor Committee on Wednesday, February 26.
