The Colorado Division of Insurance is proposing a regulation that would permit insurance companies to recoup their costs associated with the state’s FAIR Plan through a surcharge on homeowners insurance policyholders. The FAIR Plan, which provides homeowners insurance to those who cannot obtain it through the standard market, has assessed insurers doing business in Colorado $46 million.
According to Carole Walker, executive director of the Rocky Mountain Insurance Association, insurers participating in the FAIR Plan could potentially charge policyholders between $17 and $22 over a five-year period to recoup their assessment. However, Walker noted that smaller insurance companies might need to recoup the entire amount immediately, as the surcharge would be too small to be practical over a longer period.
Concerns and Considerations
Some consumer advocates have expressed concerns about the proposed surcharge. Lisa Hughes, R2R/R2P Colorado liaison at United Policyholders, suggested that the surcharge should be limited to 5% of a policyholder’s premium in any given year.
Kelly Campbell, executive director of the Colorado FAIR Plan, emphasized that maintaining the solvency of the homeowners insurance market should be the top priority in the regulation. The Colorado Division of Insurance will accept further comments on the proposed regulation until May 5.
The proposed regulation aims to provide clarity and certainty for insurers regarding the recoupment of their FAIR Plan assessments. If implemented, it could have significant implications for homeowners insurance policyholders in Colorado.
