House committee advances bill creating two insurance enterprises to tackle hail and wildfire losses

The House Finance Committee advanced House Bill 13-02 after hours of testimony and a series of negotiated amendments, sending the measure to the Appropriations Committee with a favorable recommendation. The bill creates two state-sponsored enterprises aimed at stabilizing the homeowners insurance market: a Strengthen Colorado Homes enterprise to help homeowners harden roofs and homes against hail and wind, and a Wildfire Catastrophe Reinsurance enterprise to provide state-based reinsurance capacity for wildfire losses.

Sponsor testimony emphasized that Colorado’s homeowners insurance market is under strain from both wildfires and severe hail. Representative Brett Brown, the bill sponsor, said the enterprises pair mitigation grants with a reinsurance backstop: “By investing in impact resistant roofing and other proven measures, homeowners can reduce out-of-pocket deductible expenses and make homes easier to insure,” Brown said. Insurance Commissioner Michael Conway told the committee the package is intended to address both affordability and availability: “These two measures will be cornerstones to addressing our availability and affordability challenges,” he said, noting modeled reinsurance capacity needs in the hundreds of millions of dollars.

The measure contains a set of negotiated amendments the sponsors said were shaped by months of stakeholder engagement with insurers, county officials, and consumer groups. Among the changes adopted in committee, the bill’s funding structure was revised to split a 1.0 percent premium fee between the two enterprises (0.5 percent each for the reinsurance and the mitigation enterprise), down from higher proposed fees. Another amendment removed a statutory “loss ratio” test that industry said would discourage participation. The committee also clarified board composition, removed catastrophe-bond language and added consumer-facing procurement and contractor standards for mitigation work.

Supporters at the hearing included county commissioners from wildfire-prone areas, nonprofit housing providers and advocates for homeowners who said rising premiums and nonrenewals were putting housing stability at risk. Clear Creek County Commissioner George Marlin said the enterprises would give counties new tools: “By absorbing a portion of the wildfire risk in the state, the new enterprise will encourage insurers to write homeowners coverage throughout Colorado,” Marlin said. Representatives of insurers and trade groups largely adopted a neutral stance after the amendments were filed, though industry witnesses pressed for technical changes around board membership and program administration.

Opponents expressed concern about any new fees being passed through to consumers and the complexity of another enterprise, but those concerns were addressed in part by the fee reductions and governance changes negotiated in committee. After debate, the Finance Committee voted 9-4 to send HB 13-02 to Appropriations.

If enacted, the Strengthen Colorado Homes enterprise would offer grants and incentives for impact-resistant roofs and other mitigation measures; the Wildfire Catastrophe Reinsurance enterprise would allow insurers to cede some wildfire exposure to a state-backed facility in exchange for conditions intended to expand availability and competition in high-risk areas. Sponsors said program rules and board appointments will be phased in before collections begin to allow administrative setup and outreach.

The bill is now docketed for consideration by the House Appropriations Committee, where lawmakers will consider implementation costs and any required budget language.

Votes: The House Finance Committee advanced HB 13-02 to Appropriations with a 9-4 vote.

Speakers: Representative Brett Brown (sponsor), Commissioner Michael Conway (Colorado Division of Insurance), George Marlin (Clear Creek County Commissioner), Charles Allison Godfrey (Elevation Community Land Trust), Amy Bach (United Policyholders), Paul Martin (National Association of Mutual Insurance Companies), Daniel Furman (APCIA)