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Commissioner warns of insurance strains; regulators push model transparency and mitigation crediting
Summary
Insurance Commissioner Mike Conway told the committee that hail and wildfire have driven underwriting losses and affordability problems; the department has created the FAIR plan and passed HB 1182 to require insurers to credit mitigation and increase model transparency while a proposed reinsurance/grant package (13o2) will return for further work.
Colorado’s insurance regulator told the Wildfire Matters Review Committee that a combination of hail losses and wildfire exposure has strained the homeowners insurance market and prompted regulatory and legislative action.
Commissioner Mike Conway said homeowners insurance premiums in Colorado are about 57% higher than the national average and that insurers reported underwriting losses in 8 of the last 11 years. He said 2023 produced a 115% loss ratio for personal lines, driven largely by hail, and that single events and recurrent hail damage have contributed to affordability and availability problems. He estimated the insured loss from the Marshall Fire’s single‑family homes at roughly $1 billion and reminded members such events compound the market challenges.
Conway described recent regulatory and statutory responses: Colorado established a FAIR plan as an insurer of last resort in 2023 to preserve availability; the department is preparing remediation standards for smoke‑contaminated homes after the Marshall Fire; and HB 1182 (passed in the most recent session) increases transparency in third‑party wildfire predictive models, requires insurers to account for mitigation work in scores and offers policyholders an appeal process.
He also discussed an affordability and resilience package (referred to in testimony as House Bill 13o2) that would have created a grant program to fortify roofs against hail and a state reinsurance mechanism for wildfire risk; the bill did not pass and will return for revision. Conway said the failed package proposed a small assessment (roughly $1–$1.60 per month on average) to fund grant and reinsurance enterprises, but committee members raised concerns about regressivity and impacts on working families.
Why it matters: loss of insurer participation in parts of the state or escalating deductibles and premiums can leave homeowners uninsured or effectively self‑insured. HB 1182 aims to make models and mitigation incentives more transparent so homeowners and local fire chiefs can understand what actions reduce scores and premiums.
Next steps: the Insurance Department will continue outreach to communities for town halls on reinsurance proposals, develop remediation standards for smoke‑damaged homes and monitor FAIR plan enrollments. The committee asked the department to return with cost and distributional analyses for any funding proposals.
