This story was produced as part of the Colorado Capitol News Alliance. It first appeared at coloradosun.com.
DENVER | State lawmakers Tuesday killed a first-in-the-nation effort by Gov. Jared Polis and one of the top Democrats in the legislature to rein in home insurance premiums in Colorado, which are one of the biggest drivers of increased housing costs.
House Bill 25-1302 would have imposed a 1% fee on every homeowner’s insurance policy. Homeowners would have borne the cost.
Revenue from the charge, potentially hundreds of millions of dollars over the life of the fee, would have been split between a grant program to help hail-proof roofs and an effort to limit the wildfire-loss risk borne by insurers.
But the measure was rejected Tuesday morning in the Senate Finance Committee by a 6-2 vote, with three Democrats joining the three Republicans on the panel in voting to kill the measure.
The senators who voted against the bill said they were worried about imposing a new fee on Coloradans, who have been complaining about the cost of living.
“I’ve heard loud and clear from people that they don’t want more fees,” said state Sen. Kyle Mullica, a Thornton Democrat who voted to kill the bill.
But the sponsors of the measure said the benefit would have far outweighed the cost to homeowners.
“We’re now opting to do nothing about a runaway freight train,” state Sen. Judy Amabile, a Boulder Democrat and lead sponsor of the bill, told the Senate Finance Committee before it rejected the measure.
The bill sought to reduce insurers’ loss risk by having the state purchase reinsurance coverage for companies that offer policies in wildfire-prone areas. Reinsurance is insurance for insurers that kicks in under extraordinary circumstances, such as when a natural disaster causes enormous losses.
The concept is borrowed from a health insurance program adopted in Colorado in 2019 that has helped drive down costs — albeit with some caveats. That initiative is funded by fees on insurers and federal funding, not directly by Coloradans.
House Bill 1302 was the latest effort by Polis and the legislature in recent years to rein in rising property insurance costs caused by increased wildfire and hail risks tied to a warming climate. The governor saw the bill as a cornerstone of his wildfire policy push.
Hail and wildfire are the two biggest drivers of home insurance costs in Colorado.
“I think it can be a win-win for everybody,” Polis told The Colorado Sun earlier this year. “There are currently Coloradans that only have access to one insurance product for their home or are being cut off altogether. By reducing risk through reinsurance — a distinct but similar approach to what we took in health care and helped reduce rates — we feel this can help put downward pressure” on the home insurance market.
In a written statement Tuesday, the governor blasted the Democrats who opposed the measure.
“It’s disappointing to see Democrats join with Republicans not take action to help Coloradans facing out-of-control home insurance costs and increase competition for Coloradans,” said Shelby Wieman, a spokeswoman for Polis. “Homeowners’ insurance is part of housing costs, and it’s quite simply too expensive in Colorado. This bill would have helped us address both affordability and availability of homeowners’ insurance in the state. Too many Coloradans are paying more money for home insurance than ever before and we must take action to provide relief.”
Wieman added: “In broad daylight, the legislature failed to help save people money when they need it most.”
The legislature this year has been increasingly willing to buck the governor’s policy goals. In addition to the failure of House Bill 1302, the Senate this week killed his “Yes in God’s Backyard” housing bill and a measure he requested that was aimed at rewriting Colorado’s law regulating the use of artificial intelligence.
The bill’s other lead sponsors were House Speaker Julie McCluskie, D-Dillon; state Rep. Kyle Brown, D-Louisville; and state Rep. Marc Snyder, D-Manitou Springs.
Colorado Capitol coverage is produced by the Capitol News Alliance, a collaboration between KUNC News, Colorado Public Radio, Rocky Mountain PBS, and The Colorado Sun, and shared with Rocky Mountain Community Radio and other news organizations across the state. Funding for the Alliance is provided in part by the Corporation for Public Broadcasting.
I’ve seen bills like these fail in states that I’ve lived in. Flooding was the problem in Texas and Iowa, but only a small percentage of people chose to live in flood-prone areas. They suffered repeated losses, which could have been avoided by not choosing to live in those areas and cities not allowing building permits in flood zones. The same is true in this case. I’m not sure promoting this type of bill curbs the behavior of homeowners that choose riskier locales. It seems to me that high rates would do more to provide more common sense to purchase behaviors. Society needs to come to grips with the reality of climate change risks through development and purchase behaviors, not price controls!
The solution isn’t to save people money by charging them more money (sounds like a Democrat solution if there ever was one!) But to require the state insurance commissioner to require the insurance companies to lower their rates or get out. By that i mean if they are not going to offer homeowners insurance at the state mandated price, then they can’t do business in the state period. No auto, no life, no annuities, no insurance products of any kind. Take an entire market away from these companies and see how fast they change their tune!