Colorado lawmakers are advancing a new proposal aimed at addressing rising homeowners insurance premiums, which have increased 65% over the past five years, according to the National Association of Insurance Commissioners. Hailstorms remain the primary driver behind these costs.
The legislation would impose a 0.5% fee on homeowners insurance policies to generate up to $20 million annually. The funds would support a state-managed grant program to help homeowners install hail-resistant roofs, which cost more than traditional materials. A state board would oversee the distribution of the grants through an enterprise fund structure.
Sen. Kyle Mullica, a Democrat from Thornton and sponsor of the bill, said the goal is to reduce the frequency and severity of hail-related claims. Fewer claims could ease pressure on premiums statewide. The proposal represents a revised version of a similar bill that failed in the previous legislative session.
One key change addresses earlier concerns that insurers might pass the fee directly to policyholders. The updated bill specifies that insurers “shall not surcharge the fee amount to policyholders,” although enforcement mechanisms have not yet been defined.
Mullica said lawmakers aimed to balance funding the program with limiting any additional cost burden on consumers. He emphasized that the program’s success depends on increasing the number of homes equipped with fortified roofing materials.
Hail damage accounts for a significant portion of insurance costs in Colorado. State data shows that 60% to 70% of premiums are tied to hail risk, even in regions with limited hail activity. Each major hail event increases claims costs, which insurers then incorporate into premium pricing.
The broader insurance environment in Colorado reflects increasing challenges tied to weather-related risks. Since 1980, the state has experienced more than 76 weather disasters totaling more than $1 billion in damage. Most of these events have occurred in the past decade, with climate experts citing more frequent and severe conditions.
Gov. Jared Polis has described the state’s insurance market as a growing crisis, noting reduced availability and limited competition in some areas. In certain cases, homeowners have only one insurance option, which contributes to higher rates.
While the current proposal focuses on hail mitigation, it also includes a study component to examine wildfire risk and best practices. Unlike the previous version, the bill does not include financial incentives for insurers operating in wildfire-prone regions.
Industry representatives have expressed support for the program’s focus on risk reduction. Carole Walker, executive director of the Rocky Mountain Insurance Association, attended the bill’s unveiling at the state capitol. She said the industry shares the state’s goal of expanding the use of hail-resistant roofing.
“That is what’s going to make a difference. That’s the long-term answer to making our homes safer and more insurable,” Walker said.
Lawmakers are expected to consider the bill in the coming weeks as part of ongoing efforts to address insurance affordability and availability across Colorado.
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