Colorado Gov. Jared Governor Polis signed a bill into law that proponents say will lower the price of homeowners insurance in Colorado
Polis signed SB26-155, called Increase Access Homeowner’s Insurance Enterprise, designed to make it more affordable for residents to get hail proof roofs, help decrease premiums and increase market competition in high-wildfire areas. The bill is part of Polis’s efforts he says will save Coloradans $800 each year on homeowners insurance.
The bill, sponsored by Speaker Julie McCluskie and Representative Kyle Brown, and Senators Kyle Mullica and Janice Marchman, creates an enterprise governed by a seven-member board, including the commissioner of insurance or their designee; members with expertise in home hardening, risk mitigation, resilient roof systems, and insurance underwriting or actuarial analysis; and members representing the interests of insurance companies, consumers, and counties.
The enterprise will impose an annual fee of 0.5% starting in 2027 of the total premium collected by admitted insurers selling multiperil homeowner’s insurance policies in the state.
The fee will go to efforts including:
- Defraying the cost of retrofitting residential property by providing grants for the installation of resilient roof systems. At least 85% of the fee revenue must be used for grants to Colorado homeowners to retrofit residential property to reduce insurer losses due to hail and windstorms.
- Analyzing data on hail losses to identify areas of the state to target for installation of resilient roof systems;
- Setting standards for resilient roof systems and awarding workforce training grants for installing and certifying resilient roofs;
- Creating codes of conduct for roofing contractors to ensure roofs are properly and appropriately installed;
- Conducting or contracting with a third party to conduct a study to analyze insurance risk in high-risk wildfire areas of the state.
The U.S. faces a widening gap between growing flood risk and the take-up of flood insurance, potentially exposing the nation to more than $375 billion in aggregated uninsured flood losses from a 1-in-100-year event, according to a new whitepaper from Moody’s.
The growing insurance protection gap, now at 65%, poses a significant financial risk to households and local governments, which have long relied on FEMA Specific Flood Hazard Area (SFHA) maps primarily based on riverine flooding, and generally don’t account for flood risk from storm surge, sea level rise or extreme precipitation, the Moody’s report said. This exposes counties to losses that can occur outside of mapped FEMA flood zones, added Moody’s.
Mortgage underwriters use FEMA SFHA maps to determine if a property needs to carry flood insurance, which is primarily provided to U.S residences by the National Flood Insurance Program. According to Moody’s, private flood insurance represents about 10% of the market.
“Uninsured losses arise not from isolated outliers, but from persistent gaps between expanding flood hazards – particularly beyond regulatory flood maps that dictate mortgage requirements, as well as rarer, high-severity events – and insurance take-up,” Moody’s concluded.
The interactive whitepaper analyzed residential flood risk in the U.S. using the Moody’s RMS US Inland Flood HD model, including scenarios of a 1-in-100-year flood and a more extreme 1-in-500-year flood, which could result in uninsured loss exposure of more than $1 trillion with a 70% protection gap.
In a 1-in-100 year-flood scenario, most counties’ uninsured loss exposure is manageable as a share of property replacement cost, the whitepaper found. A 1‑in‑100‑year flood is a flood event that has a 1% chance of occurring in any given year.
