Fallout from climate change blamed for rising insurance rates in Colorado: "I think we're seeing a paradigm shift"
When Bob Hunter moved from Kansas to the Leyden Rock neighborhood in Arvada, he was partly drawn by the rural nature of the area, the broad views from his duplex, and the surrounding open space.
"We've got a great view here," said Hunter, as he stood on his deck and looked toward Standley Lake. "We really do enjoy living here", he said.
But Hunter and some 83 other property owners in his Leyden Rock Patio Villa Homes HOA are bracing for a roughly 33% increase in their monthly dues, an increase brought about partly due to fallout from climate change and seismic shifts in the insurance industry, which are expected to impact HOAs across Colorado.
In 2023, the insurer of Hunter's HOA decided not to renew the HOA's policy as the insurance company decided to no longer do business in Colorado.
Nick Strong, a commercial insurance risk manager in Steamboat Springs, said that is happening regularly these days as insurance companies have seen a loss in profitability in certain states.
"We're seeing more catastrophic losses and it's tied to climate change", said Strong. "It's all connected".
In 2023, Colorado was listed as one of 18 states where insurers lost money on homeowners coverage, according to the AM Best credit agency. In eight of the last 10 years, Colorado has been listed as a state where homeowners insurance has been unprofitable for the insurance industry, according to Best, leading insurers to pull out of the state.
"I think we're seeing a paradigm shift," said Strong. He says climate change is seen as exacerbating disasters like wildfires, wind and hailstorms, which are becoming more severe.
"Well, of course, we were here when the Marshall Fire went through and we could see the glow," said Hunter.
That massive fire -- in the middle of winter, propelled by high winds -- is seen as an emblematic of the changing climate pattern and the impact the insurance industry believes it is having on communities- and on the insurance industry's bottom line.
"The Marshall Fire just demonstrated to everyone you don't have to be surrounded by trees to be in danger of a crazy fire," noted Hunter.
So when the insurance company that had insured his HOA pulled out, it may not have been a total surprise. But what happened next underlined the broader shift in the insurance industry.
Hunter says his HOA sought bids from nearly two dozen insurance companies."We went through 20 insurance companies and in actuality got back one quote," recalled Hunter.
And that quote was for $175,000 per year, nearly triple the previous premiums of $55,000 annually.
Starting in January, Hunter says those rising insurance rates will impact every homeowner in his HOA, with monthly dues going from $282 per month to $400 per month.
"I'm certainly a believer in climate change and the impact it's having," said Hunter.
Nick Strong says Hunter's situation is not an outlier and more and more HOAs will likely see significant rate increases due to the same set of factors being seen by Bob Hunter's Leyden Rock HOA.