In wake of Marshall Fire, insurance commissioner considers state insurance fund
As home insurers abandon California due to devastating wildfires, some worry Colorado could be next.
"It's something we need to be prepared for what the future could look like if we don't help the market stabilize and keep insurance companies here," said Colorado Insurance Commissioner Mike Conway.
Lawmakers asked Conway to conduct a study on the availability and affordability of homeowners insurance according to zip code or county by county. He's also studying whether it's time Colorado had a state insurance fund.
We're one of 17 states that doesn't have one.
"I think that is part of the conversation," said Conway. He says it should be an insurer of last resort, not the main insurer as it's become in Florida.
As climate-driven catastrophes increase here, so too have insurance premiums. According to AAA, they're up 21% between 2017 and 2020 alone. Rocky Mountain Insurance Information Association estimates the Marshall Fire will cost more than $2 billion, which will drive rates further.
Conway says while he has not heard of carriers refusing to insure entire communities, he says they will likely make community-wide mitigation a condition of coverage.
"Parcel by parcel can't be the solution."
He says the state will also likely impose mandates of its own after two-thirds of Marshall Fire victims learned they were underinsured. Conway says he's received hundreds of phone calls from people whose homes were destroyed or damaged.
"We all rely on our insurance company to tell us how much we actually need to rebuild. So that means there's a responsibility on an insurance company to give you correct information."
He's also not sure rates correctly reflect risk in all cases, and he is considering state modeling software to make sure policyholders are protected.
Conway says just as he and lawmakers here have addressed the availability and affordability of health insurance over the last few years, they will do the same now in regard to homeowners' insurance.
