A Bill for an Act
Page 1, Line 101Concerning increasing the availability of homeowner's
Page 1, Line 102insurance in the state.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)
The bill creates 2 enterprises in the division of insurance (division) in the department of regulatory agencies.
The bill creates the strengthen Colorado homes enterprise (strengthen homes enterprise), which is a state-owned business that imposes and collects a fee from insurance companies (insurers), including the FAIR plan association, that offer homeowner's insurance policies in Colorado, which fee is equal to 1.5% of the dollar amount of the premiums that the insurer collects from homeowners for issuing homeowner's insurance policies (insurer fee).
With the insurer fee revenue, the strengthen homes enterprise board administers a grant program (grant program) to strengthen homes against the risk of future damage claims caused by high winds, wildfire, hail, and other extreme weather events (extreme weather events) by allowing a homeowner to use grant money to upgrade their roof system with certain resilient roof materials. By paying the insurer fee to support the grant program to retrofit homes with resilient roofs, insurers reduce their overall risk in the market due to hail and other extreme weather events.
The bill also creates the wildfire catastrophe reinsurance enterprise (reinsurance enterprise), which is a state-owned business implementing and administering the wildfire catastrophe reinsurance program (reinsurance program). The reinsurance program makes reinsurance payments to insurers that offer homeowner's insurance on properties located in the state to partially mitigate losses in the event of a state or federally declared wildfire-related disaster (wildfire-related disaster). The purpose of the reinsurance program is to stabilize the homeowner's insurance market in the state and to attract and retain homeowner's insurers. In exchange for access to the reinsurance program, the reinsurance program requires insurers to sell homeowner's insurance in areas of the state that are at high risk for wildfires.
To pay for the reinsurance program, the reinsurance enterprise:
- Issues revenue bonds secured by the reinsurance enterprise;
- Issues a catastrophe bond to a person that purchases the bond but pays the principal to cover costs of a wildfire-related disaster if it occurs;
- May impose and collect an insurer fee on insurers to cover a shortfall if a wildfire-related disaster does not occur during the bond term and the reinsurance enterprise has insufficient money to redeem the bonds at maturity; and
- Invests the revenue from the bonds and insurer fees.
In addition, the bill sets the loss ratio for homeowner's insurance by presuming that the rates charged to purchasers are excessive if the insurer's loss ratio is less than 75% over a 3-year period and, if rates are in excess of the loss ratio, requires insurers to submit rates that are at least 5% less than the previous year.
Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 2, Line 2SECTION 1. In Colorado Revised Statutes, add parts 20 and 21 to article 4 of title 10 as follows:
Page 3, Line 1PART 20
STRENGTHEN COLORADO HOMES ENTERPRISE
Page 3, Line 210-4-2001. Legislative declaration. (1) The general assembly:
Page 3, Line 3(a) Finds and determines that:
Page 3, Line 4(I) Increased greenhouse gas emissions and rapidly rising
Page 3, Line 5temperatures resulting from human activity are changing the
Page 3, Line 6climate in ways that threaten Colorado's economy, the health of its residents, and its natural landscape;
Page 3, Line 7(II) These temperature increases have an impact on
Page 3, Line 8Colorado's environment, with drought, heat waves, windstorms,
Page 3, Line 9wildfires, hail, and other extreme weather events increasing in recent years;
Page 3, Line 10(III) The economic impacts of these increasingly frequent and severe weather events are significant;
Page 3, Line 11(IV) Colorado property owners in the state are faced
Page 3, Line 12with challenges in finding insurance coverage and increasing
Page 3, Line 13insurance premiums, undermining the ability to purchase, sell, and own a home;
Page 3, Line 14(V) There is a need in the state to encourage investments
Page 3, Line 15in home hardening, which means making homes and communities
Page 3, Line 16more resilient to extreme weather events such as hail and wildfires;
Page 3, Line 17(VI) Making investments in home hardening will decrease
Page 3, Line 18losses that would otherwise predominantly be paid by insurers
Page 3, Line 19and will allow and encourage insurer participation and
Page 4, Line 1competition in the insurance market to offer coverage
Page 4, Line 2throughout the state to all Coloradans, resulting in long-term savings for insurers; and
Page 4, Line 3(VII) Accordingly, it is appropriate to finance a home
Page 4, Line 4hardening program through a fee imposed on homeowner's insurance products; and
Page 4, Line 5(b) Declares that:
Page 4, Line 6(I) The strengthen Colorado homes enterprise provides
Page 4, Line 7valuable services, benefits, and useful business services to
Page 4, Line 8insurers when, in exchange for payment of the fee described in
Page 4, Line 9section 10-4-2003, the enterprise uses the fee revenue to provide
Page 4, Line 10grants to homeowners to fortify the roof of and otherwise
Page 4, Line 11mitigate the risk of losses to an insured property resulting from
Page 4, Line 12natural disasters and extreme weather, including hail, thus reducing risk and losses to insurers in the state;
Page 4, Line 13(II) By providing the benefits and services specified in this
Page 4, Line 14part 20, the strengthen Colorado homes enterprise engages in
Page 4, Line 15activities conducted in the pursuit of a benefit, gain, or livelihood and therefore operates as a business;
Page 4, Line 16(III) Consistent with the determination of the Colorado
Page 4, Line 17supreme court in Nicholl v. E-470 Public Highway Authority, 896
Page 4, Line 18P.2d 859 (Colo. 1995), that the power to impose taxes is
Page 4, Line 19inconsistent with enterprise status under section 20 of article
Page 4, Line 20X of the state constitution, the general assembly concludes
Page 4, Line 21that the revenue collected by the enterprise is generated by fees, not taxes, because the money credited to the enterprise is:
Page 4, Line 22(A) For the specific purpose of allowing the enterprise to
Page 5, Line 1defray the costs of providing the services described in this part 20;
Page 5, Line 2(B) Collected at rates that are reasonably calculated
Page 5, Line 3based on the costs of the services provided by the enterprise; and
Page 5, Line 4(C) Not state fiscal year spending, as defined in section
Page 5, Line 524-77-102 (17), or state revenues, as defined in section 24-77-103.6
Page 5, Line 6(6)(c), and does not count against either the state fiscal year
Page 5, Line 7spending limit imposed by section 20 of article X of the state
Page 5, Line 8constitution or the excess state revenues cap, as defined in
Page 5, Line 9section 24-77-103.6 (6)(b), so long as the enterprise qualifies as
Page 5, Line 10an enterprise for purposes of section 20 of article X of the state constitution; and
Page 5, Line 11(IV) No other enterprise created simultaneously or
Page 5, Line 12within the preceding five years serves primarily the same purpose
Page 5, Line 13as the enterprise, and the enterprise will generate revenue from
Page 5, Line 14fees and surcharges of less than one hundred million dollars
Page 5, Line 15total in its first five fiscal years. Accordingly, the creation of
Page 5, Line 16the enterprise does not require voter approval pursuant to section 24-77-108.
Page 5, Line 1710-4-2002. Definitions.As used in this part 20, unless the context otherwise requires:
Page 5, Line 18(1) "Board" or "enterprise board" means the governing board of the strengthen Colorado homes enterprise.
Page 5, Line 19(2) "FAIR plan association" means the fair access to
Page 5, Line 20insurance requirements plan association created in section
Page 5, Line 2110-4-1804.
Page 6, Line 1(3) "Fee" means the fee that the enterprise imposes and collects from insurers pursuant to section 10-4-2003 (4).
Page 6, Line 2(4) "Fund" means the strengthen Colorado homes enterprise fund created in section 10-4-2003 (5).
Page 6, Line 3(5) "Grant program" means the strengthen Colorado homes enterprise grant program created in section 10-4-2004.
Page 6, Line 4(6) "Resilient roof system" means the integrated assembly
Page 6, Line 5of components that protect a structure from environmental
Page 6, Line 6elements, including the roof covering, underlayment, decking,
Page 6, Line 7flashing, vents, soffits, fascia, gutters, downspouts, and
Page 6, Line 8structural supports. "Resilient roof system" includes both
Page 6, Line 9materials and construction techniques that are designed to
Page 6, Line 10exceed recognized performance standards for extreme weather events.
Page 6, Line 11(7) "Strengthen Colorado homes enterprise" or
Page 6, Line 12"enterprise" means the strengthen Colorado homes enterprise created in section 10-4-2003 (1).
Page 6, Line 1310-4-2003. Strengthen Colorado homes enterprise - creation
Page 6, Line 14- purpose - enterprise board - powers and duties - fee - fund - gifts,
Page 6, Line 15grants, or donations - rules - reporting - repeal. (1) Enterprise -
Page 6, Line 16creation - purpose. (a) (I) The strengthen Colorado homes
Page 6, Line 17enterprise is created in the division. The enterprise is a type 1
Page 6, Line 18entity, as defined in section 24-1-105, and exercises its powers
Page 6, Line 19and performs its duties and functions under the division. The
Page 6, Line 20enterprise is and operates as a government-owned business within the division.
Page 6, Line 21(II) The business purpose of the enterprise is to impose and
Page 7, Line 1collect a fee charged to certain insurers and to use the revenue
Page 7, Line 2from the fee to provide the following business services to insurers paying the fee:
Page 7, Line 3(A) Awarding grants to insured homeowners pursuant to
Page 7, Line 4section 10-4-2004 to defray the cost of retrofitting residential
Page 7, Line 5property to resist loss by purchasing and installing resilient roof systems using qualified professionals;
Page 7, Line 6(B) Through the installation of resilient roof systems on
Page 7, Line 7homes in the state, reducing the frequency of hail damage claims;
Page 7, Line 8(C) Improving insurance market stability throughout the state; and
Page 7, Line 9(D) Reducing insurer losses by increasing the number of homes with resilient roof systems.
Page 7, Line 10(b) The enterprise constitutes an enterprise for purposes
Page 7, Line 11of section 20 of article X of the state constitution so long as it
Page 7, Line 12retains the authority to issue revenue bonds and receives less
Page 7, Line 13than ten percent of its total revenues in grants from all
Page 7, Line 14Colorado state and local governments combined. So long as it
Page 7, Line 15constitutes an enterprise pursuant to this subsection (1), the
Page 7, Line 16enterprise is not subject to section 20 of article X of the state constitution.
Page 7, Line 17(2) Enterprise board. (a) The enterprise is governed by the enterprise board.
Page 7, Line 18(b) The board consists of the following three voting members:
Page 7, Line 19(I) The commissioner or the commissioner's designee; and
Page 8, Line 1(II) Two members appointed by the governor to serve three-year terms, including:
Page 8, Line 2(A) One member who is an insurer with expertise in homeowner's insurance; and
Page 8, Line 3(B) One member who has expertise or experience in home hardening and other mitigation activities.
Page 8, Line 4(c) Of the first members appointed to the board pursuant
Page 8, Line 5to subsection (2)(b)(II) of this section, one member shall serve an initial term of two years.
Page 8, Line 6(d) (I) The governor shall make the initial appointments to the board no later than January 1, 2026.
Page 8, Line 7(II) This subsection (2)(d) is repealed, effective July 1, 2027.
Page 8, Line 8(e) The commissioner or the commissioner's designee is the chair of the board.
Page 8, Line 9(f) Members of the board serve without compensation but
Page 8, Line 10must be reimbursed from money in the fund for actual and
Page 8, Line 11necessary expenses incurred in the performance of their duties pursuant to this part 20.
Page 8, Line 12(g) The board shall conduct the enterprise's business as
Page 8, Line 13required by state law, including in compliance with the open
Page 8, Line 14meeting requirements of part 4 of article 6 of title 24 and the open record requirements of article 72 of title 24.
Page 8, Line 15(3) Powers and duties. (a) The enterprise's primary powers and duties are to:
Page 8, Line 16(I) Impose and collect the enterprise fee from insurers pursuant to subsection (4) of this section;
Page 8, Line 17(II) Award grants from money in the fund in accordance
Page 9, Line 1with the grant program requirements specified in section 10-4-2004;
Page 9, Line 2(III) Issue revenue bonds for the expenses of the enterprise, secured by revenue of the enterprise;
Page 9, Line 3(IV) Pay the administrative expenses of the enterprise;
Page 9, Line 4(V) Adopt, amend, or repeal rules or policies for the
Page 9, Line 5regulation of the enterprise's affairs and the conduct of the enterprise's business consistent with this part 20;
Page 9, Line 6(VI) (A) Contract with any public or private entity,
Page 9, Line 7including state agencies, consultants, and the attorney
Page 9, Line 8general's office, for professional and technical assistance,
Page 9, Line 9office space and administrative services, advice, and other services related to the conduct of the affairs of the enterprise.
Page 9, Line 10(B) The enterprise shall pay a fair market rate to any
Page 9, Line 11public entity, private entity, contractor, or consultant, which
Page 9, Line 12may include a state agency, the attorney general's office, the
Page 9, Line 13division, or the department, that is hired by the enterprise,
Page 9, Line 14without regard to the "Procurement Code", articles 101 to 112 of title 24, to perform duties pursuant to this subsection (3).
Page 9, Line 15(VII) Prepare and submit an annual financial report
Page 9, Line 16pursuant to subsection (7) of this section concerning the
Page 9, Line 17administration of the enterprise and the grant program and post the report on the enterprise's public-facing website.
Page 9, Line 18(b) The enterprise may seek, accept, and expend grants or
Page 9, Line 19other money from the federal government and gifts, grants, or
Page 9, Line 20donations from other public and private sources to support and
Page 9, Line 21enhance enterprise activities; except that the enterprise shall
Page 10, Line 1not accept grants from the state or from local governments
Page 10, Line 2unless the combined total of all grants from such sources is under ten percent of the enterprise's annual revenue.
Page 10, Line 3(4) Fee - rules. (a) Beginning in the 2026 calendar year on
Page 10, Line 4or before a date determined by the enterprise, and annually
Page 10, Line 5each calendar year thereafter on or before the same date, each
Page 10, Line 6insurer that has a policy or contract for homeowner's multiple
Page 10, Line 7peril insurance covering property or risks in the state shall pay
Page 10, Line 8a fee imposed and collected by the enterprise pursuant to
Page 10, Line 9subsection (4)(c) of this section. The FAIR plan association shall
Page 10, Line 10pay the fee imposed and collected by the enterprise pursuant to
Page 10, Line 11subsection (4)(c) of this section for each of its policies covering a homeowner's property or risk in the state.
Page 10, Line 12(b) The enterprise shall credit the fees collected to the
Page 10, Line 13fund. A fee collected by the enterprise is excluded from the state's fiscal year spending.
Page 10, Line 14(c) (I) The amount of the fee is an amount equal to one and
Page 10, Line 15one-half percent on the percentage of total premiums collected
Page 10, Line 16by each insurer and by the FAIR plan association in the
Page 10, Line 17immediately preceding calendar year on homeowner's insurance
Page 10, Line 18policies issued in the state on any home that does not have a
Page 10, Line 19resilient roof system that meets the standards of the Insurance
Page 10, Line 20Institute for Business and Home Safety or similar standards, as determined by the board by rule.
Page 10, Line 21(II) The enterprise may lower the fee or cease collecting
Page 10, Line 22the fee in any calendar year to ensure that the total amount of
Page 10, Line 23fee revenue does not exceed one hundred million dollars over the first five fiscal years of the enterprise's existence.
Page 11, Line 1(d) The enterprise may annually request from insurers
Page 11, Line 2and the FAIR plan association information about policies and
Page 11, Line 3contracts as necessary to implement and enforce this part 20
Page 11, Line 4and may request that the division impose, after a public hearing,
Page 11, Line 5a civil fine or penalty of not more than one hundred twenty
Page 11, Line 6percent of the fee due to the enterprise for a violation of this part 20. The division shall credit the fine to the fund.
Page 11, Line 7(5) Fund. (a) The strengthen Colorado homes enterprise fund is created in the state treasury.
Page 11, Line 8(b) The fund consists of:
Page 11, Line 9(I) Fees imposed and collected from insurers pursuant to subsection (4) of this section;
Page 11, Line 10(II) Grants or other money received from the federal
Page 11, Line 11government or gifts, grants, and donations received from public or private sources to support and enhance enterprise activities;
Page 11, Line 12(III) Fines for failure to pay the enterprise fee imposed pursuant to subsection (4)(d) of this section;
Page 11, Line 13(IV) Any money from bonds issued pursuant to subsection (3)(a)(III) of this section; and
Page 11, Line 14(V) Any money that the general assembly may appropriate or transfer to the fund.
Page 11, Line 15(c) Money in the fund is continuously appropriated to the
Page 11, Line 16enterprise for the purposes set forth in this part 20 and to pay
Page 11, Line 17the enterprise's reasonable and necessary administrative and operating expenses.
Page 11, Line 18(d) The state treasurer shall credit all interest and
Page 12, Line 1income derived from the deposit and investment of money in the fund to the fund.
Page 12, Line 2(6) Rules.The enterprise board shall adopt rules that are
Page 12, Line 3reasonable and necessary for administration and implementation of the enterprise and the grant program.
Page 12, Line 4(7) Reporting. (a) Notwithstanding section 24-1-136
Page 12, Line 5(11)(a)(I), beginning July 1, 2027, and each July 1 thereafter, the
Page 12, Line 6enterprise shall submit a report to the committees of reference
Page 12, Line 7of the general assembly to which the department is assigned
Page 12, Line 8pursuant to section 2-7-203 concerning the administration and implementation of the enterprise and the grant program.
Page 12, Line 9(b) The annual report must include:
Page 12, Line 10(I) The amount of fees collected from insurers and the FAIR plan association, and the unobligated balance of the fund;
Page 12, Line 11(II) The number of grant applications and the amount of grants awarded;
Page 12, Line 12(III) The areas of the state where grant recipients reside; and
Page 12, Line 13(IV) Any other information relevant to the success of the enterprise and the grant program.
Page 12, Line 1410-4-2004. Strengthen Colorado homes enterprise grant
Page 12, Line 15program - application - eligibility criteria - award of grants - rules.
Page 12, Line 16(1) There is created in the enterprise the strengthen Colorado
Page 12, Line 17homes enterprise grant program to provide grants to Colorado
Page 12, Line 18homeowners to retrofit residential property to resist loss due
Page 12, Line 19to common perils, including hail, windstorms, wildfire, and
Page 12, Line 20other extreme weather events.
Page 13, Line 1(2) (a) Subject to available fee revenue, the enterprise
Page 13, Line 2board shall award grants, in accordance with this section, from
Page 13, Line 3the fund. The board may establish procedures and criteria for
Page 13, Line 4the award of grants if there is insufficient money in the fund to award grants to all eligible homeowner applicants.
Page 13, Line 5(b) The board may contract with a third-party vendor to administer the grant program.
Page 13, Line 6(3) In addition to any grant program criteria established by the board by rule, a homeowner awarded a grant shall:
Page 13, Line 7(a) Have an insurable residential property located in
Page 13, Line 8Colorado that is covered by a homeowner's multiple peril insurance policy;
Page 13, Line 9(b) Obtain all permits required by law for construction;
(c) Comply with all applicable building codes;
Page 13, Line 10(d) Arrange and pay for inspections required by law and the terms of the grant program;
Page 13, Line 11(e) Construct a roof that meets the standards of the
Page 13, Line 12Insurance Institute for Business and Home Safety or similar standards, as determined by the board by rule; and
Page 13, Line 13(f) Select a contractor licensed in the state with
Page 13, Line 14demonstrated evidence of passing a nationally recognized
Page 13, Line 15examination that meets the 2024 building code mandates for
Page 13, Line 16roof work on residential property and any subsequent updates to the building code.
Page 13, Line 17(4) The board may perform audits to verify:
Page 13, Line 18(a) The accuracy of the information included in an
Page 13, Line 19application; and
(b) That the applicant meets all eligibility criteria.
Page 14, Line 1(5) A homeowner shall not use money that is awarded as
Page 14, Line 2a grant to pay for general roof maintenance or repair, but may
Page 14, Line 3use grant money in conjunction with repairs or reconstruction
Page 14, Line 4necessitated by damage from wind, hail, wildfire, or other
Page 14, Line 5extreme weather events or for proactive retrofitting necessitated by or designed to prevent such damage.
Page 14, Line 6(6) The enterprise board shall adopt rules for the
Page 14, Line 7administration and implementation of the grant program,
Page 14, Line 8including the standards for a resilient roof system, the criteria
Page 14, Line 9used to determine whether an applicant is eligible for a grant
Page 14, Line 10under this section, and the amount and timing of the grant
Page 14, Line 11award. In adopting eligibility requirements for the grants, the
Page 14, Line 12board may take into consideration applicant income, whether an
Page 14, Line 13applicant lives in a location that, based on historical data, has
Page 14, Line 14a higher susceptibility to extreme weather events, the number
Page 14, Line 15of applicants, and any other criteria the board determines is
Page 14, Line 16appropriate to meet the purpose of the enterprise and the money available for grants.
Page 14, Line 17(7) Nothing in this section creates:
Page 14, Line 18(a) An entitlement for a homeowner to receive grant money to inspect or retrofit residential property; or
Page 14, Line 19(b) An obligation for the state to appropriate money to inspect or retrofit residential property.
Page 14, Line 2010-4-2005. Repeal of part - subject to review.This part 20 is
Page 14, Line 21repealed, effective September 1, 2035. Before the repeal, the
Page 14, Line 22enterprise and the grant program are scheduled for review in accordance with section 24-34-104.
Page 15, Line 1PART 21
WILDFIRE CATASTROPHE REINSURANCE ENTERPRISE
Page 15, Line 210-4-2101. Legislative declaration. (1) The general assembly:
Page 15, Line 3(a) Finds and determines that:
Page 15, Line 4(I) Increased greenhouse gas emissions and rapidly rising
Page 15, Line 5temperatures are changing the climate in ways that threaten
Page 15, Line 6Colorado's economy, the health of its residents, and its natural landscape;
Page 15, Line 7(II) The changing climate is already impacting Colorado's
Page 15, Line 8environment, with drought, heat waves, high windstorms,
Page 15, Line 9wildfires, and other extreme weather events increasing in size and severity in recent years;
Page 15, Line 10(III) The economic impacts of these extreme weather
Page 15, Line 11events on Colorado and its residents are significant, especially the impacts from wildfires;
Page 15, Line 12(IV) Colorado property owners are faced with challenges
Page 15, Line 13in finding insurance coverage and in paying increasing insurance
Page 15, Line 14premiums, undermining the ability of Coloradans to purchase, sell, and own a home;
Page 15, Line 15(V) Establishing a reinsurance program to cover certain
Page 15, Line 16homeowner losses caused by wildfires will decrease losses to
Page 15, Line 17insurers, provide more predictability for insurers, and
Page 15, Line 18encourage insurer competition and participation in the homeowner's insurance market;
Page 15, Line 19(VI) Robust participation by insurers in the homeowner's
Page 16, Line 1insurance market is necessary to ensure affordable
Page 16, Line 2homeowner's insurance coverage throughout the state to all
Page 16, Line 3Coloradans, including those in areas of the state at high risk for wildfires; and
Page 16, Line 4(VII) Accordingly, it is appropriate to create a
Page 16, Line 5reinsurance program to mitigate catastrophic losses to insurers
Page 16, Line 6from state or federally declared wildfire-related disasters
Page 16, Line 7and, in exchange for that service, to provide money for the
Page 16, Line 8reinsurance program by issuing revenue and catastrophe bonds and imposing an insurer fee in certain circumstances; and
Page 16, Line 9(b) Declares that:
Page 16, Line 10(I) The insurer fee is reasonably related to the overall
Page 16, Line 11cost of the service provided in this part 21 and is imposed on
Page 16, Line 12insurers in the state that will benefit from or use the service provided by the wildfire catastrophe reinsurance enterprise;
Page 16, Line 13(II) By providing the benefits and services specified in this
Page 16, Line 14part 21, the enterprise engages in activities conducted in the
Page 16, Line 15pursuit of a benefit, gain, or livelihood and therefore operates as a business;
Page 16, Line 16(III) Consistent with the determination of the Colorado
Page 16, Line 17supreme court in Nicholl v. E-470 Public Highway Authority, 896
Page 16, Line 18P.2d 859 (Colo. 1995), that the power to impose taxes is
Page 16, Line 19inconsistent with enterprise status under section 20 of article
Page 16, Line 20X of the state constitution, the general assembly concludes
Page 16, Line 21that the revenue collected by the enterprise is generated by fees, not taxes, because the money credited to the enterprise is:
Page 16, Line 22(A) For the specific purpose of allowing the enterprise to
Page 17, Line 1defray the costs of providing the services described in this part 21;
Page 17, Line 2(B) Collected at rates that are reasonably calculated
Page 17, Line 3based on the costs of the services provided by the enterprise; and
Page 17, Line 4(C) Not state fiscal year spending, as defined in section
Page 17, Line 524-77-102 (17), or state revenues, as defined in section 24-77-103.6
Page 17, Line 6(6)(c), and does not count against either the state fiscal year
Page 17, Line 7spending limit imposed by section 20 of article X of the state
Page 17, Line 8constitution or the excess state revenues cap, as defined in
Page 17, Line 9section 24-77-103.6 (6)(b), so long as the enterprise qualifies as
Page 17, Line 10an enterprise for purposes of section 20 of article X of the state constitution; and
Page 17, Line 11(IV) No other enterprise created simultaneously or
Page 17, Line 12within the preceding five years serves primarily the same purpose
Page 17, Line 13as the enterprise, and the enterprise will generate revenue from
Page 17, Line 14fees and surcharges of less than one hundred million dollars
Page 17, Line 15total in its first five fiscal years. Accordingly, the creation of
Page 17, Line 16the enterprise does not require voter approval pursuant to section 24-77-108.
Page 17, Line 1710-4-2102. Definitions.As used in this part 21, unless the context otherwise requires:
Page 17, Line 18(1) "Catastrophe bond" means a high-yield debt
Page 17, Line 19instrument that is issued to raise money in the event a natural disaster occurs.
Page 17, Line 20(2) "Eligible insurer" means an insurer that:
Page 17, Line 21(a) Offers homeowner's insurance on property located in the state;
Page 18, Line 1(b) Incurs claims costs as a result of a state or federally declared wildfire-related disaster; and
Page 18, Line 2(c) Writes policies for a proportional share of risk in
Page 18, Line 3areas at highest risk of wildfires in the state, as determined by the commissioner.
Page 18, Line 4(3) "Enterprise" means the wildfire catastrophe reinsurance enterprise created in section 10-4-2103 (1).
Page 18, Line 5(4) "Enterprise board" or "board" means the governing board of the enterprise created in section 10-4-2103 (2).
Page 18, Line 6(5) "Fund" means the wildfire catastrophe reinsurance enterprise fund created in section 10-4-2103 (6).
Page 18, Line 7(6) "Insurer fee" means a fee imposed by the enterprise pursuant to section 10-4-2103 (4).
Page 18, Line 8(7) "Reinsurance payment" means a payment to an eligible insurer through the reinsurance program.
Page 18, Line 9(8) "Reinsurance program" means the wildfire catastrophe reinsurance program created in section 10-4-2104.
Page 18, Line 10(9) "Revenue bond" means a bond, note, or other security
Page 18, Line 11evidencing an obligation and issued by the enterprise pursuant to section 10-4-2103.
Page 18, Line 1210-4-2103. Wildfire catastrophe reinsurance enterprise -
Page 18, Line 13creation - purpose - board - powers and duties - insurer fee - advisory
Page 18, Line 14committee - fund - gifts, grants, or donations - utility purchasers of
Page 18, Line 15bonds - rules - reporting - repeal. (1) Enterprise - creation - purpose.
Page 18, Line 16(a) The wildfire catastrophe reinsurance enterprise is created
Page 18, Line 17in the division. The enterprise is a type 1 entity, as defined in
Page 19, Line 1section 24-1-105, and exercises its powers and performs its duties
Page 19, Line 2and functions under the division. The enterprise is and operates as a government-owned business within the division.
Page 19, Line 3(b) The business purpose of the enterprise is to:
Page 19, Line 4(I) Provide stability in the homeowner's insurance market
Page 19, Line 5by implementing and administering the reinsurance program for
Page 19, Line 6the benefit of insurers to cover a portion of insurer losses
Page 19, Line 7resulting from a state or federally declared wildfire-related disaster;
Page 19, Line 8(II) Provide money for the reinsurance program by
Page 19, Line 9imposing and collecting, under certain circumstances, an
Page 19, Line 10insurer fee on insurers offering homeowner's insurance on
Page 19, Line 11property located in the state; selling catastrophe bonds and
Page 19, Line 12revenue bonds; and investing the revenue from the fees and bonds to provide money for the reinsurance;
Page 19, Line 13(III) Incentivize the offer of homeowner's insurance
Page 19, Line 14coverage for property throughout the state, which is expected
Page 19, Line 15to increase competition among insurers and make insurance more
Page 19, Line 16affordable to purchase, resulting in a reduction in the
Page 19, Line 17concentration of risk to insurers in areas of the state at highest risk of insurer losses due to wildfires; and
Page 19, Line 18(IV) Enhance insurers' customer retention by addressing
Page 19, Line 19challenges to the affordability and availability of housing in
Page 19, Line 20the state and reduce the overall risk for insurers offering homeowner's insurance.
Page 19, Line 21(c) The enterprise constitutes an enterprise for purposes
Page 19, Line 22of section 20 of article X of the state constitution so long as it
Page 20, Line 1retains the authority to issue revenue bonds and receives less
Page 20, Line 2than ten percent of its total revenues in grants from all
Page 20, Line 3Colorado state and local governments combined. So long as it
Page 20, Line 4constitutes an enterprise pursuant to this subsection (1), the
Page 20, Line 5enterprise is not subject to section 20 of article X of the state constitution.
Page 20, Line 6(2) Enterprise board. (a) The enterprise is governed by the enterprise board.
Page 20, Line 7(b) The board consists of the following three voting members:
Page 20, Line 8(I) The commissioner or the commissioner's designee; and
Page 20, Line 9(II) Two members appointed by the governor to serve three-year terms, including:
Page 20, Line 10(A) One member who is an insurer with expertise in underwriting and pricing homeowner's insurance; and
Page 20, Line 11(B) One member who is a consumer with financial expertise.
Page 20, Line 12(c) Of the first members appointed to the board pursuant
Page 20, Line 13to subsection (2)(b)(II) of this section, one member shall serve an initial term of two years.
Page 20, Line 14(d) The commissioner or the commissioner's designee is the chair of the board.
Page 20, Line 15(e) (I) The governor shall make initial appointments to the board no later than January 1, 2026.
Page 20, Line 16(II) This subsection (2)(e) is repealed, effective July 1, 2027.
Page 20, Line 17(f) Members of the board serve without compensation but
Page 20, Line 18must be reimbursed from money in the fund for actual and
Page 21, Line 1necessary expenses incurred in the performance of their duties pursuant to this part 21.
Page 21, Line 2(g) The board shall conduct the enterprise's business as
Page 21, Line 3required by state law, including in compliance with the open
Page 21, Line 4meeting requirements of part 4 of article 6 of title 24 and the open record requirements of article 72 of title 24.
Page 21, Line 5(3) Powers and duties. (a) As determined by the board, the enterprise shall engage in activities that:
Page 21, Line 6(I) Seek to address the affordability challenges faced by Coloradans in purchasing homeowner's insurance;
Page 21, Line 7(II) Enhance competition in the homeowner's insurance market throughout the state;
Page 21, Line 8(III) Incentivize insurers to offer homeowner's insurance
Page 21, Line 9coverage in areas of the state at high risk for damage or loss due to wildfires;
Page 21, Line 10(IV) Ensure insurers are offering coverage throughout the state; and
Page 21, Line 11(V) Ensure insurers are properly administering claims
Page 21, Line 12associated with state or federally declared wildfire-related
Page 21, Line 13disasters for which the enterprise makes reinsurance payments pursuant to section 10-4-2104.
Page 21, Line 14(b) In furtherance of its business purpose, the enterprise's primary powers and duties are to:
Page 21, Line 15(I) Issue catastrophe bonds for the expenses of the enterprise, secured by the revenue of the enterprise;
Page 21, Line 16(II) Issue revenue bonds for the expenses of the enterprise,
Page 21, Line 17secured by revenue of the enterprise;
Page 22, Line 1(III) Impose and collect the insurer fee, as applicable, on
Page 22, Line 2homeowner's insurance insurers pursuant to subsection (4) of this section and to require reporting from insurers;
Page 22, Line 3(IV) Invest the revenue from the issuance of catastrophe and revenue bonds and the insurer fee;
Page 22, Line 4(V) Purchase reinsurance from the private market;
Page 22, Line 5(VI) Make reinsurance payments to eligible insurers in accordance with section 10-4-2104;
Page 22, Line 6(VII) Pay the administrative expenses of the enterprise;
Page 22, Line 7(VIII) Adopt, amend, or repeal rules or policies for the
Page 22, Line 8regulation of the enterprise's affairs and the conduct of the enterprise's business consistent with this part 21;
Page 22, Line 9(IX) (A) Contract with any public or private entity,
Page 22, Line 10including state agencies, consultants, and the attorney
Page 22, Line 11general's office, for professional and technical assistance,
Page 22, Line 12office space and administrative services, advice, and other services related to the conduct of the affairs of the enterprise.
Page 22, Line 13(B) The enterprise shall pay a fair market rate to any
Page 22, Line 14public entity, private entity, contractor, or consultant, which
Page 22, Line 15may include a state agency, the attorney general's office, the
Page 22, Line 16division, or the department, that is hired by the enterprise,
Page 22, Line 17without regard to the "Procurement Code", articles 101 to 112 of title 24, to perform duties pursuant to this subsection (3).
Page 22, Line 18(X) Prepare and submit an annual financial report
Page 22, Line 19pursuant to subsection (9) of this section concerning the
Page 22, Line 20administration of the enterprise and the reinsurance program
Page 22, Line 21and post the report on the enterprise's public-facing website.
Page 23, Line 1(c) The enterprise may seek, accept, and expend grants or
Page 23, Line 2other money from the federal government and gifts, grants, or
Page 23, Line 3donations from other public and private sources to support and
Page 23, Line 4enhance enterprise activities; except that the enterprise shall
Page 23, Line 5not accept grants from the state or from local governments
Page 23, Line 6unless the combined total of all grants from such sources is under ten percent of the enterprise's annual revenue.
Page 23, Line 7(4) Insurer fee - rules. (a) The enterprise may impose and
Page 23, Line 8collect an insurer fee pursuant to subsection (4)(b) of this
Page 23, Line 9section on insurers that offer homeowner's insurance on property located in the state.
Page 23, Line 10(b) In the event the enterprise has insufficient money in
Page 23, Line 11the fund to remit the principal amount of a catastrophe or
Page 23, Line 12revenue bond to the bondholder at the bond's maturity, the
Page 23, Line 13enterprise may impose and collect an insurer fee, as determined
Page 23, Line 14by the board, on insurers that offer homeowner's insurance on
Page 23, Line 15property located in the state in order to raise the amount owed to the bondholder.
Page 23, Line 16(c) The enterprise shall adopt rules relating to the assessment and collection of the insurer fee.
Page 23, Line 17(5) Advisory committee.The board may establish an
Page 23, Line 18advisory committee consisting of up to five individuals with
Page 23, Line 19expertise in financing and bonding mechanisms and investments
Page 23, Line 20to advise the board on its issuance and management of
Page 23, Line 21catastrophe bonds and revenue bonds and the financing of the enterprise and reinsurance program.
Page 23, Line 22(6) Fund. (a) The wildfire catastrophe reinsurance enterprise fund is created in the state treasury.
Page 24, Line 1(b) The fund consists of:
Page 24, Line 2(I) The insurer fee imposed on homeowner's insurance insurers pursuant to subsection (4) of this section;
Page 24, Line 3(II) Revenue from catastrophe bonds and revenue bonds issued by the enterprise;
Page 24, Line 4(III) Money from investments of fees collected and catastrophe and revenue bond purchase payments;
Page 24, Line 5(IV) Grants or other money received from the federal
Page 24, Line 6government or gifts, grants, or donations received from other
Page 24, Line 7public or private sources to support and enhance enterprise activities; and
Page 24, Line 8(V) Any money that the general assembly may appropriate or transfer to the fund.
Page 24, Line 9(c) Money in the fund is continuously appropriated to the
Page 24, Line 10enterprise for the administration and implementation of this
Page 24, Line 11part 21, including for reinsurance payments made under the
Page 24, Line 12reinsurance program and other allowable purposes under this part 21.
Page 24, Line 13(d) The state treasurer shall credit all interest and
Page 24, Line 14income derived from the deposit and investment of money in the fund to the fund.
Page 24, Line 15(e) The enterprise shall credit the insurer fee collected
Page 24, Line 16to the fund. A fee collected by the enterprise is excluded from the state's fiscal year spending.
Page 24, Line 17(f) The enterprise may adjust the insurer fee or cease
Page 24, Line 18collecting the fee in any calendar year to ensure that the total
Page 25, Line 1amount of fee revenue does not exceed one hundred million
Page 25, Line 2dollars over the first five fiscal years of the enterprise's existence.
Page 25, Line 3(7) Utility purchasers of bonds. (a) A utility that purchases
Page 25, Line 4bonds shall not recover the cost of the purchase of the bonds from rates charged to the utility's customers.
Page 25, Line 5(b) In the event that a state or federally declared
Page 25, Line 6wildfire-related disaster occurs, an insurer shall not hold a
Page 25, Line 7utility bondholder liable for any amounts paid by the enterprise
Page 25, Line 8to an insurer for damage or loss arising from the state or federally declared wildfire-related disaster.
Page 25, Line 9(8) Rules.The enterprise board shall adopt rules that are
Page 25, Line 10reasonable and necessary for the implementation and
Page 25, Line 11administration of the enterprise, including rules relating to the
Page 25, Line 12insurer fee, the issuance of catastrophe and revenue bonds, and
Page 25, Line 13reinsurance payments made pursuant to the reinsurance program.
Page 25, Line 14(9) Reporting. (a) Notwithstanding section 24-1-136
Page 25, Line 15(11)(a)(I), beginning July 1, 2027, and each July 1 thereafter, the
Page 25, Line 16enterprise shall submit a report to the committees of reference
Page 25, Line 17of the general assembly to which the department is assigned
Page 25, Line 18pursuant to section 2-7-203 concerning the administration and implementation of the enterprise and the reinsurance program.
Page 25, Line 19(b) The annual report must include:
Page 25, Line 20(I) The amount collected through the issuance of
Page 25, Line 21catastrophe and revenue bonds and through the imposition of
Page 25, Line 22the insurer fee, if imposed, money earned through investments, and the unobligated balance of the fund;
Page 26, Line 1(II) The effect of the enterprise on the availability and affordability of homeowner's insurance in the state; and
Page 26, Line 2(III) Any other information relevant to the success of the enterprise and the reinsurance program.
Page 26, Line 310-4-2104. Reinsurance program - creation - operation -
Page 26, Line 4payment parameters - calculation of reinsurance payments - eligible
Page 26, Line 5insurer requests - rules - definition. (1) There is created in the
Page 26, Line 6enterprise the wildfire catastrophe reinsurance program to
Page 26, Line 7provide reinsurance payments to eligible insurers. The objectives of the reinsurance program are to:
Page 26, Line 8(a) Address the challenges faced by Coloradans in affording homeowner's insurance;
Page 26, Line 9(b) Enhance competition in the homeowner's insurance market throughout the state;
Page 26, Line 10(c) Incentivize insurers to offer homeowner's insurance
Page 26, Line 11coverage in areas of the state at high risk for damage or loss due to wildfires;
Page 26, Line 12(d) Ensure insurers are offering coverage throughout the state; and
Page 26, Line 13(e) Ensure insurers are properly administering claims
Page 26, Line 14associated with state or federally declared wildfire-related
Page 26, Line 15disasters for which the enterprise makes reinsurance payments under this section.
Page 26, Line 16(2) To further the business purpose of the enterprise, the enterprise board is authorized to:
Page 26, Line 17(a) Take reasonable actions authorized pursuant to this
Page 27, Line 1section to raise money for the implementation and
Page 27, Line 2administration of the reinsurance program to achieve the purpose and objectives specified in subsection (1) of this section;
Page 27, Line 3(b) Enter into contracts to carry out the provisions and purposes of the reinsurance program;
Page 27, Line 4(c) Establish administrative and accounting procedures for the operation of the reinsurance program;
Page 27, Line 5(d) Establish procedures and standards for eligible insurers to submit claims to the reinsurance program;
Page 27, Line 6(e) Establish or adjust, by rule, the eligibility
Page 27, Line 7requirements and payment parameters in accordance with subsection (3) of this section;
Page 27, Line 8(f) Take legal action as necessary to avoid the payment of improper claims to insurers; and
Page 27, Line 9(g) Subject to section 10-4-2103 (1)(c), apply for, accept,
Page 27, Line 10and administer any federal or state money that may become
Page 27, Line 11available to the enterprise relating to a state or federally declared wildfire-related disaster.
Page 27, Line 12(3) For purposes of determining insurer eligibility for
Page 27, Line 13reinsurance payments under the reinsurance program, the board by rule shall:
Page 27, Line 14(a) Set the eligibility requirements and payment
Page 27, Line 15parameters for the reinsurance program to achieve reductions in claims costs in geographic rating areas in the state;
Page 27, Line 16(b) Determine data requirements for reinsurance
Page 27, Line 17payments made under the reinsurance program and collect or
Page 27, Line 18access data from each eligible insurer;
Page 28, Line 1(c) Upon the occurrence of a state or federally declared
Page 28, Line 2wildfire-related disaster, require each eligible insurer to
Page 28, Line 3report to the enterprise its claims costs as a result of the wildfire-related disaster; and
Page 28, Line 4(d) In exchange for access to the reinsurance program to mitigate an insurer's risk, require an eligible insurer to:
Page 28, Line 5(I) Provide insurance coverage based upon the eligible
Page 28, Line 6insurer's percentage of market share in the state to areas throughout the state at highest risk for wildfires; and
Page 28, Line 7(II) Reduce premiums in areas in the state at high risk for
Page 28, Line 8wildfires to account for reinsurance payments that would be provided through the reinsurance program.
Page 28, Line 9(4) (a) In response to a state or federally declared
Page 28, Line 10wildfire-related disaster, the enterprise board shall calculate
Page 28, Line 11each reinsurance payment based on an eligible insurer's
Page 28, Line 12incurred claims costs for the state or federally declared wildfire-related disaster.
Page 28, Line 13(b) An eligible insurer must make requests for
Page 28, Line 14reinsurance payments in accordance with requirements
Page 28, Line 15established by the board by rule and comply with insurer data requirements.
Page 28, Line 16(5) (a) The board shall notify eligible insurers of
Page 28, Line 17reinsurance payments to be made in accordance with subsection
Page 28, Line 18(4) of this section and shall disburse reinsurance payments to an eligible insurer.
Page 28, Line 19(b) An eligible insurer may request that the board
Page 28, Line 20reconsider a decision on the insurer's request for reinsurance
Page 29, Line 1payments within thirty days after notice of the commissioner's
Page 29, Line 2decision. A final action of the board under this subsection (5) is subject to judicial review in accordance with section 24-4-106.
Page 29, Line 3(6) If there is insufficient money in the fund to cover
Page 29, Line 4insurers' total losses from a state or federally declared
Page 29, Line 5wildfire-related disaster, the board shall establish procedures
Page 29, Line 6to pay insurers on a pro rata basis based on the amount of available money in the fund.
Page 29, Line 710-4-2105. Repeal of part - subject to review.This part 21 is
Page 29, Line 8repealed, effective September 1, 2035. Before the repeal, the
Page 29, Line 9enterprise and reinsurance program are scheduled for review in accordance with section 24-34-104.
Page 29, Line 10SECTION 2. In Colorado Revised Statutes, 24-34-104, add (36)(a)(VII) and (36)(a)(VIII) as follows:
Page 29, Line 1124-34-104. General assembly review of regulatory agencies
Page 29, Line 12and functions for repeal, continuation, or reestablishment - legislative
Page 29, Line 13declaration - repeal. (36) (a) The following agencies, functions, or both are scheduled for repeal on September 1, 2035:
Page 29, Line 14(VII) The strengthen Colorado homes enterprise and the
Page 29, Line 15strengthen Colorado homes enterprise grant program created in part 20 of article 4 of title 10;
Page 29, Line 16(VIII) The wildfire catastrophe reinsurance enterprise
Page 29, Line 17and the wildfire catastrophe reinsurance program created in part 21 of article 4 of title 10.
Page 29, Line 18SECTION 3. In Colorado Revised Statutes, 10-4-403, add (2.3) as follows:
Page 29, Line 1910-4-403. Standards for rates - competition - procedure -
Page 30, Line 1requirement for independent actuarial opinions regarding 1991
Page 30, Line 2legislation - rules - definition. (2.3) (a) In addition to the rate
Page 30, Line 3standards set forth in subsection (1) of this section, rates for
Page 30, Line 4homeowner's insurance are presumed excessive if the loss ratio is less than seventy-five percent over a three-year period.
Page 30, Line 5(b) The commissioner by rule shall establish a process for
Page 30, Line 6calculating the loss ratio. Insurers that have rates in excess of
Page 30, Line 7the loss ratio shall file an actuarially justified and reasonable
Page 30, Line 8rate decrease of at least five percent as compared to the previous year.
Page 30, Line 9(c) As used in this subsection (2.3), "loss ratio" means, with
Page 30, Line 10respect to homeowner's insurance, the ratio of expected policy
Page 30, Line 11benefits paid by the insurer over the entire future period for
Page 30, Line 12which the proposed rates are expected to provide coverage to
Page 30, Line 13the sum of the expected earnings from premiums paid to the insurer over the same period.
Page 30, Line 14SECTION 4. In Colorado Revised Statutes, 10-4-405, add (1.3) as follows:
Page 30, Line 1510-4-405. Filing of rating information - certain coverages.
Page 30, Line 16(1.3) Beginning with rate filings submitted on and after January
Page 30, Line 171, 2026, an insurer offering homeowner's insurance for property
Page 30, Line 18located in the state shall include in its filing the following two sets of rates:
Page 30, Line 19(a) One set of rates that shows the rates after taking into
Page 30, Line 20consideration the reinsurance program created in section 10-4-2104; and
Page 30, Line 21(b) One set of rates that shows the rates as if the
Page 31, Line 1reinsurance program created in section 10-4-2104 had not taken effect.
Page 31, Line 2SECTION 5. Act subject to petition - effective date. This act
Page 31, Line 3takes effect at 12:01 a.m. on the day following the expiration of the
Page 31, Line 4ninety-day period after final adjournment of the general assembly; except
Page 31, Line 5that, if a referendum petition is filed pursuant to section 1 (3) of article V
Page 31, Line 6of the state constitution against this act or an item, section, or part of this
Page 31, Line 7act within such period, then the act, item, section, or part will not take
Page 31, Line 8effect unless approved by the people at the general election to be held in
Page 31, Line 9November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.