A Bill for an Act
Page 1, Line 101Concerning tools to assess risk for the purpose of
Page 1, Line 102underwriting property insurance policies.
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.)
For the purposes of underwriting homeowners and other property insurance policies, the bill requires insurers who use a wildfire risk model, a catastrophe model, a combination of models, or a scoring method to adhere to specific requirements that concern the sharing of information with the commissioner of insurance and the public, the inclusion of specific activities in the models, and providing notices to policyholders.
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 10-4-124 as follows:
Page 2, Line 310-4-124. Homeowner insurance - underwriting - wildfire risk
Page 2, Line 4models - requirements - definitions - rules. (1) As used in this section, unless the context otherwise requires:
Page 2, Line 5(a) "Catastrophe model" means a tool, instrumentality,
Page 2, Line 6means, or product, including a map-based tool, a computer-based
Page 2, Line 7tool, or a simulation that is used by an insurer to estimate potential losses from catastrophic events.
Page 2, Line 8(b) "Community-level mitigation action" means a
Page 2, Line 9science-based mitigation action as demonstrated by a
Page 2, Line 10community- or neighborhood-level designation or certification or as undertaken by a government entity.
Page 2, Line 11(c) "Property-specific mitigation action" means a
Page 2, Line 12science-based mitigation action as demonstrated by the
Page 2, Line 13"Wildfire Prepared Home" designation from the Insurance
Page 2, Line 14Institute for Business and Home Safety or by a similar
Page 2, Line 15mitigation program that includes a verification and certification process.
Page 2, Line 16(d) "Wildfire risk model" means a tool, instrumentality,
Page 2, Line 17means, or product, including a map-based tool, a computer-based
Page 2, Line 18tool, or a simulation, that is used by an insurer in whole or in
Page 2, Line 19part, to measure or assess the wildfire risk associated with a
Page 2, Line 20residential property or community for purposes of rating,
Page 3, Line 1classifying, or pricing based on wildfire risk or estimating risks or losses corresponding to the wildfire risk classifications.
Page 3, Line 2(2) (a) An insurer that uses a wildfire risk model or a
Page 3, Line 3catastrophe model or scoring method to assign risk shall
Page 3, Line 4provide the wildfire risk model, catastrophe model, or scoring
Page 3, Line 5method used to assign risk, including a description of the model,
Page 3, Line 6the impact of the model on rates, an actuarial justification for
Page 3, Line 7all rating factors, including mitigation discounts offered, and
Page 3, Line 8an explanation of the use of the model in underwriting decisions, to the commissioner as part of the insurer's complete filing.
Page 3, Line 9(b) To the extent data is available and as established by
Page 3, Line 10rule, an insurer shall submit to the division, as part of their rate
Page 3, Line 11filings, information on how and whether the models used for
Page 3, Line 12underwriting and rating account for state-wide mitigation
Page 3, Line 13activities, such as forest treatment, investments in wildfire
Page 3, Line 14fighting and mitigation equipment, and utility wildfire
Page 3, Line 15mitigation activities undertaken pursuant to a wildfire mitigation plan approved by the public utilities commission.
Page 3, Line 16(c) Models submitted to the commissioner pursuant to this
Page 3, Line 17section shall be treated as trade secrets and not subject to
Page 3, Line 18disclosure under the "Colorado Open Records Act, part 2 of article 72 of title 24.
Page 3, Line 19(3) An insurer that uses a wildfire risk model, a
Page 3, Line 20catastrophe model, or a combination of models shall ensure the
Page 3, Line 21following factors are either incorporated in the wildfire risk
Page 3, Line 22model, catastrophe model, or combination of models or are
Page 3, Line 23otherwise demonstrably included in the insurer's underwriting and pricing:
Page 4, Line 1(a) Property-specific mitigation actions such as
Page 4, Line 2establishing defensible space, incorporating building hardening
Page 4, Line 3measures, or receiving certification from an entity with expertise in mitigation of properties against wildfire;and
Page 4, Line 4(b) Community-level mitigation activities or designations,
Page 4, Line 5including forest treatment and other fuel reduction activities.
Page 4, Line 6(4) If an insurer does not incorporate property-specific
Page 4, Line 7and community-level mitigation actions into its models, the
Page 4, Line 8insurer shall provide discounts to policyholders who can
Page 4, Line 9demonstrate that property-specific mitigation actions have been
Page 4, Line 10undertaken on the property or community-level mitigation
Page 4, Line 11actions have been undertaken in sufficient proximity to the property to reduce the risk of loss.
Page 4, Line 12(5) An insurer shall post on its public website readily
Page 4, Line 13accessible information on the premium discounts, incentives, or
Page 4, Line 14other premium adjustments that are available to policyholders
Page 4, Line 15who undertake property-specific mitigation actions or provide
Page 4, Line 16evidence of community-level mitigation actions and the process
Page 4, Line 17for appealing a wildfire risk score. The website shall identify, as applicable:
Page 4, Line 18(a) Property-specific mitigation actions for the
Page 4, Line 19policyholder to undertake and community-level mitigation
Page 4, Line 20actions that could result in a discount, incentive, or other premium adjustment; and
Page 4, Line 21(b) The amount of the discount, incentive, or other
Page 4, Line 22premium adjustment associated with each action.
Page 5, Line 1(6) (a) An insurer that provides a mitigation discount or
Page 5, Line 2that uses a wildfire risk model or risk score to underwrite,
Page 5, Line 3nonrenew, price, create a rate differential, or surcharge the
Page 5, Line 4premium based upon the policyholder's or applicant's wildfire
Page 5, Line 5risk shall provide an annual written notice to each
Page 5, Line 6policyholder or applicant upon application for property
Page 5, Line 7insurance of the applicable mitigation discounts, the wildfire
Page 5, Line 8risk score, and any other wildfire risk classification used by the
Page 5, Line 9insurer to underwrite, nonrenew, price, create a rate
Page 5, Line 10differential, or surcharge the premium based upon the policyholder's or applicant's wildfire risk.
Page 5, Line 11(b) The notice shall include:
Page 5, Line 12(I) A plain-language explanation of the wildfire risk
Page 5, Line 13score or other wildfire risk classification, including an
Page 5, Line 14explanation that insurers may use different models and have
Page 5, Line 15different risk score ranges that could result in different risk scores from other insurers;
Page 5, Line 16(II) The range of the scores or classifications that could potentially be assigned to the property;
Page 5, Line 17(III) The relative position of the score or classification
Page 5, Line 18assigned to the property within that range of possible scores or classifications provided by the insurer's risk model;
Page 5, Line 19(IV) A written explanation of why the policyholder or
Page 5, Line 20applicant received the assigned score or classification that
Page 5, Line 21identifies the primary features of the property that influenced the assignment of the score or classification; and
Page 5, Line 22(V) The impact, if any, that each property-specific
Page 6, Line 1mitigation or community-level mitigation action could have on a wildfire risk score or classification assigned to the property.
Page 6, Line 2(7) The insurer shall provide the wildfire risk score or classification to the policyholder or applicant:
Page 6, Line 3(a) For applicants, no later than fifteen days after the
Page 6, Line 4submission of the applicant's completed application to the insurer;
Page 6, Line 5(b) For policyholders, in the offer of renewal;
Page 6, Line 6(c) For policyholders that are not being offered a renewal, with the nonrenewal notice; and
Page 6, Line 7(d) For a policyholder or applicant, if the policyholder or
Page 6, Line 8applicant has completed a property-specific mitigation action or
Page 6, Line 9provides evidence of a community-level mitigation action in
Page 6, Line 10sufficient proximity to the property to reduce the risk of loss
Page 6, Line 11since the time of the last application to or renewal by the
Page 6, Line 12insurer, no later than thirty days after the submission to the
Page 6, Line 13insurer of the policyholder's or applicant's request that the
Page 6, Line 14insurer provide a revised wildfire risk score or wildfire risk classification.
Page 6, Line 15(8) A policyholder or applicant for a policy of property
Page 6, Line 16insurance whose wildfire risk model score, wildfire risk
Page 6, Line 17classification assigned to the property, or applicable mitigation
Page 6, Line 18discount is inaccurate and provides evidence of the
Page 6, Line 19property-specific or community-level mitigation action may
Page 6, Line 20appeal the score directly to the insurer. The insurer shall
Page 6, Line 21notify the policyholder or applicant in writing of the right to
Page 6, Line 22appeal the wildfire risk score or other wildfire risk
Page 7, Line 1classification or applicable mitigation discount when the score
Page 7, Line 2or classification or discount is provided to the policyholder or
Page 7, Line 3applicant as required by subsection (6) of this section. If the
Page 7, Line 4policyholder or applicant appeals the wildfire risk score or
Page 7, Line 5other wildfire risk classification or applicable wildfire
Page 7, Line 6discount, the insurer shall acknowledge receipt of the appeal in
Page 7, Line 7writing within ten calendar days after receipt of the appeal. The
Page 7, Line 8insurer shall respond to the appeal in writing with a
Page 7, Line 9reconsideration and decision within thirty calendar days after
Page 7, Line 10receiving the appeal. If an appeal is denied, the insurer shall,
Page 7, Line 11upon request by the commissioner, forward a copy of the appeal and the insurer's response, to the commissioner.
Page 7, Line 12(9) This section applies to property insurance coverage
Page 7, Line 13provided by the fair access to insurance requirements plan association created in section 10-4-1804.
Page 7, Line 14(10) This section applies only to homeowner's insurance
Page 7, Line 15policies as defined in section 10-4-110.6, property insurance
Page 7, Line 16policies coveringresidentialcondominium units as defined in
Page 7, Line 17section 38-33-103 (1), and multifamily residential housing as defined in section 24-32-3701 (9).
Page 7, Line 18(11) The commissioner may adopt rules to implement this section.
Page 7, Line 19SECTION 2. Act subject to petition - effective date -
Page 7, Line 20applicability. (1) This act takes effect July 1, 2026; except that, if a
Page 7, Line 21referendum petition is filed pursuant to section 1 (3) of article V of the
Page 7, Line 22state constitution against this act or an item, section, or part of this act
Page 7, Line 23within the ninety-day period after final adjournment of the general
Page 8, Line 1assembly, then the act, item, section, or part will not take effect unless
Page 8, Line 2approved by the people at the general election to be held in November
Page 8, Line 32026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.
Page 8, Line 4(2) This act applies to property insurance policies issued or renewed on or after the applicable effective date of this act.