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.
This Unofficial Version Includes Committee
Amendments Not Yet Adopted on Second Reading
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 and commercial insurance -
Page 2, Line 4underwriting - wildfire risk models - requirements - definitions -
Page 2, Line 5rules. (1) As used in this section, unless the context otherwise requires:
Page 2, Line 6(a) "Catastrophe model" means a tool, instrumentality,
Page 2, Line 7means, or product, including a map-based tool, a computer-based
Page 2, Line 8tool, or a simulation that is used by an insurer to estimate potential losses from catastrophic events.
Page 2, Line 9(b) "Community-level mitigation action" means a
Page 2, Line 10science-based mitigation action as demonstrated by a
Page 2, Line 11community- or neighborhood-level designation or certification or as undertaken by a government entity.
Page 2, Line 12(c) "Property-specific mitigation action" means a
Page 2, Line 13science-based mitigation action as demonstrated by the
Page 2, Line 14"Wildfire Prepared Home" designation from the Insurance
Page 2, Line 15Institute for Business and Home Safety or by a similar
Page 2, Line 16mitigation program that includes a verification and certification process.
Page 2, Line 17(d) "Wildfire risk model" means a tool, instrumentality,
Page 2, Line 18means, or product, including a map-based tool, a computer-based
Page 2, Line 19tool, or a simulation, that is used by an insurer in whole or in
Page 2, Line 20part, to measure or assess the wildfire risk associated with a
Page 3, Line 1residential or commercial property or community for purposes
Page 3, Line 2of rating, classifying, or pricing based on wildfire risk or
Page 3, Line 3estimating risks or losses corresponding to the wildfire risk classifications.
Page 3, Line 4(2) (a) An insurer that uses a wildfire risk model or a
Page 3, Line 5catastrophe model or scoring method to assign risk shall
Page 3, Line 6provide the wildfire risk model, catastrophe model, or scoring
Page 3, Line 7method used to assign risk, including a description of the model,
Page 3, Line 8the impact of the model on rates, an actuarial justification for
Page 3, Line 9all rating factors, including mitigation discounts offered, and
Page 3, Line 10an explanation of the use of the model in underwriting decisions, to the commissioner as part of the insurer's complete filing.
Page 3, Line 11(b) An insurer shall submit to the division, as part of their
Page 3, Line 12rate filings, information on how the models used for
Page 3, Line 13underwriting and rating account for state-wide mitigation
Page 3, Line 14activities, such as forest treatment, investments in wildfire
Page 3, Line 15fighting and mitigation equipment, and utility wildfire
Page 3, Line 16mitigation activities undertaken pursuant to a wildfire mitigation plan approved by the public utilities commission.
Page 3, Line 17(c) Models submitted to the commissioner pursuant to this
Page 3, Line 18section shall be treated as trade secrets and not subject to
Page 3, Line 19disclosure under the "Colorado Open Records Act, part 2 of article 72 of title 24.
Page 3, Line 20(3) An insurer that uses a wildfire risk model, a
Page 3, Line 21catastrophe model, or a combination of models shall ensure the
Page 3, Line 22following factors are either incorporated in the wildfire risk
Page 3, Line 23model, catastrophe model, or combination of models or are
Page 4, Line 1otherwise demonstrably included in the insurer's underwriting and pricing:
Page 4, Line 2(a) Property-specific mitigation actions such as
Page 4, Line 3establishing defensible space, incorporating building hardening
Page 4, Line 4measures, or receiving certification from an entity with expertise in mitigation of properties against wildfire;and
Page 4, Line 5(b) Community-level mitigation activities or designations,
Page 4, Line 6including forest treatment and other fuel reduction activities.
Page 4, Line 7(4) If an insurer does not incorporate property-specific
Page 4, Line 8and community-level mitigation actions into its models, the
Page 4, Line 9insurer shall provide discounts to policyholders who can
Page 4, Line 10demonstrate that property-specific mitigation actions have been
Page 4, Line 11undertaken on the property or community-level mitigation
Page 4, Line 12actions have been undertaken in sufficient proximity to the property to reduce the risk of loss.
Page 4, Line 13(5) An insurer shall post on its public website readily
Page 4, Line 14accessible information on the premium discounts, incentives, or
Page 4, Line 15other premium adjustments that are available to policyholders
Page 4, Line 16who undertake property-specific mitigation actions or provide
Page 4, Line 17evidence of community-level mitigation actions and the process
Page 4, Line 18for appealing a wildfire risk score. The website shall identify, as applicable:
Page 4, Line 19(a) Property-specific mitigation actions for the
Page 4, Line 20policyholder to undertake and community-level mitigation
Page 4, Line 21actions that could result in a discount, incentive, or other premium adjustment; and
Page 4, Line 22(b) The amount of the discount, incentive, or other premium 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
Page 5, Line 22the assignment of the score or classification; and
Page 6, Line 1(V) The impact, if any, that each property-specific
Page 6, Line 2mitigation or community-level mitigation action could have on a wildfire risk score or classification assigned to the property.
Page 6, Line 3(7) The insurer shall provide the wildfire risk score or classification to the policyholder or applicant:
Page 6, Line 4(a) For applicants, no later than fifteen days after the
Page 6, Line 5submission of the applicant's completed application to the insurer;
Page 6, Line 6(b) For policyholders, in the offer of renewal;
Page 6, Line 7(c) For policyholders that are not being offered a renewal, with the nonrenewal notice; and
Page 6, Line 8(d) For a policyholder or applicant, if the policyholder or
Page 6, Line 9applicant has completed a property-specific mitigation action or
Page 6, Line 10provides evidence of a community-level mitigation action in
Page 6, Line 11sufficient proximity to the property to reduce the risk of loss
Page 6, Line 12since the time of the last application to or renewal by the
Page 6, Line 13insurer, no later than thirty days after the submission to the
Page 6, Line 14insurer of the policyholder's or applicant's request that the
Page 6, Line 15insurer provide a revised wildfire risk score or wildfire risk classification.
Page 6, Line 16(8) A policyholder or applicant for a policy of property
Page 6, Line 17insurance whose wildfire risk model score, wildfire risk
Page 6, Line 18classification assigned to the property, or applicable mitigation
Page 6, Line 19discount is inaccurate and provides evidence of the
Page 6, Line 20property-specific or community-level mitigation action may
Page 6, Line 21appeal the score directly to the insurer. The insurer shall
Page 6, Line 22notify the policyholder or applicant in writing of the right to
Page 7, Line 1appeal the wildfire risk score or other wildfire risk
Page 7, Line 2classification or applicable mitigation discount when the score
Page 7, Line 3or classification or discount is provided to the policyholder or
Page 7, Line 4applicant as required by subsection (6) of this section. If the
Page 7, Line 5policyholder or applicant appeals the wildfire risk score or
Page 7, Line 6other wildfire risk classification or applicable wildfire
Page 7, Line 7discount, the insurer shall acknowledge receipt of the appeal in
Page 7, Line 8writing within ten calendar days after receipt of the appeal. The
Page 7, Line 9insurer shall respond to the appeal in writing with a
Page 7, Line 10reconsideration and decision within thirty calendar days after
Page 7, Line 11receiving the appeal. If an appeal is denied, the insurer shall,
Page 7, Line 12upon request by the commissioner, forward a copy of the appeal and the insurer's response, to the commissioner.
Page 7, Line 13(9) This section applies to property insurance coverage
Page 7, Line 14provided by the fair access to insurance requirements plan association created in section 10-4-1804.
Page 7, Line 15(10) The commissioner may adopt rules to implement this section.
Page 7, Line 16SECTION 2. Act subject to petition - effective date -
Page 7, Line 17applicability. (1) This act takes effect July 1, 2026; except that, if a
Page 7, Line 18referendum petition is filed pursuant to section 1 (3) of article V of the
Page 7, Line 19state constitution against this act or an item, section, or part of this act
Page 7, Line 20within the ninety-day period after final adjournment of the general
Page 7, Line 21assembly, then the act, item, section, or part will not take effect unless
Page 7, Line 22approved by the people at the general election to be held in November
Page 7, Line 232026 and, in such case, will take effect on the date of the official
Page 7, Line 24declaration of the vote thereon by the governor.
Page 8, Line 1(2) This act applies to property insurance policies issued or renewed on or after the applicable effective date of this act.