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Colorado HB 1182: An Overreach in Insurance Regulation

Colorado House Bill 1182 (HB 1182) aims to increase transparency in property insurance, particularly in how companies assess wildfire risk. However, while the bill may have good intentions, its approach is flawed. Instead of improving access to fair insurance policies, it creates unnecessary burdens for insurers that could drive up costs and reduce coverage options for homeowners—ultimately working against its own purpose.

Excessive Regulations on Insurers

A major issue with HB 1182 is that it forces insurance companies to disclose proprietary information about their risk assessment models and pricing methods. This not only compromises their competitive advantage but also discourages innovation in risk prediction.

Insurance companies already adhere to state and federal regulations that ensure fair business practices. Adding more layers of disclosure could lead to unintended consequences, such as outdated risk models or less accurate assessments of wildfire danger, which could ultimately harm both insurers and homeowners.

Higher Premiums for Homeowners

The increased compliance costs associated with HB 1182 will likely be passed on to policyholders, contradicting the bill’s main purpose. Colorado homeowners already face rising insurance premiums due to the state’s growing wildfire risks. By making it more expensive for insurers to operate, this bill will only exacerbate that problem, leading to higher costs for consumers.

Decreased Availability of Insurance

When regulatory requirements become too restrictive, some insurers may choose to withdraw from the Colorado market altogether. This would reduce competition and leave homeowners with fewer coverage options. In extreme cases, homeowners in high-risk areas may be forced into state-backed insurance plans, which tend to be more expensive and less efficient than private-sector alternatives. The industry is already experiencing this trend in Colorado, even before the bill’s introduction.

A More Effective Approach

Rather than imposing strict disclosure rules on insurers, lawmakers should focus on proactive wildfire prevention measures. Policies that support better land management, community fire safety initiatives, and incentives for homeowners to implement fire-resistant upgrades would be far more effective in reducing overall risk and stabilizing insurance costs.

Colorado needs a policy framework that balances the interests of insurers and consumers. HB 1182 falls short of this goal and should be reconsidered in favor of solutions that address the underlying risks without further destabilizing an already fragile insurance market.