Need home insurance? Options across the state are dwindling, report finds

The top five insurance groups in Colorado account for 64% of the market share and that share is growing.

Need home insurance? Options across the state are dwindling, report finds

A report commissioned by Colorado found that homeowner insurance rates have increased across the state, as insurers are finding the Colorado market to be less profitable. They are also reducing their exposure in the state.

Researchers warn that insurers outside of the top five insurance groups in Colorado are reducing coverage and canceling renewals at a rapid rate. Some Colorado residents could be without insurance as soon as this year.

The Colorado Department of Regulatory Agencies released a report last week that was mandated last year by a law that sought to gather more information on the affordability, availability and stability of homeowner insurance in Colorado. The mandate was prompted by the East Troublesome fire in 2020 and the Marshall fire in 2021, which were among the most costly and destructive in Colorado's history.

Inflation and the changing global reinsurance markets also led insurers to reduce their coverage in Colorado.

The report stated that this is the reason why rates have increased across the state, not just in areas prone to wildfires. It also explains why exposure has decreased in the whole state.

Vincent Plymell, spokesperson for DORA, confirmed that the findings of this report are in line with DORA's anecdotal experiences. According to him, complaints about insurance options are increasing. They also complain about the rising costs of these policies.

Researchers found that a large portion of the rate increases will occur in 2022. This represents "remarkably higher" increases than the average for the entire country. Researchers found that the rate increases are "remarkably higher" than the average for the entire country.

Researchers found that the top five insurance companies in Colorado -- State Farm Liberty Mutual USAA American Family Insurance Allstate Corp. -- account 64% of Colorado's market share, and this share is increasing. Researchers found that 76% of all carriers reduced their exposures by October 2022 and 32% did so more than 10%.

The report, conducted by Oliver Wyman Actuarial Consulting, Inc., stated that the market was currently consolidating into the five largest carriers.

Plymell is concerned about the shrinkage in portfolios of smaller insurers.

He said that people were having trouble finding insurance. It's not for everyone, but there are different pockets.

This week, state lawmakers are debating two bills that address these issues.

House Bill 23-1288 is based on a report which suggests creating an alternative insurance program to be managed by the state where private insurers cannot or do not want to operate.

Plymell explained that the FAIR plan (fair access insurance requirements) would be an option of last resort and not a plan which directly competes against other insurers on the market. He said that the plan was intentionally basic. This means homeowners may still need to buy supplemental insurance in order to feel covered.

He said that the key was to maintain a strong private market.

These bills are a result of a number of recent news reports about Marshall Fire victims, who discovered that their insurance did not cover the cost to rebuild their homes. They also reported that those without the financial resources were falling behind the rest of the community in the process of reconstruction.

Plymell stated that "what we saw and heard continually on the Marshall Fire is that people were not armed with good knowledge" about their policies. For example, they didn't know what an accurate estimate of a rebuild cost might be.

House Bill 23-1174 will be debated at the Capitol in Colorado this week. These complaints are also the motivation behind the bill. The bill would mandate that the insurance commissioner of Colorado prepare an annual report regarding the cost to rebuild homes in Colorado after a total loss. It would also mandate homeowners insurance coverage for replacement costs.

Plymell believes that the report authors have also recommended that wildfire mitigation be increased.

Insurers used to consider mitigation a bonus, but in recent years it has become a requirement. Plymell also said that the state recognizes mitigation as a collective effort and not just an individual's job.