Colorado Requires Insurer Modeling to Apply Wildfire Mitigation

Colorado Gov. Jared Polis (D) on May 28 signed into law the bipartisan HB 1182, Risk Model Use in Property Insurance Policies, which passed both chambers of the General Assembly by large majorities earlier in the spring.

Among other measures, the bill requires that “An insurer that uses a wildfire risk model, a catastrophe model, or a combination of models shall ensure the following factors are either incorporated in the [model] or are otherwise demonstrably included in the insurer’s underwriting and pricing: (a) property-specific mitigation actions such as establishing defensible space, incorporating building hardening measures, or receiving certification from an entity with expertise in mitigation of properties against wildfire; and (b) community-level mitigation activities or designations, including forest treatment and other fuel reduction activities.”

The only other option to incorporating such measures into modeling would be to offer discounts to policyholders who can show they have taken such mitigation measures on their property or that community-level activities are close enough to the property to lower the potential for damage from a wildfire.

Insurers must also place clear information on their websites regarding premium discounts, incentives, or other measures offered to policyholders who conduct wildfire mitigation on their property or show proof of communitylevel mitigation.

State Rep. Brianna Titone (D), one of the bill’s sponsors, says the legislation resulted from discussions following the 2021 Marshall Fire with a local fire chief, her colleagues, and Colorado Insurance Commissioner Michael Conway about increasing insurance rates amid the growing hazard to the state.

“There’s going to be a point where it’s going to be too expensive for people to get. They’re not going to be able to get insurance, they’re not going to be able to afford it,” Titone says. “And insurance companies aren’t going to be able to afford to replace all of the homes and everything else that people have. So we have to be proactive. We have to do things to prevent and to mitigate the severity of these events as much as we can.”

Titone acknowledges skepticism from the industry regarding the new law, but says she believes compromises made during the legislative process addressed its primary concerns. Those include restricting the new requirements to residential property rather than including commercial property, and pushing the implementation date back from Jan. 1, 2026, to July 1, 2026.

“We understand that commercial property insurance is really different [than] residential,” she says. “So we didn’t want to get into that kind of detail at this point. And maybe if it becomes more of an issue that companies are looking for us to try to broker some kind of agreement with the insurance companies, then we can certainly get into that later on.”