Colorado lawmakers on Thursday introduced legislation that would establish a state-run Fair Access to Insurance Requirements Plan for businesses and homeowners unable to secure property coverage from private insurers.
The move comes as increased frequency of wildfires and other natural catastrophes in the state driven by climate change have put pressure on commercial and residential insurance markets, according to House Bill 1288.
In the last five years, Colorado has experienced three of the largest wildfires in its history and the 2021 Marshall fire resulted in the loss of more than 1,000 homes and commercial properties.
Under the bill, the governor would appoint a nine-member board by Jan. 1, 2024, that would have until July 1 to establish and submit a plan of operation to the insurance commissioner for the property insurer of last resort.
The FAIR plan would provide coverage limits of up to $5 million for commercial property owners and $1 million for homeowners who would have to show they are unable to secure coverage in the private market, according to the bill.
Rates charged by the plan must be actuarially sound and “not excessive, inadequate, or unfairly discriminatory.”
The plan would assess and share all expenses, income and losses among member insurers based on each insurer’s written premium in the state.