Lawmakers in Colorado are reviewing House Bill 1182, which would impose new disclosure and notification requirements on insurance carriers using wildfire risk models in underwriting.
The proposed legislation would require insurers to provide greater transparency regarding their use of catastrophe models, risk-scoring methods, and other underwriting tools that assess wildfire exposure.
If enacted, insurers using these models would need to include specific details in their rate filings with the state insurance commissioner. The bill outlines that filings must describe the model’s methodology, its influence on premium rates, and its role in underwriting decisions.
The proposed law also requires that risk models account for both property-specific and community-wide mitigation efforts, as well as statewide initiatives to address wildfire risks, according to a report from AM Best.
The search for better solutions against wildfires continues, with California recently being put on the brink by a major catastrophe event. Moody’s RMS Event Response estimates that insured losses from the Los Angeles wildfires will range from $20 billion to $30 billion.
That is on top of the $79 billion, or 60% of the $132 billion of total wildfire losses, that insurers paid out globally over the last decade.
The Colorado bill would require insurers to provide clear information on their websites about discounts available for policyholders who undertake mitigation efforts. Insurers would need to disclose the percentage reduction in premiums associated with specific mitigation actions and provide guidance on how such efforts can influence policy pricing.
Policyholders would also be entitled to receive written notification of their wildfire risk scores, how these scores impact their insurance costs, and recommendations for mitigation efforts. The bill includes a provision establishing an appeal process for consumers who wish to challenge their assigned wildfire risk scores.
If approved, the new requirements would take effect on Jan. 1, 2026.
The review of House Bill 1182 follows recent regulatory changes in California, where new rules finalized in November 2024 allow insurers to incorporate forward-looking risk models in underwriting.
Under California’s updated framework, insurers using these models must commit to increasing coverage availability in high-risk wildfire areas. Industry groups have stated that the changes are intended to help stabilize the market.
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