322B2361FB0891D687258442005E23AA Hearing Summary

Peg Brown, Chief Deputy Commissioner of the Division of Insurance, provided a PowerPoint on property and casualty insurance (Attachment F).  Deputy Commissioner Brown discussed the fire in Paradise, California, including that there were $8.3 billion in losses and more than 10,000 buildings that were more than 50 percent destroyed.  She stated that prevention is important, including fire safe building materials and mitigation and that the division is working with partners at the Colorado Resiliency Office, the U.S. Department of Homeland Security, the Federal Emergency Management Agency, the Forest Service, and others to bring more focus on mitigation.

There was a discussion about tiered insurance rates to differentiate between customers that mitigate and those that don't.

The discussion turned to preventing a Paradise fire type situation in Colorado.  Deputy Commissioner Brown explained that ensuring mitigation is complete will be important, as well working with the Colorado Department of Transportation and local agencies to ensure adequate access to escape routes.  There was also a discussion about building materials and how local building codes could be strengthened and become a part of mitigation and resiliency.  Some communities are currently looking at this. 

The lack of insurance coverage for homeowners rebuilding historic homes was discussed.  Deputy Commissioner Brown stated that the Division of Insurance is looking at this issue, but the state cannot make insurance companies stay in an area.

Carole Walker, Director of the Rocky Mountain Insurance Association, provided information about the insurance industry.  Ms. Walker represents Colorado, Wyoming, and Utah.  She works to help citizens understand how to protect their homes and finances.  She stated that Colorado has one of the fastest rising insurance rates, in part due to hail.  She mentioned that the association is looking at putting energy into community mitigation programs focusing on WUI areas. 

Ms. Walker indicated that the Division of Insurance is a partner in outreach efforts.  The new Colorado Property and Insurance Wildfire Preparedness Guide (Attachment G) was created with the division.  She also discussed a partnership with realtors in creating a social media program about different perils.

The committee discussed instances of consumers not being able to buy insurance after a fire destroyed their houses.

Deputy Commissioner Brown explained that the Division of Insurance is working on an education program for consumers, perhaps to be called In the Know.

She answered questions about adequate insurance coverage in high risk areas, as well as cost.  She explained that the division is organizing a data call about available insurance and cost that will be used as a baseline to determine what changes need to be made.  The division is in the planning stages for the call.

Ms. Brown responded to questions about options for rebuilding in high risk areas, such as reinsurance, surplus, or pooled insurance.  She mentioned a fair plan or state managed pool to help rebuild immediately, but stated that there may be solvency issues with these types of programs.  Current states with funds include Texas (windstorm fund) and California (earthquake fund).

There was also a discussion about insurance cost and hail.  Ms. Walker said that volatile storms are a problem because replacement costs are challenging and Colorado has an increasing population.  Deputy Commissioner Brown noted that the Institute for Business and Home Safety is testing building materials for hail resistance.  Other organizations testing building materials include the National Renewable Energy Laboratory and the National Center for Atmospheric Research in Boulder.

There was a discussion about changes in weather conditions.  The panelists explained that there are separate deductibles for both hail and wind and there may be large deductibles and percentage deductibles for other perils.

Mitigation efforts in coastal areas, including partnerships between local officials and insurance companies, were discussed.  The panelists explained that when mitigation efforts are complete and loss still exists perhaps requirements for mitigation and resiliency need adjustment and that partnerships are important between insurance companies and local communities.

The committee recessed for lunch.