Colorado homeowners consider selling as insurance rates continue to increase – KOAA News 5

COLORADO SPRINGS — Some Colorado homeowners, especially those on fixed incomes, are facing a crisis as home insurance premiums continue to rise in the state.“We\'re one paycheck away from disaster,” said Gerard Brennan, who bought a home with his wife in the Security-Widefield area in 2017. “There has to be a way for us to get these rates lower.”The Brennans thought Widefield would be a more affordable area and their “forever home.” Their daughter and grandson live nearby and they don’t want to leave.Their annual insurance premium was about $1400 six years ago. They managed, but increases in property taxes and home insurance premiums are now forcing them to consider the difficult decision of uprooting their lives, selling the home and moving somewhere more affordable.“Maybe look into a mobile home or a condo,” said Brennan. “Do we stay in Colorado Springs? Do we go further out to Peyton? But then all our doctors are here. And it\'s a tough, tough thing to have to consider.”Since Mr. Brennan has multiple sclerosis, their only income is through his disability insurance and his spouse’s caregiver pay.“There are nights that I don\'t sleep because I\'m worried. What am I going to do? Where can I go?” asked Brennan.Since 2018, his home insurance has increased over 200%, from $1290 to $3900. The insurance costs have caused a deficiency in his escrow. When coupled with increased property taxes, the Brennans are facing nearly unaffordable mortgage payments.The Brennans called their insurance company, but he said they essentially told him it’s “the cost of doing business in Colorado.”WHAT’S DRIVING THE COSTS?Carole Walker, executive director of the Rocky Mountain Insurance Information Association (RMIIA), said the reasons for Colorado’s high home insurance rates are threefold: climate disasters, high costs on goods and services, and the reinsurance market (insurance for insurers).In Colorado, catastrophic hail storms and wildfires are common and devastating. The 2021 Marshall wildfire in Boulder County led to $2 billion in loss. The 2012 Waldo Canyon Fire in Colorado Springs cost just under half a billion dollars. A 2017 Denver hail storm had a price tag of $2.3 billion.“Mother Nature is not slowing down. Call it climate change—whatever you want. All we know is, in 2023, we had record breaking catastrophes,” said Walker.According to the National Center for Environmental Information, 2023 had 28

confirmed weather/climate disaster events with losses exceeding $1 billion each in the US. Colorado experienced one of those disasters in a June hail storm.Colorado ranks second in the country for hail claims and third for highest wildfire risk areas, according to the RMIA.Apart from catastrophic climate events, the cost of goods and services have all risen. Everything from the cost to repair and rebuild and labor shortages to the price of construction products like lumber, drywall, and glass.All of these factors and market conditions are colliding, which in turn is increasing the reinsurance market. Reinsurance rates have been going up at a record pace of 40%, Walker said.“Colorado is the third most expensive and worst profitability state in the country, after Louisiana and Texas. So when you think about insurance companies making all this money, how can they be charging more for rates? It really is not the situation,” said Walker. “Insurance companies, unlike a retail product, are trying to balance the amount of risk they take on—that\'s the number of high risk policies—with ‘Can they afford reinsurance?’”WILL INSURANCE COMPANIES LEAVE COLORADO?In states like Florida, Louisiana, and California, some insurance companies have pulled out or reduced availability due to the previously mentioned factors.In May last year, State Farm announced it will cease accepting new applications in California.“State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market,” their announcement said.But with a growing population, Carole Walker with the Rocky Mountain Insurance Information Association said insurance companies don’t want to leave Colorado.“I think there\'s a lot of rumor and innuendo around insurance companies exiting the state of Colorado. We\'re not in that situation yet. But we are at a tipping point,” she said.She said the insurance industry is at the table in Colorado and wants to have a stable, competitive marketplace, but she’s worried state lawmakers might attempt to regulate the industry in a way that does push them out.“You can\'t control Mother Nature and escalating catastrophes. But you can control that knee-jerk reaction to ‘Okay, we need to crack down on the insurance companies. We need to regulate what they charge for insurance. We need to mandate discounts,’”