What's Working: Colorado homeowners insurance is among the most expensive in the US

Tamara Chuang

Colorado has adopted new laws and programs to address rising insurance costs and the scarcity of homeowners policies in risky areas. The state was still unable to avoid the dubious honor of having the nation's largest increase in home insurance premiums since 2020, according to one analysis. Even the state's insurance commissioner knows something is not right. He's asking for help.

"To address the affordability challenges that we have in the state, we're going to have to get innovative," Commissioner Michael Conway said this week. "The market isn't going to solve them by itself. So, as we've always said, we welcome all thoughts and ideas, and we're open to all conversations."

Conway said this even after pointing out several new programs and tactics that the state is pursuing. One program will soon provide grants to homeowners to mitigate risk, like adding fortified roofs to protect against hail damage. There's also the state's FAIR plan, short for Fair Access to Insurance Requirements, which now provides coverage to a couple hundred property owners rejected by other insurers. FAIR plans help insurers share the high risk if they so choose to participate.

But FAIR is still pricey with limited coverage. And even though mitigation against hail and wildfires is expected to lead to a decline in insurance premiums, Colorado's costs are still high and not declining.

"Ideally, we'd have zero policies in the FAIR plan because we'd have an incredibly robust private market that was taking all of the risk in the state," he said. "We've got to figure out ways to make coverage in the private market more affordable for us, and available."

map visualization

According to insurance-comparison site Insurify, the cost of homeowners premiums is estimated to be $4,164 this year, ranking the state the sixth most expensive in the U.S. That's a 61% increase compared with 2023. The U.S. average is $3,057, up 26% in the same period. Colorado's increase since 2019, according to a LendingTree analysis, has more than doubled, up 100.8%.

There is something going on, said Matt Brannon, an Insurify senior economic analyst.

"I would say that in recent years the amount of increases we've seen are not typical," Brannon said. "Home insurance didn't get as much attention because the prices weren't going up as fast. … The average single-family home now costs 42% more to build per square foot than it did before the pandemic in 2019. So that doesn't even account for the weather."

Colorado insurers' 5-year loss rate shows more profits

According to an annual state report on how much property insurers are losing — or profiting — each year, insurers are faring a bit better despite the regular wildfires each year, including several currently burning in Colorado.

The annual Colorado Insurance Industry Statistical Report looks at the loss ratio. When it's above 1.0, or 100%, that means the insurer is losing money because it's paying more in claims than it collects in premiums. But when it's lower? The insurer is making money, although profits are used to cover expenses that the loss ratio doesn't consider.

"Like any business, you have to price your product correctly," Brannon said. "If you price it too low, you risk leaving a lot of money on the table. If you price it too high, you risk driving your customers away to other competitors."

Colorado's loss ratio for homeowners insurance in 2024 was 70%, which is within target range, Conway said. But in 2023, it was 115%. ("In 2023, it wasn't the Marshall fire," Conway said. "It was a long summer of constant hail, which is really the story in Colorado.")

The state data also shows that individual insurance companies have loss ratios all over the place. State Farm, which is the largest property coverage insurer, was at 100% in 2024. Allstate, the second largest, had a loss ratio of 61%. Farmers Insurance Exchange, the state's eighth largest, was at 48%.

"I don't know if there is an ideal number necessarily," Conway said. "The loss ratio that they tend to target in their rate filings is in the 65-to-75% range."

So, if the loss ratio is 70%, insurers paid out 70 cents in claims for every dollar collected in premiums. The remaining 30 cents goes to administrative costs, overhead and profit, he said.

"I think what gets a little bit confusing when you look at homeowners insurance in particular, there are such huge swings year-to-year for insurance companies on their claims," Conway said. "In order to really get a good feel for whether the insurers are hitting an appropriate loss ratio, you really need to look at something around a five-year average."

Colorado's home insurance trajectory

We analyzed 10 years of insurance data and found that five-year average back to 2014 in this chart:

visualization

The years when insurers paid out more in claims than they collected in premiums are smoothed out with the years when the loss ratio was down to 54% in 2022. The five-year ratio still hovers above 80% and 90%, though it's declined since 2021. In 2024, the five-year average was 80%.

Of course, by 2024, insurers had increased prices and collected 78% more premiums to offset the higher payouts for homeowners who made claims.

The unpredictability of extreme weather continues to be what insurers are looking at the most when it comes to a rise in rates. But this summer's wildfires, which have already burned several hundred homes in Pueblo County as of Friday, aren't likely to move that rate up drastically, Conway said. That's because hailstorms are by far the largest share of Colorado claims.

"The futuristic predictive models are a huge part of rates in the homeowners space," Conway said. "These models are trying to predict the future from a catastrophe standpoint. So in particular, hail is the biggest one."

While Colorado data isn't available yet for 2025, the nation's property and casualty insurance industry did see profits increase in 2025, according to a report from the National Association of Insurance Commissioners — "underwriting income jumped by over $40 billion compared to last year due to a combination of strong premium growth and lower incurred losses, driven by a meaningful reduction of catastrophe losses," according to the organization's 2025 report. In it, Colorado's direct loss ratio fell by 15 percentage points to 46.3%, from 61.3% in 2024.

Could this be a sign of lower premiums for Coloradans?

Conway hopes so. He feels that there's still more untapped options out there to encourage it as well. He's been supporting a different type of high-risk plan or reinsurance program to offset risk for insurers. It'd be different from the FAIR plan, which is only about making sure coverage is available, not necessarily affordable.

"That'll do two things," he said. "It'll reduce premiums because that program will be taking on a portion of the risk. But the second piece is it would encourage insurance companies to operate in those areas, which would bring more competition. And that competition would help make things more affordable because competition does that."

➔ Time to revisit your home insurance costs? Matt Brannon, with Insurify, said that prices change all the time so it's best to check regularly. Discounts also may be available, he said, with some lesser-known discounts, including folks who live in gated communities, work from home or are part of affinity groups like a professional organization. Insurify provides comparison tools for those shopping and a page of discounts by the insurer.

Take the poll: How expensive?

It's hard not to notice how much homeowners insurance has increased, if you're a homeowner. Take the latest What's Working poll to help us better understand what's going on in Colorado.

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Sun economy stories you may have missed

➔ Telluride, Mountain Village investigations find no evidence of government conspiracy in offer to buy ski area. The outside investigations by both towns did not uncover illegal actions by local leaders who have resigned from their jobs in the wake of their offer to buy Telluride ski area from billionaire owner Chuck Horning Read story

➔ Xcel rate hike may leave more people struggling to pay bills, even as the utility offers more aid to customers. As many as a third of Xcel's 1.4 million customers could qualify for help under plan the utility has proposed to state regulators Read story

➔ Colorado fires forcing race directors to rethink summer events. As public lands, parks, lakes and rivers close due to fires and drought, organizers cancel Colorado's iconic Ouray 100 and Leadville's Silver Rush races while the Hardrock 100 remains intact Read story

➔ This rural Colorado hospital is using AI to go after health insurers that ghosted payments. The promise of modern AI to help Spanish Peaks Regional Health Center recover lost revenues is built on a system that keeps medical data private. Read story

➔ Fort Collins manufacturing plant to produce 15 billion chips for Apple. Apple picked Broadcom and its Fort Collins plant for multiyear agreement to manufacture 15 billion chips for wireless devices Read story

➔ Another record year for the outdoors as participation surges past booze. More than 183 million Americans went outside for recreation in 2025, including 30 million newcomers since the pandemic. The $1.3 trillion outdoor industry is working to keep the new arrivals engaged. Read story

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Other working bits

➔ City of Denver commits $100M to support 10,000 new jobs. Mayor Mike Johnston calls it the Denver Jobs Agenda. Nearly half the $100 million is going to training and workforce development, with $45 million set aside to bolster the Denver Workforce Development agency that already supports more than 20,000 Denverites a year, according to the announcement. Another $6 million is for programs that support entrepreneurs, while $10.5 million is for a revolving loan fund for small businesses that will be operated by the Colorado Enterprise Fund.

And $40 million will be used to incentivize companies to move or expand in Denver. Funding comes from the Denver Downtown Development Authority, which is a voter-approved district that is already using future tax revenue to rebuild the city's downtown economic core. Details

➔ Colorado's share of $45M Cash App settlement is $1.7M. The state attorney general's office joined the multistate lawsuit that alleged Block, the company behind the peer-to-peer payment brand Cash App, had inadequate fraud protection and misled consumers into thinking the service was as safe as using a bank. Block also had no phone support for customers who were dealing with potential fraud. The company settled in January and the Colorado AG's office said this week the state's share is $1,663,539.

As part of the settlement, Block must maintain a customer support program to resolve fraud complaints. The company also is paying up to $120 million to compensate consumers as part of a settlement with the Consumer Financial Protection Bureau. Affected customers can make a claim here.

➔ Colorado business outlook: Still negative but improving. Local business leaders are still quite pessimistic about the state and nation's economy heading into the third quarter, according to the Leeds Business Confidence Index, a report from the business school at the University of Colorado.

But with a tad more confidence for industry sales, profits and hiring, the 214 business leaders responding to the survey pushed the index up five percentage points from a year ago, and up 1.3 points from the second quarter. But landing at a score of 43.2, it's still negative. A 50 is neutral.

Top reasons respondents shared about why they're still pessimistic were inflation and costs, followed by political and policy instability and then global conflict. View report

➔ Job fair in Aurora on July 24. Dozens of area employers will be at U.S. Rep. Jason Crow's job fair in Aurora on July 24. Crow's staff has organized the event nearly every year in the eight years Crow has been in Congress. This year, they're doing two (one in January).

It's part of his role representing Colorado's Sixth Congressional district, which includes Aurora, Centennial and other parts of Arapahoe County. Doors open at 10 a.m., but veterans, active-duty service members, and their spouses can get in 30 minutes earlier. The job event will be at the Stampede at 2430 S Havana St. and ends at 2 p.m. Register to attend

Got some economic news or business bits Coloradans should know? Tell us: cosun.co/heyww

Stay cool Colorado. Thanks for sticking with me for this week's report. ~ tamara

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