The Colorado Division of Insurance is considering
The Colorado FAIR Plan has assessed insurers doing business in the state for $46 million.
For insurers taking part in the plan that want to recoup the assessment, that works out to a surcharge of $17 to $22 per policyholder, divided out over a five-year period, according to Carole Walker, executive director of the Rocky Mountain Insurance Association, which represents P&C insurers in the state, who spoke in an online hearing April 30.
Insurers seeking to recoup the assessment can decline to do so if their collection costs outweigh the benefits, Walker added in a follow-up email. The small size of the surcharge would only be practical to collect in a one- or two-year timeframe, she stated. However, without the surcharge, some insurance carriers' solvency would be at risk, she added.
"Smaller companies may not be in a financial position to not recoup the entire assessment immediately," Walker said in the hearing. "The draft bulletin states that the surcharge should be applied fairly and equitably. However, that doesn't make it clear that the surcharge amount could be a flat surcharge across all policy holders, rather than an individualized premium surcharge."
A consumer advocate who spoke in the hearing said the surcharge should be limited. "Any amount collected from a policyholder in any given year should be no greater than the amount equal to 5% of the policy premium for that policyholder," said Lisa Hughes, R2R/R2P Colorado liaison at United Policyholders.
Kelly Campbell, executive director of the Colorado FAIR Plan, emphasized that keeping the homeowners insurance market solvent should be the top priority with the regulation. "We do just want to ensure that the regulation moving forward provides key components for member insurers in regards to their assessments, and specifically provides them certainty and clarity in regards to the recoupment of that assessment," she said.
The Division of Insurance will accept further comments on the proposed regulation through 5 pm on Monday, May 5, stated Michael Conway, Colorado Insurance Commissioner.
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