#14 The Future

#14 What can we expect in the future?

We can expect the state and county to continue their efforts to improve our wildfire risk and protect consumers. The insurance industry has research projects that look at the impact of specific mitigation, at both the individual home and community level, on outcomes in real life wildfires. 

More Details: Property insurers lost money in Colorado in 8 of the 11 years through 2023, due to the amount paid in claims, according to the Colorado Division of Insurance. Legislators know from California’s experience that if they put legislative limits on premium increases, insurers may opt to leave the state.  As a result, officials are working with insurers on new legislation to ensure the bills do not drive away insurers. 

The Colorado Division of Insurance has explored developing a Wildfire Reinsurance Enterprise to ease the insurance availability situation in high-risk areas such as the Front Range foothills (see FAQ #1 on what is happening to understand reinsurance and its effect on insurance availability). A bill to do this failed to get out of committee in 2025, but there will likely be future efforts to address this issue. The bill would also have incentivized hail-resistant roofs, which should bring down the cost of insurance since hail damage is the main driver of insurer losses and customers’ cost in Colorado.

Given the impact of wildfires over the past few years, insurers are looking much more carefully at the risk of conflagration – i.e., the spread of wildfire from home to home, resulting in catastrophic losses. In Colorado, the Marshall fire demonstrates the impact of non-wildfire-resistant homes being built close together, often with “connecting fuels” like wooden fencing or vegetation. The insurance industry is now looking at community mitigation, including fire breaks to decrease the likelihood of embers from a nearby wildfire reaching the community and resulting in a catastrophic loss of homes.   

There are three primary factors that contribute the risk of catastrophic wildfire loss in a neighborhood or community: (1) the likelihood that embers from a nearby wildfire will ignite a wildfire in the neighborhood; (2) the presence of connecting fuels like vegetation or fences made of combustible material like wood between homes; and (3) homes that are so close together that the radiant heat generated when one home burns directly ignites the neighboring house, even if that home has been mitigated for wildfire risk.  Research is also being done to better define “near-by.” Right now, the working figure is 10 feet or less between homes.  The bottom line is that in communities where homes are built close together, there is an increased risk of conflagration and catastrophic loss; new communities built in the WUI should be built to withstand wildfire.

The insurance industry, through its research arm, the Institute for Building and Home Safety (IBHS), has two projects underway that will inform their decisions about insurance availability and cost: (1) the WUI Data Commons that will be collect data in a uniform manner to determine the effects of parcel-level and community-level mitigation on actual wildfire outcomes; and (2) development of a standard for a Wildfire-Prepared Community.  The community standard will address the factors that lead to “conflagration,” a term recently in use by the wildfire community to describe catastrophic losses that occur in a neighborhood where a single ignition can result in wildfire spreading from home to home. 

All of the information being collected by the research could ultimately affect both insurance premiums and availability in our foothills communities. The focus on community-wide mitigation and concerns about the risk of conflagration and catastrophic losses is likely to make issues of cost and availability generally worse.