A provision in Colorado's new homeowner insurance bill will reshape insurer costs—and potentially affect the commercial insurance market—starting next year.
Most Colorado manufacturers don't realize that buried in SB155, the bill aimed at expanding homeowner insurance access, is a provision that will impose a new operating cost on every admitted insurer selling multiperil homeowner policies in the state. And here's the catch: insurers cannot pass this fee to customers.
Starting in calendar year 2027, every admitted insurer offering multiperil homeowner insurance in Colorado must pay an annual fee equal to 0.5% of the premiums it collected in the prior year. This is a direct, mandatory cost to the insurer—not a tax on policyholders, but a real operating expense that comes out of the insurer's bottom line.
The bill is explicit on one point: insurers are prohibited from passing this fee through as a surcharge to policyholders. Section 10-4-2003(4)(a) on page 10 of SB155 makes clear the cost must be absorbed by the insurer directly. No pass-through. No surcharge. No workaround.
For most manufacturers, the direct impact is indirect—you buy commercial insurance, not homeowner policies. But the insurance market is interconnected. When insurers face new mandatory costs on one line of business, they often adjust pricing and underwriting on others to stay profitable. Smaller or regional insurers, which may already operate on tighter margins, could respond by raising commercial premiums, tightening eligibility, or exiting markets altogether.
Additionally, if you own the building your manufacturing operation occupies, or if your business carries landlord or property coverage tied to homeowner market conditions, you should monitor how this fee reshapes the competitive landscape.
SB155 takes effect August 12, 2026 (assuming no successful referendum petition). The 0.5% fee collection begins in calendar year 2027, based on premiums collected in 2026. This gives insurers roughly eight months to prepare.
Insurers will need to model the impact on their Colorado operations and decide how to absorb the cost. Some may accept lower margins on homeowner business. Others may seek to grow that business to spread the fixed fee across a larger premium base. A few may reduce their presence in Colorado's homeowner market. Any of these moves could ripple into the broader insurance ecosystem, including commercial lines.
Manufacturers with significant real estate holdings or those shopping for commercial insurance renewal in 2027 and beyond should be aware that the competitive and pricing dynamics in Colorado's insurance market are shifting. It's worth asking your broker how SB155 might affect your renewal options or rates.
Source: Colorado SB155, Section 10-4-2003(4)(a), effective August 12, 2026. Fee collection begins calendar year 2027.