A mandatory fee on homeowner's insurance premiums starting in 2027 may have ripple effects on small-business property owners in Colorado.
Most Colorado manufacturing owners don't realize that a bill focused on homeowner's insurance access contains a provision that could indirectly affect their own property insurance costs and market options.
SB155, titled "Increase Access Homeowner's Insurance Enterprise," includes a buried requirement that every admitted insurer writing multiperil homeowner's policies in Colorado must pay an annual fee of 0.5% of all in-state premiums they collect. Starting in calendar year 2027, and every year after, this fee flows to the state.
Here's the critical part: insurers cannot pass this fee directly to policyholders through a surcharge. Instead, they must absorb it. That constraint creates pressure on insurers' margins, which historically leads to one of three outcomes: reduced market participation, higher baseline premiums across the board, or tighter underwriting standards.
For small-business owners who carry homeowner's policies on commercial property or mixed-use facilities, this matters. When insurers face cost pressures they can't pass through directly, they often respond by raising rates on all customers, limiting new business in a state, or exiting the market entirely. Colorado's insurance market has already faced significant strain; this fee adds another cost layer to an already tight system.
The provision appears in Section 10-4-2003(4)(a) on page 10 of the bill and applies to all admitted insurers—meaning those licensed and regulated by the Colorado Division of Insurance.
The fee takes effect January 1, 2027, and recurs annually. The enterprise managing the fee may reduce or cease collection if total revenue reaches a specified threshold, but manufacturers should plan for this to be a permanent fixture in the insurance landscape starting next year.
If you renew property insurance in late 2026 or early 2027, you may see rate adjustments that reflect insurers' anticipation of this fee. Locking in rates before January 2027 could be worth exploring with your broker, though no guarantees exist. More importantly, understanding the fee's existence helps you interpret rate increases or coverage changes your insurer may announce as we approach 2027.
The fee was designed to fund Colorado's homeowner's insurance access enterprise, but its indirect effects on market dynamics and premium pressure are real considerations for any business owner with property exposure in the state.
For a detailed breakdown of how this provision may affect your specific business insurance strategy, contact your insurance broker or the Colorado Manufacturers Association for business-specific guidance.
Source: SB155, Section 10-4-2003(4)(a); Colorado Division of Insurance.