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May 1, 2023 HB 23-1174
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated February 28, 2023)
Drafting Number:
Prime Sponsors:
LLS 23-0133
Rep. Amabile; Brown
Sen. Baisley; Roberts
Date:
Bill Status:
Fiscal Analyst:
May 1, 2023
Senate Business
Matt Bishop | 303-866-4796
matt.bishop@coleg.gov
Bill Topic: HOMEOWNER'S INSURANCE UNDERINSURANCE
Summary of
Fiscal Impact:
☐ State Revenue
☒ State Expenditure
☒ State Diversion
☐ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill specifies what insurers must consider in establishing replacement cost
coverage for homeowners, and requires the Division of Insurance to publish an annual
report on replacement costs. It increases state expenditures, which requires a General
Fund diversion, on an ongoing basis beginning in FY 2023-24.
Appropriation
Summary:
For FY 2023-24, the bill requires an appropriation of $109,955 to the Department of
Regulatory Agencies.
Fiscal Note
Status:
The revised fiscal note reflects the reengrossed bill.
Table 1
State Fiscal Impacts Under HB 23-1174
Budget Year
FY 2023-24
Out Year
FY 2024-25
Revenue - -
Expenditures Cash Funds $109,955 $770,326
Centrally Appropriated $14,821 $36,812
Total Expenditures $124,776 $807,138
Total FTE 1.0 FTE 3.9 FTE
Diversions General Fund ($124,776) ($807,138)
Cash Funds $124,776 $807,138
Net Diversion $0 $0
Other Budget Impacts - -
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May 1, 2023 HB 23-1174
Summary of Legislation
The bill specifies what factors insurers must consider in determining replacement value
in replacement cost homeowner’s insurance policies. For policies issued or renewed as of
January 1, 2025, insurers must provide homeowners with additional information about replacement
costs. The Division of Insurance (DOI) in the Department of Regulatory Agencies must promulgate
rules to implement these requirements.
DOI must contract with an independent third-party to prepare an annual report on the cost of
reconstructing homes in Colorado. The first report is due April 1, 2025. After a stakeholder process,
DOI may contract for an evaluation of policies to address homeowner’s insurance affordability.
Under current law, an insurer cannot cancel or refuse to renew a homeowner’s insurance without
notifying them at least 30 days in advance. The bill extends this notification deadline to 60 days.
State Diversion
The bill diverts $124,776 from the General Fund in FY 2023-24 and $807,138 in FY 2024-25. This occurs
because the bill increases costs in the Department of Regulatory Agencies, Division of Insurance,
which is funded with premium tax revenue that would otherwise be credited to the General Fund.
State Expenditures
The bill increases state expenditures in the Department of Regulatory Agencies by $124,776 in
FY 2023-24 and $807,138 in FY 2024-25, paid from the Division of Insurance Cash Fund. Expenditures
are detailed below and shown in Table 2.
Table 2
Expenditures Under HB 23-1174
FY 2023-24 FY 2024-25
Department of Regulatory Agencies
Personal Services $64,139 $157,784
Standard Operating $1,080 $2,700
Capital Outlay $6,670 $6,670
Legal Services $38,066 $353,172
Contractor - $250,000
Centrally Appropriated Costs
1
$14,821 $36,812
FTE – Personal Services 0.8 FTE 2.0 FTE
FTE – Legal Services 0.2 FTE 1.9 FTE
Total Cost $124,776 $807,138
Total FTE 1.0 FTE 3.9 FTE
1
Centrally appropriated costs are not included in the bill's appropriation. Page 3
May 1, 2023 HB 23-1174
Department of Regulatory Agencies. The bill increases expenditures to generate the annual report,
facilitate reporting requirements with insurers, and update rules.
Staff. Managing the contract with the third party, facilitating the reporting process for insurers,
and conducting compliance audits requires 1.0 FTE beginning in FY 2024-25. DORA requires an
additional 1.0 FTE in FY 2023-24 and FY 2024-25 to support rulemaking, policy development, and
outreach. Workload in subsequent years will depend on the extent to which rules must be
updated; this will be addressed through the annual budget process. Standard operating and
capital outlay costs are included, and costs are prorated to reflect the bill’s effective date.
Legal services. DORA requires legal support to execute the contract and conduct rulemaking in
FY 2023-24, estimated at 360 hours (0.2 FTE). In subsequent years, DORA requires an estimated
3,340 hours (1.9 FTE) of additional legal services for general counsel and representation due to the
anticipated disputes between insurers and homeowners related to DOI’s replacement cost
benchmarks published in the annual report, and the high level of confidential consumer data DOI
receives from insurers. Legal services are provided by the Department of Law at of $105.47 per
hour.
Contractor. The cost to solicit a contract for the annual report is estimated at $250,000 beginning
in FY 2024-25, consisting of 625 hours at $400 per hour to create the initial report and to update it
annually. This workload is expected to decrease over time as data collection and evaluation
methodologies are established.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs
associated with this bill are addressed through the annual budget process and centrally
appropriated in the Long Bill or supplemental appropriations bills, rather than in this bill. These
costs, which include employee insurance and supplemental employee retirement payments, are
shown in Table 2.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed, except that the Section 3 of the bill, pertaining to requirements of insurers,
takes effect January 1, 2025.
State Appropriations
For FY 2023-24, the bill requires an appropriation of $109,955 from the Division of Insurance Cash
Fund to the Department of Regulatory Agencies, and 0.8 FTE. Of this, $38,066 is reappropriated to
the Department of Law, with an additional 0.2 FTE.
State and Local Government Contacts
Information Technology Law Regulatory Agencies
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.