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February 28, 2024 HB 24-1083
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated January 23, 2024)
Drafting Number:
Prime Sponsors:
LLS 24-0192
Rep. Willford; Brown
Sen. Cutter
Date:
Bill Status:
Fiscal Analyst:
February 28, 2024
House Appropriations
Brendan Fung | 303-866-4781
brendan.fung@coleg.gov
Bill Topic: CONSTRUCTION PROFESSIONAL INSURANCE COVERAGE TRANSPARENCY
Summary of
Fiscal Impact:
☐ State Revenue
☒ State Expenditure
☒ State Diversion
☐ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill commissions a statewide study of residential property developers’
construction liability insurance. It creates a General Fund diversion and increases state
expenditures in FY 2024-25 and FY 2025-26 only.
Appropriation
Summary:
For FY 2024-25, the bill requires an appropriation of $339,803 to the Department of
Regulatory Agencies.
Fiscal Note
Status:
This revised fiscal note reflects the introduced bill, as amended by the House Business
Affairs & Labor Committee.
Table 1
State Fiscal Impacts Under HB 24-1083
Budget Year
FY 2024-25
Out Year
FY 2025-26
Revenue
- -
Expenditures Cash Funds $339,803 $9,951
Centrally Appropriated $8,531 $2,133
Total Expenditures $348,334 $12,084
Total FTE 0.4 FTE 0.1 FTE
Diversions General Fund ($348,334) ($12,084)
Cash Funds $348,334 $12,084
Net Diversion $0 $0
Other Budget Impacts - -
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February 28, 2024 HB 24-1083
Summary of Legislation
The bill requires the Division of Insurance in the Department of Regulatory Agencies (DORA) to
conduct or commission a statewide study of residential property developers’ construction
liability insurance. The study must identify:
insurers offering construction liability policies to residential property developers in the state;
rates and the basis for rates charged by insurers, to include three years of data, where
available;
risk factors, classifications, and loss cost multipliers that insurers use to set rates;
a comparison of rates charged in other regional states for similar residential projects; and
limitations or exclusions from coverage.
DORA must submit a report of the study’s findings to the General Assembly by August 1, 2025.
State Diversion
This bill diverts General Fund to the Division of Insurance Cash Fund in FY 2024-25 and
FY 2025-26. This revenue diversion occurs because the bill increases costs in the Division of
Insurance in the Department of Regulatory Agencies, which is funded with premium tax revenue
that would otherwise be credited to the General Fund.
State Expenditures
The bill increases state expenditures in DORA by about $348,000 in FY 2024-25 and about
$12,000 in FY 2025-26, paid from the Division of Insurance Cash Fund to collect data and hire
and actuarial contractor to conduct the study. Expenditures are shown in Table 2 and detailed
below.
Table 2
Expenditures Under HB 24-1083
FY 2024-25 FY 2025-26
Department of Regulatory Agencies
Personal Services $39,803 $9,951
Contract Study $300,000
-
Centrally Appropriated Costs
1
$8,531 $2,133
Total Cost $348,334 $12,084
Total FTE 0.4 FTE 0.1 FTE
1
Centrally appropriated costs are not included in the bill's appropriation. Page 3
February 28, 2024 HB 24-1083
Staff. In FY 2024-25, DORA requires 0.3 FTE Actuary II to request, review, and analyze carrier
data that is not currently required to be filed with the division, and to collect and analyze
insurance rates in other states in the region. In FY 2024-25 and FY 2025-26, an additional 0.1 FTE
Actuary II will hire and manage the contractor for the study. Staffing costs conclude in
August 2025, upon delivery of the study.
Contract study. DORA requires an estimated $300,000 to hire an actuarial firm to conduct
market research on residential construction liability insurers, analyze coverage limits and
exclusions, run data analyses of rates, and generate a report. Based on the level of detail
required by the bill, the fiscal note assumes that a contractor will perform 750 hours of work at
an estimated $400 per hour. Actual costs will be determined through the contracting process.
Expenditure for the contract study will be spent over two years.
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, and applies to sales occurring on or after this date.
State Appropriations
For FY 2024-25, the bill requires an appropriation of $339,803 and 0.4 FTE from the Division of
Insurance Cash Fund to the Department of Regulatory Agencies. Of this amount, $300,000
requires roll-forward spending authority through FY 2025-26.
State and Local Government Contacts
Counties County Clerks Information Technology
Judicial 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 the General Assembly website.