Every once in a while, a piece of nerdy insurance legislation catches my eye, not because it disrupts the industry overnight, but because it signals a trend about risk and how property insurance is going to operate. Colorado’s newly passed HB 25-1182 is a bill that may not make national headlines, but it should. Colorado has officially joined other states and stepped into the world of risk-based structure scoring, bringing transparency and accountability to how insurers are increasingly determining wildfire risk for individual properties.
Under the legislation, insurers using wildfire risk scores must disclose those scores to policyholders, explain how they influence premiums, and allow homeowners to appeal their assigned risk level. It’s a recognition that peril-based property scoring is the future of insurance underwriting, and like credit scores for loans, we should expect it to become an everyday factor in determining whether someone can get insurance and how much they’ll pay.
Colorado isn’t alone in embracing this trend. In fact, risk-based scoring for wildfire, flood, and wind exposure is already being used in states like California, Florida, Oregon, and Texas. United Policyholders noted an article from the San Francisco Chronicle, “Do You Know Your Home’s Wildfire Risk Score? Your Insurance Company Does,” showing that California insurers have been utilizing wildfire risk-based scoring for some time.
Insurers and modeling companies have been refining these tools for years, and now they’re becoming mainstream. Companies like CoreLogic, Verisk and Zesty.AI offer detailed wildfire risk scores that insurers rely on to assess whether a home is a high-risk bet or a reasonable one. If you’re a homeowner in a wildfire-prone area, these scores are likely influencing your policy right now—whether you know it or not.
For example, CoreLogic’s wildfire risk score evaluates properties based on terrain, nearby vegetation, and historical fire patterns. This allows insurers to assign a numerical score to each home, factoring in the surrounding fire environment. Insurers can use this to determine which properties are insurable, which ones might require mitigation efforts, and which ones should come with higher premiums due to elevated risk. If your home sits on a hillside covered in chaparral with no defensible space, expect CoreLogic’s wildfire model to rate you as a high risk.
Verisk’s FireLine takes a slightly different approach by breaking wildfire risk into three major factors: fuel, slope, and road access. FireLine assigns properties a score based on these elements, offering insurers a more structured way to identify homes that might be at extreme wildfire risk.
In California, where insurers have increasingly used FireLine to justify policy non-renewals, this has led to public backlash and regulatory scrutiny. Now, under current California laws, insurers must disclose wildfire risk scores to homeowners and allow them to take mitigation measures to lower their risk and potentially reduce their premiums.
Perhaps the most modern approach comes from Zesty.ai, which has partnered with Allstate and other insurers to use artificial intelligence and satellite imagery to refine wildfire risk assessment. It evaluates more than 200 unique data points, including property-level attributes like roof type, surrounding vegetation, and even the arrangement of neighboring structures. The idea is that a home with a fire-resistant roof and proper defensible space should not be rated the same as a neighboring home with a shake-shingle roof and overgrown vegetation, even if they’re in the same wildfire-prone region.
These private scoring systems bring rigor to property insurance underwriting. They also raise questions about fairness, transparency, and the role of regulatory oversight. Insurers argue that risk-based scores help align premiums with actual exposure, reducing reliance on outdated, broad-stroke metrics like ZIP codes. On the other hand, these models could leave homeowners stranded without coverage or facing skyrocketing premiums without a clear explanation of how the risk was calculated.
To make the risk scoring more transparent and fair, policyholders protection laws, similar to the Colorado House Bill, are emerging to ensure that insurers using risk-based scores provide transparency, mitigation incentives, and an appeals process. In California, these new wildfire insurance regulations require insurers to recognize specific home-hardening measures when assigning risk scores. This means that if you install a fire-resistant roof, clear defensible space, or upgrade to ember-resistant vents, your insurer must take those actions into account when setting your premium.
My prediction is that insurance applications will get even longer. Many insurers are asking homeowners about specific wildfire mitigation efforts, roof conditions, and even the proximity of flammable vegetation. As risk-based scoring becomes more sophisticated, homeowners may be required to submit detailed documentation—photos of home improvements, professional inspections, and aerial drone surveys to justify a better risk classification.
The big question is whether these systems will strike a fair balance. Will they allow well-prepared homeowners to maintain coverage and reasonable rates? Or, will they become a “black box” of insurance decision-making, as some have suggested in my research on this topic.
Colorado’s legislation is an attempt to push risk-based scoring toward fairness and transparency. Still, other states will need to follow suit to ensure that these models work for policyholders, not just insurers. The National Association of Insurance Commissioners certainly needs to address these issues in much greater detail—maybe United Policyholder’s Amy Bach, who is at the current meeting, will raise it?
One thing is certain: Risk-based scoring isn’t going away and is a growing trend. Policyholders, insurance regulators, and legislators must stay ahead of these changes to ensure that the insurance industry remains both data-driven and fair. Just as we’ve learned to navigate credit scores, it’s time to look behind the curtain to see how wildfire and hurricane risk scores are shaping the future of property insurance underwriting, premiums and resiliency.
Thought For The Day
“If you think nobody cares if you’re alive, try missing a couple of insurance payments.”
—Steven Wright
