Colorado wildfires are making it harder for homeowners and businesses to buy property insurance, and now the General Assembly is poised to create a public insurance plan to serve as a last resort for those who can’t find policies on the open market.

A bill introduced Thursday would create an insurance-of-last-resort plan — what’s being called a “fair plan” — that would protect Colorado property owners from losses due to wildfires, floods, hail, theft, vandalism and civil disturbances when no other options exist.

The bill is necessary because destructive wildfires, floods and hailstorms are increasing amid global climate change and the risks that come with those disasters are making property insurance companies skittish about doing business in Colorado, according to the state’s insurance commissioner and the bill’s sponsors.

In the 15 months since the Marshall fire caused $2 billion in damages in Boulder County, the Colorado Division of Insurance has heard from people who say their insurers were dropping them and their options for finding new policies were extremely limited and very expensive, Colorado Insurance Commissioner Michael Conway said.

So far, state officials are not aware of a homeowner being denied insurance coverage.

“It really hasn’t happened yet, but we can see that it’s about to,” said Rep. Judy Amabile, D-Boulder, who is one of the bill’s sponsors. “Frankly, if no one ever needed to buy insurance from the ‘fair plan,’ that would be awesome.”

If approved, the bill would task the governor with appointing a nine-member board to create and run the insurance plan. Six members would represent the insurance industry and three would represent consumers, said Conway, whose office has been heavily involved in drafting the legislation. The board would need to be up and running by Jan. 1.

The insurance plan would be expensive for homeowners and would offer minimal coverage, Conway said. For example, the policies would not cover the contents of a person’s home or provide liability protection.

“It’s not a solution for affordability,” Conway said. “It’s my expectation is that it will be expensive for people. It’s to solve an availability crisis.”

The plan would be funded by premiums that participating homeowners pay, Amabile said. The bill’s creators intend for it to be self-funded.

There would be some up-front costs to create the plan.

“The start-up costs in the grand scheme of the insurance market will be marginal,” Conway said.

If, however, the plan’s financial resources were drained because of a wildfire or flood that led to a huge payout to customers, the bill would require the insurance industry to pay into the pool. That likely would cause premiums for all Colorado property owners to rise.

While the insurance industry has been part of negotiations in drafting the legislation, there are concerns, said Carole Walker, executive director of the Rocky Mountain Insurance Information Association, an industry trade group.

Walker’s group is pushing to change the board’s composition. Insurance companies want to hold the majority of the seats on the board rather than allow the industry’s representation to be diluted by independent agents and consumers, she said.

“This has to be run like a business,” Walker said. “It’s an insurance business. With Colorado building one from scratch, you need the right board in place to make good decisions.”

Although the clock is ticking on the 2023 legislative session, the bill is likely to pass. House Speaker Julie McCluskie is a sponsor, which assures it will get hearings, and the insurance commissioner’s involvement means it likely has Gov. Jared Polis’s support.

Colorado is one of 18 states that does not have a last-resort insurance plan, and no state has created one from scratch in decades. Some that exist are rife with problems, and the insurance industry has been hesitant about creating one for Colorado residents.

In Florida and Louisiana — states where hurricanes cause millions of dollars in damages almost every year — the government plans have become the largest insurance policyholders in each state. Colorado wants to avoid that.

Conway said insurance companies have been at the table as his staff and legislators have drafted the bill.

Last fall, Conway warned people that an insurance crisis was looming after his office began fielding calls from people across the state who were reporting that their insurance carriers were dropping them and they were struggling to find replacement policies.

The property owners were saying large, well-known companies such as Allstate and State Farm were not renewing policies, and the companies that were offering to sell them a policy were charging exorbitant premiums.

In one example in Aspen, an insurance broker said he had a client who had been paying a $60,000 annual premium to insure $20 million worth of buildings, and the client’s carrier decided not to renew. The agent managed to piece together coverage by buying four policies that cover $5 million each to reach the $20 million limit needed. Those four policies cost a combined $600,000 in premiums — a 900% increase for the client.