Legislation that could set a dangerous precedent in how wildfire risk is assessed was passed by the House Financial Services Committee Feb. 29. The Wildfire Insurance Coverage Study Act was introduced by Rep. Maxine Waters, D-Calif., the committee’s ranking member, and would require the Government Accountability Office, in consultation with the Federal Insurance Office and state regulators, to conduct a study relating to the availability of insurance coverage for damages related to wildfires. Specifically, it would authorize a study on the following:

  1. Risk Assessment – extent and nature of wildfire risk in the U.S.;
  2. Existing State of Coverage – existing state of homeowners insurance coverage and commercial property insurance coverage for damage from wildfire in the U.S. that would look at:
    1. Extent to which private insurers have, during a 10-year period ending on the date of enactment of this bill, increased rates, cost-sharing provisions, or both for such coverage (after adjusting for inflation);
    2. Extent to which private insurers have refused to renew policies for such coverages; and
    3. Events that have triggered such increased rates and refusals to renew policies.
  3. Regulatory Responses – actions taken by state insurance regulators in response to increased premium rates, cost sharing, or both for coverage of damage from wildfires and exclusion of such coverage from homeowner polices; and
  4. Impediments to underwriting wildfire – impediments faced by private insurers underwriting wildfire risk.

Further, data from 10-years prior to the enactment of the bill into federal law would be fair game to study all of the above.

While NAMIC recognizes the bill would simply authorize a study, it has potentially damaging impacts to the industry. While it is not news that insurers have pulled out of some of the most at-risk markets for a host of different reasons, the data to be collected could be misinterpreted to encourage policymakers to offer harmful proposals for addressing wildfire risk, such as a government-run program for wildfire, which NAMIC strongly opposes.

Post Details

Publish Date

March 4, 2024

News Type

  • Washington Weekly

Points of Contact