California Department of Insurance-NAIC Study on Wildfire Insurability

The California Department of Insurance teamed with the National Association of Insurance Commissioners (NAIC) and produced what is being termed a significant report. The conclusion is rebuilding areas destroyed by wildfire according to the IBHS Wildfire Prepared Home (WPH) standard could reduce wildfire losses by a third.

The study focused on the January 2025 Palisades and Eaton fires in Los Angeles.

California Insurance Commissioner Ricardo Lara said it builds an interesting case for rebuilding wildfire destroyed neighborhoods to science-based-building and landscaping standards. The study shows how that will impact Average Annual Loss (AAL) metrics that insurers use to decide whether to write policies in an area.

When an area — or a community — rebuilds to higher standards it reduces what is called the chain of ignition. This buys time in a wildfire to stop widespread devastation.

“As Los Angeles continues to rebuild, local leaders face a pivotal choice: reconstruct to the same standards that left communities vulnerable, or seize this moment to build back with proven, science-based protections that will safeguard lives, property, and insurance access for decades to come,” Lara said. “Rebuilding with safety and insurability support our goal of increasing coverage options for all Californians.”

Lara’s news release on the study has nothing but praise for the WPH standards.

“The IBHS Wildfire Prepared Home (WPH) designation addresses roof protection, building features and defensible space at two tiers: a Base level focused on ember defense and a Plus level that adds protection against radiant heat and direct flame contact,” Lara’s news release stated. “The Department of Insurance-NAIC study modeled the insurance impact of rebuilding the Palisades and Eaton fire zones to the IBHS standard. The results are striking: rebuilding to the WPH Base standard would reduce Average Annual Loss by 31 percent, and rebuilding to WPH Plus would achieve a 35 percent reduction.”

All of this points to more insurability.

“Every home rebuilt to the Wildfire Prepared Home standard is a home that is safer for the family inside it, safer for its neighbors, and more likely to remain insurable for decades,” Lara added. “The data now confirm what the science has long indicated: community-wide resilient rebuilding works, it is achievable, and it is the single most powerful lever available to restore a sustainable insurance market in wildfire country. Los Angeles has the opportunity to lead the way — not just for its own residents, but as a proof of concept for every fire-threatened community in California and across the nation.”

We highly recommend reading the entire news release from the link below to get more, important, detail.

Source link: California Department of Insurance — https://bit.ly/3PHx3eO