National Association of Insurance Commissioners research finds rebuilding to IBHS wildfire standards could cut projected average annual losses by up to 35 percent

The National Association of Insurance Commissioners (NAIC) Catastrophe Risk Management Center of Excellence has published research, conducted with the California Department of Insurance, on how science-based mitigation and catastrophe modeling can reduce disaster losses and support more stable insurance markets. The analysis estimates that rebuilding wildfire-impacted communities to the Insurance Institute for Business & Home Safety (IBHS) Wildfire Prepared Home Standards could reduce projected wildfire average annual losses (AAL) by up to 35 percent if adopted by all individual homeowners in a community. The study, focused on Los Angeles, links AAL reductions to practical insurance outcomes, noting that AAL is a key input in insurance rate filings and can influence whether insurers offer coverage in a given area and at what price. It also finds that rebuilding to the highest IBHS standard would add about three percent to project costs, and frames the results as evidence of the value of individual homeowner mitigation when implemented at scale. The NAIC’s Catastrophe Risk Management Center of Excellence, housed within the NAIC Center for Insurance Policy and Research, is positioned as a technical resource for state regulators on catastrophe models, risk analysis training, and applied research on how mitigation affects insurance pricing, underwriting, and availability.