The National Association of Insurance Commissioners’ Catastrophe Risk Management Center of Excellence announced on Apr. 1 that new research demonstrates how science-based mitigation and catastrophe modeling can significantly reduce disaster losses and help stabilize insurance markets.
The findings are important as they show that targeted rebuilding strategies could lower projected wildfire average annual losses, which are key in determining insurance rates and availability for homeowners.
The analysis, conducted with the California Department of Insurance, found that if all individual homeowners in a wildfire-impacted community rebuilt according to the Insurance Institute for Business & Home Safety Wildfire Prepared Home Standards, projected average annual losses from wildfires could drop by up to 35 percent. The study focused on Los Angeles but is intended to have broader national implications for risk assessment and long-term insurability.
“Catastrophe risk is a national challenge, and state insurance regulators rely on sound data and modeling to protect consumers and support healthy insurance markets,” said NAIC President and Virginia Insurance Commissioner Scott A. White. “The Catastrophe Risk Management Center of Excellence helps regulators turn complex risk information into actionable insight.”
According to the NAIC, its Center of Excellence provides technical expertise on catastrophe models, training in risk analysis, and applied research so regulators can better understand how mitigation strategies affect pricing, underwriting, and availability within the insurance sector. The California study also noted that rebuilding homes to meet the highest IBHS standard would add about three percent in costs but could result in significant safety improvements and potential reductions in insurance premiums.
While this work centered on wildfire risks in California, officials say it offers a framework that can be applied across other regions facing natural disasters. Through shared tools and research provided by the COE, state regulators aim to strengthen resilience efforts nationwide.
