Wildfire Insurance Coverage Study Act of 2024

Bill: 118-hr-7462
Sponsor: full_name: Rep. Waters, Maxine [D-CA-43]
Introduced: 2024-02-26
Policy area: Finance and Financial Sector
Subjects: Congressional oversight

Disaster relief and insurance

Environmental assessment, monitoring, research

Fires

Geography and mapping

Government Accountability Office (GAO)

Government studies and investigations

Insurance industry and regulation

State and local finance

Wilderness and natural areas, wildlife refuges, wild rivers, habitats
Latest action: action_date: 2024-07-18
text: Placed on the Union Calendar, Calendar No. 489.

Summaries:
action_date: 2024-02-26
action_desc: Introduced in House
text: <p><strong>Wildfire Insurance Coverage Study Act of 2023 </strong></p><p>This bill requires reports regarding wildfire risk and damage. Specifically, the &nbsp;Government Accountability Office (GAO)&nbsp;must report on trends in wildfire declarations, mitigation practices, state and federal programs regarding wildfire risk, and the need for a national map of wildfire risks.</p><p>The GAO must also report on (1) the availability and cost of wildfire insurance coverage for homes and commercial property, (2) state regulatory responses to increasing costs of coverage, and (3) impediments to private wildfire insurance coverage.</p>

tv_txt: IB Union Calendar No. 489 118th CONGRESS 2d Session H. R. 7462 [Report No. 118–589] IN THE HOUSE OF REPRESENTATIVES February 26, 2024 Ms. Waters introduced the following bill; which was referred to the Committee on Financial Services July 18, 2024 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed Strike out all after the enacting clause and insert the part printed in italic For text of introduced bill, see copy of bill as introduced on February 26, 2024 A BILL To require the Government Accountability Office to conduct a study regarding insurance coverage for damages from wildfires, and for other purposes.

1. Short title This Act may be cited as the Wildfire Insurance Coverage Study Act of 2024 . 2. GAO study regarding insurance for wildfire damage (a) Study The Comptroller General of the United States, in consultation with the Director of the Federal Insurance Office and State insurance regulators, shall conduct a study to analyze and determine the following: (1) Risk assessment The extent and nature of wildfire risk in the United States, including— (A) identifying trends in declarations for wildfires under the Fire Management Assistance grant program under section 420 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( 42 U.S.C. 5187 ), with respect to geography, costs, probability, and frequency of wildfire disasters; (B) identifying mitigation practices that would assist in reducing costs and risks for insurance policies covering damages from wildfires; (C) identifying existing programs of the Federal Government and State governments that measure wildfire risk and assess their effectiveness in forecasting wildfire events and informing wildfire response; and (D) analyzing and assessing the need for a national map for measuring and quantifying wildfire risk. (2) Existing state of coverage With respect to the existing state of homeowners insurance coverage and commercial property insurance coverage for damage from wildfires in the United States— (A) the extent to which private insurers have, during the 10-year period ending on the date of the enactment of this Act, adjusted rates, policyholder cost-sharing provisions, or both for such coverage (after adjusting for inflation) and the geographic areas in which adjusted rates, policyholder cost-sharing, or both have increased; (B) the extent to which private insurers have, during the 10-year period ending on the date of the enactment of this Act, declined to renew policies for such coverages and the geographic areas to which such declinations applied; (C) the events and economic factors that have contributed to any such increased rates and declinations to renew policies; (D) in cases in which private insurers have curtailed their overall wildfire exposure, the extent to which homeowners insurance coverage and commercial property coverage were terminated altogether and the extent to which such coverages are still offered but with coverage for damage from wildfires excluded; and (E) the extent to which, and circumstances under which, private insurers are continuing to provide coverage for damage from wildfires— (i) in general; (ii) subject to a condition that mitigation activities are taken, such as hardening of properties and landscaping against wildfires, by property owners, State or local governments, park or forest authorities, or other land management authorities; and (iii) subject to any other conditions. (3) Regulatory responses With respect to actions taken by State insurance regulatory agencies in response to increased premium rates, policyholder cost-sharing, or both for coverage for damage from wildfires or exclusion of such coverage from homeowners insurance policies— (A) the extent to which States have leveraged their respective authorities to regulate rate increases; (B) the extent to which States have enacted any moratoria on such rate and policyholder cost-sharing increases or exclusions and on non-renewals; (C) the extent to which States require homeowners insurance coverage to include coverage for damage from wildfires or make sales of homeowners insurance coverage contingent on the sale, underwriting, or financing of separate wildfire coverage in the State; (D) the extent to which States have established State residual market insurance entities, reinsurance programs, or similar mechanisms for coverage of damages from wildfires; (E) any other actions States or localities have taken in response to increased premium rates, policyholder cost-sharing, or both for coverage for damage from wildfires or exclusion of such coverage from homeowners policies, including forestry and wildfire management policies and subsidies for premiums and cost-sharing for wildfire coverage; (F) the effects of actions taken by States on the availability, coverage level, and affordability of homeowners insurance coverage; and (G) the effectiveness and sustainability of such actions taken by States. (4) Challenges in underwriting wildfire risk With respect to the challenges faced by private insurers underwriting wildfire risk, what is or are— (A) the correlated risks and the extent of such risks; (B) the factors affecting the extent of private insurers’ ability to estimate magnitude of future likelihood of wildfires and of expected damages from wildfires; (C) the effects of the need to increase more affordable housing options, which may contribute to increased homebuilding in more remote, heavily-wooded areas with higher wildfire risk; (D) the potential for wildfire losses sufficiently large to jeopardize insurers’ solvency; (E) the extent to which, and areas in which, risk-adjusted market premiums for wildfire risk limit affordability or availability of coverage for consumers; (F) the effects of various existing and potential State and Federal Government responses to help address these challenges and mitigate wildfire risk, including actions such as— (i) improved forest management policies; (ii) improved data to estimate risk; (iii) relocating homeowners from wildfire zones; (iv) offsetting a portion of insurers’ charged risk-adjusted premiums with means-tested government affordability programs for lower income homeowners; (v) encouraging the increased use of private reinsurance and other risk-sharing mechanisms by insurers to better diversify wildfire risk; and (vi) developing programs that offset the costs of wildfire risk for consumers and industry; (G) the available policy responses if private insurers exit the wildfire coverage market and the potential advantages and disadvantages of each such response; (H) the effects of the availability and affordability of wildfire coverage, policyholder cost-sharing, or both, on— (i) local communities that are disproportionately vulnerable to wildfires, including on low- or moderate-income property owners and small businesses; (ii) rebuilding in communities previously damaged by wildfires; (iii) the availability and affordability of housing supply; and (iv) the demand for wildfire insurance coverage by property owners; (I) the effects of potential State prohibitions on termination of policies due to wildfire claims on insurer solvency; and (J) the manner in which private insurers are modeling or estimating future wildfire risk. (b) Report Not later than the expiration of the 12-month period beginning on the date of the enactment of this Act, the Comptroller General shall submit to the Congress a report identifying the findings and conclusions of the study conducted pursuant to subsection (a).

July 18, 2024 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

tv_txt: I 118th CONGRESS 2d Session H. R. 7462 IN THE HOUSE OF REPRESENTATIVES February 26, 2024 Ms. Waters introduced the following bill; which was referred to the Committee on Financial Services A BILL To require the Government Accountability Office to conduct a study regarding insurance coverage for damages from wildfires, and for other purposes.

1. Short title This Act may be cited as the Wildfire Insurance Coverage Study Act of 2023 . 2. GAO study regarding insurance for wildfire damage (a) Study The Comptroller General of the United States, in consultation with the Director of the Federal Insurance Office and State insurance regulators, shall conduct a study to analyze and determine the following: (1) Risk assessment The extent and nature of wildfire risk in the United States, including— (A) identifying trends in declarations for wildfires under the Fire Management Assistance grant program under section 420 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( 42 U.S.C. 5187 ), with respect to geography, costs, probability, and frequency of wildfire disasters; (B) identifying mitigation practices that would assist in reducing premiums for insurance policies covering damages from wildfires; (C) identifying existing programs of the Federal Government and State governments that measure wildfire risk and assess their effectiveness in forecasting wildfire events and informing wildfire response; and (D) analyzing and assessing the need for a national map for measuring and quantifying wildfire risk. (2) Existing state of coverage With respect to the existing state of homeowners insurance coverage and commercial property insurance coverage for damage from wildfires in the United States— (A) the extent to which private insurers have, during the 10-year period ending on the date of the enactment of this Act, increased rates, cost-sharing provisions, or both for such coverage (after adjusting for inflation) and the geographic areas in which such increased rates, cost-sharing, or both applied; (B) the extent to which private insurers have, during the 10-year period ending on the date of the enactment of this Act, refused to renew policies for such coverages and the geographic areas to which such refusals applied; (C) the events that have triggered such increased rates and refusals to renew policies; (D) in cases in which private insurers curtail coverage, the extent to which homeowners coverage and commercial property coverage are terminated altogether and the extent to which such coverages are offered but with coverage for damage from wildfires excluded; and (E) the extent to which, and circumstances under which, private insurers are continuing to provide coverage for damage from wildfires— (i) in general; (ii) subject to a condition that mitigation activities are taken, such as hardening of properties and landscaping against wildfires, by property owners, State or local governments, park or forest authorities, or other land management authorities; and (iii) subject to any other conditions. (3) Regulatory responses With respect to actions taken by State insurance regulatory agencies in response to increased premium rates, cost-sharing, or both for coverage for damage from wildfires and exclusion of such coverage from homeowners policies— (A) the extent of rate regulation; (B) the extent of moratoria on such rate and cost-sharing increases and exclusions and on non-renewals; (C) the extent to which States require homeowners coverage to include coverage for damage from wildfires or make sales of homeowners coverage contingent on the sale, underwriting, or financing of separate wildfire coverage in the State; (D) the extent to which States have established State residual market insurance entities, reinsurance programs, or similar mechanisms for coverage of damages from wildfires; (E) any other actions States or localities have taken in response to increased premium rates, cost-sharing, or both for coverage for damage from wildfires and exclusion of such coverage from homeowners policies, including forestry and wildfire management policies and subsidies for premiums and cost-sharing for wildfire coverage; (F) the effects on the homeownership coverage market of such actions taken by States; and (G) the effectiveness and sustainability of such actions taken by States. (4) Impediments in underwriting wildfire risk With respect to impediments faced by private insurers underwriting wildfire risk, what is or are— (A) the correlated risks and the extent of such risks; (B) the extent of private insurers’ inability to estimate magnitude of future likelihood of wildfires and of expected damages from wildfires; (C) the extent to which need for affordable housing contributes to people relocating to more remote, heavily wooded areas with higher wildfire risk; (D) the potential for wildfire losses sufficiently large to jeopardize insurers’ solvency; (E) the extent to which, and areas in which, risk-adjusted market premiums for wildfire risk are so high as to be unaffordable; (F) the manners in which the Federal Government and State governments can alleviate any of these impediments, including through— (i) improved forest management policies to reduce wildfire risk; (ii) improved data to estimate risk; (iii) relocating homeowners from wildfire zones; (iv) allowing insurers to charge risk-adjusted premiums for wildfire risk, combined with subsidized premiums for lower-income homeowners; and (v) taking a last-loss position in reinsuring wildfire risk; (G) the available policy responses if private insurers exit the wildfire coverage market and the advantages and disadvantages of each such response; (H) the effects of lack of wildfire coverage or more expensive wildfire coverage rates, cost-sharing, or both— (i) on local communities, including on low- or moderate-income property owners and small businesses; (ii) by race and ethnicity; (iii) on rebuilding in communities previously damaged by wildfires; and (iv) on the demand for wildfire coverage by property owners; (I) the effects of potential State prohibitions on termination of policies due to wildfire claims on insurer solvency; and (J) the manner in which private insurers are modeling or estimating future wildfire risk. (b) Report Not later than the expiration of the 24-month period beginning on the date of the enactment of this Act, the Comptroller General shall submit to the Congress a report identifying the findings and conclusions of the study conducted pursuant to subsection (a).