Wildfire Mitigation Study Shows 35% AAL Reduction Through Resilient Rebuilding

NAIC Newsroom

Published April 1st, 2026

Detected April 5th, 2026

Summary

NAIC's Catastrophe Risk Management Center of Excellence released research conducted with the California Department of Insurance demonstrating that rebuilding wildfire-impacted communities to IBHS Wildfire Prepared Home Standards can reduce projected wildfire average annual losses by up to 35 percent. The study found that rebuilding to the highest IBHS standard adds approximately 3 percent in construction costs.

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The NAIC Catastrophe Risk Management Center of Excellence published research findings showing that adoption of IBHS Wildfire Prepared Home Standards by individual homeowners can reduce projected wildfire average annual losses by up to 35 percent. The study, conducted in partnership with the California Department of Insurance and focused on Los Angeles communities, demonstrates how science-based mitigation and catastrophe modeling can support stronger, more stable insurance markets. The COE provides state insurance regulators with technical expertise on catastrophe models and applied research to evaluate how mitigation strategies affect insurance pricing, underwriting, and availability.\n\nWhile this is research and guidance rather than a binding regulatory requirement, state insurance regulators can use these findings to assess risk, guide mitigation-funding decisions, and inform rate filings and coverage availability decisions. The findings are intended to be applicable across catastrophe-exposed regions nationally. Regulators and insurers may consider these mitigation standards when evaluating insurability and pricing in wildfire-prone areas.

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News Release

KANSAS CITY, Mo. (April 1, 2026)

NAIC Catastrophe Risk Management Center of Excellence Shows How Resilient Rebuilding Can Strengthen Insurance Markets

California Wildfire Study Highlights National Role of State Insurance Regulators

New research led by the National Association of Insurance Commissioners’ (NAIC) Catastrophe Risk Management Center of Excellence (COE) demonstrates how science-based mitigation and catastrophe modeling can significantly reduce disaster losses and support stronger, more stable insurance markets.

The analysis, conducted in partnership with the California Department of Insurance, found 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 when adopted by all individual homeowners in the community. AAL is a central data point in insurance rates filings and can be a factor in determining whether insurers will offer coverage in an area and at what price.

While focused on Los Angeles, the study illustrates the broader national value of the COE’s work in helping state insurance regulators assess risk and improve 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.”

Housed within the NAIC’s Center for Insurance Policy and Research, the COE provides regulators with technical expertise on catastrophe models, training on risk analysis, and applied research to evaluate how mitigation strategies affect insurance pricing, underwriting, and availability.

The California study highlights the importance of science-backed individual homeowner mitigation at scale. The research also found that rebuilding to the highest IBHS standard adds approximately three percent in costs to the project, an investment that can yield substantial insurance and safety benefits.

While centered on wildfire risk, the findings underscore a national framework that can be applied across catastrophe-exposed regions. Through the COE, state insurance regulators share tools, research, and lessons learned to strengthen resilience, guide mitigation-funding decisions, and support faster, stronger recoveries after disasters.

About the NAIC Catastrophe Risk Management Center of Excellence

The NAIC’s Catastrophe Risk Management Center of Excellence provides state insurance regulators with technical expertise and applied research on natural hazard risk to help protect consumers and promote resilient, competitive insurance markets.

For more information, visit NAIC.org.

About the National Association of Insurance Commissioners

As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.