Arizona senators hear that wildfire risk and federal land management are driving homeowner insurance cancellations

PHOENIX — Arizona lawmakers convened a special hearing Feb. 25 to examine what witnesses called an emerging crisis: homeowners’ insurance cancellations and premium spikes linked to wildfire risk and forest conditions.

The Senate committee heard accounts from county and local officials, fire chiefs, insurance representatives, a major utility and real estate advocates describing similar complaints: properties that meet local mitigation standards are nonetheless losing coverage or seeing steep price increases because insurers treat large areas as high wildfire risk.

Doyle Shamley, an Apache County elected official from Eagar who has worked with local fire managers, told the committee that data show extensive Forest Service lands in Arizona classified at extreme risk and little of that acreage has received fuel‑reduction treatment. Shamley said much of the relevant data were drawn from forest inventory and research institutions and cited a 2023 congressional Joint Economic Committee estimate of wildfire costs in the hundreds of billions nationally. He said 63% of U.S. Forest Service–managed acres in Arizona are at extreme risk and that only a small share of those acres have been treated for fuels reduction. "They're using convenient, for them, old Google Earth images," Shamley said, describing insurers' remote assessments of property that do not reflect recent on‑the‑ground thinning or stewardship projects.

County and fire leaders described mitigation efforts and funding shortfalls. Sherry Hannah, co‑chair of Prescott’s Proposition 478 (a local sales‑tax measure), said Prescott voters approved a sales tax increase to support police and fire and to fund community mitigation work; she asked insurers not to penalize communities that have invested in Firewise and other programs. Randy Chevalier, vice president of the Arizona Fire Districts Association and chief of Timber Mesa Fire Medical District, and other chiefs described chronic underfunding for rural fire districts and the operational strain of responding to both medical calls and wildfire incidents. Chevalier and witnesses urged dedicated, sustainable funding for mitigation and fire‑district staffing, and noted that fire districts generally do not receive federal PILT (payments in lieu of taxes) for public lands they protect.

Insurance industry witnesses described the market stresses that have produced cancellations and price increases. David Snyder of the American Property Casualty Insurance Association said insurers recognize they are both part of the cause and part of the solution and called for coordinated mitigation, data sharing and federal and state policy changes. He warned against regulatory responses that prevent insurers from charging actuarially sound rates, citing California's earlier market disruptions as a cautionary example.

Mark Osborne, counsel for a group of insurance carriers, told senators that insurers are recalibrating risk models and that reduced reinsurance capacity and rising replacement costs are compressing market capacity. He urged lawmakers not to "force" insurers to remain on risks through nonrenewal prohibitions, saying such measures could shrink market participation further. Ward Tisdale of NAMIC (the National Association of Mutual Insurance Companies) summarized national loss trends and said population shifts into the South and West and rising building and replacement costs help explain growing insurer losses.

Fire chiefs and associations emphasized both the importance of on‑the‑ground fuels treatments and the time delays caused by environmental review processes. Danny Johnson, president of the Arizona Fire District Association, and Jake Rhodes of the Arizona Fire Chiefs Association called for more mitigation grants and streamlined permitting to allow faster thinning and prescribed fire projects on local, state and federal lands. Johnson noted that many mitigation projects stall in pre‑NEPA phases or NEPA review and urged legislative reform that preserves environmental safeguards while reducing administrative delays.

Utilities and local mitigation programs also drew discussion. Scott Bordenkircher, director of forestry and fire mitigation for Arizona Public Service (APS), described APS’s five‑pillar mitigation program: vegetation management, system hardening (for example replacing wooden poles), annual asset inspection, weather and smoke monitoring (including AI smoke‑detection cameras), and operational changes during high‑risk periods. He said APS spends more than $110 million annually on mitigation and hardening in Arizona.

Realtors and local agents reported transactions slowed or blocked when policies are denied. Tom Farley of the Arizona Association of Realtors said he had received letters from insurers telling homeowners they could be nonrenewed despite mitigation work, and he urged discussion of a government backstop or other mechanisms if the private market cannot restore availability.

Committee members asked witnesses about short‑term steps to address mass cancellations. Witnesses proposed a mix of near‑term and long‑term measures: improve real‑time mapping and insurer access to up‑to‑date mitigation records; create state mitigation grant programs tied to recognized retrofit or home‑hardening standards; coordinate federal and state treatment of federal lands to reduce fuels; explore targeted funding mechanisms for fire districts (rather than relying solely on property taxes); encourage insurers to adopt science‑based underwriting tied to certified mitigation standards; and resist blunt statutory mandates that would constrain insurers’ ability to price risk. Several witnesses also pointed senators to federal legislation — including a recently introduced Fix Our Forests bill in Congress — and urged interstate and federal cooperation on stewardship and funding.

No formal votes were taken; the hearing was presented as an information‑gathering session and committee members said they would follow up with federal and state partners. The chairman noted representatives in Congress are already exploring federal responses and said the federal government "created the problem" by leaving large tracts of national forest untreated and must be part of a solution.

What’s next: witnesses and committee staff agreed on the need for better data sharing (insurers supplying nonrenewal data to the state, and communities documenting mitigation investments), increased mitigation funding, and attention to wildfire treatment capacity on federal lands. Industry groups and utilities offered to provide materials and data to staff; the committee said it would continue hearings and coordinate with federal lawmakers on possible legislation and funding pathways.

Ending note: testimony at the hearing emphasized a near‑term emergency facing homeowners — denied or nonrenewed policies and constrained real‑estate transactions — and a long‑term set of policy questions about how to pay for and carry out large‑scale fuels reduction on federal and nonfederal lands, how to bolster local fire districts, and how to preserve an insurance market that can offer affordable coverage in wildfire‑prone parts of Arizona.