Amendment to AB 376 would create insurer 'sandbox' and other options to expand wildfire-related homeowners coverage

Sponsor PK O’Neil said AB 376 is intended to increase availability of homeowners insurance in wildfire-prone areas and to provide options for owners and community associations. The sponsor and the Division of Insurance presented a multi-part amendment that Division staff said eliminates the department’s prior fiscal note.

Key elements of the amendment described by Adam Plaine of the Nevada Division of Insurance:

- A sandbox innovation program (sections 2–20) that lets insurers seek narrowly tailored waivers to test products or delivery models intended to expand market offerings while preserving core consumer protections. The amendment expressly prevents waivers of certain consumer-protection statutes (chapters 679B and 686A).

- A flex-rating mechanism (section 20.3 in the amendment) for homeowners coverage that separates thresholds for an insurer’s overall rate impact and an individual policyholder’s rate disruption; the commissioner would set thresholds annually after public comment.

- Authority for insurers to offer policies that either exclude wildfire coverage or cover only wildfire, analogous to separate earthquake coverages in other states (section 25.1).

- Clarifications for reciprocal insurers to encourage entry into Nevada and changes to allow homeowners associations and commercial habitational entities to consider captive insurance arrangements (sections 25.2, 25.4, 25.5). The amendment also removes a statutory clause that prevented unit owners from obtaining individual structure coverage distinct from an association policy (section 25.6).

Support and neutral perspectives: Property/casualty industry groups supported the bill. Leah Cartwright of the American Property Casualty Insurance Association said the legislation could increase premium-tax base and welcomed collaboration between DOI and the sponsor. Washoe County and insurance trade groups also testified in favor, highlighting condo and HOA impacts in wildland-urban interface areas. State Farm and other carriers described the bill as constructive. Douglas County insurance broker Jim DeGraffenreid testified neutral, saying AB 376 may not fully solve availability where carriers have withdrawn from high-risk ZIP codes but that the sandbox and related provisions posed no harm.

Committee discussion and next steps: Committee members asked DOI to provide further detail on how consumer protections would be maintained in sandbox approvals and how the flex-rating thresholds would be set. DOI said insurer applications would need to identify specific statutes or regulations for which a waiver was requested, and the division would evaluate each application individually; there would be no blanket waivers. The amendment contains a sunset (section 27) so the pilot authority expires unless extended by the Legislature.

Ending: The committee closed the hearing on AB 376. Division staff said the amendment removes the fiscal note; DOI offered to provide follow-up answers about rate and consumer-protection details at the committee’s request.