AB376 would create an insurance 'sandbox' and allow standalone wildfire coverage; opponents warn of consumer protections loss

The committee heard Assembly Bill 376, a package of amendments designed to address homeowners‑insurance availability in wildfire‑exposed parts of Nevada by creating a limited regulatory "sandbox," allowing stand‑alone wildfire products and authorizing a flex‑rating procedure for real‑property coverage.

Sponsor Assemblymember P.K. O’Neil and Nevada Insurance Commissioner Scott Kipper presented the bill and a negotiated amendment. The amendment would create a four‑year sandbox (January 1, 2026 effective date for the sandbox) to permit insurers to test innovative property products under specified consumer disclosures and regulatory oversight. Approved sandbox products would receive limited exemptions from the specific statutes and regulations listed and justified in their applications; initial trials would be limited to 36 months with one 12‑month extension. The amendment also includes a flex‑rating mechanism to allow automatic approval of rate changes inside a commissioner‑set threshold, and a section permitting insurers to offer policies that exclude wildfire peril or that provide only wildfire coverage — an approach analogous to how earthquake coverage is often handled in other states. The measure would also allow homeowners associations and common‑interest communities to pursue captive‑insurance arrangements for property risks.

Supporters — including property‑casualty trade groups, county representatives and civic policy organizations — said the bill is intended to expand options in markets where standard homeowners coverage has been withdrawn. "This will provide options for homeowners who cannot otherwise obtain coverage," Adam Plain of the Division of Insurance said while walking through technical amendments. Commissioner Kipper told the committee that town halls in affected communities showed homeowners and HOAs struggling to find coverage in high‑exposure neighborhoods.

Opponents included the Consumer Federation of America, which urged rejection of the bill’s original draft as drafted earlier in the day, arguing the proposal would erode prior‑approval rate review and allow companies to raise rates or test products with insufficient consumer safeguard and refund mechanisms. Michael DeLong of the federation said the original bill "would gut Nevada's insurance regulation" by enabling companies to increase rates without adequate division review and keeping overcharges from being refunded to consumers. The recorded opposition focused on the risk that flex‑rating systems let insurers increase prices up to the threshold repeatedly and that carving wildfire out of standard policies could hollow out consumer protection.

Commissioner Kipper and sponsors said the amendment narrows and clarifies the sandbox, preserves consumer protections through disclosures, provides the Division authority to remove participants who abuse the program, and includes a legislative sunset so the program can be evaluated. Regulators asked for a phased or staggered effective date for payroll‑related or rate changes to allow third‑party rate services (NCCI) to adjust multipliers.

The committee heard supportive testimony from local government (Washoe County) and industry associations, and neutral technical testimony from the Division of Insurance; the Consumer Federation delivered on‑record opposition. The hearing record concluded with committee questions about metrics to evaluate the sandbox, consumer protections in the event an experimental product fails, and possible federal reinsurance developments that could affect wildfire coverage.

The committee closed the hearing without final action; sponsors and regulators said they expect to continue working on amendments to balance market access and consumer protection.