Little Hoover Commission urges mitigation accounting, stronger model oversight and better homeowner information for troubled insurance market
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Summary
The Commission’s homeowners insurance report recommends insurers account for mitigation in underwriting and catastrophe models, calls for stronger independent oversight of catastrophic models, and urges improved homeowner information, grants for hardening, and a shared property-data commons.
The Little Hoover Commission presented policy options Friday to address a homeowners insurance market reshaped by wildfire: insurer exits, dropped policies and rapid growth in the FAIR Plan.
Tamar Foster, presenting the Commission’s late‑2024 homeowners insurance study, described a market in which many homeowners struggle to find affordable coverage and some are dropped from policies, forcing reliance on the FAIR Plan. Foster said the Commission issued 11 recommendations and that recent 2024 regulations addressed parts of the Commission’s proposals but did not go as far on two items the report flagged.
First, the Commission recommended insurers use catastrophe models and rate calculations that account for mitigation—work homeowners and communities undertake to protect homes from fire—because current regulations do not clearly ensure mitigation is factored into underwriting models. Foster also urged stronger public oversight of catastrophic models: while recent regulations include some oversight, much review remains confidential within the Department of Insurance, with only a public process at the end; the Commission called for independent experts to evaluate whether insurers’ risk assessments are fair and reasonable.
Other recommendations include defining a minimum, evidence-based set of home-level mitigations and community mitigations, establishing statutory protections so homeowners association rules do not prevent property hardening, expanding homeowner grant programs and discount/tax incentives to make mitigation affordable, improving Department of Insurance web tools and data accessibility (market filings, premium volumes, approval timelines), and building a centralized data commons for property condition and risk information to make condition data available to insurers, regulators and communities.
Foster noted the Commission supported a bill to establish home-hardening grants and stressed that homeowner mitigation can be expensive and inaccessible without state support. The Commission said it will continue to follow implementation and offer assistance to legislative offices seeking to translate recommendations into law.
What’s next: the Commission’s recommendations give legislative and administrative options—mortgage of oversight reforms, new consumer information tools, grant programs and statutory clarifications—for the Legislature and the Department of Insurance to consider.
