[House Report 118-589]
[From the U.S. Government Publishing Office]


118th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      118-589

======================================================================



 
             WILDFIRE INSURANCE COVERAGE STUDY ACT OF 2024

                                _______
                                

 July 18, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 7462]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 7462) to require the Government Accountability 
Office to conduct a study regarding insurance coverage for 
damages from wildfires, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     3
Related Hearings.................................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     6
Performance Goals and Objectives.................................     6
Congressional Budget Office Estimates............................     6
New Budget Authority, Entitlement Authority, and Tax Expenditures     7
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     7
Applicability to Legislative Branch..............................     7
Earmark Identification...........................................     7
Duplication of Federal Programs..................................     7
Section-by-Section Analysis of the Legislation...................     7

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Wildfire Insurance Coverage Study Act 
of 2024''.

SEC. 2. GAO STUDY REGARDING INSURANCE FOR WILDFIRE DAMAGE .

  (a) Study.--The Comptroller General of the United States, in 
consultation with the Director of the Federal Insurance Office and 
State insurance regulators, shall conduct a study to analyze and 
determine the following:
          (1) Risk assessment.--The extent and nature of wildfire risk 
        in the United States, including--
                  (A) identifying trends in declarations for wildfires 
                under the Fire Management Assistance grant program 
                under section 420 of the Robert T. Stafford Disaster 
                Relief and Emergency Assistance Act (42 U.S.C. 5187), 
                with respect to geography, costs, probability, and 
                frequency of wildfire disasters;
                  (B) identifying mitigation practices that would 
                assist in reducing costs and risks for insurance 
                policies covering damages from wildfires;
                  (C) identifying existing programs of the Federal 
                Government and State governments that measure wildfire 
                risk and assess their effectiveness in forecasting 
                wildfire events and informing wildfire response; and
                  (D) analyzing and assessing the need for a national 
                map for measuring and quantifying wildfire risk.
          (2) Existing state of coverage.--With respect to the existing 
        state of homeowners insurance coverage and commercial property 
        insurance coverage for damage from wildfires in the United 
        States--
                  (A) the extent to which private insurers have, during 
                the 10-year period ending on the date of the enactment 
                of this Act, adjusted rates, policyholder cost-sharing 
                provisions, or both for such coverage (after adjusting 
                for inflation) and the geographic areas in which 
                adjusted rates, policyholder cost-sharing, or both have 
                increased;
                  (B) the extent to which private insurers have, during 
                the 10-year period ending on the date of the enactment 
                of this Act, declined to renew policies for such 
                coverages and the geographic areas to which such 
                declinations applied;
                  (C) the events and economic factors that have 
                contributed to any such increased rates and 
                declinations to renew policies;
                  (D) in cases in which private insurers have curtailed 
                their overall wildfire exposure, the extent to which 
                homeowners insurance coverage and commercial property 
                coverage were terminated altogether and the extent to 
                which such coverages are still offered but with 
                coverage for damage from wildfires excluded; and
                  (E) the extent to which, and circumstances under 
                which, private insurers are continuing to provide 
                coverage for damage from wildfires--
                          (i) in general;
                          (ii) subject to a condition that mitigation 
                        activities are taken, such as hardening of 
                        properties and landscaping against wildfires, 
                        by property owners, State or local governments, 
                        park or forest authorities, or other land 
                        management authorities; and
                          (iii) subject to any other conditions.
          (3) Regulatory responses.--With respect to actions taken by 
        State insurance regulatory agencies in response to increased 
        premium rates, policyholder cost-sharing, or both for coverage 
        for damage from wildfires or exclusion of such coverage from 
        homeowners insurance policies--
                  (A) the extent to which States have leveraged their 
                respective authorities to regulate rate increases;
                  (B) the extent to which States have enacted any 
                moratoria on such rate and policyholder cost-sharing 
                increases or exclusions and on non-renewals;
                  (C) the extent to which States require homeowners 
                insurance coverage to include coverage for damage from 
                wildfires or make sales of homeowners insurance 
                coverage contingent on the sale, underwriting, or 
                financing of separate wildfire coverage in the State;
                  (D) the extent to which States have established State 
                residual market insurance entities, reinsurance 
                programs, or similar mechanisms for coverage of damages 
                from wildfires;
                  (E) any other actions States or localities have taken 
                in response to increased premium rates, policyholder 
                cost-sharing, or both for coverage for damage from 
                wildfires or exclusion of such coverage from homeowners 
                policies, including forestry and wildfire management 
                policies and subsidies for premiums and cost-sharing 
                for wildfire coverage;
                  (F) the effects of actions taken by States on the 
                availability, coverage level, and affordability of 
                homeowners insurance coverage; and
                  (G) the effectiveness and sustainability of such 
                actions taken by States.
          (4) Challenges in underwriting wildfire risk.--With respect 
        to the challenges faced by private insurers underwriting 
        wildfire risk, what is or are--
                  (A) the correlated risks and the extent of such 
                risks;
                  (B) the factors affecting the extent of private 
                insurers' ability to estimate magnitude of future 
                likelihood of wildfires and of expected damages from 
                wildfires;
                  (C) the effects of the need to increase more 
                affordable housing options, which may contribute to 
                increased homebuilding in more remote, heavily-wooded 
                areas with higher wildfire risk;
                  (D) the potential for wildfire losses sufficiently 
                large to jeopardize insurers' solvency;
                  (E) the extent to which, and areas in which, risk-
                adjusted market premiums for wildfire risk limit 
                affordability or availability of coverage for 
                consumers;
                  (F) the effects of various existing and potential 
                State and Federal Government responses to help address 
                these challenges and mitigate wildfire risk, including 
                actions such as--
                          (i) improved forest management policies;
                          (ii) improved data to estimate risk;
                          (iii) relocating homeowners from wildfire 
                        zones;
                          (iv) offsetting a portion of insurers' 
                        charged risk-adjusted premiums with means-
                        tested government affordability programs for 
                        lower income homeowners;
                          (v) encouraging the increased use of private 
                        reinsurance and other risk-sharing mechanisms 
                        by insurers to better diversify wildfire risk; 
                        and
                          (vi) developing programs that offset the 
                        costs of wildfire risk for consumers and 
                        industry;
                  (G) the available policy responses if private 
                insurers exit the wildfire coverage market and the 
                potential advantages and disadvantages of each such 
                response;
                  (H) the effects of the availability and affordability 
                of wildfire coverage, policyholder cost-sharing, or 
                both, on--
                          (i) local communities that are 
                        disproportionately vulnerable to wildfires, 
                        including on low- or moderate-income property 
                        owners and small businesses;
                          (ii) rebuilding in communities previously 
                        damaged by wildfires;
                          (iii) the availability and affordability of 
                        housing supply; and
                          (iv) the demand for wildfire insurance 
                        coverage by property owners;
                  (I) the effects of potential State prohibitions on 
                termination of policies due to wildfire claims on 
                insurer solvency; and
                  (J) the manner in which private insurers are modeling 
                or estimating future wildfire risk.
  (b) Report.--Not later than the expiration of the 12-month period 
beginning on the date of the enactment of this Act, the Comptroller 
General shall submit to the Congress a report identifying the findings 
and conclusions of the study conducted pursuant to subsection (a).

                          PURPOSE AND SUMMARY

    Introduced on February 26, 2024, by Representative Maxine 
Waters, H.R. 7462, the Wildfire Insurance Coverage Study Act of 
2023, would require the Government Accountability Office (GAO) 
to conduct a study relating to the availability of insurance 
coverage for damages related to wildfires.

                  BACKGROUND AND NEED FOR LEGISLATION

    Wildfires pose a serious threat to property and the health 
and safety of homeowners in many states across the country, 
especially in heavily forested places in the western United 
States. In 2020, wildfires burned roughly 10.3 million acres 
and caused $16.5 billion in damage nationwide. The threat has 
been most acute in California, where more than 1.2 million 
homes are said to be at risk for extreme wildfire, far more 
than any other state. Understanding the factors that contribute 
to wildfire risk, how to reduce that risk, and how to better 
financially protect homeowners from this peril through 
insurance can both save lives and countless billions in 
wildfire recovery payments. To help understand those 
challenges, Rep. Waters introduced H.R. 7462, the Wildfire 
Insurance Coverage Study Act, which calls upon the Government 
Accountability Office to conduct a study to analyze and 
determine the extent and nature of the problem, the existing 
level of wildfire insurance coverage, and how various states 
have responded to this dangerous peril.

                                HEARING

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 7462: The Subcommittee on 
Housing and Insurance of the Committee on Financial Services 
held a hearing on November 2, 2023, titled ``Factors 
Influencing the High Cost of Insurance for Consumers.''

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
February 29, 2024, and ordered H.R. 7462 to be reported 
favorably to the House as amended by a recorded vote of 47 ayes 
to 2 nays (Record vote no. FC-124), a quorum being present. 
Before the question was called to order the bill favorably 
reported, the Committee adopted an amendment in the nature of a 
substitute offered by Ms. Waters by voice vote.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the order to report legislation and amendments thereto. H.R. 
7462 was ordered reported favorably to the House as amended by 
a recorded vote of 47 ayes to 2 nays (Record vote no. FC-124), 
a quorum being present.


    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee, based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.R. 7462 is to require 
the GAO to conduct a study relating to the availability of 
insurance coverage for damages related to wildfires.

                 CONGRESSIONAL BUDGET OFFICE ESTIMATES

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    H.R. 7462 would require the Government Accountability 
Office (GAO) to study the nature and extent of wildfire risk in 
the United States, the availability of private insurance 
coverage for wildfire damage, state regulation of those 
insurance markets, and other topics related to wildfire risk 
and insurance. The bill would require GAO to report to the 
Congress within one year after enactment on the results of the 
study.
    Based on the costs of similar reports, CBO estimates that 
implementing the bill would cost less than $500,000 over the 
2024-2029 period. Any spending would be subject to the 
availability of appropriated funds.
    The CBO staff contact for this estimate is Jon Sperl. The 
estimate was reviewed by H. Samuel Papenfuss, Deputy Director 
of Budget Analysis.

                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee adopts as its own the 
estimate of new budget authority, entitlement authority, or tax 
expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1973.

                       FEDERAL MANDATES STATEMENT

    Pursuant to section 423 of the Unfunded Mandates Reform 
Act, the Committee adopts as its own the estimate of the 
Federal mandates prepared by the Director of the Congressional 
Budget Office.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1.

    Designates the short title of the bill as the ``Wildfire 
Insurance Coverage Study Act of 2024.''

Section 2.

    Requires the Comptroller General of the Government 
Accountability Office, in consultation with the Director of the 
Federal Insurance Office and State insurance regulators, to 
conduct a study to analyze and determine: (1) the extent and 
nature of wildfire risk in the United States; (2) the existing 
state of homeowners insurance coverage and commercial property 
insurance coverage for damage from wildfires in the United 
States; (3) the actions taken by State insurance regulatory 
agencies in response to increased premium rates, policyholder 
cost-sharing, or both, for coverage for damage from wildfires 
or the exclusion of such coverage from homeowners insurance 
policies; and, (4) the challenges faced by private insurers 
underwriting wildfire risk. It further requires the Comptroller 
General to submit a report identifying the findings and 
conclusions of that study to Congress within 12 months of the 
date of the enactment of the bill.

                                  [all]