Solution: Require insurers by regulation to recognize a nationally administered community wildfire designation and provide discounts for it, with an independent non-profit maintaining the designation and pushing updated community boundary data to insurers twice a year through commercial data providers.
Key challenge: Voluntary place-level designations only change outcomes if insurers actually use them, and in a market under stress - California insurers shed more than 350,000 policies, 25% of them in Los Angeles County, with non-renewals in high-risk areas rising around 800% - there is no commercial incentive to do so without a requirement.
Context: California insurance is among the most heavily regulated in the country: Proposition 103 requires the Department of Insurance to approve all rate changes, increases above 7% can trigger lengthy and costly public hearings, rate filings take around 10-12 months against a national average of 2-3 months, and the inclusion of climate risk and reinsurance costs in forecasting and rate-setting is forbidden. The FAIR Plan is now the largest residual insurance market in the country, having overtaken Florida, with exposure up 317% since September 2021 and a record 35.8% rate increase requested in September 2025. The Program covers communities from as small as 8 units to as large as 2,500, across peri-urban and rural wildland-urban interface areas, focusing on retrofits for older existing homes and complementing CAL FIRE wildfire building standards that apply to new development.
Solution in practice: 2022 legislation, Safer From Wildfires, requires insurance companies to recognize Firewise USA designated communities and provide discounts. The designation itself is administered independently: the National Fire Protection Association, a global non-profit, processes Firewise USA applications, provides information on communities earning the designation to companies that supply data to home insurers, and updates boundary data for all communities in good standing twice a year, making it available to insurers through those data providers. In May 2025 Table Mountain Rancheria became the 1,000th Firewise USA community in the state. The arrangement is delivered as an interagency partnership.
Impact / outcome: Insurers must give discounts for Firewise USA communities; California reached its 1,000th Firewise USA community in May 2025.
Next steps: The design solves two problems the Community Rating System also solved for flood: an independent body owns the standard, so recognition does not depend on any single carrier; and boundary data flows automatically to insurers through existing commercial data pipes, so the designation is machine-readable at the point of underwriting rather than a document a homeowner has to produce. The playbook identifies interoperability as the next step - mutual recognition between Firewise USA, the IBHS Wildfire Prepared designation and Australia's Bushfire Resilience Rating would support consistent assessment of portfolios spanning countries. The open constraint in California specifically is that the same regulatory environment which mandates recognition also suppresses risk-based pricing, so any discount available for a designation is set within a system where premiums are, on the Lab’s assessment, artificially low.
Organizations involved:
Authoring: National Fire Protection Association (NFPA)
Actors: California Department of Insurance; Table Mountain Rancheria
Implementation partners: Regulators & Policymakers; Insurers; Civil Society Organizations; Data Providers; Local Governments