As insurance carriers flee high-risk areas, NAIC president sounds alarm

As extreme weather continues to pummel towns and cities across the country, the insurance industry is grappling with questions of affordability, availability, and long-term sustainability. In a recent interview with InsuranceNewsNet, Jon Godfread, president of the National Association of Insurance Commissioners (NAIC), emphasized that the path forward depends heavily on building resilience and increasing mitigation before disaster strikes.

“Resiliency is the number one priority right now,” Godfread said. “We’ve been having that discussion for a decade at the NAIC, and it’s finally gaining real traction.”

By resiliency, Godfread means more than just insurance coverage—it is about hardening homes, strengthening communities, and implementing wildfire and flood mitigation measures that can withstand the next catastrophe, that is almost surely coming.

Florida's experience cited

Florida’s experience offers a compelling case study, Godfread noted. After Hurricane Andrew in 1992, the state implemented tougher building codes and fortified construction standards. While it took decades to fully roll out, those measures are paying off.

“They’re weathering storms far better than in the late ’90s,” he said. Other states, including Alabama, have adopted similar programs, with data showing fortified roofs can significantly reduce losses during hurricanes.

But regulators face a central challenge: they do not have authority over building codes or local development decisions. Instead, Godfread said, their role is to “connect the dots,” working with realtors, builders, and local governments to emphasize the link between mitigation efforts and insurability.

'Less incentive for insurers to invest'

“Insurance is a private industry,” he said. “If you’re not mitigating risk, there’s less incentive for insurers to invest in covering that risk.”

Recent pullbacks by insurers from wildfire-prone regions and coastal areas have amplified the urgency of that message. In California, programs like Safer Homes have shown that when communities take mitigation steps—such as creating defensible space around homes—insurers respond by returning to the market, albeit often with higher premiums.

State-backed “fair plans” remain a necessary last resort in high-risk areas, Godfread acknowledged, but he pointed to Louisiana’s successful efforts to modernize roofs and reduce reliance on these programs. At the federal level, he dismissed the idea of a broader insurance backstop, saying that the National Flood Insurance Program already struggles with financial sustainability.

“We’ve had 150 years of state-based regulation that’s weathered plenty of storms,” said Godfread, who is also the insurance commissioner for North Dakota.

Affordability a tough balancing act

Affordability, however, is still a tough balancing act. Regulators must make certain insurers stay solvent enough to pay claims while avoiding pricing consumers out of the market. Some states, like Minnesota, now require insurers to offer premium discounts to homeowners who take mitigation steps. Godfread expects data from fortified home programs will eventually help make these discounts widespread.

Beyond catastrophe insurance, Godfread highlighted NAIC’s work on modernizing risk-based capital rules to attract more capital into insurance markets, potentially easing long-term affordability issues. And while state regulators are under pressure to oversee an increasingly globalized industry, Godfread defended the decentralized U.S. model.

“We’ve got over 11,000 regulators across the country. The flexibility to adapt to local risks is what makes our system work,” he said.

Ultimately, Godfread believes resilience is a shared responsibility.

“Consumers are more in tune with their risk now than ever,” he said. “If communities take proactive steps, the insurance industry will be there. But we can’t wait for catastrophe to force our hand.”

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].