NAIC tackles affordability, availability in disaster-prone markets

At this year’s NAIC Summer National Meeting, the urgent challenge of building a more resilient insurance system—and the consequences of failing to do so in the face of disaster-prone markets—dominated the conversation. Across workshops and committee meetings, state regulators and consumer advocates faced intensifying challenges: widening protection gaps, growing pressure on recovery systems, and the need to keep insurance available and affordable for consumers.

Three sessions in particular—the Catastrophe Insurance and Disaster Response working group, the Insurance Disaster Preparedness and Catastrophe Risk task force, and the Property and Casualty Committee’s wildfire and affordability initiatives—highlighted the evolving regulatory response to catastrophe risk.

One workshop featured on-the-ground disaster accounts. Chair Angela Nelson of Missouri described the impact of a May EF3 tornado in St. Louis, which left significant uninsured losses—up to 70% of owner-occupied and 90% of renter dwellings in some ZIP codes were uninsured.

This lack of insurance made recovery difficult. Nelson noted generational homes often lacked insurance or clear titles, complicating assistance. Missouri responded by collecting monthly loss data and mapping uninsured households.

Texas deputy insurance commissioner Randall Evans, described July 4 floods, which surged 30 feet in an hour. TDI activated rapid response teams, extended hotlines, deployed staff locally, and held weekly meetings with insurers to monitor fraud and messaging.

The rapid response, Evans said, underscored the importance of “deployment-ready volunteers, surge-ready contact centers, and consistent communication with insurers and consumers.” But like Missouri, Texas found itself balancing the immediate needs of policyholders with longer-term questions of resilience and insurance availability.

Lara, Temple lead session on prevention

Shifting to the second workshop, California Commissioner Ricardo Lara and Louisiana Commissioner Tim Temple led a session focused on prevention. Their task force is drafting a Disaster Preparedness Guide—a compendium of lessons learned across states, from hurricane evacuations to wildfire mitigation.

Lara emphasized that the fundamental challenge is keeping insurance available at all: “You can’t afford what doesn’t exist. Catastrophe models, resilient communities, and reinsurance capacity are fundamental to insurance availability.”

California, he noted, had been hamstrung for decades by outdated rules requiring insurers to rely on backward-looking historical models. Recent reforms now allow insurers to incorporate catastrophe models and reinsurance into rate filings—a “transformational shift” Lara said was overdue.

Temple pointed to Louisiana’s fortified homes program, where homes built to IBHS standards saw 22% reductions in wind premiums. The draft guide, expected by fall, will include case studies, after-action reports, and practical templates for states facing hurricanes, wildfires, floods, or earthquakes.

Consumer advocates Amy Bach of United Policyholders and Ken Klein, a longtime NAIC consumer representative, pressed regulators to focus on underinsurance and consumer clarity. Bach urged more uniform standards for loss-of-use coverage durations—arguing 12 months is insufficient after major disasters—and better training for out-of-state adjusters. Klein highlighted the need to track how building code upgrades affect claims and the adequacy of coverage

Property committee cites affordability issues

Turning to the third session, the Property and Casualty Committee meeting added yet another layer: affordability. Florida Commissioner Michael Yaworski, Colorado Deputy Commissioner Kate Harris, and others are drafting an Affordability and Availability Playbook. Designed as a modular toolkit for regulators, the playbook covers market trends, mitigation incentives, legislative reforms, and parametric insurance options.

The effort reflects the recognition that catastrophe risk has converged with a broader “new era of risk,” as insurers face spiraling claims from climate-driven disasters, rising reinsurance costs, and protection gaps in housing markets.

Industry representatives welcomed the initiative but urged precision. Dave Snyder of the American Property Casualty Insurance Association warned that insurance is “one of the last links in the chain of risk,” and policymakers must also confront land-use and building code enforcement. Consumer representatives countered that affordability efforts should be evidence-based, with clear metrics for success, particularly in contentious areas like legal system abuse reforms.

The session also spotlighted wildfire risk. Jennifer Gardner of the Insurance Institute for Business and Home Safety (IBHS) explained how ember-driven fires cause most building ignitions, underscoring the importance of “the first five feet” around a structure. She pointed to lessons from Lahaina and California fires: once flames reach within 10 feet, structure-to-structure spread is almost inevitable, but at 30 feet, homes begin to act independently.

Taken together, the three meetings underscored a unifying regulatory agenda: ensuring data-driven policymaking, clear consumer communication, and most importantly, prioritizing resilience so insurance remains accessible. Missouri’s uninsured mapping, Texas’ disaster dashboards, and the NAIC’s catastrophe modeling primer are all aimed at this goal. So are new outreach campaigns, preparedness guides, and wallet-sized “RAC cards” that help consumers understand their coverage.

Ultimately, the workshops made clear: strong resilience strategies—stricter building codes, mitigation incentives, and better federal-state coordination—are now essential for keeping insurance markets functioning and protecting consumers in a new era of risk.

As Lara put it bluntly: “We don’t have the luxury to stay in our bubble. If we don’t modernize, consumers lose access to insurance, and that is the greatest risk of all.”

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