Wildfire risk pricing runs into a problem that hail and hurricane coverage never posed: the house next door matters nearly as much as the house itself.
The urgency follows record losses: the January 2025 Los Angeles fires produced roughly $40 billion in insured losses, the costliest wildfire event on record, according to Swiss Re Institute. Effective August 1, CSAA Insurance Group, the AAA insurer serving members across 23 states and the District of Columbia, rolled out wildfire discounts that stack as high as 31% for homes combining individual hardening with community-level mitigation – a pricing structure built around a peril that behaves less like an individual risk and more like a shared one.
It is not individual- or community-level property wildfire risk mitigation, "to me, it is truly an 'and'," said Ryan Vigus, executive vice president of personal lines product management at CSAA Insurance Group, who also chairs the board of directors of the Insurance Institute for Business & Home Safety (IBHS). Individual home hardening matters, he said, but "a community is stronger when more homes are resilient."
Michael Newman, general counsel and head of public policy, partnerships and code development at IBHS, said for other risks like hail and hurricane, mitigation works individually: "house, by house, by house." Wildfire doesn't. "We need to shift our thinking from home by home, to block by block, and to neighborhood by neighborhood," he said, pointing to the conflagrations (uncontrolled fire spread from structure to structure) that drove recent losses in Los Angeles, Lahaina, Boulder and New Mexico.
Vigus was careful to separate what's realistic for an individual homeowner from what requires collective action. "If you're a handy person and willing to put in some sweat equity, you can make a pretty big difference yourself," he said. Keeping flammable material away from the house is the single best step he said, which is also inexpensive.
Reaching the next tier of insurable mitigation, the IBHS designation of Wildfire Prepared Home Enhanced, necessitates new siding, windows and roofing, and is expensive and requires licensed contractors.
Heather Kanzlemar, principal and consulting actuary at Milliman based in San Francisco, said a study her team conducted in the Moraga-Orinda area of California found that community-level fuel reduction produced a similar effect to achieving defensible space on every individual parcel in the study area. The benefit was naturally largest, she said, for the least-mitigated properties: homeowners who had done nothing themselves still gained protection if their neighbors’ land was cleared.
"I think about it in this layered approach," Kanzlemar said, describing parcel-specific credits for home hardening and defensible space alongside a second, community-level layer reflecting measurable changes in neighborhood fuel conditions. IBHS itself has been building the case that resilience doesn't have to be a cost story: a 2025 IBHS and Headwaters Economics study of rebuilding in Altadena, California, found that building a new home to the Wildfire Prepared Home Plus standard adds only about $15,000 to a typical $500,000 build, roughly 3% more than traditional construction.
Vigus laid out what he called the requirements for resilience at scale, treating CSAA's new discount as much a product-architecture question as a mitigation one.
The gold standard: building codes. "That's like the best-case scenario, but building codes are incredibly hard to change,” said Vigus For instance, California's Chapter 7A wildfire code for wildfire-resistant construction in high-risk zones, still doesn't apply statewide.
Second, you need a knowledgeable contractor community willing to do the work differently than they're used to, which takes time and market demand to build. Third, insurers need to send price and eligibility signals of their own – rewarding mitigated properties with better pricing, and factoring resilience into which risks they're willing to write in the first place, a dynamic that already shows up in CSAA's own pricing. And fourth, funding: a mix of grants, insurance payouts after a loss, and homeowners covering whatever remains themselves.
IBHS has moved quickly on the standards piece specifically: in April 2026 it expanded its Wildfire Prepared designation program from four states to 14, and in June 2026 it introduced formal Neighborhood and Multifamily standards, formalizing the community-level program Vigus and Kanzlemar both pointed to as still developing.
On the underwriting side, Vigus said carriers decline a wildfire risk for one of two reasons. "Reason number one is that we feel like the approved rate doesn't reflect the risk," he said. Reason two: concentrated exposure. "If you have a lot of risks in one area, you have a major event" – a problem reinsurance can offset, provided a carrier can pass that cost fully back through its rates. California's recent regulatory changes allowing insurers to do so have helped, Vigus said.
“We felt like it was important to put a big discount forward even if we didn’t know exactly how it’s going to play out over the long run,” Vigus said of CSAA’s stacked wildfire discounts, worth up to 31%. CSAA used aerial imagery and statistical relativities to help set its new discount tiers, but confidence intervals remain wide – reliable data on all specifics, such as ember-resistant vents, are especially hard to come by.
The gap Vigus flagged as most frustrating sits in the rebuild process itself. Unlike auto claims, which usually route through the insurer’s own recommended shops, homeowner claims move quickly to a contractor with the insurer largely absent, leaving policyholders to rebuild without guidance. Homes destroyed in recent California fires are, in some cases, being rebuilt without the mitigation features that would have slowed the next fire, sometimes closer together than before. "We’re building new homes, but they were built back with the same vulnerabilities," Vigus said, despite the relative low expense of rebuilding more resiliently. "There’s no better time to build in the right way than now."
The strain on the standard market in the meantime is already visible: reliance on California’s FAIR Plan, the state’s insurer of last resort, rose 52% in Los Angeles County between 2024 and 2025, according to Moody’s.
For carriers and reinsurers underwriting wildfire-exposed states, the takeaway is less about any single technology than about recognizing which perils their existing playbook doesn’t fit. As Newman put it, wildfire is the peril where "what your neighbor does impacts your risk" – and, increasingly, insurers are pricing it, and building the standards and contractor pipelines around it, that way.
