GAO Mandated to Study Wildfire Insurance Crisis: Report Due to Congress in One Year

The Wildfire Insurance Coverage Study Act of 2025 isn't a bill that changes your insurance policy today, but it’s the kind of legislation that sets the stage for major changes down the road. Essentially, this Act tells the Government Accountability Office (GAO)—the federal government’s internal watchdog—to drop everything and spend the next year figuring out exactly what’s going wrong with wildfire insurance across the country. They have a year to report back to Congress with the full picture.

The Data Dive: Why Can’t I Get Covered?

The core of this study (Section 2) is a massive data dive into the availability and affordability of wildfire insurance, which has become a nightmare for homeowners and businesses in fire-prone areas. The GAO has to analyze the last decade of coverage changes. That means looking at where private insurers have hiked rates, increased deductibles, or just straight-up refused to renew policies—a practice known as non-renewal. If you live in a rural or suburban area bordering wildlands, you know this is already happening, and this study aims to quantify why it’s happening and where it’s hitting hardest.

Crucially, the GAO must look at mitigation. If you spent thousands hardening your home—maybe installing a metal roof or clearing defensible space—did your insurance company actually reward you for it? The study is tasked with finding out if insurers are still offering coverage, even limited coverage, when property owners take those proactive steps. For a small business owner in a high-risk town, this data could be critical, showing whether mitigation efforts are just good practice or a necessary bargaining chip for staying insured.

State Regulators on the Hot Seat

This Act also puts state insurance regulators under the microscope. The GAO will analyze how effective states have been in managing this crisis. Did they try to freeze rate hikes (moratoria)? Did they require insurance companies to keep offering wildfire coverage? Did they set up state-run insurance pools or reinsurance programs as a backup plan? This is important because insurance is regulated primarily at the state level, and the report will essentially be a scorecard on which state responses worked and which didn't. For someone trying to buy a house in California or Colorado, understanding how their state is managing the insurance market is just as important as knowing their mortgage rate.

The Insurer’s Dilemma and the Bottom Line

The study doesn't ignore the challenges faced by insurance companies, either. It requires the GAO to look at the factors making it nearly impossible for insurers to accurately model wildfire risk, especially as climate change makes fire seasons less predictable. They have to assess the financial stability risk—the danger that one huge, catastrophic fire could bankrupt an insurer. Furthermore, the report must examine how the rising cost of risk-adjusted premiums is affecting consumers, specifically looking at vulnerable communities, low-income owners, and small businesses.

One particularly interesting provision requires the GAO to analyze the impact of potential state rules that ban insurers from canceling policies after a wildfire claim. This gets straight to the heart of the consumer protection versus insurer solvency debate. If insurers can’t manage risk, they leave the market, which is why the study must also outline options for a federal response if the private market completely abandons wildfire coverage, detailing the pros and cons of each scenario.

Overall, this bill is a fact-finding mission. It doesn't solve the wildfire insurance crisis, but it aims to give Congress the data needed to make informed decisions. It’s the policy equivalent of turning on the lights to see how messy the room really is before deciding how to clean it up. The final report is due in one year, which means any major federal policy changes based on this data won't likely hit until 2026 or later.