Conference Agenda

With California facing ever-increasing losses due to wildfires, there is a need to examine all policy options in order to reduce risks and keep homes insurable. One recent action taken by the insurance commission has been to reward communities that engage in risk reduction activities through the Firewise USA program. While the state mandates insurers to give discounts to residents of participating communities, the effectiveness of this program has not been studied, and insurers cite this lack of study to provide very low and widely varying discounts. Here, we compare Firewise USA communities to similar communities that do not participate in a differences-in-differences design. We find that the probability that a community experiences a fire after becoming a Firewise USA site decreases by 12.5 percentage points, implying that insurance premiums should be reduced by about 6\% in participating areas, compared to an average reduction of just 2.4\%. Wealthier areas and those more exposed to fire risk are found to be more likely to join the Firewise USA program. The findings suggest that community risk reduction activities could play a key role in reducing losses for wildfires, but more could be done to increase the access to the program for poorer communities.