From reviewing prior state-level mitigation programs and their impact on filed loss costs, the actuarial evidence for mitigation credits is compelling but wildly inconsistent across jurisdictions. Alabama carriers offer FORTIFIED roof discounts ranging from 20% to 55% on the wind portion of premiums. Louisiana ranges from 20% to 52%. South Carolina runs 10% to 35%. Florida has its own wind mitigation inspection framework that produces results on a different scale entirely. The same physical improvement to a roof or structure produces dramatically different premium outcomes depending on which state the home sits in, which insurer writes the policy, and which regulatory framework governs the discount calculation.
The NAIC's decision to develop the Strengthen Homes Act model law, approved by the Executive Committee at the Spring 2026 National Meeting in San Diego on March 25, 2026, is an attempt to impose order on this patchwork. The model law would establish a uniform framework for state departments of insurance to run mitigation grant programs and, more consequentially for pricing actuaries, standardize the processes and metrics behind premium discount calculations, certification standards, and data-gathering documentation requirements. The Natural Catastrophe Risk and Resilience (EX) Task Force is now charged with drafting the model, with a completion deadline of one year plus one national meeting from authorization.
This matters because insured catastrophe losses have exceeded $100 billion globally for six consecutive years. Swiss Re estimates 2025 losses at $107 billion, with the United States accounting for 83% of that total. Severe convective storm losses in the U.S. have surpassed $45 billion for three consecutive years. The question of whether mitigation actually reduces losses at scale is no longer theoretical; the data from Alabama, Oklahoma, and Florida now provides actuarially credible evidence that standardized programs can shift loss distributions. The NAIC model law is the first serious regulatory attempt to scale that evidence into a national framework.
What the Strengthen Homes Act Model Law Mandates
The model law's stated objectives, as approved by the Executive Committee, are to reduce vulnerability in existing residential properties, promote voluntary adoption of recognized mitigation standards, enhance housing resilience while preserving homeowner choice, and support stable, competitive, and affordable property insurance markets. The emphasis on "voluntary adoption" and "homeowner choice" distinguishes this from building code mandates; the model law creates incentive structures rather than requirements.
The Natural Catastrophe Risk and Resilience Task Force, formed after the Fall 2025 National Meeting by consolidating the Climate and Resiliency Task Force, the Catastrophe Insurance Working Group, and the FEMA Working Group, has two working groups driving the effort. The Pre-Disaster Mitigation and Risk Modeling Working Group carries the primary drafting charge. Its mandate includes developing and coordinating regulator-facing resilience tools for state mitigation programs, analyzing how natural catastrophe models assess risks to identify priority areas for community risk mitigation, collaborating with the NAIC Catastrophe Risk Management Center of Excellence to establish research priorities in risk and mitigation, and developing formal coordination protocols between state departments of insurance and their respective State Emergency Management Agencies.
The second working group, the Severe Peril Working Group, will evaluate and monitor peril-specific protection gaps and market conditions across severe perils and launch a national initiative to raise awareness of flood risk and mitigation strategies. The two working groups together cover the full scope from pre-disaster mitigation to peril-specific market stability.
For the model law drafting process itself, NAIC rules require at least one 30-day exposure period for public comment. Adoption requires a two-thirds majority vote of the responsible parent committee. Once adopted, the NAIC's goal is for a majority of states to adopt the model law within three years, though that timeline has historically varied considerably depending on the model's complexity and political dynamics.
The State Program Landscape: What Already Works (and What Doesn't)
The model law does not start from scratch. Several states have already built mitigation grant programs that provide a natural laboratory for what the NAIC framework will need to accommodate. The variance in program design, funding mechanisms, and actuarial outcomes across these programs is precisely why standardization is needed.
Alabama: Strengthen Alabama Homes. Launched in 2012, Alabama's program has produced approximately 53,000 IBHS-certified FORTIFIED homes statewide. Grants cover 100% of mitigation costs up to $10,000 per home. Crucially, the program is funded entirely by the insurance industry in Alabama, not from the state's general budget and not tied to a federal program. The direct industry funding model creates a natural alignment between grant spending and expected loss reduction, because the same carriers paying into the fund benefit from lower claims on FORTIFIED-designated properties. Premium discounts range from 20% to 55% off the wind portion of homeowners policies, depending on the insurer and the level of FORTIFIED designation achieved.
Oklahoma: Strengthen Oklahoma Homes. Oklahoma launched its program in 2025, targeting severe convective storm exposure rather than hurricane risk. The program provides up to $10,000 in grants for IBHS FORTIFIED Home-Roof upgrades with hail supplements, funded by the insurance industry with a cap of $10 million per year. The program expanded statewide to all 77 counties on January 12, 2026. Early pilot participants reported average annual premium savings of approximately $750, with insurers offering discounts up to 42% on qualifying policies. The Oklahoma Insurance Department released storm damage data in August 2025 showing FORTIFIED upgrades can reduce severe storm damage by up to 80%, with claim severity decreasing 15% to 40% for homes carrying the FORTIFIED designation.
Florida: My Safe Florida Home. Florida's program operates at a different scale. The 2025-2026 fiscal year received $352 million in funding, enough to serve roughly 33,000 homes. The program provides matching grants up to $10,000, with the state contributing $2 for every $1 the homeowner provides. Demand has consistently outstripped supply: in 2024, $200 million was exhausted in two weeks, creating a backlog of 45,000 homeowners waiting for grants. The proposed 2026-2027 budget includes $480 million specifically to clear this backlog, plus $109 million in recurring annual funds. Average premium savings for participating homeowners were approximately $932 in the most recent program year.
South Carolina: SC Safe Home. South Carolina's program has a more modest footprint. Since inception, 7,992 homeowners have received $39 million in grants. Payouts range from $3,000 to $7,500 depending on the mitigation tier and homeowner income relative to county median. Premium discounts run 10% to 35% off the wind portion of policies.
| State Program | Max Grant | Funding Source | Homes Served | Premium Discount Range |
|---|---|---|---|---|
| Alabama (Strengthen Alabama Homes) | $10,000 | Insurance industry | ~53,000 | 20-55% (wind) |
| Oklahoma (Strengthen Oklahoma Homes) | $10,000 | Insurance industry ($10M/yr cap) | ~1,000 target FY2026 | Up to 42% |
| Florida (My Safe Florida Home) | $10,000 | State budget ($352M FY2025-26) | ~33,000/yr | ~$932 avg savings |
| South Carolina (SC Safe Home) | $7,500 | State budget | 7,992 total | 10-35% (wind) |
The table illustrates the core problem the NAIC model law is trying to solve. Four states, four different funding mechanisms, four different grant structures, and four dramatically different scales of deployment. A pricing actuary at a multi-state carrier writing homeowners business across the Gulf Coast and Southeast faces a different mitigation credit framework in every state. The actuarial basis for the discounts varies, the certification standards differ, and the data available to validate loss reduction assumptions is inconsistent.
The FORTIFIED Evidence Base: What Actuaries Can Trust
The strongest actuarial evidence supporting mitigation credits comes from the IBHS FORTIFIED program, which has accumulated enough exposure and claims experience to produce peer-reviewed loss reduction data.
A University of Alabama Center for Risk and Insurance Research study analyzed FORTIFIED home performance during Hurricane Sally, a Category 2 hurricane that struck Gulf Shores, Alabama, in September 2020. The study drew on a data call from the Alabama Department of Insurance, with 86 insurance companies responding (including non-admitted carriers providing voluntary data). The sample included 25,093 conventional homes, 7,685 homes built to supplemental codes, and 7,417 FORTIFIED houses in coastal Alabama.
The results were unambiguous. FORTIFIED homes showed loss frequency reductions of 55% to 74% compared to conventional construction. Loss ratios (losses divided by premiums) decreased between 51% and 72%. Claim severity decreased 15% to 40%. When combining frequency and severity reductions, FORTIFIED homes reduced deductibles paid by policyholders by more than 60%. The study estimated that total damage in the affected area would have been approximately 75% lower if every home had been built to FORTIFIED standards.
These are the kinds of numbers that make actuarial rate filings straightforward, at least in principle. A 55% to 74% reduction in loss frequency is a material underwriting variable. The challenge is translating that evidence into premium credits that are actuarially sound, competitive, and consistent across carriers and jurisdictions.
The FORTIFIED program has also reached a scale where the data becomes statistically meaningful for portfolio analysis. In 2025, the program issued more than 20,000 designations in a single year for the first time, compressing what used to be a multi-year total into one calendar year. Cumulative designations are approaching 90,000 structures across 34 states, with IBHS targeting 120,000 by the end of 2026. At that volume, carriers can observe outcomes across large enough sample sizes to incorporate mitigation into underwriting, pricing, and specific endorsements with confidence in the credibility of the underlying data.
Premium Discount Mechanics: The Actuarial Pricing Challenge
Translating mitigation evidence into premium credits requires actuaries to navigate several interconnected technical problems. The NAIC model law's call for standardized premium discount calculations will force regulators and carriers to resolve ambiguities that existing state programs have largely sidestepped.
Base rate versus wind-only application. Most existing mitigation credits apply only to the wind portion of a homeowners premium. In coastal states, wind can represent 40% to 70% of the total premium, making a 30% wind credit equivalent to a 12% to 21% reduction in the total premium. In inland states where wind is a smaller share of total premium, the same percentage credit produces a much smaller dollar reduction. The model law will need to address whether mitigation credits apply to total premium, wind-only premium, or a peril-specific sublimit, and whether the basis should be uniform or vary by geography.
Prospective versus retrospective pricing. Current mitigation credits in most states are prospective: a homeowner obtains a FORTIFIED designation, and the carrier applies a filed discount going forward. The actuarial question is whether the discount should reflect the expected loss reduction for that individual risk (a prospective, risk-characteristic approach) or the observed aggregate loss reduction from the FORTIFIED program (a retrospective, experience-based approach). The two methods produce different results because individual risk characteristics (construction year, geography, roof geometry) interact with the mitigation standard in ways that aggregate data may not capture.
Depreciation and re-certification. FORTIFIED designations expire and require re-inspection. Roofing materials degrade. The actuarial question is how quickly the mitigation benefit decays after installation and whether carriers should taper credits over time or maintain flat discounts contingent on re-certification. Alabama requires periodic re-designation; Florida's wind mitigation inspections capture the current state of specific building features. The model law's certification and documentation standards will determine whether carriers can rely on a single inspection or must build re-inspection triggers into their rating algorithms.
Cross-subsidization risk. If mitigation credits are too generous, the premium reduction for FORTIFIED homes must be offset by higher premiums for non-mitigated homes in the same rating territory, creating a cross-subsidization dynamic that regulators may find politically untenable. If credits are too conservative, homeowners lack sufficient incentive to invest in mitigation. The actuarial sweet spot requires loss cost data granular enough to isolate the mitigation effect from other rating variables, and that data has historically been scarce outside of Alabama's FORTIFIED dataset.
How the NAIC Center of Excellence Connects Modeling to Mitigation
The NAIC Catastrophe Risk Management Center of Excellence, which operates within the Center for Insurance Policy and Research, is the technical backbone connecting catastrophe modeling to the mitigation framework the model law envisions. The COE has a direct research mandate that intersects with the Strengthen Homes Act in two critical areas.
First, the COE published research demonstrating that rebuilding wildfire-impacted communities to IBHS Wildfire Prepared Home standards could reduce projected wildfire average annual losses by up to 35% when universally adopted, at an incremental construction cost of approximately 3% of project costs. Average annual loss is a central metric in property insurance rate filings; a 35% reduction in AAL translates directly to lower indicated rates, improved availability, and reduced residual market pressure. The 3% incremental cost figure is particularly significant because it establishes a benefit-cost ratio that actuaries can use in rate filing support.
Second, the COE provides regulators with technical training on catastrophe models, including beginner and intermediate courses and a new curriculum covering cat and climate risk for financial regulators, the use of cat models in P&C rate filings, reinsurance and alternative risk transfer, and resilience. This training pipeline matters because state actuaries reviewing mitigation-credit rate filings need to understand how the credits interact with modeled loss costs. If a carrier's cat model already incorporates building-level mitigation features (as Verisk's AIR, Moody's RMS, and CoreLogic models increasingly do), then a separate filed mitigation credit could double-count the loss reduction. The COE training program is designed to help state regulators identify and prevent that kind of redundancy.
The Pre-Disaster Mitigation and Risk Modeling Working Group's charge to "analyze how natural catastrophe models assess risks to identify priority areas for community risk mitigation" is directly connected to this COE function. The model law's data-gathering and documentation requirements will likely align with the inputs that cat models need to properly reflect mitigation at the individual property level, creating a feedback loop between regulatory data collection and pricing model calibration.
Reinsurance and Capital Market Implications
Mitigation at scale affects reinsurance pricing and capital allocation in ways that the model law's drafters will need to consider, even if the immediate focus is on primary carrier rate filings.
Property catastrophe reinsurance pricing is fundamentally driven by modeled probable maximum losses (PMLs) at various return periods. If a significant share of a carrier's insured properties carry FORTIFIED or equivalent designations, the carrier's modeled PML should decrease, producing lower reinsurance costs. This creates a compounding benefit: the primary carrier pays less in reinsurance premium, which reduces the net cost of reinsurance embedded in filed rates, which further reduces the homeowner's premium beyond the direct mitigation credit.
With Guy Carpenter's US property cat rate-on-line index down 14% at the most recent renewal, and Gallagher Re reporting property cat down 20% at April 1, 2026, the reinsurance market is already softening. Carriers that can demonstrate lower PMLs through mitigation penetration will have additional leverage in treaty negotiations. The model law's standardized documentation and certification requirements could provide the data infrastructure that reinsurers need to price mitigation benefits into their own models, rather than relying on carrier-specific assertions about portfolio quality.
For ILS investors and cat bond sponsors, mitigation penetration rates in cedant portfolios could become a factor in spread pricing. A cat bond referencing a portfolio with 40% FORTIFIED-designated homes in wind-exposed ZIP codes presents a different expected loss profile than one with zero mitigation penetration. The model law's data-gathering requirements could eventually produce the standardized, auditable mitigation data that capital markets need to price this differential.
Lessons from Existing Programs: What the Model Law Must Get Right
The experience of existing state programs highlights several design decisions the NAIC drafters will need to resolve.
Funding mechanism. Alabama and Oklahoma fund their programs through insurance industry assessments, creating a direct loop between premium revenue and mitigation spending. Florida funds through the state budget, which produces larger scale ($352 million versus $10 million) but introduces political risk: the program's funding is subject to annual legislative appropriation and has been inconsistent historically (the original 2006 program went dormant for over a decade before revival in 2022). The model law will need to either prescribe a funding mechanism or provide flexible guidance that accommodates both approaches.
Demand management. Florida's experience of exhausting $200 million in two weeks with a 45,000-homeowner backlog shows that well-designed mitigation programs generate demand that outstrips supply. The model law should address how states prioritize applicants. Risk-based prioritization (targeting homes in the highest cat-exposure ZIP codes first) would maximize actuarial impact per grant dollar. Income-based prioritization (targeting lower-income homeowners first) addresses equity but may not maximize loss reduction. The drafting process will need to navigate these competing objectives.
Certification standards. The existing programs reference different certification benchmarks. Alabama and Oklahoma use IBHS FORTIFIED standards. Florida uses its own wind mitigation inspection framework, which captures building features (roof covering, roof deck attachment, roof-to-wall connection, opening protection) but does not require FORTIFIED designation. The model law's approach to certification will determine whether IBHS FORTIFIED becomes the de facto national standard or whether states retain flexibility to define their own mitigation benchmarks. For actuaries, a single national standard would simplify multi-state rate filings considerably.
Data collection and sharing. The actuarial value of mitigation programs depends on carriers receiving standardized, property-level mitigation data that can be incorporated into rating algorithms and cat models. Alabama's 86-company data call following Hurricane Sally produced the peer-reviewed evidence that validates FORTIFIED credits. The model law's data-gathering and documentation requirements will determine whether other states can replicate that kind of analysis. Without standardized data collection, the actuarial evidence base will remain fragmented and the discount calculations will continue to vary arbitrarily across jurisdictions.
Why This Matters for Actuaries
The Strengthen Homes Act model law affects actuarial work across pricing, reserving, and catastrophe modeling in several concrete ways.
Pricing actuaries at multi-state homeowners writers will need to build mitigation credit frameworks that can accommodate the model law's standardized calculations while remaining actuarially sound at the state level. The current patchwork of discounts ranging from 10% to 55% across states reflects genuine differences in wind exposure, construction type, and loss experience; a national model cannot simply flatten those into a single number. Pricing teams should begin cataloging their current mitigation credit filings by state and identifying where the model law's standardization requirements will force changes to existing filed rating plans.
Reserving actuaries need to consider how mitigation penetration affects loss development patterns. If FORTIFIED homes produce 55% to 74% lower claim frequency and 15% to 40% lower severity, then as mitigation penetration increases in a book of business, the historical loss development factors calibrated to a non-mitigated portfolio will overstate IBNR. The effect is gradual but cumulative: a book that moves from 5% to 25% FORTIFIED penetration over five years will produce lower-than-expected development on recent accident years, generating favorable prior-year reserve releases that mask the underlying shift in the loss distribution. ASOP 23 guidance on credibility and data selection applies directly here.
Cat modelers will need to evaluate how their vendor models (AIR, RMS, CoreLogic) incorporate FORTIFIED designations versus the mitigation credits filed in rate plans. If the cat model already adjusts expected losses downward for FORTIFIED construction features at the property level, then a separate filed mitigation credit on top of the model's output would double-count the benefit. The model law's documentation requirements could help resolve this by creating a standardized mapping between regulatory mitigation designations and cat model construction class inputs.
Appointed actuaries at carriers with significant cat exposure should track the model law's drafting progress through the Summer 2026 and Fall 2026 National Meetings. The one-year-plus-one-meeting deadline for model law completion means the draft could be ready for adoption as early as the Spring 2027 National Meeting. Given the three-year state adoption target, pricing actuaries could see new mitigation credit requirements in rate filings as early as 2028 in fast-adopting states.
The broader strategic question is whether standardized mitigation programs can materially reduce the residual market pressure that has driven FAIR plan growth in California, Florida, and other cat-exposed states. The NAIC COE's wildfire research showing 35% AAL reduction at 3% incremental cost, combined with FORTIFIED's 55-74% frequency reduction data, suggests the actuarial case is strong. The model law's success will depend on whether the standardized framework can translate that evidence into premium structures that homeowners, carriers, and regulators all find workable.
Further Reading
- California FAIR Plan's 35.8% Wildfire Rate Hike Resets Cat-Exposed Pricing – How the FAIR Plan's first forward-looking wildfire cat model filing intersects with the mitigation credit framework the Strengthen Homes Act aims to standardize.
- Climate Risk and Catastrophe Modeling 2026 – The cat model updates, secondary peril trends, and climate-adjusted pricing context behind the NAIC's push for standardized mitigation programs.
- Verisk Synergy Studio Rewrites the Cat Modeling Playbook – How cloud-native cat models incorporating 110+ perils create the technical infrastructure for property-level mitigation credits in rate filings.
- Soft Market Reserve Adequacy Playbook for the 2026 Pricing Downturn – The reserve adequacy framework for pricing actuaries navigating the interaction between softening rates and emerging mitigation credit requirements.
- Florida Cat Fund Exodus: Seven Carriers Drop to the 45% Statutory Floor – Florida carriers restructuring reinsurance purchases in the same regulatory environment where My Safe Florida Home mitigation grants are scaling.