Requires an insurer that uses a catastrophe model or wildfire risk model or scoring method to provide the Director of the Department of Consumer and Business Services a description of each model or scoring method, along with related information, and an explanation of how the insurer uses the model or scoring method in underwriting decisions.
SB 1540 regulates how insurers use catastrophe models and wildfire risk models when underwriting and pricing residential property, homeowners, fire, and casualty insurance in Oregon. The bill requires insurers that rely on these models or scoring methods to submit descriptions of the models, how they affect rates, actuarial support for rating factors and mitigation discounts, and how the models are used in underwriting to the Director of the Department of Consumer and Business Services. The director must review whether the models account for wildfire mitigation and may require modifications if they do not.
The bill also requires insurers to incorporate community-level and property-specific wildfire mitigation actions into their models or otherwise reflect those actions in underwriting and pricing. If they do not, insurers must provide actuarially supported premium discounts, adjustments, or other incentives for policyholders who have taken qualifying mitigation steps or who benefit from nearby community mitigation work. Insurers must also post information on their websites about appeal procedures, available discounts, and the mitigation actions that can qualify for better pricing.
For applicants and policyholders, the bill creates new notice and appeal rights. Insurers must explain wildfire risk classifications or scores, identify the property features driving the score, describe how mitigation actions could improve the score, and notify consumers of their right to appeal a classification or dispute the amount of any discount or incentive. The bill sets deadlines for these notices and for insurer responses to appeals, and it allows the director to request copies of disputed appeals and responses. The bill applies to policies issued or renewed on or after July 1, 2027, and authorizes rulemaking by the Department of Consumer and Business Services and the State Fire Marshal.
The overall sentiment reflected in the available legislative history appears supportive, as the Senate committee voted 5-0 to do pass with amendments and refer the measure to Rules. No committee transcript is available, so there is no recorded debate in the provided materials, but the unanimous committee vote suggests broad agreement on increasing transparency and consumer protections in wildfire-related insurance underwriting.
The main point of potential contention is the extent to which the bill directs or constrains insurer underwriting models and pricing. Insurers may be concerned about disclosure of model details, compliance costs, and the requirement to account for mitigation actions in actuarially supported ways, while supporters are likely focused on fairness, transparency, and rewarding wildfire-hardening efforts. The bill also leaves room for administrative rulemaking, which may become important in defining qualifying mitigation actions, acceptable discounts, and how appeals are handled.
SB 1540 would add new requirements to Oregon insurance law governing wildfire-related underwriting and pricing for residential property and homeowners coverage. It expands oversight by the Department of Consumer and Business Services over catastrophe and wildfire risk models, creates disclosure and notice obligations for insurers, and establishes consumer appeal rights. The bill also authorizes the Director of the Department of Consumer and Business Services and the State Fire Marshal to adopt rules, and it applies prospectively to policies issued or renewed on or after July 1, 2027.
The available voting history indicates favorable committee sentiment: the Senate committee advanced the bill unanimously, 5-0, with amendments and a referral to Rules. Because no committee transcript is provided, there is no direct record of floor or committee debate, but the vote suggests the measure was viewed positively as a consumer-protection and wildfire-mitigation policy.
The likely areas of contention are insurer compliance burdens, the treatment of proprietary catastrophe and wildfire models as trade secrets, and whether mandated consideration of mitigation actions could interfere with actuarial pricing or underwriting discretion. Supporters would likely emphasize transparency, consumer notice, and incentives for wildfire preparedness, while insurers or other opponents may question the feasibility of model modification, the cost of required discounts or adjustments, and the administrative complexity of appeals and rulemaking.