SB 1540 — Relating to property insurance; prescribing an effective date.

83rd OREGON LEGISLATIVE ASSEMBLY--2026 Regular Session A-Engrossed Senate Bill 1540 Ordered by the Senate February 17 Including Senate Amendments dated February 17 Printed pursuant to Senate Interim Rule 213.28 by order of the President of the Senate in conformance with pre- session filing rules, indicating neither advocacy nor opposition on the part of the President (at the request of Senate Interim Committee on Natural Resources and Wildfire) SUMMARY The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject to consideration by the Legislative Assembly.

It is an editor’s brief statement of the essential features of the measuremeasure. as introduced.

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,model or scoring method, along with re-related lated information, and an explanation of how the insurer uses the model or scoring method in underwriting decisions.

Specifies elements[elements] that an insurer must include[include inin] incorporate applicable community-level mitigation actions and property- specific mitigation actions into each model and requires the insurer to give a premium discount or adjustment, or other incentive, to a policy holder that demonstrates having undertaken a property-specific mitigation action or that a community-level mitigation action oc-occurred curred in proximity to the policy holder’s property.

(a) “Catastrophe“Adverse model”rating” meansmeans: a tool, instrument, means, product or method, including a map- or computer-based tool or a simulation, that an insurer uses to estimate potential losses from catastrophic events.

(b)(A) “Community-levelAn mitigationapplication action”of meansa rating rule under which an actioninsurer orcharges setmore offor actionsa topremium reducethan the riskinsurer ofwould orhave hazardscharged orif lossunderwriting fromhad wildfireresulted thatin isa basedmore infavorable scientificwildfire practicerisk and:score;

(A)or Consists(B) ofAssignment, actionsbased suchon asa forestwildfire treatmentrisk andscore, fuel reduction, investments in equipment to fighta wildfiresrating andtier mitigate impacts from wildfires and actions that utilitiesdoes takenot tohave prevent or reduce the risklowest ofavailable wildfiresrates. in accordance with a plan that the Public Utility Commission approves;

and(b) (B)“Catastrophe Ismodel” certifiedmeans bya thetool, Stateinstrument, Firemeans, Marshalproduct as effective in reducing the risk of or hazardsmethod, orincluding loss from wildfire in a neighborhoodmap- or communitycomputer-based tool or is undertaken by a localsimulation, governmentthat oran stateinsurer agencyuses to reduceestimate thepotential risklosses of or hazards or loss from wildfirecatastrophic inevents. a neighborhood or community.

(c) “Property-specific“Community-level mitigation action” means an action or set of actions to reduce the risk of wildfire or hazards or loss from wildfire for a specific property that is based in sci-scientific NOTE:practice and:

NOTE:

LC 182 SBA-Eng. 1540 entific practice and:

SB 1540 (A) Consists of actions such as establishingforest defensibletreatment space,and hardeningfuel structuresreduction, againstinvestments firein orequipment similarto orfight relatedwildfires and mitigate impacts from wildfires and actions that utilities take to prevent or reduce the risk of wildfirewildfires orin theaccordance riskwith ofa hazardsplan orthat lossthe fromPublic wildfireUtility onCommission theapproves; property;

and (B) Results in a certification from the Insurance Institute for Business and Home Safety that designates the propertycommunity as a Wildfire Prepared HomeNeighborhood or results in a certificationcerti- fication from an equivalent program that verifies that the action is effective in reducing the risk of wildfire or hazards or loss from wildfire.wildfire;

(d)or “Wildfire(C) riskIs model”certified meansby athe tool,State instrument,Fire means,Marshal productas oreffective method,in includingreducing athe map-risk orof computer-basedwildfire toolor hazards or aloss simulation,from thatwildfire anin insurera uses,neighborhood inor wholecommunity or inis part,undertaken toby measurea local government or assessstate or federal agency to reduce the risk of wildfire associatedor withhazards aor residentialloss propertyfrom orwildfire within a com-neighborhood munity,or forcommunity. the purposes of:

(A)(d) Rating,“Property-specific classifyingmitigation action” means an action or pricingset insuranceof coverageactions onto reduce the basisrisk of thewildfire risk;or hazards or loss from wildfire for a specific property that is based in sci- entific practice and:

(A) Consists of actions such as establishing defensible space, hardening structures against fire or similar or related actions that prevent or reduce the risk of wildfire or haz- ards or loss from wildfire on the property;

or (B) Results in compliance with section R327, Wildfire Hazard Mitigation, of the Oregon Residential Specialty Code or results in a certification from the Insurance Institute for Business and Home Safety that designates the property as a Wildfire Prepared Home.

(e) “Wildfire risk model” means a tool, instrument, means, product or method, including a map- or computer-based tool or a simulation, that an insurer uses, in whole or in part, to measure or assess the risk of wildfire associated with a residential property or with a com- munity, for the purposes of:

(A) Rating, underwriting, classifying or pricing insurance coverage on the basis of the risk;

(2)(a)(f) An“Wildfire insurerrisk thatscore” usesmeans a catastrophemeasurement model, wildfire risk model or aassessment scoringof methodthe to assign risk forof residentialwildfire, propertyexpressed oras a communityscore, shallthat submitsummarizes the catastropheresults model,of applying a wildfire risk model or scoringother methodwildfire torisk thescoring Directormethod. of the Department of Consumer and Business Services for approval as part of the insurer’s filings under ORS chapter 737.

(2)(a) An insurer that uses a catastrophe model or a wildfire risk model or scoring method to assign risk for residential property or a community shall submit the catastrophe model or wildfire risk model or scoring method to the Director of the Department of Con- sumer and Business Services as part of the insurer’s filings under ORS chapter 737.

The di- rector shall review the submission to determine whether an insurer’s catastrophe model or wildfire risk model or scoring method accounts for community-level mitigation actions or property-specific mitigation actions.

If the director determines that the catastrophe model, wildfire risk model or scoring method does not account for community-level mitigation actions or property-specific mitigation actions, the director shall require the insurer to modify the catastrophe model or wildfire risk model or scoring method to account for community-level mitigation actions or property-specific mitigation actions.

(A) A description of the model or scoring method;

(B) How the model or scoring method affects rates;

(C)[2] AnA-Eng. actuarial justification for all rating factors, including any discounts offered for mitigation actions;

andSB (D)1540 (C) An explanationactuarial ofjustification howfor theall insurerrating usesfactors, theincluding modelany indiscounts underwritingoffered decisions.for mitigation actions;

(c)and (D) An insurerexplanation that makes a submission under paragraph (a) of this subsection shall in- clude in the submission information about whether and how the models the insurer uses forthe ratingmodel and underwriting take account of community-level mitigation actions or mitigationscoring actionsmethod thatin stateunderwriting agenciesdecisions. perform.

(d)(c) AAn modelinsurer or method that anmakes insurera submitssubmission under paragraph (a) of this subsection isshall confidentialin- asclude provided in ORSthe 705.137.submission information about whether and how the model or scoring method the insurer uses for rating and underwriting takes account of property-specific mitigation actions, community-level mitigation actions or mitigation actions that state or federal agencies perform.

(3)(a)(d) AnA insurer that uses a catastrophe model or wildfiremethod riskthat model,an orinsurer asubmits combinationunder ofparagraph a(a) catastrophe model and a wildfire risk model, shall incorporate applicable community- level mitigation actions and property-specific mitigation actions into the catastrophe model, wildfire risk model or combination of models,this orsubsection shallis otherwisea demonstratetrade thatsecret, theas insurer’sprovided underwritingin andORS rates192.345, incorporate applicable community-level mitigation actions and property-specificis mitigationexempt actions.from disclosure.

(b)(e) AnThis insurersubsection that does not complyrequire withan theinsurer requirement set forth in paragraph (a) of this subsection shall give a premium discount or adjustment or other incentive to asubmit policynew holderunderwriting thatguidelines demonstrates that the policy holder has undertaken a property-specific miti- gation action for the policy holder’s property or thatmanuals aand community-leveldoes mitigationnot actionmodify hasexisting occurredrequirements in sufficient proximity to thesubmit policyunderwriting holder’sguidelines propertyor tomanuals. reduce the risk of loss.

(4)(3)(a) An insurer shallthat postuses ona thecatastrophe insurer’smodel publicor websitea thewildfire processrisk formodel, appealingor thea insurer’scombination riskof classificationa andcatastrophe readilymodel accessibleand informationa aboutwildfire therisk premiummodel, discountsshall orincorporate adjustmentsapplicable orcommunity- otherlevel incentivesmitigation availableactions toand policyproperty-specific holdersmitigation thatactions demonstrateinto that the policycatastrophe holdermodel, haswildfire undertakenrisk amodel property-specific mitigation action or thatcombination aof community-levelmodels, [2]or SBshall 1540otherwise mitigationdemonstrate actionthat occurredthe ininsurer’s sufficientunderwriting, proximityrates toand therate policydifferentials holder’sincorporate propertyapplicable tocommunity-level reducemitigation theactions riskand ofproperty-specific loss.mitigation actions.

The(b) informationAn mustinsurer identifythat property-specificdoes mitigationnot actionscomply awith policythe holderrequirement couldset undertakeforth toin receiveparagraph the(a) of this subsection shall, when actuarially supported, give a premium discount or adjustment or other incentive,incentive andto an insurance policy holder that demonstrates that the amountpolicy ofholder has undertaken a property-specific mitigation action for the discount,policy adjustmentholder’s property or incentive that correspondsa withcommunity-level eachmitigation action.action has occurred in sufficient proximity to the policy holder’s property to reduce the risk of loss.

(5)(a)(4) An insurer thatshall providespost aon premiumthe discountinsurer’s orpublic adjustmentwebsite orthe otherprocess incentive,for orappealing thatthe usesinsurer’s arisk catastropheclassification modeland orreadily wildfireaccessible riskinformation modelabout tothe underwrite,premium price,discounts declineor toadjustments renew,or createother aincentives differentialthat ratemay orbe imposeavailable ato surchargeinsurance onpolicy aholders premiumthat shalldemonstrate eachthat yearthe notifypolicy anholder ap-has plicantundertaken fora insuranceproperty-specific mitigation action or that a policycommunity-level holder,mitigation action occurred in writingsufficient andproximity withinto the deadlinespolicy specifiedholder’s inproperty sub-to sectionreduce (6)the risk of thisloss. section, of:

The information must identify property-specific mitigation actions a policy holder could undertake to receive the premium discount or ad- justment or other incentive and the amount of the discount, adjustment or incentive that corresponds with each action or combination of actions.

The director by rule may determine which mitigation actions or combination of mitigation actions qualify for an actuarially sup- ported discount.

(5)(a) An insurer that provides a premium discount or adjustment or other incentive, or that uses a catastrophe model or wildfire risk model to underwrite, price, decline to renew, create a differential rate or assign an adverse rating for a policy of insurance shall notify an applicant for insurance or a policy holder, in writing and within the deadlines specified in subsection (6) of this section, of:

and (B) Any applicable property-specific mitigation action the policy holder could undertake and[3] anyA-Eng. community-level mitigation action that could result in a more favorable classifica- tion or score, acceptance or renewal of an application, withdrawal of a rate differential, surcharge, a premium discount or adjustment or other incentive.

SB 1540 and any community-level mitigation action that could result in a more favorable classifica- tion or score, acceptance or renewal of an application, withdrawal of a rate differential, surcharge, a premium discount or adjustment or other incentive.

(a) Not later than 1510 business days after the applicant submits a completed application for insur-insurance anceto the insurer and the insurer offers a policy of insurance to the insurer;applicant, if the policy has an adverse rating on the basis of a wildfire risk score;