Verisk Wildfire Model is the First Catastrophe Model Under Review for Insurance Ratemaking in the State of California

Core Insights - The California Department of Insurance has introduced regulations allowing the use of forward-looking catastrophe models to enhance property insurance availability, with Verisk being the first to submit a wildfire catastrophe model for review [1][2] Group 1: Regulatory Changes - The new regulation is part of California Insurance Commissioner Ricardo Lara's Sustainable Insurance Strategy, aimed at improving the resilience of the property insurance market [1] - The regulation went into effect on January 2, 2025, enabling insurers to utilize catastrophe models for assessing catastrophic risks [1] Group 2: Verisk's Role - Verisk, a leader in catastrophe modeling since 1987, has submitted its wildfire model, which incorporates extensive knowledge of wildfire hazards and vulnerabilities, particularly relevant to California, which experienced over 391,000 acres burned in wildfires in 2023 [2] - The submission by Verisk is expected to enhance insights into natural disaster risks, thereby increasing insurance availability and supporting the stability of California's property insurance market [2] Group 3: Market Impact - The initiative aims to create a more stable, competitive, and resilient property insurance market by fostering collaboration between insurers, modeling firms, and the California Department of Insurance [2] - The use of catastrophe models in rate filings will allow insurers to accurately assess and reflect wildfire risks faced by homeowners and businesses in California [2] Group 4: Model Integrity and Compliance - The newly established pre-application required information determination (PRID) process will enable the California Department of Insurance to examine model integrity and ensure compliance with Proposition 103 [2] - Verisk's modeling has a strong history of regulatory acceptance across the United States, reinforcing its credibility in the market [2]