CDI completes review of Verisk’s wildfire model to help address California’s coverage crisis

The California Department of Insurance (CDI) has completed its review of the Verisk Wildfire Model for the US, approving it for use by insurers in assessing wildfire risk and property insurance ratemaking—marking it as the first catastrophe model to successfully complete evaluation under the state’s new regulatory framework.

This marks a milestone in California’s evolving insurance landscape and underscores Verisk’s leadership in catastrophe modelling and regulatory collaboration to support insurance-driven resilience for property owners and communities.

Developed by Verisk’s Extreme Event Solutions business, the model draws on decades of wildfire science, engineering expertise, and climate data to provide a forward-looking view of risk. It incorporates advanced data and science, accounting for both property-level and community-level mitigation efforts.

The model underwent extensive review through CDI’s Pre-Application Required Information Determination (PRID) process, part of Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy. This included a review process open to the public, a PRID which included consumer advocates, and a public webinar.

Commissioner Lara’s strategy represents California’s most significant insurance reform in over 30 years. It requires insurers using Department-reviewed wildfire catastrophe models to write and maintain coverage in wildfire-prone areas. This will also assist policyholders in transitioning out of the FAIR Plan and restoring consumer options across the state.

CDI will now begin accepting rate applications from insurers using the Verisk model, outlining plans to write and maintain more homeowners and commercial insurance policies in the voluntary market.

“For the first time in California history, insurance companies will be required to write more policies in wildfire-distressed areas. This closes one of the biggest coverage gaps across the state,” said Commissioner Lara. “Under existing regulations, insurers have raised rates without guaranteeing coverage or committing to Californians, causing distress for homeowners. That ends now.”

He continued, “Past insurance commissioners ignored warning signs for decades, leaving consumers, homeowners, small businesses, and nonprofits to bear the consequences.

“If Californians are taking steps to mitigate wildfire risks, then insurance companies must fulfil their responsibilities and write more policies across the state.”

With the PRID review completed, California insurers can now use a robust, forward-looking wildfire model to more accurately assess risk—supporting a more resilient insurance market and encouraging greater insurer participation in wildfire-prone areas.

This development comes as several major insurers have scaled back coverage in California, raising concerns about insurance availability in high-risk regions. By permitting the use of catastrophe models, CDI aims to provide insurers with a more accurate, actuarially sound basis for pricing risk—while encouraging them to return to underserved areas.

Rob Newbold, President of Verisk Extreme Event Solutions, said, “This is a transformative moment for the insurance industry and for California homeowners and businesses.

“We’re proud to be the first catastrophe modeller to work with the California Department of Insurance to offer a modeled assessment of wildfire risk and contribute to efforts to bring stability to the insurance market. The latest version of the model, released in 2024, reflects decades of scientific research and engineering expertise, and we believe it will be a powerful tool for insurers navigating the complexities of wildfire risk in a changing climate.”

Dr. Julia Borman, Assistant Vice President and Director of Regulatory at Verisk Extreme Event Solutions, added, “This approval is the result of years of collaboration, transparency, and rigorous review.

“We’re grateful to the CDI for their thoughtful engagement throughout the process and to our clients for their support. This milestone underscores Verisk’s commitment to helping insurers and regulators make informed, data-driven decisions that benefit both the industry and the communities they serve.”

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