Verisk submits wildfire cat model for review whilst new California rules take effect

Global data analytics and technology provider, Verisk, has submitted its wildfire catastrophe model for review by the California Department of Insurance (CDI), which recently finalised regulatory changes aimed at stabilising the state’s insurance market.

If you recall, a new regulation was recently launched in order to help expand insurance access for Californians amid increasing climate risks, which includes increased coverage for wildfire-prone regions by factoring reinsurance costs into the provision of this insurance.

According to the announcement, Verisk is the first organisation to submit a model following the regulation going into effect from January 2, 2025.

The company brings decades of experience and technical expertise to help insurers understand and manage the complex landscape of natural disaster risks.

Moreover, the firm’s Wildfire Model for the US incorporates critical knowledge of the wildfire hazard and vulnerability as well as recent trends seen in variables that impact the full extent of wildfire risk in the Western US, including in California, which saw more than 391,000 acres burned in wildfires in 2023 alone.

It’s no secret that California’s property insurance market has faced a number of unprecedented challenges as wildfire risks and claims costs continue to keep rising.

Nonetheless, the use of catastrophe models across the state is expected to provide insurers, consumers and regulators with enhanced insights into natural disaster risks and increased insurance availability across the state.

Furthermore, Verisk’s submission demonstrates how insurers, modeling firms, and the CDI can work together effectively to create a more stable, competitive, and resilient property insurance market.

In addition, the newly established pre-application required information determination (PRID) process allows the CDI to examine model integrity and ensure public review and compliance with Proposition 103.

Rob Newbold, president of Extreme Event Solutions at Verisk, commented: “We’re proud to be the first catastrophe modeler to work with the California Department of Insurance to offer a modeled assessment of wildfire risk and to help bring stability to the insurance market. This is a pivotal moment for California’s insurance market, one that promises improved resilience and stability for providers and potential insureds.”

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