Nguồn: insurancebusinessmag.com

The California Department of Insurance (CDI) has officially completed its review of the Verisk Wildfire Model for the United States. This is the first time a catastrophe model has been approved for insurance rate-setting under the state’s new regulations.

The California Department of Forestry and Fire Protection reported that more than 1 million acres were burned across over 8,000 wildfires last year. Insurers, meanwhile, have been pulling out of high-risk areas due to outdated models and unpredictable losses. In response, the state has implemented regulations to help stabilize its insurance market and ensure adequate coverage in high-risk areas.

Verisk’s model is already approved in Nevada and accepted in all other US states for catastrophe modeling. This approval marks the first successful completion of the Pre-Application Required Information Determination (PRID) process, part of Commissioner Ricardo Lara’s Sustainable Insurance Strategy. It allows CDI to review the integrity of catastrophe models and ensure compliance with Proposition 103, which governs insurance rate approvals in California.

Developed by Verisk’s Extreme Event Solutions unit, the model underwent extensive public and regulatory scrutiny, including input from consumer advocates and a public webinar. The model offers a forward-looking, science-based approach to wildfire risk assessment, accounts for individual property mitigation efforts as well as broader community fire prevention strategies, a factor consumer groups have long advocated for.

Verisk highlighted its history in catastrophe modeling, noting that it “pioneered the catastrophe modeling business in 1987” and has decades of experience in assisting carriers to manage risks related to natural disasters. The company stated that it serves over 400 clients across the insurance industry, public sector, and other entities.

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