California Approves Verisk Wildfire Model for Insurance Ratemaking

The California Department of Insurance (CDI) has completed the evaluation and approved the Verisk Wildfire Model, marking the first wildfire catastrophe model to successfully pass the state’s new regulatory framework under Commissioner Ricardo Lara’s Sustainable Insurance Strategy. This forward-looking model, developed by Verisk’s Extreme Event Solutions, incorporates decades of wildfire science, engineering expertise, and climate data, accounting for both property-level and community-level mitigation efforts. Approval of this model requires insurers to write more policies in wildfire-distressed areas, addressing major coverage gaps affecting over 1.5 million homeowners statewide and aiming to stabilize the insurance market in high-risk regions. The model’s approval followed a rigorous, transparent review process including public input and consumer advocate participation, reflecting a significant reform in California’s insurance landscape. Insurers can now use this data-driven approach for more accurate wildfire risk assessment and ratemaking, potentially enabling a transition of policyholders from the FAIR Plan to the voluntary market. This development is expected to enhance wildfire safety efforts, improve consumer options, and help control rising insurance costs related to wildfire catastrophes and other factors.