Verisk Wildfire Model is the First Catastrophe Model Under Review for Insurance Ratemaking in the State of California
Verisk's Wildfire Model has become the first catastrophe model to be reviewed for insurance ratemaking in California, as per the newly-announced regulation from the California Department of Insurance. This regulation aims to tackle property insurance availability issues by including catastrophe models in ratemaking processes. Verisk’s model, which assesses wildfire risks, is intended to help insurers better evaluate and price wildfire coverage, potentially leading to more accurate rates and improved availability of insurance in wildfire-prone areas. This move could significantly impact the insurance market in California, aiding both insurers and policyholders in managing wildfire risks more effectively.
Il Modello di Incendio Forestale di Verisk è diventato il primo modello di catastrofe a essere esaminato per la determinazione delle tariffe assicurative in California, secondo la nuova regolamentazione annunciata dal Dipartimento delle Assicurazioni della California. Questa regolamentazione mira a risolvere i problemi di disponibilità delle assicurazioni immobiliari includendo i modelli di catastrofe nei processi di determinazione delle tariffe. Il modello di Verisk, che valuta i rischi di incendio forestale, è progettato per aiutare le compagnie di assicurazione a valutare e prezzare meglio la copertura contro incendi, portando potenzialmente a tariffe più accurate e a una disponibilità migliorata delle assicurazioni nelle aree ad alto rischio di incendi. Questa iniziativa potrebbe avere un impatto significativo sul mercato assicurativo in California, aiutando sia le compagnie assicurative che gli assicurati a gestire i rischi legati agli incendi in modo più efficace.
El Modelo de Incendio Forestal de Verisk se ha convertido en el primer modelo de catástrofe en ser revisado para la fijación de tarifas de seguros en California, según la nueva regulación anunciada por el Departamento de Seguros de California. Esta regulación tiene como objetivo abordar los problemas de disponibilidad de seguros para propiedades al incluir modelos de catástrofe en los procesos de fijación de tarifas. El modelo de Verisk, que evalúa los riesgos de incendios forestales, está destinado a ayudar a los aseguradores a evaluar y fijar mejor los precios de la cobertura contra incendios, lo que podría llevar a tarifas más precisas y a una mejor disponibilidad de seguros en áreas propensas a incendios. Este movimiento podría tener un impacto significativo en el mercado de seguros en California, ayudando tanto a los aseguradores como a los asegurados a gestionar los riesgos de incendios de manera más efectiva.
Verisk의 산불 모델은 캘리포니아 보험 요율 산정에 대해 검토된 첫 번째 재해 모델이 되었습니다. 이는 캘리포니아 보험부에서 새롭게 발표한 규정에 따른 것입니다. 이 규정의 목적은 재해 모델을 요율 산정 과정에 포함시켜 자산 보험의 가용성 문제를 해결하는 데 있습니다. Verisk의 모델은 산불 위험을 평가하며, 보험사가 산불 보장을 보다 잘 평가하고 가격을 책정하는 데 도움을 주어, 보다 정확한 요율과 산불 위험 지역에서의 보험 가용성 개선으로 이어지기를 기대합니다. 이 조치는 캘리포니아의 보험 시장에 상당한 영향을 미칠 수 있으며, 보험사와 보험가입자 모두가 산불 위험을 보다 효과적으로 관리할 수 있도록 도울 것입니다.
Le Modèle d'Incendie de Verisk est devenu le premier modèle de catastrophe à être examiné pour la définition des tarifs d'assurance en Californie, conformément à la nouvelle réglementation annoncée par le Département des Assurances de Californie. Cette réglementation vise à résoudre les problèmes de disponibilité des assurances immobilières en incluant les modèles de catastrophe dans les processus de tarification. Le modèle de Verisk, qui évalue les risques d'incendie de forêt, est conçu pour aider les assureurs à mieux évaluer et tarifer la couverture contre les incendies, ce qui pourrait conduire à des tarifs plus précis et à une meilleure disponibilité des assurances dans les zones à risque d'incendie. Cette initiative pourrait avoir un impact significatif sur le marché de l'assurance en Californie, en aidant à la fois les assureurs et les assurés à gérer plus efficacement les risques d'incendie.
Das Waldbrandmodell von Verisk ist das erste Katastrophenmodell, das für die Versicherungstarifierung in Kalifornien überprüft wurde, gemäß der neu angekündigten Regelung des kalifornischen Versicherungsministeriums. Diese Regelung zielt darauf ab, die Verfügbarkeit von Sachversicherungen zu verbessern, indem Katastrophenmodelle in die Tarifierungsprozesse einbezogen werden. Das Modell von Verisk, das Waldbrandrisiken bewertet, soll den Versicherern helfen, die Waldbranddeckung besser zu bewerten und zu bepreisen, was potenziell zu genaueren Tarifen und einer verbesserten Verfügbarkeit von Versicherungen in waldbrandgefährdeten Gebieten führen könnte. Dieser Schritt könnte erhebliche Auswirkungen auf den Versicherungsmarkt in Kalifornien haben und sowohl Versicherern als auch Versicherungsnehmern helfen, Waldbrandrisiken effektiver zu managen.
- Verisk Wildfire Model is the first to be reviewed for insurance ratemaking in California.
- New regulation aims to improve property insurance availability by incorporating catastrophe models in ratemaking.
- Potential for more accurate insurance rates and better management of wildfire risks.
- Potential challenges in the adoption and implementation of the new regulation.
Insights
This marks a groundbreaking regulatory shift in California's insurance landscape. The inclusion of Verisk's wildfire model in insurance ratemaking represents the first time catastrophe models will be considered for determining property insurance rates in California - a state that has historically relied on historical loss data. This development could fundamentally transform how insurance companies price wildfire risk in one of the largest insurance markets in the United States.
The timing is important as California faces an insurance availability crisis, with major insurers like State Farm and Allstate restricting new business in the state due to wildfire risks. Verisk's model could help insurers more accurately price risks, potentially leading to market stabilization and increased insurance availability. For property owners, this could mean more options for coverage, though possibly at higher rates in high-risk areas.
From a market perspective, this regulatory approval process positions Verisk as a pioneer in California's catastrophe modeling space. If approved, it could create a significant competitive advantage and new revenue streams as other insurers adopt the model to comply with new regulations. The California market alone represents approximately
The California Department of Insurance's decision to consider catastrophe models for ratemaking is a pivotal shift that could resolve the state's property insurance crisis. Verisk's first-mover advantage in this regulatory review process positions them to capture significant market share in California's insurance analytics space. Insurance carriers have been desperately seeking more sophisticated tools to price wildfire risk and Verisk's model could become the industry standard.
This development could lead to increased adoption of Verisk's solutions across other states facing similar climate-related insurance challenges. The company's data analytics and risk assessment services could see enhanced demand as insurers seek to better understand and price climate risks. Being the first model under review also gives Verisk valuable insights into regulatory requirements, potentially accelerating future model approvals in other jurisdictions.
Newly-Announced Regulation from the California Department of Insurance Will Address Property Insurance Availability by Allowing Forward-Looking Catastrophe Models
Jersey City, Jan. 02, 2025 (GLOBE NEWSWIRE) -- In a groundbreaking step toward a more resilient and sustainable property insurance market in California, Verisk (Nasdaq: VRSK), a leading global data analytics and technology provider, announced today that it is the first modeler to request a review of its wildfire catastrophe model by the California Department of Insurance (CDI).
This development is made possible as one part of California Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy, which includes the decision to allow catastrophe models to be used by insurance carriers as a critical tool for assessing catastrophic risk. Verisk is the first to submit a model after the regulation went into effect on January 2, 2025.
Verisk’s Extreme Event Solutions pioneered the catastrophe modeling business in 1987 to support the insurance industry’s ability to provide resilience to communities and businesses. With its longstanding tradition of best-in-class modeling, Verisk brings decades of experience and technical expertise to help insurance companies understand and manage the complex landscape of natural disaster risks. The Verisk Wildfire Model for the United States incorporates leading knowledge of the wildfire hazard and vulnerability as well as recent trends in variables that impact the extent of wildfire risk in the Western United States, including in California, which saw more than 391,000 acres burned in wildfires in 2023 alone.
California’s property insurance market has faced unprecedented challenges as wildfire risks and claims costs continue to rise. The use of catastrophe models in California is expected to provide consumers, insurers, and regulators with enhanced insights into natural disaster risks and increased insurance availability across the state. The initiative balances transparency and innovation, helping secure California’s property insurance market for the future.
Today’s pioneering submission demonstrates Verisk’s commitment to supporting Californians and the CDI’s efforts in ensuring that California’s insurance industry is adaptable and responsive to emerging challenges by enabling:
- Strengthening of California’s Insurance Market: This process showcases how insurers, modeling firms, and the CDI can work together to create a more stable, competitive, and resilient property insurance market. Verisk’s submission sets the stage for insurers to utilize catastrophe models in California.
- Use of Catastrophe Models in Rate Filing: As the first catastrophe modeling company to be reviewed in California, Verisk is taking a proactive step in advancing fair and accurate risk assessment. This enables insurers to accurately reflect and consider the wildfire risks encountered by California homeowners and businesses.
- Further Validation of Model Integrity: 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. Verisk’s best-in-class modeling has a long tradition of regulatory acceptance throughout the United States.
“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,” said Rob Newbold, president of Extreme Event Solutions at Verisk. “This is a pivotal moment for California’s insurance market, one that promises improved resilience and stability for providers and potential insureds.”
Learn more about the Verisk Wildfire Model for the U.S.
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About Verisk
Verisk (Nasdaq: VRSK) is a leading strategic data analytics and technology partner to the global insurance industry. It empowers clients to strengthen operating efficiency, improve underwriting and claims outcomes, combat fraud and make informed decisions about global risks, including climate change, extreme events, sustainability and political issues. Through advanced data analytics, software, scientific research and deep industry knowledge, Verisk helps build global resilience for individuals, communities and businesses. With teams across more than 20 countries, Verisk consistently earns certification by Great Place to Work and fosters an inclusive culture where all team members feel they belong. For more, visit Verisk.com and the Verisk Newsroom.
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