California Department of Insurance Approves Verisk Wildfire Model, Transforming Risk Assessment for Insurers

California approves Verisk's Wildfire Model for insurers, enhancing wildfire risk assessment and supporting market stability.

Quiver AI Summary

The California Department of Insurance (CDI) has approved the Verisk Wildfire Model for insurers to assess wildfire risk, marking a significant advancement in California's insurance sector. This model is the first catastrophe model to be evaluated under the state's new regulatory framework and aims to improve the accuracy of wildfire risk assessments, enhancing the stability of the insurance market. Developed by Verisk, a global analytics provider, the model utilizes extensive wildfire science and climate data, allowing for a more precise approach to property insurance ratemaking. The evaluation process included public engagement and input from consumer advocates, aligning with CDI Commissioner Ricardo Lara’s Sustainable Insurance Strategy. This approval is particularly crucial as many insurers have reduced coverage in California due to rising losses and outdated rating methods. Verisk's model is designed to support insurers in navigating wildfire risks, thereby fostering greater market participation and benefiting consumers in susceptible areas.

Potential Positives

• This is the first time a catastrophe model has successfully passed the California Department of Insurance's evaluation under the new regulatory framework, marking a significant milestone for risk assessment in the state's insurance market.
• The approval of the Verisk Wildfire Model enables insurance carriers in California to utilize a robust and forward-looking tool for assessing wildfire risk, potentially stabilizing the insurance market and improving availability for consumers.
• The model's development involved extensive collaboration and public engagement, demonstrating Verisk's commitment to transparency and consumer advocacy in the insurance industry.
• Verisk’s Wildfire Model supports community-level mitigation efforts, addressing crucial concerns related to the sustainability of coverage in fire-prone regions and promoting the return of insurers to underserved areas.

Potential Negatives

• The announcement highlights a significant issue in the insurance market, specifically that several major insurers have scaled back coverage in California due to unsustainable losses and outdated rating tools, indicating potential vulnerability for Verisk's model.
• The lengthy review process and need for regulatory approval may imply that their model faced scrutiny and challenges, which could raise concerns about its reliability despite being approved.
• While the approval is a positive step, it also underscores the urgent need to address growing concerns around insurance availability in fire-prone regions, which may reflect broader systemic issues in the insurance industry that Verisk needs to navigate.

FAQ

What is the Verisk Wildfire Model?

The Verisk Wildfire Model is a catastrophe model used to assess wildfire risk for property insurance ratemaking in the United States.

Why is the CDI's approval significant?

This is the first time a catastrophe model has completed evaluation under California's new regulatory framework, enhancing risk assessment accuracy.

How does the model support insurers?

The model provides a forward-looking view of risk, assisting insurers in pricing risk more accurately in fire-prone areas.

What are the benefits to California homeowners?

It encourages greater insurer participation, potentially stabilizing insurance markets and improving coverage availability for consumers.

How long did the review process take?

The evaluation involved years of collaboration and rigorous review, ensuring transparency and stakeholder engagement throughout the process.

Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.

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Full Release

JERSEY CITY, N.J., July 24, 2025 (GLOBE NEWSWIRE) -- In a milestone for California’s evolving insurance landscape, the California Department of Insurance (CDI) has completed its review of the Verisk Wildfire Model for the United States for use by insurers in assessing wildfire risk and property insurance ratemaking. This is the first time a catastrophe model has successfully completed the evaluation under the state’s new regulatory framework, ushering in a new era of data-driven risk assessment in California.

Developed by the Extreme Event Solutions business of Verisk (Nasdaq: VRSK), a leading global analytics and data provider, the Verisk Wildfire Model for the United States leverages decades of wildfire science, engineering expertise, and climate data to provide a forward-looking view of risk. It was extensively reviewed through the CDI’s Pre-Application Required Information Determination (PRID) process as part of Commissioner Ricardo Lara’s Sustainable Insurance Strategy aimed at stabilizing the state’s insurance market. This included a review process open to the public, a PRID which included consumer advocates, and an additional public webinar.

With the PRID review completed, California insurance carriers can, for the first time in the state's history, use a robust, forward-looking wildfire model to more accurately assess wildfire risk—supporting a more resilient insurance market and encouraging greater insurer participation, which can benefit consumers in wildfire-prone areas. Catastrophe models are accepted as a part of ratemaking in all states; the Verisk Wildfire Model for the United States is already approved by the Nevada Division of Insurance issued in February 2025.

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

The determination comes amid growing concern over insurance availability in fire-prone regions. Several major insurers have scaled back coverage in California, citing unsustainable losses and outdated rating tools. By allowing the use of catastrophe models, the CDI aims to give insurers a more accurate and actuarially sound basis for pricing risk—while encouraging them to return to underserved areas. Verisk’s model incorporates advanced science and data and accounts for both property-level and community-level mitigation efforts.

“This approval is the result of years of collaboration, transparency, and rigorous review,” said Dr. Julia Borman, assistant vice president and director of regulatory at Verisk Extreme Event Solutions. “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.”

For more information about Verisk’s wildfire modeling capabilities, visit:

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.