What's Happening?
The California Department of Insurance (CDI) has introduced a new regulatory process called the Pre-Application Required Information Determination (PRID) to approve probabilistic wildfire hazard risk models. This initiative is part of the Sustainable Insurance Strategy (SIS) aimed at addressing the insurance crisis in California, where property insurance has become scarce due to frequent and destructive wildfires. The PRID process allows insurers to use innovative risk forecasting models for insurance rate filings, moving beyond historical loss data. The Cotality Wildfire Risk Model is one such model expected to meet PRID requirements, offering detailed risk insights and historical fire intelligence.
Why It's Important?
The introduction of PRID-approved models is crucial for insurers struggling to provide coverage in wildfire-prone areas of California. By enabling more accurate risk assessment and pricing, these models can help insurers return to the market, potentially increasing the availability of affordable property insurance. This development is significant for California's resilience against wildfires, which are increasing in frequency and intensity due to climate change. The ability to use advanced models may also lead to better risk management strategies, benefiting both insurers and property owners.
What's Next?
Insurers can anticipate further CDI approval of models via PRID, with many commonly used models expected to undergo review soon. The next iteration of the Cotality Wildfire Risk Model is scheduled for official review in late 2025, promising improved geospatial and meteorological output granularity. This ongoing innovation aims to support long-term resilience in California, adapting to changing wildfire realities and providing precise risk differentiation for individual properties.
