Verisk requests California's review of its wildfire model, enhancing insurance stability amid rising wildfire risks.
Quiver AI Summary
Verisk, a prominent data analytics and technology provider, has made a significant move toward enhancing California's property insurance market by becoming the first modeler to seek a review of its wildfire catastrophe model from the California Department of Insurance (CDI). This initiative aligns with the Sustainable Insurance Strategy led by California Insurance Commissioner Ricardo Lara, which encourages the use of catastrophe models to assess risks associated with natural disasters. Verisk’s Wildfire Model incorporates extensive knowledge of wildfire hazards and aims to improve the understanding of complex wildfire risks in the state, which has seen increasing challenges due to rising wildfire incidents and insurance claims costs. The use of these models is anticipated to enhance the overall stability and competitiveness of the state's insurance market, providing better insights for consumers, insurers, and regulators while ensuring accurate risk assessment for California homeowners and businesses. Verisk's commitment highlights the importance of collaboration among modeling firms, insurers, and regulatory bodies in building a more resilient insurance market.
Potential Positives
- Verisk is the first modeler to seek review of its wildfire catastrophe model by the California Department of Insurance, positioning the company as a leader in embracing regulatory changes in the insurance sector.
- The submission of Verisk’s model is a pivotal move to enhance stability and competitiveness in California’s property insurance market, which has faced significant challenges due to rising wildfire risks.
- This initiative allows for the accurate assessment of wildfire risks, improving the underwriting processes for insurers and potentially increasing insurance availability for consumers in California.
- Verisk’s longstanding experience in catastrophe modeling and regulatory acceptance demonstrates its commitment to innovation and providing essential tools for managing natural disaster risks.
Potential Negatives
- This press release highlights the unprecedented challenges faced by California’s property insurance market due to rising wildfire risks, which may suggest underlying vulnerabilities in Verisk's modeling services and overall market conditions.
- Verisk's pioneering submission comes as California's insurance market grapples with increasing claims costs from natural disasters, indicating that the company may be reacting to significant external pressures rather than leading the market proactively.
- The mention of compliance with Proposition 103 and the introduction of a new model integrity review process may imply heightened regulatory scrutiny and potential challenges for Verisk's models in meeting evolving standards.
FAQ
What is Verisk's recent development in California's insurance market?
Verisk has requested a review of its wildfire catastrophe model by the California Department of Insurance, becoming the first modeler to do so.
How does Verisk's model aim to help Californians?
The model provides enhanced insights into wildfire risks, aiding insurers and regulators in stabilizing California's property insurance market.
What is the significance of the Sustainable Insurance Strategy?
This strategy allows catastrophe models to be used by insurance carriers, improving risk assessment and insurance availability in California.
When did the regulation for catastrophe models in California take effect?
The regulation went into effect on January 2, 2025, allowing firms like Verisk to submit their models for review.
How does Verisk's Wildfire Model support the insurance industry?
Verisk's model incorporates extensive knowledge of wildfire hazards and trends, helping insurers understand and manage disaster risks effectively.
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, 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.
###
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
.
This article was originally published on Quiver News, read the full story.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
