Last Updated on August 25, 2024 by The HD Post Staff
CALIFORNIA – The California Department of Insurance (CDI) is accepting public comment on a wildfire insurance coverage proposal via email and a virtual public hearing September 17, 2024.
Insurance Commissioner Ricardo Lara says this is the final phase of approving a “first of its kind” catastrophe modeling and ratemaking regulation that will help restore options for all Californians and prepare for the reality of climate change.
AI catastrophe models will predict destruction
According to Lara, climate-driven mega-fires burning across the state makes it clear that relying on decades-old regulations only hurts CDI’s ability to prepare for the future.
“The regulation posted today details the commitments that insurance companies must make in future rate filings to write more policies in wildfire distressed areas as a condition for using wildfire catastrophe modeling to more accurately assess wildfire risks they will write,” said the news release.
The Sustainable Insurance Strategy will use AI catastrophe models based on historic disaster data and estimates of future losses to generate scenarios for predicting destruction.
CDI says the strategy is an effort to modernize the nearly 35 year old Proposition 103. The 1988 ballot measure requires prior approval for any future rate increases which limits catastrophe models.
Advocates say California is in danger of becoming Florida
According to E&E News the cost of some homeowner insurance policies in Florida have risen from $1,500 to $9,000 annually since factoring in climate change risks.
“California is in danger of becoming Florida with these changes that mimic the failed strategies in Florida. Lara has given into the industry’s demands and the consumers are going to be paying the bills for a long time unless he is stopped,” said Consumer Watchdog President Jamie Court.
Consumer Federation of America Director of Insurance Doug Heller calls for more transparency in how the algorithm determines the rates. He says catastrophe modeling companies – so far, have been unwilling or unable to share proprietary information on how the models work.
“In California, we don’t just trust whatever the black box spits out,” Heller said.
Heller advocates for the creation of a California public wildfire catastrophe model.
Submit public comment
The virtual public hearing September 17, 2024 will take place at 10 a.m. For more information click here.
The public can also submit a comment via email to [email protected]
RELATED: Insurance Commissioner approves AI model — advocates say rates may go 2 to 3 times higher
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