California Insurance Commissioner Ricardo Lara has unveiled a proposal aimed at enabling insurance firms to incorporate catastrophe modeling into their homeowner premium calculations.
The role of catastrophe modeling took center stage during a recent public hearing conducted by the Insurance Commission. Consumer advocates expressed caution regarding the potential impacts of these models on homeowners statewide.
During a discussion on “Inside the Issues” with host Amrit Singh, insurance expert Karl Susman delved into the intricacies of catastrophe modeling.
Catastrophe modeling involves the use of algorithms by insurance companies to assess potential risks in specific areas and predict future outcomes. While these models are already in use in other states, their implementation in California is of particular concern due to the state’s susceptibility to wildfires.
“This modeling will introduce more variability,” explained Susman. “We won’t see uniform pricing across different regions, with those residing in hillside or canyon areas likely facing different premiums compared to urban dwellers.”
This proposal highlights the ongoing debate within the insurance industry and among consumer advocates regarding the potential impact of catastrophe modeling on California homeowners.
