Farmers Group chief executive Raul Vargas (pictured above) has expressed support for the proposed expansion of catastrophe modeling in California.
Speaking at the recent Global Sustainable Insurance Summit in Los Angeles, Vargas said: “Insurers need the confidence to price correctly for the risk.”
The CEO was responding to a question by California Insurance Commissioner Ricardo Lara (pictured below) on how to get other insurers back to the state. Vargas, whose camp has remained in the California market through constructive engagement with the CA Department of Insurance, believes the use of catastrophe modeling in rates-setting would be key.
We had a great day 1 at the Global Sustainable Insurance Summit working on solutions to the problems facing California and our entire world, from extreme heat to wildfires. We are the home base of the global fight to make insurance work for all -- a fight we have to win #InsureCA https://t.co/bYHUpWQ8hO
— Ricardo Lara (@ICRicardoLara) April 10, 2024
At present, the use of catastrophe models in the state is allowed for earthquake losses and post-quake fire. Under Lara’s proposed regulation, the allowable use will be broadened to include wildfire, terrorism, and flood lines for homeowners’ and commercial insurance.
Read more: Lara proposes California’s most significant insurance reform in 30 years
State Farm General Insurance Company, as part of a partial pullout in California, is not renewing approximately 30,000 homeowners’, rental dwelling, and other property insurance policies. The insurer is also withdrawing from offering commercial apartment policies, with around 42,000 policies not to be renewed.
“This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,” State Farm previously said.
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