California Gov. Gavin Newsom is reviewing legislation that would establish what state lawmakers describe as the nation’s first public wildfire catastrophe model.
The proposal, Senate Bill 429, aims to expand the state’s approach to wildfire risk assessment and insurance regulation.
Current law requires admitted insurers with at least $10 million in written California premiums to submit fire risk data for the residential properties they insure. The insurance commissioner is responsible for making this information available to the public.
Senate Bill 429 would create a Wildfire Safety and Risk Mitigation Program under the California Department of Insurance. The program would fund research to develop and implement a public wildfire catastrophe model.
According to the bill summary, the model and related research projects would be used to shape risk mitigation strategies, inform actuarial analyses, and support regulatory oversight of insurance rates.
This legislative push comes as California continues to evolve its wildfire risk modeling framework. In July, the California Department of Insurance certified the Verisk Wildfire Model, which became the first catastrophe model approved for insurance rate-setting under the state’s new regulations.
The Verisk model, developed by the company’s Extreme Event Solutions unit, is already in use in other states.
The insurance industry has largely welcomed these regulatory changes. The American Property Casualty Insurance Association (APCIA) has commented that forward-looking catastrophe models are essential for stabilizing California’s insurance market and restoring access to coverage. APCIA also emphasized that these models are one part of a broader set of reforms needed to address the state’s ongoing insurance challenges.
However, some consumer advocates have voiced concerns about the new approach. Groups such as Consumer Watchdog have questioned the transparency and accountability of the regulations, particularly in relation to the use of climate model algorithms by insurers to justify rate increases.
State Sen. Dave Cortese, who represents Silicon Valley, said the public model would provide lawmakers with a data pool to address constituent questions about insurance rates. He noted that the questions are not only about the reasons behind rate increases, but also about where rates are rising and what actions can be taken.
“We (lawmakers) can’t do what the insurance commissioner does in evaluating and calling the shots on rate increases based on actuarial risk, but what we can do is say: ‘Hey, we’ve got our own data now and it does or doesn’t generate the same conclusions.’ And as a public system, it isn’t proprietary,” Cortese said.
Cortese added that the model would allow broad access to risk data, enabling review of actual risk and disparities between different geographic areas.
Insurance Commissioner Ricardo Lara, in a letter of support, said such models can improve insurance affordability and availability and help identify changes needed to prevent future wildfires.
Lara wrote, “A first-in-the-nation public wildfire model will be a critical tool for firefighters, city leaders, scientists and students, and keep California at the forefront of safety and innovation.”
Cortese said the bill faced little opposition, as it was included in a broader legislative package addressing wildfire risk and insurance issues.
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