On Thursday, November 14th, California Insurance Commissioner Ricardo Lara announced that his office had sent the final version of his proposed regulations on catastrophe modeling for insurance ratemaking to the state Office of Administrative Law for approval. The new regulations, which Commissioner Lara hopes will stabilize the insurance market and expand options for property insurance customers throughout the state, allows insurers to utilize catastrophe models in their ratemaking processes in exchange for meeting prescribed commitments to increase policy coverage in high-risk areas of the state.
The regulations have been in development since early 2024 as the California Department of Insurance (CDI) engaged stakeholders, including RCRC, and received public input. Earlier this year, Commissioner Lara also announced plans to work with Cal Poly Humboldt to develop a statewide catastrophe model to help with transparency and enable property owners to better understand their own risk.
The new regulations should be in effect by the end of 2024, with review of the new catastrophe models beginning January 1, 2025. For more information, contact RCRC Senior Policy Advocate Staci Heaton or visit the CDI website.