The California Department of Insurance (CDI) has announced the completion of a review of three wildfire catastrophe models. These models will be instrumental in setting insurance rates and guiding coverage availability as companies plan expansions within the state.
According to the CDI, California’s Sustainable Insurance Strategy mandates that insurers using department-reviewed wildfire catastrophe models must provide and maintain coverage in wildfire-prone areas. This initiative aims to assist policyholders in transitioning out of the FAIR Plan while expanding consumer options statewide. The department is currently accepting rate applications from insurers detailing plans to increase homeowners and commercial insurance in the voluntary market. Mercury Insurance, Allstate, and CSAA have been the first to respond, with additional filings anticipated from other insurers.
The strategy is unique to California, requiring insurers to commit to writing more policies in higher-risk areas. The department recently completed a six-month public review of models from Verisk, Karen Clark and Company, and Moody’s. These models integrate scientific data on wildfire mitigation by homeowners, communities, and government agencies, potentially lowering insurance costs. Since January 2025, the department has addressed complaints related to Los Angeles wildfires, returning over $67 million to survivors while maintaining model review timelines.
“For more than 30 years, insurance companies have raised rates without guaranteeing coverage or committing to Californians. That ends now,” said Insurance Commissioner Ricardo Lara. “We are on time and on target for bringing insurance options back to all parts of California.”
The CDI was established in 1868 with a focus on consumer protection within the state’s insurance industry. Led by Insurance Commissioner Ricardo Lara, it oversees insurer solvency, licenses agents and brokers, monitors market practices, resolves consumer complaints, and investigates insurance fraud. With nearly 1,400 employees supervising over 1,600 insurance companies and more than 495,000 licensed professionals, the CDI handles numerous financial reviews and thousands of complaints annually while recovering over $130 million for consumers. Proposition 103 expanded CDI’s authority in 1988 by making the Insurance Commissioner an elected position that requires prior approval for certain insurance rates.
