California’s Next Steps on Cat Models: Challenges and Issues in Insurance Rate-Making‎

Insurance Journal
August 3, 2023

San Francisco Locke Lord Partner Elizabeth Tosaris authored an article for the Insurance Journal on the critical issue of the insurance industry’s use of effective catastrophe rating models in their California property ratemaking and California regulators’ interpretation of laws allowing use of models and the legal requirements for a public inspection of rate filings. Tosaris writes that a large majority of carriers in the industry believe their present rates are insufficient to support the property risks posed in the state, and that catastrophe models, which are increasingly sophisticated, offer a fair and reasonable way to identify and support adequate rates. She adds that at the same time, those responsible for developing these models want to protect their intellectual property from their competitors and others.

“This dilemma regarding inspection of catastrophe models is set against the backdrop of increasingly frequent and severe wildfire losses in the state, losses that have been cited by more than one insurer as the reason either to depart from the state or at least to halt sales of new policies because they are unable to accept the level of risk given their currently filed and approved rates,” she explains.

Read the full Insurance Journal article.