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Proposed wildfire rules could reshape insurance pricing in California

The United States is no stranger to the destructive and disruptive reach of wildfires. For the past decade, there's been an average of 7.3 million acres torched annually in the country.1 Last year alone, some 59,000 fires burned over 7.1 million acres and caused billions in losses.2

Wildfire is a peril that California property owners—and insurers—are only too familiar with. California suffered four of the largest fires in the state’s history in 2021, and 2020’s August Complex fire was the largest ever recorded in the state.

Wildfire Wheel

In proposed regulation, the California Department of Insurance has recommended several potentially significant changes that could impact how personal and commercial property insurers operate in the state.

As punishing drought conditions persist, managing wildfire risk has become a key priority for many stakeholders throughout the state and beyond.3

A new regulatory framework proposed for California property insurers

In proposed regulation, the California Department of Insurance (DOI) has recommended several potentially significant changes that could impact how personal and commercial property insurers operate in the state.

The proposals would generally require insurers to account for and reflect wildfire mitigation efforts in their filed rating plans, including4:

  • Community-level mitigation activities, such as the use of firebreaks
  • Property-level mitigation efforts, such as creating defensible space and the use of fire-resistant building materials

Optional factors may also be included in rating plans, including an account of fuel in the vicinity of the property or how easy (or difficult) it is for firefighters to access the property.5

If insurers use a wildfire risk model to inform their rating plan, the proposed regulations would generally require that insurers file the model and make its data publicly available, including but not limited to consumers should they wish to see the underlying data their insurance rates were based on.6 Insurance policyholders or applicants would also be able to make an appeal to an insurance company to have their wildfire risk classification reviewed.7

Ready to respond

At Verisk we're working to closely monitor developments. We've already communicated our feedback on the proposed regulations and we’re prepared to submit our own personal and commercial lines-related information should updates be required. We will communicate any future changes as soon as possible to customers.8

An ecosystem of wildfire risk solutions

Verisk has long recognized the critical importance of wildfire mitigation in property risk management and continues to focus on enhancing our mitigation data.

We’ve been actively delivering California mitigation data to insurers at both the parcel and community levels through FireLine®, Verisk’s wildfire risk management tool. Verisk has partnered with organizations at the forefront of wildfire mitigation, including the International Association of Fire Chiefs and their Ready, Set, Go! (RSG) Program. Through these strategic initiatives, Verisk can provide insurers with data on property-level mitigation efforts related to wildland and wildland-urban interface fire hazards.

In addition, Verisk works with the National Fire Protection Association (NFPA)’s Firewise USA® Program, which educates property owners and communities on how to help reduce wildfire risks. Verisk is now able to deliver robust information on FireWise USA communities through FireLine. These insights include:

  • Granular data on over 500 active communities throughout California
  • In-depth historical data: In California, NFPA has 15 years’ worth of data on hundreds of active communities—and counting

FireLine also features analytics on defensible space and structure hardening based on Verisk’s aerial imagery capabilities, which has nearly 100 percent coverage of the United States using high-resolution aerial imagery.

Collectively, this mitigation data is already being used by some FireLine customers to create rating factors for property risk.

Additionally, insurers can get verified information on construction, hazards, and fire protection through our Commercial Property Surveys for Rating service. The surveys use our Specific Commercial Property Evaluation Schedule (SCOPES) to help support consistent evaluation and analysis of fire hazards for every property surveyed. In states where we provide such surveys, we also file the schedule with state insurance regulators.9 The schedule recognizes national standards—such as those of the National Fire Protection Association—and product listings of recognized testing organizations such as UL.

Wildfire Wheel

Proposed timing

According to the California Department of Insurance, if the proposed regulation is adopted, it’s expected to be effective in July 2022 and gives insurers 180 days to file rate applications that incorporate rating plans responsive to the new regulatory requirements.10

Fuel To The Flame White Paper

Wild Risk Insight

Learn more about the wildfire risk landscape in 2022.

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Dr. Arindam Samanta

Dr. Arindam Samanta is director of product management at Verisk. He can be reached at Arindam.Samanta@verisk.com.

William C. Schlager

William C. Schlager is director of personal property and farm product development, Underwriting Solutions at Verisk. He can be reached at William.Schlager@Verisk.com.

Gregory Palumbo

Gregory Palumbo is senior manager of commercial lines coverage products, Underwriting Solutions at Verisk. He can be reached at Gregory.Palumbo@Verisk.com.

Kara Cross

Kara Cross is regional vice president of government affairs at Verisk. She can be reached at Kara.Cross@Verisk.com


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  1. “Statistics,” National Interagency Fire Center, 2021, < https://www.nifc.gov/fire-information/statistics >, accessed on May 6, 2022.
  2. Mark Puleo, “2021 wildfire season: AccuWeather estimates $70 billion to $90 billion in damages,” AccuWeather, October 1, 2021, <  https://news.yahoo.com/2021-wildfire-season-accuweather-estimates-151247210.html >, accessed on May 6, 2022.
  3. “California,” National Integrated Drought Information System, 2022, < https://www.drought.gov/states/california >, accessed on June 8, 2022.
  4. “Mitigation in Rating Plans and Wildfire Risk Models,” State of California Department of Insurance, February 25, 2022, <  https://uphelp.org/wp-content/uploads/2022/03/Mitigation-in-Rating-Plans-and-Wildfire-Risk-Models-Notice-of-Proposed-Action-and-Notice-of-Public-Hearing-1.pdf >, accessed on June 8, 2022.
  5. Ibid.
  6. Ibid.
  7. Ibid.
  8. Any submissions to insurance regulators with related personal and commercial lines information filed by Insurance Services Office, Inc. a wholly owned subsidiary of Verisk.
  9. Filings with state insurance regulators made by Insurance Services Office, Inc.
  10. “Mitigation in Rating Plans and Wildfire Risk Models”

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