No One Can Agree on How to Price California Home Insurance for Wildfires

 

 

The state, through restrictive insurance regulations, has encouraged development in places that are beautiful but are also highly prone to seasonal fires. Over the years more and more houses have been built in the California hills despite the risk. Insurance companies want to use algorithms to more accurately assess risk and to more accurately charge customers for that risk. Some homeowners (and other interests like realtors) have a problem with that.

(From The Wall Street Journal)

“We’re told there’s a new normal” due to climate change, which regulators and scientists have said increases wildfire risk, said Rex Frazier, president of the Personal Insurance Federation of California. But under current regulations, “we cannot use probabilistic modeling that attempts to build a rate based upon where models suggest losses will go.”


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Author: Nick Sorrentino


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