California Insurance Reform Creates Opportunity

1. Catastrophe models allow insurers to account for the effects of climate change.
Unlike other states, California requires insurers to price homeowners insurance based on historical experience, rather than authorizing the use of forward-looking catastrophe models that use algorithms to quantify the risk of future natural disasters. Wildfires and other natural catastrophes have therefore presented a significant challenge to insurers operating in California, which are stuck using artificially low rates as natural disasters increase. As a result, some insurers have