Moody’s latest wildfire model completes California Department of Insurance review

Moody’s Corporation has disclosed that Moody’s RMS US Wildfire Model v2.0 has completed the review process established by the California Department of Insurance (CDI), enabling insurers to use the catastrophe model in their residential rate filings.

The model was reviewed under the CDI’s rigorous Pre-Application Required Information Determination procedure, which includes an extensive examination of its hazard, vulnerability, and actuarial components.

The critical milestone aims to support California’s Sustainable Insurance Strategy, aimed at stabilising the state’s property insurance market.

The Moody’s wildfire risk model will allow insurers to leverage the model’s advanced, science-driven analytics to assess and price wildfire risk.

This enhanced risk assessment is designed to support a more resilient and accessible insurance market, particularly in wildfire-prone areas, according to Moody’s.

The latest model represents a major advances in capturing the complexities of wildfire behaviour, including extreme urban conflagration events. A key feature of the model is its ability to directly account for property-level and community-wide mitigation efforts.

By incorporating property-specific data aligned with California regulations, the model will allow insurers to recognise and reward homeowners for risk-reduction efforts, creating tangible incentives that strengthen resilience.

Michael Steel, Head of Insurance Solutions at Moody’s, commented, “At Moody’s, we are committed to providing markets with transparent, scientifically rigorous tools to decode today’s interconnected risks. Today’s milestone marks a significant step forward in addressing the complexities of wildfire risk and promoting greater resilience for insurers, regulators, and homeowners alike.”