California Department of Insurance to Host Workshop on Contemplated Regulation to Standardize the Net Cost of Reinsurance and Increase Reinsurance Coverage in High Wildfire Risk Areas

The California Department of Insurance (“CDI”) has issued a public notice inviting interested parties to a workshop titled “Net Cost of Reinsurance and Ratemaking,” which will occur on December 5, 2024 at 10:00 a.m. PST. The public notice is linked in the CDI’s press release. The CDI has scheduled the workshop to seek input on its contemplated proposal to standardize treatment of reinsurance costs in property insurance ratemaking, and will receive both written comments prior to the workshop and oral comments during the session. The workshop is part of Commissioner Ricardo Lara’s Sustainable Insurance Strategy, which is aimed at stabilizing California’s property insurance market and expanding coverage options for homeowners, businesses and other consumers.

Increased wildfire risk has depressed the affordability and availability of homeowners and commercial property insurance across California. The CDI has introduced several measures targeting this issue, including its proposed regulation to enable insurers who write increased amounts of homeowners policies in high-risk areas to use catastrophe modeling in calculating their property and casualty insurance rates, which we have previously reported on here.This workshop will focus on providing a standardized method for addressing the costs of reinsurance in ratemaking.

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