To use forward-looking risk models in California, insurers have to offer coverage in under-served areas. (Credit: Mario Cobian/Adobe Stock)
Detailed, property-level data could help insurers cover more homes in high-risk areas in California, according to a new study from Triple-I.
Using predictive wildfire scores from Guidewire HazardHub, the study found that many of the properties in areas previously deemed too risky for traditional insurers have lower risk profiles than expected.
The study examined three zip codes that the California Department of Insurance has deemed “undermarketed” by insurers: Los Angeles (90210), Mendocino (95490) and El Dorado (95667). HazardHub used granular geographical data, updated vegetation data, proximity to fire hydrants and fire stations, historical wildfire data and environmental factors to create a detailed wildfire score for each area.
The analysis found that many of the properties in these areas have strong scores. Overall fire-suppression success rates were 90% for Los Angeles, 95% for Mendocino and 97% for El Dorado.
“The traditional approach to wildfire risk assessment has left many Californians without access to affordable property insurance coverage,” said Dale Porfilio, chief insurance officer with Triple-I, in a statement. "Our research shows that with more detailed, property-level analysis, insurers can confidently offer coverage in areas previously deemed too risky."
California’s Sustainable Insurance Strategy, rolled out by the state’s Department of Insurance this year, requires insurance companies to offer home insurance in under-served areas in order to use forward-looking models when setting their rates. Policies in under-served areas must equal at least 85% of their total market share in the state.
“To sustainably write insurance in California and other wildfire-prone states, insurers need access to granular property-level data, modern wildfire risk models and a regulatory environment that embraces innovation,” said Leo Tenenblat, senior vice president and general manager, data and analytics, at Guidewire. “The Triple-I analysis highlights how next-generation tools and data can uncover lower-risk properties – even in high-risk areas – empowering insurers to expand coverage confidently and responsibly.”
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