Is $11 million too much to pay for a public catastrophe model?
Executive Summary
Getting it done. Now that the California Department of Insurance has announced a Sustainable Insurance Strategy to repair an ailing insurance market, exactly how CDI will undertake the task of reviewing forward-looking catastrophe models, from which outputs will be allowed to be consider in ratemaking, and deciding which models are appropriate, are among the formidable tasks to be tackled before the end of next year.Does the California Department of Insurance have to hire a new contingent of specialists to understand private models, if those are allowed in the rate filing process? Or a boatload of actuaries?
While consumer advocates were still vocal in alleging closed door deals between regulators and insurers during the second Catastrophe Modeling and Insurance Workshop hosted by CDI last week, practical questions about how to move forward with the Sustainable Insurance Strategy began to emerge as well—among them, what types of specialists will be needed to assist CDI in reviewing catastrophe models during the rate approval process and whether a public model is the right solution for California.
