The California Department of Insurance (CDI) has made some serious moves to tackle the state’s insurance crisis head on, last year launching its Sustainable Insurance Strategy (SIS). With the SIS came a set of initiatives to help insurers offer affordable, long-term property insurance across California, where coverage has become concerningly scarce over the last decade. This shortage has been largely due to overwhelmingly destructive wildfires occurring on average every other year.
As part of this strategy, the CDI opened the doors for insurers to use certain probabilistic models to support their insurance rate filings. It started by establishing the Pre-Application Required Information Determination (PRID), a regulatory process for approving these probabilistic solutions. Before this was in place, property insurers could only establish wildfire insurance pricing based on historical losses.
This was a significant move for the CDI, which overcame legislative hurdles established by the decades old Proposition 103, legislation that placed controls on insurer insurance rate setting. Now, it is possible for insurers to get critical probabilistic support in pricing processes.
The PRID process has introduced the potential for bringing relief to the many insurers who have struggled to provide coverage across California. With the ability to use more innovative risk forecasting model technologies, many carriers may return to provide coverage in the wildfire prone regions of California.
This is crucial for making California more resilient and insurable as wildfires increase in frequency and intensity.
Considerations in evaluating probabilistic wildfire loss models
As insurers become more familiar with PRID-approved probabilistic wildfire hazard risk models, it’s important to remember that they don’t need to discard the models they have been using confidently for other purposes unrelated to pricing. For instance, insurers can continue using their time-tested models for risk exposure management, loss reserving, and reinsurance purchasing — all without PRID approval.
Carriers can also anticipate CDI approval of more models via PRID to support rate filings in the near future. Some of the most commonly used models across the industry will soon be submitted for approval — including the Cotality™ Wildfire Risk Model.
PRID acceptance criteria and other key requirements for a comprehensive wildfire risk model
A model approved by the CDI through the PRID review process is likely to meet the following criteria:
Foundation in well-established science and accurate data
Outputs that reflect historical wildfire behavior
Consistent and repeatable results
Bias free
A transparent framework for explaining rate determinations
These features are important for an effective model, but insurers must also consider other functionalities to support primary use cases. It is also prudent to bear in mind that many models will undergo the PRID review in the near future. In other words, just because a robust, reliable, and innovative model hasn’t yet received PRID approval does not mean it won’t — possibly soon.
The Cotality Wildfire Risk Model is one of these solutions to pursue confidently. Trusted by insurers, reinsurers, and utilities, this model assesses concentration risk and the severity–frequency distribution of losses across California. Its next iteration, coming to market this year, is designed to meet PRID requirements and is scheduled for official review in late 2025.
To support the most comprehensive, effective, long-term wildfire risk management strategy in California, the updated 2025 version of Cotality’s U.S. Wildfire Model will deliver:
All angles of risk insights at the steepest risk gradient (not averages)
To more accurately support the precise risk differentiation needed for today’s wildfires — arguably the most variable peril — Cotality’s model reflects improved geospatial and meteorological output granularity. This model also takes into account all the potential agents of damage, including conflagration, an increasingly relevant and overlooked factors of modern wildfires. While most models produce results based on averages, Cotality’s model produces risk values and data that deliver location-specific insights that reveal the true risk profile of any individual property.
The most current, relevant historical insights, including from 2025 fires
Cotality is continuously innovating its forward-looking model, which also provides a robust, up-to-date archive of historical fire intelligence dating back to the 1900s. The model already includes the footprints of the Palisades and Eaton Fires. Cotality is also committed to providing a model that calibrates and validates losses for future fires.
Ongoing innovation to support long-term resilience
In all its technologies, Cotality focuses on incremental innovation that makes the most sense for the industry. As wildfire realities change, so will Cotality’s wildfire loss model to properly reflect risk. The next version of the Cotality U.S. Wildfire Model will feature:
Pinpoint, individual property-level analysis for improved risk evaluation.
Hazard, vulnerability, and data updates.
Deep dives into extreme windspeed and direction, humidity, and other critical atmosphere factors that directly influence wildfire behavior.
A multitude of property-specific characteristics allowing risk assessment at the most granular level.
Cotality innovation won’t stop with PRID, either. Through ongoing developments to this model, the team will continue to strategically support a resilient California.
To learn more about this model, contact Cotality today.
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Topics
Catastrophe
Natural Disasters
California
Carriers
Profit Loss
Wildfire
Property
