California regulators forced insurers to price wildfire risk using 20-year historical average losses rather than forward-looking catastrophe models, and prevented them from passing through higher reinsurance costs; as wildfires grew more frequent and severe, historical data became a poor predictor and insurers could not price to actual risk, leading major insurers to withdraw.
causalpending
Speaker
Howard MarksEvidence Quote
“Insurers were prohibited from using forward-looking catastrophe models to set rates for wildfire risk. Instead, they were required by law to base their rates on historical average losses over the previous 20 years.”
Created: 6/18/2026, 2:18:14 PM
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