On the regulatory front, CDI endeavors to execute the various regulations necessary to implement the Commissioner’s Sustainable Insurance Strategy. Following the disappointing announcement of the Complete Rate Application, which PIFC strongly opposes, CDI has announced draft regulations that would allow insurers to use forward-looking Catastrophe (CAT) modeling in their ratemaking. Since Commissioner Lara announced the Sustainable Insurance Strategy in September of last year, PIFC staff has been focused on making sure it is implemented in a timely manner. PIFC Legislative Advocate, Allison Adey, recently provided comments in support of this necessary first step at CDI’s Workshop on Catastrophe Modeling.
We believe that allowing the use of catastrophe modeling in the rate approval process is a critical component of the Commissioner’s Sustainable Insurance Strategy and will promote availability of insurance by improving pricing accuracy and encouraging a more competitive market.
We support the goals of these draft regulations, which include improving rate stability by allowing insurers to assess prospective exposure to catastrophe losses in their rate calculations; and promoting fairness as models account for risk mitigation trends and actions taken at the parcel and community levels.
These proposed regulations represent an important step forward, but we are concerned the Pre-Application Required Information Determination (PRID) procedure is completely open-ended with no specified timeframe for completion of a model review. It appears the PRID process could drag on for years, much like the current rate application approval process.
