California home insurers are required to predict future losses based on losses that happened in the past, usually over the past 20 years.
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Since 10 of California’s 20 biggest fires have happened in the past five years, rates are already rising quickly.
Using the last 20 years as a baseline is not going to work.
Allison Castro, a spokeswoman for the state’s Department of Insurance, said there hasn’t been an instance yet where an insurer tried to use a model and was denied, but the department has a litany of concerns. Regulators worry the models aren’t credible, and that they’re a “black box” and could be used to overcharge consumers.
Of course the government could create an organisation running such models to set bounds if they actually cared.