California Commissioner Ricardo Lara is launching his Sustainable Insurance Strategy. You can read many of the details here.
As I understand it, part of this strategy is to rely on a private sector firm’s wildfire risk model. This firm is called Verisk.
I searched Google and could not find the technical documents explaining how this firm creates its model. This model generates predictions about the absolute and relative risk that each property in the American West faces from wildfires. Insurers would find an accurate model to be quite useful in pricing products! Is the Verisk model accurate? What criteria should be used?
In this brief podcast, I discuss the economics of model competition. Economists will see how this recent NBER paper has influenced my thinking.
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