Garret Gray is the president of Global Insurance Solutions at Cotality.
It was an ordinary Tuesday in California until a phone call changed everything: “The hill behind your house is on fire.”
My stomach dropped.
I then saw text messages from my kids’ school informing parents they needed to pick up their children immediately. I rerouted my car, headed toward the school and made some frantic phone calls.
Though I learned my kids were safe, I could hardly breathe until I saw them with my own eyes. When I found myself in gridlocked traffic close to our designated meeting place, smoke billowing everywhere, I pulled over and ran to reach them.
After my family was safely relocated, the large-scale devastation started to sink in. I began to wonder: What will rebuilding Los Angeles look like? Is the future insurable?
Sustainable Insurance Through Collaboration And Regulation
Having built my career in property insurance, I recognize these are complex questions with no simple answers.
Since the outbreak of the fires, the LA community has come together to support one another, and I believe the insurance community will benefit from following suit. By uniting and aligning all stakeholders, we can build an insurance system that thrives systematically in the long term.
This starts with regulation. Fostering a shared understanding that a well-structured regulatory environment benefits insurers and consumers is a key step in creating a sustainable system.
Insurer And Consumer Needs
Miraculously, my house is still upright but will require remediation that could take months or years for my insurance company to facilitate. The cost of my insurance will also increase—something many will experience.
My experience highlights the need for a competitive insurance environment, which helps make coverage more affordable. When more insurers share risk, the insurance market becomes more financially stable. While many factors contribute to creating a viable and attractive landscape for insurers, state regulation is often a key determinant in whether an insurer chooses to operate there.
State insurance regulators serve as consumer protection agents, but a competitive insurance market also serves as consumer protection.
The entire property insurance ecosystem can work in tandem, creating partnerships between private and public entities to help regulatory bodies establish more effective guardrails for insurance operations.
Three Principles Of Successful Regulation
State regulatory bodies widely recognize three principles to guide the interpretation and enforcement of insurance laws:
1. Insurance rates should not be excessive.
2. Insurance rates should support the solvency of insurance businesses.
3. Insurance rates should not be unfairly discriminatory.
I find that many regulators prioritize securing the lowest possible rates for policyholders across their state, often placing less emphasis on the other two guidelines, which indirectly help control rates. I think it is critical to embrace these three principles equally, as they are symbiotic.
Using Technology
One way for insurance regulators to effectively address an affordable insurance environment while ensuring profitability is to break down barriers that prevent insurers from using sophisticated technology in risk assessments.
Predictive analytics technology can transform insurers’ underwriting and claims processes by optimizing human resources and enabling highly accurate, data-driven risk decisions. These technologies analyze vast amounts of data, detect patterns and forecast risk. One form of predictive analytics is probabilistic modeling, which quantifies risk for straightforward processing and provides multiple scenarios surrounding potential perils.
Catastrophe models are commonly used probabilistic solutions among insurers. These peril-specific models simulate the financial impact of natural disasters such as hurricanes, earthquakes, floods and wildfires, allowing insurers to assess potential losses and better prepare for high-risk events.
Advanced predictive analytics technologies increasingly leverage artificial intelligence (AI), which learns from data over time. This enables insurers to leverage all the data they have to properly assess risk and avoid risk concentrations—increasing their capacity to operate in hazard-prone states.
Overcoming Barriers Through Transparency
Uncertainty is a massive barrier to the widespread adoption of advanced predictive analytics. This presents an opportunity for insurance companies to enhance transparency in areas where legislators may feel it’s lacking.
Private insurers can start by showing consumers how predictive analytics and probabilistic modeling technologies could be used in underwriting and risk assessment. As property owners become more comfortable with the role of predictive technology in assessing policy risk, regulators may also become more receptive to its use.
Insurers can also help refine state restrictions by engaging with regulators directly. An example of this is the Innovation, Cybersecurity and Technology Committee within the National Association of Insurance Commissioners, which focuses on emerging technologies and their impacts on insurance workflows. The group holds events throughout the year to collaborate with insurance carriers, experts and others.
I think the communication fueled by this committee could move the industry toward a sustainable future.
Solutions For Insurers Are Solutions For Consumers
The California Department of Insurance (CDI) is actively implementing its Sustainable Insurance Strategy to build a more resilient and sustainable insurance market in the natural-disaster-prone state. As part of these reforms, introduced in 2023, private insurers now have greater flexibility to use predictive analytics to assess property hazard risks, allowing them to make more effective underwriting and risk decisions.
At the beginning of 2025, the CDI also began allowing the use of catastrophe models for rate applications, which supports the goal of furthering availability and affordability for state consumers.
This encouraging reform enables insurers to leverage technology that effectively represents the current environment rather than relying on only historical models.
The Complex Web Of Responsibility
I find that regulators and private insurers often unfairly bear the brunt of the blame for the fallout of natural disasters like the Los Angeles wildfires. The reality is that there is no single entity at fault for the insurability challenges currently facing the country.
Every player in this industry—insurtech providers, catastrophe modelers, regulators and even consumers—plays a role in the building of an infrastructure that ensures insurers remain solvent while adhering to regulations and being transparent with consumers.
As stakeholders in the property insurance industry consider the future of insurance, we must operate with the shared understanding: What benefits one, benefits all.
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