In this report, Milliman was asked to study how enabling California insurers to use wildfire catastrophe models for ratemaking might affect homeowners premiums and market conditions. The report includes seven key findings. Milliman notes how the experience method currently required under the rate template that uses the category development index (CDI) exposes both insurers and consumers to rate shock. While the historical method relies solely on an insurer’s past experience, catastrophe models can recognize changes in exposure, the environment and mitigation.