California Insurance commissioner Ricardo Lara has proposed a plan to allow insurance companies to utilize catastrophe modeling when setting premiums for homeowners.

The use of catastrophe modeling was a focus of a public hearing held by the Insurance Commission, where consumer advocates are wary of how the models could impact homeowners across the state.

Insurance expert Karl Susman joined “Inside the Issues” host Amrit Singh to provide a breakdown of catastrophe modeling.

Catastrophe modeling allows insurance companies to calculate potential risks in areas using algorithms to predict the future. They are already used in other states, but in California it could affect areas that are prone to wildfires.

“What this modeling is going to do is it is going to make things a little less homogeneous,” Susman said. “We’re not going to have the same price for people that are living in the hills or the canyons compared to people living in the city.”