Wildfire is common in rural California. But after devastating losses to wildfires, insurance companies put on the pressure to bypass voter-induced controls on insurance rates. Actually this is a red herring since the rates can already change under the current rules by showing rolling loss averages over several years and California companies have made a profit under those rules until recently.
Instead, companies want to operate on a profit basis that anticipate future losses. They are paying claims in a high cost rebuilding environment hit by low worker and materials availability and increased rates applied by umbrella reinsurance companies outside California. Because risk costs are established by independent firms developing actuarial tables from proprietary cost data sets, much of the actual costs are hidden from the public affected. Most information is provided by news media reporting devastating fire storms in the Wildland Urban Interface [WUI] where approximately 10 million people are at risk with no mention of the other 30 million left to produce profits.
Maybe we can cut through the smoke to see what might be different with insurance protection so the loan industry remains confident in funding a business or home located where the losses occur. A little history review is helpful. Fire risk to a large population goes back to days when people began living close together to improve trade and protection. Fire prone building methods brought big fires such as the London fire of 1667 which spawned strict new fire risk reducing regulations, firefighting brigades and insurance underwriters to reassure investors and owners.
California has the world’s biggest firefighting organizations that can speed specialized airplanes and trucks to fight fires in rural areas. These assets should bring some of the assurance needed by insurances companies; but maybe they also brought about larger fires. Aboriginal tribes around the world located in dry climates were aware of the downside of large hot fires and often set fires to lower fuel buildup and improve game habitat and travel corridors. But early 20th century western forestry attempted to protect market trees and profits by extinguishing fires. The public came to support wildfire repression through smoky the bear advertisements. Along came large planting blocks with little tree spacing and fewer fires. The result is California fires today are significantly larger and connected by introduced grasses. So basically, reducing wildland fires just saves fuel for the next drought. This duplicates existing conditions during the 1871 high-wind, drought-driven 1.2 million acre Wisconsin Peshtigo Fire that burned away all vestige of human habitation. We haven’t come very far.
People increasingly want to move to peaceful country WUI surroundings. Many are risky areas similar to situations the insurance companies already abandoned; flood prone areas and known earthquake fault zones. Insurance for these risks are not available in a regular policy but in a risk-collective specific to the insurance loss type. For flood areas, risk assessments are driven by flood plain maps, but earthquakes rates can be reduced by special construction techniques. A combined approach might work for WUI fire insurance.
The Ventura County Fire Agency brought together fire risk reducing hardening techniques developed through science funded by the insurance industry and practical protection methods from Australian’ fire danger areas. These tips are published State-wide by CalFire, as are vegetation fire risk maps.
It would be difficult to slow the present approach of zip-code-lumping insurance rates to fit an outdated concept designed for cities. But maybe a competing, optional, reduced risk model for rural areas that scores each house for its risk factors could work. The three areas for a merit-based score are clearing the flammable material next to the house, setbacks or firewalls to reduce radiant heat affects and special guards to block embers cast by the fire. Already considered are low flammability construction material and fire sprinklers. Merit scoring would put the incentive into the homeowner and builders hands to gain a better rate. A further sophistication is reintroducing regular fire back into the forests. A California sponsored, optional, separate approach based on merit incentives is an idea ready to be kindled.
Jim Steele is a former rural county supervisor, retired State ecologist and Registered Professional Forester.
