Mitigating wildfire risks

There has been no shortage of disasters over the last year affecting insurers. Between wildfires on the West Coast and hurricanes on the East Coast, carriers and their adjusting staffs have faced an abundance of claims.

In California, some mistakenly believe that the increase in wildfires was due to drought conditions, but this isn’t really the case, explained Stu Ryland, senior vice president of the Pacific Region for Sedgwick in an interview with PropertyCasualty360.com. “Rainfall has been good. It’s a dry climate here since we don’t get rain in the summertime – usually from May to November.”

The danger for wildfires arises from a number of factors. “There are more people in suburban areas and they interact with areas that were previously wildland,” shared Ryland. “The more human interaction, the more likely you are to have sources of ignition.”

When drought conditions are followed by significant rainfall, the underbrush grows, creating the fuel load for wildfires. “It can be quite hazardous,” added Ryland.

At the Atlantic Claims Executives Association conference in Baltimore, Matthew English, a property claims executive with GenRe, said that the 2017 wildfire season was the most destructive one on record with 9,133 fires and more than 1.3 million acres burned. He said the Tubbs Fire, which decimated parts of Sonoma, Napa and Lake Counties, burned so hot that it literally melted the engines out of vehicles.

The Thomas Fire around Santa Barbara burned 281,893 acres and caused $2.2 billion in damage. English indicated that some of the additional costs insurers encountered included building to new construction regulations and digging out existing structure foundations in order to pour new ones.

Related: Another historic wildfire season leads insurers, lawmakers to make changes

Reducing the risk

Ryland maintained that creating defensible space makes a huge difference in terms of what burns from a wildfire. This includes clearing out underbrush, leaving open space around structures and using fire-resistant greenery. “Homes with defensible space are less likely to burn unless there is a massive fire, and then everything will be burned,” he observed.

The types of construction materials used also matter when it comes to reducing wildfire risks. Tile, stucco and composition roofing materials are more fire resistant than wood siding said Ryland.

He also indicated that insurers are seeing a number of secondary claims from smoke damage caused by the wildfires. “Smoke travels a long way, and if the temperature stays warm, the smoke doesn’t dissipate,” acknowledged Ryland. Structures and contents covered in ash from the fires can affect an entire community and will also need to be cleaned.

The most frequent claims arising from the wildfires include smoke damage, actual fire damage, evacuation costs, additional living expense and business interruption claims.

Ryland believes that building codes play an important role in reducing claims. “If we want to continue to have the wildland-urban interface that people want, you have to do it wisely,” he asserted. “Building codes and fire codes need to be followed. We have a pretty safe society because these codes protect us and they are designed to do just that.”

Insurers play a key role in helping communities deal with and recover from these types of incidents, and Ryland encouraged them to remember the importance of the work they do. “The insurance industry does a lot to help society cope with these events, and insurers are an integral part of making developing nations safe and healthy places to live.”