The importance of tracking wildfires in real-time
With the latest technology, insurance providers are monitoring the path of wildfires in real-time to identify future potential risks.
Wildfires tend to start and spread rapidly and typically garner little attention until they become a problem, according to Matt Olsen, vice president of catastrophe modeling at reinsurer Holborn Corp. He notes that during active seasons, smaller fires get even less attention.
“Our clients have been challenged with getting out in front of these events and notifying policyholders ahead of them while mobilizing claims teams,” Olsen says.
As a significant loss driver, with insured losses from wildfires totaling $45 billion from 2010-2019, proactively tracking wildfires is vital for managing risks, according to Insurity LLC.
“Understanding the potential path of a wildfire is crucial, as they can spread incredibly fast. In fact, Northern California wildfires in 2017 advanced at a rate of more than a football field every three seconds,” says Kirstin Marr, head of Insurity Analytics. “While wildfires move fast, perimeter data has historically been generated slowly.”
Understanding the path of a wildfire, particularly during windy seasons in California, is critical to identifying active hotspots and exposure that might eventually be at risk as the fire evolves, Olsen explains, noting active fire perimeters are extremely dynamic.
Aiming to move past a “very manual” process for tracking wildfires, which required the devotion of resources simply to determine if a client would be impacted. The manual process included retrieving event perimeter data and assessing the potential effect against internal mapping software.
While these manual processes would receive perimeter measurement updates every 12 to 72 hours, the newest technology can monitor fires in near real-time with updates every 15 to 30 minutes, Insurity reports. The InsurTech’s wildfire threat analysis tool leverage several data streams, including from the National Interagency Fire Center and NASA, to develop approximate perimeters as soon as a wildfire is named.
“Our resources are now spent quantifying the potential impact. Even smaller fires can have significant impacts for clients if large TIV risks are exposed, potentially impacting per-risk treaties for reinsurers,” Olsen says. “Honestly, the most surprising thing was just how many fires occur and are active at the same time during the course of a season.”
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