In the Face of a Severe California Wildfire Season, is The Oft-Used ‘Mitigation’ Word Too Little Too Late?

July 20, 2021 by

It may have been around 2017 when a true sense of urgency donned on insurers, public officials, residents and regulators in wildfire-prone California, as fires destroyed or damaged more than 10,000 structures in the state, a higher tally than the previous nine years combined.

In terms of property damage, 2017 was the most destructive wildfire season on record in California at the time, with 9,133 fires burning more than 1.2 million acres, and it was after 2017 that the word “mitigation” seemed to appear more prominently and more often in public messaging about wildfires – along with news of warnings about rising homeowners insurance rates, increasing non-renewals, and of course climate change.

With California and the drought-plagued U.S. West staring down the barrel of what could be another historically bad wildfire season, Roy Wright continues to preach the mitigation message – an idea that he believes is neither too late, nor one that the insurance industry has only recently begun to embrace.

Wright, president and CEO of the Insurance Institute for Business and Home Safety, who came the group a few years ago from the Federal Emergency Management Agency, has been talking about mitigation for years.

And he’s hopeful that 2017 and the ensuing years of massive California wildfires have hammered home that message enough for it to make a difference this year.

“You have the climate change narrative, you’ve got a drought reality, you’ve got increased temperatures, and you have a recency bias in the best sense of the term, saying ‘We’ve seen the devastation,'” Wright said.

These realities have driven conversations over the past few years about being prepared, and taking steps to mitigate fire hazards, such as creating defensible spaces around homes in the wildland-urban interface.

Wright and the IBHS, an industry-backed nonprofit, scientific research and communications organization, have been increasingly fielding queries from citizens and public officials about getting ahead of the brewing wildfire season.

“People want to know specifically ‘What can I do about it?” Wright said. “What they can do at the community level, what they can do on individual parcels or a structural level. I’m hearing from consumers, I’m hearing from insurance companies, I’m hearing from public policy leaders in California. I’m hearing from all of them.”

The queries and go beyond questions of how to best beef up fire codes, fortify buildings and homes, trimming bushes and some light retrofitting.

“I think what I’m seeing form the insurance industry, it’s really a demand signal that says, ‘We need community-scale answers to this,'” Wright said.

California Insurance Commissioner Ricardo Lara began calling for incentives to mitigate. In May, he asked property insurers in the state to step up and do more to help residents and businesses deal with wildfires. He said eight insurers and the California FAIR Plan offer discounts to harden homes and take mitigation steps to reduce wildfire risks, which only represents 13% of the overall state market.

“So, there’s a lot more room to grow,” Lara said at the time.

The American Property Casualty Insurers Association, the largest trade group representing property/casualty insurers, says the industry has long worked to encourage homeowners and businesses to take mitigation more seriously, and that it only makes sense for the industry to do all it can to counter the massive insured losses it’s been seeing.

“Mitigation is a huge priority,” said Karen Collins, an assistant vice president at APCIA.

Collins said record-breaking wildfire losses have had the industry’s attention for some time, and aside from calling attention to the dangers, and stricter underwriting, insurers have also begun to pull back from the riskier areas.

“The impact in California and other states has given insurers pause,” Collins said. “We’ve seen substantial losses that have undermined a number of years of profit.”

Wright was asked what he thinks about Lara’s call for insurers to offer discounts for mitigation steps. He believes a broader solution is required, one that may include government grants, in other words, “a collection of market forces.”

The Nature Conservancy in a recent report calling for a “paradigm shift” to create greater wildfire resilience, outlined policy actions to reduce the risks of catastrophic wildfires, including an investment surge of $5 billion to $6 billion per year over the next 10 years for the highest priority work of reducing wildfire risks and providing communities with resources for infrastructure and adaptation.

John Putnam is veteran of the insurance brokerage business who now owns a consultancy service, Putnam Assurance & Risk Services LLC.

He believes the mitigation message is getting out to homeowners, but along with that messaging, insurance agents in places like California are also having to give some bad news to their clients.

He was on the recovery team after the 2012 Waldo Canyon Fire in Colorado, which destroyed nearly 350 houses and caused $493 million in damage in 2018 dollars, so he’s familiar with the massive devastation and heartache large wildfires can cause.

As someone who has been on both the side of selling policies and wildfire recovery, he has been apprehensively watching the unfolding drought and wildfire season in California and the West.

“I’m very concerned about it,” Putnam said.

Mitigation is important tool that carriers and insurance agents emphasize the importance of for homeowners in risky areas, but agents must also explain to their clients why their rates are so high, or why insurance in the regular market may no longer be available.

“They’re the bearers of the bad news,” Putnam said. “If they go back with a price, that’s one conversation. If they go back with a cancellation that’s another conversation. This is kind of new territory for insurance agents.”

The U.S. West continues to be in a major drought. The latest U.S. Drought Monitor Map shows the majority of California in “extreme” or “exceptional” drought conditions, while the outlook for the large region is dire.

Large wildfires are burning in several states. In Oregon, the Bootleg Fire, one of the largest in the state’s history, has already burned more than 476 square miles and was 25% contained.

California’s biggest fire of current concern is the Dixie Fire in the northern portion of the state in Butte County. The blaze, which has been active for less than a week, has grown to 60,000 acres and is only 15% contained.

The National Interagency Fire Center reports nearly 1.3 million acres burned this year, with ongoing wildfire activity in 13 states.

“Seven fuels and fire behavior advisories have been issued for south/central Idaho, Northern California, Northern Rockies, and south/central Oregon,” states the latest NIFC fire report, which categorizes the latest wildfire preparedness level at a 5, the highest level calling for the greatest commitment of firefighting resources. “Many of these advisories describe extraordinarily dry fuels, resulting in elevated fire potential and fire activity.”

Wright said the industry is watching all of this, but it’s not as if insurers are just now starting to take all of this serious.

“Going back more than a decade the industry has been investing in wildfire research through IBHS,” Wright said, noting the group’s members – comprising 76% of the nation’s residential property insurers – each have a risk portfolio they’re concerned about. “Company after company, without exception, has leaned on us and said, ”Help us point the way with scientifically backed retrofit actions that we can have confidence in.'”

IBHS last year published its Suburban Wildfire Adaptation Roadmaps, a report that identified “critical lanes” that can increase or decrease a chance that a home survives a wildfire:

  • Fuel management
  • Fences
  • Decks
  • Building shape
  • Walls
  • Roofs
  • Roof vents
  • Eave overhangs

Beside encouraging mitigation, the grim California wildfire outlook has insurers forking over big bucks for modeling.

“There’s a clarion call to bring pragmatic scientific-based solutions that will allow us to retrofit homes that are in harm’s way,” Wright said.

But, he wants people realize that’s not something they just started on.

“We’ve been doing this wildfire work for more than a decade,” he said.

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