Wildfire damage in the US State of California is up sharply compared to last year, creating a major problem for insurers, says Risk Management Solutions.
In news reports, CNN has called the Carr Fire the sixth most destructive in California history, scorching an area larger than the entire city of Los Angeles, as 4,200 firefighters tackle the blaze. Containment, according to CAL FIRE, at the time of writing stood at 35 percent. The Carr Fire is currently one of sixteen wildfires that firefighters are attempting to contain across the state.
Although there is not an “official” start date to the California wildfire season, late-August and September — the approach to early fall, is usually the period when activity builds up, making this an intense pre-season. From January 1 to July 29, 2018, CAL FIRE reported that 292,455 acres have burnt, a figure that is still climbing rapidly with current events. This is up a third on the same period last year and nearly 150 percent higher than the five-year average.
If 2018 is already a third ahead in terms of acres burned compared to last year, this could be another record year, stealing the crown from the 2017 California wildfire season which was already a record-breaking on virtually every front. Some 1.25 million acres were torched by over 9,000 wildfire events during the period, with October to December seeing some of the most devastating fires ever recorded in the region.
For 2017, from an insurance perspective, according to the California Department of Insurance, as of January 31, 2018, insurers had received almost 45,000 claims relating to losses in the region of US$11.8 billion. These losses included damage or total loss to over 30,000 homes and 4,300 businesses.
As one of the richest areas within the USA, California fires cost insurers much more per household – people there own a great deal more than in States like Utah or Arkansas, and things like cars, electronic devices etc tend to be newer and more valuable. Wealthier people are more likely to have comprehensive insurance too. All these factors play a part in the final claims settlement process.
What drove events last year? In a recent article in EXPOSURE magazine, Tania Schoennagel, research scientist at the University of Colorado, Boulder, stated that the start of the 2017 season presented seemingly benign conditions, but it rapidly became the third-largest wildfire year since 1960. “This was primarily due to rapid warming and drying in the late spring and summer of 2017, with parts of the West witnessing some of the driest and warmest periods on record during the summer and remarkably into the late fall.
“Additionally, moist conditions in early spring promoted build-up of fine fuels which burn more easily when hot and dry,” she added. “This combination rapidly set up conditions conducive to burning that continued longer than usual, making for a big fire year.”
Mark Bove, research meteorologist, risk accumulation, Munich Reinsurance America, Inc noted the affect climate change could have on wildfires.
“Climate change is causing California and the American Southwest to be warmer and drier, leading to an expansion of the fire season in the region,” says Bove. “In addition, warmer temperatures increase the rate of evapotranspiration in plants and evaporation of soil moisture. This means that drought conditions return to California faster today than in the past, increasing the fire risk.”
Wildfire risk modeling needs to advance; the range of factors such as the encroaching development of the Wildlife Urban Interface (WUI), the increasing value and quantity of both real estate and personal property, the presence of fire mitigation measures, and variables such as vegetation levels and building density, all need to be considered.
Granular modeling and analysis really is now required, to simulate stochastic or scenario events all the way from ignition through to spread, creating realistic footprints that can capture what the risk is and the physical mechanisms that contribute to its spread into populated environments, to enable insurers to make sense of a rapidly evolving problem.