Burning issue: Fighting fire with foam

• Although wildfire numbers have remained relatively constant, season-on-season, their size, volatility and impacts have dramatically increased
• Risk modeling experts attribute “mega-fire” events to increased human activities in fire-prone areas, more dry/dead vegetation due to drought and worsening weather volatility
• Innovative fire-fighting methods, such as spraying biodegradable insulated foam onto structures and vegetation, have been successfully used to suppress fires and save property
• A variety of insurance covers are available to mitigate against fires and, during the wet season that follows, mudslides in previously burned areas

Each year, California burns. But some seasons are worse than others.

In 2018, major fires stretched from the Oregon border in northern California south to the Los Angeles suburbs – a distance of over 685 miles (1,100 km). The worst was the Camp Fire (so called because of its outbreak on Camp Creek Road in Butte County), which broke a 2017 record for the number of structures destroyed (15,573 – 472 of which were commercial) and killed over 80 people¹. It became the deadliest wildfire in California’s history and the worst in a century in the US².

Just three fires, alone – the Camp, Woolsey and Hill fires – caused total insured losses of $9.05bn³, which could balloon to over $13bn when final tallies are in. CoreLogic, a third-party loss estimator, places total California wildfire losses for 2018 at between $15bn and $19bn⁴.

Of the 20 largest wildfires in California history, 15 have occurred since 2000⁵. And while data show the overall frequency of wildfires has remained relatively constant season-on-season, the size, volatility and impact of wildfire events has dramatically increased.

Reinsurance and risk modeling experts have begun using terms such as “mega-fires” and “the new abnormal” when mentioning recent wildfire trends and have identified some contributing trends to worsening conflagrations.

So, is this a new normal? And how can improved risk mitigation techniques help extinguish wildfires.

.

Among fire mitigation solutions, one of the more novel has been the application of environmentally-safe, biodegradable fire-fighting foam used for pretreatment and suppression around a property’s perimeter and buildings when fire threat is imminent. One such solution, marketed by Consumer Fire Products, Inc. (CFPI), a professionally trained brigade of fire professionals dedicated to wildfire property protection, is applied manually from private fire trucks fashioned with state-of-the-art equipment. The brigades coordinate closely with local incident command centers and operate within active fire zones, at the behest of insurers and other interested parties.

In 2018, Allianz Global Corporate & Speciality (AGCS) had significant accumulations of customers concentrated in the areas of the Mendocino Complex and Woolsey Fires, with variations in topography, density of vegetation and exposed construction. The Allianz Risk Consulting (ARC) and MidCorp Underwriting teams conferred and decided conditions within these areas warranted engaging CPFI services for some customers.

Insurance can offer mitigation solutions to wildfire events, through close association with support services like CFPI.

“We are pleased to support communities struggling to mitigate extreme catastrophes like wildfires,” says Scott Steinmetz, Global Head of Risk Control, MidCorp, AGCS. He explains that innovative approaches and services such as CFPI’s represent a part of the new frontier in predictive and proactive mitigation responses and that the insurance industry should be at the center of the dialogue as such capabilities emerge.

After an event, insurers should ramp-up communication efforts with customers – making immediate contact and maintaining it until adjusters can access impacted areas to assess damages, advance funds and analyze and facilitate customer needs (e.g. finding temporary storage locations or modifying existing undamaged structures – as in the case of the help AGCS provided to a winery in 2018 when it paid to modify an existing structure to accommodate a destroyed tasting room and enlisted winery employees to help clean-up so the business could reopen).

“While our capabilities as an insurer are overmatched by the nature and size of weather patterns and resulting consequences,” said Brian Klepchick, Global Head of MidCorp Property, “We support and respond to wildfire events when they occur and help solve problems in the very communities in which we also live. We are committed to bringing risk awareness, property preparation and customer service wherever we can.”

Besides property insurance, which covers existing structures, and time element coverages to protect against business interruption, some “inland marine” coverages can also help in the rebuilding phase (e.g. repairing a burned-out site that is damaged by ensuing mudslides).

• Builders risk coverages protect real estate developers, contractors, subcontractors, architects and property owners against rebuilding or remodeling damages.
• Installation floaters insurance protect machinery and equipment to be installed at a project or job site or in temporary storage awaiting installation.
• Riggers liability insurance covers  the legal liability of contractors acting as riggers for third-party property that they are holding for others.
• Construction block insurance covers all projects until the customer’s interest ceases.

Irene Rhodes, Founder and CEO of CFPI, united her backgrounds in engineering and firefighting to create a system that automatically sprays a biodegradable protective foam onto structures when a wildfire is nearby. Rhodes has 30 years of experience responding to wildfires and says the 2017 and 2018 seasons were unprecedented.

“These were back-to-back 200 year events. Drought, warmer trends, 100% ember fire combustion rates, and 1% humidity were all contributing factors,” Rhodes says. “There was just so much fuel from the quick growth in the spring — enough fuel to burn 40,000 to 50,000 acres in under 6 hours — that’s a lot of flash fuel.” Rhodes noted the fires were more terrain- than wind-driven, feeding off dry vegetation."

 “We took risk prevention and mitigation to the next level by hardening clients’ defenses and preserving property in partnership with policyholders,” added Scott Steinmetz, Global Head of Allianz Risk Consulting MidCorp, “We’re looking into how this form of an innovative, in-event mitigation service on such a large scale can be tailored to meet the needs of customers exposed to various natural perils.”