Moving the needle on future wildfire losses

Blog Post created by twelle Employee on Jan 24, 2020

Recently, the Times of San Diego published an article about their Board of Supervisors approving building code upgrades for wildfire protection.  With the rise of extreme wildfires in the last several decades, our nation seems to struggle with using these same types of tools, Codes and Standards, to address the ever increasing life and property losses from wildfire.   In fact, there are numerous examples where the codes were actually relaxed by local governments after significant fires in order to speed up the re-building process and get the tax base back on track.  This inevitably allows us to repeat the disaster.

However, I tripped across a couple of examples where governments or the private sector are taking the “bull by the horns” and saying, “Enough is enough”.

The proposed ordinance in San Diego received a unanimous positive vote by the board and requires several significant improvements that reduce structural ignition potential from wildfire.  

While a cost increase for a 2400 square foot home is mentioned, it is unclear if this is for retrofit or new construction.   Construction cost increases are often a significant barrier to getting code upgrades approved even in light of Headwaters Economics’ report to the contrary for new construction.

The NFPA has a long history of showing that adoption of appropriate codes and standards can decrease fatalities and property loss from fire.  For over a century, we have engaged in reducing those numbers in structure fires, particularly in commercial, assembly, and multi-family type occupancies.  

Thomson Reuters Foundation reports that in Canada, Insurers are driving changes in rebuilding after the 2016 Ft. McMurray fire.  Nearly 25% of the victims took the offer of a cash settlement to re-build in a safer location rather than replace what they had where they were.

Others, used replacement costs to rebuild with more ignition resistant materials and designs leading to a more resilient community emerging from the ashes.

But the current level of loss is a concern to the Insurance industry.  According to Robert Muir-Wood, chief research officer for Risk Management Solutions, “If your house is rebuilt twice in a century, on average, that going to be intolerable for the functioning of insurance.”

As we look to the future, insurance is likely to be a key driver in how recovery from wildfire disasters will look.  The industry has the potential to influence the construction and siting of new developments wildfire country.  But that influence is not without limits.