NEW YORK, Jan. 7, 1998 — Population shifts and an unparalleled accumulation of fuel to feed future wildfires have created the potential for conflagrations far more destructive than any before, according to a new study by Insurance Services Office, Inc. (ISO).
For much of this century, fire-suppression policies have sought to extinguish wildfires as quickly as possible. Such policies have led to the accumulation of brush and other vegetation to feed future fires, says ISO's study, The Wildland/Urban Fire Hazard.
"In addition, population shifts to wildfire-prone areas — and the development patterns in those areas — have put many homes and other insured structures at risk," says John J. Kollar, vice president of ISO's Actuarial Services & Research Department." As a result, insurers today face the potential both for catastrophic wildfires with unequaled losses and an increasing stream of losses from smaller but more numerous fires."
In California, for instance, the population has grown particularly rapidly in forest regions. From 1970 to 1996, the population of 11 California counties grew by more than 150 percent, and nine of those counties are in forest areas. Meanwhile, the population of the entire state rose by just 60 percent.
The study also reports that wildfires are not confined to the western part of the United States, as is commonly believed.
"Although the most destructive wildfires have historically been concentrated in the West, we now recognize that the fire hazard from wildland/urban interface is a national problem," says Kollar. "In 1996, wildfires occurred in every state. More than 113,000 conflagrations burned a total of 6.4 million acres that year."
From 1985 to 1994, wildfires destroyed more than 9,000 homes and other insured properties countrywide, the ISO study reports. One of the most significant wildfires of that period was the 1991 Oakland/Berkeley Tunnel Fire, which caused $1.7 billion in insured property losses — $2.0 billion in today's dollars.
According to the study, the challenges confronting insurers that underwrite properties exposed to the wildfire hazard include:
The report urges insurers to meet these challenges or they "may one day pay for a catastrophe that prudent action could have prevented."
To help insurers, government agencies and other groups better prepare for and manage wildfire threats, the ISO study reports on national, state and local approaches to mitigating potential damage from wildfires, including public education campaigns, stricter building codes, more effective landscaping ordinances, and hazard fuel-reduction programs.
Moreover, the report explores how new technologies can help insurers gain a better understanding of their aggregate exposure to wildfires and allocate their underwriting and loss-mitigation resources more effectively.
"Fire-danger rating systems can now gauge the likelihood that fires will start, and models can predict the spread of fires," the study says.
ISO's FireLineTM, a CD-ROM that combines data based on satellite imagery with an easy-to-use geographic information system, measures the wildfire hazard facing specific properties in California. FireLine takes into account three of the most important factors affecting a structure's chances of surviving a wildfire — the amount and type of fuel present at a site, a site's topography and a site's accessibility.
Insurers also can use FireLine to develop overall wildfire hazard ratings for all of the risks in their books of business to gain a better understanding of their overall amount of wildfire risk and whether that risk is geographically concentrated.
FireLine helps insurers focus underwriting and loss mitigation resources where they are apt to yield the highest returns. Information gained by mapping overall wildfire hazard ratings may also have implications for new-business development programs and reinsurance arrangements.
"Advances in science and technology have increased our understanding of how fire behaves and the factors affecting whether a structure will survive it," says Kollar. "That's important information to have, given that the Federal Wildland Fire Policy calls wildfires a major problem that will escalate as the nation moves into the 21st century."
To obtain a copy of the study, call ISO's Customer Service Department at 1-888-4476.