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California wildfire risk mitigation requires collaborative effort: III panel

Woolsey Wildfire Burns on Hillside with Flames and Smoke in California Woolsey Fire

The insurance industry needs to partner with all levels of government to help reduce the risk from wildfires in California, panelists said during the Bay Area Council Economic Institute’s discussion on the state’s wildfire problem.

“It's going to be absolutely imperative that we realize we're in this together,” said Laurna Castillo, senior vice president, state product management for CSAA Insurance Group said during the discussion.

“We all need to do our parts and take that first step, and the second step and do it all together, be collaborative and open and share ideas,” Castillo said.

Mark Hein, fire chief of the Sonoma County fire district, which was one of the hardest hit areas of the state in recent years, said the last five years have been “extraordinary”.

Addressing the wildfire danger will require a variety of responses, he said, from building mitigation to forest preparation and improved response.

“We have significantly improved as our lessons learned out of the major fires, going back to 2018,” Hein said. “We're changing our strategy and tactics as professionals on how we address the wildfire threat, through improved technologies and improved use of different firefighting resources.”

What's not working well, he said, is vegetation management that could make differences in the landscape.

“We don't do enough right now to support our private property owners, the homeowners, the business owners, that have a desire and a passion to want to step forward and prepare their properties more effectively,” he said. “They need our funding support, they need access to programs and they need access to services.”

Castillo pointed to several areas where the insurance industry can take a lead, including working with the state’s Department of Insurance and other regulators to find ways to address loss mitigation, to encourage property owners and communities to adopt resilience measures. One question CSAA is working on, she said, is how insurance can provide incentives for mitigation not only to homeowners, but also to communities.

Right now, she said, the company is offering policyholders discounts for individual home hardening of up to 20%.

“You think about community efforts to help prepare for wildfires and honestly, it's maybe even more important than an individual property owner taking steps just on their home,” she said. It’s easy to imagine a scenario where an individual retrofits their own home, but it remains threatened because it’s in a community that is not clearing brush or making other efforts to reduce risk. The company is working with the state’s insurance department to introduce a community fire mitigation program discount, she said.

“I also think it's important that we use technology and tools at our disposal to further understand and thus manage wildfire risk,” Castillo added. “There's a ton of data out there. So how do we leverage that data to really understand on a granular level wildfire, and not just wildfire in general, but also wildfire for specific member’s risk situations?”

CSAA’s work with regulators in this area reflects an industrywide effort to develop programs that insurers can use to mitigate wildfire risk, said Janet Ruiz, director of strategic communication at the Insurance Information Institute, and the panel’s moderator.

III’s Institute for Business and Home Safety is researching fire prevention and resiliency efforts, she said. “I think we are looking at all these solutions on prevention and being more resilient to actually be the answers to continuing in commercial and personal lines insurance in California,” Ruiz said.

The panel was organized by the Bay Area Council Economic Institute, a think tank that focuses on economic and policy issues in the Bay Area region. It was presented in conjunction with the group’s report, “The True Cost of Wildfires,” which analyzed the impact of the record number of large wildfires that have swept the state since 2017.

It looks not only at the cost of the fires themselves – which reached roughly $19bn from 2017 to 2020 – but also at the health and ancillary economic costs.

While the increase in fires can be partially attributed to the state’s multi-year drought, the report said, it also counted climate change, fire suppression strategies that resulted in fuel buildup in the state’s forests and an increase in residential development in the urban-wild interface as reasons for the increased number and intensity of wildfires.

John Watts, a senior staffer for US Senator Dianne Feinstein (D-Calif), said that the infrastructure bill that passed last week has significant cash included for fire mitigation efforts in California, as does President Biden’s lingering “Build Back Better” pending bill.

“The current budget federal budget has about $5bn dollars over a decade for those efforts,” Watts said. “And these bills include between them $16bn-$17bn.”

There is also $3.5bn between the two bills to provide incentives for homeowners to harden their properties, he said, along with tax credits for weatherization and fire resistance and money for firefighters. The bills have funding for efforts to clear forest debris and potentially create jobs milling wood that is removed from forests.

Another key issue the bills address is power lines, providing funding for utilities to move power lines underground and otherwise make them more fire resilient.

Downed power lines have been the spark for several of the worst fires in California, including the Dixie Fire, the second largest fire in the state’s history. It burned nearly one million acres between July and last week when it was finally fully contained. The blaze caused one death, while destroying or damaging more than 1,400 structures, according to the state’s fire management agency, CalFire.

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