Recent wildfires in Northern California, specifically in Napa and Sonoma counties, have sparked widespread devastation across the area to lives, homes, and businesses. Despite the fires still being active, and the numbers still being calculated, this event is already “the deadliest and most destructive series of wildfires in California history,” and among the worst in U.S. history. And with damages estimated between $3 billion and $6 billion (which could still rise), insurers may face another massive payout due to natural catastrophes in 2017. These devastating events are proof that data is the only line of defense for insurers. And, it’s more paramount than ever, to gain a better understanding of how you can use data to better mitigate and underwrite wildfire risk going forward.Northern California wildfires, courtesy of Jim Stimson / CalFire
Years of business interruption, and rebuilding, at stake
Right now, the most severe damages appear to be to the homes in the area, and, California’s $58 billion wine industry. Phil Lynch, spokesperson for Brown-Forman Corp., which owns Sonoma-Cutrer vineyards, mentioned, “If it’s only smoke damage, it’s one season. If it’s fire damage, it’ll be three or four seasons.” With some vineyards out of operation for potentially years, business interruption is sure to play a big role in the insurance story of this event. And, as reported by S&P Global Ratings, "The loss of lives, infrastructure and potential environmental damage will take years to recover from."
How to prepare for tomorrow
Heavy on insurers’ minds is the question, “What can I do to prepare for the next wildfire and prevent my insureds from suffering?” We’re working closely with RedZone, a leading provider of wildfire data, to help answer that question. “We understand how unpredictable wildfires are, as many of us used to fight them on the ground,” says Clark Woodward, CEO of RedZone. “Our hearts go out to the people working to contain these fires and those whose lives are being turned upside down because of them.” The current Northern California wildfires, as well as other recent wildfires in the Northwest, remind us that we are at the mercy of nature and human error. Arming yourself with the right information is the best defense—and having that information ready at the point of underwriting even moreso, since that’s where risk mitigation begins.
Better response starts at the point of underwriting
RedZone wildfire data seen in SpatialKey’s underwriting application
In the above screenshot, it’s easy to see how RedZone’s data provides insight into an insurer’s potential exposure to the Napa fires. The yellow point on the map, a Napa vineyard, falls in the yellow/green area, signaling low to moderate risk, but we also see it’s close to areas where there is high risk of smoke and floating embers. Data like this takes insight to a deeper level, giving insurers understanding beyond the obvious.
RedZone incorporates factors such as wind, smoke, and floating embers, as well as frequency, severity, and historic factors, to provide insurers with a much clearer and more comprehensive picture of risk, which we see in action with the Northern California fires. Having this information at the point of underwriting empowers event preparedness that proves invaluable in times like these when insurers are doing everything they can to help their clients assess their risk. As Mr. Woodward explains, “Forecasting a wildfire is challenging, but not insurmountable when science is applied with a unique perspective on probability over perfection. When we see an event like the one in California, it further confirms why we’re dedicated to developing the most sophisticated wildfire data for underwriters and catastrophe managers: it helps them write risk with the most detailed information, empowering every part of their organization for disasters like the one we’re seeing today. Seeing our data come to life through our collaboration with SpatialKey offers insurers tangible metrics and visualizations that enable appropriate action and decision-making.”
To learn more about leveraging RedZone’s wildfire data in SpatialKey, make sure to reach out to your dedicated account manager, or contact us anytime. And, for all those impacted by these devastating fires, please continue to stay safe and out of harm’s way. We’re hoping you can begin the process of recovering, rebuilding, and ultimately, restarting soon.