The Friday Five: Week of October 28, 2019

If you care about what’s happening in the world of property and casualty (P&C), then this is the place to be. Each week, we serve up a bite-size roundup of the latest news, hot topics, and (admittedly subjective) tidbits to keep curious insurance professionals, like you, in-the-know.

Latest on California wildfires & resources for P&C insurers

Image: JOSH EDELSON/GETTY IMAGES

California is once again in crisis mode. The Kincade, Saddle Ridge, Tick, and Getty fires were spurred by high winds—some reportedly in excess of 100 mph (the equivalent of a Cat 2 hurricane)—causing California’s governor to declare a state of emergency. While the Getty Fire threatened high-value homes in Los Angeles, the Kincade Fire, in northern California, grew rapidly—burning 77,000 acres and forcing 200,000 people to evacuate. Likewise, proactive power outages have exacerbated fear and frustration and left millions of people in the dark across California, including some of our own here at SpatialKey.

A burning need for better wildfire perimeter data

Insurers have always been a step behind with their wildfire event response efforts. Namely because of how quickly a wildfire moves and how slowly perimeter data has historically been generated. This means carriers are often left in the dark during an event, not knowing which insureds have been or could be impacted. With the past several years seeing steep increases in the severity of wildfire events—$12 billion in insured losses in California alone in 2018, and nearly that same amount in 2017—now is the time for carriers to ensure every measure is being taken to get in front of this year’s wildfires.  

Underwriting wildfire risk requires a more strategic P&C approach...

Following back-to-back years of tragic wildfires, some California residents and business owners may face another crisis—getting adequate and affordable wildfire coverage. Surplus line carriers and the FAIR Plan, for homeowners who can’t get mainstream insurance, are seeing notable spikes in policies. According to the Surplus Line Association of California, in the first three months of this year 19,389 policies with $52.6 million in premiums were sold—up 93 percent and 143 percent respectively over the same period last year. In counties at "very high risk" of wildfires, the FAIR Plan is running 300 percent ahead of last year according to Tammy Schwartz, its vice president for underwriting and operations.

3 ways P&C insurers can get more creative about wildfire risk

Following back-to-back years of tragic wildfires, some California residents and business owners will face another crisis—getting wildfire coverage—and making sure it’s adequate and affordable. As an insurer, agent, or broker, how do you rise to this challenge? The challenge of helping Californians rebuild and safeguard their homes and businesses, while protecting your own interests. There’s no doubt, insurance plays a key role in California's economy and resilience as wildfire risk continues to evolve. Last August, California Governor, Jerry Brown, stated about fighting wildfires in California: “We’re in for a really rough ride...and we have to apply all our creativity to make the best of what is going to be an increasingly bad situation.” 

Technology is shaping better wildfire perimeter data and analytics

Technology is shaping better data and analytics for improved wildfire response. Instead of guessing about how a fire has grown and which insureds are impacted, insurers can access regular fire boundary updates within SpatialKey. Up-to-date wildfire perimeter data has historically been a challenge, with insurance professionals resorting to hand-drawn boundaries or custom shapefile creation. Now, insurers can gain a much more accurate and comprehensive understanding of exposure by overlaying the latest fire perimeter data, including multiple models such as RedZone, GeoMac, and NASA data (all available during the latest California fires), with their portfolio data to visualize exposure, apply buffers and filters, and understand TIV and/or policy exposed limits.

California wildfires devastate $58 billion wine industry

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. 

Check out our infographic to learn how to do just that

California wildfires continue to rage for the fifth straight day

California wildfires burn a Paras Vineyards building burns in the Napa area Oct. 10, 2017 (courtesy of Josh Edelson/AFP/Getty Images)

This fall, it seems that we can’t catch a break from natural catastrophes and extreme weather. While many people have been eyeing the record-setting hurricanes we’ve seen over the last few months, wildfires in the West are rapidly competing for our attention. Northern California is the latest area to be hit by wildfires, and as of Thursday, they’ve burned for five days straight, with the worst occurring in Napa and Sonoma counties.

Popular Posts

Visit our resources page for quick access to our P&C guides and webinars.