Consistent data is key as California seeks to understand and mitigate wildfire risk and its impact on the state’s home insurance market, according to participants at a recent roundtable discussion organized by the Little Hoover Commission.
“We have an issue where insurers do not understand enough about the wildfire risk to put enough of their capital at risk as we need them to,” said roundtable participant Nancy Watkins, Principal and Consulting Actuary at Milliman Inc. “Generally, availability of insurance is predicated by insurers being able to manage and measure the risk.”
Wildfire risk is affected by many factors, making it difficult to measure. Some home insurance providers are pulling out of the California market entirely as the state continues to see an increasing rate of wildfires.
“Whoever’s in charge of managing fire risk and driving it down will need access to some level of information,” said Watkins.
The June 6 roundtable followed a series of hearings held by the Commission earlier this year to learn about the state’s home insurance market and potential solutions as Californians struggle to insure their homes. The meeting featured 12 panelists, including insurance industry representatives, conservation and resiliency organizations, and state and local fire agencies.
In addition to data to help inform insurance providers, participants agreed that a pool of shared data is necessary.
“Shared data is so critical to this conversation,” said Kate Gordon, CEO at California Forward. “We should be not only collecting that, having best in class, but also using it across our agencies, and industries.”
There are a number of actions that homeowners and businesses can take to help prepare for and mitigate the impact of wildfire disasters. These actions are outlined in wildfire resilience guides, such as Wildfire Prepared Home created by the Insurance Institute for Business & Home Safety (IIBHS) and the California Department of Insurance’s (CDI) Safer from Wildfires program.
“Part of the confusion we are seeing is created by the disconnect between the science that underlies the CDI Safer from Wildfires framework, and IIBHS Wildfire Prepared Home, and the existing regulations, some of which may be quite frankly out of date in light of the current environment,” said Dave Winnacker, Fire Chief of the Moraga-Orinda Fire District.
“If we can have evidence-based mitigations that prove effective, that’s how we can start getting this aligned crowdsourcing of mitigation at scale and keep our … communities resilient to the fire that we do have in our future,” said Frank Frievalt, Director of the Cal Poly Wildland-Urban Interface Fire Institute.
Public education and outreach to homeowners is vital for mitigation efforts to really work.
“We are working, as an insurance industry, to educate all of the stakeholders that have a role in this, starting initially at the top,” said Karen Collins, Vice President of Property & Environmental, American Property Casualty Insurance Association. “We’ve convened different opportunities to meet with all the different stakeholders, builders, realtors, insurers, and [are] working to disseminate that information as deeply into organizations as possible.”
The Commission expects to release a report later this year assessing the home insurance market and making recommendations for change. To be notified electronically of meetings, events, or when the review is complete, please subscribe to Little Hoover Commission updates: https://bit.ly/LittleHooverNews.
Commission Hosts Roundtable Discussion on Homeowners Insurance
