Assessing and managing wildfire risk

This summer, much of the western United States was in flames. Wildfires spurred by above-normal spring and summer temperatures, and one of the worst droughts in decades charred several million acres across the 11 western states. Between July 16 and 19 alone, 1,000 new blazes ignited, prompting fire officials to raise the nation’s fire preparedness level to 5, its absolute highest, and contributing to one of the most destructive wildfire seasons in recent memory.

The unpredictable nature of the wildfire peril complicates agents’ task in assisting customers in managing fire risk and quantifying potential losses, as well as complicates risks for insurers underwriting properties in fire-prone zones.

Fire severity

One of the summer’s costliest wildfires, which occurred in late June near South Lake Tahoe, Calif., destroyed 329 buildings and ravaged 3,100 acres. Dubbed the “Angora Fire,” the event was sparked by an illegal fire at a campsite. The U.S. Forest Service initially hoped to contain the blaze within a week. But what began as a small brushfire soon intensified into a full-blown inferno that raged for more than 10 days, destroying nearly every structure in its path before crews finally contained it.

Several factors influence the severity of wildfire events such as the summer’s Angora blaze. A sudden ignition can result in either a moderate blaze or a catastrophe depending on atmospheric conditions, topography, or moisture content of the local vegetation. Those fires then can drive losses disproportionate to their size.

For example, the 2003 Cedar fire was the largest in California history, destroying more than 270,000 acres. Yet it caused just $1.2 billion in insured losses, making it far less devastating than the $3.1 billion Oakland Hills fire in 1991, which scorched less than 1 percent of the acreage but ranks as the most expensive fire event in U.S. history.

Recent models are allowing insurers and agents to synthesize factors contributing to wildfire development to simulate a wildfire’s perimeter — and ultimately determine the area and property a fire could affect.

Factors influencing
wildfire development

Ignition site has become one of the most important considerations when predicting a fire’s impact. That is because while the frequency of U.S. wildfires has decreased in the past several decades, wildfire-driven losses have significantly increased. Since 1980, wildfires in the United States have been responsible for insured property losses exceeding $10 billion. The increase in losses is driven by the growth in the number and value of exposed properties in a high-risk construction area known as the wildland/urban interface (WUI) — a buffer zone where human development intersects dense woodland vegetation. Fires that ignite in those zones can move readily between structural fuel and vegetation fuel, facilitating unusually rapid spread.

Although more than half of California wildfires occur in WUI zones — originally designated as such by a 2001 U.S. Department of Agriculture and U.S. Department of the Interior report on communities at risk from fire — Americans continue to move in, building well-equipped first and second homes. Between 1990 and 2000, the rate of construction on WUI-designated land exceeded that of non-WUI areas by a factor of three. According to U.S. Fire Administration statistics, nearly 40 percent of new home development in the western United States is occurring in the wildland/urban interface.

In addition to ignition site, available fuel is another factor dictating the way a wildfire will develop and grow. Fire spreads faster in some fuels than others because different types of wildland vegetation — including coniferous trees, grass and chaparral — burn at unique rates and generate flames of different intensities. Grass, for example, does not hold moisture particularly well and can dry out even in a short drought, quickly transforming into ideal tinder through which flames can zoom.

In forests, fire spread rates are more complex. Forest fires may be fairly slow to spread, depending on the undergrowth, but they can also be exceedingly difficult for fire-fighters to access and put out. Furthermore, if forest fires manage to spread vertically into the canopy, they may become full-fledged crown fires, which move at incredible rates through treetops and can be virtually uncontrollable.

Weather conditions also influence fire development. In California, wildfires are highly seasonal due to variation in temperature and precipitation within the year. During the six months from May through October, the average maximum temperature rises considerably. During the same time, little or no rain falls. That lack of precipitation removes moisture from vegetation until it reaches a very dry state, which in turn increases both the probability that wildfires will occur and the rate at which they spread.

Seasonal winds represent another influential weather component. They can quickly revitalize a blaze, depending on their speed and direction. Early growth of the Cedar fire of 2003 was driven primarily by the presence of strong Santa Ana gusts — hot, dry easterly winds unique to California. Fortunately, Santa Anas are often short-lived. In the Cedar fire, they were soon replaced with westerly winds from the Pacific Ocean, and that reversed the fire’s direction.

Topography’s impact on fire spread is contingent on slope; fire travels upslope more readily than it does on level ground because flame advancing at an upward angle encounters a larger cross-sectional area of fuel, feeding its growth, than flame on level or downward sloping ground. Additionally, because trees and grasses immediately upslope from a smoldering fire are preheated by sweltering winds, which rob fuels of their moisture, they become ideal tinderboxes.

Also contributing to the overall wildfire picture is fire suppression — the suite of tactical techniques used by firefighters to halt expanding flame. Those include clearing underbrush, airdropping fire retardants, and building fire breaks, or gaps in vegetation.

Decisions regarding where and when to deploy firefighting resources are influenced by fuel conditions and weather forecasts. Officials also review information on how a fire is developing and where it is headed to identify potential locations at which to fight a blaze.

In unpopulated areas, wildfires are often allowed to burn out. That eliminates fuel buildup. In areas closer to human habitation, however, fire policies are aimed at extinguishing fires as quickly as possible. Interestingly, the rise in singed acreage this summer was largely due to bone-dry conditions, but it was exacerbated by the Forest Service’s policy of quickly halting fires that threaten residential areas, which permitted the accumulation of dry brush.

Vulnerability of affected structures

Estimates of fire-driven loss must incorporate the structural characteristics of specific properties. The flammability of roof and siding materials is the primary determinant of a building’s vulnerability. Because people continue to populate fire-prone woodland spaces such as the WUI, engineers have identified construction materials that are fire-resistant. Unfortunately, many homes today still have wood siding and either wood or asphalt shingle roofs, both of which are highly susceptible to ignition.

Homes are also susceptible to fire when they lack sufficient set-back distances — cleared space separating them from surrounding wildland vegetation. A post-disaster survey conducted by investigators from modeling company AIR Worldwide revealed that most of the fire-ravaged homes in the Angora blaze did not have adequately cleared spaces. Of the homes that did survive with minimal damage, complete or partial setbacks were in place.

Wildfire risk best practices

The 2007 wildfire season — which damaged homes, power lines, and communication towers across the western United States — illustrates the growing threat to property from wildfires. Many insurers and reinsurers do not believe they could face a wildfire more destructive than 1991’s Oakland Hills Fire. The rush to build in the WUI has resulted in an unparalleled accumulation of fuel and development, however, creating the potential for today’s wildfires to be more destructive than any in history. In fact, the Hurricane Andrew of wildfires, so to speak, has yet to occur, and the WUI would be the perfect home for such a conflagration.

Agents and insurers alike need to be aware that as a result of the growth in the number and value of properties in the WUI, underwriting properties exposed to the wildfire hazard today cannot rely on historical data when attempting to estimate wildfire-driven losses. Leading insurers are evolving their risk assessment strategies through the use of catastrophe models to better quantify the risk by accounting for a wide range of factors influencing wildfire development.

Topics California Catastrophe USA Natural Disasters Wildfire Talent