Wildfires

THE TOPIC

MARCH 2015

As many as 90 percent of wildland fires in the United States are caused by humans, according to the U.S. Department of Interior. Some human-caused fires result from campfires left unattended, the burning of debris, negligently discarded cigarettes and intentional acts of arson. The remaining 10 percent are started by lightning or lava.

Over the 20-year period, 1993 to 2012, fires, including wildfires, accounted for 1.7 percent of insured catastrophes losses, totaling about $6.5 billion, according to the Property Claims Services (PCS) unit of ISO. The term “catastrophe” in the property insurance industry denotes a natural or man-made disaster that is unusually severe. An event is designated a catastrophe by the industry when claims are expected to reach a certain dollar threshold, currently set at $25 million, and more than a certain number of policyholders and insurance companies are affected.

Damage caused by fire and smoke are covered under standard homeowners, renters and business owners insurance policies and under the comprehensive portion of an auto insurance policy. Water or other damage caused by fire fighters to extinguish the fire is also covered under these policies. In California the California FAIR Plan covers residential and commercial properties located in brush and wildfire areas. Properties in those areas are subject to higher rates due to increased risk of fire. 

RECENT DEVELOPMENTS

  • Recent Research: A 2015 study by CoreLogic identifies almost 900,000 residential properties across 13 states in the western U.S. currently at high or very high risk of wildfire damage. They represent a combined total property value estimated at more than $237 billion. Of the total properties identified, 192,000 homes fall into the very high risk category, with total residential exposure valued at more than $49 billion.
  • California, Colorado and Texas are the states with the largest number of properties categorized as very high risk, with a combined property value exceeding 36 billion. The exposure jumps to $188 billion when properties at high and very high risk are included.
  • The cost of fighting wildfires reached $3.5 billion per year from 2002 to 2012 according to a report by Headwaters Economics, a nonprofit Research group.
  • Harvard School of Engineering and Applied Sciences researchers have concluded that by 2050 the number of wildfires in the West could rise by 50 percent, and across the U.S. the number would double.
  • 2015 Wildfire Season: Between January 1 and February 20, 2015 there were 5,040 wildfires in the U.S., which burned 85,282 acres, according to the National Interagency Fire Center.
  • 2014 Wildfire Season: Over the past 20 years the 2014 wildfire season ranks second only to 2013 for the lowest number of fires and acres burned.
  • In 2014 there were 63,312 wildfires which burned over about 3.6 million acres.
  • The Happy Camp Complex fire in California burned over 134,056 acres.
  • The Carlton Complex fire in Washington state burned over 256,108 acres and was the largest fire in the state to date.

BACKGROUND

Researchers are discovering that embers blown by the wind during wildfires cause most of the fires that burn homes. Also, homes that are less than 15 feet apart are more likely to burn in clusters. In such cases, fire is often spread by combustible fences and decks connected to houses, a study by the Institute for Business & Home Safety (IBHS) found.

The risk of wildfires is likely to continue to grow as temperatures rise, lengthening the fire season, and more people move into steep forested areas once largely uninhabited. Thirty-eight states have wildfire risks, according to IBHS, and the risk of wildfires keeps growing as more homes are built in wildland areas, some five million in California alone. Among the preventive features recommended in the IBHS study were noncombustible siding, decking and roofing materials; covered vents; and fences not connected directly to the house. In addition, combustible structures in the yard such as playground equipment should be at least 30 feet away from the house and vegetation 100 feet away.

 

TOTAL POTENTIAL EXPOSURE TO WILDFIRE DAMAGE BY RISK CATEGORY, 2014 (1)

($ billions)

State Low Moderate High Very high
Arizona $9.64 $0.98 $1.76 $1.57
California 75.84 61.92 89.35 16.10
Colorado 18.63 11.53 14.58 13.91
Idaho 9.20 5.56 3.71 2.62
Montana 14.63 4.43 2.29 2.40
Nevada 4.24 5.19 4.57 0.16
New Mexico 11.65 4.62 7.07 2.46
Oklahoma 31.92 16.77 0.03 0.00
Oregon 8.24 9.49 11.91 3.20
Texas 59.53 147.68 48.26 6.33
Utah 2.85 3.93 0.77 0.01
Washington 84.07 18.08 2.88 0.51
Wyoming 3.68 2.62 0.49 0.33
Total, states shown $331.27 $292.81 $187.66 $49.61

(1) Reconstruction value of single-family residences at risk.

Source: CoreLogic, Inc., a data and analytics company.

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THE TEN MOST WILDFIRE-PRONE STATES, 2013

By households By percent By insured wildfire loss
Rank State Households at high or extreme risk from wildfires (1) Rank State Percent of households at high or extreme risk from wildfires Rank State Largest insured wildfire loss (year)
1 California 1,989,100 1 Idaho 24.1% 1 California $1.7 billion (1991)
2 Texas 1,299,800 2 Colorado 16.9 2 Colorado $450 million (2012)
3 Colorado 373,600 3 California 14.5 3 Texas $530 million (2011)
4 Washington 163,400 4 New Mexico 13.6 4 New Mexico $140 million (2000)
5 Idaho 160,800 5 Texas 13.0 5 Arizona $120 million (2002)
6 Oregon 159,800 6 Utah 12.8 6 Idaho NA
7 Arizona 159,100 7 Oregon 9.5 7 Nevada NA
8 Utah 125,500 8 Washington 5.7 8 Oregon NA
9 New Mexico 122,600 9 Arizona 5.6 9 Utah NA
10 Nevada 59,100 10 Nevada 5.1 10 Washington NA

(1) Number of households is based on data from the 2010 U.S. Census.

NA=Data not available.

Source: Verisk Insurance Solutions – Underwriting and Verisk Climate units of Verisk Analytics®.

 

 

WILDFIRE LOSSES IN THE UNITED STATES, 2004-2013 (1)

(2013 $ millions)

(1) Adjusted for inflation.

Source: © 2014 Munich Re, Geo Risks Research, NatCatSERVICE.

 

 

NATURAL CATASTROPHE LOSSES IN THE UNITED STATES, 2014 (1)

($ millions)

Event  Number of  events Fatalities Estimated overall losses Estimated insured losses (2) 
Severe thunderstorm 62 98 $17,000 $12,300
Winter storm 13 115 3,700 2,300
Flood 20 5 1,800 500
Earthquake and geophysical 11 45 750 150
Tropical cyclone 2 1 95 Minor
Wildfire, heat and drought 11 2 1,700 Minor
Total 119 266 $25,000 $15,300

(1) As of December 31, 2014.
(2) Based on property losses including, if applicable, agricultural, offshore, marine, aviation and National Flood Insurance Program losses and may differ from data shown elsewhere.

Source: © 2015 Munich Re, NatCatSERVICE. As of January 2015.

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TOP TEN STATES FOR WILDFIRES RANKED BY NUMBER OF FIRES AND BY NUMBER OF ACRES BURNED, 2013

Rank State Number of fires Rank State Number of acres burned
1 California 9,907 1 Alaska 1,316,876
2 North Carolina 3,514 2 Idaho 722,204
3 Georgia 2,942 3 California 577,675
4 Oregon 2,848 4 Oregon 350,786
5 Arizona 1,756 5 New Mexico 221,951
6 Montana 1,723 6 Colorado 195,145
7 Washington 1,527 7 Nevada 162,907
8 Idaho 1,471 8 Washington 152,603
9 South Carolina 1,337 9 Montana 124,209
10 Alabama 1,284 10 Arizona 105,281

Source: National Interagency Fire Center.

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THE TEN MOST COSTLY WILDLAND FIRES IN THE UNITED STATES (1)

($ millions)

      Estimated insured loss
Rank Date Location Dollars when occurred In 2013 dollars (2)
1 Oct. 20-21, 1991 Oakland Fire, CA $1,700 $2,623
2 Oct. 21-24, 2007 Witch Fire, CA 1,300 1,424
3 Oct. 25-Nov. 4, 2003 Cedar Fire, CA 1,060 1,302
4 Oct. 25-Nov. 3, 2003 Old Fire, CA 975 1,198
5 Nov. 2-3, 1993 Los Angeles County Fire, CA 375 553
6 Sep. 4-9, 2011 Bastrop County Complex Fire, TX 530 547
7 Oct. 27-28, 1993 Orange County Fire, CA 350 516
8 Jun. 24-28, 2012 Waldo Canyon Fire, CO 450 457
9 Jun. 27-Jul. 2, 1990 Santa Barbara Fire, CA 265 423
10 Jun. 11-16, 2013 Black Forest Fire, CO 385 385

(1) Property coverage only for catastrophic fires. Effective January 1, 1997, ISO's Property Claim Services (PCS) unit defines catastrophes as events that cause more than $25 million in insured property damage and that affect a significant number of insureds and insurers. From 1982 to 1996, PCS used a $5 million threshold in defining catastrophes. Before 1982, PCS used a $1 million threshold.
(2) Adjusted for inflation through 2013 by ISO using the GDP implicit price deflator.

Source: The Property Claim Services® (PCS®) unit of ISO®, a Verisk Analytics® company.

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Resources

Verisk Insurance Solutions – Underwriting and Verisk Climate, units of Verisk Analytics. FireLine State Risk Report, November, 2013.

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