The Wildland/Urban Fire Hazard

December 1997
Executive Summary

The Hazard

Although most significant wildfires occur in the West, the wildfire hazard is a national issue. Serious wildfires have occurred all across the country — from Washington to Maine to Florida. An average of 140,000 wildfires per year took place in the United States from 1916 to 1996. Wildfires burned an average of 14.5 million acres each year during that period. And, from 1985 to 1994, wildfires destroyed more than 9,000 homes and other insured property. According to the Federal Wildland Policy adopted in December 1995, "nearly every state has experienced wildland/urban interface fire losses." The policy further states that the wildfire hazard "has become a major fire problem that will escalate as the nation moves into the twenty-first century. . . It is clear from recent episodes that losses will increase in the future."

Although the historical record shows no clear trend in the number of wildfires, the number of acres burned each year fell from a peak of 52.3 million in 1930 to 3.6 million in 1958. Since then, the number of acres burned each year by wildfires has remained fairly steady, ranging from a high of 7.4 million in 1988 to a low of 1.6 million in 1993. The long-term decline in the number of acres burned reflects fire suppression policies aimed at extinguishing wildfires as quickly as possible. One unintended consequence of such policies has been accumulation of brush and other vegetation — fuel to feed future wildfires. Without periodic natural fires or active measures to reduce fuel, the risk and potential intensity of future fires increase.

While unprecedented amounts of fuel have accumulated, the population has shifted. More and more people are living in or near areas prone to wildfire. During the twentieth century, the population of the United States has moved west. In recent decades, the population has also become more dispersed. Those trends have increased the number of people living in heavily vegetated areas where wildlands meet urban development — the wildland/urban interface. "These new wildland/urban immigrants give little thought to the wildfire hazard," according to the Federal Wildland Policy.

The result is more homes and other structures at risk. Together, the accumulation of fuel and development in hazardous areas pose particular challenges for insureds and insurers, as well as government agencies responsible for fire prevention, mitigation, and suppression.

In broad perspective, the challenges and their respective solutions fit into two categories. The first category consists of socioenvironmental challenges associated with the unprecedented accumulation of fuel and population growth in areas prone to wildfire. The solutions to those challenges involve mitigating potential losses though increased understanding of fire behavior, public education, fire-safe building codes, landscaping ordinances, and the like.

The second category consists of the risk decision challenges insurers face in underwriting properties exposed to the wildfire hazard — challenges much like the ones insurers face in underwriting properties exposed to hurricanes, earthquakes, and other natural hazards. The solutions to those challenges include: developing and implementing appropriate underwriting guidelines; measuring and managing the aggregate amount of wildfire exposure in an insurer's book of business; managing the geographic distribution of exposures to prevent excessive concentration in any single area or contiguous areas prone to wildfires; and educating agents and insureds about loss mitigation.

The Response

Many community groups and agencies at all levels of government have recognized the need to address the wildfire hazard. Those organizations include the U.S. Department of the Interior (USDI), responsible for our national parks; the U.S. Department of Agriculture (USDA), responsible for our national forests; governors' associations; state departments of forestry; county governments; fire departments; and others.

The responses to the wildfire hazard include hazard mapping, fuel management, adoption and enforcement of stricter building codes, and educating individuals about what they can do to make their property safer.

Despite those responses, the wildfire hazard persists. The reasons that the hazard persists include:

• resistance from property owners and developers
• expense of fuel management
• development and land use patterns in the wildland/urban interface
• diffusion of responsibility among a wide range of government agencies
• priorities and jurisdictional issues
• constraints imposed by law on fuel reduction and other mitigation efforts

Research

Until recently, researchers studying fire have done little work on how wildfire spreads to buildings and how those structures react. Fire protection engineers focused on interior fires, and forest fire behavior models ignored how fire moves into buildings. Now, however, researchers and others are responding with models that can assess the risk of structures igniting and databases that track the features common in houses destroyed by wildfire. Research shows that fire intensity is the most important factor affecting whether a structure will ignite. Once the intensity of a wildfire passes a certain point, little else matters. Research also shows that the amount and type of fuel and topography — the steepness of the terrain — affect the intensity of a fire.

At lower intensities, the following factors determine a structure's prospects for survival:

• the amount of cleared space around the structure
• the structure's construction
• access to the site
• whether anyone takes defensive action

The amount of space cleared of flammable vegetation around structures affects whether fire spreads to structures. Construction characteristics (especially roof type, the number and type of windowpanes, the presence of unenclosed decks, and the presence of soffit vents) also affect whether structures will ignite and how likely they are to survive. Access affects firefighters' ability to suppress fire and protect structures. Defensive action can reduce the likelihood of a structure igniting and, in the event it does ignite, can increase the structure's prospects for survival.

Fire danger rating systems can now gauge the likelihood that fires will start, and models can predict the spread of fires. Other new tools and technology combine information about fuels, obtained from satellite imagery, with information about roads and topography to generate hazard maps and assess the wildfire risk facing specific properties. FireLine™, a CD-ROM product developed by Insurance Services Office, Inc. (ISO) in 1997, provides such information for California.

Implications for Insurers

Before Hurricane Andrew, many insurers might not have believed that a single hurricane could cause $16 billion in insured losses. Today, many insurers may not believe that they will ever face a wildfire that causes more than the $1.7 billion in insured losses caused by the Oakland/Berkeley Tunnel Fire of 1991. But unprecedented accumulation of fuel and development in wildland/urban interface areas have created the potential for wildfires more destructive than any previous conflagration. The accumulation of fuel and continued development also suggest that insurers will face an increasing stream of claims from smaller but more numerous fires.

Many levels of government, the fire-fighting community, and other groups are working to contain the risks of wildland/urban interface fires. But the programs those groups have undertaken can be costly and unpopular. If budgets and politics continue to curtail the effectiveness of loss mitigation programs, insurers may one day pay for a catastrophe that prudent action could have prevented.

Advances in science and technology have increased our understanding of how fire behaves and the factors affecting whether structures will survive a wildfire. Other breakthroughs, such as FireLine, make it possible to generate hazard ratings for specific properties. Insurers can use such ratings to allocate underwriting and loss mitigation resources more effectively.

For example, with hazard ratings based on FireLine, insurers can make better decisions about which properties to survey to obtain information about construction characteristics and the amount of cleared, defensible space. Underwriters can use the information obtained from those surveys to make more informed decisions and to help determine the premium for each risk. Risk-based pricing and underwriting would also encourage mitigation.

By mapping the hazard ratings for the risks they have written, insurers can increase their understanding of their aggregate exposure to wildfire losses and how that exposure is distributed. Improved understanding of those factors could, in turn, have implications for loss mitigation activities, new business development programs, reinsurance arrangements, and other aspects of insurers' operations.