Wednesday, February 20, 2008

Are Canada's insurers prepared for a catastrophic wildland fire?

A Canadian insurer ponders wildfire issues in the Canadian Underwriter. Looking south at California's recent infernos, Paul Kovacs of Institute for Catastrophic Loss Reduction, points out that many of the same fire conditions exist in various dry parts of Canada, with similar concentrations of property value and liability. How should insurers manage their exposure?

He makes an important point that's particularly relevant for fires -- the absence of big losses in the recent past doesn't mean that there won't be big losses in the future. In a changing climate, once-safe areas may suddenly become more vulnerable. He also calls on insurers to stir themselves more in loss prevention, in encouraging fire-safe behaviors among policyholders.

He also says: ...Perhaps the greatest challenge is accepting that current wildland fire management practices need to change. These efforts have been successful over several decades in minimizing loss of life and destruction of property, but the losses in Kelowna and in California warn of a growing risk across Canada. Property owners, community leaders and other stakeholders need to become more involved in wildland fire management through the use of fire-resistant roofing, maintenance of a defensible space around each building and community regulations to control development. We need healthy forests supported by prescribed burns, thinning and proactive management of insect infestations. We need firefighters trained and equipped to suppress fires that threaten our communities. And the insurance industry needs to actively manage its wildland fire exposure and work with other stakeholders to promote loss control.

Wildfire image from the US Bureau of Land Management, Wikimedia Commons

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