As number of wildfires explode, expert says mitigation is possible

By Doug Bailey

It’s only March and already there have been 7,112 wildfires in the U.S., a 37% increase over the 10-year average for the same period and a further sign that the frequency and intensity of the fires has become the “new normal” that imperils lives, communities, ecosystems, and insurers.

Wildfires are breaking out beyond the traditional fire season, driven by climate change and evolving weather patterns. Higher temperatures cause snow to melt earlier, and delay Fall precipitation, resulting in extended drought periods that elevate the risk of wildfires.

The fire season, which used to last four months, now often extends to between six and eight months, with winter wildfires becoming more common in states such as the Carolinas, New Jersey, New York, California, Arizona, Colorado, New Mexico, Texas and Tennessee.

Wildfires worsening in new areas

The increasing wildfire activity in the Carolinas and other parts of the U.S. underscores the need for comprehensive risk preparedness efforts that extend beyond traditionally fire-prone regions, says Firas Saleh, director of wildfire models North America at Moody’s.

“Wildfire is maybe one of the perils that can be mitigated,” said Saleh. “It's not similar to hurricanes. This is a peril that we can mitigate right now.”

Despite the rise in wildfires and the threat of more to come, Saleh says fire awareness is still lacking in many areas of the country, even in places prone to dangerous conditions.

“The increasing wildfire activity in the Carolinas and other parts of the U.S. underscores the need for comprehensive risk preparedness efforts that extend beyond traditionally fire-prone regions,” he said.

New climate models produced

Moody’s has produced newly comprehensive climate models to assist stakeholders in addressing wildfire risk, including insurers, utilities, policymakers, and asset managers. The models cover insurance pricing, loan underwriting, portfolio management, community and investment planning for adaptation, and regulatory workflows.

“The models include numerous scenarios of extreme urban conflagration,” Saleh said. “By capturing the risk profile comprehensively, our models provide unparalleled insights to help the market understand and prepare for these catastrophic events.”

While wildfires are natural phenomena, the real risk is urban conflagrations, he said, where fires spread from structure to structure, causing significant impacts, as seen in Los Angeles County wildfires. High winds, dry vegetation, flammable building materials, and proximity to vegetation all contribute to this heightened risk.

LA firestorm 'most destructive'

“This firestorm is the most destructive and multifaceted wildfire event in U.S. history, with unprecedented levels of urban conflagration,” he said. “However, this was not a ‘black swan’ event given the escalating wildfire risk in recent years.”

Sometimes there are simple approaches to mitigation, Saleh said, such as having a mesh above vents that prevent burning embers from flying in. "And then, of course, you have mitigation on a community level, or even neighborhood level,” he said. “I think we’re seeing more of a systematic approach to mitigation that includes everything from vegetation management to hardening structures."

Saleh said Moody’s surveyed around 30,000 properties or structures in the Los Angeles area and more than 50% were fully destroyed. Others had minor or moderate damage or were fully intact.

“So, what we do within Moody's is we study that, and we try to understand why specific structures survived versus other structures that were fully destroyed,” he said. “We look at the year built, we look at the construction material and we look at the roof type, we look at the windows – so all this highly granular information is gathered to understand the behavior of the wildfire.”

The January wildfires in Los Angeles resulted in unprecedented insured losses, with estimates varying among experts, from $25 billion to $45 billion in insured losses, and total property and capital losses between $76 billion and $131 billion.

Severe impact on insurance industry

These losses underscore the severe financial impact of wildfires on the insurance industry and highlight the challenges in accurately assessing damages from such large-scale disasters. The losses also exacerbated the insurance crisis in the state with some insurers refusing to write or cover for fire insurance until extreme mitigation measures are taken.

Moody’s has partnered with the Insurance Institute for Business and Home Safety and conducts experiments to help better understand the nature and risks of wildfires. They include building entire structures and setting them on fire for research.

“They have a huge wind tunnel that generates wind at 30, 40 or 50 miles per hour speed and they ignite the property to study the behavior,” Saleh said.

Despite the growing threat, Saleh said he is optimistic that mitigation strategies will improve, spread, and succeed.

“We are seeing an increase in the frequency and severity of wildfires, but at the same time, I think it's important to note that technology is on our side,” he said.

“We're seeing huge advances in computational power. We're seeing advances in the way we look into how we can better capture attributes that we were not able to capture before. We can model at a resolution and accuracy that we were not able to 10 to 15 years ago.”