Coconino supervisors hear from insurance industry expert as public forums on wildfire insurance issues continue

Coconino County's efforts to address growing concerns by homeowners regarding fire insurance premiums and availability amid the region's wildfire risk continued last week as part of the Board of Supervisors' Sept. 9 meeting.

Initially beginning on June 3 with a pair of speakers from the Headwaters Institute, an independent, nonprofit economics research agency, the ongoing series of public forums shifted to hearing from an expert within the insurance industry on Tuesday.

In addition to detailing the current state of the property insurance market and how wildfire risk has increased in recent years, Ethan Aumann's presentation touched on a similar theme to the first: how mitigation efforts might reduce costs to homeowners by reducing insurance companies' exposure to risk.

"I know it's frustrating for us. I am sure it's frustrating for most of the people in the audience that we are in a situation that has been rated one of the top fire risk areas in the country. No matter all of our best work and efforts on trying to reduce that on a landscape scale with the Forest Service and on our educational outreach, obviously it's not enough," said Patrice Horstman, the chair of the board and District 1's supervisor. "I hear the frustration. I am getting emails, I am getting phone calls. Neighbors and friends that have had their insurance denied or their rates are so high, they are really questioning whether they can continue to live here."

Aumann, the senior director for environmental issues and resiliency, noted that he specifically works toward policy solutions for property and environmental issues for the American Property Casualty Insurance Association (APCIA), which represents about two-thirds of the insurance market as a primary national trade association for home, auto and business.

For the APCIA, Aumann explained that the organization advocates that wildfires are "a natural and essential part of many landscapes, and we simply cannot suppress all fires," while also expressing concerns regarding recent policy proposals including restricting the use of catastrophe models and requiring disclosures or appeals related to risk scores.

Citing the push by policymakers as hiding or masking risk, and inadvertently pushing insurers to back out of certain markets, Aumann explained the potential changes require complex and costly actions on the side of the insurers. Instead, Aumann said, the APCIA believes the primary focus should be on mitigation efforts.

Originally referenced in the first forum in June, the Insurance Institute for Business and Home Safety (IBHS), a nonprofit organization supported by property insurers, reinsurers and additional affiliated companies, has developed a program called Wildfire Prepared.

The program offers homeowners a list of actions or alterations that can be made to reduce the risk of fire through embers, considered to be the ignition cause in the "overwhelming majority" of homes that burn in wildfire.

Just as was detailed in June's presentation, Aumann explained the recommendations, which include fire-resistant roofs, the creation of a buffer of defensible space around the exterior, ember-resistant vents and 6 inches of non-combustible clearance from the base of exterior walls among other potential actions.

Using the 2018 Camp Fire and Paradise, California, as an example, Aumann explained that the community is being rebuilt while adopting the standards of IBHS' Wildfire Prepared program.

While the added cost of enhancing new construction to be wildfire resistant comes in at less than $3,000 per home and insurers can build the mitigation measures into their risk models to possibly provide discounts on policies for homes made more resilient to wildfire, the IBHS program is currently only available in California and Oregon. Though Arizona is still just considering adopting a similar framework for certification along with many other Western states, homeowners, according to Aumann, could follow the guidance and get ahead of the process by taking mitigation measures on their property now.

However, as Horstman noted, those efforts do not necessarily solve the problem for communities required to make infrastructure changes to existing homes, nor does it ensure insurance carriers would provide the discounted rates at this time. While current property owners have made efforts to create defensible space, removing trees or limbs from around their homes, Horstman said there's been no change.

"No matter what they do, they can't get their homeowners insurance or their rates have gone up so greatly, they are having a difficult time affording homeowners insurance," she said.

Additionally, while the destruction in Paradise created the need to rebuild and is being done so under the new higher standard, Horstman said that isn't the case in Coconino County.

"For most of us, that's not where we are here, yet we're in this crisis now," Horstman added. "What can we do to work with the insurance companies to get a checklist, if you will, to assist in taking the actions we can as individual property owners or even neighborhoods to make sure that we have coverage?"

In response to Horstman's question, Aumann reiterated that the situation is complex for Coconino County and the implementation of the IBHS Wildfire Prepared program's standards at both an individual parcel level and community scale "will really have a meaningful impact to affordability and availability of insurance."

He also suggested residents work with an independent insurance agent who is familiar with the region in order to shop for coverage with multiple carriers. In addition to the "standard admitted market," Aumann explained that there's the excess and surplus lines insurers that can offer specialized insurance and "focus a lot of times on high-risk properties."

"I know that's not an immediate overnight solution. IBHS should hopefully be able to provide some more information in terms of the status of their rolling out that program across the West," Aumann said. "Their guidance and resources for property owners exists today and homeowners can look at that and try to meet that level of mitigation."

According to Lucinda Andreani, Coconino County's Flood Control District administrator, the next presentation in the series -- currently scheduled for the board's Sept. 30 meeting -- will include Michael Newman from the IBHS to detail how home hardening has gradually become the core strategy in reducing risk.

Aumann advised the board to inquire about the potential for Arizona to adopt similar standards during the upcoming public forum in response to District 3 Supervisor Tammy Ontiveros' question regarding the status of a certification program by IBHS for Arizona residents.

Questions from other supervisors, such as what happens if neighboring homes did not follow similar IBHS standards and left a homeowner's property vulnerable or how to find grant funding for the potential mitigation remodeling, added to the complexity of quickly making an impact on policy availability or discounts.

"Unfortunately there aren't any kind of quick, fast fixes that will solve these challenges. It's a long-term investment and ongoing investment," Aumann said. "Fortunately, we are seeing increasing attention, exponentially so. Just in the last few years, awareness of the issue, with wildfires happening in LA and Hawaii and these various towns across the West, we are seeing a steady drumbeat of communities and leaders advocating for more action and more resources."

Board Vice Chair and District 2 Supervisor Jeronimo Vasquez also suggested residents push elected officials at the state and federal level to make changes on insurance policies.

"We do go -- as part of our state and federal lobbying -- we do go push for the need for fire insurance and flood insurance reform," Vasquez said. "But they need to hear from you, their constituents, about this need. ... We need your help to go lobby those higher levels that actually make the policy that can change the laws to make it so that it's more affordable or at least more accessible for our communities."

For more information regarding the increased risk for insurers based on the rising wildfire impacts due to weather changes and a recent spike in homes being built within higher-risk areas, as well as recent losses by insurance companies over the past few years, Aumann's entire presentation can be viewed at youtube.com/@CoconinoCounty or at coconino.az.gov/3286/The-Wildfire-Crisis-in-Coconino-County