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- Boosting Resilience to Extreme Events Is an Insurance Industry Priority
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Nearly a year after the deadliest and costliest wildfire in
"While our research has been in the works for the last year because of
"Building codes that incorporate fire-resilient construction, such as fire-resistive roofs, can help protect new housing stock from wildfire damage," the I.I.I. states, in its just-released white paper, Fighting Wildfires with Innovation, which cites the insurance industry's support for groups like Stronger California. "For example, an analysis found that 51 percent of houses in
The I.I.I.'s paper explains how insurers are encouraging customers to harden their homes by installing Class A fire-rated roofs, metal screens which cover all vents, and double or multi-paned tempered glass windows. "Creating what's called a defensible space around a structure can significantly reduce the risk of embers and surface fires spreading and igniting the structure," the I.I.I.'s paper also notes.
Moreover, the I.I.I.'s white paper addresses the regulatory challenges insurers face amid the growing frequency and severity of wildfires, especially in
"Instead, insurers are often required to rely only on their own historical loss data to set prices, regardless of what the anticipated future risk might be," the I.I.I.'s paper says. "This could result in underpricing of wildfire risks in some areas, since there might be as yet little historical loss data for catastrophic losses--even in high-risk areas. Some have argued that the cumulative effect of these and other regulations may be creating an unsustainable financial environment for insurers that seek to offer property insurance in high-risk areas, since they cannot accurately price risk."