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Thomas Fire Loss Estimate

RMS has produced estimates for the insured loss arising from the Thomas Fire that affected the Southern California counties of Ventura and Santa Barbara in December 2017. The estimate will fall between US$1 billion and US$2.5 billion, and includes loss caused by burn or smoke damage to personal, commercial, and industrial lines of business, along with insured loss from business interruption and additional living expenses. It excludes loss to automobile and agriculture lines of business and all damage related to the recent mudslides that impacted the same area. This estimate was calculated using RMS high-resolution exposure data and comparisons against historical fire damage, loss, and claim data.

Historically, fires that have damaged approximately 1,000 structures have not exceeded US$1 billion in insured loss. However, RMS notes significant sensitivity of total exposure value to the burn perimeter extent. Adding a 500-meter buffer to the Thomas Fire burn perimeter, as retrieved from Geospatial Multi-Agency Coordination (GeoMAC), increases the total exposure value from around US$2.5 billion to over US$10 billion and to nearly 14,000 structures.

Wildfire Loss Table

Table 1: Thomas Fire Perimeter Exposure Data

While the burn perimeter was limited in its extension into the wildland-urban interface, the large amount of exposure just outside the fire perimeter may lead to increased claims counts related to smoke damage, business interruption, and additional living expenses, compared to other historical fires. Prior historical events that have damaged or destroyed approximately 1,000 structures, such as the 2015 Butte Fire, 2003 Old Fire, and the 2017 Atlas Fire, have produced approximately two to five times that number in total industry claims. Claims counts of around ten times the number of affected structures are possible from this event, resulting in a higher than average total insured loss.

In addition, the fire directly or indirectly impacted several commercial structures, including the complete destruction of the Vista Del Mar hospital in Ventura, and business interruption to other hospitals, oil field equipment, train services, and schools. This leads to elevated levels of loss beyond the direct damage from flames, resulting in a greater likelihood of reaching the upper bound of the range estimate.

Historical Fire Context

With 1,063 structures destroyed and 280 damaged according to CAL FIRE, compared to 3,450 structures located within the fire perimeter according to RMS high-resolution exposure, the damage percentage within the footprint is approximately 40 percent. In context, that percentage is in-line with other historical fires, outside of the exceptional Wine Country fires in October 2017 as shown in Figure 1.

A key factor not present in the Thomas Fire that differentiates the Wine Country Tubbs Fire, was the occurrence of an urban conflagration that resulted in highly concentrated damage. This did not occur in the Thomas Fire, most likely due to a combination of risk awareness, available fire-fighting capacity, community-level risk mitigation, and weather conditions that were less extreme.

Wildfire SoCal Burn

Figure 1: Percentage of damaged or destroyed structures within historical burn perimeters

The Thomas Fire burn footprint includes areas that have experienced multiple large fires in the past, such as the 1979 Creek Road Fire, the 2006 Day Fire, and the 2007 Zaca Fire (see Figure 2). In fact, there have been over 200 recorded fires in the area since the late 1800s. Before this event, the largest fire in Ventura County was the 1932 Matilija Fire that covered 220,000 acres (89,030 hectares), representing the fifth largest California event.

However, unlike the Thomas Fire, prior historical fires in the area have not resulted in large numbers of destroyed or damaged structures. At 1,063 destroyed structures, the Thomas Fire ranks seventh on the list of most destructive fires in California, and would have placed fifth on the list if not for the Tubbs (first) and Nuns (fifth) fires from the 2017 Wine Country event. Increases in developed area throughout the footprint and additional burning near the coast has likely contributed to a greater number of structures burned compared to prior historical events.

Wildfire SoCal Burn

Figure 2: Historical burn counts since 1980 around the Thomas Fire perimeter

Montecito Mudslides

After four to six inches (10 to 15 centimeters) of rainfall on the Thomas Fire burn scar in early January this year, significant mudslides caused widespread destruction across Montecito and other communities. The damage includes 128 homes and six commercial properties destroyed with an additional 307 homes and 17 commercial properties damaged. Many of these affected structures and families were also part of the evacuation efforts from the Thomas Fire in December.

The combination of a late season, large wildfire event, when the winter rainy season along the West Coast has typically already started, coupled with a severe rain storm directly centered on the burn scar created a perfect scenario for mudslides to occur. While mudslides along the coast of California have been a known issue for a long time, the close temporal proximity of the fire and the rain made this a particularly notable event.

The U.S Geological Survey (USGS) created an estimate of basin debris flow probabilities before the mudslides occurred, which are based on the forecasted rainfall from the event. The figure below overlays these probabilities with the Thomas Fire perimeter and the destroyed structures in the Montecito area. It highlights the spatial correlation between the higher debris flow probabilities and the impacted areas downslope from the burn scar.

Wildfire SoCal Mudslide

Figure 3: Thomas Fire perimeter, USGS debris flow probabilities, and structures destroyed by mudslides (Perimeter source: GeoMAC; Structure Data source: CAL FIRE Preliminary Damage Surveys)

The question now for affected residents and business owners becomes one of insurance. To be covered under a standard homeowner’s policy, the damage from these mudslides must be attributed directly to the Thomas Fire. Without attribution to the Thomas Fire burn scar, the damage would typically be excluded and is left to a separate flood policy, if present.

Given the low penetration rates of flood coverage nationally, as seen even in the flood prone area of Houston with Hurricane Harvey (see RMS press release), it is unlikely that flood policies are prevalent throughout the affected area. This leaves home and business owners in the difficult position of making the case that the mudslides were a direct result of the wildfire. It remains to be seen what the outcome of this event will be in terms of insurance payout, but it will be closely monitored to understand the future of how these two perils — flood and wildfire — interact and result in highly correlated catastrophic losses.

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December 20, 2017
California Wildfires: Exposure Impacted by the Thomas Fire

As the Thomas Fire continues to climb the list of the top twenty largest California wildfires for both acres burned and structures destroyed, many in the insurance industry are asking how this fire, in addition to the other burned areas across Southern California, will impact their portfolio. A critical element in understanding the industry impact, but also the significance for an individual book, is the insured value of the burned structures. The Thomas Fire, which at 60 percent containment at the time of publication is already the second largest fire in California history with a reported burn area of 272,000 acres (110,074 hectares), has affected several different communities with wide ranges of average insured value. Figure 1: Top 20 Largest California Wildfires. Source: CAL FIREWhile damage assessments are still ongoing and counts of damaged or destroyed structures are actively being reported, we can use RMS high resolution exposure data and the latest burn footprint available from Geospatial Multi-Agency Coordination (GeoMAC) to gain a perspective on the total amount and average value of exposure across different areas within the perimeter. Figure 2: Map of the Thomas Fire Perimeter. Source: GeoMAC as of 0100 UTC on December 18, 2017.As of December 18, portions of ten different ZIP codes are located within the Thomas Fire perimeter, spanning across Santa Barbara and Ventura counties. While the fire started north of Santa Paula around sunset on December 4, it has now spread approximately 50 miles (80 kilometers), primarily to the west, to the hills north of Montecito and Santa Barbara. So far, during two weeks of spread the fire has impacted the communities of Santa Paula, Ojai, Ventura, Oak View, Wheeler Springs, Carpinteria, Montecito, and several others. Each of these communities vary in average residential exposure value, making “average” estimates across the entire perimeter more difficult. Table 1 below compares the residential exposure for the high value 93108 ZIP postal code that spans the Montecito area against the exposure outside of that ZIP code. All values correspond only to exposure located within the Thomas Fire perimeter, according to the RMS high resolution exposure database. The average residential structure exposure value for 93108 is on average three and a half times higher than structures located outside of that ZIP code. Structures in 93108 accounts for only three and a half percent of the number of structures within the fire perimeter, but 12 percent of the total exposure value. Table 1: Residential Exposure Values in the Thomas Fire Perimeter.As noted in prior blogs about the Wine Country wildfires, it is important to note that only a fraction of the structures within the perimeter will be damaged or destroyed in this event. The reported numbers so far from CAL FIRE are 1,024 structures destroyed and 250 damaged. Comparing this against the total number of structures within the perimeters, the ratio is approximately 37 percent, which is far lower than the 75 to 80 percent seen in the Wine Country wildfires in October this year, but higher than the other historical Southern California events that have been analyzed (Cedar in 2003 and Witch in 2007). Figure 3: Percentage of damaged or destroyed structures within historical fire footprints.Also, a comparison of the percentage of destroyed structures versus the total number in the perimeter between the Thomas Fire (1,024 destroyed versus 1,274 total or 80 percent) and the Wine Country Tubbs Fire (6,957 destroyed versus 7,443 total or 93 percent), raises important questions for understanding the key differences between the events. This may indicate a stronger presence of fire suppression, lower impacts of embers, more distributed exposure, differences in surface fuel characteristics (e.g. chaparral versus forest) or a combination of these and other factors in the Thomas Fire. A further review of these event-specific factors, including the weather conditions, will provide more clarity around key drivers of these differences. By extracting information about the differences between these two events, RMS will continue to build insight into the development of the RMS® U.S. Wildfire HD model, part of the RMS North America Wildfire HD Models suite, due for release in 2018. RMS is still monitoring the ongoing events affecting Southern California and will continue to provide updates through RMS Owl.…

December 07, 2017
California Wildfires: Special Climate Conditions Drive Enhanced Risk
Kevin Van Leer
Kevin Van Leer
Senior Product Manager, Model Product Management

As a senior product manager in the Model Product Management group at RMS, Kevin is responsible for RMS climate-peril products for the Americas, including wildfire and custom vulnerability analytics. Kevin has been actively involved in model releases for both severe convective storm and hurricane models over the last four years at RMS. Kevin holds a master’s degree in atmospheric science from the University of Illinois at Urbana-Champaign, where he authored a thesis on tornado-genesis and severe convective storms, and a bachelor’s degree in atmospheric science from Purdue University. He also holds the Certified Catastrophe Risk Analyst (CCRA) designation from RMS. Kevin is a member of the American Meteorological Society (AMS), a mentor for the AMS Board of Private Sector Meteorologists, and a voting member of the ASCE Standards Committee on Wind Speed Estimation in Tornadoes.

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