Chris Folkman, senior director of product management at RMS, was interviewed by Paula Newton on CNN’s Quest Means Business program on Monday, November 12, about the impact of the California wildfires.
Paula asked Chris about the range of factors that have made these wildfires so intense, and also about the potential causes of the fires. Chris explained how the fires could have started and how the almost perfect conditions for the fire produced such a rapid spread. For the Camp Fire in Northern California, deaths were caused by the fire’s sheer speed that had overwhelmed residents as they tried to escape from the path of the flames.
Describing the scale and savagery of the wildfires currently burning in California is difficult to do, but a simple recounting of the statistics is a good starting point. They are thus:
At the time of writing, fifteen wildfires are now burning more than 280,000 acres (~113,000 hectares) in California. Collectively, they have laid waste to almost 7,000 homes and businesses. 31 people have died in the fires. 300,000 more were evacuated. 12,000 firefighters are working the front lines, making admirable progress at containment.
The biggest of these events, the Camp Fire (named for the road of its point of origin) is the most destructive wildfire in history, with 6,700 structures burned. During a period of particularly intense wind, it spread at a rate of more than one football field per second. Entire towns in its path are effectively destroyed.
Catastrophe modeling remains work in progress. With each upgrade we aim to build a better model, employing expanded data sets for hazard calibration, longer simulation runs, more detailed exposure data, and higher resolution digital terrain models (DTMs).
Yet the principal way that the catastrophe model “learns” still comes from the experience of actual disasters. What elements, or impacts, were previously not fully appreciated? What loss pattern is new? How do actual claims relate to the severity of the hazard, or change with time through shifts in the claiming process?
After a particularly catastrophic season we give presentations around ”the lessons from last year’s catastrophes.” We should make it a practice, a few years later, to recount how those lessons became implemented in the models.
As an organization, it is always great to get recognition from the industry for the work that you are doing; and industry recognition does make a real difference to the teams that work so hard to produce robust, quality solutions that are solving the problems that the market faces. And so, on September 27, off we went to Cipriani 25 on Broadway in New York, for the Eleventh Reactions Annual North America Awards, with RMS receiving the “2018 North America Risk Modeler of the Year” award.
This award is decided by votes from the industry and it recognizes our reputation for providing best-in-class support and leadership to our North America clients, and especially at times when insight is so critical to a business — such as during the significant cat events that ran through 2017. It also provides an endorsement for the approach that RMS is taking more generally to anticipate and deliver on the needs of the North America market, to keep pushing the boundaries and break new ground, to help a growing client base across the industry ranging from reinsurers and carriers through to capital markets.
Memories of last year’s Wine Country fires in Northern California and the Thomas Fire in Southern California are top of mind as we look at the unfolding wildfire events across the state, especially the notable Carr Fire to the northwest of the city of Redding in Shasta County, with a population of around 92,000.
Initial observations show similarities to the Wine Country fires in terms of its speed and ferocity, as the Carr Fire spread rapidly overnight on Saturday, July 28, nearly doubling in size. As of 02:00 UTC on Thursday, August 2, the fire is reported to have burned about 121,000 acres (~49,000 hectares) — see figure one below, destroying 1,546 structures, damaging an additional 255 structures, and forcing the evacuation of 38,000 people, according to CAL FIRE and local officials.
This is a taster of an article published in the latest edition of EXPOSURE magazine. For the full article click here or visit the EXPOSURE website.
Hurricanes Harvey, Irma and Maria (HIM) tore through the Caribbean and U.S. in 2017, resulting in insured losses over US$80 billion. Twelve years after Hurricanes Katrina, Rita and Wilma (KRW), EXPOSURE asks if the (re)insurance industry was better prepared for its next “terrible trio” and what lessons can be learned.
The latest edition of EXPOSURE is essential reading for risk professionals, as we look back at what can be learned from last year’s events and look forward to the future including new challenges faced by the global risk management community and new opportunities to capitalize on.
EXPOSURE offers a unique perspective with a clear mission “… to provide insight and analysis to help insurance and risk professionals innovate, adapt and deliver.” And with a new North Atlantic hurricane season nearly upon us, and memories of HIM (Hurricane Harvey, Irma and Maria) fresh in the industry’s collective consciousness, EXPOSURE talks to the industry and paints a picture of a mature, responsible insurance sector that managed HIM with certainty and confidence. Cyber has also demonstrated its potential as a global systemic risk, and EXPOSURE looks at how events such as an outage of a major cloud services provider could generate economic losses as high as Superstorm Sandy.
New findings into the effect of a magnitude 7.0 earthquake originating from the 74 mile-long (119 kilometer) Hayward Fault in the California Bay Area, suggests that fire following earthquake alone could see more than 52,000 single-family homes burn. Earlier this month, the United States Geological Survey (USGS) released new results for their HayWired scenario, a scientifically plausible magnitude 7.0 earthquake on the Hayward fault. The hypothetical HayWired earthquake occurs at 4:18 p.m. on April 18, 2018, the anniversary of the magnitude 7.8 earthquake which struck San Francisco in 1906. The mainshock ruptures the fault along its length for about 52 miles (83 kilometers). The impact of such an event on one of the most densely populated and interconnected areas of the U.S. West Coast — with a population of about seven million people — would be disruptive.
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.
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.