Understanding Wildfire Risk: Capturing the Full Spectrum of a Complex Threat
Until 1990, wildfire was a highly manageable peril for the insurance industry, resulting in less than $100 million per year of insured losses. Then something changed.
From 1991 to 2018, North America experienced tens of billions of dollars of losses, dozens of catastrophic wildfires, and devastating casualty counts in a series of fires that became progressively larger, more intense, and more damaging.
Recent wildfires in California, Colorado, and Tennessee have set off alarm bells in the insurance industry and highlighted the need for better tools to manage the risk, identify problematic accumulations, and understand return period loss metrics. Probabilistic models can account for the conditions that turn a small wildfire into a catastrophe. They also provide insights on the effects of increased development in high risk areas, , the impact of fire suppression, and the value of targeted mitigation measures.
The RMS HD wildfire model provides this critical insight with millions of high-resolution simulated and historically recreated wildfires across the entire Continental U.S. Based on a 50,000-year climate simulation and calibrated with nearly a billion dollars in claims data, the model provides unprecedented detail on the range of loss outcomes for any location or portfolio, to better manage and price this difficult peril.
Wildfire must be managed with the same rigor as any other natural catastrophe peril, and the RMS wildfire solutions are designed to answer important questions facing the re/insurance industry, including:
+What is the 100-year wildfire loss for the U.S.?
+With the increase in exposure, will we see a US$ 20 billion wildfire event loss?
+What role do mitigation measures play in the probabilistic view of risk?
Continental Coverage at High Resolution
Delivers wildfire risk quantification at continental scale, and high resolution across the contiguous U.S., while providing the realistic representation of fire behavior and variations across different regions. This enables loss metrics from the portfolio level down to the individual location.
Assessing the Impact of Embers and Urban Conflagrations
The contribution of embers to wildfire hazard severity inside and outside a fire perimeter is a critical component in RMS wildfire products. Without explicit representation of this element, the spatial coverage and distribution of the hazard is incomplete, and an understanding of house-to-house urban conflagrations may be overlooked.
Understanding How Smoke Damage Contributes to Event Losses
In addition to direct damage from burning structures, losses can arise from smoke damage. Burn and smoke are covered in a standard homeowner’s policy, and quantifying the relative contribution of each can enable more relevant coverages and present new opportunities for insurance products, such as smoke cleanup.
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