One type of catastrophe home and business owners must continually be vigilant of is wildfires, which are difficult to anticipate because of their dynamic nature and rapid spread.
The BC Wildfire Service reported nearly 200 active wildfires as of September 4, with more than 60 burning in the southeast. Between April 1 and September 4, the BC Wildfire Service recorded 1,426 wildfires that burned 62,212 hectares of land in British Columbia.
Dozens of wildfires are also actively burning in Alberta. Environment Canada has issued air quality warnings for much of the province as wildfire smoke spreads.
Despite the ongoing threats, there are notable differences between the wildfire season this year and last year, according to Markham Sandulak (pictured).
“This year, wildfires are impacting fewer areas than average, and it’s affecting areas that are less densely populated,” noted Sandulak (pictured), a senior risk control consultant at CNA Canada.
“There are fewer assets at risk and fewer sound bites on the news because of the lower number of evacuations. The wildfires are not threatening as many populated areas compared to last year.”
Sandulak, who specializes in natural hazard exposure analysis and climate change, spoke to Insurance Business about wildfire trends and challenges this year. The seasonal peril remains fraught with challenges for underwriters.
“The peril only represents itself for a portion of a policy term, between five to six months. It’s very dynamic, changes year to year, month to month, week to week, and no two seasons are identical,” Sandulak said.
Another challenge for underwriters is that models for identifying wildfire risk are built on statistical summaries of past seasons. Because of the variability of wildfires, the models are “very limited in their scope,” according to Sandulak. “It makes determining an individual property’s wildfire exposure much more difficult,” he added.
Even within the scope of one season, a property that may not have been at risk can suddenly develop an exposure, which is why a below-average wildfire season doesn’t mean brokers and their clients should let their guard down.
In the lead-up to traditional wildfire season, which begins in April and winds down in September, Sandulak said the conversation between underwriters and brokers should start as early as possible to identify the inherent risks, which vary per location, and to lay out mitigation strategies.
CNA Canada’s Risk Control department has published a resource for brokers and clients on business resiliency to boost their clients’ preparation. Sandulak recommends property owners maintain a defensible space around structures, which means pushing back vegetation and removing combustible materials.
Proactively heading off wildfire risk also entails choosing fire-resistant materials during construction or renovation. Finally, having an incident response plan is a must-have for preparing for wildfire season.
“The plan would include pre-event preparation, such as identifying when a wildfire threat is present and securing the facility when evacuation is ordered. Owners should also have a post-event recovery strategy that is always evolving based on the changing needs of the individual property and operations,” noted Sandulak.
Experts like Sandulak are on hand to evaluate clients’ wildfire exposures and propose recommendations to minimize them. “We also have an active CAT Committee that monitors wildfires throughout the season using a real-time dashboard, which links up with our claims department. This way, we know which policyholders are at risk and can give advisory notices or follow up on any impacted properties,” he added.
CNA Canada maps fire hazard potential using a complex model that factors property characteristics such as land use, vegetation cover, terrain slope and altitude, and proximity to developed areas like roads and towns.
Sandulak explained: “We can very quickly identify properties within the interface between wild lands and urban areas, which are the biggest risk area. Using these assessment tools, we can develop a weighted matrix to quantify the wildfire exposure relative to a property.”
Brokers and property owners should note that smoke damage is the most common claim arising from wildfires beyond physical damage incurred from a fire. In the aftermath, buildings often must be decontaminated for smoke, which can drive up recovery costs.
“If you have a healthcare facility, a research and development facility, or something similar that requires a very clean area of operation, decontamination and business interruption costs can be high,” said Sandulak.
Business interruption is another critical factor for brokers and their clients to consider. While a wildfire event may not directly impact a business, closed roadways could hamper access to facilities, or power interruptions could result in product spoilage. Companies should also consider special arrangements for employees who can’t evacuate and must shelter in place.
“From a broker perspective educating clients on wildfire risk is important and should be considered in their emergency plans. Businesses can put up water barriers and maintain their defensible space, but so much of [wildfire risk] is dependent on factors out of their control,” Sandulak admitted.
Inevitably, climate change will continue to impact wildfire exposures in the coming seasons. Hotter and longer-lasting heat waves will spur more uncontrollable blazes. But continued expansion into the urban-wildland interface also contributes to changes in individual wildfire risk. This underscores the need for proactivity by underwriters, brokers, and clients alike.
“As we grow our cities and explore new areas for natural resources, it puts us in direct competition or conflict with those wildland areas. We’re pushing our boundaries into that hazard area, which means we are putting more people and property in harm’s way,” Sandulak said.
Preparation against the exposures is vital – although uncontrollable, the damage caused can be mitigated more efficiently with a thorough resiliency plan.
