Wildfire Risks: How Cincinnati’s approach combines the best of data and personal connections

Pamela Simpson of The Insurance Journal interviewed Dorothy Sarna, the National Los Prevention Program director of The Cincinnati Insurance Companies, in California, Oregon, Montana, and other states to explore the carriers’ approach to high insurance worth networks in wildfires. Had to face increasing incidents of At the time of this September 2020 interview, more than 3 million acres were burnt in California and severe fires throughout the Pacific Northwest as extreme heat and winds carried dangerous embers in many rural areas over Labor Day weekend.

Dorothy Sarna has over 30 years of experience in risk management and loss prevention, building her wildfire expertise through training with the National Inter Fire Center, the National Fire Protection Association and FireWise USA. Since joining Cincinnati Insurance in 2015, Dorothy has focused on risk management and loss prevention for high net worth assets in the Western Region of the Americas.

What are the characteristics that would define a high net worth of a property?

In Cincinnati, our definition of a high net worth home is one that is occupied as a primary home and insured for $ 1 million or more. The figure is based on the replacement cost of that house, not the market value, as our coverage provides for the replacement of the home in the event of a total loss.

As a result of the catastrophic wildfires prevalent in California over the years, has Cincinnati banned insuring the homes of high net worth individuals in California?

As a result of all recent fire activity, we have more claimed data available, enabling us to take a more data-driven approach to the process. Instead of creating restrictions, we implemented new underwriting guidelines to help evaluate the acceptability of wildfire risks. First, we estimate how it is based for wildfires. Once we get the model indicators, we look at other characteristics that can determine if a fire can occur in a house. These factors include the condition and extent of building materials, topography, accessibility, defensible space, and managed landscaping. Those characteristics help us to determine whether, in combination with the model, we think we should accept or reject the risk.

Can you elaborate on the risk modeling techniques used by Cincinnati for properties in these high-risk areas?

The model to which we combine data from highly accurate geocoding and spatial analysis based on national hazard and risk models is subscribed to arrive at the prediction of severity and frequency. In addition to providing a score for severity and frequency, the model then takes into account individual risks – vegetable fuel, crown fire probability, wind speed, wind direction, smoke direction, road, network, firebreaks, structured density , Fuel island. more. Air characteristics and fuel availability have become important factors in modeling. Winds carrying embers in an area on properties with fuel islands or with flammable vegetation or debris can devastate a community. We saw this in 2018 with the Woolsey fire in Southern California, where about 100,000 acres were burned, destroying more than 1,600 structures spread across the area due to Santa Ana winds.

In addition to modeling for personal risk, we are also managing our risk at the company level. We engage in very active portfolio management to continuously analyze the overall risk level of this business line.

What type of guidance or solution is being offered during a risk reduction or loss prevention inspection at a high net worth home located in a wildfire risk area?

If a home is in a high-risk area, we have colleagues who conduct in-person inspections with more than 20 years of experience in evaluating brush and wildfire risks. First and foremost, we want to help homeowners build a defensive space around their home. We help them evaluate possible fuel sources at various intervals – immediately around their homes, then extend that analysis to 30 and 100 feet and up to 200 possible if possible. We are concerned about vegetation, debris and overhanding trees and strongly suggest that they be trimmed or removed. Fuel includes lawn furniture, toys, play sets, pergolas – any facilities that are combustible.

We also look at the construction and original year of the house. Current building codes specify closed vents and eaves, non-combustible construction, roofing, and attachments, but older homes often have building features that do not meet the code, and coals can land at or around the house, Can catch fire, or enter through a vent, to ignite from inside a house. Homes with any combustible exterior siding, roof, deck area, or overhang are also susceptible to damage due to direct flame contact or embers.

Are there any other wildfire-related services that provide high net worth to Cincinnati homeowners that independent agents should know about?

We have contracted with Wildfire Defense Systems, a leader in providing emergency response and suppression services to policyholders during active fire. When a fire is threatening one of our policyholders, WDS deploys union-certified firefighters who are trained and experienced in structure protection and wildland firefighting. When permitted to use, these respondents may clean vegetation, pressurize hot spots, install temporary sprinkler systems or, if necessary, apply gel or diluent to prevent the structure from setting fire. Do it

They are our eyes and ears during these emergencies. WDS sends me updates and photos after visiting each house. With that information, I am able to reach out to a homeowner and say, “I just heard from WDS, your house is fine.” The relief I have heard over the phone after informing a policyholder about their house is the most beneficial part of my job.

And during this whole process, I am also communicating with the insurance agent, because they have a relationship with the customer. It is really important to keep the agent aware of the situation as it unfolds so that they can support their client during very difficult times. Should damage occur, I immediately engage our claims colleagues. We will keep in touch with homeowners and work with them through the entire process of putting their lives back together.

As a final question, how would you respond to the concerns that the insurance industry cannot continue to sustain annual losses from wildfires in California?

As an industry, we have a history of finding innovative ways to help policyholders reduce and manage risk. Cincinnati started a non-recruitment program in California through The Cincinnati Specialty Underwriters Insurance Company, which gives us another opportunity to rewrite a high-risk business in California.

We want to continue to support independent agents who work with us and continue to offer solutions to policyholders in these high-risk locations. We know that we have to continuously evaluate our approach, and to do this, we are investing in the best technology and investing in our employees so that they understand from an underwriting and risk management point of view, how the forest Stay abreast of developments around fire risk. Finally, we continue to educate homeowners on measures to reduce the risk to our property’s surroundings and structures. Literally, we best serve our agents and their clients through a combination of exemplary tools and people.

For more information about the Cincinnati wildfire itinerary www.cinfin.com.

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