6.1.9.1 Costing the Earth: Insurance at the Wildland Urban Interface

“In the visionary plans for the new city set out by Sir Christopher Wren in 1667, there was even a site for a public “Insurance Office”. In the Rebuilding Act of the same year, only 9,000 houses were licensed, and all were to be built of brick or stone, with roof tiles”. Muir-Wood, 2016.

Of the many innovations that fire has catalysed, insurance is one. A concept conceived in the 1630s in response to London’s then numerous house fires, its introduction was stalled by five decades by the English Civil War. But, from the flames of the Great Fire arose the first private fire insurance scheme, which founded by Dr. Nicholas Barbon, marked the birth of an industry that, from its materiality to its management, would have a profound impact on the built environment. From the outset, insurers have not merely evaluated both the quantitative and qualitative nature of the risks that are presented by fire, but played an active role in reducing them. Integral to the creation of the London Fire Brigade, other examples of the way in which the insurance business has shaped our relationship with fire include the funding of science laboratories concerned with establishing fire safety standards [i.e. the Underwriters Laboratories (UL), Illinois, est. 1894, and the Insurance Institute for Business & Home Safety, South Carolina, est. 2010]; stipulating what can and cannot be insured and why, and thus influencing where and how properties and their contents are built; developing risk models and other theoretical methods that help inform our understanding of current and possible future threats to human life and property, and disseminating the findings therefrom through publications and other media. While multi-national insurance and re-insurance firms actively evaluate their path ahead, and with the benefit of some of the most sophisticated data analyses systems yet created, and $80± billion is spent annually on the purchase of catastrophe insurance, both within the WUI and beyond, “the number of people and buildings in harm’s way keeps rising” (Muir-Wood, 2016, p.254). In California, in addition to the factors listed earlier, the state’s insurance scheme plays a hand, for its “decision to become “an insurer of last resort””, has incentivised developers “to build housing in some of the most hazardous and ecologically sensitive lands”, thus “furthering the cycle of fire suppression and catastrophic conflagration” (Gill et al, 2013, p. 449 citing Troy, 2007).

Adept at handling risk the insurance industry may be, but when, worldwide, insured losses from natural and man-made disasters hit $144 billion in one year [2017] (Swiss Re, 2018), against a backdrop of an ever-narrowing “protection gap” [variance between the amount insured and the actual cost of natural disasters] that “has quadrupled to $100 billion a year since the 1980s” (Carrington, 2016), systemic sector change isn’t so much an option, as a necessity for its survival. While that statement is universally applicable, it is particularly relevant in the U.S., as in the fiscal year 2017 it accounted for 50% of the global insured losses, the sum thereof an increase of 20% on the historical average (Tabuchi, 2018). Insurance losses from wildfires fast rising, the probability that, in some states, insurers will revoke access to coverage as can accommodate therefore is likewise. Signs of sector stress have been building for some time, and no less so than in California, where in 2016 state insurers refused to renew over 10,000 policies in fire-prone areas (Daniels, 2018). Thus, as is already the case with earthquakes, it is not untenable that within years Californian citizens could lose the capacity to insure their homes against wildfire. While policy makers are seeking to “limit insurers’ ability to cut coverage” in the affected areas (Ibid), when all is said and done economics not state bills will decide the matter. Yet further complicating the situation, wildfires aren’t the only disruptive agent that insurers have to deal with. Such is the scale of insurance fraud that in December 2017 the Federal Bureau of Investigation created a task force of which the explicit purpose is investigating wildfire fraud complaints in California (The Economist, 2018). The fraud typically takes the form of identity theft wherein criminals attempt to obtain aid by presenting themselves under the names, addresses and social security numbers of those that have lost their homes to wildfires.

Whether or not insurers pull fire protection policy access from fire-prone regions of the western U.S., numerous parties, including the Royal Society (2014), Urban Land Institute (Braunstein, 2014), and the United Nations (Almendral, 2014; Jones, 2016) are calling for greater investment in building resilience to wildfires and other natural disasters. Whereas, others have highlighted the need to “use post-disaster recovery and reconstruction processes to create better lives and livelihoods” in the aftermath of such events, wherein rebuilding works replicate not such vulnerabilities as stood before (World Bank, 2014). However, given that, despite the advent of such financial instruments as ‘catastrophe bonds’ that trade on a ‘Catastrophe Risk Exchange’ by means of providing “an interface between capital and nature” [which translates to spreading risk between nations] (Keucheyan, 2014, online), some governments have not the funds to afford to compensate citizens as have lost their homes and/or businesses to natural hazards, the extent to which existing buildings and infrastructure can be adapted is questionable.

>Continue to Chapter 6.1.9.2 here.

The thesis is also available in PDF format, downloadable in several parts on Academia and Researchgate.

Note that figures have been removed from the digital version hosted on this site, but are included in the PDFs available at the links above.

Citation: Sterry, M. L., (2018) Panarchistic Architecture: Building Wildland-Urban Interface Resilience to Wildfire through Design Thinking, Practice and Building Codes Modelled on Ecological Systems Theory. PhD Thesis, Advanced Virtual and Technological Architecture Research [AVATAR] group, University of Greenwich, London.