As Wildfires Raged, Insurers Sent in Private Firefighters to Protect Homes of the Wealthy
November 05 2017 - 8:29AM
Dow Jones News
By Leslie Scism
During the worst of last month's wildfires in Northern
California, Dick Fredericks got a phone call that passed on "some
magical words": His house was safe.
The message from a private firefighting service hired by his
home insurer, Chubb Ltd., was accompanied by an email with some two
dozen photos, including one of the service's firefighters pumping
water from Mr. Fredericks's swimming pool to extinguish a brush
fire on his Sonoma Valley property.
Increasingly, insurance carriers are finding wildfires, such as
those in California, are an opportunity to provide protection
beyond what most people get through publicly funded fire fighting.
Some insurers say they typically get new customers when homeowners
see the special treatment received by neighbors during big
fires.
"The enrollment has taken off dramatically over the years as
people have seen us save homes," Paul Krump, a senior executive at
Chubb, said of the insurer's Wildfire Defense Services. "It's
absolutely growing leaps and bounds."
The services are complimentary to policyholders in certain ZIP
Codes or states that are prone to wildfires. Some insurers require
policyholders to enroll in the programs in advance, to give
permission for workers to access the property and to obtain contact
information.
Chubb's service, which began in 2008, is offered in 15 states.
American International Group Inc. launched its Wildfire Protection
Unit in 2005 in 14 California ZIP Codes. The unit has since
expanded to 385 ZIP Codes in California, Colorado and Texas. At
least one other insurer, Privilege Underwriters Reciprocal
Exchange, or PURE, also extends the services.
Tens of thousands of people benefit from the programs. For their
overall insurance, policyholders can pay anywhere from thousands of
dollars in annual premiums with these firms to more than $100,000,
depending on the number and types of homes and other possessions
they insure.
Consumer advocates lament that the programs mean the rich can
get better fire protection.
"Do we like the idea of a two-tier system for wealthy
individuals and people with less means? No," said Amy Bach,
executive director of United Policyholders, a national
insurance-focused consumer nonprofit based in California.
"But do we want to see their approaches work? Yes," she
added.
The private-sector activity calls to mind the early days of fire
insurance in the U.S., in the 18th and 19th centuries before
municipal fire services became common. Back then, metal-plaque
"fire marks" were affixed to the front of insured buildings as a
guide for insurers' own fire brigades as to which fires to put out,
said spokeswoman Loretta Worters of the Insurance Information
Institute.
Scott McLean, a spokesman for the California Department of
Forestry and Fire Protection, known as Cal Fire, said the state has
procedures in place to coordinate with the private-sector crews.
They are allowed to visit properties only after obtaining
permission of an incident commander.
The insurers run "intelligence" or "command" centers from which
they deploy these field forces.
"Our goal is to be out in front of a fire...before the fire is
burning up the hillside," said Stephen Poux, head of
risk-management services and loss prevention at AIG.
The private crews seek to clear combustible items from a
property: wood piles, outdoor furniture including cushions, weeds,
straw floor mats and leaves in gutters. They may set up sprinklers
with water available at the location, or with water they bring to
the site, along with sprinkler lines and a generator to operate
them.
Insurers sometimes spray a property's perimeter with fire
retardants, such as foams or gels. The may even spray the home
itself, though they typically don't take this step until a fire is
closing in.
"The foam is short-lived, which is why we proactively work with
members and take multiple precautions," said Martin Hartley, chief
operating officer of policyholder-owned insurer PURE.
The logistics are challenging, he said, because crews may not
get access later if they have misjudged the fire's speed.
Mr. Fredericks, the founding partner of Main Management Fund
Advisors LLC in San Francisco and a former U.S. ambassador to
Switzerland and Liechtenstein, said he began checking in with
Chubb's Wildfire Defense Services team as fire became a danger to
the Sonoma area.
"The fire was so pervasive," he said. "As a homeowner you want
to try everything to save your home, and the first responders can't
be everywhere at once. The fact that Chubb supplemented an
unbelievable effort by the first responders is probably what saved
our home."
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
November 05, 2017 08:14 ET (13:14 GMT)
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