Florida wildfires draw attention to climate change – Business Insurance

“The wildfires burning across the state of Florida this month highlight the increasing danger a changing climate poses in the southern United States for this type of catastrophic event. Wildfire risk is generally perceived to be a western United States problem, and the majority of major insurance losses caused by wildfires to date have occurred in California; but southern U.S. states have been plagued by wildfires in recent years, including the more than 100 wildfires actively raging across Florida this month. “Traditionally, we see the wildfire exposures in the western half of the United States, but recently the South is experiencing warmer-than-average temperatures and drier-than-average seasons,” said Jim Clifford, director of safety and prevention programs for insurer USAA based in San Antonio, Texas. “Florida has a history back and forth, having a drought occasionally, and the Everglades have extensive forest — and they tend to burn quite easily when there’s a little bit of a drought.” Climate change is causing increases in temperature across the Southeast, according to the U.S. Environmental Protection Agency. Heavy downpours have increased in the Southeast, but the region has also experienced periods of extreme drying, according to the agency. On April 11, Florida Gov. Rick Scott declared a state of emergency because of the wildfires and the high potential for increased wildfires to continue this year as forecasts predict hotter and drier conditions than normal in the state during the coming months. “That’s really peculiar for Florida, because one of the things wildfires hate is humidity,” said F. Douglas Hoyle, Philadelphia-based loss control director at Pennsylvania Lumbermens Mutual, an insurer of wood and related products. “The humidity has been down significantly in Florida this year, and that’s what experts are saying has led to significant wildfires in Florida.” Florida wildfires have burned 250% more acreage during the first three months of 2017 than during the same time period last year. “Three months out, it looks like there might be some hope on the horizon, but the next month in Florida looks to be the worst,” Mr. Clifford said, citing data from the National Oceanic and Atmospheric Administration’s Climate Prediction Center. “Central Florida looks really bad as far as the drought persisting for the next month or so.” The major modeling firms do not currently have plans to forecast insurance losses related to the Florida wildfires. Wildfires tend to be less costly from an insurance perspective than hurricanes, with the largest estimated insurance loss in the United States caused by wildfire being the $1.7 billion due to the 1991 Oakland Hills Fire, according to Property Claim Services, a Verisk Analytics business. However, the Fort McMurray fire in the province of Alberta, Canada, became the costliest natural disaster in Canadian history last year, causing a CA$3.6 billion ($2.67 billion) loss, more than twice the cost of the previous largest natural disaster: the 2013 southern Alberta floods, which cost CA$1.7 billion ($1.3 billion) in insurance claims, according to the Insurance Bureau of Canada. “Wildfire losses are typically dominated by residential properties,” Tammy Viggato, Boston-based scientist at AIR Worldwide, said in an emailed statement. “This is because most wildfires impact the outer regions of an urban area, but don’t penetrate into the center of urban areas where more commercial properties are located, although notable exceptions would be the fires in Fort McMurray and Gatlinburg.” The 2016 wildfires in Gatlinburg, Tennessee, caused $842 million in insurance losses, according to the Tennessee Department of Commerce and Insurance. “The Gatlinburg fire burned into the downtown area, and there were a number of businesses that were lost in that fire,” said Steve Quarles, chief scientist for wildfire and durability, Insurance Institute for Business and Home Safety Research Center in Richburg, South Carolina. “That was an eye-opener for the business community.” In addition to the property losses, business interruption losses can be sizable, as the areas are evacuated and roads are closed, meaning both visitors and employees will likely not be able to access the businesses for some time, which could lead them without enough cash to pay their bills, according to experts. “People don’t think of all those ripple effects,” said Michele Steinberg, wildfire division manager for the National Fire Protection Association in Quincy, Massachusetts. Home and business owners can minimize the risks to their properties by creating setback distances between the properties and burnable fuels such as mulch, which is critical because lit embers can come in contact with flammable material and set the property on fire, according to experts. “To protect businesses, it’s important to do things that minimize the opportunity for these embers landing on or near the building” and resulting in ignition, Mr. Quarles said. USAA offers a discount on insurance premiums for communities in seven Western states participating in the NFPA’s Firewise Communities program, which recognizes those that take steps to prepare for and mitigate wildfire risks. The insurer covers the risk in standard property policies with no differences in contractual limitations or deductibles compared to other covered perils, he said. “Wildfire losses tend to be pretty easy to adjust,” Mr. Clifford said.”


About John Fagan

John is a Jacksonville native who grew up on the First Coast. He graduated from Bishop Kenny High School in 1975 and went to college at Florida State University where he completed a 4-year program in 3 years. John graduated from the Florida State University College of Business in 1978 and went straight into Florida State University College of Law. While in law school, John earned a position on the prestigious Law Review Board serving as its Business Editor. As a law student, John studied in the Oxford program. He also interned with the Florida Legislature working in the Florida House of Representatives Criminal Justice Committee. John was admitted to the Florida Bar in 1981. John began his legal career as a law school intern in the State Attorney's Office in Jacksonville in 1981. After his internship, legendary State Attorney Ed Austin hired John as a full-time Assistant State Attorney for the Fourth Judicial Circuit (Clay, Duval, and Nassau Counties). As a prosecutor, John tried jury and non-jury trial on charges ranging from DUI to Murder. In 1983, John moved from the State Attorney's Office to begin his career in private practice. He has practiced law for 30 years on the First Coast. For the last 20 years, John and his family have made Clay County their home. John limits his practice to personal injury and disability cases. While there are many fine attorneys in Clay County, John is one of only a few Clay County attorneys who limit their practice to personal injury and disability cases. John takes pride in helping clients resolve injury claims in ways that avoid the stress, uncertainty, and the expense of unnecessary litigation. Professional Activities John is the past President of the Clay County Bar Association and has served on the Board of the Clay County Bar Association from 2009-2013. He is an active member of the Florida Bar, and the Federal Bar of the Middle and Southern Districts of Florida. He is also a member of the American Association of Justice, the Florida Association of Justice, the National Organization of Social Security Claimants' Representatives, and the National Organization of Veterans' Advocates. Service to the Community John is involved in the Clay County Community serving as a member and Director of the Rotary Club of Orange Park, of the Clay County Bar Association, and the Putnam County Bar Association.
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