S. E. Williams
Staff Writer
This is the second in a series of articles offered by The Alpenhorn News aimed at exploring the complex and symbiotic relationships between insurance carriers, government policies and fire agencies.
�� 2011 was a record year for disasters in America, and as a result did nothing to quell the anxiety experienced by local homeowners in recent years over the availability and reliability of homeowners� insurance policies.
�� National Public Radio reported that the nation experienced a record-breaking twelve major disasters last year. Each disaster accrued over a billion dollars in damages, and as a result some large insurance carriers were quick to leverage these disasters as justification to once again increase rates.��
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�� In recent years, California communities, like those in the San Bernardino Mountains, have seen insurance premiums escalate even as the availability of insurance providers serving the area declined, while others who still offer policies continue to find creative ways to either cancel policies or not renew them.
�� Reports indicate that although the insurance industry in California historically experienced periodic ups and downs in the cost of homeowners� insurance policies, rates have increased steadily every year since 2008.
�� The requirement for homeowners insurance is something that property owners have little control over�homeowners insurance is required by mortgage lenders. And, although homeowners do have the option of selecting their own insurance carriers, it is the mortgage companies that dictate what minimum insurance requirements they will accept.
�� Those requirements must be met before any lender will fund a mortgage loan�lenders are unwilling to take any risks relative to fire or any other type of damages. As a result, the property becomes collateral in the insurance process. Interestingly, the way insurance companies determine their requirements is a curious process that may be somehow linked to hazard determinations made by the government.
�� Fire protection is a government responsibility held at either the federal, state or local level. The unincorporated areas of San Bernardino County fall within a State Responsibility Area for fire protection under the stewardship of the California Department of Forestry.
�� Title 14 of the California Code of Regulations requires the California Department of Forestry (Cal Fire) to create maps of significant fire hazard areas. It is well established that wildfire hazards have two key components�probability and fire behavior.
�� Cal Fire developed Fire Hazard Severity Zone maps based on fuels, terrain, weather and all other factors deemed relevant. The initiative was originally developed in 1985. The current Fire Hazard Severity Zone maps were published in November, 2007. According to Cal Fire, the maps were �developed and field tested using a science-based computer model that assigned hazard scores based on factors that influence fire likelihood and fire behavior.�
�� A 2007 California Department of Forestry publication stressed that the Fire Hazard Severity Zones identify fire hazard, not fire risk. And, the report makes a clear distinction between the two.
�� �Hazard,� as defined by the CDF, is based on the physical conditions that give a likelihood that an area will burn over a 30 to 50-year period. It does not consider modifications such as fuel reduction efforts.
�� The CDF defined �risk� as the potential damage a fire can do to an area under existing conditions, taking into consideration any modifications such as defensible space, building codes and other actions taken to reduce the �risk� of fires. Ultimately, according to the CDF, �risk� considers the vulnerability of what is being protected.
�� Controversy exists regarding whether these Fire Hazard Severity Zone maps are driving up the costs of homeowners insurance. Allegedly, the maps are primarily intended for consideration in general plans; building construction standards relative to building permits; natural hazard real estate disclosures at time of sale; defensible space clearance requirements; and, property development standards such as road widths, water supply and signage.
�� Fire Hazard Severity Zones were not developed for tactical firefighting or insurance. And, according to a recent investigative report by the Orange County Register, there is no clear indication that insurance rates are affected by the Fire Hazard Severity Zone Maps�or are they?
�� Since Cal Fire adopted the current Fire Hazard Severity Zone maps for State Responsibility Areas (SRA�s) in November 2007, homeowners� insurance rates have increased in California each succeeding year. Conveniently, across the nation, it is easy for big insurance carriers to blame each year�s increase on the previous year�s fires, floods, tornadoes and hurricanes and any other disaster that can befall a community.
�� Call it a convenient coincidence or government/industry contrivance; it is difficult to determine �what�s true� relative to this issue. What is known, however, is that insurance industry information provider RiskMeter, based in Boston, Massachusetts, is used nationally by a number of large insurance companies, and does make the Fire Hazard Severity Zone maps available to both underwriters and insurance agents.�
�� In addition, Insurance Services Office (ISO) is another source used by the insurance industry to determine eligibility and rates. It purportedly provides statistics that measure a home�s risk in relation to wildfires like properties in the mountain communities that are in designated California high fire/wildfire zones�this seems very similar to the SRA�s Fire Hazard Severity Zones.
�� According to ISO�s official website, insurers rate properties using Public Protection Class (PPC) Codes that consider the distance to a fire hydrant and the nearest fire station (excludes volunteer stations).� The score is based on a scale of 1 to 10, with 10 indicating a very high fire risk. When a property scores above five there is a premium surcharge.
�� Insurers also use an ARS or Brushfire Score that is based on a scale of 1-15, with 15 being a very high fire risk. This rating considers three variables that include the type and amount of brush within a quarter mile radius; the slope and terrain; and, whether the property can be easily accessed by a fire truck. This includes whether the road is paved and/or whether the property can be accessed from more than one direction. Insurance companies look for an ARS score of 11 or less.
�� The Insurance Services Office considers a home to be in a Special Hazard Interface Area if its fuel and slope scores are unfavorable. This clearly mirrors the Cal Fire SRA�s Fire Hazard Severity Zones which are also based on fuels, terrain, etc.
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