We cannot secure our way out of climate catastrophe

Since 2016, more than 50,000 structures in California have been destroyed by wildfires. During fire season in the West, when the sky is darkened with smoke and the sun is an eerie red, you might find yourself breathing in tiny charred particles from what was once someone’s porch swing. ‘a.

These fires will only get worse as the climate warms. Unless we want to keep risking lives and inhaling cremated dreams, something has to change.

The California Department of Insurance issued new regulations last month requiring insurance companies to reward homeowners who take steps to protect their homes from wildfires, such as clearing brush and trees from the immediate vicinity of their property. house or install a fire-resistant roof. The policy is widely welcomed. But it raises a larger question: as climate risks to our property, livelihoods and lives increase, to what extent do we need to cushion the blow from these hazards, and is there a limit to how much, or how long, we pay? Is there a time when protecting people from risk begets more risk?

California makes a good case study because it leads the nation in annual number and extent of wildfires. Climate change, unsurprisingly, is making matters worse. Eighteen of the 20 largest wildfires in California history have occurred since the turn of the millennium; 12 of them since 2016.

Mark Bove, meteorologist and senior vice president of natural disaster solutions for Munich Reinsurance America, told me the California wildfire situation is rocking the insurance industry. “We’re trying to understand this new landscape with everyone,” he said. “All the bounty earned in three decades of writing business has disappeared in wine country and campfires.” One estimate, from the actuarial firm Milliman, pointed out that two years of fires wiped out 26 years of profits for state insurers. (The insurers themselves, however, were partly protected from these losses by their own reinsurance.)

State law prohibits insurance companies from using models of future conditions to set their rates, but with the fires of the past five years or so, even retrospective risk calculations are starting to spur insurers to raise rates. or to refuse to renew the policies. Some regions become so risky that insurance companies simply do not sell policies there.

In 32 states, rejected homeowners can still get coverage through programs known as FAIR plans — insurance pools collectively operated by every company offering homeowners insurance in the state. Companies are legally required to participate and share losses. A FAIR plan should insure everyone, no matter where a home is built, although their policies tend to cover only the most catastrophic losses. The number of Californians insured under the state’s FAIR plan in 2020 was 241,466. This represents 2.7% of homeowners in the state, up from 1.7% in 2015. The percentage is expected to be even higher for 2021.

As more homeowners in fire-prone areas migrate to these stopgap plans, a “FAIR plan gradually ceases to be just a temporary fix,” according to an analysis by Devika Hazra and Patricia Gallagher, economists at California State. University in Los Angeles. . And their March 2022 article shows that FAIR plan premiums in Los Angeles County simply don’t reflect real risk — they’re influenced more by factors like a home’s bed-to-bath ratio than the likelihood that it’s going to happen. it rises in flames.

These policies send an unrealistic message to owners about the level of risk they are taking. Bounties seem normal, so it’s okay to live there. Homeowners don’t hear “Your house is so at risk of burning it’s not insurable”. In that sense, a FAIR plan is “a form of lying to the public,” according to Abrahm Lustgarten, an investigative reporter at ProPublica who is currently writing a book on climate migration in the United States.

Hazda and Gallagher recommend that insurers be allowed to set rates that reflect actual risk, based on weather models. But they know that the wealthy, who can afford the bonuses or absorb the losses, will just shrug their shoulders and build anyway, while the poor will be squeezed at a time when housing in the less risky parts of the West American – like coastal cities – is almost comically unaffordable.

People who live in the “Wilderness Urban Interface,” or WUI, are a socioeconomic mix. Second homes and mansions with beautiful views are being built next to housing lots for people who cannot afford downtown and are forced to “drive until they qualify”. The result is “the intertwining of two different crises,” Hazda says — “the wildfire crisis and the LA housing crisis”

“By making the FAIR plan more expensive, you’re going to end up punishing a bunch of other people who have no other choice and risk not paying their mortgage,” said environmental policy expert Matt Auer, from the University of Georgia. said. If people put themselves at risk just because they want to, using an insurance policy to make that expensive or impossible seems like a great idea. But when people move to risky areas out of necessity, the same policies can instead seem cruel.

One way to try to thread the needle would be to limit FAIR plan coverage to primary residences, or charge extra for secondary residence coverage. Another would be to structure premium rates in tiers, like graduated taxes, so that the most extravagant homes in WUI subsidize low-income housing protection. California could also consider offering the FAIR plan option only for existing housing stock, a policy that could freeze new construction in some areas. Any of these options could help. But the Galactic Brain’s solution may simply be to provide plenty of affordable housing options in the urban core.

Affordable housing advocates, including Sonja Trauss, executive director of San Francisco-based Yes in My Back Yard, are beginning to make explicit claims that increased urban density can mitigate climate change and wildfire risk. More affordable housing in the city will reduce the number of people moving to WUI for economic reasons. And it can provide a landing place for those who return there. “There are probably places too dangerous to live in,” Trauss says. It supports progressive voluntary takeovers of some of these most at-risk areas. But, she adds, “there has to be a place where people can go.”

Lustgarten’s research also suggests that to avoid repeated catastrophic loss of property and life, “our communities should become more dense and should withdraw somewhat from wildland interface areas.” But Lustgarten realizes that not everyone can leave or will want to leave. We will therefore also need to “invest heavily in building better and more resilient structures” and manage landscapes better.

Many of the West’s most flammable landscapes are deeply meaningful to people who are connected to where they live by livelihood or cultural community. WUI is cluttered with tictic-tacky homes bumped into the cream of the bonkers real estate market profits, but where the city fits into the country you can also find tribal lands, small towns that have been around for generations, working forests and livestock. ranches – places that would break your heart if you came from there.

Staying means rethinking the pooling of risks. Our modern insurance system relies on contracts between individuals and businesses, but Matt Auer has studied cases where communities have taken collective reinforcing action – cleaning up fuels that encircle entire neighborhoods, sending a free truck to remove debris woody sites, make sure there is enough water available for firefighters when they open a fire hydrant. He found that successful community fire protection plans tended to involve “collaborations across different levels of government and with non-state actors,” including nonprofits and homeowners associations.

Mark Bove of Munich Reinsurance said community-level insurance pools and community action to reduce fire risk are hot new trends in the insurance industry. “In California, a house can be one yard from the property line and your neighbor’s house can be one yard from the property line, which means the house is six feet away. You can spread from house to house. You can’t just look at this at the individual house level. You need the whole community to watch this.

California’s new mandatory hardening insurance rebates include provisions for “community-level mitigation efforts,” such as “widths of driveways and roadways that facilitate evacuations and firefighting efforts.” , and a community-wide landscape and vegetation plan that is approved by the local fire district. .” In a way, this new emphasis on action at the community level derives from the same principle as insurance itself, the for-profit version of which evolved in the Middle Ages from a pre-existing landscape of religious societies. , social clubs, guilds and other groups that practiced mutual aid.

As an English insurance deed of 1601 put it, “Loss lies rather easily on many than heavily on a few”.