Pamela Simpson, an insurance magazine journalist, interviewed Dorothy Sarn, director of the Cincinnati National Insurance Program, to examine the carrier’s approach to homeownership insurance in California, Oregon, Montana, and other frequent states. fires. At the time of this interview, more than 3 million acres had burned in California in September 2020, and heavy fires were burning across the Pacific Northwest as extreme heat and winds carried dangerous coals to many rural areas over the weekend before Labor Day.
Dorothy Sarna has more than 30 years of experience in risk management and loss prevention, developing her experience of fires through training at the National Interagency Fire Center, the National Fire Association and FireWise USA. Since joining Cincinnati in 2015, Dorothy has focused on risk management and loss prevention for high-equity properties in the western United States.
What characteristics can determine a property with a high net worth?
In Cincinnati, by our definition of a home with a high level of equity, we understand one that deals with the primary home and is insured for more than $ 1 million. This figure is based on the replacement cost of this house, not on the market value, as our coverage provides for the replacement of the house in case of complete loss.
As a result of the catastrophic wildfires that have raged in California over the past few years, has Cincinnati imposed restrictions on insurance for high-rise homes in California?
As a result of all recent firefighting, we have more claims data, which allows us to take a more data-driven approach to the process. Instead of creating restrictions, we have introduced new underwriting guidelines to help us assess the acceptability of fire risk. We first assess the risk based on how it simulates the fire. After receiving the model indicator, we consider other characteristics that can be used to determine whether a house can survive a fire. These factors include building materials, terrain, access, protected space and the condition and extent of managed landscaping. These characteristics help us determine, along with the model, whether we believe we should accept or decline risk.
Can you tell us more about the risk modeling methods used by Cincinnati for properties in these high-risk areas?
The model we subscribe to combines high-precision geocoding and spatial analysis data with risk modeling based on a national risk and risk model to predict severity and frequency. In addition to assessing severity and frequency, the model takes into account individual impacts – vegetable fuel, fire potential in the crown, wind speed, wind direction, smoke direction, road, network, fire cells, structured density, fuel islands and more. Wind characteristics and fuel availability have become important modeling factors. Winds that carry coal to an area with fuel islands or to areas with flammable vegetation or debris can devastate a community. We saw this during the Woolsey Fire in Southern California in 2018, which burned nearly 100,000 acres, destroying more than 1,600 structures when coals were blown into the area due to Santa Ana winds.
In addition to individual risk modeling, we also manage our risk at the company level. We are very active in portfolio management to constantly analyze the overall level of risk in this area of activity.
What types of guidance or solutions are offered during the inspection to reduce the risk or prevent damage to a high-value home that is in a high-risk area of wildfires?
If the house is in a high-risk area, we have employees who conduct personal inspections – all with more than 20 years of experience in brushing and fire. First of all, we want to help the homeowner create a secure space around their home. We help them evaluate possible fuel sources at various intervals – directly surrounding their homes, then increasing this analysis to 30 and 100 feet and up to 200 ′ if possible. We are concerned about vegetation, debris and overhanging trees and strongly recommend pruning or removing them. Fuel also includes lawn furniture, toys, play sets, pergolas – any convenient combustible products.
We are also considering the construction and original year of construction of the house. Current building codes define closed vents and cornices, non-combustible construction, roofs and attachments, but older homes often have substandard construction characteristics and embers can sit in or near the house, burn or enter through the vent, forcing the house is lit from the inside. Houses with any combustible exterior siding, roof, deck areas or overhangs are also very susceptible to direct flames or embers.
Are there any other fire-related services that Cincinnati provides to homeowners of high value that independent agents should be aware of?
We have contracted with Wildfire Defense Systems, a leader in emergency and fire suppression services. When a fire threatens one of our policyholders, WDS deploys federally certified firefighters who have been trained and experienced in the field of structural protection and wildfire extinguishing. When access is permitted, these reactants can clear vegetation, suppress hotspots, install temporary sprinkler systems or, if necessary, apply a gel or anti-adhesive to prevent fire in the structure.
They are our eyes and ears during these emergencies. WDS sends me updates and photos after visiting each house. With this information, I can contact the homeowner and say, “I just heard from WDS, your home is fine.” The relief I hear over the phone after passing information about their home to the policyholder is the most rewarding part of my job.
And during this process, I also communicate with the insurance agent, because they are the ones who have a relationship with the client. It is really important to inform the agent about the situation when it unfolds so that he can support his client in a very difficult time. In case of losses, I immediately involve our employees in claims. We will stay in touch with homeowners and work with them throughout the process of rebuilding their lives.
As a final question, how would you respond to concerns that the insurance industry could not bear the annual damage from fires in California?
As an industry, we have a history of finding innovative ways to help policyholders reduce and manage risk. Cincinnati started the program, which is not accepted in California, through the insurance company “Cincinnati Special Insurance Company”, which allows us to get another way to provide high-risk business in California.
We want to continue to support the independent agents who work with us and continue to offer solutions to policyholders in these high-risk locations. We know that we need to constantly evaluate our approach, and to do this we invest in the best technology and invest in our staff so that they understand from the point of view of underwriting and risk management how to keep abreast of fire risk events. . Finally, we continue to educate homeowners about risk mitigation measures for their property and buildings. In fact, we serve our agents and their clients best through a combination of exemplary tools and people.
For more information on the Cincinnati fire program, visit www.cinfin.com.