Why some Canadian insurance companies are bringing in a wildfire tactical team
When Joelle Fraser-McGaghey had to evacuate her home during the 2016 Fort McMurray wildfire, she only had a few minutes to pack before her family had to get out the door.
Trying to pull outdoor furniture away from her house was not at the top of her list.
“Honestly, I’m not thinking ‘Should I remove that propane tank?’ I’m thinking, ‘Let’s get my kids out of here and let’s get us to safety,'” she said in an interview.
Insurance companies have realized homeowners aren’t necessarily thinking about last-minute fire prevention when they’re packing up to evacuate. So a growing number are paying a U.S.-based firm to take on that responsibility.
Fraser-McGaghey’s insurance provider, Economical, is one of several Canadian insurers — including Aviva, Intact and Gore Mutual — that have hired Montana-based Wildfire Defense Systems to provide “loss intervention services.”
The company sends field staff into communities when a wildfire is looming to move patio furniture away from walls, clean out gutters, set up sprinklers and otherwise try to keep homes from catching fire.
“I thought, ‘Any way to prevent someone else losing their home — why not?'” said Fraser-McGaghey.
The company is active across 22 U.S. states but started working on behalf of insurers in B.C. and Alberta for the first time this year.
“After last year’s wildfire season … what we wanted was a company that could provide preventative services,” said Rosa Nelson, Intact’s vice-president of sales and business development for Alberta and the Prairies.
Hiring WDS is just one example of the lengths insurance companies are going to mitigate the costs of extreme weather — something that’s a growing threat to their bottom line.
Just as insurers once advocated for seatbelts to reduce the number of payouts from car crashes, companies are now funding community-level fire-prevention grants and supporting research centres devoted to catastrophic loss prevention and climate change adaptation.
“If you can spend money to save money, that’s what you do,” said Anne Kleffner, a professor of risk management at the University of Calgary.
How it works
WDS, based in Bozeman, Mont., was founded in 2001 as a contractor for the U.S. Forest Service, before starting to work on behalf of the insurance industry in 2008. The company’s grown to include 350 field staff who are dispatched from its head office and from regional centres in California, Colorado, Idaho and Oregon when fires strike.
The employees aren’t there to fight the wildfires but rather are trying to keep sparks out of insured homes.
It’s actually tape that is one of the most important tools, said the company’s communications director Scott Eskwitt.
“We train our crews to make sure that they’re sealing that house up,” Eskwitt said. “The majority of structures burn from wildfire because of embers that get into the structure, and it burns from the inside out, not from the outside in.”
It may not be ideal to send staff to Canadian wildfires from the U.S. — and some local firefighters have criticized insurers’ use of Americans for this job — but Eskwitt said the company hopes to soon set up operations within Canada.
“We look forward to … being able to respond from Canada,” he said.
The company has a memorandum of understanding with Alberta that allows its staff to enter wildfire areas at the direction of the province’s incident management team. BC Wildfire Service, for its part, has no agreement with WDS, but a provincial spokesperson told CBC News the company has worked in that province this year with permission from local authorities.
So far, the company has responded to at least a half dozen communities in Western Canada, according to insurers Definity and Aviva, including Jasper and Fort McMurray in Alberta and Meadow Creek, Spences Bridge, Silverton and Slocan in B.C.
During this year’s Jasper wildfire, which has been reported to cost up to $880 million in insured losses, WDS dispatched staff from northern Idaho and from Spences Bridge, and they spent 13 days extinguishing spot fires, setting up sprinklers and using water to create firebreaks. The crews responded to 240 properties, 239 of which survived the wildfire, according to a company report.
WATCH | Climate change is sending up insurance premiums:
Climate change has made extreme weather more common in Canada. And the accompanying disasters such as floods and fires have made home insurance more expensive — if you can get it at all.
Intact declined to tell CBC how much it’s paying for WDS. It said the services have been offered free of charge to customers this wildfire season, though the company will evaluate the program as a whole after the season’s end.
“So far we have been very happy,” said Nelson.
Efforts to mitigate costs
All this comes as more frequent extreme weather events are driving up insurance payouts, according to Statistics Canada.
Wildfires, in particular, have caused insurers to pay out about $6 billion in the last 10 years — up from $700 million the decade before, according to the Insurance Bureau of Canada (IBC).
“We’re seeing more catastrophic events,” said Craig Stewart, IBC’s vice-president of climate change and federal issues, who says such events are contributing to higher insurance premiums.
Beyond bringing in last-minute fire mitigation tactics, some insurers, like Wawanesa and Intact, are putting up money for municipal fire-prevention projects.
Insurers in the U.S., in contrast, have taken a more drastic approach, with some no longer offering home insurance in the fire-prone state of California.
Stewart said that he doesn’t believe Canadian insurers are looking at that option right now, at least when it comes to wildfires. Floods, he said, have been the greater problem for getting access to insurance, with about 10 per cent of Canadians in high-risk flood areas unable to get flood coverage.
That has prompted the federal government to dedicate funding in the latest federal budget to a national flood insurance program, which Stewart said might eventually need to include “other perils,” including wildfires.
Kleffner said she believes a more flexible national program may indeed become a necessity.
With extreme weather becoming more common, insurers will be looking even more closely at how they, along with communities and homeowners, can reduce risk, the risk management professor said.
If “that risk can’t be reduced to an acceptable level, then that becomes a problem for providing insurance,” she said. “It’s not hard to believe that we’re going to get to a point where we may need the federal government to create an option for those properties, [though] we’re not there right now.”
