Wildfires Not A Crisis: Insurers

By Gregg Greenberg

NU Online News Service, July 18, 10:42 a.m.EST?Wildfires that ravaged sections of Arizona, Coloradoand Oregon this summer may have destroyed large sections ofAmerica's National Forests, but from an insurance liabilitystandpoint, such wildfires "are not yet a crisis situation,"according to an insurers group spokesman.

Charles Schmidt, VP of Public Affairs for the Alliance ofAmerican Insurers, based in Downers Grove, Ill., said the reasonwildfires' toll on carriers is far less than one might concludeafter viewing the blazes on the nightly news is the relatively lowlevel of residential housing near the National Forest sites.

Insurance Services Office spokesman Dave Dasgupta, based inJersey City, N.J., also does not consider wildfires to be on parwith other natural disasters like tornadoes or hurricanes when itcomes to insurance risk. Mr. Dasgupta confirmed that a relativelylow $2.56 billion in insured property losses from wildfires hasbeen paid out by insurers to policyholders since 1991, notincluding the losses from the most recent wildfires in Arizona.

Despite these facts, and due to the large increase inresidential dwellings near national forests since the late 1990's,Mr. Schmidt and his organization see the potential for increasedinsurer liability and are pushing the Federal Government for fullfunding of the National Fire Plan.

The National Fire Plan is a collaborative effort by theDepartments of Agriculture and the Interior to manage the impact ofwildfires on communities and the environment.

On Tuesday the US Senate Committee on Energy and NaturalResources, chaired by Sen. Jeff Bingaman, D-N.M., met for a hearingon the need for additional funds to fight fires in wild landacreage.

"Insurers have a strong interest in protecting the lives andproperty of their policyholders who suffer when proper fireplanning is not implemented. We strongly support the committee'sefforts," said Kenneth Schloman, Washington counsel for theAlliance.

Mr. Schmidt said his organization's efforts to promote fireprevention are meant to avert a repeat of situations like thewildfires near Oakland in 1991 that forced a number of homeownersto obtain insurance under the California FAIR Plan.

The "FAIR" in FAIR Plan is an acronym for Fair Access toInsurance Requirements and was established in 1968 by theCalifornia legislature to provide basic property insurance toproperty owners who are unable to obtain it in the normalmarket.