A Data-Driven Conversation About California's Dry Winter

Written for client Zesty.ai

Current climate conditions in California reveal that 2020 may have a higher than normal risk for wildfire losses. The probability that California will undergo losses of more than $10Bn in a non-drought year is ~2.5% (1 in 40 years) but that probability jumps to 3.5 % in a drought year (a whopping 40% increase). The combination of high resolution aerial imagery, property-level loss history and artificial intelligence (AI) can yield actionable insight into where future fires are more likely to flare up and how structures may fare if involved in a fire perimeter. That data can be used to help insurers better understand risk and increase transparency with homeowners, agents, and regulators.

California’s unrelenting wildfire threat faces additional challenges from ever-increasing scrutiny and government regulation. For carriers and reinsurers who underwrite property insurance in the state, things are getting more complicated.

The increased severity of recent years’ wildfire events combined with the failure of traditional catastrophe risk models, it has become more difficult for carriers to underwrite property risk in California. While many of us associate “wildfire season” with summer through early fall, what happens during the preceding winter and spring is equally important. In California, summer typically brings prolonged spells of hot weather, strong wind activity and notably little precipitation. Reduction in the amount of precipitation (rain and/or snow) during preceding winter and spring months—a situation California is experiencing more and more— results in drought. These drought conditions further contribute to a heightened potential for significant wildfires. To view more of the article and/or download full PDF, visit: https://www.renegade-pr.com/blog/navigating-potentially-difficult-year