Uniting Actuaries and Fire Chiefs: A Proposed Solution to the Wildfire Insurance Crisis

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[PART OF THE 2023 CAS WILDFIRE VIRTUAL SEMINAR]

In California and other regions alike, wildfires have destroyed or threatened many communities, causing havoc in the insurance industry. The severe wildfires of the last decade have significantly impacted underwriting profits and led to immense regulatory changes, leaving insurers no choice but to make extreme decisions about the coverage they provide. While homeowners in high risk areas now struggle to find any coverage and those in lower risk areas are seeing their rates skyrocket to unbearable levels, Departments of Insurance are searching for solutions to balance affordability of coverage with profitability. Without intervention in the form of effective parcel-level and community-level mitigation, reliable and affordable risk transfer through the insurance market is in real peril. In an effort to address these issues, a strategic alliance has been formed consisting of fire chiefs, actuaries, and wildfire research specialists. This team is ready to pilot their proposed solution: the Wildland-Urban Interface Fire Pathway Disruption System (WFPDS). This presentation will focus in on the components of the proposed system, and provide examples and up to date status on the progress made.

Contributors

Frank L. Frievalt

Chief Frievalt (ret.) has served since 1979 with Special District, City, County, State, and Federal fire agencies in roles from Firefighter to Fire Chief. He holds a M.S. from Oklahoma State University in Fire and Emergency Management Administration, and currently serves as Director of the Wildland-Urban Interface Fire Institute at Cal Poly, San Luis Obispo. Frank is an SME for the Gordon and Betty Moore Foundation Wildfire Advisory Council, and previously served as a Senior Policy Advisor to the Western Fire Chiefs Association, with an emphasis on the development of resilient Wildland Urban Interface (WUI) communities. His work is grounded in aligning key stakeholders around a core set of parcel and community level mitigations that will disrupt the fire pathways which lead to conflagration. He is pursuing the actuarial valuation of risk mitigations, for both the public and private sectors, because we share the same desired outcome, minimizing property loss to the peril of wildfire.
Rehan Siddique

Rehan Siddique is a consulting actuary with the Property and Casualty practice in Milliman's San Francisco office. He is a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries. He specializes in climate resilience, flood insurance, homeowners insurance, auto insurance, Insurtech, and other catastrophic property risk. Rehan’s consulting services include product pricing and development, reserve analyses, litigation support, claims analytics, use of catastrophe models and new data sources, competitive analysis, and predictive analytics. As consultant on NFIP Risk Rating 2.0, he provides actuarial expertise and analytics support to FEMA. In prior roles, Rehan was an actuarial consultant at Oliver Wyman, and a pricing actuary at Homesite Insurance. In those roles, Rehan specialized in homeowners insurance pricing, product warranty, workers compensation, general liability, and self-insured programs. He also serves as the Vice President for the South Asian Network of Actuaries (SANA) working to support actuaries of South Asian descent.
Taylor Deacon

Taylor is an actuarial analyst with the Property and Casualty practice in Milliman’s San Francisco office. She joined the firm in 2020. Taylor’s areas of expertise include:
- Personal lines homeowners ratemaking, utilizing generalized linear modeling, catastrophe models, and competitor analysis.
- Preparation of regulatory filings for submission to departments of insurance in multiple states, primarily in Florida.
- Implementation of by-peril homeowners rating plans including data collection, class factor analysis, and rate level analysis.
Taylor is active in researching the impact of wildfire in California, with a focus on the insurance industry. She contributes to innovating unique solutions for clients recovering from, as well as preparing for, future effects of this peril. Prior to joining Milliman, Taylor was an underwriter with Chubb. At Chubb, Taylor had a book of business covering Workers Compensation, Automobile Liability, and General Liability for national commercial accounts.

Thank you

Description

Contributors

Frank L. Frievalt

Rehan Siddique

Taylor Deacon