"As California Fires Smolder, Insurers Contemplate Change"
BestWire (11/20/08) Hemenway, Chad

The recent wildfires in California are expected to spur insurers to reassess their coverage and pricing given that the fire seasons seem to last longer and have more devastating results. Milliman, Inc. Consulting Actuary Paul Anderson says insurers have the option to reduce aggregate risk in certain fire-prone regions, purchase additional reinsurance coverage to transfer some of their exposure, and tighten their underwriting guidelines. Fire seasons in California also have encouraged modeling firms to examine historical data and plug them into models to determine the spots where wildfires are most likely to occur. These seasons once lasted from May to October, but A.M. Best reports fire seasons can last up to two months longer. Losses rose from an average of $573 million per year between 1964 and 1999 to more than $1 billion on average per year beginning in 2000.
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