How Do You Prevent the Next L.A. Wildfire? This Insurance CEO Weighs In.

As the Southern California fires continue to inch closer toward containment, estimates of insured losses are climbing. CoreLogic predicts the industry price tag could reach between $35 and $45 billion, while Moody’s RMS confirms it will be the costliest wildfire in U.S. history. Amidst the devastation, insurance companies are grappling with how to prevent the next L.A. wildfire. Kevin Stein, CEO of Delos Insurance Solutions, shares his perspective on the peril and discusses how the ongoing fires could affect insurance moving forward.

Stein believes that wildfires no longer fit into the standard insurance market and require a new approach. He and his cofounder, Shanna McIntyre, recognized an opportunity to use new satellite imagery and model wildfire in higher spatial and temporal resolutions. They partnered with Spatial Informatics Group (SIG), an environmental think tank made up of over 100 academics, to develop proprietary research and algorithms for wildfire underwriting. This enables Delos to make more accurate predictions about how addresses could be affected by changing climate conditions.



Delos has a significant amount of sophistication around wind and weather, which Stein believes is the biggest driver of wildfire loss in the Western U.S. and other places. They tap into detailed wind maps and understandings of precipitation and vegetation moisture developed by SIG to inform their modeling. This allows them to account for current conditions and predict how they could change in the next couple of years. SIG has also developed a significantly more sophisticated understanding of vegetation, which Delos uses in its modeling to understand how a fire would spread once it starts and what the firefighting strategy would be to defend against it.

Stein explained that Delos also has detailed understandings of neighborhoods and homes from large landscape and hardening perspectives. This helps the company understand the risk associated with specific properties and make informed decisions about insurance coverage. Delos accepts 65% of the business that the primary market is currently declining because of perceived wildfire exposure, allowing them to insure properties in high-risk areas that other companies may not cover.



Stein believes that these measures, combined with the expertise of SIG, are what's required to understand fire today and prevent the next L.A. wildfire. He also mentioned that Delos is not willing to insure certain areas that are at extreme risk, indicating a proactive approach to risk management.

In conclusion, preventing the next L.A. wildfire requires a new approach to insurance, focusing on advanced modeling, data analysis, and a comprehensive understanding of wildfire risks. By leveraging satellite imagery, AI, and partnerships with environmental experts, companies like Delos Insurance Solutions can better assess risks and make informed decisions about insurance coverage. As the industry grapples with the aftermath of the Southern California fires, it is crucial to learn from these events and implement proactive measures to mitigate future wildfire risks.