Updated U.S. wildfire catastrophe risk model released by AIR


Catastrophe risk modelling firm AIR Worldwide has released an updated version of its United States wildfire risk model, a timely update given the impactful start to the California wildfire season in 2018.

Wildfire image from Thinkprogress.orgAIR said that the updated wildfire risk model will offer users, largely insurance, reinsurance and ILS market interests, a comprehensive view of wildfire risk to properties across the 13 westernmost U.S. states.

Using an event-based modeling approach, the updated U.S. wildfire risk model now accounts for weather variability in the current climate regime, AIR said, as well as the impact weather and climate have on wildfire behavior.

As a result, AIR said that the updated model can simulate correlated countrywide wildfire activity, based on weather and climate inputs.

“AIR is committed to offering the most advanced tools for assessing potential insured losses from wildfire throughout the insurance and risk transfer value chain,” explained Dr. Jayanta Guin, executive vice president, AIR Worldwide.

“With the updates introduced in this model, AIR is building on our experience in modeling wildfires by introducing a fresh approach to estimating the hazard on both local and national levels and accounting for the full range of vulnerabilities in residential, commercial, and industrial lines of business,” Guin continued.

The release is timely given the spread of wildfire activity in California, which is already set to have a significant impact on insurers and knock-on loss impact for reinsurance and some ILS fund interests.

With more wildfires having begun in California in recent days, although the most threatening Carr and Mendocino fires are coming under greater control, the wildfire peril is set to be high-profile again in 2018.

The updated wildfire risk model features an extensive historical event set that includes the 2017 Tubbs, Atlas and Thomas fires in California, which were the most impactful ever for reinsurance and ILS interests.

The model also looks at clustering of wildfires and how development and urbanisation impacts wildfire potential and losses as well.

“With residential and commercial development continuing to increase in areas prone to wildfire risk, the model explicitly accounts for this increased penetration into the WUI [wildland-urban interface],” explains Tammy Viggato, senior scientist, AIR Worldwide. “Approximately one-third of the U.S. population currently lives in the WUI in the United States, where most wildfire-related losses occur, and this figure continues to grow rapidly. To address the increasing risk, the model realistically captures fire behavior as it moves from rural areas to the suburbs and, under extreme conditions, into more urban areas.”

The model also helps with predicting the spread and direction of travel for wildfire burns, including how fires spread based on wind speed and direction, availability of fuels, terrain, and the likelihood of suppression.

The risk model also accounts for the way wildfires spread. It also calculates flame length at each time step, which is directly correlated with the intensity of the fire and is therefore used to help estimate the severity of its damage.

Using these criteria plus constantly evolving wind conditions and suppression efforts, the updated wildfire risk model can determine how and where a wildfire may progress across the landscape, AIR said.

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