|Log home in the wildland urban interface in Central Oregon. Photo: blogs.USDA.gov|
The folks at Headwaters Economics have completed a review of studies, anecdotal evidence, news articles, conversations with insurance industry experts, and analysis of trends and concluded that it is unlikely that insurance rates and policies alone will determine whether or not a landowner decides to build a new home on fire-prone land.
The most likely way that insurance companies will play a role in reducing wildfire risk is by developing financial rewards, such as lower rates, that are tied to fire-safe practices such as the use of flame-retardant building materials, creation of defensible space, and reduction of flammable fuels near homes. To that end, insurance companies have significantly increased their activities in recent years.
Homeowners insurance alone however, is not a strong enough market force today to solve the problem of home development in the wildfire-prone WUI.
With a few exceptions, insurance rates and policies will not affect whether or not a home is built on fire-prone land. Rather, the role the insurance industry can play and in which it has already demonstrated success is to make existing developments safer.
To create a stronger incentive for improved land use planning that directs future home building away from fire-prone lands, local governments must bear a higher proportion of firefighting costs.
Although land use planning—the decision of where to allow the building of homes—is a local government responsibility, currently the cost of defending the homes from wildfires is often a state and federal burden.
To date, no clear policy alternatives have been developed that would lead to negative financial consequences for private land management decisions that increase risks or positive financial rewards for decisions that reduce risk.