74
BloombergBusinessweek November 16, 2020Pyregence is a multidisciplinary
project that includes all kinds of pro-
fessionals, such as atmospheric phys-
icists, forest ecologists, and wildfire
analysts like Zeke Lunder, founder of
Deer Creek Resources, which provides
fire intelligence to communities. In early
September, Lunder was monitoring the
Bear Fire north of Sacramento using
Pyregence’s new tool, which is still in
the testing phase. According to the mod-
els, there was a 90% probability the fire
wouldn’t spread very far, maybe a couple
of hundred acres. But it also indicated
therewasa 10%probabilityit wouldrun
away,tearingacrossmilesofCalifornia’s
north-central forest.
“It actually ended up doing that,”
Lunder says. When he saw the extreme
case was in play, he posted on Facebook
that the Bear Fire could blow up and that
anyone east of Oroville should “be pack-
ing up and getting off the mountain.”
“We like to think that was help-
ful and that saved lives,” he says. But
if in the short run these models will
improve evacuations, their true long-
term value is in keeping people out of
danger to begin with. The California
Forest Observatory initiative, which
went online in mid-September, is the
result of a collaboration among com-
panies, philanthropies, and research-
ers (including the Pyregence team) led
by Salo Sciences Inc., a conservation
technology company. The platform
uses satellite imagery, data from aircraft
that scan tree canopies, and artificial
intelligence to create highly detailed
maps showing where California is
overstockedwith fire fuelleft over
fromdecadesofoverlyaggressivefire-
suppression policies that allowed brush
to build up.
Salo’s work is generally free to the
public sector and nonprofits, whereas
utilities and insurers can license its
products. Before the observatory’s
launch, Cal Fire had already asked
for access so it could test how well
itsfire-fueldataheldupinmodeling
whereandhowquicklyCalifornia’s
largest-ever fire, the August Complex,
might be moving next.
“The real value is going to be in4m20
1989 2020AcresofCalifornia
wildfires*1964-
19901991-
20102011-
2018Averageannual
insurancepayoutson
propertydamagedby
Californiawildfires$100m$600m$3.7b*WILDFIRESAGENCIES.DOESN’TRESPONDEDINCLUDETOBYALLCALFIRESFIREORWITHFEDERALLOCALGOVERNMENTFIREFIGHTING
RESPONSES.DATA:CALFIRE,RISKMANAGEMENTSOLUTIONSTHE NEW ECONOMYincentivizing,”saysDavidMarvin,Salo’s
co-founderandCEO.Intheory,insur-
erscouldgivediscountstoanycustomer
willingtofollowbestpracticestoprotect
theirhome.Inpracticeonlytwoactu-
allydothis,accordingtotheCalifornia
InsuranceCommission.(Severaloffer
discountsif anentirecommunitytakes
preventionmeasures.)
The industryhasanothervision.
Since1988,Californiahaslimitedhow
insurerscandecidetheirrates,forcing
themtorelylargelyon20-yearhisto-
riesoffiredamageinsteadofanyfuture
risksfrom,say,climatechange.If they
raiseratesmorethan7%inanygiven
year, homeowners aregrantedthe
righttopursuea potentiallyexpensive
reviewprocess.Asa result,thestate
hasthecountry’s46th-lowest insur-
ance costs relative to home prices. (The
state insurance regulator says this is
meaningless, as California’s market is
mostly urban, which has a lower risk
profile overall.) In early November the
state renewed a one-year moratorium
on insurance companies canceling
or not renewing residential policies—
an action that will cover 2.1 million
homeowners affected by this year’s
fires, or 18% of California’s residential
insurance market.
Instead, insurers would like to be
allowed to use all these fancy new
models to help them set premiums.
Consumers have fought this idea,
fearing their policies would suddenly
become much more expensive, butinsurancecompaniesinsistthatwon’t
happen—or,atleast,it won’tnecessarily
happen. Looking at precedents in
Florida after Hurricane Andrew, they
argue, some rates would go up, and oth-
ers would go down. Really, they say, it’s
a matter of accuracy.
“Catastrophe models are more scien-
tific and precise,” says Nancy Watkins,
a principal at Milliman. “And they’re
notjustlookingbackwards.Theyare
reflectingthecurrentstateofrisk”—
bothphysical and financial.Government fire maps and private risk
assessments for insurers are related, but
they aren’t the same thing. If homeown-
ers don’t like the quote they get from one
insurance company, they can always try
another. But when the state tells them to
do something, that’s the end of the line.
Public anger can be intense. Hundreds
showed up at community meetings orga-
nized by California’s Department of
Insurance over the summer of 2019 and
this past spring to vent about insurance
availability. People grabbed the micro-
phone to tell stories about how compa-
nies would cancel policies and refuse
to call them back. Sapsis is feeling the
pressure. “We have to figure this out,”
he says, “or honestly, everything is going
to continue to get worse.”
One morning this past summer,
he began a virtual team discussion by
screen-sharing a street map of Chico
(population 100,000). The city is just
west of Paradise, which burned to the
ground in the Camp Fire. As planners
look to the future, urban areas such as
Chico give them nightmares.
When California made its current
maps in 2007, it simply marked urban
areasasvegetation-free.But,ofcourse,
inrealitythey’repockedwithtrees,
shrubs, and backyard landscaping
that can dry up and create a conduit
for flames. “You see here, it’s not a
forest canopy, but we’ve got 50% tree
cover,” he says, running his cursor over
a vibrant rust-colored swath that indi-
cates both dry vegetation buildup and
high population density.
The new maps will be much more
nuanced than the old ones. Granular