Insurance woes plague efforts to cut growing wildfire risks

This story is part of a series on weakening access to insurance protection in the United States in the face of growing losses from climate related disasters: End of insurance?

• Soaring insurance costs threaten preventive fire providers
• Controlled fires rarely escape despite high-profile incidents
• California launches new state fund to fill insurance gap

KING WILLIAM COUNTY, Virginia – A few years ago, U.S. conservation groups could buy insurance policies to conduct controlled burns to cut wildfire risk - or for other ecological purposes - for about $10,000 per year.

No more.

"In many cases, the premium is zero,” said Dave Lasky, a longtime fire management expert. “There are all kinds of non-profits trying to get these policies and no one will write them."

Lasky, based in Colorado, said underwriters had indicated such groups might be able to buy policies with a million dollars of coverage – but at an annual cost of $100,000.

While some established groups, such as the New Mexico-based Forest Stewards Guild, still have insurance coverage for so-called “prescribed fire,” the costs are out of reach for a growing number of the private groups that carry out much of the burning to cut fire risks in the United States.

"How can you afford a $100,000-a-year premium?" Lasky asked.

These days, insurance "is either outrageous or unavailable," he said.

For centuries if not millenia, people have used controlled fire as a vital tool to curb wildfire risks by preemptively burning dry timber and other fire fodder that could fuel out-of-control blazes.

Around the world, such proactive fire-setting is seen as one of the cheapest and most effective ways to limit catastrophic fire risk, which is swiftly rising as climate change brings hotter temperatures and harsher droughts.

But in the United States, spiking insurance costs and wary providers now present an existential threat to such efforts, according to officials and groups trying to promote "good fire."

"Without sounding alarmist, it frankly couldn't be more dire - at least on the national level," Lasky said.

Analysts say the approaching end of affordable "prescribed burn" insurance coverage is just one example of how, as climate change drives growing losses from disasters such as wildfires, floods and storms, access to insurance protection from them also is weakening.

That is leaving many more families, organizations and governments at growing financial risk, they say.

Anxious insurers

Major problems accessing affordable controlled fire insurance have been percolating for at least several years, if not longer, according to Daniel Godwin, a fire management planning specialist with the U.S. Forest Service.

Anxious insurers increasingly fear that preventive fires could escape - even if that happens very rarely. "Even if it isn't actually that risky, the perception matters," Godwin said.

The Forest Service estimates that of the 4,500 controlled burns it conducts on average every year, more than 99% go according to plan, translating to about six annual escapes.

Even that tiny share, though, has the potential to be immensely destructive, giving insurers pause.

One of the worst came last April, when escaped U.S. Forest Service burns ignited the huge Calf Canyon/Hermits Peak Fire in the state of New Mexico, incinerating hundreds of homes in the state's largest-recorded wildfire.

Government agencies like the Forest Service and state forestry departments frequently self-insure for damages associated with escaped burns - covering the costs themselves - or have a qualified immunity or gross negligence liability insurance policy.

But most prescribed fire in the United States happens on private land, Godwin said, and the nonprofits and trusts crucial to carrying it out are being squeezed out of the market.

Even forest management companies and nonprofits that have been operating for years "lose their insurance, they can't get the contracts, and they just blip out," Godwin said.

"When that happens, you're losing a lot of institutional knowledge and it's not something that you can just easily flip a switch and get a new business coming in," he said.

As such groups disappear, the ability to scale back wildfire risks with controlled burns goes with them, he said.

"The government can't do all this work – there's not enough burn windows, people, money, any of it," he said.

Cheap fire

Wildland fires blazed through 7.6 million acres in the United States in 2022, according to the National Interagency Fire Center, a level above average compared to the last decade.

Getting ahead of those fires - through efforts such as prescribed burns to try to limit their size and destructive capacity - makes financial sense, analysts say.

Efforts to mitigate wildfires, usually by using manpower and equipment for controlled burns, tree thinning, and other hazardous fuel reduction efforts, cost roughly $1,500 per acre, a fraction of the $50,000 per acre it costs to fight active wildfires, according to the federal government.

But for private insurers, "there's a very low tolerance factor" for potential accidents with prescribed burns, said Craig Poulton, CEO of Utah-based Poulton Associates, which offers catastrophe insurance products.

"Just a few degrees of wind shift and now you've got the whole subdivision on fire," Poulton noted.

Even federal agencies are increasingly concerned - or under growing public pressure - over the risks from preemptive burns.

In May 2022, the U.S. Forest Service announced a 90-day moratorium on prescribed fire operations after the massive Calf Canyon/Hermits Peak fire.

But preventive fires were already in decline.

In 2020, 9.4 million acres of forest and rangeland were managed with prescribed fires, down from a high of more than 10 million acres in 2019, according to a report released in January by the National Association of State Foresters (NASF) and the Coalition of Prescribed Fire Councils (CPFC).

While the area being burned remains higher than a decade ago, more than half of U.S. states saw decreases in prescribed fire in 2020 compared to their historical averages, according to the report.

Soaring private insurance costs are likely contributing to the decrease, wildfire experts said, with 84% of prescribed fires in 2020 on state or private land.

For anyone conducting prescribed fires, "it becomes an economic issue that they look at and they have to weigh: can they afford that insurance price, to continue to be able to burn?" asked Jim Karels, NASF's fire director.

"It's a tough problem without an easy solution," he added.

'Orderly, predictable'

Despite attention-grabbing escaped blazes like the one in New Mexico last year, thousands of controlled burns are conducted each year, the vast majority without incident or fanfare.

On a bright, cool morning in March, Dave Slack and his Virginia Department of Forestry crew carefully set fire to about 16 acres of private land in the eastern U.S. state.

"It is something you'd like to be orderly, predictable, calm. Excitement is ..."

Slack paused.

"(I) prefer not to have excitement," he continued with a laugh as he surveyed the burn's progress in a wooded area about a 40-minute drive northeast of the state capital of Richmond.

While many burns aim to curb future wildfires, they can serve multiple purposes. Slack and his team hoped the one they were carrying out would improve vegetation and make the area more hospitable for wildlife.

The state of Virginia self-insures for such burns - but Slack acknowledged that declining insurance availability could weigh on private groups' ability to operate.

The rising cost of policies "may be something that reduces either the interest or the appetite for burning," he noted.

‘No market’

Problems accessing insurance are also a problem in the western United States.

In wildfire-prone California, authorities in 2021 were not aware of any insurers offering prescribed burn liability insurance, according to a commercial insurance survey that year - the first time the California Department of Insurance conducted such a poll.

State Insurance Commissioner Ricardo Lara called the gap "unacceptable."

"We still do not have a market for prescribed fire liability," Lara said. "We need the insurance industry to play an important role to help manage this risk."

Lawmakers stepped in last year to create a new $20 million pilot fund, using state money, to allow certified prescribed fire practitioners to apply for liability coverage of up to $2 million. The fund is set to launch this spring.

Lara's office hopes the fund will help persuade private insurers that preventive burns are insurable.

As a broader national solution, the federal government could also consider stepping in with an insurance backstop, Lasky said.

But he predicted that what might actually drive action to make prescribed fire affordable again could be other costly problems stemming from a surge in destructive wildfires.

For example, the water utility that serves the Colorado city of Denver is paying millions of dollars each year to manage sediment washed into the system - a problem at least partially caused by forest-destroying wildfires, including a huge blaze in 2002.

"People may not pay for prescribed fire, but they're sure as hell going to pay for drinking water," Lasky said. "As the western megadrought gets worse, that may actually be what (sparks) the political will to pass legislation to pay for fire."

This story was updated on April 15, 2023, to clarify that the Forest Stewards Guild has full insurance coverage for prescribed fire.

(Reporting by David Sherfinski; Editing by Laurie Goering.)