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How Cincinnati's strategy combines the best of data and personal connectivity

Insurance Journalist Pamela Simpson interviewed Dorothy Sarna, director of the National Loss Prevention Program for The Cincinnati Insurance Companies, to explore the carrier's strategy for taking out high value insurance in California, Oregon, Montana and other states experiencing increased forest fire incidents. At the time of this interview in September 2020, more than 3 million acres had burned in California and severe fires were burning throughout the northwestern Pacific, as extreme heat and winds brought dangerous embers to many rural areas during Labor Day weekend.

Dorothy Sarna has over 30 years of experience in risk management and loss prevention and built her wildfire expertise through training with the National Interagency Fire Center, National Fire Protection Association and FireWise USA. Since joining Cincinnati Insurance in 2015, Dorothy has focused on risk management and loss prevention for high net worth properties in the western region of the United States.

What characteristics characterize a property value property?

In Cincinnati, our definition of a high wealth home is one that is listed as a primary home and is insured for $ 1 million or more. This figure is based on the cost of compensation for that home, not the market value, as our coverage provides compensation for the home in the event of a total loss.

As a result of the catastrophic forest fires that prevailed in California, has Cincinnati in recent years placed restrictions on insuring individuals' homes in California?

As a result of all the recent fire activity, we have more damage data available to us, so that we can take more information-driven approach to the process. Instead of creating restrictions, we implemented new insurance guidelines to help us evaluate the acceptability of the risk of wildfire. First, we evaluate the risk based on how it models for wildfires. Once we have the model indicator, we look at other characteristics that can determine whether the home can survive a fire. These factors include building materials, topography, accessibility, defensible space and the condition and extent of managed landscaping. These characteristics help us to decide, together with the model, whether we think we should accept or reduce the risk.

Can you develop the risk modeling techniques used by Cincinnati for the properties in these high-risk areas? areas?

The model we subscribe to combines data from very accurate geocoding and spatial analysis with risk modeling based on the national risk and risk model to arrive at a prediction of severity and frequency. In addition to giving a score for severity and frequency, the model then takes into account the individual exposure – vegetative fuel, potential for crown fire, wind speed, wind direction, smoke direction, road, network, fire routes, structured density, fuel islands and More. Wind properties and the availability of fuel have become important factors in modeling. Winds that transport embers into an area with fuel islands or on properties with flammable vegetation or debris can destroy a community. We saw this with the Woolsey fire in Southern California in 2018 where nearly 100,000 acres were burned and destroyed over 1,600 structures when embers blew into the area due to Santa Ana winds.

In addition to modeling individual risk, we also manage our risk at the company level. We conduct very proactive portfolio management to continuously analyze the total risk level for this business area.

During a risk reduction or loss prevention inspection in a high net worth home located in a high risk area in wildfire, what type of guidance or solutions are offered?

If a home is located in a high-risk area, we have employees who perform personal inspections – all with over 20 years of experience in evaluating exposures of brushes and wildfires. First and foremost, we want to help the homeowner create defensible space around their home. We help them evaluate the possible fuel sources at different intervals – immediately surround their home and then increase the analysis to 30 and 100 feet and up to 200 ′ if possible. We are concerned about vegetation, debris and overhanging trees and strongly suggest that they be trimmed or removed. Fuel also includes grass furniture, toys, play sets, pergolas – all amenities that are combustible.

We also look at construction and original years built by the home. Current building codes specify closed valves and skylights, non-combustible construction, roofs and accessories, but older homes often have building properties that do not meet the code and embers can land on or near the home, ignite or penetrate through an aeration, causing a home to ignite from within. Homes with any flammable exterior exterior walls, ceilings, deck areas or overhangs are also very susceptible to damage due to direct flame contact or glow.

Are there other services related to wildfire that Cincinnati offers homeowners with high net worth that independent agents should know about?

We have signed an agreement with Wildfire Defense Systems, a leading provider of emergency response and damping services to policyholders during active fires. When a fire threatens one of our policyholders, WDS puts out federally certified firefighters who are trained and experienced in structural protection and fire fighting. When access is allowed, these responders can clear vegetation, suppress hot spots, set up temporary sprinkler systems or, if necessary, apply gel or retardant to prevent the fire from igniting the structure.

They are our eyes and ears during these emergencies. . WDS sends me updates and photos when they visit each home. With that information, I can reach a homeowner and say, "I just heard from WDS, your home is fine." The relief I hear on the phone after passing on information to a policyholder about their home is the most rewarding part of my job.

And throughout this process, I also communicate with the insurance agent, because they are the ones who have the relationship with the client. It is really important to keep the agent informed about the situation as it develops so that they can support their client during a very difficult time. Should damage occur, I will contact our employees immediately. We will stay in touch with homeowners and work with them throughout the process to put their lives back together.

As a final question, how would you respond to concerns that the insurance industry cannot sustain continue annual losses from California forest fires?

As an industry, we have a history of finding innovative ways to help policyholders reduce and manage risks. Cincinnati launched an unapproved program in California through The Cincinnati Specialty Underwriters Insurance Company, allowing us another way to take out high-risk business in California.

We want to continue to support the independent agents who work with us and to continue to offer solutions to policyholders in these high-risk locations. We know that we must constantly evaluate our approach, and to do so we invest in the best technology and invest in our staff so that from an insurance and risk management perspective they understand how we can keep up to date with developments around wildfire risk. . Finally, we continue to educate homeowners about what measures to take to reduce the risks to their property environment and structures. We truly serve our agents and their customers best through a combination of exemplary tools and people.

For more information on Cincinnati & # 39 ;s wildfire program, visit www.cinfin.com.

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