KCC Releases Version 1.0 of US Wildfire Model

High Resolution Model Covers 48 Contiguous States and Incorporates Climate Change

BOSTON–(BUSINESS WIRE)–Karen Clark & Company (KCC) is pleased to announce the release of Version 1.0 of its high resolution US Wildfire Model. This advanced and fully probabilistic model provides Exceedance Probability (EP) curves, PMLs, and AALs down to the location level and can be used to develop underwriting and pricing strategies that account for the impacts of climate change.

“Climate change is having an unequivocal and significant impact on the frequency and severity of wildfires,” said Dr. Daniel Bishop, KCC Atmospheric Scientist. “The new KCC model captures these impacts and provides a credible view of future loss potential. KCC scientists have conducted detailed studies of the correlations between atmospheric variables and area burned in California and other states.”

“The most important atmospheric variable is the vapor pressure deficit (VPD) which is the capacity of an airmass to hold moisture beyond what is available in the atmospheric environment,” said Dr. Daniel Ward, KCC Senior Atmospheric Scientist. “Studies have shown the VPD to more accurately predict the total area burned per year than precipitation or temperature alone, and a recent KCC analysis shows that an increase in the VPD corresponds to an exponential increase in area burned.”

Along with the VPD, the KCC Wildfire Model accounts for high resolution fuels data, topography, wind speeds, road density, suppression activities, and other factors that influence the rate and direction of fire spread. The model also incorporates several important secondary building characteristics and mitigation features.

“Modeling wildfires is challenging,” said Dr. Christopher Burke, KCC Senior Research Scientist. “The model must account for constantly changing exposure in the wildland urban interface (WUI), the flammability characteristics of different fuels, the likelihood of different wind patterns that aid fire spread, and the various factors that influence how successful suppression activities are likely to be. The KCC model is the result of years of research and scientific analyses on the ignitions and propagation of wildfires.”

Insurers who license the KCC Wildfire Model also have access to KCC’s unique Live Events process for monitoring actual fires as they propagate and spread. Insurers can obtain their own high resolution claims estimates in real time as events unfold for planning and strategy purposes.

The KCC Wildfire Model also comes with nine climate change scenarios reflecting wildfire loss potential in three future years—2025, 2030, and 2050—and three of the Intergovernmental Panel on Climate Change (IPCC) Shared Socioeconomic Paths (SSPs) as provided in the latest IPCC report.

“Wildfire used to be thought of as a secondary peril,” said Karen Clark, KCC CEO. “But the new KCC model shows insurers could face a loss in excess of $30 billion from an extreme fire in California, and they should be prepared for losses exceeding $10 billion with a significant probability based on today’s exposures and climate conditions. The risk varies significantly by location and so along with providing PMLs and portfolio metrics, the model can accurately estimate expected loss costs for individual properties so insurers can price the coverage adequately.”

“Insurers had started to back away from wildfire risk because previously they didn’t have credible models to price and underwrite the exposure,” said Glen Daraskevich, KCC Senior Vice President. “We’re very pleased to be delivering to the market a robust and credible view of risk that enables insurers to confidently write the business and capitalize on current market opportunities.”

About Karen Clark & Company

Karen Clark & Company (KCC) provides advanced models, innovative software, and comprehensive consulting services for deeper insight into catastrophe risk. KCC professionals are globally recognized experts in catastrophe modeling and risk management who work with (re)insurance company executives to enhance business strategies, competitive advantage, and financial results. KCC catastrophe models currently cover tropical cyclones, extratropical cyclones, severe convective storms, winter storms, wildfires, floods, and earthquakes in over 20 countries. For more information, please visit www.karenclarkandco.com.


Philip Nunes

BackBay Communications




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