The wildfire catastrophe that unfolded in Southern California over the past week makes it difficult to focus this month’s article on anything else. Even in Florida, every meaningful conversation I’ve had since Tuesday has focused on what has transpired there. Insurance consumers, carriers, and government officials have been pointing fingers at each other while tens of thousands of structures burn to the ground, fire hydrants run dry, and fires remain largely uncontained, despite the valiant efforts of firefighters from around the world and the heroism of the public who are directly in harm’s way.

I initially considered dedicating this article entirely to this unfolding event but realized that doing so would contradict my broader resiliency first platform. In the coming weeks, the wildfires will subside, people will grieve and lash out over their losses and perceived wrongdoings, and competing interests will clash over who is responsible for recovery efforts. Nothing can change this, but it is crucial that we learn from this experience, plan accordingly, and take swift action to reduce our exposure to such devastating circumstances in the future.

If you believe that California’s legislators and private property insurers will soon reach a solution that serves the public interest, you are gravely mistaken. Trusted colleagues and I view the market's progression similarly to where Florida stood in 2017-18. Recent reforms, which allow carriers to leverage catastrophe models and pass some reinsurance costs onto consumers, are a step in the right direction compared to the outdated system that has been in place since Proposition 103 passed in 1988. However, the state's concurrent demands for property carriers to significantly increase their exposure to high-risk wildfire areas, combined with the inevitable premium spikes consumers will face, will fuel a crisis just as intense as the fires that rage across the Malibu mountainsides.

Expect the California FAIR Plan to expand, much like Citizens did in Florida. Expect several more years of additional tort reform as the state and the private insurance market engage in a tug-of-war, attempting to find a balance that each side can truly tolerate. Expect the public to be pushed far beyond what they can bear, only to realize the true cost of living in a climate increasingly prone to catastrophic risks at which point they will either take matters into their own hands or move out of mother nature’s crosshairs. 

The only viable path forward for consumers living in catastrophe-prone regions is to focus intensely on resilience. I am committed to dedicating my organization and career to providing the education necessary to empower the public to confidently implement property-level resilience strategies. However, each property owner must also be willing to play their part. Survival along coastlines and in wildfire-urban interfaces will require a combination of fortifying physical property attributes and gaining a deep understanding of the financial mechanisms related to risk retention and transfer. For those with the financial means, or exceptional determination otherwise, this dual approach just might enable them to maintain their current way of life. Either have a plan or become prey to the plans of others.

Could government agencies, insurance companies, and industry professionals do a better job educating policyholders and constituents? Absolutely. But how many people actually take advantage of the risk management resources already available to them through their carrier’s or state agency websites? How many call their agent to review the specifics of their policy? How many choose to proactively install more resilient roofing systems or flood prevention measures instead of investing in summer vacations? These are rhetorical questions, and the answer is universally “very, very few.”

If we want to drive accelerated market change, property owners must prioritize making their homes and assets as resilient as possible. By doing so, they place themselves in a position to retain manageable risks while transferring those which are unmanageable to insurance markets from a position of strength. The markets will in turn either align with the needs of the public or be replaced by more effective risk transfer mechanisms.