Private Client Risk & Resilience

Preparing for Wildfire Risk with Certified Wildfire Mitigation Specialist Mike Thayer

• Kurt Thoennessen, CAPI • Episode 27

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In this information-packed episode, host Kurt Thoennessen and certified wildfire mitigation specialist, Mike Thayer provides invaluable insights on wildfire risks and prevention strategies. As wildfires continue to rise in severity across the Western U.S., homeowners must get prepared.

Key topics discussed:

  • The role of wind events in driving large, fast-moving wildfires that rapidly spread
  • How extended drought and historical fire suppression have built up fuel loads, contributing to more severe fires
  • Why ember intrusion, not walls of flames, cause most home ignitions - defensible space is critical
  • New standards like the zero to five foot “non-combustible zone” being mandated in CA by 2025 to protect homes
  • The wildland urban interface expansion in western states lacking CA’s wildfire building codes
  • The impacts of insurance availability and modeling on admitted/non-admitted markets
  • The value of wildfire risk education for homeowners that explains the “why” behind mitigations
  • Specific home hardening measures (ember-resistant vents, gutter guards, etc.) that make homes insurable

As Mike emphasizes, wildfire readiness education and prevention work must expand outside California to other wildfire-prone states. All homeowners with natural vegetation exposure should proactively mitigate now, before threats grow. Advanced preparation is key to saving homes and making them insurable.

Resources:

  1. The ibhs website/standards that Mike mentions explains the "why" behind wildfire mitigation recommendations through videos and other content.  - https://ibhs.org/wildfireready/
  2. The ArcGIS product showing expansion of homes in the wildland urban interface, with percentage increases by state from 2007-2020. Allows visual hovering over states. - https://storymaps.arcgis.com/stories/6b2050a0ded0498c863ce30d73460c9e
  3. This is an article Mike Thayer read about potential "doomsday" scenarios if a major non-admitted carrier wildfire loss occurred, and the impacts that could have. - https://www.kqed.org/science/1985175/insurance-in-california-is-changing-heres-how-it-may-affect-you
  4. The updated CalFire wildfire hazard severity zone maps that recently came out, designating more high risk WUI areas. - https://www.fire.ca.gov/incidents. 
  5. All Things Wildfire Podcast - https://allthingswildfire.com/
  6. Wildfire Prepared Website - https://wildfireprepared.org/


Mike Thayer's linkedin - https://www.linkedin.com/in/michael-thayer-wms/




Welcome to the private client risk and resilience podcast. My name is Kurt Thoennessen. And I am your host of this amazing show. In addition to this show, I am also a personal risk advisor at Ericsson insurance. And I'm the CEO of risk review, which is a software as a service platform that helps agents gather information from their clients and prospects in an efficient and modern way. So welcome to the show. Welcome back. For those of you who are new to the show. I'm really glad you're here. For those of you who have been listening to the previous podcast. Thank you very much. I'm really excited that you're back again. And I'm looking forward to our conversation today. We're gonna be talking to Mike Thayer who I had the privilege of meeting at the recent private Risk Management Association Summit in Chicago, which was about a month ago, right, Mike? Yeah, about that. Yeah. So we, we bumped into each other in the hallways, I was talking to Opie Alvarez, who is a previous guest on the show where we also were talking about wildfire. He's the he's, he runs allied defense, disaster defense company out there, which is, which is cool. But we ended up just having a quick chat. And one thing led to another I talked about the podcasts. And Mike was saying that, that sounds cool. And I said, Would you like to be a guest? And here we are. So I'm really appreciative of your time, Mike, and obviously looking forward to hearing your expertise on this topic of wildfire. And and looking forward to sharing that with the audience. So officially, welcome to the show. And thank you for your time.

Mike Thayer:

Thanks for having me so much. Yeah, Opie was generous enough to do the introduction. I was previously on his podcast, all things wildfire. I think that kind of kicked it off. And I think it's a great opportunity here that with the podcast that you have reaches, you know, a wide audience of risk advisors and insurance brokers and hitting all the topics, right, the all the risk and resilience, which is much needed in the high net worth space.

Kurt Thoennessen:

Yep, no, I completely agree. And there is, there's so many things that we talk about as brokers and insurance companies and vendors in the space, that it's just so important to just dive deep on some of these things. So I'm really grateful that we have this show, and that we have the ability in today's world to to disseminate this information in this fun way. So let's get started. And I think the first thing I wanted to do is just, you know, let people know who you are and what you do. And I know, you know, from our conversation that you are a certified wildfire mitigation specialist. And so I wanted to ask, you know, number one, what is that? And number two, just tell us a little bit about yourself and how you got where you are?

Mike Thayer:

Okay, well, we're a little bit backwards there. For the past eight years, I was with the Wildfire Protection Unit of AIG insurance. We had a mitigation program in place where we would go out inspect homeowners properties, but we could also respond during wildfire to prepare and protect those homes. worked eight years with a great team over there. Previous to my time at AIG, I worked in Colorado, for Jefferson County Sheriff's Office on an emergency management team. We did wildfire mitigation and wildfire response both within the state and outside of the state. So that's kind of my background in the fire history. So the certified wildfire mitigation specialist, it's a designation from the National Fire Protection Association. It's a first of its kind for wildfire professionals. Similar to the some of the designations you have an insurance world this is strictly for the those in the in the mitigations base planning, all those types of services for wildfire. It focuses on the wildland fire behavior planning and preparedness, hazard mitigation and public education.

Kurt Thoennessen:

Excellent. And is this a new designation? You said it was relatively new, where did this come out of?

Unknown:

So it started in 2017. There was a need for, you know, a certified program through NFPA. To have that designation, even though came out in 2017. It really hadn't picked up any speed until recently, probably 2021 or more, more and more people are getting designation. The designation itself is It's a little bit tough, there's a wide range of the topics that it covers. So somebody that may not be as may be really well versed in it hazard mitigation, but not so much to public education. And they want to hit all those points. So the study materials pretty wide ranging. So it's a little bit of challenging course.

Kurt Thoennessen:

Well, that's important. I mean, I think anytime there's an educational program that they put together, you know, it's important that it is challenging, and it does bring to light a lot of these a lot of the issues that you need to understand, I know the Practice Management Association has a designation. There are several designations that have just come into the high net workspace, which I know, brokers and agents all across the country have flocked to, because of the importance of education. So we definitely understand that. Now, in our previous conversations, we've also talked about how you are actually, you have actually been to fires, and that you are a fire firefighter. And so this has been part of your, your job with the AIG Wildfire Protection Unit and beyond. And so can you tell us, you know, because we have listeners from all over the country, can you tell us a little bit about what responding to a wildfire in California looks and feels, and smells like?

Unknown:

Well, they all smell pretty much the same, depending on what region you're in, you know, depending if it's forest or, you know, brush those burning. There's a lot of things to it, things have evolved pretty rapidly in California, I started my firefighting career in Colorado, in California, there's a lot more resources available to fight these fires. And I know that the beginning of the program, it was very challenging to be accepted by the local fire agencies, they were a little bit leery of the insurance companies coming in there and trying to protect homes. But as we worked side by side with some of these agencies and develop relationships, and as things escalated in California, as far as the number of fires is the size and spread, they were down on resources, and they counted as on us as a resource to come to the fire. And our main job was to prepare homes for the fire actually hit. That's how the program was developed, prepare and get out of the way the fire, the reality is 2017 2018 We're arriving at homes that there's already fire in the backyard, and you know, trying to manage that, as well. So all our firefighters, they all had at least four years experience with other agencies, US Forest Service CalFire those other entities, so you had to have the previous experience even be hired by DJI for this team. So we were pretty well versed in wildfire arena, we would come in and prep the homes and what I mean by practice fully combustibles away from home, you know, patio cushions, dog beds, propane tanks, limit the exposure, where embers can win in something ignited and carry fire to the home. The majority of homes are lost from embers landing in a receptive fuel bed and igniting right on or next to the home. It's not a massive wall flame that takes the songs down, it's mostly ember. So we were in there to kind of protect the homes. You know, we could clear a pineal or leaf debris out of the gutters, we had the ability to do that got wind around structures, a defensible space in there, even cut vegetation around. And then as the last line of defense we had thermal gel that we could spray on the structures. The the is a good tool in our toolbox, but it's one that we try to limit the use. There's a short window of effectiveness and then there's also a cleanup to consideration. So the fire is not going to hit the house. It doesn't make any sense to jelly. It's a it's a kind of a timely process. And as we're trying to go from house to house to house. That's not what something we want to be doing on every house when they don't need it. And in reality, if the homeowner has done everything before the fire, there's very low likelihood that we would have to gel in the first place. You know, those mitigation factors that we look for on inspections, you know, if those were taken care of the prep time, there's a lot less for both homes. So that's kind of how we went in. Sometimes we get pulled into the fire to help out by with the fire agencies if they're doing a firing operation off road if they're trying to put a backfire in front of the main fire. They would ask us our engines to help them assess toll road just because of limited resources. So there was all kinds of factors that would limit you know, how many homes will you see that the work we can do in a short amount of time before that arrives.

Kurt Thoennessen:

Excellent. And there's a couple of really important things I heard there is number one, it's not a wall of fire, that takes these homes down. It's the embers, and it's the defensible space around the home, that's super critical to protecting the homes. And it's the preparation ahead of time, that's going to save the home. And so the, you know, where we have this, these buzzwords, like, predict and prevent, you know, yours is like, prepare and prevent, you know, and I love that. And I think that that, that's really important to to note, and, and when you're going when you're out there in the trucks, and you're facing down this, this, this wildfire, I mean, what is that, like? You know, because these are sometimes fast moving, sometimes slow moving, and then sometimes it's just you're sitting there and watching numbers go over your head. You know, how can you talk a little bit about that?

Mike Thayer:

Yeah, I mean, it's about safety first, right? We're not going to put ourselves in a bad spot in fire agencies the same way. It's public safety, first, firefighter safety second, and then protect your property. Third, that's the order. And that's how we would operate as well. There's, we wouldn't necessarily put ourselves in a bad spot, we would make precautionary measures as we go in, when we'd have people looking out for us we worked with a liaison was which is basically what a task force leader in the fire agency world, so he was managing the engines, he was a communications within stickman. And kind of looking out for our best interests in those those fire areas. There was, you know, some situations where, you know, things change rapidly, but we were always primarily in a safe spot to operate, to prep, protect homes. And I think that's one of the misconceptions is, you know, there's always gonna be a firefighter there to save your home. And the reality is, yes, we were able to make efforts to save homes, and we did save homes. But there are a lot of things have to line up timing number one, in the luck to be in the right spot at the right time. That's why we always preach to the clients, you know, prepare your home, the best can as if nobody's gonna be there, don't depend on us be there don't be depend on the fire agency there. They're just not enough trucks. And that was what we try to impart on them on the inspection piece of it, you know, the more you can do before the fire has better chance to survive it. But, you know, the media kind of picks up the firefighting that's, you know, the real sexy part, you know, you're you're saving a home as wildfire. And it, it can happen, and it's pretty exhilarating. But it's not the everyday it's the prep before the before the fire hits. Yeah,

Kurt Thoennessen:

and the other thing that was really important, you mentioned, it's, you have a process, it's public safety, first, firefighter safety, second, and property safety. Third. And that, I mean, I think that says so much about just, you have to prioritize, and public safety is number one, and you as a firefighter, you're putting yourself in harm's way potentially, to protect the public first, and then yourself, and then the property. So they, you know, there is very thoughtful planning that goes into all of these things as well. And, you know, talking about these wildfires, you know, we we've definitely seen a lot of these events and heard of a lot of these events over the years. But we've also heard of the severity of them. And the severity has increased, I believe, and correct me if I'm wrong, but can you can you talk about maybe what is causing the severity to increase with these wildfires?

Mike Thayer:

Yeah, so it's a multiple factors, you know, climate for, for one part definitely has an effect on it, you know, extended drought, increase wind events, while these large wildfires are wind driven. What we saw even in Ohio, in Colorado on the marshal fire in a lot of California ones, their high wind events, which are different than normal wildfires, it's a lot harder to get out in front of and protect homes in those those spaces. And then behind that, you have, like I mentioned before the drought, extended drought, killing vegetation, and you have that buildup that fuels we go on these cycles of drought. And then we come out of drought, everything greens up, everybody thinks, Oh, we're fine. Well, all that dead fuel is still below the wife, vegetation and all tasted Ember getting into debt fuel, igniting that into can carry it into the wide vegetation so that the risk doesn't go away, even though we're in a drought. So that gets contributes as well. And then primarily, you know, over the past century, firefighting was the focus and not prevention. So we exclude wildfire for nearly 100 years, based on thinking, if we put every fire out, we're gonna save that, you know, save homes. But the reality is, as we put all these fires out the fuels built up the fuels in the forest that saw frequent lightning fires that kind of cleared underbrush, those were gone. So you had to increase the fuels in these forests that are completely built up, it leads to the bug kill, because there are weakened trees. So you see a lot of dead fuel in there dead and down trees, dropping the floor. If you have a fire in these areas, they're much harder to fight than a healthy for us that have spacing between the trees and very light fuel loading underneath the trees. So that definitely plays a factor to, you know, 100 years of exclusion. And, you know, my worry kind of going forward, there's a lot of investments right now, on the early detection and automatic suppression of fires, which is great, it's going to help save homes, but it's gonna put us right back in the spot. And you know, further down the road, you're basically kicking it down the road to the one fire that does escape, the chance for severity in those fires is going to be really extreme. And what we've learned in California, the majority of the fires, the top 10, fires in California, have all burned in fuels that are 35 years or older. So we're in one of these risk models, a fire frequency is always seen as a bad the bad guy. It's really the fire exclusion, and the severity result of that, that burns homes, mostly large fires 35 plus years of fuel buildup, so and some have no fire history going back until 1800s. Those are the areas that are most vulnerable to these severe wildfires.

Kurt Thoennessen:

When you say exclusion, what do you mean?

Mike Thayer:

So getting back to the the fire suppression. So in the in the 1920s, Forest Service as a result of major losses came up with a 10am policy that they that they caught fire that that day, and to be out by 10am, the next the next day. And that kind of process didn't really change until the 1970s, where they said, Oh, we probably need a reintroduced fire environment. And by that I mean the prescribed fire to reduce the fuel, what they call good fire, beneficial fire that widens fuel loads, so they're not severe fire when it does happen. Because all those years of suppression just lead to more fuel buildup.

Kurt Thoennessen:

Thank you. Now, you know, in the insurance industry right now, we know California is going through a tough time where there are carriers who have stopped writing new business, they have stopped writing any business and rates are going up. Is there any perspective from you from the wildfire standpoint? For you know, what's driving this with carriers? Is wildfire the cause of that? Is it part of the cause? How do you think insurance carriers should think about wildfire? And, and and and how should they respond? How could they respond? You Yeah, it's

Mike Thayer:

it's interesting to see their response. And in California is it's a it's a very tight spot for carriers, right. So on the one hand, for the longest time on that insurance commission side, they wouldn't let them raise any rates, or is very difficult to raise rates on the back end, because of all the losses we've had since 2017. And kind of moving on that and combining with the increase of reconstruction costs, the reinsures are, are kind of backing up, they they don't have the capacity, or really the appetite to really support the carriers that are still in the state. So the carriers can raise their rates to match what reinsurance is doing. It doesn't make it profitable for the insurance carrier to even stay in this state. So that's kind of leading to the exit strategy of all these carriers. And then the carriers that are staying you see, you know, strict requirements on what the homeowners have to do. Specifically, you know, in the zero to five foot zone around the home, making sure there's no combustible vegetation, no combustible materials. It's something that has been known. That saves homes but now it's been become used as kind of the hammer, right? If you don't comply with this, we're not gonna write you so Though there's the ibhs, California wildfire report paired home standard that came out, which is a great resource. So they're they built this system built on all their, you know, studies, scientific studies and what real world results, folks how that happens, you know, what they create in that lab is exactly what we see in the actual real world on wildfires, you know, bark most next to home vegetation, so home embers landing in those items, and carrying fire to the homes and burning them down. So they created the standard to follow. And I think the intent, you know, was to have this in place for guidelines for carriers to kind of use and provide discounts with my fear is that it's going to be somewhat weaponized, where you have to follow these strict standards and allow more tough depending on the home's you have to follow standards, or you're not going to be not, you're going to be non renewed. On the on the admitted side, I think that's going to be probably coming down the pipe. It's, it's tough, because I think carriers are looking to kind of walk their way away from California. But the reality is, there's a lot of good money being left on the table. And more importantly, a lot of people being left without insurance. You know, there's areas that time and time again, they survive wildfires do the frequency, but they're the ones being excluded because it's considered a high hazard area. Well, they have the mitigations in place in a defensible space home hardening. Reality is they're gonna survive the wildfires time after time, especially in an area that has lighter fuels. So this is the opposite side of this severe fire areas that see frequent fire in areas like Simi Valley, agora Hills, Calabasas, their fuel model, a lot of it's changed from brush, it's kind of what we call type conversion from brush to grass, and a grass fire, you have a very fast moving fire, which is scary on its own. But you don't have the extended duration of the fire, you don't have the Ember production of the fire, and there are a lot more manageable, flame links are lower. So in those types of areas, because of frequency, those areas are deemed high risk. But in reality, they're not really going to see any any severe losses, all those severe losses are in areas that burn less frequently. So in that, in that respect, it makes it counterintuitive as a firefighter to see those policies being dropped and harder to get insurance.

Kurt Thoennessen:

Yeah, that's interesting. Yeah, if a an area of land has already seen a wildfire, it's less likely to burn again, because the fuels are gone. And yet, those might be considered higher risks. Yeah,

Mike Thayer:

I mean, to put it in context to compare to other cat, you know, events. So if you have a town that has a fire, and it has another fire within five years that fire five years down, the line is not going to be worse than the original fire is the city that has been impacted by a hurricane, well, five years later, it gets hit by another game, that area can actually be worse, that second event can be worse, because of different events leading up to that, you know, cups of water temperature, wind speed, all that factors, but in wildfire, it's the fuel that drives that fire. And if there's less fuel, the Fire won't be as severe.

Kurt Thoennessen:

Yeah, very, very interesting. And, and you mentioned the hammer, you know, some of this stuff, the mitigation, the new discounts, may be weaponized and to be used by insurance companies as a reason to potentially non renew an account which is, which is very interesting. And I have seen this with certain with some clients that are dealing with this and it is it is very difficult to go through that. Have you seen other situations where that is being that is being done by carriers in the California market?

Mike Thayer:

Um, not so much on requirements, but I see it more on the modeling side. So getting back to, you know, the frequency versus severity. The models themselves have been weaponized, you know, they look at saying, Oh, you're in a high risk area. Nothing we can do about it, especially in areas that, you know, haven't seen a wildfire. There was there's been a lot of protections in California, the moratoriums you know, these we've had so many wildfires a lot of areas were in the moratoriums for one year. A state mandated moratorium tool once those expire, those those places are getting non renewed, just because they fall in that high risk map. They'll be interesting to see, as it comes down the line, because CalFire just released its updated fire hazard severity zone maps, there's been kind of a long time coming, it hasn't been updated since 2007. So a lot of a lot more homes. I mean, we're talking 1000s more homes are going to be considered in that vulnerable, wildland urban interface. So, and that's where they're gonna start seeing, you know, more issues with, you know, comply, or non renewed, I think.

Kurt Thoennessen:

Yeah, it's interesting. And, you know, I guess, as they broaden out those zones, yes, more homes are going to fall into that category, and more homes are going to be at risk of being non renewed because they're not in compliance now. So is the IBA ibhs? Is the state are there any things that these organizations are doing to help prepare homeowners and clients in the state of California for those types of things? You know, the state's coming out with these new laws saying insurance companies have to offer discounts. But how is that being implemented? Is there any, are there any compliance type codes or building new building codes or anything like that?

Mike Thayer:

Right. So it's important to remember that those discounts that the state's starting to mandate is only for admitted business, non admitted, does not have to file suit. And in California, it's it's very hard to find admitted solutions right now. And we heard at the summit, it's less likely the insurance carrier is going to be willing to do any kind of discounts. Just because the profit margins are so small because of reinsurance costs. So it'll be interesting to see how that shakes out. I see the state is going to start to follow suit with what the ibhs standards are, as far as that zero to five foot zone, that noncombustible zone, they're looking at 2025, making that state code for new construction. And then in 2026, looking to have that as be being applied to existing homes. Now, we're talking 1000s at home, so I'm not sure how they're gonna enforce that. They're also, I think, still discussing whether it's gonna be completely non combustible zone, or some plants are gonna be allowed, but there's definitely gonna be no bark mulch, no, juniper, no Italian Cypress, the highly flammable, you know, vegetation and groundcovers that we see that caused losses. That's definitely gonna be done. But we're gonna see that coming, you know, here shortly, one way or another, and they admitted, there's got to be a public education piece that's out there. I think that's something that's severely lacking right now. statewide. You know, the carriers will obstruct it. There's not a lot of education. Why? Right, they just said do it. And I think that's part of that's lacking. ibhs has just revamped their website that does a really good job of focusing on the why. So steps you through all the standards, and they have the videos backing up the why they show the bark mulch burning, you know, they shoot the embers that the structures that show exactly why each of these recommendations is coming down line. So I think that's a good resource that people could see it, but it needs to be broadcast a lot bigger. Right? You know, we have these state PSAs all time for water restrictions and everything like that, but there's never anything on wildfire. And I think that needs to change.

Kurt Thoennessen:

Yeah, I agree. Education is critical. And doing it on a wide scale is critical. So one thing I wanted to ask is about this noncombustible zone, because, you know, I have several clients who have been insured with and they've owned these homes for many years. And now all of a sudden, the carrier's saying we need to have a non combustible zone of five feet. Can you explain or walk us through how an existing property will go about making that five foot zone of non combustible material because they might not already have landscaping there? Is that just digging everything out and moving it and putting somewhere else and what have you seen there?

Mike Thayer:

Yeah, unfortunately, sometimes that's the case. You know, it's, you know, the, the removal of plants. If you have bark mulch, it's swapping that out for rock bass. And, you know, like we used to tell homeowners all time, like gold rocks really expensive on my Well, yeah, but it's a one time cost. You know, you replace your bark mulch every year at Blue. As a way, decomposes it, even if it changes color than a happy with the color. You know, so rock, yes, it's more expensive upfront. But number one, save your home. And it's a one time costs. So that's something they have to look at, do it for new constructions a lot easier. You know, it's about flipping the script about where, where your pathways and walkways are, how to interrupt the fire as it comes to your home. That's what they're looking at doing. And it's about reimagining that. And working with these landscape architects, that's another, you know, couple of missing pieces in the equation is, is getting these landscape architects, builders, developers on board with these standards, that's something that states obviously going to have to do. But yeah, it's, it's a pain point for sure. And people are very attached to the, to the vegetation. But there's, you know, it's something that's gonna have to change, it's a, it's a total shift in behavior that we're gonna have to see. And if you're doing upfront on the carrier side, that sets you up better down line for the state side, once it becomes regulated on the state side. So

Kurt Thoennessen:

it's good point, it's much easier on the new construction. And, you know, when we talk about when I talk to clients, when brokers talk to clients about their construction and renovation projects, this should absolutely be part of the conversation. It's and clients do ask, what should I be thinking about from a risk management standpoint? Well, this is one of them, especially if you're in a wildfire, or, you know, a state that is conducive to wildfires. So I wanted to jump to a different topic real quick, not a different topic, but a question about the and ask if you would tell us about the wildland urban interface? And how does that play a role in, in this insurance? Question and insurance industry?

Mike Thayer:

Right, so the wildland urban interface, there's a couple of different definitions, but it's basically where the wildland vegetation or unmanaged vegetation, intermixes with the built environment, any type of structures, whether it be homes or commercial. And as we know, our high net worth, clients love to live in these areas, because they're more rural. They have great views. hillsides. So there's a lot of expansion into this, this wildland urban interface. So it, it absolutely plays a fact because, you know, that's where the insurance companies are looking, though. They're also the riskiness and as they expand out there, I was looking at the other day, they said, from 2007 to 2020, Arizona had 122% increase of homes in the wildland urban interface. Yeah, Colorado has 86, Texas have 82%. So it's not just California, right? It's, you know, California, is starting to limit building in those areas, but other states, I mean, it's literally still the Wild West, they, they're expanding out there, into these zones. And the scary part is, outside of California, and Utah, there is no wildfire building codes, no defensible space standards that are mandated by the state. They're, you know, they're called Home Rule states, and they let their local jurisdictions determine those types of building codes. So as we see this massive expansion in the wildland urban interface, they're not being built wildfire ready, at all. And that's, that's the that's a really dangerous part. I think.

Kurt Thoennessen:

That's where the education comes into play with the landscape architects, the contractors, the builders, the designers, all these folks need to know about that. And it sounds like California, although that's the place that's having the most difficulty right now, from an insurance standpoint, they are doing the best job with trying to mitigate damage from wildfire.

Mike Thayer:

Yeah, absolutely. You know, typically, you know, in California, you do better percentage wise on losses during a large wildfire event. California, maybe 10 to 25% loss with within the fire perimeter, but you get outside California looking at 50% loss, you know, loss ratio of homes inside that fire perimeter. So you can imagine the area like Breckenridge, Colorado, or the foothills outside Scottsdale, what is 50% of the homes lost and a large wildfire 100,000 acre ballpark it looked like there. It would make the losses in California look pretty small compared to what's going to happen in those states.

Kurt Thoennessen:

Yeah, pretty scary to think about these things, but really important to be aware. And I thank you for bringing that awareness to us. I wanted to jump to back to something you said earlier about admitted markets. And cuz, you know, any insurance business, we have the admitted markets in the non admitted markets. And it seems like today, as a broker, working in California, like not working with clients in California, most of the business that I placed there is in the non admitted markets. What kind of impact is that going to have on us long term on the California residents long term high net worth clients long term?

Mike Thayer:

Right, I just read a great article and be able to share this too. That explains a little bit that goes into here not had been a market, there's a pretty big thing that could come down the line, almost like a kind of a doomsday thinking of, of scenario. We haven't had an area that had a while large loss for non admitted homes, not admitted, is not backed by the state, which works in both their papers. So they don't have they get charged rates they need. But if there is a large bunch of large losses on the non admin space, they're not backed by the state, that carrier could actually be in deep trouble and not be able to pay out claims being that unregulated, not backed by the state. So if you have a large event, we're multiple, you know, we're talking hundreds of homes and anonymous space, which could happen is this shift happens. Nobody knows what that looks like. Because it hasn't happened yet. But being in California since 2017, we've gotten pretty tired of the word unprecedented. Right? It's never going to happen here. Well, we can't say that anymore. Because year after year, the unpressed didn't happen. So that's a little bit scary of a scenario. The next one down the line is the fare plan. scenario. So fare plan is, you know, the resort, the insurance of last resort for the state. Again, it's not, you know, you pay a lot, and you don't really get a lot in return here, we're talking that maximum limits are $3 million, that doesn't really work for a high neck, you know, person that has a $20 million home. Kind of the same scenario, you have a bunch of fare plan homes, and that these are backed by admitted carriers that pay into the pool. If you lose a lot of fare plan homes within an area, and then carriers don't have a plan to pay for that. You can see a lot of damage being done to those carriers and may meet maybe some of them going under as well. So that's some, you know, scary scenarios that haven't happened before. But we've never been in a situation before.

Kurt Thoennessen:

Yeah, yeah, it certainly makes the, you know, the the industry that you want to feel like it's solid underneath you. Where and you can totally lean on it. And it's going to be there when you need it. It makes it feel a little flimsy, you know, with non admitted carriers. And, and this is an important too, for brokers who are selling the non admitted policies and clients who are buying those policies is to understand if there is a backstop to those to those companies, if they do go bankrupt, because if they go bankrupt, then you're on the hook for those claims. But some of the non admitted companies may have a backstop that is not the state, but it's some other financial resource that they have access to. So that's something to certainly think about. Did you have something else that you wanted to say on that?

Mike Thayer:

No, no. I mean, it's a great point. It's it's about doing the research and seeing what's available. Because as I read that article, that was news to me, as well. And it's something that nobody really thinks about too much. But yeah, it could happen. And then what does that do to the mortgage industry? Kind of going down to why when people can't get insurance and they're not being? And that's, that can be a whole nother podcast. So I have some people like appointing rejection for that, that scenario. Oh,

Kurt Thoennessen:

great. Yeah, that that would be very interesting as well. And so, you know, one of the last questions I wanted to ask you, because this has been phenomenal, like very interesting. I've learned a lot so far. Why is it as we're talking about California and you know, potential of non renewals because people aren't complying or there's new requirements for defensible space for we didn't mention Ember resistant venting, but, you know, insurance companies will come out with these things that they ask clients to do to protect their homes. And if they don't, they will be non renewed. But there's an education there too, because we're at the insurance companies are asking them to do that for a reason. to protect their home so that there isn't a large claim. And in today's market, we're trying to place insurance more insurance and allow customers to buy that. How do homeowners make their homes more attractive to insurance companies?

Mike Thayer:

Right, it kind of gets back to what we talked about about the firefighting agencies as coming to community. As they come in and community. They're pretty restricted, and they may have one, one engine for 10 homes. And as they go in there, they triage they look at the home that has clearance around their driveway that has defensible space that has, you know, maybe that 05 foot zone, you know, cleared out free of vegetation, those homes are gonna be able to make a stand and try to protect. On the flip side, it's the exact same things that carriers are looking for. So those home hardening initiatives, whether to be Emory's event, or at least eighth inch mesh beds to keep embers from getting in your attic, and foundation events, if you have trees near property, looking at installing gutter guards to keep leaf debris out of your gutters, those type of items they look for, and then the 05 flood zone, which is the critical zone, I mean, it's basically what a battle is won and lost for home, you know, having that free of vegetation, or at least the super flammable vegetation, no bark mulch, you know, those are the you know, the key items right at the home level, and then you know, building out from there having, you know, not a ton of vegetation around your home, whether it be planted or you know, natural vegetation, you want to have it than that you want to have spacing in between your trees, you want to have the trees lined up to keep any service fire from getting the crowds to the trees. So those are the things that, you know, number one can save your home. But now that with, you know, the market being limited as what it is you want to have your house, you know, ready to go fire ready to even have a chance to getting insurance.

Kurt Thoennessen:

Yeah, yeah, as a broker, I definitely do, I want to help my clients do that. And now is the time to do it. You know, when you have insurance, when it's not a problem, if everything's going great, now's the time to look at it. Because you don't want to get caught off guard. And then all of a sudden, you have to create a defensible space within 30 days, and install Ember resistant venting, which, as I know, from Opie I, the the time to order those and the time to have them delivered could be eight weeks. You know, so it's, it's, it's doing these things proactively and when things are good. So, I mean, like this conversation has been extremely illuminating and interesting. And somewhat like lighting not not to say this, but lighting a fire underneath us as brokers and agents and insurance companies to bring this education to our clients in the high net worth space to help avoid a disaster. And like you said, this is not just California, this is outside the state and and potentially even worse outside the state, because the codes are not in place because the infrastructure is not in place. The resources are not in place. So, you know, as we wrap up this conversation, I just wanted to ask, is there anything else that you think is really important for us to discuss here and and to share with the private client risk and resilience audience?

Mike Thayer:

Right, I think you just hit on it, you know, what we see going on California, people absolutely need to be paying attention to another state's because reading regulation may be coming. But before that it's going to be insurance carriers, making those those hard requirements, having those conversations for defensible space. I know outside of California, a lot of times when we talk to clients, it'd be the first time that people were even hearing about wildfire. They weren't hearing it from their local agency. So really having those conversations and starting to prepare those homes now because that window is shortening, number one for you know, possible wildfires coming down the line that we're seeing increased wildfires across the west and that it just a West. Me you look at the Pine Barrens in New Jersey, in Florida, you have issues North Carolina, so all those areas that have any kind of you know, natural vegetation exposure, start talking them about doing these mitigation actions. You don't want to be waiting till like I said before the hammer falls and you have to do it last second. It can be hard. You have clients that are in Colorado, that may be a New York based underwriter and they're New York people they don't know about wildfire. So it's about educating them especially as a secondary home. Those homes are extremely vulnerable, because they're not being seen on a regular basis, there may not be a PCAP all the time, they're only visited in a winter. And then when they're being inspected a lot of time, maybe there's no way there to convey the risk. So be there for an inspection, you know, walk them through the process and what they need to do for those large properties. Uses ones in Colorado, and in those key areas, you know, are, are extremely vulnerable.

Kurt Thoennessen:

I exceptional point. You know, as high net worth brokers, our clients bring us to all areas of the country and outside of the country, I and we are not local to every one of them. And nor can we visit every one, even though I would love to visit every one of their homes. We can't, and we don't, and I don't. But super important to have that local knowledge and to be able to share that with clients so that they can make the necessary actions. And you say, you know, wildfires outside of California, and you talk about on the East Coast, we had a wildfire in Connecticut. And I heard the news and it was in my town. And I was like, what we have a wildfire in Canada in my town. So they can happen anywhere, and certainly something to be aware of. So this has been excellent. Mike, one thing I wanted to ask you is, I if people have a question for you, they would like to get in touch with you. What is the best way for them to do that?

Mike Thayer:

Probably currently right now LinkedIn. I mean, if you can make the contact available on the website, that probably be the easiest way to get ahold of me.

Kurt Thoennessen:

Absolutely. No, thank you very much. So thanks again, for this conversation. I learned a ton. And I hope our audience did too. So and and thank you to the audience for tuning in for this amazing conversation. Mike, this was great. Thank you for your time today.

Unknown:

Oh, thank you so much for the opportunity. I appreciate it.

Kurt Thoennessen:

to everybody who's listening, have a wonderful Thanksgiving. I know that's coming up in a few days. And if you're listening to this as well, and you're headed to the you're going to be attending the progress Management Association, New York Metro chapter event that I am a part of. I look forward to seeing you there. So thanks again, Mike. And thank you to the audience. You have a wonderful day everyone