After the Wildfires: Gauging Future Housing Needs, Options and Demand
In 2016, unprecedented fire catastrophes swept across North America, hitting Fort McMurray, Alberta, and sweeping through Central and Southern California. Without pause, 2017 ushered in a barrage of devastating wildfires in the U.S. with over 9.8 million acres burned and damages up to $18 billion, according to the National Oceanographic and Atmospheric Administration. Six of the 20 most destructive fires in California occurred, wreaking havoc on residents and communities, including Napa, Mendocino, Solano, as well as Ventura, Santa Barbara and Orange counties. The resulting record fire- and smoke related losses that insurance carriers needed to cover involved thousands of structures and tens of thousands of displaced homeowners.
With the fires extinguished in Northern California and Ventura (thankfully), attention now turns to: which families need long-term housing and how can insurance carriers best prepare for the evolving housing cycle after future fire events?
After analysis of hundreds of temporary housing claims from previous wildfires over the past year and a half, we found specific demand trends for temporary housing. The trend places temporary housing in three distinct phases: immediate loss and evacuation, smoke-related losses and longer-term need.
Immediate Loss and Evacuation
A smaller percentage of overall housing requests occurred in the first 1-3 days following the fires and generally were requested by policyholders at ground zero who had immediately lost their homes and/or were forced to evacuate. In those early days, affected policyholders also tended to either stay in emergency housing offered by organizations, like the Red Cross, or with family members.
With the initial onset of housing needs for evacuation and immediate loss, hotel accommodations met the majority of temporary housing requests.
The need for temporary housing grew during the third phase – from 7-30 days after a fire – when smoke-related losses became more evident. About one-third of housing requests took place within this timeframe, with additional policyholders seeking more permanent housing, including apartments and single-family homes. In addition, demand grew for hotels and apartments needed by first-responders, firefighters, relief organizations and insurance personnel assigned to handle claims. This convergence of demand – coupled with the obvious lack of suitable housing in an affected area – placed the most significant pressure on housing resources. During several of the wildfire events, insurance carriers had to decide whether to place personnel as close to the affected areas as possible or place them further away and leave available housing available for policyholders.
The largest – and final – phase of claims took place 30+ days after an event, with just more than half of all housing requests submitted. Several factors came into play, including the need to move some affected policyholders into more permanent housing after their stays with family or into emergency housing.
In Canada, many properties were inaccessible for several weeks, so insurance personnel, contractors and policyholders were unable to fully assess damages to make decisions on specific longer-term housing needs. Finally, even after appraisals on actual losses were completed, carriers and policyholders needed time to collaborate on repair plans and engage contractors before getting accurate projections of “loss of use” time.
These three housing phases can be used to help gauge expectations of policyholders and carriers and prepare for future fire crises. They also offer a more comprehensive understanding of the time required to complete loss assessments, decide the most appropriate housing options, and plan for peak housing demand periods. When looking for temporary housing during future fire crises, it is important to look to your temporary housing partner who can provide the resources, industry expertise, and inventory options that will help you set and manage expectations for the three housing phases.