(Bloomberg) --In the era of cutting-edge computer modeling, satellite data and AI, there has never been more abundant information on the danger that
Many homes that burned in the Eaton Fire lay outside the boundaries of state- or local-designated "very high"
The fires last month destroyed more than 11,000 homes in total, and more than 40% of those had stood outside of the official fire-hazard zones. In Altadena, some 4,500 houses burned in locations beyond the zone boundaries. That means homeowners faced no fire-related disclosure requirements when purchasing a home, as would be the case for transactions inside the zones. Property owners inside the zone also face mandates for brush clearing and other steps to mitigate risk that didn't apply to nearby homes outside the boundary.
Insurers had access to more finely tuned risk indicators, and knew how to interpret them. The neighborhoods that burned in LA "looked disproportionately high risk compared to the rest of the country, and insurers knew it," says Anand Srinivasan, head of research and development at CoreLogic Inc., a property information company.
This gap points to a wider problem. As climate-driven perils such as wildfire and flooding become more frequent and more severe, many more Americans will try to assess their home's vulnerability. They'll face mixed signals and a disparity between what data is freely available and the fuller data that private companies can pay to access.
The government fire hazard maps of LA are easily found online. Other, more precise information on fire risk in LA neighborhoods exists in the private sector. CoreLogic, which consults for government and insurers, among other clients, had rated the vast majority of homes in Altadena as having a "high" or "very high" risk of wildfire damage — even if they lay outside a hazard zone.
But this data isn't available to the general public. It's sold business-to-business; CoreLogic made it available to Bloomberg for this story.
There were other places homeowners worried about wildfire risk could find more information, if they were motivated. First Street Technology Inc. estimates climate risks at the property level and makes its risk scores available to the public for free. Its risk ratings appear in listings on the popular real estate sites Zillow and Redfin.
About 95% of destroyed homes in Altadena had a fire risk level of at least 7 on a 10-point scale as assigned by First Street.
But even people who see higher scores might not fully grasp them or can find ways to downplay them.
"When you give people numbers like this, they tend to numb," says Anthony Leiserowitz, the founding director of the Yale Program on Climate Change Communication. "Especially if they're not based directly on someone's own experience."
People tend to discount danger that is not immediate. While a majority of Americans say that global warming is already happening, only 47% believe that it is causing harm in the US "right now," according to
Climate change made the LA fires
Climate risk is also difficult to convey because it's lower in the very near term than over a lifetime, or the typical length of a mortgage. For example, what's often called the 100-year floodplain is not an area that floods roughly once a century, as is often assumed. It's an area where the risk of flooding is 1% a year, and over 30 years, that chance amounts to
Complicating the picture further, current levels of climate risk aren't constant. They will rise as
Arguably, the clearest signal for LA homeowners was being located in a fire hazard severity zone. But bright boundary lines can be lulling to those just on the other side of them.
Doug Mark, a resident of West Hollywood, lives less than a block from where Sunset Boulevard marks the start of a zone. He says it's not of great concern to him and his neighbors, and that he hasn't had trouble getting or keeping insurance.
"Even if you're five minutes from the hills, I don't think there's any issue. As soon as you cross Sunset Boulevard, that's when people are thinking about it," he says.
Altadena sits at the edge of one "very high" severity zone. Eighty percent of the local homes that burned sat outside the zone.
Cal Fire takes pains to explain that risk levels and hazard zones are not the same thing. Hazard zones are mapped based on physical conditions that create a likelihood of fire, and the expected behavior of potential fires, over a 30-to-50-year period. That process doesn't take into account possible mitigation measures such as home hardening or fuel reduction, which can change the risk.
Matthew Eby, the founder and president of First Street, says the company thought a lot about how to communicate risk, choosing a 1-to-10 scale for simplicity, paired with descriptors such as "moderate" or "severe." Still, its estimates are just that. Every risk modeler approaches the task differently and often with different inputs. A past Bloomberg analysis of estimates of flood risk in Los Angeles — including by First Street and CoreLogic — found wide discrepancies between them. And wildfire risk is
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Eby says that since insurers and financial institutions have access to property-level risk estimates, it's only fair for homeowners to have it, too.
While First Street assesses the relative risk of fire occurring on a given property, CoreLogic calculates its scores based on the projected costs of repairing or rebuilding due to wildfires and smoke over time. CoreLogic can estimate current risk or look at risk going into the future. (By contrast, First Street's risk scores are designed to capture cumulative risk over 30 years.)
Further west, the entire area leveled by the Palisades Fire was covered by state or local fire hazard severity zones. Yet about 850 of the homes destroyed, or 15% of the total, had a current wildfire risk score from CoreLogic in the "moderate" range, between 36 and 55 out of 100. Many of these homes were clustered in the eastern areas of the fire's path, in the Pacific Palisades neighborhood proper. By contrast, further west in Malibu, one in three homes had an "extreme" score of 86 or higher.
The catch is that while ordinary citizens tend to discount risk scores, insurance companies absolutely do not. And they don't measure it the same way, either. Insurers are a liquid pool of capital with no emotional attachment to homes; it is their business to be ruthless in their analytical assessments.
Even a "moderate" CoreLogic score would send a strong signal to an insurance company. Fully 70% of homes across the US scored by CoreLogic have fire risk below "moderate." Insurers also look not only at averages but at the tail of the curve, which is probable maximum loss.
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Although a share of the homes had lower scores, says CoreLogic's Srinivasan, "the bulk were higher, and when you couple that with 80-mile-an-hour sustained winds and the proximity of the properties, you are going to have a severe impact on even lower-risk properties."
Insurers had already been pulling out of Pacific Palisades. State Farm, California's largest residential insurer, moved to cancel
In theory, high-priced insurance or a lack of insurance options should be another clear message to homeowners that they are in harm's way. But, says Yale's Leiserowitz, it is possible to put that down mostly to insurance company greed.
Marcy Weinstein, a real estate agent in fire-prone Newport Beach, south of LA in Orange County, says her clients often interpret it that way.
After the fires in LA, "I'm not seeing a huge level of anxiety happen," she said. "What we are seeing is backlash toward the insurance being so difficult to get. You're trying to get your dream home, and it's difficult for insurance to match up."
To contact the authors of this story:
Leslie Kaufman in New York at
Andre Tartar in New York at
Armand Emamdjomeh in Washington at
