Dr. Matt Hinds-Aldrich, Senior Risk Strategy Lead, was a recent guest on the FNO: InsureTech podcast, joining hosts Rob Beller and Lee Boyd to talk about how new thinking around data can enhance insurers’ ability to measure, rate, and mitigate fire risk and the challenges associated with insuring the peril, particularly in wildfire-prone areas such as California.
The podcast’s pun-loving hosts teed up that discussion as a “sizzling” conversation on a “hot topic,” while referring to Matt as the “Fire Dr.” – not a misnomer given that Matt wrote his PhD thesis on The Way of the Smoke Eater: Rethinking Firefighter Culture in the Field of Structural Fire Protection and spent the lion’s share of his career in teaching fire science and leveraging data to help fire department’s optimize performance, before joining AAIS in 2020.
Matt described AAIS’s mission in fire risk as building a mutually beneficial bridge between the insurance industry and the fire protection industry, an umbrella term encompassing everything from local and municipal fire departments to wildfire-specific governmental agencies, and the fire sprinkler and fire protection engineering industries.
The foundation of this bridge is data.
As the hosts noted, InsureTech resolves around data and utilizing and capturing data that has not been available or capturable before and analyzing data in new and novel ways. Matt concurred but noted that the focus is often on the interesting things you can do with data, and less on where that data comes from in the first place. That can limit the value and usefulness of all that data. He shares that if you follow it back to its origin, it is created by people who have the least to gain from report writing and data collection. But that is changing as we start to close the loop between data producers and data consumers. Encouraging the same organizations, people, and processes that collect and create data to also start using their own data—so they have an incentive to improve its quality. When fire departments ask how to improve their data quality, Matt encourages them to try to answer three fundamental questions:
- Can you get the data out of the systems it is entered into?
- Is it useful data that’s relevant to what you are actually trying to do?
- Is the quality of data actually something you can rely on?
On the topic of wildfires—which are growing more frequent and severe in California and other western states—Matt pointed to the sometimes controversial but scientific truth that wildfires are a natural, healthy part of the ecosystem. The difference today is that so many of the areas affected by this natural rhythm have been developed with homes and businesses. It is well established that this situation presents enormous challenges for insurers; challenges akin to those seen with other perils such as a Florida hurricane. Maintaining insurance availability and affordability for properties in wildfire-prone areas, while maintaining financially healthy insurance carriers, is a critical goal everyone can agree on.
Matt discussed the tremendous amount of mitigation effort happening in California, via local and state entities. Yet, he noted that much of this information is not currently available and accessible to insurers. A critical link in the mitigation chain is data: information on what has been done and where it was done, so we can begin to determine its impact. He noted that is the next frontier in our collective efforts to address the fire peril, getting useful data about mitigation activities across the country.
Listen to the entire podcast here.
