Wildfire risk and insurance: research directions for policy scientists

Abstract

Catastrophic wildfire is an increasingly familiar phenomenon on multiple continents. In the United States, concerns about uncontrolled, destructive wildfire have prompted some major insurance carriers to cease writing new policies or to non-renew existing policies. These trends affect not only policyholders, but also, vulnerable communities that already face multiple obstacles to securing property or renters insurance. This study reviews the social and behavioral sciences literatures on wildfire risk in the United States and insurance protection by homeowners. Three categories of research emerge from the review, namely, homeowner as rational actor, wildfire governance and risk management, and wildfire and social equity. There is abundant scholarship on determinants of homeowner decisions to manage wildfire risk by self-protecting or by purchasing insurance, but comparatively little research on the policy implications of shrinking markets for insurance. Policy research on the needs of underinsured and uninsured populations is also relatively undeveloped. Overlaying Lasswell’s social process framework on the three dominant research themes, we find not only divergent research questions, models, and methods, but also, important differences in which stakeholders and stakeholder values are considered. There are opportunities for the different literatures to learn from one another, but also, to sharpen their focus on insurance as a scarce and uncertain resource amid climate change and as property development continues to expand in wildfire-prone areas.