Speaking to The Insurer on the sidelines of this year’s Baden-Baden meeting, White says the main lesson learned from wildfire activity in the US during the last two loss years was that the risk had been largely underestimated – and poorly priced.

“I think the biggest takeaway of the 2017 and 2018 wildfires in California, given the losses we’re experiencing, is simply this: it is really time for this model peril to get the same rigour as the big boy perils of hurricane, earthquake and flood.”.

Pointing towards the actuarial approach that “didn’t go so well,” but was favoured by the industry at the time, White added: “What we saw in 2017 was a loss ratio of 160 percent. We saw in 2018 a loss ratio of 150 percent. So, what that means is that for every dollar that you took in in premiums, after your operating costs you were basically getting two going out the door.”

The situation is only getting more complex, she argued, with the cost of ongoing litigation surrounding PG&E – the company liable for last year’s fatal Camp Fire – looking as though it could soar to as much as $30bn or more.

Part of the cause was the often unconsidered effects of embers and smoke damage, which add to loss bills, White explained, which is what RMS has taken proactive steps to anticipate, building these risks into the firm’s wildfire models.

“The way that embers travel, and the way that we’ve modelled that in the winds that you can find, is that a very low risk area goes up in one of the fires in about 90 minutes, suffering so much loss that had been unanticipated.

“Another hazard that we’ve modelled is smoke, for example, again making it a first-class citizen, because the smoke damage can really cause problems for people needing to relocate, extending the losses to beyond what was anticipated in the property,” she said.

To bolster the industry’s response as a whole, White called for players join a data standard – RMS is already using one called RDO (Risk Data Open) in its own modelling software.

“We’ve launched a new open standard, called the Risk Data Open Standard, because… we fundamentally think this is a problem we have to solve, so we’ve made our next standard open to contribute it to the industry,” she said.

For the good of bringing the industry “to the next level,” the time to take advantage of improving data and analytics opportunities is now, White argued.

“It is no longer tenable to stand still,” she concluded.

White’s comments come on the day that Munich Re said climate change was increasing the risk of extensive wildfires globally.

Doris Höpke, on Munich Re’s board of management, said at a Baden-Baden press conference today that the “risk of extensive wildfires is rapidly increasing” due to climate change and also higher insured values in risk areas.