Wildfires

Paul Martin & Colin Rooke discuss the impact of wildfires on businesses and on those responsible for managing corporate assets.

Listen to the full episode here, or read the full transcript below.

Paul Martin:

Welcome to Risky Business Commercial Insurance with Butler Buyers. This is Paul Martin, the business commentator on CKOM, and I’m the host of this program. And joining me today, Colin Rooke, the commercial risk reduction specialist with Butler Buyers. Colin, we tend on this program to respond to things that are timely in the news as well as the more broad, general kind of themes that we pop up with, such as, say, for example, cyber or data protection.

But today we’re going to talk a little bit about something that’s really timely in terms of news coverage, and it’s just you’d really be hard-pressed to operate in this country right now without bumping into the news story that says forest fires, wildfires, everywhere you look from BC to Newfoundland. Every province is experiencing it. We’ve got firefighters coming from all over the world to assist us, and it’s got us into the conversation around climate change, all of that sort of stuff. But I’m just wondering, that’s sort of the news part of it. What’s the insurance part of this story? And it’s not something we talk about. So perhaps on this program, we can provide a bit of insight to business owners and those responsible for managing enterprises and looking after corporate assets. These wildfires, something we should be talking about? I mean, is it the topic that business people need to pay a little attention to?

Colin Rooke:

It really is. When it comes to the topic of just wildfires in general, I think there’s a lot to be learned. For example, you think, okay, when it comes to the wildfire itself, there’s actually three different types of damage, four really that occur, and most will not think through that.

I mean, you’ve got direct flames, so that’s the obvious one. I’m way too close to an out of control fire, and as a result, my building, my property caught fire. However, another huge culprit are the airborne embers, where again, pieces, hot coal, burning pieces are in the air and they can travel hundreds of kilometers and start new fires. And then you’ve got impacts from radiant heat. So you might be a ways away from the fire, but then you’ve got this extreme heat that will melt and damage properties. So you see that a ton of all these surrounding buildings that again, didn’t catch fire but then you come back and you say, oh, I dodged that. They wanted us to evacuate. We’re so fortunate that we got out of the path. And then you arrive to your property and everything’s melted. And then sort of the fourth big one, and I think that’s talked about the least, is the impact from smoke. So really anywhere there’s smoke as a rule, there’s damage. So you think about –

Paul Martin:

Where there’s smoke, there’s damage? We’ve just changed that old adage?

Colin Rooke:

Yeah, so you think about the fires that everyone knows about so Fort McMurray fires. And yes, there’s a lot of buildings caught fire, but the resulting damage of those fires to the homes in Fort McMurray were actually smoke related. So there were certainly airborne embers. There was damage, but the real culprit was how thick the smoke is. So if you could imagine you’ve left your home in Fort McMurray, it’s so hot, the windows have burst, but your home never actually does catch flames. Just think about how much smoke was inside those homes for so long and what the inside would be like when you returned. And actually the damage itself got most of the press. And of course it all adds to the overall number. But when you think about damage, you think, again, burned to the ground structures. But again, the major part is the damage that smoke does.

And so why am I highlighting that? It’s really important if you’re anywhere near these zones to take a look at your property. So you might not realize that there was some heat damage. You may not realize that although your building didn’t catch fire, that there’s damage from embers. But don’t, especially you think of these remote cabin communities, vacation homes, that sort of thing, make sure you’re cognizant of any damage that could be resulting from smoke. And I don’t want to promise that on every policy that there is coverage for this, but it is an insured peril, meaning you may be entitled to something, but don’t discount the damage that smoke can do if you are on the fringe of a blaze. And don’t convince yourself that you made it out of it sort of scot-free. Do your due diligence and say to yourself, is there a lasting smell? And that smell could constitute a claim.

Paul Martin:

I think you draw a valid point here is that not very many people talk or think about this aspect of it. And yet here you’re saying this is the bulk of the damage. This is where the bulk of the claims come from as the smoke, as opposed to the outright destructive damage that is very visible. And I guess is what captures the attention of the TV cameras, for example, when you’re doing the coverage. So when you look at a Fort Mac, for example, and there’s not much drama and taking a video of a smokey wall inside a house through a broken window, it’s way more dramatic to see an entire block burn to the ground. But your point here is that from an insurance perspective, it’s a totally different aspect.

Colin Rooke:

It is, and that’s what I find so interesting is that I find it less interesting to stare at rubble because when you look at a total loss, everyone can be an insurance adjuster. You walk in and say, yep, it’s gone, looks like fire. But what I find very interesting is you can have a completely intact house and suddenly there’s a $600,000 claim due to the fact that there is smoke throughout.

And to give a good example for those that are listening, protein fire. So you see it all the time in personal lines, home insurance, condo insurance, tenant insurance. So you fire up the pan, you throw the steak on, you’re cooking it inside, you fire up the pan, you throw the steak on and the phone rings or you’re drawn away outside, you forget that you’ve left it on high, it starts to char, it starts to smoke, and then a small blaze ensues. Now maybe it goes on for a few minutes. The home never actually does catch fire, but the smell created by the burned meat will not go away on its own, and it can cause a significant amount of damage. And again, similar to plastics, oils, petroleum. So if you think of it in those contexts, if you had a protein fire that the smell doesn’t go away, think about the damage that again, wildfire smoke could have caused or is causing to your structure as well.

Paul Martin:

I never cease to be amazed at what we learn on this program. So I’ve now heard a new term, a protein fire. So I’ll put that one on my-

Colin Rooke:

Yeah, we use it all the time. Yeah.

Paul Martin:

I’ll put that in my library. But that’s something that you guys in the insurance industry talk about on an ongoing basis, I assume. That’s just parlance for you. But for those of us who are not in the industry, and that’s why we have this program, it’s that we can provide this kind of information and insight into people who don’t live what you live on a daily basis.

Now we’ve got to take a little break. So just to stand by, Colin. You’re listening to Colin Rooke, the Commercial Risk Reduction Specialist with Butler Buyers. This is Risky Business. We’re going to take a little break. We’ll be back after this.

Welcome back to Risky Business Commercial Insurance with Butler Buyers, Paul Martin here, your host, and joining me, Colin Rooke, the commercial risk reduction specialist with Butler Buyers and the primary voice on this program for the last few years.

Colin, before the break, we were talking about smoke damage and how as a property owner with these wildfires going on, you don’t necessarily have to be right next door to the fire, but you could suffer some kind of damage. I’m wondering, the thing that we talk about frequently on this program is step-by-step plans, risk reduction, helping business owners and those responsible for running businesses to make preparations, to take the steps in advance of something happening and to try and foresee what might go on. I’m wondering, with this conversation we’re having in Canada right now about wildfires, do you have one of those step-by-step guides available for business people to look at, to say, what about wildfires? What steps do I need to be aware of?

Colin Rooke:

Yeah, we do, and it’s a timely topic. So if you look at the 10-year average for forest fires in Canada, it’s about 3,400 a year. And as of right now, we’re almost in excess of 4,500 and the season isn’t over. And so the idea of giving a wildfire preparedness guide or planning for wildfire is very relevant. So in the last few episodes, we’ve talked about the oldie but a goodie, the disaster recovery plan. And then we had Grant from Apex Consulting come on and say, okay, as part of the plan, you want to talk about the people plan. What are you going to do with your staff and make sure everyone’s educated. But what we do is, so if we’re looking at a typical disaster recovery plan, there are certain categories or certain sectors or depending on where you are in the world or the exposure you face, that we will build it out further.

So if you have a disaster recovery plan, you will have more than the basics complete. What do we do in the event of, but then we’ve taken it a step further and said, okay, we have a complete guide for getting ready for a wildfire. And so yes, it talks about who does what, who’s going to make what phone calls, what are the critical operations, what are the non-critical, how long will it take to get back up and running? But it also goes through everything you would need to proactively prepare your property, your business, for a pending wildfire.

So one, it talks about really, I’ll start with the basics. Do you have the appropriate insurance coverages in place? And so it’s going to force you to review that and say, what are our policy limits? If we haven’t reviewed the building in a while and now we’ve got 300 kilometers away ablaze, do we need to get on that? Do we have the appropriate business interruption coverage? Do we have enough extra expense coverage to find a temporary location? Maybe if your area burns, you have to be in a completely different city center to operate temporarily while you rebuild. So it covers that.

But then it also talks about all the little things that you can do and who should do them. And it is pretty sophisticated. So they talk about zone one, zone two, zone three in fire preparedness. And I won’t go through them all and what they entail, but for example, it’s zone one is zero to 1.5 meters from any building. So what can you do or should you do? And it defines what that is and the steps you should take. And then you’ve got zone two, 1.5 meters to 10 meters. So you expand the area and what can you do there to be completely fire prepared and it takes it further 10 meters to 30 meters.

And it’s a really good, and it walks you through again, all the little things that if you really thought about it, maybe you’d come to that conclusion. But it’s just as simple as is there any debris up against the building? Is there a clear path for the fire to travel right through the yard and to the building? And if there is, you can do the following to deter it. And so very, very good tool for that. Very educational. It talks about how to create a wildfire evacuation plan, which is very different than an internal fire plan. It doesn’t just say, well, there should be a muster point out in the yard, X amount of meters away from the manufacturing facility because right now we could be in position where we’ve got a wall of fire heading towards the muster point, and sometimes the facility is further from danger than the actual muster point. So how do we build that out? How do you review it with the employees? How do you communicate with everyone of what to do in the event we get a notice saying you’ve got hours?

Paul Martin:

And that’s usually the way it works, isn’t it? And the officials come along and the emergency measures people and just sort of say, we’re evacuating, or you’re on a one-hour notice or something. If you get one hour’s notice to evacuate, you don’t really have time to build a plan, do you? Or to start to look at your yard and rearrange things. This is like everything else we talk about, the preparation, preparation, preparation, get ready in advance storyline.

 

Colin Rooke:

It is. And just to give you sort of a personal example at Butler Buyer’s Insurance. So we do have a full and complete disaster recovery plan that gets reviewed quarterly, like I portray on the show. But based on where one of our office is located, we are in a position where we often have our water shut off. And so we don’t know when that’s going to happen. They don’t say, Colin, in about three weeks, there’s going to be a water main and you’re going to operate, no water. And so we’ve been in a position where it’s happened a few times, and it’s usually we get to work, you use the tap, nothing comes out. And depending on when the incident occurred, we may have notice from the city, sometimes we have to reach out and find it for ourselves.

But we’ve talked about and said, okay, we need a preparedness guide for what exactly to do when the water’s turned off so then nobody misses a beat. Everyone knows who stays home. Everyone knows who stays here, where we go. And it’ll be a simple guide, but it’s an exposure that we have as an office. And so if you look at it in that context, if you are anywhere near an area where you’re prone to wildfire, do the work now, and hopefully you never have to use this, but in the event you do, and maybe it’s just a simple evacuation, you know exactly what to do, how to do it, what critical documents need to leave, because that’s the other thing. If you’re given three hours notice, who knows what they need to grab on the premise that you might never see that again. And that’s a big component of this guide itself.

Paul Martin:

Well, I mean, this is a hypothetical situation, preparation in advance for something that hasn’t occurred yet. And people might be saying, gee, you guys, come on. I mean, this is the prairies and you’re talking forest fires and whatever. But were also some parts of Saskatchewan in a drought. And so grass fires would probably be equally as substituted for forest fire. You say wildfire probably an accurate description.

Colin Rooke:

Exactly. We have clients all over, but very, very dry conditions. And back to where there’s smoke, there’s damage comment. If you’ve ever burned a whole bunch of leaves or a whole bunch of grass, that’s particularly potent, strong smelling smoke. And so you think about, okay, now I’m in a position where the farm has fires all around, you could have smoke damage.

Paul Martin:

Yeah. Listen, Colin, we’ve run out of time. This always goes by so quickly. Thank you for this very insightful, and I just again, want to say thanks for providing this sort of advice and guidance to people who are listening to us today.

You’ve been listening to Colin Rooke, the Commercial Risk Reduction Specialist with Butler Buyers. I’m Paul Martin. This is Risky Business. Thanks for joining us. We’ll talk to you next time.