Public-Private Partnerships and Wildfire Recovery

Wildfire Danger

Many wildfires have burned in the Western United States in the first months of 2024 due to the heat and drought in this region. Several wildfires burned a lot of acreage and had minimum impact on property losses. A handful of wildfires have caused extensive property damage. All fires have created significant smoke that affects residents near the fire and at great distances.

In many respects, the conditions in Colorado Springs in 2012 matched the drought and heat levels experienced by the current fires. Like many of the current communities visited by wildfire, Colorado Springs did not have a recovery plan when this disaster struck. In this article, I will share the incredible formation, inner workings, insurance and noninsurance issues tackled, and outcomes of this public-private partnership (P3) entity as it collaborated on assisting this neighborhood to recover as expeditiously as possible.

Waldo Canyon Wildfire

Like most wildfires, it was a human-caused (exact person and details unknown) fire that started near a popular hiking trail on June 22 or 23, 2012. The first sightings of smoke were on June 23, 2012, which initiated the active firefighting of this wildfire and mandatory evacuations of residents in harm's way. Before it was finally fully contained on July 10, 2012, the following occurred.

• Burned 18,247 acres
• Burned 347 homes in the Mountain Shadows neighborhood
• Partially damaged (smoke and heat) many other homes for which exact figures are unavailable
• Minimal business-related losses except for several townhomes and one office building

The most dramatic moments of the fire were from 4 p.m. to 10 p.m. (MDT) on June 26, 2012, when the fire burned 347 homes and damaged other residences.

One of the first lessons learned is that wildfire behavior is unpredictable due to its ability to create weather. Just before 4 p.m., a weak cold front collided with the fire-induced pyrocumulus cloud caused by the wildfire. That cold front triggered the collapse of the cloud, which caused hurricane-force winds to drive the fire downhill and into the Mountain Shadows neighborhood. The intensity of the winds caused a "blowtorch" effect, starting the residential fires individually at first and leading to several conflagration effects within the neighborhood that overwhelmed the firefighting resources.

As a resident of Colorado Springs, I witnessed the progression of this fire from start to finish from my home, which was approximately 10 miles away, so a very horrific sight in many respects. In addition, there was 24/7 local news coverage. On the late news, Governor John Hickenlooper, who had flown over the area, likened the scene to a World War II newsreel common after that war.

As the residents of Colorado Springs headed to bed that night, we were happy to hear that the Mountain Shadows fire was contained so it would not spread further into the City of Colorado Springs. As we went to sleep, the following questions were already started.

• Were the residents of Mountain Shadows and the first responders safe?
• How would we ever recover from such destruction that was not yet fully known?
• What were the next steps to begin to recover?

More importantly, I wondered what, if anything, I could do with my insurance background to make a difference to help the folks in Mountain Shadows. The answer to this question would arrive before week's end as CST was formed to tackle the worst wildfire in both the city and state as measured by property damage as of that date.

Formation of CST

As the mayor and his administration assessed the next steps late in the evening of June 26, it became apparent that the city's preparedness planning was directed toward incident response rather than community recovery. Because the city had never experienced such an impactful disaster, the path forward was uncharted, and the city had limited resources and expertise to move forward. Due to the apparent scope of damage, any recovery plan needed to be robust, efficient, effective, and fast to help the neighborhood and city recover. The mayor chose a P3 approach to the recovery.

Community leaders looked to public recovery processes relating to East Coast hurricanes and California wildfires for guidance. The Federal Emergency Management Administration Web page was especially helpful in identifying the following key elements for any recovery organization.

• Include all community stakeholders in the oversight and management of the recovery.
• Coordinate the many recovery tasks to identify and resolve choke points.
• Act quickly, giving the survivors hope that recovery will happen.
• Involve the neighborhood stakeholders.
• Complete the job.
• Build back better than before.

Takeaway. Any recovery organizational design needs to act quickly, leverage community and public resources, and stay agile to change course as necessary as the facts on the ground may change.

Natural Disaster Recovery

The CST team encountered a steep learning curve as it initiated its volunteer work to help Mountain Shadow citizens. At a minimum, the task at hand was to return people, neighborhoods, and the city back to the conditions that existed before this wildfire. To launch a recovery team, the following organizing principles were essential.

• Disaster type. There were two ramifications for recovery. First, if the disaster results from an insured peril, it will include a significant source of insurance funds to facilitate that recovery. Wildfire is a covered peril, so private insurers were a major player in helping their policyholders recover. Very few uninsured residents were encountered in the Waldo recovery. Second, the disaster type will likely determine the scope and extent of damage. For example, a large hailstorm might create more partial losses but not make homes uninhabitable; a wildfire burning down 347 homes creates a different recovery path.
• Political jurisdictions. A limited number of involved governmental jurisdictions create a more conducive environment for a more focused recovery effort. The jurisdiction's size can also impact the recovery's speed because larger political entities have more staff and financial resources to use on the recovery, whereas smaller rural entities have less of those resources.
• Demographics. The socioeconomic profile of the disaster survivors impacts recoveries. Middle class and affluent residents are more likely to demand quicker action and often have financial resources or the ability to borrow more funds to speed up recoveries. Poorer groups may not have the same political clout or financial resources to do so.
• Recovery finances. A recovery team's design is influenced by who funds the recovery. Natural disasters that are uninsured or underinsured (i.e. flood and earthquake disasters) are more dependent on governmental funding, which tends to be a slower recovery. Wildfires and tornado recoveries are quicker, assuming adequate insurance limits and sufficient local contractors and building supplies are readily available.

The CST team was fortunate to deal primarily with one political unit (the City of Colorado Springs) to assist and leverage an upper-middle-class neighborhood's needs and talents and to have the private insurance sector largely pay for most of the damage.

No two recoveries are alike because of the many factors that must be dealt with. For example, the CST recovery was not just an insurance event but also needed to address the following five subrecoveries.

• Rebuild, repair, and/or replace real and personal property. This was accomplished by each resident's insurance company but did rely on CST's coordination of debris removal, building permits and codes, and related city services.
• Restoring survivor lives to a new normal. The traumatic shock of losing homes and belongings plays a major role in the recovery effort. After a major disaster, everyone recovers at a different rate and needs specialized help to facilitate this process. CST did not handle this counseling assistance but a partner agency, Aspen Pointe, did.
• Infrastructure rebuild and repair. The Waldo Fire impacted the infrastructure in the Mountain Shadows neighborhood. Because not all residents suffered structural fire loss, an early focus by the Colorado Springs Utilities was to ensure all utilities were both safe and available so other neighbors could return home. Additional infrastructure items (i.e., replacement of group mailboxes and underground sprinklers) required repair or replacement before the neighborhood could fully recover. These infrastructure issues were outside CST's mission, but we did have the organizational structure to bring the stakeholders together to find solutions in a few instances.
• Environmental recovery. The adjacent national forest was severely impacted by the wildfire. Although there was a lot of community interest in assisting in revegetating this land, forest restoration is usually slower due to the significant impacts to the soil that takes more time to recover, especially when steep slopes are involved. CST played virtually no role in this phase of the recovery except for providing information about mitigation of the area from potential flash floods as well as from dangerous burned trees.
• Business recovery. Even though there were few businesses that suffered direct damage to their buildings, many depended on the business of the displaced residents for their home-based livelihood. These losses were hard to quantify and to make economically whole. In addition, there were many Mountain Shadows homeowners who lost their livelihood due to the loss of their homes. Although our focus was not directly on business recovery, we did have a couple of strategies designed to help them.

Parting Thoughts

Why should this article matter to insurance professionals and other stakeholders in natural catastrophe recoveries? The following are several takeaways.

• As natural catastrophes continue to be more frequent and severe, it is important for frontline insurance agents to assess the relative catastrophe exposures of their communities and advocate for developing a recovery plan of action that can be implemented very quickly and is flexible enough to adapt to the catastrophe. The goal should emulate how the first responders plan for the response portion of the incident.
• It is time for the collective insurance industry to adopt a similar process for evaluating what worked well and opportunities for continuous improvement like our first responders who regularly prepare after-action reports that outline the lessons learned on each incident.
• Insurance claim organizations should review their processes to encourage less friction and more speed to assist wildfire survivors reduce the inherent stresses that follow such an event. It is important to understand the underlying dynamic of recovery psychology to minimize policyholder grief.
• From my past writings and educational forums, most people have no idea of all the things happening in the recovery process. Most insurance people understand a regular claim process where they are better able to control the pace of final claim settlements. When you are in a catastrophic claim setting, many more dynamics govern the claim process. Speaking for myself, I never experienced this level of claims intensity in my insurance career.

It is not the intent of this article to criticize the role of the insurance industry in responding to this natural disaster in our community; it was my purpose to shed light on the recovery process to help my fellow insurance professionals make continuous improvements to dealing with the rapid increase in natural disasters to which they need to respond. Bottom line: It was a proud moment for me to see how our product provided benefits to their policyholders to make them whole. All stakeholders to catastrophic events need to see how insurance policies play a major role in any natural catastrophe event.

I encourage your comments and suggestions for finding better risk management solutions to this exposure. My preferred contact is my email address: [email protected].