Understanding the Resilience and Recovery of Wildfire Survivors

Wildfire Trauma

Each wildfire is different; so is each wildfire survivor. Insurance professionals need to exercise caution in overgeneralizing or standardizing post-loss practices. However, one general statement can be made: The combination of evacuation and losing one's home is generally recognized as a cause of some form of post-traumatic stress disorder (PTSD) that affects individual survivors in different ways, which will likely impact the claim process in some way.

How can you know each person's story? In most cases, they will share their "trauma" stories with you. The claim handler needs to listen for clues about how significantly the wildfire impacted them. In those cases where they are still in a state of shock and do not wish to tell you their story, that is an important clue but not an unusual one.

Here are some examples of potential triggers for wildfire PTSD symptoms.

1. In many wildfires, public officials have alerted policyholders threatened by wildfire to either an evacuation or pre-evacuation order that allows them to make a more orderly exit and to take the necessary personal effects for the evacuation period. In other wildfires, there is no luxury of time to make an orderly evacuation, and the survivors' lives are often at risk of getting out. The latter evacuation is likely going to be more traumatic.
2. While they are evacuating, where will they go? Many have the luxury of the hospitality of friends and family. Others face either a public shelter or a motel, if these are even available locally. Now, the stressor of uncertainty starts. Will I have a home to return to? Did I remember all the essential things to take with me? Where are other loved ones? How can I reach out to them? Do I have enough insurance to cover me for whatever happens? These evacuation periods vary based on each fire, but they are great anxiety generators for everyone displaced from the comfort of their home.
3. Certainly, learning that your home is a total loss is a significant trauma. "Home" has different connotations for each survivor. Most observers agree that women see the home as a more emotional object where the family "lived" and life events were celebrated. This emotional home can never be entirely replaced. Conversely, men see the home as a physical structure that will eventually be rebuilt. Children grieve over the loss of their valued possessions and friends. Regardless of the individual involved, this event initiates significant change and uncertainty.
4. In some instances, wildfires result in a loss of life. In those cases, family, neighbors, and friends have separate traumas to grieve and process.
5. Survivor guilt is a recognized phenomenon for those whose homes were saved. Generally, this is less traumatic for those with either minor fire or smoke damage. In some cases of extreme smoke damage, the remediation of a badly smoke-damaged home can create anxiety for residents with respiratory or immune system issues. ¹
6. Finally, visiting their former home and seeing the totality of the damage can trigger PTSD trauma.

As the reality of all these triggers sets in, the survivors are faced with a daunting path to both emotional and physical recovery. They recognize that their whole world has turned upside down and must rapidly retool their mindset for the uphill climb ahead.

While my team did not encounter most wildfire survivors until at least 30 days after the fire's conclusion, the survivors' stories of this period were incredible to hear. Initially, most were in a state of shock or denial. Other early symptoms included the following.

• Continual exhaustion due to the initial overload of tasks needing attention
• Greater forgetfulness due to this task overload
• Task avoidance due to the pain of needing to document the past
• Negative thoughts
• Hypersensitivity to the many things they needed to learn and deal with
• Nightmares
• Sleep deprivation

As noted above, each survivor deals differently with these traumatic triggers, but most are impacted in some way. This post-disaster reality allows insurance professionals to make a big difference by learning and creating a positive recovery path for their policyholders.

Critical First Recovery Steps

Like all claims, the importance of each policyholder contact, beginning with the initial claim reporting, cannot be stressed enough. These communications must be empathetic, positive, and kept as simple as possible. Most importantly, message consistency and establishing the initial expectations for who needs to do what and when are also critical. Every transaction needs to establish trust and credibility. There are several reasons why these early communications are crucial.

• Insurance professionals need to overcome the widespread perception that insurance companies will not deliver the benefits for which they contracted. Honest and concise information about each policyholder's benefits is essential, preferably with written backup information readily available to the customer when they need to recall that conversation.
• After a disaster, the recovery area will be flooded with consumer advocates and public adjusters, so providing correct and concise information is essential.
• In this era of social media and 24/7 news programs, the risk of misinformation or misunderstanding is increased. So, each company should strive to speak with one voice and continuously provide correct policyholder information.
• Finally, it is just the right thing to do.

Considering this is a standard practice in most claim handling, company leadership needs to understand that they usually do not have control over the area of the loss nor sufficient human resources to handle the claim volume in the immediate aftermath, so preplanning for these contingencies will pay big dividends in the short and long term.

At the time of first contact, insurance professionals will talk with policyholders who were going about their regular lives before the fire and are now homeless. While it is difficult to do, the more you can understand this simple fact and put yourselves in that setting, the more you will set the stage for a successful relationship. Not surprisingly, your first task is to relocate them into temporary housing so they can start their long recovery journey. In addition, four other vital tasks need to happen, preferably during this first encounter.

• You need to get money into their hands to purchase replacement clothes, personal items, identification documents, and other necessities they need to get back on track. In addition, you need to explain the process for tracking all personal property replacements. It would be great if your company or local merchants offered discount cards for these purchases to help them stretch their insurance proceeds. At this stage, simplicity is key, so I recommend avoiding any complete inventory discussion in this initial conversation.
• It is usually constructive to start mapping their journey by breaking down the next steps in their insurance claim and giving realistic timelines for them to happen. In these early stages, you must be flexible if they need time to process their many other transition tasks. Because they usually have information overload at this time, it is also helpful to provide them with good resources to help them navigate through this process, either with written or virtual documents.
• The law in some states requires customers to be provided with a copy of their policy in the early stages of a catastrophic claim. If this is not the law in your state, providing this information to establish trust is professional and helps to build a rapport.
• Finally, exchanging good contact information, including a place of emergency contact and their preferred contact method, is essential until the survivors get into more permanent housing. The insurance professional should also provide the same information to the survivor for all active people assigned to the claim, along with guidelines for their expected response times.

Early coaching and facilitation to get them into safer, more permanent housing and to get their kids settled in their present or new schools is an integral part of the recovery process. Some will take the ball and run, while others will be more tentative and may need more significant support. These early steps are where insurance professionals can be a great asset to their companies and provide excellent job satisfaction for the person(s) handling these conversations.

Transparency at this stage is also critical, so communicate the best answers to any questions. If the answers are unclear based on the dynamics of the catastrophe, let them know you will keep those questions on your radar until firm answers are available. You will learn that each disaster creates its own uncertainties. It is essential to let claimants know this is normal and that you will help them navigate through all these recovery elements.

To Build or Not to Build, That Is the Question

Addressing temporary housing is an essential first step in the path to recovery. It still does not replace their "own" home but does provide a foundation to start working toward permanent shelter. The complexity of rebuilding homes creates many issues for wildfire survivors, such as the following.

• Who should clean up and pay for the debris removal? Is the additional limit on my policy sufficient to cover this cost? ³
• Should I rebuild or consider replacing my home by buying another nearby home or one out of state? Should I rebuild using the same footprint or downsize or upgrade certain features?
• Are my limits sufficient to cover rebuilding costs in my old neighborhood? Can I use other policy limits to fill any rebuild cost gaps? Are there other funds available to cover these costs? Where can I get help determining my eligibility for these funds?
• How do I engage with my mortgage company to release the insurance proceeds from my policy to rebuild the new home?
• How do I engage a reputable contractor to assist me with the rebuild? Who needs to address the redesign, and what permits are necessary?
• How can I access the funds necessary to pay the contractor based on their contract? When is the difference between the actual cash value (ACV) and full replacement costs due and payable to me? What about the other additional coverage limits that we may be due?

Essentially, the survivor serves as a general contractor in this process, which is overwhelming and creates many more anxieties at this critical junction as they decide whether to rebuild. Why do they increase the many stressors on themselves in this whole process? There are likely two underlying reasons: They want to rebuild in their original neighborhood, and they want to maximize the benefits to which they are entitled under their insurance policy, which requires them to rebuild to get the entire policy proceeds.

Each insurer addresses all these challenges differently and even differs among its claim personnel. Because "replacement" is not defined in many policies, it creates an opening that causes the survivor even more significant anxiety. If you were to replace a home with another home, how do you determine if it is of "like kind and quality"? Most companies will entertain payment for another house in the community or out of state in the same price range as a basis for paying the full replacement cost benefit. Under some circumstances, the insurer may consider paying the extended replacement cost but not the ordinance and law additional coverage to save on their payment of ALE. Other survivors are content with taking the ACV payment, selling their lot, and moving on. Most survivors opt to rebuild where their home was lost.

The decision to rebuild is often tied to the adequacy of their insurance limits. Underinsurance has become a much more significant factor in deciding how to rebuild in the past 10 years. Learning that their limits are inadequate creates another anxious moment for the survivors, who look for someone to blame. This conversation is much more challenging to navigate, so experienced people need to continue guiding the survivor to recovery. The bottom line is that insurance professionals should have a plan to address this issue when it arises. Remember, in the recovery environment, other folks offer advice that may differ from yours, so keeping the conversation and relationship positive is even more important.

Although there is limited data on the extent of rebuilds after a significant wildfire incident, the general benchmark is that you are lucky if you get two-thirds of the homes replaced. In the aftermath of the Waldo Canyon fire, the rebuild ratio was over 80 percent within 3 years, the best outcome discovered through research. Insurance professionals should continually strive to improve these outcomes and to find creative ways to help our policyholders through this challenging process.

This recovery stage is critical for determining the length of the shortening displacement time for the affected families. For the displaced policyholders, the quicker they can resolve the many issues in this phase, the earlier they can contract with their chosen builder without waiting in line. The decision-making speed varies widely between people based on many factors.

Personal Property Inventory Stressors

This discussion has featured stress caused by the aftermath of a wildfire disaster. This topic will add an insurer-induced stressor to how personal property claims are handled. Most homeowners insurance policies require their policyholders to list all their personal property items, including their age and replacement cost. Once the insurer receives this information, it determines each item's ACV and pays the total ACV values to the insured. As the insured replaces each item, the insurer will make up the difference between the ACV and the replacement value.

This is standard practice that most insurance professionals should know and understand. However, unless policyholders have made similar claims, they are not prepared for this process—and at the most stressful times of their lives. Their fundamental question is why it is necessary to list all items when their home and contents are a total loss. Is there an alternative method to determine the amount of their personal property claim?

To comply with this policy requirement, an insured must create a list of all their belongings, which makes them sad because it triggers memories of their former settled life and the cherished memories of some contents. Certain kinds of property, i.e., collections, books, and photographs, are complicated to itemize and value. In an average home, these lists can quickly fill 25–50 single-space Excel pages, which takes considerable time and energy to accomplish.

Once submitted, the insurer pays the ACV as noted above, which requires double accounting. As items are replaced, supplemental claims need to be submitted, which causes a lot of extra paperwork. In most instances, policyholders have no place to store many of their replaced items until their home is rebuilt. The bottom line is that this is not a simple process, and it usually extends beyond the time required for the house to be rebuilt.

How can this stressor be mitigated? Because of constituent uproar following wildfire events, certain state legislatures have mandated that insurers pay a certain percentage of coverage C (personal property) within a given period and without an inventory. If the policyholder wishes to maximize their payment, they can still complete the inventory and go through this process. Some insurers have increased that limit to the benefit of their customers. Other insurers have adopted practices to facilitate the process by having outside specialized vendors handle this process and pay for the replacement items directly.

While this seems acceptable, few customers opt for this service for various reasons, but its use may not always be presented as positively as it could be. Remarkably, it was interesting to see how some survivors developed innovative ways to soften the stress associated with this task. In other instances, claim handlers could suggest ways to make an arduous task more manageable.

Recovery Rhythms

No two recoveries and no two policyholder claims are alike. The challenge for insurance professionals is to assess each catastrophic disaster for those differences and begin to adapt their approach to addressing those claims. The goal is to evaluate and prepare for the claims environment to handle and close claims as expeditiously as possible, not only for the bottom line but for the best possible outcome for the insureds. In addition, you need to prepare your front-line people to respond to not just the region where they will work but also the complex emotional needs of your policyholders.

The duration of recoveries will differ based on many factors over which we have little control post-loss, such as the demand surge, limited temporary housing, few contractors, building codes, underinsurance, and others. If prepared, you will find fewer hurdles to navigate once adjusters are on the ground or actively communicating with the survivors. Additionally, it is helpful to know how a community recovers from catastrophes and how most individuals recover emotionally following these events. This knowledge will benefit your communications throughout the process.

Like a mental health recovery following a death, your customer will proceed through several phases after losing their home, but the recovery speed will differ between individuals and families. Insurance professionals should not be behavioral health specialists. However, they should recognize these behaviors to communicate better with customers and facilitate insurance recovery. Here are some generic recovery phases.

1. In the immediate aftermath of the incident, most survivors will have some degree of PTSD symptoms until they get settled in their temporary housing and the debris is removed. Some neighbors will probably decide not to rebuild, so the "old neighborhood" won't be the same. Others are ready to begin more serious discussions with contractors about rebuilding their homes during this time and begin to share their forward progress with others.
2. Establishing the beginning of the second phase is difficult, although seeing construction begin is likely the best indicator of its start. This visual stimulus provides more positive evidence that life can return to the neighborhood and demonstrates to folks still in phase one that it can happen. These early pathfinders can advocate with their neighbors on how they made it happen, which increases the pace of new home permits and starts.
3. A third phase begins when the first rebuilt homes are occupied, and neighbors can participate in housewarming parties that signal life returning to normal.
4. The fourth phase occurs when a certain percentage of the neighborhood, including landscapes, is rebuilt. It is a phoenix moment to see life return from the ashes.

Even after this fourth phase, some additional reconstruction will occur, but most are moving on with their new lives and creating a new normal.

Takeaways

Most insurance professionals never see the human side of a wildfire recovery unless they have survived a disaster, know someone who did, or participated in its aftermath. As these catastrophes continue to increase and grow in severity, we need to recognize the human toll from these events and work to humanize our claim procedures to meet this evolving claim reality.

As an added challenge, we must improve our ability to respond rapidly to such events and incorporate more humanity into our claim processes. The time has come to address these complex claims more innovatively and recognize that the existing everyday claim processes may not work well in this environment. It is time to evaluate and implement better ways to handle these claims, which should strive for win-win outcomes for the policyholder and survivor.

Why is this important? The impact of these wildfires has only continued to grow over the past 13 years. It is hard to imagine the magnitude of the Los Angeles Fire recovery when I reflect on what I learned in the Waldo Canyon Fire in 2012, which was 30 times smaller. Based on the many reflections in this article, it is time for claim leaders and front-line personnel to initiate the following initiatives.

• Incorporate more psychological training into their training to better navigate and communicate with customers when catastrophic events strike.
• Review existing claims handling procedures to determine whether they make sense for large-scale claim events and seek to simplify them as much as possible.
• Evaluate the organizational structure of claim responses. Get the claim handlers as close to the survivors as possible and let them know who is doing what, when, and where to contact them. Start by setting standards for responding to customer inquiries.
• Consider adopting more group approaches to adjusting claims. In the wildfire recoveries I witnessed, this practice was never initiated by the insurance companies but by the survivors themselves. Based on my observations, such group endeavors can assist in leveraging a speedier recovery and better claim outcomes.
• Consider re-engaging and training front-line agents in the recovery process and incentivizing this assistance beyond their standard commission.
• Adopt a more rigorous after-action review of each catastrophic event, including company personnel and customers, to identify what worked and what improvement opportunities should be incorporated into future events. The goal should be to make continuous improvements, recognizing that the learning curve continues to be steep.

Our collective industry goal should be to make continuous improvements to better serve our customers and to promote our mutual long-term relationships.