Wildfire & Climate Risk in the Housing Market

In this episode of the Top of Mind podcast, Mike Simonsen sits down with Clark Woodward, Founder and CEO of RedZone, to discuss how wildfire and other climate risks are creating new existential challenges for the housing market. Clark talks about the changing landscape for disaster insurance, shares how homeowners should think about climate risk in the coming decades, and offers hope for the future through new technology and policy innovations.

About Clark Woodward

Clark Woodward is the Founder and CEO of RedZone, the leading expert on wildfire analytics and the impact of wildfires on homes and businesses. RedZone aggregates natural disaster response data and provides a platform for companies to easily understand and develop the appropriate response to protect their assets. Clark is a firefighter, a data scientist, and an entrepreneur, so he has the perfect combination of expertise to tackle this incredibly important and timely issue.

 

Here’s a glimpse of what you’ll learn: 

• How homeowners should think about climate risk in the coming decades
• Which elements of climate change are most impactful to wildfires
• How insurance is changing with regards to disasters and climate change
• Why it’s so hard to properly promote forest health
• The latest data science innovations for predicting wildfire probabilities
• The most promising technologies for preventing home damage and loss
• How new building standards and technologies implemented in Florida made a difference in mitigating damage and loss from Hurricane Ian 
• What he’s most optimistic about, and what keeps him up at night

Resources mentioned in this episode:

• Clark Woodward on LinkedIn
• RedZone
• Mike Simonsen on LinkedIn
• Altos Research

About Altos Research

The Top of Mind Podcast is produced by Altos Research.

Each week, Altos tracks every home for sale in the country - all the pricing, and all the changes in pricing - and synthesizes those analytics to make them available before becoming visible through traditional channels.

Schedule a demo to see Altos in action. You can also get a copy of our free eBook: How To Use Market Data to Build Your Real Estate Business.

Episode Transcript

Intro 0:02

Welcome to Top of Mind The show where we talk to real estate industry insiders and experts about the biggest trends impacting the market today. Enjoy the show.

Mike Simonsen 0:13

Mike Simonson here. Thanks for joining me today. Welcome to the Top of Mind podcast. This is where I talk to the smartest leaders thinkers, doers in the real estate and related industries. For a few years now, we've been sharing our latest market data every week in a weekly video series. With the Top of Mind podcast, we are looking to add context to the discussion about what's happening in the market from from leaders in the industry. Each week, altos research tracks every home for sale in the country, all the pricing all the supply and demand all the changes in that data and we make it available to you. Before you see it in the traditional channels. People desperately need to know what's going on in housing right now. It was so hot and so competitive, and the landscape has just changed dramatically. And so when people asked me Mike, can I get data for local market? The answer is yes. Visit altos research.com book free consultation with our team we can dive into local data with for you and for your business. But really we're here today to talk to my guest. So without further ado, I'm happy to introduce today, Clark Woodward. Clark is the Founder CEO of RedZone. RedZone is the leading expert on wildfire analytics in the impact of wildfires on homes and businesses. RedZone aggregates natural disaster response data provides a platform for companies to easily understand and develop a proper response to protect their assets. Clark is a firefighter, a data scientist and an entrepreneur. And he says the perfect combination to tackle this really, really important topic and timely issue. So Clark, thanks for joining me today, I got so much we want to cover wildfire in the American West. And like in the in the related topics of climate change and all of the risks that are around us. I can't wait to dive in.

Clark Woodward 2:25

Thank you, Mike. I mean, it's awesome to be here. And I'm really excited for the opportunity to talk to you about housing, which is kind of an area that we don't necessarily get to explore here at RedZone. So this is a really fascinating topic for me.

Mike Simonsen 2:38

Awesome, terrific. Well, that's a great place to start. So like I love that, like I'm interested in about RedZone and about, you know, obviously particular that like you're a firefighter and a data scientist, tell me how that happens. And then tell me about that tell us about RedZone a little bit.

Clark Woodward 2:53

Sure. So, you know, I got into this business because I lived in it. You know, I grew up and moved out to Boulder, Colorado, I was living in the hills in an area with super high wildfire risk. And I became a firefighter, I became a volunteer, and my education. I'm a math guy, I'm a math dork. I was building maps to the US Geological Survey. And my fire chief said, Hey, Clark, can you make us a map of all of the homes in our district. So I built some software to do that. And that software became popular among fire departments. And then big companies started coming to us. And that's how we got into insurance is that people wanted to know where their homes were, and what the risk was in the surrounding areas. So, you know, we really evolved through the need, you know, of our own local fire district, and we've turned it into, you know, a business now for like, 22 years.

Mike Simonsen 3:48

Amazing. And so when when you look at the map, you're plotting homes on the map, are you are like assessing fire risk of those homes for the like insurance companies or mortgage companies or something like that.

Clark Woodward 4:04

So you can think of an insurance company having homes all across the West, what do they need to know? Well, the first thing they need to know is which homes are exposed to wildfire. How bad would it be should one occur and how frequently they expect you know those fires to to happen. So we provide those analytics along with their concentration of risk, what could a really bad day look for, like for an insurance company to help them prepare for these disasters? But one of the cool things that we do is that we also provide real time monitoring. So we are on top of every wildfire that happens across the US. And we tell our customers when they're affected by a wildfire, and then often what they can do about it. So they might communicate out to their customers. Maybe they send an email with a map of every person's home and their distance to the wildfire to help them understand you know how the event is really impacting the individual person. You know, you often hear that insurance companies are sending private fire trucks to help mitigate homes, right and head of a wildfire. You know, it's really common in California, where, you know, they'll try to save those homes and they, you know, in the event that we have a fire on the ground, that's often RedZones, technology, putting those firefighters at the home for an insurance company. And so it's kind of one of the unique and really exciting products that

Mike Simonsen 5:33

we offer. That's amazing. So because obviously, it's a lot cheaper to go hire a private fire truck, and go clear some stops and fire right before it gets to the neighborhood where you have exposure.

Clark Woodward 5:48

Yeah, and you hit it on the head right there, you know, what we do is we get a fire truck to help that home get prepped for the fire to arrive. We're moving furniture, where you know, spring fire retardant, we're closing windows, and then when the fire arrives, we're out of there, you know, we are and then it's the job of the fire departments to you know, fight that fire. So we're there to complement and really, you know, improve the chances of that home surviving the event.

Mike Simonsen 6:18

That's amazing. Can individual consumers go to you and do the book that you know

Clark Woodward 6:23

it, we work sometimes with smaller, Hoa communities, but it's really a game of having not enough resources across a big geographic area? Yeah. So you know, it's best to have somebody like an insurance company who can move those resources around the state to where they're needed, you know, you have to be there at the right time.

Mike Simonsen 6:44

Man, that is so fascinated me so much to talk about. So. So before we dive in, like, I'm really interested in the technology and the data that you're using, but before we dive into that, let's talk a little more broadly, you know, the one of the reasons that like I wanted to have you on is, is, you know, I live in California, I have a house in the mountains, and it seems like the world is the fire risk in general, but but natural disasters more broadly, are increasing and increasing in in, you know, impact. And and so sometimes I wonder, is it like, is it all just recency bias? Like, I just remember the most recent ones, and therefore, I think it's a lot or is there data that says, Yeah, Mike, the fires are getting worse, and they're gonna keep getting worse. What do we know? What does the data say?

Clark Woodward 7:39

Well, I mean, clearly, the data says that climate is changing. And, you know, what we're seeing is we're seeing warmer waters. And probably most importantly, across the US, we're seeing windier events. So we're having larger wildfires that are growing unabated in this extreme weather. So the average wildfire size has increased dramatically in the last two decades. So those large wildfires, you know, are the ones that can become the most damaging, because they're really hard to fight. You know, individual firefighters, the planes in the skies, they can't stop 100,000 acre wildfire, right. So we're seeing bigger fires that are more intense. And, you know, at the same time, we're seeing more and more people living in the communities. You know, we've had, you know, in the last 10 years, something like 6 million new homes, in the wildland urban interface, you know, accounting for, like 20 million people living. So we are encountering these large wildfires, because as a, you know, as a society, we're living in those areas where they're happening.

Mike Simonsen 8:49

Yeah, that's amazing. And so if you said 6 million new homes that are at that wildfire, that the the wilderness, suburban edge, the excerpts that keep inexorably driving further out. Yeah, we

Clark Woodward 9:04

call it the wildland urban interface, wildland

Mike Simonsen 9:07

urban interface. Yeah. Yeah. And so do you have policy opinions on that? Like, should we stop? Or should we do something dramatic like, like, dramatically different building codes? What do you think from from your perspective of like, the fires are getting worse, and the people are getting more exposed? What do we do?

Clark Woodward 9:33

Well, I mean, with all complex problems, if there isn't a single solution, if there was a single solution, we would have done it. And we'd be, you know, on our way to recovery. Yeah, realistically, you know, we have to approach this from both the individual structure as well as the forest health. You know, if we started with forest health, we can think of, you know, the last seven years of fire suppression where we've made every For, you know, from the Forest Service and from the BLM, or other firefighting agencies to put every wildfire out. So what we've ended up with is we've ended up with forests that have not burned in 100 years. And naturally, they should expect to have had wildfires, you know, two or three times a century, which reduces the amount of fuel we have in the forest. So now we have these forests that are over accumulated. And when they burn, they burn with a greater intensity, which makes them larger and harder to put out. And, you know, therefore more destructive. So from a policy perspective, you know, we need to attack the forest health as a policy nationally. So we need to be putting, you know, prescribed fire down on the ground be burning for us under our own terms, where we can, you know, to some degree control the, the, the intensity of that wildfire and reduce that fuel. You know, that's something we're seeing in the inflation Reduction Act, there's, you know, $450 million toward forest health and climate resilience, and that is a step in the right direction, you know, so from a policy standpoint, we need more of that. And we need more of that long term thinking, where we're, you know, thinking about our forests over the next century, and making them safer and healthier, you know, for us to coexist.

Mike Simonsen 11:23

Yeah, that's so. So that makes a lot of sense, obviously. And, and it makes a lot of intuitive sense about, you know, forests need to burn and, and so 50 or more years ago, we were still in active suppression mode. Are we? Are we more in? Like, is it more commonly accepted that we need to be in prescribed burn mode more frequently? Or is there like, is there still a camp that's resisting that very dramatically.

Clark Woodward 11:52

I mean, there's definitely a camps that are resisting it, it's a hard decision to make, to let a fire burn, you know, in particular, because there's a higher chance that you're going to lose homes. And so you're putting people at risk, knowingly and willingly. And that's an incredibly hard decision for, you know, a society to make. But it is, you know, they're, they're going to burn, whether we want them to or not. So, in control them, there's a growing movement to, you know, try to keep those fires that are allowed to burn. And, you know, let them go with, you know, understanding that it's toward the greater good, even though it puts some individuals at risk.

Mike Simonsen 12:37

Yeah, that's fascinating. So, yeah, it's like you could imagine, especially in a place like California, you get like one homeowner that says, You can't burn here. And it stops the whole process from, you know, from happening, and regaining health.

Clark Woodward 12:54

Yeah, I mean, air quality is often a big target of prescribed burning, you can't burn if you're going to negatively impact the air quality, and therefore put those citizens with respiratory issues and, you know, problems at risk. And so, it is, you know, it's a complex dance to do host a prescribed fire in your community, for sure.

Mike Simonsen 13:17

Wow. Yeah. The, the so many constituents on that, that's really fascinating. Are there? Are there places that were currently building? That you're like, Man, that's nuts? We can't we should not be doing that. Is it? Is there any place that that's obviously that that is obviously happening? From an end? Like, from like, you know, where we are now, it may be feels okay, but, you know, the trends say that in 15 years, we're, they're all screwed, or anything like that, as you can see.

Clark Woodward 13:53

Yeah, I mean, I think, you know, across the West, we could say that in high risk areas, you know, it's insane to be building flammable homes. So, you know, there are high risk areas, where a home that is properly constructed, with, you know, fire resistant materials, with good space around the home, that would, you know, would not have this kind of fire intensity, you know, that is a risk that is a reasonably responsible place to build a home. But, you know, we see these, you know, millions of homes that are going up in high risk areas that are difficult to protect, you know, they're dangerous for firefighters to be there. And, you know, they're made of combustible materials. And that, you know, that doesn't, that's, that's hard to swallow. And, you know, it's really a factor of the fact that that's where land is cheap. Housing is really expensive. And it's so it's completely understandable that people do it because that gives them the opportunity to be a homeowner, you know, where they may not be able to buy downtown LA, but they can buy on the outskirts, they can buy in those higher risk areas where land is

Mike Simonsen 15:06

cheaper. And then the construction is cheaper with when you're putting up sticks to write. What a while we're on that topic of construction. Are there are there? Like what? So So what's the what does a less flammable house look like? Like what are we building? What should we be building from, like concrete cladding kind of those kinds of things? What does it look like?

Clark Woodward 15:27

Well, I mean, I think this is an exciting part of the market right now, because there's been a lot of research. And there's finally been some data that helps us really validate what makes a home survive. And you know, what, the way that I like to think about it is that when we think of a wildfire, we often think of it as the big flames that we see on TV because our eyes are drawn to it. But in reality, you know, the, the real driver of home loss is the embers that precede that wildfire. So a fire is burning through the forest, and it's lifting leaves and pine cones, and you know, all sorts of material. And when it approaches your home, you know, you have a billion embers up against your house. So when you think of home hardening, you're really protecting yourself, you know, against those embers. So, you know, we might start with the construction type, you know, a metal roof is better than asphalt roof, which is a light years better than, you know, a wood roof. Yeah, you know, we know, stucco is better than than wood siding. But the other things we got to think about is like, where are all those embers going to go to they get into my ears, and they get into my vents and they get under the house. And so when we harden that house, and we walk around, we think of all those places that would help that home survive, it's going to be to survive that Ember shower. And you have to think about the surrounding forest, if you have flames up against your house, your probability of survival go way, way down. So removing the fuel the the grass from around your house, mowing, liming, you know, and removing trees, even selectively from around the house, you know, we'll keep those flames and getting close. And then you've got to survive that Ember shower. And that's really a sort of a one two punch of home hardening is, is defensible space. And, you know, the the materials and

Mike Simonsen 17:22

the Ember, ya know, the, the community that I have my home in, is really aggressive about defensible space, and it's probably seems to me, it's probably a change from even maybe 20 years ago, they will probably be doing the opposite of that, like, you can't cut down trees. And you know, they're probably like, I don't know, when that transition happened. But my guess is that, you know, 20 or 25 years ago, they were prevented, they were like, still preventing people from that, and they've moved into a really aggressive defensible space, you know, with citations on homes where you haven't done the the upkeep. Do you? Is that true? In most of the risky areas around there, like are the local, like, the the authorities that whether it's county or whatever, like, are they starting to be more enlightened? And, and working harder on this?

Clark Woodward 18:16

Well, I think there's an acknowledgement to the scale of the problem, no doubt about it. But I think you have to remember that, that, you know, the history of the West was a history of independent free spirit, and, you know, the ability to, for you to live or person to live, and have no one tell them what to do. So, you know, that has carried forward to a really a lack of building codes, which have enabled very flammable homes to be built. And so it is, you know, it is very difficult, both politically difficult, and from a regulatory standpoint, you know, difficult to implement building codes. And that only really addresses new home construction. So, you know, we've seen in California, where, you know, after building codes were required, that the home losses of homes built after the 1970s has been, you know, extremely limited compared to those that were built prior to the implementation of building codes. So we know building codes have a positive impact.

Mike Simonsen 19:22

Yeah. Wow. Right. And so the yes, the history of the American West is like self reinforcing on that topic, I suppose. Like the

Clark Woodward 19:33

Yeah, I mean, it's certainly you know, it's expensive to retrofit. So you have a home that is flammable you as a homeowner, you acknowledge the problem nowadays, you know, to replace your siding to replace your roof to to make fundamental changes to your home. It's really expensive. And, you know, I think we're we're seeing success is in programs either state or federally, where the federal government will provide you or you can get a Low Cost loan to do some of that retrofitting. That's, that's a place where I think there's a lot of promise for homeowners to, you know, who have the intent to do the right thing is to give them the ability, the financial ability to then go execute and change the combustibility of their home.

Mike Simonsen 20:19

Interesting. That's, that's encouraging. Like, it's like, yeah, you know, you got to put a new roof on that thing. That's 10s of 1000s. of dollars, and you can have, like, very easy to put off that decision. And hope that it makes it one more year. Yeah. Yeah. So having having a federal program for for for doing that is really that's really, really fascinating. Do you do you might get the same kind of questions I do, which is, people are like, ask that. Because I do analyze the real estate market. People ask me all the time, should I buy a house? Now? Is it a good time to buy a house? You know, should I buy? Should I buy a house in Tahoe? And one of the things that I discussed, especially when they're talking about buying, you know, in Northern California, it's like, like, I don't know, given the direction of fires and in smoke in this state now, like, if I Is that Is that something I'd recommend is that, you know, and, and, and, like, I remember, like, I've been in, I've been in San Francisco for 25 years. And, and almost, and I, in the first couple of decades, maybe smoke one time. And now smoke every year. Like, it seems like in San Francisco. And so when people ask you, like, should I be doing this a real? Or what do you say when they ask? So

Clark Woodward 22:12

what I say is that you got to go into it, with eyes wide open, you know, you have to understand the risk that you're taking on, if you're buying house in Tahoe, you know, there's an there's an acceptance of responsibility, that you may lose that home to a wildfire. And, you know, whether that is the, your ability to actually properly mitigate that, you know, to accept that insurance is going to be expensive, if that's even, you know, available. So buying a house that you can truly afford, and perhaps afford to lose, you know, is an important decision to make when you're buying house, in, you know, in California or kind of anywhere in the West. Yeah. Go ahead. I was gonna say, you know, this year has been pretty quiet, you know, we had a couple of years of really hard, you know, wildfire season with lots of smoke and lots of losses. And, you know, for whatever reason, this year has been reasonably quiet, you know, across the West. And so, you know, some years will be bad, and we need to remember those and not forget them, even when we have these fire years. Yeah, we

Mike Simonsen 23:23

had one in Northern California, one big one first few weeks that really smoked out most of much of the state this year, which is definitely definitely lower than then recent years. You know, I think maybe this last spring there was the it was in Boulder where was like, there's still snow on the ground, but the grass was burning. Like, there was some kind of phenomenon like that happening is that

Clark Woodward 23:47

you remember it correctly, you didn't get the season cracks between Christmas and New Year's, so December 29. And we had an exterior, it was extremely dry, there was not a lot of snow on the ground, but it was cold. And it was really windy. And a fire started either just east of the mountains and, and pushed miles across these grasslands, and then ignited the edge of the community, you know, in lead to losses of more than 1000 homes in a matter of hours. Yeah, and that's, you know, I think that's the type of event as I was mentioning before, it's about the wind, you know, those extreme ends those hurricane force winds that just make you know, fire impossible to to fight, but also produce those embers that were carried, you know, well ahead of the fire. And then when the home started to burn those, you know, the embers from those homes and all of that combustible stuff in your house started falling on the neighbors and you know, and leading to that structure to structure ignition. That was really that was the driver of that just phenomenal numbers of losses.

Mike Simonsen 24:54

That's incredible. And is that unique to have happened in December? Have a fire like

Clark Woodward 25:01

no, I mean, unfortunately not, it was unique to have that density of the numbers of losses. But, you know, we can think of all of these fires. I mean, we're under Red Flag Warning, you know, today, and it's chilly. But it's dry and it's windy. And, you know, that's, that's where the risk comes from.

Mike Simonsen 25:19

Yeah, well, we're here we are. It's late October and, and we have the same in Tahoe, you know, it is pure fire conditions that it's, it's like, you know, it could snow next week and, and calm that down. But, but man, it's, it seems late in the year for to be red flag.

Clark Woodward 25:39

Yeah, I mean, you can think of it you have these weather patterns that come across the, the West, and they're pushing ahead of them ahead of a cold front, these extreme winds. So you'll get 100 mile an hour winds. And then 12 hours later or four hours later, you'll get six inches of snow. And the two are, you know, integrally connected, because that that weather pattern is causing the wind and on the backside of it is the snow.

Mike Simonsen 26:06

Yeah, for sure. So let's switch gears for a second. Let's talk about the RedZone and like the technology and like, what data goes into the risk calculations, what what can you measure for a property level?

Clark Woodward 26:22

Well, you start with data that is mostly geographic and topographic. So it's the slope, the aspects, the fuel type, you know, how tall is it? How dense is it? And you combine that with weather data? What is the worst case scenario of weather in a particular area? And if you combine those two, you can get a sense of the or a measure of the severity of that wildfire, how intense would it be? How large would it grow? And that gives you a good understanding of the likelihood of loss, should a fire occur at that property. But then you really need to look at the frequency. So we use millions and millions of scenarios, where we there were models, you know, start wildfires, and see if they grow to a large size. And so we have, you know, 100 million simulations in our database that then allow us to look at the probability in a given year, what's the likelihood of having a wildfire at this house for that house?

Mike Simonsen 27:24

Is that like a Monte Carlo simulation is, is that like that kind of probability that you're doing?

Clark Woodward 27:29

Exactly. And, you know, you can think of there are some areas that are pile nation, and you know, the fire season is much shorter, it's you've got snow on the ground, you've got, you know, Moist, moist weather. And what you know, what it really ends up with is that you have a lower probability of actually having a fire, if you look at the front range of Colorado, you know, there's a very high probability to lots of high fire weather days. And so that's what that frequency is helping us measure is to really tease out you know, which homes are more likely to burn in a given year, or which regions are more likely to burn in a given year?

Mike Simonsen 28:04

Yeah. So when I look at, when we're looking at a community, we know that things like house build on the ridge at the top of the ridge, is that more risk than then down in the valley? Is that like a common assumption about like the Firebirds up the hill and

Clark Woodward 28:22

you're looking at Clear, like fire mechanics, what, you know, how, how quickly can a fire build its intensity as it comes up a slope, and then, you know, arrives at your home at the top of the slope with a greater intensity than it would if you were at the bottom is just beginning to kind of come up that hill? Yeah,

Mike Simonsen 28:41

so of those variables are the things like, Dude, you built your house at the top of the hill versus the bottom? Is that more important versus or is it more like a like, Look, man, this the front range of Colorado? That's gonna burn, like, which are those? How do you weight those in the in the probabilities? Or how do they end up falling out?

Clark Woodward 29:02

So I would say that it's more than, you know, understanding where large fires have occurred, is probably more important than where you are, you know, on the slope. Okay. Yeah, there's, there's an uncertainty to wildfire. Because you may lose your home, you know, due to that those embers that come from a fairly small wildfire, but, you know, have a place to land at your home. And, you know, that's what's gonna cause you to be you know, creative, more certain loss.

Mike Simonsen 29:35

Yeah. Hmm. That's really fascinating. Are there other advances in the data science that are making it more useful or more able to prevent loss?

Clark Woodward 29:53

Yeah, I mean, I think you know, there's there's all sorts of technology coming on the market. You know, some of the exciting things that We see our, you know, cameras being really positioned across the states. And, you know, look at California, we've got, you know, we've got access to cameras that pretty much pick up the vast majority of wildfires. And if you can, if you can detect them, and really understand you've got a fire burning, and then put resources on that fire and keep it small, you know, you have, you have solved part of the problem. So that initial attack, that really effective initial attack with all of the resources that you have, you know, makes makes a material impact on on losses.

Mike Simonsen 30:37

That's cool. So so the cameras that are out there, they're on like, they're on like cell towers, or whatever, that that are sitting out there, and they can skin over. And so those are detecting fires, before they were detected previously. Is that true?

Clark Woodward 30:52

Yeah, you've got people, you know, your people and artificial intelligence that takes those camera images can detect what a smoke column looks like. And, you know, and really determine, Okay, we've got a fire, we're going to, you know, alert the authorities, we're going to put aircraft in the air firefighters on their way. And the faster you can get there, you know, you keep it small, then, you know, you've you've done something, you've done something good with technology,

Mike Simonsen 31:18

that's faster, my brother was a smokejumper for a bunch of years in the in the 90s. And out of Montana. And so that's the, you know, the flying them out there, one or two guys do a little column of smoke somewhere in the middle of the mountains and drop parachute men and and so are those smoke jumpers getting two fires faster? Now?

Clark Woodward 31:40

I would say I mean, there's there's, you know, fire detection in satellites, there's fire detection in aircraft, you know, there's a lot of military, you know, military technology that's now being used for civilian purposes and fire. So there's a number of platforms that are helping to detect those fires. And, you know, combine that with severity models, where you could say, I have 100 fires that are burning right now, which ones have the recipe to become a big fire? And then you can allocate your resources to the right place? Yeah. And as we coordinate better as a, you know, across the agencies, we can get those resources there faster.

Mike Simonsen 32:18

Yeah, make better decisions. I could imagine that, that in previous decades, the decision about which of those fires to go drop the smoke jumpers on to was, you know, some managers gut feel somebody had been there for 40 years, and they're like, that one's gonna burn go to that one. And now we have we have other ways to confirm that or schedule or prioritize? Exactly, yep. Super cool. Are there other technologies that you're like jazzed about, that are going to help us through this transition of climate risk?

Clark Woodward 32:52

Yeah, I mean, I know, I would say, from an insurance perspective, that that, you know, what we call insurer tech. It is, you know, that technology that insurance companies have available to them, is just exploding. And, you know, traditionally, insurance companies would build their own systems, these megaliths systems that would, you know, exist for years and years and be really hard to connect with. But insurer tech is, has allowed them to be more nimble, that they're combining information, I want to make an underwriting decision, maybe I'm going to incorporate weather data, and I'm going to incorporate, you know, the fuel in the surrounding area. And I'm just a more nuanced decision about a home. And probably what's most exciting to me, is that it's the availability of mitigation information, what has this homeowner done to make their home more survivable in an event? And if you can incorporate that into a decision that, you know, is based in science, and you can do that in a way that's, that's acceptable to the regulatory environment? You know, having this detail really allows an insurance company to make an appropriate decision for the business and for the humbler. And I think that's probably the most exciting technology that we see.

Mike Simonsen 34:06

That's great. And then I suppose that that's a positive feedback loop in that if I can tell my insurance company, I'm doing good work, and then that, that brings back either cost benefits or even like, you're not getting dropped like that, that helps encourages me to do good work. On my defense, making my home defensible.

Clark Woodward 34:28

Yeah, I mean, even this week, we saw the California Department of Insurance, make regulatory changes, you know, requiring insurance companies to take some of this information into account when they make a decision on eligibility or on your renewal, you know, so it's, it's kind of the toe in the water on, you know, the mid incorporating mitigation and a homeowner's good efforts into that decision making process. That's great.

Mike Simonsen 34:56

Is it is it a general trend that the regulators are are doing better?

Clark Woodward 35:03

But? Well, I mean, you know, that's a dangerous question to answer, you know, the regulators are there to protect the computing of the consumer, and ensure fair practices, and, you know, access to insurance and, you know, reasonable price, you know, rates for homes. So, as our climate changes, and as our fire risk has increased exponentially, you know, we've we've definitely had that conflict between the insurers, and the regulators, which, you know, which has led the regulators to not change their stance much. And maybe what we saw this week was a duelist, a little bit of a move toward being more flexible and incorporating some more detailed analytical data into that decision making. And, you know, allowing those insurance companies to be more somewhat creative, and incorporating, you know, more real time data about the home itself, you know, into that decision making. And I think that's a it's a positive move that, you know, addressing a multifaceted problem.

Mike Simonsen 36:11

Yeah, when I bought when I first bought my house in Tahoe, I remember we're going to close on the mortgage and the deed. And the lender said, Okay, where's your insurance? And I called my insurance company that had had for ever and they said, Nope, we won't have it, I had no idea that they would insure my home. And it took me a bunch of calls. And I finally found one, and I'm most I'm now on a on a state of California plan, that is a basically a backstop? Because, essentially, nobody's going to insure that house, and I had no idea that was coming. I like so now I've got like, State of California plan in a supplemental plan and trying to do all these things. And as a consumer, I bought that house, I had no idea.

Clark Woodward 37:01

Yeah, I mean, you're not alone. Yeah, you know, millions of Californians and millions of residents around the West, that are experiencing that same thing, you know, and we're seeing, you know, one of the concepts I think a lot of people are, aren't aware of is the reinsurance market, you know, primarily out of London, is where insurance companies buy insurance, on their insurance and on their assets. And, you know, those costs have risen dramatically in the last two years, you know, after the fires of, you know, 2021 and 30, or 2020 2019, to 2021, you know, reinsurance become became much more expensive and limited. And that cost, you know, is definitely not passed down to the consumer, but incorporated into the decision making of an insurance company. So, they, they have non renewing, it may be because they can't get the insurance, you know, on on the end. So people don't often understand that there's a, you know, a whole market sort of behind the insurance company's decision. And it's really impacting the individual consumer today.

Mike Simonsen 38:06

Yeah, we project all the nefarious evil insurance company decisions, when it's, it can be very straightforward, a couple of those factors, they've got a market that they have to deal with, but they also have a regulatory environment that says, what they can charge, even if they assess the risk to be higher, they can't make up for it. And therefore they say, therefore, we can't insure in this state, like we can't make it happen. Yeah. Fascinating. So we've been talking about fire and the climate risk, especially in American West about that, is that is impacting the growth in wildfires in the risk from wildfires? Do you guys look at other climate risks, other things that are changing around the country around the world, that turn into disasters that are analogous to fires in the American West? Like, we just had hurricane Ian in Florida? Do you guys look at that stuff?

Clark Woodward 39:01

Yeah, I mean, I think we, you know, we do from a couple of different ways. You know, one RedZone is a company monitors, hurricanes, earthquakes, you know, other natural disasters, because part of our specialty is, is having that public safety background and helping a, you know, a company, unravel all the messy data about a disaster, and make a business decision, like a fast business decision, you know, and so we do this in Japan, and we do it in typhoons and earthquakes. And so the model that we provide in expertise, the human intelligence aspect, you know, is applicable, but uh, you know, I think we're in hurricane in, you know, we saw some real success stories about the mitigation and hardening and we saw some communities that were built on, you know, with solar panels, they their infrastructure was underground. The community was built to survive an event, and they've survived unscathed. And I think that's so heartening. When we think of the scale of the challenge that we have in the West, is that we can build communities that can survive these fires. But we just have to do it, you know, with a with a long term vision. And you know, and they have the resources to make that investment. So we can do it. Right. And I, we saw it in hurricane n. And I think it's just it's, you know, it's a good lesson for us to take, as we make these hard decisions in the West is that we've never seen examples of it working. And that was Hartman.

Mike Simonsen 40:30

Yeah. So that's interesting. I didn't realize it. So there were real success stories about how to build a hurricane proof. Community, you're building on an island, right? In the, in the hurricane past that. So there were some good success stories there. Is that right? Yeah, yeah. Oh, neat. That's really great. Are there other things that we can, we can be optimistic about, like, you know, in in, in that thing, like, if you're looking forward, like we talk about climate risk, and it's kind of a pessimistic, you know, bad, it's a little fearful, are there other things that you see that we should be optimistic about? Or that you're like optimist trends that you see that are optimistic in the world?

Clark Woodward 41:10

Well, you know, I think the availability of data is, you know, from a personal standpoint, really, you know, exciting to me, as, you know, homeowners just so often will do the good work, and not receive the benefit. And I think that, you know, five years ago, I would have said to a homeowner, you know, in a very skeptical town, that they're never going to see the benefit of it. You know, I'm sorry, that, you know, the industry is not there. But today, I think, you know, we're seeing that those changes of data being used for better business decisions. And, you know, having that impact the homeowner, and I think that's really encouraging people to do that hard work. And so, you know, that's, that's what keeps me coming to work every day.

Mike Simonsen 41:56

Really tell you that feel that real positive impact for for the consumers? Exactly. That's cool that I love the comments about doing earthquake work in Japan. Are you doing down to the property level? Like, can you look at the maps and the fault lines and say, This guy is on a liquefaction zone? And this guy is not? And therefore, risks are like, do you have that level of analysis for earthquake work?

Clark Woodward 42:23

Yeah, so when we look at earthquakes, we're talking about the event. So say you have a million policies under your portfolio and a big event happens, we're going to categorize those and those homes that are at the epicenter, you know, are likely damaged, and an insurance company, if they know that can just open a claim and start getting money out to that homeowner to you know, start to recover their life. So they don't have to visit it in, in Japan, they can just open the claim and start to pay you out. For those, you know, homes that are on the outskirts, you know, maybe that's where the insurance company takes their people, and they send those people to visit those homes. And then all the way out the outer ring, maybe you just send them an email and ask the homeowner, have you experienced damage? Therefore, can we reach out to you and get a claim started and help you recover? Fix that damage? So what we're doing is we're helping people triage the problem quickly. And, you know, and act on it. And we're taking our lessons and our experience from public safety and applying it, you know, to a commercial business where they don't necessarily have that expertise.

Mike Simonsen 43:30

Right. Oh, that's fascinating. It's so fascinating being in the the growth industry of natural disasters. Certainly not going away. Wow, that's super, super cool. So are there are the things that we like, if you pay attention to the science, we know that climate risk, we can you can see the data about climate risk increasing, we can see the wind and the temperature changes, we can see, we can see hurricane frequency, those kinds of things. And so those are pretty well known. Are there trends that you see, especially things that like that we should think about as just homeowners in this world? Are there trends that you see that aren't being talked about enough? Are there risks? Are there things in the in the data?

Clark Woodward 44:23

I mean, to me, as a homeowner in the West, the thing that keeps me up at night is water is the availability of, you know, water for my community. And to be honest, the West just feels parched, you know, you look at at our reservoirs, you know, the reservoirs that are feeding California, are are drying up. And so from an acute standpoint, I think water is going to drive decisions on community development and housing, as you know, as much as well would. And so, I think that that we're heading toward some tough decisions on who gas water in which community survives in the coming decades?

Mike Simonsen 45:04

Yeah, that I, I am really with you on that. To a large degree. The story of the American west of the last 250 years is a story of water. And, and we are in a dramatic change. Have you seen communities doing things? Well with water? Like I think, for example, San Diego has done some really good desalinization investment and things like that. Have you seen other other places doing making good, wise water decisions?

Clark Woodward 45:33

Yeah, I mean, I think the cultural shift around, you know, around how we use our water, whether it's on the agricultural front, on the residential front, you know, as we see communities take a more serious, you know, zero escaping approach where they're not, you know, wasting water on things that are not fundamentally needed. I think that's really important.

Mike Simonsen 45:58

Right, right. Right. Right. So we make some hard decisions on swimming pools and golf courses and almond farms. Yeah, yeah. Interesting. Okay. You know, Clark, this is really terrific. I could go for a long time. We're getting close to the top of our hour, though. So are there one thing I love? You know, do you do publish much do you write like LinkedIn or anything? On things you're seeing in the world? Do you ever do you get to write so that my listeners can go follow up and read some of your stuff? You have anything like that?

Clark Woodward 46:31

Yeah, we've got a, we've got a weekly blog that comes out that is, you know, educational, you know, on the topic of wildfire, and includes current events. So you know, if people are interested, they can go to our website, www.redzone.co. And sign up for our blog, and they'll they'll get it read

Mike Simonsen 46:51

the blog on red zone.co. You got awesome. That's great. Clark, a real pleasure like it, this is exactly where I wanted to go and help understand about what we we need to know about wildfires and climate risk in the in the in the world, I am encouraged by some of the things we talked about. And so that's useful to me. So I really appreciate your insights. Anything else we want to make sure we get out today?

Clark Woodward 47:20

No, I think it's always fascinating to talk about this, especially with a resident of the West, you know, somebody who lives and breathes it. And I think that's so important that that this topic, you know, affects you individually, as well as, you know, your customer base, and, you know, the community at large. So,

Mike Simonsen 47:38

yeah, it certainly does, I think about it a lot. And about where do I spend my future, you know, I think about San Francisco proper is, is maybe one of the best insulated places from climate risk. It's, it's cool and stuff, but But you know, it's the middle of October, and I can tell it's a hot night and in San Francisco, because the because the coconut oil melts above 70 degrees in my kitchen. And there's no air conditioning in San Francisco. And so, like, that can happen in July. But when it happens in October, I'm starting to be a little a little suspect. And we had that this week as that big heatwave over the West. But mostly I feel insulated, but then that that part of the world is not that big. You know, it was like right in San Francisco. Yeah, exactly. How do you feel about being in the mountains of Colorado in the next couple decades?

Clark Woodward 48:37

So I mean, it feels it feels dry, and it feels hot. And you know, it's it's snowing less I worry about my kids. You know, we live just outside of aspen. And I grew up, you know, skiing, we moved here to ski and I'm worried about my children and their children being able to experience that, you know, deep powder, snow. I just don't think it's going to be around. It's the skiing industry is changing. And, you know, we're seeing that in our generation. As you know, the climate just creates less snow. Yeah,

Mike Simonsen 49:08

yeah. The World Cup ski season starts in Banff, Canada, in like two weeks, and it was 85 degrees there this week. So we got some we got some we got a new a new territory in front of us, I suppose. Yeah, I would agree. All right. Thanks, Clark. Thanks so much. I really, really appreciate it. All right, everybody. That's the Top of Mind podcast. I'm Mike Simonson. always visit us at altosresearch.com go to Redzone.com. For the blog to learn about wildfires and the topical interest of the news. It's happening around fires in the country. And Clark. Thanks so much.

Clark Woodward 49:50

Thank you, Mike for a fascinating hour.

Outro 49:52

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