Fire Impact Uncertain For Insurers

The impact of the devastating wildfires in Oklahoma and Texas on insurers is not clear as firefighters work to contain the blazes that have claimed thousands of acres and at least five lives.

The wildfires have affected dozens of counties in both states, closing highways and destroying homes in their wake over the past few days, according to the Texas Department of Emergency Management and Oklahoma Department of Emergency Management.

The region has been under persistent drought since early summer, noted Texas Gov. Rick Perry in issuing an emergency declaration order. He said a combination of high winds and unseasonably warm temperatures have compounded the problem, "creating the most severe wildfire threat in five years."

Texas reported that more than 200 structures were destroyed by the fires, affecting more than 20 counties and burning close to 14,000 acres.

In Oklahoma, the fires hit 20 counties, closing major highways, destroying close to 30 structures and causing the evacuation of the town of Yeager, population 40.

Some moderation in the high winds today were expected to allow firefighters to get the situation under control.

For insurers, the impact remains uncertain. According to National Underwriter's Highline Data Service, State Farm, Allstate and Farmers Insurance are the three major underwriters of homeowners coverage in both states with more than 50 percent of the market.

"It's difficult to say what the impact will be at this time, but we are monitoring it closely," said John Wiscaver, a representative for State Farm, the number-one homeowners insurer in Texas and Oklahoma. "It has created concern for us."

Mr. Wiscaver noted that clients are advised of ways to minimize the risk from fires. Many of these customers live in rural areas that are prone to wildfires. However, agents work with their clients to dispel the "misconception" that there is nothing they can do to minimize the risk.

Among some of the steps clients are advised to take include the use of fire retardant materials on their roofs and sealing eves to prevent sparks and embers from getting in under the roof.

"Our agents provide professional assessments of property and provide a lot of information to keep customers informed of loss mitigation techniques," he said, adding that the aim is "to make things safer around the home."

Mark Hanna, spokesman for the Insurance Council of Texas, said that the association, along with the state's insurance department, forest service, and others, have been actively working to educate the public about the dangers from sparks or fireworks.

"We have been issuing warning after warning that it is a dangerous situation out there and it requires everyone's help," he said.

Calls to Allstate and Farmers were not immediately returned.