"Preventable fires" costs the US $5bn and 500 lives lost a year. Is there an #Insuretech solution? There is, and although it embraces technology, it's going to make a difference not because it is technically superior, but simply because it is better looking than anything else.
No major breakthroughs yet in wildfire suppression
The Alberta wildfire is Canada’s largest natural disaster of any kind and the most expensive wildfire in the whole of North America. Once started, wildfires are difficult to control. The most effective methods for controlling the spread of fires hasn't changed for centuries; the creation of physical firebreaks. State of the art for the removal of flammable material is still the bulldozer.
Drones are being used in Alberta to pinpoint the causes of the blaze and can be used to carry chemicals or water to quench the fires, but they are still only a complement to the use of manned aircraft, rather than offering a radically new approach.
But as terrible as wildfires are, they represent only a small fraction of the cost of damage from fires. According to the US National Fire Protection Association (NFPA), one fire was reported every 24 seconds, causing $9.8bn in property damage and 2,860 deaths in 2014 in the United States.
Property fires have halved, but the death rate stays the same
There has been a marked reduction in the number fire losses in the US over the last 40 years, halving between 1977 to 2014, with a corresponding reduction in deaths (5,865 died in fires in 1977). Yet the death rate per fire has hardly change during this period, from 8.1 deaths for every 1,000 home fires in 1977, to 7.5 deaths per 1,000 in 2014. Fires are happening less frequently but people are dying at the same rate.
Why are fires fatalities different than car accident fatalities?
How can it be that technology, which has advanced so much in every other area of our lives, has made virtually no difference to our ability to survive a fire in our home? In a similar period, the compulsory fitting of seat belts (1984) and airbags (1989) to vehicles, is considered to have saved 300,000 lives.
There are a number of InsurTech startups exploring ways to use IOT (Internet of Things) and the resulting connected homes to reduce losses from fire. The most successful to date has been the Nest Protect, the smoke detector from Nest Labs launched in 2013. Nest Protect, in common with the Nest Thermostat, connects to the internet, but connectivity on it's own doesn't yet save lives. There may come a time when the technology is reliable enough to know when to call out the fire service, but that’s not going to happen until the number of false positive readings can be reduced dramatically. In the meantime, it's not the ability to be connected that makes the differences, but something a lot more straightforward: whether the alarm has power or not.
The NFPA data points to the one small low tech change that could save up to 500 lives and close to $700m of property damage a year. Taking the US government value of a human life at around $9m (used when considering investments in risk reduction measures) the full economic cost is over $5bn. It’s a solution that’s been around for many years. Replace battery smoke sensors with mains connected ones.
The NFPA report spells it out clearly
"The risk of dying in home fires is cut in half in homes with working smoke alarms. In 2009-2013, the death rate per 100 reported fires was 2.5 times as high in fires with smoke alarms powered by batteries as it was in fires with hardwired smoke alarms. Disconnected or non-working power sources were leading reasons for smoke alarm failures."
"When smoke alarms should have operated but did not do so, it was usually because batteries were missing, disconnected or dead."
Despite this, most homes in the US still have smoke alarms powered by batteries alone rather than mains electricity and batteries as backup. US building codes require hardwired smoke alarms in new construction. Yet a recent study found that in 30% of new homes the smoke alarms were powered by battery only.
It’s not even a cost issue. Mains operated smoke detectors cost only a few dollars more than battery operated ones. Except for the Nest Protect.
It’s too early to tell what impact the Nest Protect is having in reducing deaths in fires. They’re not cheap. An individual Nest Protect unit bought in a store costs more than 10 times the price of a conventional smoke detector, but it’s precisely because it’s a premium product that means it has more chance of being successful at encouraging people to install the vital mains operated smoke detectors and ditch the battery ones. It’s a curious fact of human behaviour that we are, on the whole, more motivated by the desire to buy something because it looks good than we are because it will save our lives. Otherwise we would all be driving Volvos.
Moving to zero cost
And even cost may not be an issue for much longer. In the US both American Family and Liberty provide a free Nest Protect and 5% off the household insurance premium for policy holders that install it.
Nest's innovation isn't limited to what's inside their products. In 2014 they set up a 1600 lb cube in New York to raise awareness of the problems of carbon monoxide poisoning.
There is no doubt that the explosive growth in Insurtech (see my previous article) will contribute towards saving lives, but the most successful offerings will be those that look the best, not those that are merely technically the best.
And as this global map of wildfires from Pausas and Ribiero shows, there is still a major need for technology to provide more effective wild fire suppression technology.