The State of Oregon’s One-of-a-Kind Wildfire Risk Policy

Oregon is the only state in the U.S. who has for the past 48-years maintained a wildfire risk policy. The provider is Lloyd’s of London, the insurance company founded in the 17th century coffeehouse near the Tower of London, known for issuing one-of-a-kind insurance policies. With the 2021 fire season just about to begin, Oregon will once again rely on its one-of-a-kind $25 million wildfire policy with Lloyd’s. Oregon’s Depart of Forestry spokesperson Jim Gersbach describes it as “A catastrophic firefighting expense policy.” The current runs through April 15, 2022. Lloyd’s of London accounts for 90% of the policy cost, while Nashville-based Acceptance Insurance carried 10%. The plan will pay up to $25 million of wildfire costs in Oregon. Under the policy, Oregon covers the first $50 million in fire costs, then Lloyd’s pays the next $25 million. Anything above that level is paid for by the state. When costs get that high, federal disaster money usually pays for a large share of the costs. Oddly enough, the worst wildfire in Oregon’s history was over Labor Day in 2020 and Lloyd’s paid nothing. The reason? The final cost of the Oregon wildfires to the Oregon Department of Forestry was about $130 million. The bill was offset by more than $70 million in federal disaster aid, along with fees the state earned for fighting fires on land it did not control and reimbursement for other aid. “The cost for suppressing the 2020 wildfires is estimated at just under $50 million, which is why it did not trigger the policy,” Gersbach said.