Oregon cancels its long-held policy with Lloyd’s of London

The Oregon Department of Forestry has cancelled an insurance policy that has over the years reduced the cost of fighting wildfires; it had acquired sky-high deductibles over the last few years.

ODF said it will not renew its policy with Lloyd’s of London, a UK-based insurance market, in the 2023-2024 policy year. Longer, more complex, and costlier fire seasons over the last decade have led to higher premiums and deductibles, which in turn made the policy less attractive to Oregon officials. The policy was first acquired in 1973, according to KEZI-TV, to reduce the impacts of wildland fire suppression costs for Oregonians.

The decision was made after an April 3 meeting of the Emergency Fire Cost Committee (EFCC), which oversees the Oregon Forest Land Protection Fund (FLPF). After an extensive review, the EFCC recommended to the State Forester Cal Mukumoto that he cancel the insurance policy, and he decided not to renew it, explaining that the funds that would have paid for the policy can be better used directly paying for wildfire suppression efforts.

According to the EFCC, the 2023-2024 insurance policy would have had a deductible of over $78.5 million – 57 percent higher than in the 2021-2022 policy. Oregon’s historic fire season costs did not meet that threshold, so the policy was very unlikely to actually trigger this year and provide any financial benefit to the state. The 2023-2024 premium was quoted at $4.1 million for $25 million in coverage.

Oregon’s fire insurance did not kick in this year

DC-10 Canyon Creek Fire
A DC-10 working the Canyon Creek Fire in Oregon drops in Pine Creek Drainage, August 26, 2015. Photo by Tracy Weaver, NPS.

The fire insurance policy that the state of Oregon purchased from Lloyd’s of London did not kick in this year since the net expenses of suppressing state-responsibility wildfires did not exceed the $50 million policy deductible. If it had, their additional costs could have been covered up to $25 million. Premiums for this coverage were split between state and private timberland owners, who agreed to pay $3.75 million into the policy.

Below is an excerpt from an article in the La Grande Observer:

…As of Oct. 19, the ODF had recorded 1,001 fires, 73 more than their 10-year average, according to a letter from [Oregon Department of Forestry State Forester Doug] Decker sent to the co-chairs of the Oregon Joint Committee on Ways and Means last month. Those fires burned 91,487 acres of ODF-protected land, 63,948 acres more than the 10-year average.

The Forestry Department estimates that its large-fire costs for this season sit at $76.7 million, compared to the 10-year average of $22.3 million, Decker wrote in the letter.

Decker said about $19.5 million will be reimbursed by FEMA’s grant program. Another $25.5 million is expected to be recovered from other partners. Still, the ODF is requesting more than $19.5 million of general fund dollars to cover the state’s portion of large-fire costs, according to the letter.

Lloyd’s of London offers Oregon wildfire insurance with $50 million deductible

Fire West of Cascade
Fire south of Cascade, SD, July 16, 2012. Photo by Bill Gabbert

(UPDATED April 20, 2015)

The state of Oregon decided to buy the wildfire insurance from Lloyd’s of London. The policy was purchased through the Oregon Department of Forestry, and provides $25 million in coverage. The coverage will kick in when firefighting costs exceed $50 million, with the policy providing as much as $25 million to cover these costs. Premiums for this coverage are being split between state and private timberland owners, whom have agreed to pay $3.75 million into the policy.


(Originally published April 4, 2015)

For decades the state of Oregon has purchased insurance from Lloyd’s of London to help defray the costs of suppressing wildfires, the only state that does so according to OregonLive. This year the company has almost doubled the annual premium from $2 million to $3.75 million while increasing the deductible from $20 million to $50 million.

If the state decides to accept Lloyd’s offer, up to $25 million of their costs of suppressing wildfires will be reimbursed.

The last two consecutive bad fire seasons had state officials rightfully worried that they would have to pay more for the policy this year, especially after spending $75 million on managing wildfires in 2014.

State of Oregon’s wildfire insurance premium may increase after the 2014 fire season

Beaver Fire
The Beaver Fire, August 12, 2014, in northern California. Photo by Bill Gabbert.

The state of Oregon has an insurance policy with Lloyd’s of London that helps to cover the cost of suppressing wildfires during busy fire seasons. The premium for that policy has been about $2 million. But before the state receives any payout from Lloyd’s they have to spend $20 million to cover the deductible, after which the insurance company will cover the additional costs up to $25 million.

Two consecutive bad fire seasons has state officials thinking that they may have to pay more for that policy next year.

Below is an excerpt from an article in the Bend Bulletin:

…Like car insurance, where premiums go up when drivers have accidents, one thing is clear: If the state can land another policy through insurance giant Lloyd’s of London to help with rising wildfire costs, it’s going to have to cut a bigger check.

“We’re fully expecting that based on the experience of the last two years that we’ll probably be paying more for insurance if we can get a policy in the coming year,” Rod Nichols, spokesman for the Oregon Department of Forestry, said Wednesday.

The prospect of missing out on wildfire relief has rural lawmakers talking about thinning and clearing fuels from forests and addressing the effects of climate change.

“One of these years we’re going to light up Southern Oregon and have a fire season you won’t believe,” Sen. Alan Bates, D-Medford, said.

Oregon has had a wildfire insurance policy for nearly four decades…