Oregon Will Tap Catastrophic Insurance Policy To Cover Firefighting Costs

Jul 30, 2014

For the second year in a row, the Oregon Department of Forestry says it will draw on a catastrophic loss insurance policy to help cover the costs of fighting wildfires.

ODF is responsible for protecting 16 million acres, roughly half the forestland in the state. It fights fires on Bureau of Land Management land, privately owned timber, and state and county forests.

State Forester Doug Decker says ODF’s firefighters put out most fires when they’re less than 10 acres. But the few fires that grow larger can cost a $1 million a day to fight, and rack up costs well beyond the department’s $42 million firefighting budget. To reduce the impact of large fires on the state’s general fund, ODF has an insurance policy with Lloyds of London.

The policy goes into effect after the state has spent $20 million fighting fires on top of its its regular budget. This year, Decker expects it’s going to pay out.

“We’re at the brink right now of having burned through the deductible. We’ve spent about $ 20 million in extra fire costs. So from here forward, additional large fires we have, we will be drawing on that insurance policy,” he said.

ODF says the costs it incurred fighting the Two Bulls, Bryant Mountain, White River, Moccasin Hill, Rye Valley, Sunflower, Waterman Complex, and Reeves Creek fires have fulfilled the required deductible.

After the insurance kicks in, Lloyds will pay up to $25 million for large fire costs on ODF protected land. The state paid about $2 million for the policy this year. The premium doubled after last year, which was one of the most expensive fire seasons in state history.

Lloyds has provided ODF with catastrophic loss insurance for large wildfires since 1973.

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