Getting Started Process

“If all homeowners carry out the actions recommended by the Insurance Institute for Business & Home Safety’s Wildfire Prepared Home Program, the aggregate expected loss for the Town of Paradise is expected to decrease by 53% relative to pre-Camp Fire conditions.”
— A Milliman and Corelogic Report "Town of Paradise California Challenge" April 2023

The Process

Step 1: Survey the Community (need a template? use ours, below!)

  • Reveal coverage gaps and correct misconceptions about existing policies

  • Identify household and small business critical financial needs in the first 30 days

  • Check knowledge of the importance of risk mitigation and rapid recovery and the economic and social costs avoided

  • Collective willingness to participate in aligned coverage

  • Assess financial capacity to complete risk mitigation and need for financing

  • Identify lower income households that may need financial assistance

  • Collective willingness to purchase and install devices on property and within homes for detection and payout purposes

  • Tolerance for initial set-up costs such as legal and risk modeling

Step 2: Survey Results Analysis Review community responses to identify needs and readiness

Step 3: Form Legal Entity Organize as an HOA, neighborhood association, or special district

Step 4: Propose and Vote on Policy Terms

  • Coverage amounts per property type

  • Payout triggers (objective, measurable conditions)

  • Distribution methodology

  • Mitigation requirements

  • Premium structure

(option) Step 5: Hire Risk Modeling Firm Although California’s SB 429 allows for risk modeling data to be available to the public, having a third-party assess the risk anew may yield better market pricing of coverage. The community will have taken measures to reduce risk and install early warning sensors that would minimize basis risk, speed up firefighter response times, and creates additional time for safe evacuation and pre-evacuation steps to assist potential firefighter efforts. If the State models cannot accommodate these updates, a new assessment may rationalize the cost.

Step 6: Encode Policy BoxedCover platform converts approved terms into immutable software that automatically executes payouts should an event be triggered

Step 7: Submit for Pricing Institutional investors and reinsurers bid to underwrite your catastrophe bond

Step 8: Secure Capital 100% of coverage amount is placed by investors with major custodians. This guarantees payments can be immediately deployed if needed

Step 9: Activate Coverage Automatic monitoring begins; payouts trigger instantly when trigger thresholds are exceeded

Need a Survey Template?

Our survey helps community leaders survey (and educate) their community to better understand readiness for wildfire risk and impacts of disaster, as follows:

Section A:  Evacuation and Pre-Evacuation

Section B: Current Insurance Status & Understanding

Section C: Immediate Needs After a Wildfire

Section D: Rebuilding Timeline & Community Vulnerability

Section E: Risk Mitigation: Capacity & Willingness

The format is Google Forms so you will be able to copy it and edit it as you deem fit for redistribution. If you need help, ask us!

Q&A

  • The California Department of Insurance has approved new regulation that permits indemnity insurers to: (1) Use forward-looking event models for setting insurance premiums; (2) include reinsurance costs in their policy rates; and (3) Seek approval to assess all state policyholders if claims exceed the FAIR Plan's capacity.

    As such, insurers will be required to expand coverage in high-risk wildfire areas.Further, they must increase the number of policies issued annually by 5% until they reach 85% of their statewide market share in wildfire-affected areas.

    Why this matters: It means that policy costs will be going higher. Also, note there is no coverage or payout improvements within your policy.

  • Some people will always resist additional costs or the intrusion of collective action regardless of the positive return on investment. The aggregation of individual coverage can still take place and will not impact the community in achieving competitive pricing.

  • You decide your own coverage amount. Consider the value of replacing everything in your house, rebuilding the landscape and hardscape, cost of living elsewhere, new cars (if burned), rebuilding your home, and anything else that may be disrupted creating a new cost (e.g., private schools?)

  • Parametric policies are based on triggers that do not include the actual loss incurred. So it is possible that a wildfire strikes your community and triggers a community payment but your payout may not match an actual loss. Deploying sensors and IoT (internet-of-things) devices tries to match coverage with loss outcomes as closely as possible.

Stay Updated