Since 2018, Greg Rosalsky has been a writer and reporter at NPR's Planet Money.
If you're enjoying this article, you'll love our daily newsletter, The LA Report. Each weekday, catch up on the 5 most pressing stories to start your morning in 3 minutes or less.Three decades ago, Nancy Wallace narrowly escaped death in what was then California's most destructive wildfire. Since then, the problem of wildfires has gotten much worse, so bad in fact that the state now faces a crisis in its.
The Oakland Hills fire burned thousands of homes and created a dust cloud that could be seen for miles. Picture taken on Oct. 20, 1991.San Francisco Chronicle/Hearst NewspapersThey turned frantic. When they hit a fork in the road, they hesitated whether to turn right or left. Both directions were being enveloped by flames. Wallace insisted they go right." Seconds after going right, a car came out of the flames," Wallace says.
A pretty weird thing seemed to be happening to properties destroyed by fires. Nancy noticed it in her own community. After the fire, people got insurance money and rebuilt their homes. Their homes seemed to get bigger and nicer. And, like elsewhere in the Bay Area, their home values went on a rocket ship to the moon in the decades after the fire. It was like everyone had forgotten that it was still a risky area.
And, in big wildfires, the houses in whole neighborhoods got built back bigger and better. Because the value of your house is influenced by the value of houses in your neighborhood, that was another boost to property values. Meanwhile, nature recovers — and, Wallace says, it recovers rather quickly in areas with Mediterranean climates — and the amazing beauty of these Californian communities returns.
But, Wallace says, something funky began happening in California's insurance markets, and the state's insurance system ended up breaking down.First, the state has had restrictive regulations on what insurance companies can charge. Wallace says that a big force behind that was, which was championed by Ralph Nader. In the 1980s, Nader and other consumer activists argued that insurance companies should be strictly regulated when setting their premium rates.
And greater density in fire country may have contributed, Wallace says, to problems like narrow roads prone to traffic jams, making escapes from wildfires — like the one she personally made — much harder. And this increased number of people living in fire-prone areas meant that taxpayers had to invest much more in firefighting and other public services to keep people safe.
"The California Department of Insurance is seriously at fault," Wallace says."They destroyed the markets." But updating California's older housing stock is expensive. Which is why Wallace wants policymakers and businesspeople to create new home loan programs, which would make it feasible for California homeowners to invest in making their homes more resistant to fire. She believes this could even be a money-making product for financial firms.
Another big cost will be building back better. If the city and state are being sensible, Wallace says, they will make investments in better infrastructure, like a less fire-prone electricity grid and better water systems to fight fires, making it less likely for future fires to break out and spread. Even more, she says, the state should continue mandating that builders of new houses follow the building code that has proved to be more resilient to fires.
Eaton Economist Fire Insurance Kelly Palisades Wallace
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