Lloyd's | Building resilience to wildfire in the US

Challenge: Businesses in California protecting their properties against wildfire

According to the United States Environmental Protection Agency, there are, on average, 70,000 wildfires in the US every year. In 2017, the worst year on record, damage from wildfires was estimated at $24 billion. Fire suppression alone now costs the US Federal Government, on average $2.8 billion per year.

In California the situation is more severe. Following major insurance losses between 2017 – 2020 and 2021, the cost of property insurance in the state rose to the point that an ‘insurance crisis’ ensued. 

Solution: A new wildfire syndicate at Lloyd’s

To provide insurance cover to commercial businesses in California who are unable to buy insurance through the usual channels because of the high level of risk they pose, the Wildfire Defense Systems (WDS) has launched a syndicate at LIoyd’s. 

Founded in 2008, WDS is a private-sector wildfire service that protects properties. They work on behalf of the insurance companies who insure these properties helping to prepare a property in advance of a wildfire by implementing mitigation tactics. Once they service a property, WDS has a more than 99% success rate that it will survive a fire, and they have tracked over 100,000 wildfire ignitions since 2013. 

Through their syndicate (Wildfire Defence Syndicate 1996) at Lloyd’s they now provide the insurance solution for California commercial (Excess & Surplus) wildfire-prone properties. Excess and Surplus Lines—also known as ‘E&S’—insurance is designed for businesses with uniquely high risks that the traditional insurance market will not cover. 

WDS chose to enter Lloyd’s market as a syndicate in a box (SIAB) due to the highly innovative and niche nature of the Californian wildfire solution.

The SIAB option was created by Lloyd’s to allow smaller, entrepreneurial businesses to establish an underwriting platform in the Lloyd’s insurance market without having to go through the same regulatory and financial conditions designed with much larger insurance businesses in mind.

Impact:  Protecting from wildfire losses

As a result, WDS are able to underwrite risks of a substantial nature. This helps keep Californian businesses in operation, protecting them from loss, providing for business continuity and reducing wildfire's economic impact to society.

Lloyd’s brand is highly respected which gives the WDS insurance solution greater credibility and for every insurance policy written by the Wildfire Defense Syndicate, the commercial policyholder has the option to make use of the wildfire response services as well.

Today’s WDS offering is supplemental to work done by local, state, and federal agencies and provides for a scalable contribution to reducing structure loss in a climate change environment.