America is Poised to Burn This Summer By Chris Orr, Editor of Weather Trader Dear Sovereign Investor, Great billows of smoke fill the sky as a forest fire rages, threatening million-dollar homes and entire communities. The fire has burned for two days and charred 10,000 acres on the momentum of 50 mile-per-hour wind, temperatures in the 90s and very low humidity.
Does it sound like a story ripped from the news? It could very well be a paragraph in any news story this summer as California braces for what might be a very bad year for wildfires.
As temperatures heat up and the threat of hot Santa Ana winds increases, the possibility of catastrophe mounts. Advertisement
Crazy new federal law goes into effect July 1st of this year
Now, for the first time ever, one of America's top financial analysts says we can accurately predict the exact day of the U.S. dollar's official collapse.
It will coincide with a shocking new Federal law going into effect on July 1st, 2014.
What does this law mean and why are even some liberal media calling it a "nightmare and disaster"?
Get the facts here for yourself. You can be among the first to understand the details. The extreme drought has pushed the risk of wildfire to above-normal levels across the Sierras and along a large part of the coast from San Diego to north of San Francisco. As you can see in the chart below, within that region are Los Angeles, Santa Maria, Paso Robles and San Jose. 
See larger image A large out-of-control wildfire will present insurance companies with a significant risk of catastrophic loss, not just because of the number of multi-million-dollar houses that will be in harm's way, but just the sheer number of homes and businesses facing peril.
My sister, Holly, is a prolific magazine writer who lives in a small house in the mountains east of Los Angeles. She tells me folks there are always on the watch for fire and work to keep their property cleared of brush and pine needle so there is a firebreak around their houses. Not everyone does, to the chagrin of fire departments. She has returned from mandatory evacuations to find chunks of charred fire hoses on the road up the mountain — a testament to the vigilance of firefighters.
The fuel for wildfire includes debris on the ground (dry grass, sticks, pine needles) and dry brush or timber. Once a fire is hot enough, it will set living trees ablaze by either racing along the ground or through the treetops. Extremely hot fires can cause trees to explode, sending embers in all directions. The only way to stop a fire is to deprive it of fuel, either by burning it all, clearing firebreaks or putting it out with water.
Drought will leave firefighters short on an essential ingredient necessary for battling wildfire this year — water. Water can be dropped directly on a fire or it is mixed with phosphorus into a fire retardant — the red slurry dumped from airplanes ahead of a fire. Either way, it takes a lot of water to keep a fire's perimeter in check — a precious resource in a state where communities are running short of water. A single plane carries 2,800 gallons at a time.
In some areas, the extreme drought is actually a blessing because there's no grass to feed a fire. The National Forest Service, however, estimates one-third of homes across the West are in fire-risk areas, but homeowners are opposed to controlled burns and others do not clear the area around their house like my sister does.
The number of large wildfires is increasing, too. There was only one year in the 1960s when more than five million acres burned across the West. Since 2003, eight out of 10 years have seen more than five million acres burn. The number of large, mega-fires has also been on the increase. The Rising Cost of Wildfires The insured losses due to wildfire can be very large. Southern California's 2007 fires caused $1.6 billion in losses and 2003's San Diego and San Bernadino fires were pegged at $2.03 billion. In all, wildfires account for 1.7% of annual insurance losses, far less than tornadoes (36%) and hurricanes (40%), but still significant.
Insuring an expensive house costs thousands of dollars each year, but it comes with some important benefits. AIG Private Client Group offers personal wildfire protection that includes a crew and water tanker truck. Chubb and Fireman's Fund have even gotten into the act. The idea is that it is cheaper to hire a fire crew than replace a multi-million-dollar house.
Nevertheless, a rapidly moving inferno will engulf an entire neighborhood within hours.
While the large insurance companies with high-risk exposure are back-stopped by re-insurance, companies like AIG and Chubb stand to lose a lot of money this year if wildfires char expensive homes. Should the summer months prove to be heavily laden with wildfires in the west, insurance companies could take a substantial hit.
At the Weather Trader newsletter, I monitor weather conditions and the probability of a large, fast-moving fire so that we can stay ahead of potential trades involving the insurance companies with the highest exposure to catastrophic wildfires. There's a silver lining in every cloud,
Chris Orr
Editor, Weather Trader P.S. A fire is poised to sweep through Washington when the biggest scandal of the Obama administration finally comes to light. Jeff Opdyke has uncovered some information in a little-known government document that could cause a great upheaval across the United States. To learn more, click here. | |
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