Article — From the October 2009 issue

Too Big to Burn

AIG plays God in a man-made firestorm

( 2 of 9 )

fire season

The fire had broken out one year and one day after the Dow Jones Industrial Average hit its historic peak, 14,198.10 points; almost a decade after it first surpassed 10,000 points, on March 16, 1999; and two days after the index finished its worst week ever, closing 1,874.19 points down. It had broken out 355 days after a record twenty-one simultaneous southern California wildfires forced a record evacuation—346,000 homes—and 327 days after the second-largest fire in California history, the Zaca, had consumed 240,207 acres and $118 million in firefighting costs (another record).

Ten years of spectacular growth, and ten years of spectacular fire: Fire in Alaska and Siberia and Corsica and Bolivia and Indonesia and British Columbia. In New Mexico and Oregon and Idaho and Arizona. In the Black Hills of South Dakota and the swamplands of North Carolina. In Greece, the worst fires in recorded history. In Australia, the worst fire in recorded history during the worst drought in recorded history. The largest fires in Florida’s recorded history, in Georgia’s recorded history, in Utah’s recorded history.

Across the United States, an average of 7 million acres have burned each year of the new millennium—twice the 1990s average. In California, 2007 and 2008 were the worst two wildfire years in the past twenty, blackening 1.5 million and 1.6 million acres, respectively. And in 2009, on February 27, six days after he signed an ill-fated bill to close California’s $42 billion budget gap, Governor Arnold Schwarzenegger declared another state of emergency: drought. California was running out of water as quickly as it was running out of money. In November’s Freeway Complex fire, as many as five Yorba Linda homes were lost simply because hydrants went dry.

What Chief Sam noticed was the fire season: it didn’t exist anymore. The previous afternoon, he’d described the change. We were at the Hyatt, his favorite hotel, where he’d driven me right after my flight landed in Orange County, then parked his truck in the emergency lane and scored me a suite at the government rate. “Can we put the room on my Gold points?” he’d asked, giving me a conspiratorial kick under the check-in counter. “We’ll, uh, both be staying there.” Now we sat in the lounge, snacking on complimentary wasabi peas. “I just love these things,” he said.

The Little Tujunga fire was normal, Chief Sam told me. It fit the pattern. “When I started in 1977,” he said, leaning forward in his chair, “there was a definitive season”—late summer and especially fall, after the hills had been baked dry, after the Santa Ana winds returned. But no more. In April 2008, he said, unusually high temperatures and low humidity fueled a 600-acre brushfire in the Sierra Madre. In May 2009, the 8,700-acre Jesusita fire in Santa Barbara would burn eighty homes and force at least 15,000 people to evacuate. Chief Sam blamed climate change for turning fire into a “year-round event.”

Also responsible was encroachment: Los Angeles’s climb into the wind-buffeted, fire-prone foothills of the Santa Monica and San Gabriel ranges. According to the state’s forestry and fire agency, Cal Fire, 40 percent of California’s 12 million homes are now in areas of high or extreme danger. In southern California alone, the Forest Service identified 189,000 such homes constructed between 2003 and 2007. In the 1960s, wildfires burned a hundred buildings in an average year. In the ’90s, they burned 300. This decade, it’s 1,500. “Normally we consider the fuel to be trees and shrubs and brush,” Chief Sam said. “But now it’s not just trees. The homes are the fuel.”

It was only natural that mercenaries would appear: the crisis meant an opportunity. “That’s where a company like ours comes in,” Chief Sam told me. Already thousands of private contractors were battling wilderness forest fires for government agencies. Of the 280 pilots and ground-crew members in Cal Fire’s aviation program, 130 are actually employed by DynCorp International. Of the Forest Service’s $1.5 billion firefighting budget—about a third of its total budget—more than half ends up in the private sector, often with companies based in Oregon: the hub, for whatever reason, of the fire industry. The modern, privatized fire camp might have crews provided by Oregon’s Grayback Forestry or GFP Enterprises, air support by Oregon’s Precision Aviation, and catering by Washington State’s OK’s Cascade Company. It will have mobile showers, mobile laundry, and mobile offices, and also air-conditioning, Internet connections, and tents with floors. Firefighting now costs the federal government more than twice what it cost a decade ago.

The key innovation by Chief Sam’s own employer, Firebreak Spray Systems of Hood River, Oregon, was to work for the insurance industry, not the government. Founded by entrepreneur Jim Aamodt, who invented the sprayers that keep produce fresh at the supermarket, and Stan Brock, a former tackle for the New Orleans Saints, Firebreak has a proprietary system to coat houses with liquefied Phos-Chek—the same chemical retardant used by the Forest Service and first developed in the 1960s by Monsanto. The spray is colorless and harmless, Chief Sam said, and it can protect your home for up to eight months, far longer than rival gels and foams.

In 2005, Firebreak went to work for AIG’s insurance division, now called Chartis Insurance, increasing the fleet of the division’s Private Client Group from two to twelve trucks and expanding its reach from fourteen elite California zip codes—90049, 90077, 90210, etc.—to nearly 200, plus zips in Vail, Aspen, and Breckenridge, Colorado. Chief Sam joined the company in 2006, after five years as fire chief in Monrovia. He’d been planning a second career in executive coaching until he read about AIG’s new wildfire unit in Fortune. “It was the thing of the future,” he told me, “and I wanted to get in on the ground floor.”

Firebreak was growing—Chief Sam’s friend George had just started a two-truck pilot program for Farmers Insurance—but now there was competition. Chubb insurance protects policyholders in thirteen western states through Montana’s Wildfire Defense Systems, which sprays homes with rival Thermo-Gel retardant. Fireman’s Fund contracts San Diego’s Fireprotec to clear a defensible space around clients’ homes, and offers evacuation services to its richest customers. San Diego’s Fire-Pro USA sprays homes with patented FireIce gel. Wildomar’s Pacific Fire Guard deploys “the Navy SEALs of firefighters” to spray homes with GELTEC retardant. Carmel Valley’s Golden Valley Fire Suppression offers spray-foam services on Craigslist as well as “Land Clearing with use of a goat herd.” It beckons customers with an online survey. Question 6: “If you could have a private fire force that would specifically work to save YOUR home in the event of a threatening wildfire, and the price of this protection would be $35,000 (financing available), plus $1,600 per year thereafter, how likely would it be for you to hire them?”

“We’re in a tough economy. It’s important that local governments start working with privatization,” Chief Sam told me at the Hyatt. “Municipal agencies can’t do it all on their own.” We’d downed the wasabi peas. He summoned a waitress: “Hey, I hate to say this, sorry to bother you, but can I get some water from you?”

Firebreak’s trucks were outfitted with top-flight communications systems, Chief Sam bragged, including RedZone mapping software that predicted a fire’s course and revealed clients’ addresses with a “tap on the dot.” Unlike overstretched public brigades, Firebreak could afford to be better. “To be honest with you,” he said, “we’re probably more sophisticated than a lot of municipal agencies.”

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