Firestorm Economics: How Veterans Are Battling Wildfire Risk In California

>> Mike Steadman: Welcome to Frontline Voices, a podcast brought to you by Stanford University's Hoover Institution, where we explore leadership, service, and real world solutions to some of our nation's most pressing issues. I'm your host, Iron Mike Steadman, a Marine Corps veteran and member of the inaugural class of Hoover Veteran Fellows.

 

In January of this year, wildfires once again devastated parts of California, leaving entire communities in ruin. Homes burnt to the ground, families were displaced, and many of us were left wondering, how was this still happening? Why weren't we better prepared, and is any of this preventable? To help unpack these questions, I sat down with two former Hoover veteran fellows, Dave Winnacker and Donnie Hasseltine, who who are tackling wildfire risk from a completely different angle through the lens of insurance market forces and community resilience.

 

In addition to being a Brigadier General in the Marine Corps Reserve, Dave is also a retired fire chief and one of California's foremost experts on wildfire response and mitigation, bringing more than two decades of experience from the front lines of the fire service. He joined forces with Donnie, who's also a fellow Marine, for a joint capstone project, where together they focus their efforts on how we price and manage wildfire risk, both through policy and private sector innovation.

 

In this conversation, we dive into the economics of risk, the collapse of the insurance market, and why the solutions to many of our biggest problems, like fire prevention, may be simpler and cheaper than we think. As always, I hope you enjoyed today's show and look forward to hearing your feedback.

 

Gentlemen, welcome to Frontline Voices.

>> Donnie Hasseltine: Good to be here, Mike. Good to see you again, man.

>> Mike Steadman: It's always a privilege when I get to hang out with some fellow Marines, particularly you two, who are part of the inaugural Veteran Fellowship program. And you know, like I was saying before we got started, I consider both of you friends.

 

One of the powers of these type of programs is bringing people together from all across the country. And you know, I try to tell people when you're doing cohort based programs, the programming is great, but you really gotta take time to get to know the people that you're, you know, that are part of your cohort.

 

And so it was cool. You know, we traveled the world, got to go to Tbilisi, Georgia, got to spend a couple months flying in to see each other, you know, at the, at the campus, and then even getting our touch points every year, even though you all weren't able to make it this year at the, you know, the kind of fly in or retreat, et cetera.

 

So one of the reasons I Want to invite you all to the podcast in the first place was I would love you to just kind of introduce yourself and talk about your capstone. Because when the California wildfires happened this year, immediately I said, we got to get these guys on the podcast to bring the human element to this.

 

And, you know, my first time kind of meeting you guys, I know you had this big project, and your capstone was really focused around that, but I really want to give you space to kind of, kind of introduce yourselves and talk about that capstone.

>> Donnie Hasseltine: Yeah, I can probably kick off.

 

You know, Dave and I actually go back a little ways in the Marine Corps, so after active duty, I'll let him introduce himself. He punched off in the reserves. The reason why I say that is as we went on, we kind of paralleled each other and we found ourselves.

 

When I commanded 1st Recon Battalion, Dave had command of 4th Force Reconnaissance Company. So we're both lieutenant colonel commanders, and that allowed us to work together very closely. I still remember, I think the first time you and I connected, you showed up, my office, said, hey, I got a problem.

 

I need some help from the active duty. Were you able to work that stuff out? And then fast forward a little bit? I ended up taking a job up in 23rd Marines as the inspector instructor, which is the active duty rep or regimental XO or second in command for the 23rd Marine Regiment.

 

And Dave was the XO, which was the reserve component. So essentially, Dave and I had the same position. I was the active, he was the reserve. So when he was doing his day job, I was kinda keeping things in track. And he would come in on the drill weekends, I would hand off, we'd high five each other, move from there.

 

But a lot of times we'd have sitting in the office and talking. And as I got up here in Silicon Valley, I started immersing myself in the tech, in the tech world, which eventually led to myself getting out and going into cybersecurity. But along that way, I started supporting another program at Stanford called the Hacking for Events program, where they took military and intelligence programs and problems and then had students kind of go ahead and solve that.

 

And Dave and I were in the office one day, as oftentimes they want to get the lieutenant colonels away from the Marines, go drink coffee, leave us alone sort of thing. And we'd sit there on a wet board and start just talking, like, how come we're still fighting fires like we did 100 years ago?

 

What kind of technology could we do? So we sat down there over successive Weekends sketching out ideas, Dave would pitch in perspectives from the fire department. I would come at it from the tech angle and we kind of craft out a number of different solutions and fast forward a little bit.

 

One of those ideas became a company that was very successful. Then I started getting ready to get out. Dave started moving on and this thing popped up at Hoover and I kind of reached back out to him and said, hey Dave, remember we had about 10 ideas on that board.

 

What's the next one? And maybe we should kind of take a run at this veteran fellowship program together. That's kind of how we got there. So I'll toss to Dave to kinda fill in the rest of the details.

>> Dave Winnacker: Donnie's being a little revisionist with his history. Truth be told, he called, said, I'm gonna apply for this thing.

 

Which one of your bright ideas can I use to get in? I mean, Donnie's a good friend, so I'm always down to help. So we were spitballing and we'd probably spend about a half hour working through and I go, man, this sounds really cool. You think they'd take both of us?

 

Donnie goes, I don't know. When we find out you called them up and apparently they said, I don't know, you should both apply. Anyway, that's how we ended up in the VFD together. So as Donnie mentioned, I served on active duty Marine Corps infantry officer, got out, joined the fire department and rose up through the ranks and found myself in late 2017 when I was the executive officer at 23rd Marines as a lieutenant colonel reserve officer.

 

I was also the fire chief of the Moraga Orinda Fire Protection District in the San Francisco East Bay in the area that quite famously burned in 1991 in the Oakland hills. This is the area just to the east of there. And as a local government fire chief, I had a problem, a wildfire that was going to outpace and outnumber the weight of the firefighting response I could throw against it, right?

 

So a firefighting first or think, an infantry first solution wasn't going to work. I started thinking about how we could, we could bend the curve of wildfire risk. Like any good infant infantry officer, I fell back to the pubs and I landed on defense in depth and really started working through what would be the steps it would take to come up with a holistic community wide approach that used durable pre fire measures that were passive in nature.

 

So thinking obstacle belt that could then be used to augment and increase the value of the firefighting response. And Donnie and I spent a lot of time swirling around with that. As he mentioned, we came up with an idea that turned into Zone Haven evacuation software. Gotta be able to sanitize the workspace to get all the residents out so we have room to work.

 

And through that, we built out a number of ideas that were our capstone. And I think, really, to sum it up, the solution's pretty straightforward. We have a very clear sense of what needs to be done. The challenge is, how do we get people to do it? And this is complicated by the fact that these are residents, and we're talking about work done on the private property.

 

The law and our codes are very deferential to what people do on and around their homes. This is not a. We're not invading somewhere, right, where we have to. The stakeholders are the ones who have a say. We're the residents. And so we began working through that, really aligning on how insurance, both the access and affordability of insurance, could be used to drive.

 

Changed through price signaling and the work that we did at Hoover that really set me on that journey that then resulted. I was the California director for the Western Fire Chiefs Association. I ran the WUE task force for the California Fire Chiefs Association, I was on a couple of state boards and panels and right up through my fire service retirement at the end of the year, I was really driving on this problem of how do we harness the market's ability to.

 

To tell people the price of their action or inaction? Because otherwise this is abstract, right? Wildfire. For most Californians, wildfire is an abstract thing in any given year. But insurance is annual and either now or in the very near future, wildfire caused disruptions to the insurance market are going to affect every California in a way that the actual physical manifestations of wildfire will not.

 

So I really land on the critical importance of understanding price signaling and understanding the barriers to accurate and timely price signaling vis a vis risk that people have chosen to allow to remain on and around the parcel.

>> Mike Steadman: So you and I, we all joined the VFP at the fall of 2021.

 

Right, and again, just starting out this year, all of a sudden the whole world is paying attention to what's going on in California. I will love you all's perspective of what happened and just kind of bring our viewers up to speed on how we got to where we are today and then how do we move past it moving forward.

 

 

>> Donnie Hasseltine: Let me highlight one thing as we kick off into that because I think Dave's got the. The best way to kind of talk through where we're at now. But I want to. One of the interesting things we noticed, as Dave said, the key thing is, is is how do we use market forces to drive good behavior, right.

 

How do we go ahead and take a look at showing people the costs and the risk associated with it? Right. We realized we needed some kind of lever to push that and we felt insurance was probably the right way to do it. The other thing we noticed very quickly is that in most cases, I mean, I grew up in Louisiana where there's pretty smooth flooding hurricanes, and if you go down there, you might get flood insurance, but it's very costly, it's government run, and it's very ineffective.

 

And I think when we looked at what California was going. California is a fair plan, right, if you're an insurance company, you want to do business in California, you have to pay into this fair plan. And what our concern was, we started seeing people advertise and highlight additional further fair plan adoption where and some people feel, trying to say, hey, that's a good news story because more Californians get insurance when they're getting non renewed.

 

But from us, we said that's an indicator of really bad things to come, right? If everyone's going down that road, there's something government does well, insurance probably isn't the right thing for that. And as we go down that road, if there's additional fair plan adoption increases the chances that a catastrophic event could collapse the whole system.

 

And so he pulled a lot of fair plan data from the state of California, using our resources at Stanford, and did that initial analysis and kind of showed, hey look, we're going for a pretty disastrous future if we don't find a way to kind of ameliorate this. And I think that as Dave indicated early on, people kind of just held on and said, it'll be okay, it'll be okay.

 

Fast forward turned out it wasn't okay. So Dave.

>> Dave Winnacker: Yeah. So how we got here, Mike, is a couple of things. One, we excluded wildfire from the landscape for over a hundred years as a matter of policy. So in the, in a fire dependent landscape, when you remove fire, you, you remove, think of it as the vacuum cleaner, the whisk broom, the thing that's just cleaning up the understory and keeping the vegetative landscape in balance.

 

And when you exclude fire, but you don't exclude photosynthesis, you get accumulations of vegetation over time that should have burned in a historic fire regime every couple of years in a low intensity, beneficial, no big deal fire. But when you get rid of all those little fires, you carry forward the fuel load, the dead vegetation to a future date when on the hottest, driest day with the worst winds, all of those actions that you delayed and deferred, they come due in the form of a balloon payment with interest on a, on an extreme wildfire day, where you get fires that are simply unstoppable, that's because of the accumulation of vegetation.

 

Because we excluded fire. Climate change has increased vapor deficit, meaning we are getting more dry days late in the fall with high winds due to vapor deficit and compression of the rainy season. And then lastly, we have built hundreds of thousands of homes in fire dependent landscape without considering fire.

 

And to be very clear, it's not to say you can't build there, that you can't build without considering fire. Same idea as Donnie's alluding to in a, if you're in a floodplain, you need to build on stilts. If you're in a fireplane or a fire hazard severity zone.

 

You need to build in a manner that incorporates defensible space. So vegetation management around the home and home hardening, meaning how the home is built. We know how to do this, there's no secret about it. Question is, how do we adopt those retrofits from or the homes that are already there.

 

And then lastly we, we having set conditions for unsustainable wildfire losses and we're, we've achieved that. Right? Between 1991 and 2017, very few homes burn. In the wildfire seasons of 2017 and 2018, the insurance industry lost two times the combined premiums they'd taken in over the prior 26 years.

 

That is an unsustainable level of structure loss. And then you start to see ripples through the insurance market. So all these other things, and as Donnie was alluding to attempts to address the insurance market responding to unsustainable losses with regulation, well this isn't a regulation problem. This is a too many homes are burning problem.

 

And so from our perspective, where there's a need to address regulation and some of the impacts that is having on, on preventing people from understanding the price that's associated with the risk factors they're maintaining around their homes is not to subsidize mitigations. It's not to just pay to rebuild, it's to use price signaling to encourage people to adopt the proven mitigations that will bend the curve on wildfire losses.

 

If a home is prepared to receive wildfire and all the homes around it are prepared to receive wildfire, not only is that that cluster, that neighborhood, unlikely to burn, as in extraordinarily unlikely to burn, but it now forms a non burnable barrier that protects other homes that are downstream.

 

Right, so if you were, and there's a network effect that gets achieved here that if we three are neighbors, and I would love to be neighbors, that'd be a, we have a lot of great barbecues and I have done my work because I'm a good, virtuous, upstanding citizen.

 

And you two deadbeats have left a bunch of risk factors around your homes. If the homes are less than 50ft apart, your asset becomes my peril. Because if your home starts to burn, it will burn my house down with great certainty, irregardless of the fact that I prepared my home to receive wildfire.

 

And what we saw in LA this year and what we saw in Louisville, Colorado in the Marshall fire, what we saw in Lahaina, what we saw in the North Bay, in Coffee Park, right? What we're seeing with increasing cadence, these are not wildland fires. These are wildland initiated urban fires.

 

And once homes start to burn, they burn longer and they burn hotter, and they will overwhelm wildfire. Specific mitigations. It's kind of if you put on a bike helmet and you know, some stuff to go out bike riding and you get in a car doing a hundred miles an hour, no one is going to be surprised that your bike riding PPE was inadequate to protect you from 100 mile an hour crash.

 

Wildfire is a bike ride. Urban fire is a race car. And so we have this challenge of that once fires become established in the urban environment, the all of our other mitigations are moot. And so the whole game here is about slowing the fire spread to the. To the edge of the community.

 

That's your defense in depth, your obstacle belt, about hardening the points of entry so that the homes that represent the opportunity for transition from vegetative fire to structure fire, those homes are prepared to receive fire and they are more resistive. And then understanding the firefighting response, how long it will take the appropriate number of firefighters to get to the right place, think of that as your qrf, right?

 

You gotta keep the bad guys from getting through the wall long enough for the QRF to show up. And when all of those are taken together, we have the ability, we have the tools, we have the modeling tools, we have the data, we have everything we need to understand how to do this.

 

What we don't have is the will to act on the part of the residents in our fire prone areas. And what those residents are looking for is certainty. There's certainty that if I do these things, what certainty is there that I will get insurance and at what rate?

 

Now that doesn't exist because that would be collusion and you can't have collusion in regulated markets for a lot of reasons, all of which are very good. But so the point I would just make here is that we've been experienced sustained unsustainable wildfire losses since 2017, and we are just now starting to see the market collapse that Donnie and I studied as our capstone at vfp.

 

And so for a bunch of years when bad things were happening, people were buffered by the reflex time, the flash to bang, if you will, from when large numbers of homes are lost until you see the implications of pricing. Well, that same curve works the other way, from the moment you carry out mitigations at scale, there will be time until the market corrects.

 

But most importantly, as I said in that example before, if the three of us are neighbors, all three of us need to carry out the mitigations in order for them to be effective. And so you have this terrible problem where one person does the work and doesn't see a positive outcome, and then that discourages the other two, whose unwillingness to do the work is what caused me to not be able to get the outcome for my work.

 

And so it's, it's this really challenging problem of a network effect where we need everyone to do things. And that doesn't happen just naturally. That that requires concerted and focused effort and that does require regulation and enforcement and price signaling so that people can see the benefits of having done this work because it's all otherwise, it's all just in the Abstract.

 

Until the catastrophe ensues.

>> Donnie Hasseltine: The thing I'd also add to that. Right, is when he talks about the three of us. Right, and doing our protections and our defensible space around our homes. The other challenge is, let's just say even if we all do that right, the challenge is, do our three insurance companies all agree that that's actually going to defend the homes?

 

Right. And those insurance companies don't always share that information. Because if I were, say, my insurance company looked at my home and said, okay, check, you've done those events will space. If they looked at yours and Dave's, they could look at yours. You use different insurers or they could share that information and say, okay, I don't insure Mike, I don't insure Dave, but I can validate through a common set of.

 

Of criteria that they have met that criteria to defend the home and do the home hardening defensible space. That I know that I can keep Donnie's rates low because Mike and Dave's homes are also protected. But if that communication doesn't happen, you get a case where like, like Dave said, you ended up with this weird panic, we're not incentivized.

 

We don't see the positive effects that neither do the insurance companies, so then you have all three insurance companies saying, like, I can't prove that they've all three done the home hardening they need to do. So we should all just step out of this market because it's too dangerous for us for a business case because of just what Dave said.

 

I mean, you can, you know, be mad at the insurance companies, but it's a business. And when that business loses 30 years of profits in two years, like, who's. Who's going to sign up to run that business?

>> Dave Winnacker: You know, so for me, and I'm a grunt, y' all, so I don't have all the deep industry expertise like you do.

 

 

>> Mike Steadman: But it sounds like, number one, the way we're building homes these days, they're basically just fuel for these fires. Essentially. Right. If they're not protected,

>> Dave Winnacker: actually requires

>> Donnie Hasseltine: better.

>> Dave Winnacker: Yeah, I'd say so. At least in California and some other areas as well. Since 2008, we've had the appropriate building code.

 

It's technically chapter 7A of the building code that requires the home be built to an ember resistance standard that's highly effective. In paradise in 2018, when the whole place burned out, the majority of homes built to the 7A standard did not. Amidst one of the worst fire losses we've ever seen.

 

The problem of course is that very few homes have been built since 2007. And so that the majority of the housing stock requires retrofits. You have to make changes. The second part is that the, if the home is built to an ember resistant standard that's durable right. That that will remain in place forever and ever.

 

The vegetation that surrounds the home also has to be maintained. It's a, it's a belt and suspenders approach. You have these goblin minimum and the vegetation has to be checked every year because things grow so exactly like Donnie was alluding to if, in if for some reason we all did the work and we were all able to share that with our insurance carriers.

 

So they had a comprehensive view of our little neighborhood. Said these guys are gold star a number one good to go. It doesn't mean it will be next year or the year after. And so you, you have this constant problem of having to go out and check the work and that that's really hard.

 

It's really hard as well when we're doing it in the midst of a, of a no kidding collapse of the market and this dynamic environment where things are moving so fast that a lot of people just sort of go to ground and say hey this is too much.

 

I can't track it all but to be clear that the collapse of the insurance markets are very likely with all of the ripple that come from that. The property tax is based on homes being able to sell. Homes that can't get insured, can't be sold. Mortgages require insurance.

 

If insurance is not available. The mortgage market if can get very topsy turvy, municipal bonds that are used to run any kind of capital projects in municipal government. All those are now have a wildfire component because they're secured by ad valorem property tax. So the ripple from this stuff is potentially massive.

 

And this is the my case successfully pull your hair out stuff that the solutions are low cost, high impact. We know exactly what needs to be done and it's really minor. We're talking about enhanced gardening and retrofitting of event screens on houses. Really I mean very low cost, very high impact that can prevent this potentially contagion level financial crisis for local government that would flow out of the really unwillingness to carry out the actions that could bend the curve of structure loss.

 

And that's you know micro work at scale is hard but can have this massive impact. And the alternative is truly scary. And that's. You know I don't think Donnie and I take any pride in having called where this was going three, four years ago now, because where it continues to head is potentially a really bad place.

 

And we need residents of these areas and at scale be galvanized to take action. And I continue to believe price signaling is going to be the most effective way for us to get there but that's complicated by the fact that this is a fragmented market. There are 38 admitted carriers, insurance carriers in California, and very, very large number of excess and surplus line, non admitted carriers.

 

And so getting all of them to act in a way that is sort of directionally the same. So it's not collusion. It still has competitive markets, that's really, really hard as well. So we're left with a simple solution. It's simple, it's not complex. It's simple but it's hard.

 

And as a result of that, because it is so hard, we see a lot of the energy that is being pointed towards wildfire risk reduction now is going to the complex but easy. And somewhat ironically, it's easier to launch a satellite with a complex instrument array than it is to get people to.

 

Clear out brush and grass within five feet of their house, that shouldn't be the way it is, but it is the way it is. And so we, we end up with continuing use of, of tech for sort of boutique solutions that don't address the underlying risk factors. And as long as there are vulnerable homes and fire prone communities, they will burn and anything we do other than address the vulnerabilities at the parcel level is just kind of tinkering on, on the margins of the bell curve, lower turn.

 

 

>> Donnie Hasseltine: Yeah, I think it's also worth that, Dave talked about the impacts, right? You know, when paradise burns, that means property taxes go away, which means that makes it a very difficult to rebuild or bring back those government services. But if you think about the housing crisis kind of in California and think more broadly about that, the largest source of intergenerational wealth is your home, right?

 

Is you put a lot of money in your home and that's what you're gonna eventually sell and bring out to be your nest egg in retirement or pass on your kids. And, and that goes away if you can't insure your home. And like Dave said, just to be super precise about it, a lot of what we're talking about here are pretty low, low tech, low budget things, right?

 

It's like, have you cleaned out your gutters? Do you have gutter covers in your gutters? Have you put mesh in your soffit vents so embers can't get in your attic? Have you ensured that zero to five feet around your home is non flammable, no vegetation, like simple things like that radically change whether or not that home is going to burn or not, right?

 

And I think that one interesting thing that Hoover did on day one is when we went to that VFP, we had that chat from HR McMaster where he talked about looking at your beneficiaries and your stakeholders and drawing a map of that. And that was pretty profound for Dave and I to draw out.

 

Look, we know we got government, we know we got homeowners, we know we got firefighters. And they all want the same thing. They want things not to burn, but they all have different ways of looking at that problem. And how do you draw the lines across there to see, okay, where they map, where do they, where those points meet and where can we attack those points we meet?

 

Because if you understand the stakeholders, understand where the stakeholders meet now, you can find a way to try to help, help solve that problem and eventually what that had to do. Another great thing that Uber did is we got a lot of people like Dave said you can't have collusion in the market.

 

So there's a lot of cases where insurers, California apartment insurance and certain other groups can't be seen in the same room with each other. Right. So we're able to set up like a neutral ground at Hoover on Stanford and able hey look we're not going to televise this.

 

We're not going to quote anybody. This is a Chatham House rules bring all together. Let's just acknowledge we all agree that we want the same thing as things not to burn. How do we solve that? And we just wipe away everything out and that allowed us to come with a lot of great ideas that quite frankly are carrying forward and days been able to carry forward in government and non-profit work but it took us kind of getting together and getting people who maybe wanted to talk to each other but couldn't and identifying the common thread and pulling that common thread to get them in the same room together.

 

 

>> Mike Steadman: So you all have been working on this for a few years now for a long time Dave, damn near your entire life. Right. And you also know we're in this 247 kind of news cycle and it's just so hard to keep up with particularly you know the tariffs and stuff now.

 

And I have not seen a lot of information about the follow up, you know post fires, people rebuilding. It was there front and center you know in the media for about three weeks and then now I haven't really seen a lot what is taking place what are the conversations happening now?

 

 

>> Dave Winnacker: So a couple of things specific to California. The governor issued an executive order that's bringing forward zone zero which is the requirement it was established by the legislator in 2020 should have was supposed to have gone into effect two and a half years ago but that will be by regulation no later than 2029.

 

So things move a little slowly here. There will be a state-wide regulation to remove anything that will burn inclusive of wooden fences within 5ft of a structure that that is an unlock on everything else we're doing for structured risk reduction. There's also a loosening of CEQA rules that will allow fuel breaks and some California Environmental Quality act it will allow some projects to move forward a little more quickly and it's too early to say how it unfolds but there are some early talks about rebuilding in LA in a manner that accounts for wildfire preparedness so that you can then have some really small model communities.

 

It's not rebuild them to burn again, so there's a lot more interest. And one of the challenges there, you know, four or five years ago, this was a pretty lonely space. It's gotten very crowded. But now, and because it's essentially a new field, there's not a whole lot of well established expertise.

 

And we have this challenge that wildfire, the stuff the forest service is very good at dealing with, is fundamentally different than wildfire caused urban fire. And so we have this problem. We're blending disciplines, and that can be a little rough early on. And I'll send you for the show notes.

 

Mike, I just worked on a white paper. We talked about the factories that contribute to urban fire and how the steps you have to have, and you have to have all of them to initiate urban fire because it doesn't happen that often, just when it happens is catastrophic.

 

But the Swiss cheese holes, it's about seven different steps that have to align. And if you interrupt any one of those, you bend the curve dramatically to instead of 5,000 homes, it's five homes. And you get down to the level of where these losses are sustainable and buy us time to come up with the approaches we need to get to a hundred percent compliance, you know, which is really cultural and social acceptance thing.

 

But there's a lot of energy in this space, and I think, unfortunately, a lot of it is focusing on how we further automate and use technology to enhance our ability to rapidly extinguish fire. And I would note that's how we got here, right? Giving giving firefighters a bigger hammer is not gonna solve this problem.

 

It's just gonna kick the can a little bit farther down the road. So really our focus has been on how we create those passive pre fire measures that look like community adaptation to wildfire. I mean, anyone who's watched either seen a wildfire in person or watched any of the clips of Los Angeles, I think will hit the I believe button.

 

That that is not something you can go toe to toe with. That is not something we fight. It's something we adapt to. And I would. The analogy would say, you know, bullfighter in the ring, in the first 30 seconds of a bullfight, you don't put your head down and charge the bull and hope you knock it down.

 

Right, so this is the sort of thing we need to. We need to figure out how we can dance with this piece. And we can do that through adaptation.

>> Mike Steadman: I think a lot about how do you change human behavior? You know, and when you talk about the three areas, you know, you mentioned the insurance companies, right.

 

The homeowners, right, the fire department sec, etc. Even going back to that first conversation we had with hr, we talked about one framing the problem. It's all about framing. But then if you're actually going to make meaningful progress, it's probably hard to target all three of those at the same time.

 

So where do you feel like you've been able to move the needle the most?

>> Dave Winnacker: I think on the, on the wildfire modeling. So it's called catastrophe modeling. It's used for the pricing of risk, the average yen, your loss calculation, and I just as a fun. I'd say for anyone who's listening, if you're talking to someone who's interested or is has some knowledge about the wildfire space, a great thought experiment is to ask them what is the unit of measure for wildfire risk?

 

Is it. And wildfire risk reduction specifically? Are we looking at the number of dollars that have been spent? Well, that's probably not the best way of looking at it. You can buy a very expensive car and still be late for a meeting. Are we looking at the number of acres that have been treated?

 

You know, also not a great idea because I could grow out very long hair and still be bald. Right, it wouldn't, it wouldn't really matter that I had a lot of hair on the back of my head because it's not happening in the front of my head. Or are we talking about the dollars denominated in risk, the risk denominated in dollars through the average annual loss, which I think is a useful frame of reference because it's the one the insurance industry uses.

 

That's the first thing. The second question to ask someone, if they do land upon a unit of measures, what's the denominator? Because if we say we treated a thousand acres of fire prone landscape, that sounds really impressive. Thousand acres is a lot. Unless in the case of California, the denominator is 4.25 million, 4.25 million acres burned per year when the landscape was imbalanced.

 

So thousand acres all of a sudden doesn't sound so impressive. So I think that's really the key piece is landing on the agreed upon unit measure and being able to measure our risk reduction in dollars as shown at the average annual loss calculation. So if we know that our average annual loss calculation was $5,000 per million total insured before we carried out these mitigations and we did these things, what was the outcome?

 

And so that if you, if you go back to your Marine Corps EWS or command and staff, are these measures of performance, are they measures of effectiveness really? Or is it activity or is it outcomes? And right now a lot of our effort is focused on activity. And so by working with the cap modelers, catastrophe modelers, we've been able to make real progress in understanding what are the inputs they would use, how do those inputs impact the model.

 

So understanding which ones are going to be meaningful and then laying the groundwork through some nascent work we're doing with the WI Data Commons to create the pipe through which we can feed parcel level and neighborhood level mitigation data to the catastrophe modelers. Because that's the unlock, right?

 

I mean, of those 38 admitted insurance carriers, significant number of them don't do their own wildfire risk modeling. They just buy a score and underwrite from there. If we're communicating directly with the scorekeepers, that ripples down to everyone else. And then we get all the other folks for free because it's now baked in, they're all using it.

 

So I think the cap model is where we've seen the most interesting advances.

>> Donnie Hasseltine: And I think there's also some things that Dave can go into about one of the challenges when you're pricing risk, right? It has to be backward looking, vice forward looking. And that becomes very challenging to kind of do that, to look out and see what it's going to look like in the future.

 

But I think what's interesting to know is when you talk to the cab modelers and you look at the fire models, what I think a lot of people don't realize when they look at something like those LA fires, it just looks like an Armageddon catastrophe. Right? But fire, there's science behind it and it's fairly predictable.

 

Right. You can look at things and say a house with these characteristics is going to burn, is not going to burn. And you can look up the IBHS standards and their experiments where they literally put two houses side by side and just put a flamethrower on both. And you see one burns down to ashes and the other one doesn't burn.

 

And you can also look at how fire would move. Just like in the Marine Corps, we would look at avenues of likely approach and we do our modified combined opsis overlay and predict how the enemy is going to move. Fire can do that too. You can look at valleys, you can look at fingers, you can look at wind patterns in the morning to wind patterns the evening, and you can see how that fire is going to move.

 

So like Dave said, thousand acres may not mean much, but more importantly, it might be 500 acres on a specific draw leading into a wooded village. Could make a huge bit of difference. Because if that splat has been had the underbrush removed and a fire comes in and moves down there, that fire is gonna move there.

 

It's going to start petering out. Right. And if it reaches the village, it's giving firefighters time to respond. And if it hits the point there and all those homes have that defensible space and that home hardening done, fire is not gonna ignite. It's not going to. It's not going to carry.

 

And that's the real key thing is how are you preventing the fire from carrying through those communities? And then on the backside, showing that modeling to adjust the pricing of risk, to show the insurance companies that they can actually insure those facilities. Like if you're just looking backwards, Right.

 

Can we insure in paradise? You can insure it now because it's been burned, it's not going to burn again for another 10 years. Right. Once all that vegetation grows back, different ball game. But you got to look at how does it look now, how does it look in the future and how do you bridge that gap through the modeling?

 

 

>> Dave Winnacker: Yeah, Mike, just to break that down, you know, take yourself back to Afghanistan. Do you ever see a FOB that didn't have wire around the perimeter. You didn't have Tescos, didn't have bunkers, right? It was prepared to be attacked. And so when they were attacked, generally went pretty well.

 

This is the same idea. We prepare our communities for an attack. We know it's coming, we know the avenues approach that fire pathways, that's powerful. Weather and fuel we can moderate, we can model those, we know where the breach points are. Our version of HESCO here is clearing out some defensible space and our version of bunkers is replacing some vents, putting in zone zero.

 

We can do this, we know how to do it. And as I said, defense in depth is a pretty good analog to what we're trying to carry out. The problem is you can't just, you know, have the base commander stand up and say, here's what we're going to do.

 

And then the gunnies go out and start cracking heads and it gets done. You know, here, this is, this is hand holding one driveway at a time to convince people of this is not only in their best interest, but this is their civic duty, carry out this work.

 

 

>> Mike Steadman: You're more familiar with the overall kind of history of these fires in terms of like numbers, rough estimate, how devastating was what happened in, you know, this year comparative to fires in previous years?

>> Dave Winnacker: Yeah, so year over year is not a great example, because as an example, 20, 20, 2017, 2018, really bad.

 

2019, not so bad. 2020, really, really, really bad. 22, 23, not all that bad, 24, early 25, really bad. So there's a cyclical nature to it. So part of it is, is what was the weather pattern that year? Right. One of the things that made this year's fires so bad was they were following a wet winter.

 

So the winter of 2324 in California was very wet. That means you get more vegetative growth, thicker grass crop, more growth on brush. Right. And then, so that, and then that rain ended about March, April of 2024. And then you, you had a delay in the onset of seasonal rain so that normally in LA Base in November, December, you start getting into rains.

 

Well, come January, when they had the wind event, they hadn't had any rains yet. So now you have procured remnants of a, of a record crop of growth that have gone eight months since they saw wetting rainfall and are, are cured out and dry. And then you get a Santa Ana wind event and, and an ignition and off it goes.

 

And, and so there are, you know, there's a lot of factors that come together so it's, it's better to take a macro view. And we did a, a little study on this. If you go back to 22 years, go back to 2003, 50% of the structures lost in that time have been during urban fires where it transitioned, but it was only five of them.

 

So a small number of fires can have an outsized impact because you know, in, in Altadena and parts of the Palisades, when on eighth of an acre lots, homes igniting, you know, eight homes per acre are burning as opposed to some of these really monstrous wildland fires we've had.

 

The Dixie's a good example example that burned a million acres and a couple of hundred homes. And those couple hundred homes, it's tragedy they were lost. That's very different than the thousands of homes that were lost. So the density of urban fire is really challenging. But predicting that and trying to make calls based on three, four, five year trends, I think it's a little bit of a fool's errand.

 

But the macro trends are really bad, I guess is the best way of saying it.

>> Donnie Hasseltine: And just if you take a look at what Dave just said about those years, right, 17, 18. Really bad next couple years, but then next year really bad. If you go back further right, it was the 1991 Oakland Hills fire that Dave started the conversation about.

 

And then there was a drop of insurance profits. But then it was like close to 20 years of really not any real significant fires in fire losses, right? Small ones here and there. And now it's every two or three years something catastrophic has happened. So you can just look at that timeline.

 

When you extend the timeline out and you see really bad fire, 20 years of kind of slowness and then all of a sudden, bam, bam, bam, bam. So again, that's the piece where it's very hard to look year to year. You look back collectively, you can see it's, it's spiking really bad very, very fast.

 

 

>> Mike Steadman: Are you both optimistic now about the future with all these lessons learned? Are you still worried just as you were when we first joined the vfp?

>> Dave Winnacker: We're a lot better informed, got a lot more data, know which trend lines to watch. Just Donnie mentioned the beginning.

 

I'll give a brief. In California, there's the admitted carriers. This is true everywhere. There are admitted carriers that are regulated. And then there is the insurance of last resort. It's called the Fair Plan. In parts of the west, it's called Peoples in Florida. And it's for people who through no fault of their own can or citizens, in Florida, residents who through no fault of their own can't get insurance must be offered coverage by the Fair Plan.

 

And the Fair Plan is a separate entity, but it is funded by the admitted carriers. And if you are an admitted insurance carrier, you have a proportional share of policies in the Fair Plan based on how much of the market you control. So it's not government run. Insurance is government mandated insurance.

 

And the Fair Plan, it's in the name, it's the insurance, the last resort. If you see a significant and sustained increase in Fair Plan enrollment, that's not good. That's sign of a market distress. And with the work we did at Hoover now a lot, lot more savvy about knowing what that means and how to get the data.

 

And so I, I watched some zip codes that, you know, my sort of my practitioner's eye say that's, that's probably a pretty, that's a place that probably is viewed as having high fire risk. A couple of the zip codes I keep an eye on, as of September 30th of last year, fair plan enrollment was up 680% in those in a year and that was September, that, that predates la, right?

 

So a lot of things have gotten worse since then. In a community that I was the fire chief of, 25% of the community was non renewed one day by State Farm, 25% of the community. And these are, you know, this is an affluent place where getting coverage is going to be a challenge because of the concentration of wealth and value.

 

So I am, I am optimistic. We know it needs to be done. I remain something less than optimistic about the speed with which we're going to see adaptation and the implementation of mitigations at the appropriate scale. And as a result of that, I think, and because it's a question of speed, relative speed, is that will the risk transfer industry and really the global reinsurers who underwrite the risk, will they stay while they lose money in this market long enough for us to carry out mitigations at scale?

 

That's one question. And the second question is if they stay, will we move with the appropriate speed? Cuz if we remove the stressor, right, the impetus to take action, then it's going to take us much longer. So this is a question of this is gonna happen. We're going to adapt, but how long are we going to take the.

 

Rip the band aid off and that so long as there is a functioning insurance market, we will reduce the pressure on people to carry out the mitigations that we need to sustain the insurance market. And so this, that's a hard one. And that's why, as I mentioned at the opening, that's why I'm so interested in anything that buffers people from the cost of their actions.

 

And that if you, you know, if, if every time you got in your car and you sped, you know, you had to put five bucks in the jar or whatever, you wouldn't speed very often. Right. But instead you feed until you have an accident. And this is the same thing that we're, we reduce the pressure on people to make change when we protect them from the financial impact of their decisions.

 

 

>> Mike Steadman: Love it. This was. You know, usually when I do these podcasts, I'm a lot more talkative. But I have to honestly admit, like I grew up in Texas, we didn't have to deal with wildfires. Right? You are my. Well, we had a little. But nothing like you see in California, but this was only a first time.

 

 

>> Dave Winnacker: Million acres burned last year, Mike, in Texas.

>> Mike Steadman: Really?

>> Dave Winnacker: Yeah. Powerhouse fire one day, million acres.

>> Mike Steadman: But I still had to say is like, you know, you all are just like the SMEs on this kind of subject. So I was genuinely curious to just kind of understand the situation from you all's perspective, because there's just so much I can't even use.

 

I don't know if we can use the word misinformation these days. I think that word got canceled. But there's just a lot of information coming at us and what's true, what's not. Even before it went live, I mentioned something to you, and you were like, kinda. So I think, you know, the whole concept of frontline voices is bringing people from the front line who are dealing with these hard challenges and providing perspective for our viewers.

 

 

>> Dave Winnacker: Yeah, I come back to one other thing that HR McMaster said when he first talked to us, and he talked about the importance of agency and people, community, cultures, countries, having agency. I use that word a lot. Based on how he presented it, it made so much sense to me.

 

The wildfire is a risk against which we have agency, and the question is whether or not we choose to use it. And I think to your point, Mike, about misinformation and focus on how much water is in the reservoir or whatever, that distracts from the core issue that we have control over, and we have the ability to control our own fate as communities and neighborhoods.

 

And that's really my hope, is to get the message out that we can do things about this. It's very clear. Topography, weather, and fuel tells us how the fire gets to the community. Defensible space and home hardening at the points of transition tell us how many vulnerabilities we have.

 

And time until the firefighting response can arrive with the appropriate weight of attack tells us what combination of distant mitigations, near community mitigations, and nonparcel mitigations it takes to slow the fire to the point that we will have more firefighters than fire at the point of entry. Because if we do, we win.

 

It's that simple. And that, we know how to do all of that. What we don't know how to do is get people how to execute it to scale.

>> Mike Steadman: This brings me to my next point, and I wanna shift our focus now, particularly to the kinda Bellarn Fellowship program.

 

Again, being part of that inaugural cohort, I kinda think of us as like the advanced party. You know, we got to be part of essentially kind of creating history of what this thing could be potential. And so with that comes this obligation to kind of be good stewards for the program as a whole, make sure we're attracting the Right type of veterans to participate.

 

I would love to learn from both of you all. What do you think makes a good veteran fellow and who should apply?

>> Donnie Hasseltine: Yeah, I'll jump in there, Mike. I think one of the things that was really. I think we talked about it, especially Dave, me, you, and the rest of the group pretty early on our first meeting together is, you know, Hoover was stepping on a limb to kind of create this program, and it was.

 

Dr. Rice put a lot of weight behind it about trying this out. And it was initially funded for five years, and we made the point of, like, look, we're getting a lot of great assets, a lot of great resources here, a lot of great contacts, but we've got to deliver to show the value of this program.

 

And a lot of that, as you remember day one, even the people who were setting up the program with us, who are fantastic, were trying to do discovery. I mean, like, you mentioned the Tbilisi, Georgia, trip. That wasn't part of the curriculum. Right. But we kinda said, hey, we should think about, hey, how are we leveraging some of the things that Hoover can do?

 

Can we do a foreign study? Trip can we look at these different ways where we can enrich the fellows but also tie what we're studying to different places around the world and see where there's like connectivity there. So when I look back on, I've talked to a number of veterans, some that applied and got in, some that didn't and some that have thought about it.

 

What we try to drive home is a couple things. You got to think very hard about your problem frame, it doesn't have to have to be near a solution. You have to have framed what you think you can do about it. You've got to match that up to the resources Stanford has so that within that year of the program where it's the really meat of the year where you're really working hard on it, you can create tangible wins and gains that you can point to along that way.

 

And Dave and I kind of thought through that as we mapped our piece out about, hey, let's get a webinar done. Let's figure out where can we get published, where can we get pull information to research and make sure hypothesis is correct and then how do we transmit that information out publicly in smaller groups to larger groups, how we get bigger megaphones to drive that out so we can point to how we use those resources to better dig into our problem that we'd framed and then communicate out the solutions we had identified.

 

So having kind of a good vision and have done some thought on the problem is really critical. And then thinking deeply about how can you intelligently, efficiently use the resources that Uber is going to bring to you to get some wins towards your problem and the time the program is going to give you.

 

 

>> Mike Steadman: Anything to add, Dave.

>> Dave Winnacker: I, you know, everything Donnie said, I think just having that sense of others who have gone before have given the prestige and the legacy of the service that we tried to live up to and trying to do our part within the VFP so that opportunity to be available to others, the resources of Stanford campus.

 

I mean, shoot, just having a Stanford Edu email address opened all kinds of doors for us. And then the network opportunities within the vfp. I mean, I'm sure you all have, maybe not you, Mike, but the rest of us have some serious imposter syndrome. You look who you're in the room with.

 

Go, man. This is a pretty outstanding group of people from all different walks of life that have done great things and are living up to what you would, you would hope a group made up of veterans would be capable of and learned so much from the other members of the Group just.

 

We really wanted to make sure we were doing our part to give back so that the program was able to continue. And I would encourage anyone who's thinking about applying, as Donny said, think global, act local. How can you make something deliverable within the timeframe? And then what are you going to do through your actions and your project to make the VFP better and to make your cohort better?

 

Because together we rise and there's such an opportunity here. If you just have a bright idea about your thing and you're going to be off near a rabbit hole, you're going to be missing out on an awful lot, program has to offer.

>> Mike Steadman: Yeah, 100%. You definitely want to lean in and make sure you get to know people in the program as well.

 

You know, I think one thing that makes veterans special and one reason that they even started this program was because we do have that kind of sense of service. You know, just because we take off the uniform doesn't mean, you know, we're no longer caring. Right. We're no longer serving our communities.

 

And you got amazing veterans all across the country doing great stuff. You know, I was on with the police commissioner or, sorry, the police chief of Newport News yesterday, and one of the things him and I were talking about, he realized that he's probably got a lot of veterans that are little league coaches and football coaches that he really hasn't tapped into enough to kind of lower that community violence.

 

Right. So they're already out there kind of doing the work. But you got 500 officers. Now, imagine you. You add on top of that the amount of veterans that we have across the country. And so that's the kind of spirit I think of when I think of, like, the vfp.

 

And I just know it can be intimidating, particularly for veterans that, you know, we all come from different backgrounds. And just like you said, Dave, that kind of imposter syndrome. We got veterans out here at community colleges, some that might have not gone to school and stuff, et cetera.

 

And they can look at a program like this and be super intimidated. But I really want to encourage them to apply. And like you said, using the knowledge we've gained over the last, you know, five years, seeing all the various different cohorts, you know, we took a lot of Ls, so y' all don't have to.

 

But like they said, breaking this, having really good framing for what you want to accom to accomplish during your time in the program and setting milestones as a way to drive momentum.

>> Donnie Hasseltine: Absolutely.

>> Dave Winnacker: Yeah. Remember that first week. Like, hey, we're all Stanford. Damn. Yeah, we're excited.

 

 

>> Donnie Hasseltine: Twice a week, guys. What's the big deal?

>> Mike Steadman: Yeah. And before I let y' all go, I'm gonna say this. Dave sent me a nutrition protocol. Okay. And I am training for the. You're gonna be proud of me, Dave. I'm training for the New York City Marathon on behalf of Backpacks for Life to raise money for homeless veterans.

 

And I'm going back into my. Your sheet that you gave me, and I'm working it. Did six miles this morning. You know, I'm back at it in the morning, but I got some time because the New York City Marathon's not until November. But, yeah, man, I appreciate you.

 

I appreciate our morning workouts. Sometimes, Dave will come knock on my door. We're up at like, 5:30 getting the workout in before we're doing the programming. And again, these are the things that you remember, you know, when you really lean in the program. So appreciate you all. Thank you for making time to be a part of Frontline Voices.

 

And for all our listeners, do me a favor. Make sure you subscribe to the podcast on your favorite podcast hosting platform. And if you're a military veteran that's interested in this veteran fellowship program, I want to encourage you to head over to Hoover.org/VFP and apply until next time.

 

Peace, love. Have a great rest of your week.