*Beyond a certain point it's cheaper to let houses burn down and build them again when necessary.*

Well yup, if you get somebody else to pay for it through
insurance. Clearly you are not keen to pay for it yourself.

As is being pointed out and is happening in places like America,
insurance companies become wise to this after a while and
will either refuse to insure you, or charge you a fortune and
on their terms.

A friend of mine owns some oldish homes in the NE US and every
year she battles to find any insurance company which actually
wants her business. They then send an inspector in and if
his list of repairs are not done, forget it, no insurance.

I think we can learn a great deal from these fires, about which
houses survived and why. Those who are prepared to implement those
kinds of buidling improvements should clearly not have to
subsidise those who can't be bothered, with higher insurance
premiums.

At the end of the day, insurers won't wear the losses, they will
pass them back to those taking out insurance.

A number of approaches are probably needed.

Not only the idea of protection via bunkers and the like, but about building houses that are less susceptible to ember flare and in bush areas looking at clearing trees directly near the house. Some have even suggested fire breaks at appropriate areas to prevent the spread of fires that move at an unbelievably fast rate.

On Canberra's Stateline this Friday there is a report about one fire victim who rebuilt his home to be as fire resistant as possible. From what was already reported the home has no open guttering or areas that can trap embers and the external walls are metal. There is a roof sprinkler system and a bunker/cellar built beneath.

The ferocity of a bushfire is unbelievable. From just one suburb away we stood on our front porch and the wind and heat was intense, our cheeks were burnt as flaming embers swept through the suburbs while we attempted to keep water on the roof of the house and clear the gutters. The streets near us were evacuated and the neighbours fence caught fire but was quickly dowsed by water from a neighbouring pool. The neighbour across the road found some burnt leaves in her gutters after the fire which demonstrates just how far an ember can travel.

I can only imagine the impact in a predominantly forested area.

Yabby,

The issue is whether it's worth paying the costs of hardening when that cost exceeds the true value of the reduction in risk. Essentially, at that point it's cheaper to spend money on rebuilding houses when they burn down that to spend it trying to prevent the loss.

The particular danger is that the 'experts' will push for hardening in excess of that which is economically rational on the basis that it will save lives, even though no practical level of hardening will prevent houses being destroyed in a fire storm. To my mind, that is conflating too separate issues - one being the preservation of property, and the other being the preservation of life, with the latter being better served by fire-proof bunkers than hardening.

Insurance comes into this equation only as a way of transferring money, from those who would otherwise spend it inefficiently on hardening, to those particular individuals whose houses actually burn down.

Certainly premiums should reflect the risk, and I have no issue with people with unhardened houses paying higher premiums, but the higher premium approach is the rational one for the insurers to pursue, rather than simply refusing to insure.

The real problem may not be that insurers cannot handle the risk, but the chance of an individual event exceeding their ability to pay would bankrupt them. If this is the problem, then the government should step in, because excessive hardening is economically wasteful, and should be discouraged, not encouraged.

It's like armour plating the exterior of your house, and employing armed guards, as a protection against burglars. Effective, perhaps, but hardly cost effective.

Sylvia.

*but the higher premium approach is the rational one for the insurers to pursue, rather than simply refusing to insure.*

It is of course perfectly rational for some insurers to conclude
that some houses are simply too risky to insure, so refuse to
do business with a person. That should be their choice.

People act based on self interest. Some will conclude that all
they have to do is pay their insurance premium, somebody else
will pay, if their house burns down.

Sometimes fairly cheap solutions, can make a huge amount of
difference, but if insurance pays it all, people won't bother.

A friend of mine bought a home in the hills of Perth, a
Kentucky log cabin, surrounded by gum trees, on a few acres.

When I first saw the place I coughed a bit :), having been
through some fires I suggested that he remove those trees
close by, or plant deciduous trees, for they actually filter
embers, unlike gum trees, which soon catch alight and fire
the flames.

Next I suggested that he put a sprinkler system on his house
and walls, drawing water from the swimming pool which was right
there. Best to use a small diesel pump, petrol pumps can stop
in the heat and of course the power could be out.

He kept the litter on his few acres to a minimum, he could
well have survived a fire, without bankrupting his piggy bank.

Hopefully insurers will evaluate these things and reward
people who have made an effort to minimise risk. Those who
simply rely on insurers as a solution, well its only fair
enough that they pay through the nose, but of course there
will no doubt be loud complaints.