Rich Homeowners Get Extra Fire Protection

As wildfires rage throughout Southern California, one insurance company is doing everything possible to ensure that the homes of some of its wealthiest clients are protected.

Homeowners who insure with AIG's Private Client Group are getting a little extra help.

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The insurance company — at its own expense — is spraying homes and the surrounding vegetation with fire retardant in hopes that it can offer an additional layer of protection for some of its best customers.

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AIG won't say how many homes it is spraying or how much the 2-year-old program costs. But Stan Rivera, director of wildfire protection for AIG Private Client Group, said it is well worth the expense.

Such spraying typically costs about $1,000 on the open market. The average home in AIG's Private Client Group is worth about $2 million.

Since the program was launched in June 2005, three homes have been saved directly as a result, Rivera said. In each case, the fires burned right up to the line where the spray was.

There is an added benefit for homeowners, Rivera said.

"It provides a piece of mind that they are doing everything in power to protect their home from wildfires," he said.

The free service has two phases to it.

The first happens before the fire season. The insurance company will visit a home, assess its exposure to fire and then if necessary coat the surrounding vegetation with Phos-Chek, a fire retardant that is also used by the U.S. Forest Service. Rivera said it protects the plants for the full season.

AIG also monitors fires throughout the season, constantly checking to see whether any homes its Private Client Group insures are in the path.

If a home is within three to five miles of the fire's path, Rivera said, AIG dispatches an emergency response team that will spray all the plants and the house with the same retardant.

The program started in just 14 California zip codes, but was quickly expanded to 150 zip codes in California and Colorado mountain towns such as Aspen, Eagle and Snowmass.

The AIG group has also responded to wildfires in other areas including Idaho, Nevada, Arizona, Washington and Oregon.

Eli Lehrer, a senior fellow at the Competitive Enterprise Institute, a Washington, D.C., think tank, said he wasn't familiar with the effectiveness of AIG's program, but said that generally these types of risk mitigation programs work.

Insurance companies are building more sophisticated models to determine risk and how to prevent damage, Lehrer said. Some systems work better than others in the long run and sometimes, he said, it is simply cheaper to rebuild than to mitigate against all risks.

"In many cases, this sort of thing is PR, a good form of advertising," he said. "But there are business reasons to do it too."

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