Wildfire Prevention Innovators Vie for $11 Million Prize

Interest in better wildfire detection and suppression is growing in the wake of massive fires in California and Australia — costly disasters that are expected to become more common as climate change makes some areas drier and hotter.

By: Joel Berg | June 8, 2023

Pacific Gas & Electric Co. has been experimenting with a range of new tools to reduce the risk of wildfires caused by its equipment in California, a liability that tipped the company into bankruptcy in 2019.

Now, as the threat of wildfires continues to grow, the utility is backing an ambitious $11 million effort to build the next generation of tools for spotting and dousing potentially destructive blazes.

That effort is the XPRIZE Wildfire competition, sponsored by the same group based out of Culver City, California that’s credited with helping seed the private sector space industry. The competition’s cosponsors include PG&E, Lockheed Martin, the Gordon and Betty Moore Foundation, and the Conrad N. Hilton Foundation.

The global, four-year contest aims to develop technology that can pinpoint small wildfires over massive areas and dispatch autonomous vehicles to put them out within minutes.

“XPRIZE isn’t the solution to all problems,” said Andrea Santy, program director for XPRIZE Wildfire. “But there are certain places where we really think that it can move the needle significantly, and this is one of them.”

Disasters Drive Search

Interest in better wildfire detection and suppression is growing in the wake of massive fires in California and Australia, costly disasters that are expected to become more common as climate change makes some areas drier and hotter.

PG&E filed for bankruptcy in the face of claims totaling billions of dollars after it was linked to several wildfires over the last few years.

One, the 2018 Camp Fire in Northern California, was ignited by a faulty electric transmission line and went on to claim more than 80 lives and destroy more than 18,000 structures, according to the California Department of Forestry and Fire Protection.

Another fire, the 2020 Zogg Fire in California’s Shasta County, led to a fine of $150 million from the California Public Utilities Commission. The company has also agreed to pay $45 million to Shasta County under an agreement that includes dismissal of criminal charges related to the fire, which started after a tree fell onto a PG&E distribution line. Four people died in the fire.

To minimize wildfire risks, businesses and governments have been exploring numerous technologies, according to a 2022 state of firetech report sponsored by the Wildfire Technology Funders Group, a collection of philanthropists, corporations and impact investors.

The Biden Administration voiced its support of the cause in a February 2023 report that recommended, among other things, creating a new office to carry out a science- and technology-based strategy for combating wildfires, similar to strategies used for national defense.

Andrea Santy, program director, XPRIZE Wildfire

At PG&E, new tools include a combination of satellite imagery and land-based cameras to keep watch over fire-prone areas, said Paul Doherty, a spokesperson for the Oakland-based company. Other tools include new sensors to detect problems on electrical lines and artificial intelligence to enhance the ability of the company’s fire-detecting cameras.

The utility has also worked with a Spanish company called Technosylva to provide regularly updated models of where and how fires might spread, enhancing PG&E’s ability to plan ahead, Doherty said.

But while it has made progress in detection and modeling, the company sees room for improvement in the autonomous detection and suppression of wildfires, Doherty said.

Some wildfires occur naturally, of course, so another challenge is determining which ones can be allowed to burn, said Genevieve Biggs, program director for the wildfire resilience initiative and special projects for the Gordon and Betty Moore Foundation, based in Palo Alto, California.

“That means we need more precise, earlier, accurate, higher-resolution and cost-effective detection capabilities; we need to understand where fire is burning at low to moderate severity and having a beneficial impact, and where fire is burning at high severity with potentially detrimental impacts for ecological integrity and community safety,” Biggs said.

A Dual Focus

XPRIZE Wildfire is tackling the challenge on two tracks.

On one track, called Autonomous Wildfire Response, teams will be competing to develop a system that can monitor an area of 1,000 square kilometers (or 386 square miles), detect fires, and autonomously suppress them within 10 minutes of detection.

Most wildfires are still spotted on the ground, often by people who call 911, Santy said. In the best-case scenario, it can take 15 to 45 minutes for firefighters to reach and control a conflagration.

“That time, with certain fires, with certain weather and different conditions, is just way too long,” she said. “And we know that research has shown that early detection could be a complete game changer.”

Indeed, according to a study by the Australian National University, early detection of bushfires could save the Australian economy up to AU$8.2 billion over the next 30 years, even after accounting for a 15% to 30% increase in fires.

The second track — Space-Based Wildfire Detection & Intelligence — will pit teams working to accurately detect all fires in a landscape bigger than a state or country in under a minute, then characterize and report the data within 10 minutes to two ground stations, all while minimizing false positives. Those could come from things like campfires or smokestacks.

XPRIZE is also intent on developing solutions that are user-friendly, Santy added, noting that the competition’s judges will include firefighters.

Teams Already Forming

The competition is open to individuals, businesses and university teams from around the world. As of late May, 81 teams representing 24 countries had expressed interest in the contest, according to Santy. The registration deadline for the space-based track is August 31, while the deadline for the autonomous response track is October 31.

Once teams register, they will have six months to submit a technical report outlining what they plan to do, Santy said. Judges will then select the solutions they believe are best suited to go into testing, which will occur in phases.

As part of its process, XPRIZE expects it will combine teams that have complementary solutions, Santy said. “We anticipate matchmaking happening, and then teams being able to get to these end solutions by joining forces.”

The winning team for each track will take home $3.5 million, Santy said. But XPRIZE will be handing out another $1.5 million per track in milestone awards to the teams with the most promising technologies. Lockheed Martin, which has a unit focused on technology to fight wildfires, is kicking in another $1 million as a bonus prize for teams on either track that develop accurate detection tools.

One firm expecting to compete for the prize money is Alchera, a South Korean company with roots in facial-recognition technology. After a visit to California during fire season three years ago, the company’s South Korean and U.S. CEOs — Young Hwang and Jin Hong — decided it should try to do something about the issue, according to Michael Plaksin, vice president of marketing for the company’s U.S. arm, Alchera X.

The result is a program called FireScout, which uses facial recognition software installed in cameras to detect smoke plumes, said Plaksin, who believes the detection technology can already achieve what XPRIZE is looking to do.

He expects Alchera will work with other participants to marry its detection tools to autonomous firefighting solutions, which could include drones.

“We are excited to enter the XPRIZE competition to help expand our technology and services worldwide,” Plaksin said. &

Joel Berg is a freelance writer and adjunct writing teacher based in York, Pa. He has covered business and regulatory issues. He can be reached at [email protected].

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.