AIG's private firefighters help out the rich

http://www.bloomberg.com/apps/news?pid=20601109&sid=akG9v3rOnWsE&refer=news

AIG's Fire Trucks Save Homes of Wealthy Californians (Update1)

By Daniel Taub


Oct. 26 (Bloomberg) -- Firefighter Sam Crays was in the San Diego community of Rancho Santa Fe, where the median home price is $2.4 million, spraying retardant as a wildfire spread to nearby brush.

``The vegetation lit on fire, and it was five feet from the house,'' said Crays, 28. He turned his hose on the flames, and the home was saved.

Crays doesn't work for a local fire department or the California Department of Forestry. He works for American International Group Inc., the world's largest insurer. If you're a client with a home threatened by California's worst wildfires in four years, you're getting service your next-door neighbor may envy.

``What we're trying to do here is provide our policyholders an additional level of protection,'' said Stan Rivera, director of wildfire protection for AIG Private Client Group. The average home insured by the unit is valued at $1.7 million.

AIG this year expanded its Wildfire Protection Unit to 150 ZIP codes in California and Colorado, up from 14 when it was formed in 2005. The unit has had the busiest week since its inception as fires burned at least 719 square miles (1,861 square kilometers) from Santa Barbara to San Diego, destroying 1,342 homes and 34 businesses and causing at least seven deaths.

Special Service

The Wildfire Protection Unit has six trucks outfitted to spray Phos-Chek, the fire retardant used by the U.S. Forest Service. Customers can have Phos-Chek sprayed on brush surrounding their homes before each fire season. During a wildfire, the trucks are sent out whenever a fire comes within three miles of a home and spray all combustible areas.

Such protection doesn't come cheap. It's available only to customers of AIG Private Client Group, which serves affluent individuals and their families. The average customer spends $19,000 a year on the insurance, which may also cover yachts, art collections and ransom demands, Rivera said.

AIG Private Client Group has about 55,000 customers throughout the U.S., Rivera said. California is ``one of the biggest'' markets for the group, he said.

Fire destroyed at least 43 buildings in Rancho Santa Fe in northern San Diego, ranked the second-most-expensive ZIP code in the country by Forbes Magazine. While protecting the AIG client's home there Monday night, Crays was able to stop a blaze next door as well. ``We love putting out fires,'' Crays said.

Saves

The Wildfire Protection Unit has treated about 400 to 500 homes with retardant since 2005. Before this week's fires, Rivera said, the unit had three ``saves,'' instances where ``the wildfire has burned right up to our Phos-Chek lines and then stopped.''

The unit has deployed all six of its trucks to Southern California to help fight this week's wildfires. The trucks have provided emergency service to about 150 homes this week, said Eddie Hosch, sales and marketing director for Firebreak Spray Systems, a closely held contractor that operates the AIG trucks.

``Since Sunday we've had somewhere between six and 10 saves,'' said Hosch, who was in Orange County with a truck spraying retardant on homes threatened by the Santiago fire in northeastern Orange County. ``It is effective, what we do.''

Firebreak Spray Systems' employees are trained in firefighting. Crays, who has worked for Firebreak since April, graduated from Riverside Community College's fire academy this year and has volunteered with the Riverside County Fire Department.

`Through the Roadblock'

Firebreak's red trucks look similar to fire department vehicles except for the blue-and-white AIG logo on their doors. They are able to go almost anywhere fire trucks go, Hosch said.

``We just went right through the roadblock right now,'' Hosch said by mobile phone from near the Santiago fire.

The California wildfires may cost $2.5 billion or more, which includes about $650 million for rebuilding structures and the remainder for the loss of cars, furniture, other household goods along with losses to businesses, Merrill Lynch & Co. economist David A. Rosenberg said in a report to investors yesterday.

AIG isn't one of California's largest home insurance providers. The two biggest are State Farm Mutual Automobile Insurance Co. and Farmers Insurance Group, neither of which have fire-protection plans similar to AIG's, according to spokesmen for the companies.

``We haven't looked at that yet,'' said Jerry Davies, spokesman for Farmers Insurance Group, which is owned by Zurich Financial Services AG. ``That's very new in terms of fire safety in terms of homes, but we don't have that.''

Referrals

Chubb Corp., based in Warren, New Jersey, has a service it calls Masterpiece Protection Network, which offers referrals to companies that help make homes more fire-resistant by clearing brush, replacing wood-shingle roofs and other measures.

AIG's Wildfire Protection Unit is in some ways a throwback to the early days of firefighting.

Until 1865, when the Metropolitan Fire Bridge Act was passed in the U.K., insurance companies had their own firefighters and were responsible for protecting their customers' homes and other buildings. That was the case in other countries as well, including the U.S. Customers were given medallions to place on their homes, and firefighters would look for their insurance company's ``firemark'' before extinguishing a blaze.

Some victims of the California fires may wish they had their own firemarks. During this week's wildfires, ``there were a few instances where we were spraying and the neighbor's house went up like a candle,'' Crays said.

 

You get what you pay for.

 

So, am I supposed to have a problem with this?

 

I hope not.

 

Why not Blackwater as a private police force?
This will, inevitably, be pointed out as a reason why "they" shouldn't tax us to pay for firefighters on the public dime. I have a real problem with this.

 

Tremendous idea.

 

Have you not seen Robocop? First they privatize the firefighters, then it's the cops, then next thing you know an out of control robot with twirly machine gun thingies is terrorizing all of us.

 

So every security guard should be deputized? Private schools outlawed? The government must be the only provider of every service?

 

Something tells me AIG's revenues from their California book of business will be going up, up up.

 

If you want to see why government took over the responsibility of firefighting in the first place, go rent "Gangs of New York." Certain things cannot be privatized without grave consequence. Public safety is one of those things.

 

Oh, there's a shock.
No one saying you should privatize police and fire.
AIG is trying to save itself some money. Does it not have that right?

 

I have a problem with them hosing down one house while the one next to it "goes up like a candle," and they do nothing to save it. I realize they didn't pay for that protection, but still ...

FWIW, candles don't exactly go up. Had he said like a gas-soaked rag, it would have been more descriptive and more accurate.