The Velvet Rope Economy by Nelson D. Schwartz

Author:Nelson D. Schwartz
Language: eng
Format: epub
Publisher: Knopf Doubleday Publishing Group
Published: 2020-03-02T16:00:00+00:00

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In many ways, the erosion of public sector firefighting and the rise of private services for those who can afford them is a return to what prevailed in the United States in the eighteenth and nineteenth centuries. Back then, the economy was more laissez-faire and citizens couldn’t rely on the government for basic services. Before the Civil War, private groups of volunteers would form firefighting companies and collect fees for saving homes or businesses in the event of a disaster. In a few cases, different groups of private firefighters would arrive at a conflagration at the same time and battle each other instead of the fire. There is a scene showing just that in the movie Gangs of New York. The tensions in California today between private firefighters and public ones are a contemporary echo of such nineteenth-century conflicts.

Even earlier, insurance companies employed their own firefighters to protect the properties they had underwritten, said Fran O’Brien, a senior vice president at Chubb. In fact, in the late 1700s, one of the predecessor firms that formed Chubb, the Insurance Company of North America, hired firefighters to work on their behalf in Philadelphia. In some cities, buildings had what were called fire marks, iron plates showing the logo of the insurer who protected the house. Chubb is today the world’s largest publicly traded property and casualty insurer but its homeowners’ coverage is focused on affluent property holders. “We do offer broader coverage than the mass market carriers,” said O’Brien. “We’re aimed at clients who want a different experience. In every market, there’s an insurance company that could be cheaper but we have a more service-oriented approach.”

Chubb began offering the private fire protection in thirteen states in 2008, and has since extended it to eighteen states. Chubb doesn’t charge extra for the coverage—instead, it’s built into the cost of the premium, which is why Dick Fredericks only vaguely remembered having it as part of his policy. Chubb doesn’t pick which properties are rescued by private firefighters—that’s in the hands of WDS, and it depends on the exigencies on the ground, not the value of the home.

Nevertheless, said O’Brien, “we do look for a return on the value of the program and we have to cover the cost in the premium. Over the course of ten years, given all the money we’ve put in, we’ve saved enough properties that it pays for itself.” In 2017 alone, Chubb’s service through WDS served one thousand homes and saved sixty-one properties that the company believes would otherwise have burned to the ground. Given that the 2017 California wildfires struck some of the most expensive real estate markets in the country—Santa Barbara, Bel Air, Napa, and Sonoma—that’s a potential savings of hundreds of millions of dollars.

Besides the private fire protection, Chubb offers its well-heeled customer base other benefits in the event of a disaster that run-of-the-mill insurers don’t provide. Before a hurricane, Chubb will move art or other valuables to a safe place for policyholders.

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