Wildfire Crisis in the USA - Lessons for the Insurance Industry

The recent spate of wildfires across the United States has once again underscored the devastating impact of climate change on our ecosystems, communities, and economies. States like California, Oregon, and Washington have borne the brunt of these disasters, with unprecedented destruction of property, displacement of residents, and loss of natural habitats.

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Beyond the immediate damage, these wildfires are reshaping the landscape of the insurance industry and exposing significant gaps in risk coverage and preparedness.

The Growing Frequency of Wildfires

Wildfires have become an almost annual occurrence in the U.S., with their frequency and intensity increasing at an alarming rate. According to the National Interagency Fire Center, 2024 was one of the worst years for wildfires, with over 10 million acres burned across multiple states. This destruction translated into an estimated total economic loss of $20 billion, reflecting the widespread devastation caused by these fires.

The Challenge of Being Underinsured

A significant portion of these losses remains uninsured. Reports suggest that out of the $20 billion total loss, insured losses accounted for approximately $10 billion, leaving $10 billion in uninsured losses to be borne by individuals, businesses, and communities. This highlights the widening gap in risk protection, particularly in high-risk areas where wildfire coverage is either unaffordable or unavailable.