As rising global temperatures lead to more frequent and severe natural disasters, the cost of wildfires is now at least equal to, and in some cases, surpasses that of hurricanes, according to Insurance Business America. 

What's causing more destructive wildfires?

As the news outlet detailed, Karen Clark, founder of catastrophe modeling firm Karen Clark & Co., stated that wildfires are becoming an economic threat as large as hurricanes due to their size and scale. This is quite astounding when you consider that hurricanes typically impact a much larger area than wildfires.

However, with the combination of more people moving into wildfire-prone areas, construction costs skyrocketing, and climate events becoming more intense, it creates a recipe for disaster when it comes to economic damages from wildfires. 

"A couple of years ago, when KCC released our first wildfire model, it showed insurers that there were large-loss scenarios in the tail of their loss distributions from wildfires that were comparable to hurricane losses," Clark told Royal Gazette, according to Insurance Business America.

It's estimated that the devastating January 2025 California wildfires alone will cost insurance agencies around $10 billion, which is half the average cost of damages from tropical cyclones in the U.S. from 1980 to 2022, according to the National Oceanic and Atmospheric Administration.

Why should you care about worsening wildfires?

If you live in high-risk areas for wildfires, it's important to be cognizant of the fact that your property insurance premiums will likely increase, and some insurers have even exited the market or reduced coverage to limit the amount they pay out in claims. 

Some homeowners have had to resort to state-backed insurance programs such as the California FAIR Plan, which is a last-resort option for those who can't find affordable private insurance. It does provide basic fire coverage, but it's much more expensive and has limited protection compared to traditional plans. 

All across the globe, homeowners are facing higher insurance rates and difficulties finding companies to insure their homes, in some cases. That can eventually harm the housing market if people can't find affordable insurance. That's why addressing the shifting climate is crucial, as failing to do so will be even more expensive and potentially destabilize societies and the economy. 

As for mitigation efforts, Clark explained that firefighters in California now prioritize homes that have fire-resistant materials. "First of all these LA fires were very high-wind events … firefighters are trying to make real-time decisions as to which homes they're going to try to save; they're going to naturally look at areas where there is good mitigation and they're most likely to be successful," she said.

What's being done to protect homeowners?

More homeowners are being encouraged to fireproof their homes with measures such as fire-resistant shingles, siding, windows, and vents, removing flammable items, and creating a sizable defensible space to shield properties from embers. 

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Insurers are also utilizing advanced modeling, coupled with machine learning, to help predict high-risk zones, which will aid in estimating insurance rates. 

One of the best things to do to protect your home and the planet, however, is to switch to all-electric appliances, invest in solar panels, or even upgrade to an electric car, as these decisions can reduce the planet-warming pollution that drives wildfires.

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