California Wildfires And The Future Of Wildfire Risk Modelling

The impacts of an insurance loss this large so early in the year could ripple through the industry, but greater uptake of modelling solutions may help in the long run.

By the end of January 2025, wildfires in Los Angeles had destroyed or damaged over 18,000 structures, claimed at least 29 lives and forced approximately 200,000 residents to evacuate. This event is destined to become the costliest wildfire in U.S. history, exceeding the ~$12 billion (2024 USD) loss for California's 2018 Camp Fire. The two most damaging fire complexes, the Palisades and Eaton fires, burned around 24,000 and 14,000 acres respectively.

Current insured loss estimates stand at up to $45 billion – representing roughly one-third of the global insured losses for 2024 – and occurred within just the first two weeks of the year. This means that many U.S. primary insurers with direct exposure to these fires will have already used up a significant proportion of their catastrophe loss budgets