As events during the past 12 months have demonstrated, every season is now wildfire season, and fires in urban areas are an increasingly growing concern for communities, businesses and insurers alike.
Getting your Trinity Audio player ready...

Key insights

  • The concept of a "wildfire season" has been turned on its head, with major events in Japan, the US and South Korea in 2025 occurring outside the traditional fire season.
  • In the US, the deadly California wildfires in January 2025 are indicative of increasing urban exposures, as climate change and property development put more areas at risk.
  • Wildfires have multiple business impacts. Beyond the direct threat, secondary impacts include business interruption, supply chain disruption, loss of tourism income and the human health impacts related to smoke particles and air pollution.
  • In some regions, utility companies use preemptive blackouts during high-risk periods to limit their liability for fires caused by equipment. These outages can disrupt daily activities and complicate the response of emergency services.
  • Just as communities threatened by wildfires are implementing resilience measures, businesses need to explore what mitigations are needed to better protect their people and property.

Rise of the all-season wildfire hazard

Wildfires in the northern hemisphere — including fires in Canada, Japan, Siberia, South Korea, the US and even the UK — suggest a changing dynamic where highly destructive wildfires can occur in any season of the year, not just in the summer months.

In January 2025, California saw significant devastation from intense and fast-moving wildfires in and around Los Angeles. The deadly blazes — fueled by strong Santa Ana winds, coupled with a period of scarce rainfall and extremely dry vegetation — claimed as many as 30 lives, destroyed 16,251 structures and burned over 56,834 acres (23,000 hectares).

In March 2025, a series of fires in the southeastern and central parts of South Korea claimed 32 lives and destroyed up to 5,000 properties, burning 256,989 acres (104,000 hectares) in just one week. An attribution study suggested the events that occurred were twice as likely — and 15% more intense — because of climate change.1

The combination of a warming world, changing land use and urbanization is causing more severe losses in regions around the world, both areas that have been historically prone to the peril as well as areas that have had little or no prior exposure.

"Seeing such significant fires during winter is certainly abnormal," says Chief Science Officer Steve Bowen, Gallagher Re. "We're facing a new reality regarding the seasonality of wildfires."

With traditional markers for wildfire seasons becoming less applicable, communities must address wildfires as a year-round risk. The evolving nature of the threat, with events increasing in frequency and severity, has resulted in larger economic losses and higher insurance costs.

As the insurance industry reevaluates its appetite for wildfire risk, businesses are looking at how they can better protect their people and property from losses.

“
We're facing a new reality regarding the seasonality of wildfires.
Steve Bowen, chief science officer, Gallagher Re

Beyond direct losses: The rising secondary impacts of wildfires

Since 2015, the US has recorded over USD111 billion in direct economic damages from wildfires. Of the 19 US wildfire events with losses in the billions, 15 occurred in the last decade. These losses have had a significant impact on insurer profitability.

The impact on insurability has direct implications for property owners looking for wildfire coverage. As carriers reassess their approach to exposure management and how much capacity they're willing to deploy in high-risk areas, it can become challenging for property owners to get the coverages they need.

The insured losses from January's Los Angeles wildfires are anticipated to reach USD40 billion, making it the costliest series of wildfire events for the insurance sector to date. From an insurance claims perspective, the losses are comparable to a so-called "peak peril" event, like a hurricane. Combined losses from Hurricanes Helene and Milton in 2024, for instance, were around USD44 billion.

The direct financial impact of such events on businesses and communities is significant, but as wildfires become a more notable driver of annual catastrophe losses, insurance carriers are taking steps to manage their exposure to secondary perils.

The secondary impact of wildfires can be severe. In February and March of 2025, heavy rain in Southern California caused flash flooding, mudslides and debris flows, which triggered evacuation orders for residences near burn scars.

Other secondary economic impacts include loss of attraction for tourism and hospitality businesses, and lengthy business disruption for agricultural industries due to heavy losses of crops and livestock.

Meanwhile, power utilities face the prospect of physical damage to infrastructure, as well as potential liability for ignitions caused by their equipment. As utility firms seek to mitigate their exposure to litigation, power companies regularly carry out preemptive blackouts during periods of heightened wildfire activity. For businesses and communities, such power outages can cause costly disruptions to day-to-day operations regardless of whether there has been an actual physical loss.

"Restoring electricity quickly is a key component of recovery, so shutting off power to entire communities isn't a viable solution," observes Ian Giammanco, lead research meteorologist and managing director of Standards and Data Analytics at the Insurance Institute for Business and Home Safety (IBHS). "We need to take lessons learned from decades of research into building wind-resistant electrical infrastructure and apply them to wildfire scenarios," he adds.

In the short term, businesses located in wildfire high risk areas should anticipate further proactive blackouts and consider investing in backup solutions to mitigate the impact on business continuity and potential losses unlikely to be covered by property policies.

Another ongoing concern in many cities is air pollution with wildfires impacting overall air quality. This environmental impact is a factor that rose to attention following one of Canada's worst wildfire seasons in 2023, when smoke from fires in Quebec cloaked a number of major cities, including Toronto and New York City.

The particles impacted air quality as far south and west as Washington, Chicago and Minnesota, posing serious health risks, causing the cancellation of sporting events and prompting companies to urge staff to stay indoors.

As both the frequency and severity of wildfires escalate, the extended impacts across society underscore the need for comprehensive strategies to mitigate risks and enhance recovery efforts. Addressing these challenges requires understanding the root cause of wildfire losses and collaborating across sectors for innovative solutions to safeguard communities and businesses.

Climate change and urban sprawl: Key drivers of wildfire loss

Weather whiplash

Analysis of weather conditions preceding the California wildfires points to the influence of long-term human-induced climate change on wildfire risks.2 While the Santa Ana winds exacerbated the spread of the fires, the extreme changes in weather conditions over a short period of time, also referred to as "weather whiplash," is cited as a contributing cause.

Weather whiplash describes the phenomenon whereby very wet periods, which promote rapid vegetation growth, are followed by very dry periods. This increases the amount of dry vegetation available to fuel the spread of the fire. Masses of dry vegetation, combined with strong winds, mean a wildfire can quickly spread at speeds of up to 20 mph in optimal conditions. Sloping terrain also plays a factor, with fires tending to spread uphill.

The dry autumn and winter that preceded the Los Angeles fires were due to the La Niña weather pattern — the cooler phase of the El Niño-Southern Oscillation (ENSO) cycle — that, in combination with global warming, is believed to have increased the likelihood of extreme wildfire weather by around 75%, according to research from the National Oceanic and Atmospheric Administration (NOAA).

Climate change influences the peril in other ways, too. Scientists investigating the increased frequency and severity of US wildfires in 2020 also found higher average temperatures had driven up the population of bark beetles.

As increasing temperatures and limited rainfall placed greater stress on trees, mass attacks by much larger bark beetle populations led to more diseased and dying trees, ultimately adding more dry fuel to the landscape.3

Swings in weather and precipitation patterns, exacerbated by the ENSO climatic cycle with longer, hotter and drier seasons, increases the risk of wildfire in South and Southeast Asia, Central America, northern South America and Australia.

Wildland urban interface

While fire remains a significant threat for rural areas, there's also a considerable rise in urban fires due to the impact of urbanization and more frequent and severe wildfires.

As witnessed in wildfire events in California in 2025, Jasper in 2024 and Maui in 2023, fires that begin in wildland-urban interface (WUI) — the area where urban development and wilderness mingle — are crossing over into urban areas, impacting entire communities in the process.

Far from being a new phenomenon, cities with a history of urban fires — such as San Francisco, Chicago and London — retain more fire-resilient infrastructure and knowledge than other cities. San Francisco, for instance, operates 44 neighborhood fire stations: twice as many as Los Angeles.

“
I remember watching live television coverage during the fires in Pasadena and Altadena, where a reporter remarked, 'I always thought the big one would be an earthquake; I didn't think it would be a fire.'
Ian Giammanco, managing director of Standards and Data Analytics at IBHS

"We're essentially racing against the hazard," says Giammanco. "Some of the issues we're facing have developed over multiple generations. When we built our communities, we overlooked the historical threat of urban fires. We also suppressed fires from the 1920s until the early 2000s, which shaped our approach. Throughout that period, we rarely discussed the steps homeowners should take to prepare for wildfires.

"I remember watching live television coverage during the fires in Pasadena and Altadena, where a reporter remarked, 'I always thought the big one would be an earthquake; I didn't think it would be a fire'," he continues.

The increase in population growth and development within the wildland-urban interface (WUI) — which has grown by as much as 40% in California — is further amplifying fire risk.

As wildfire claims rise, insurers aim for better risk assessment

Insurance carriers' appetite for wildfire risks has been more constrained in recent years. As underwriters take steps to better control their exposure to wildfire, they're looking for more detailed and granular property risk information based on construction, occupancy, protection and exposure (COPE).

"For clients with assets in a wildfire zone, any data analytics we can include with our submissions to underwriters can make a big difference to renewals, because carriers are using more technology and data points to underwrite this risk," says Martha Bane, managing director of US Property at Gallagher.

Despite the anticipated challenges for loss-hit accounts, US insurance carriers are demonstrating more willingness to supply capacity across the full range of property risks in 2025. But this dynamic may start to shift again if there are surprise losses during the second half of the year.

Increasingly, insurers are turning to third-party risk scoring tools to assess, price and manage wildfire exposures. With this technological support, they adjust pricing and limits accordingly and, in some cases, can decline to provide cover where a risk score exceeds a certain threshold.

The California Department of Insurance (CDI) announced proposals last year to enable wildfire catastrophe models to be used in the pricing of risks.4 Cat modeling for wildfire risks is in its relative infancy, and with scarce historical data to inform models, it will take time for carriers to fully embrace modeled outputs when determining risk-based pricing.

"That wildfire score can really dictate the amount of coverage insureds get and at what cost," says Bane. "But when clients do have a significant wildfire score, we can work with our loss control teams to establish a checklist for how they can harden their assets."

Improving resistance to wildfires at a property and community level

Typical measures to improve a building's wildfire resilience, sometimes called "home hardening", include using fire-resistant roofing materials such as clay tiles, replacing flammable siding with stucco, brick or concrete, creating a minimum 5-foot defensible perimeter, clearing brush around the property and removing wooden fences close to buildings.

The IBHS concept of the "wildfire-prepared home" outlines a base-level standard for wildfire-resistant construction. In addition to a Class A fire-resistant roof and a 5-foot perimeter, this includes a minimum 6-inch non-combustible clearance at the base of exterior walls.

"Resiliency for wildfire-prepared neighborhoods and homes should be pushed to a medium level to gain some benefits, but it's important to recognize that you need to meet a specific threshold, " says Faraz Hedayati, lead research engineer at IBHS. "You cannot simply pick and choose which mitigation measures to implement."

Lahaina's "miracle house" shows benefits and limitations of wildfire resistance measures

In the aftermath of the devastating blaze in Maui, Hawaii, in 2023, pictures circulated in the media of a red-roofed house in Lahaina that appeared to have escaped the destruction unscathed. Home hardening carried out by the owners was credited with greatly improving the building's resilience to wildfire.
Similarly, during the Los Angeles fires, houses that had implemented resilience measures were more likely to have survived.
The IBHS conducted on-site assessments following both events, and according to Hedayati, the real story behind the survival of the Lahaina house is more nuanced.
The mitigating factors implemented by the homeowner — replacing the roof with wildfire-resistant materials and a 3-foot defensible space around the property — helped to reduce the damage to the building. However, it sustained damage on its north side due to its proximity to a neighboring structure and tree, which both caught fire.
"There were many people and news stories that tried to portray that house in a way that was not really realistic," says Hedayati. "Some, but not all, of the elements that we require to reduce the vulnerability were in place.
"The homeowner had changed the roof and created a zero-to-3-foot space around the property due to termite issues. But the northern side of the structure had some level of damage because of proximity to a tree and a neighbouring structure, which was burned up."
"A building is only as strong as its weakest part. With wildfires as chaotic as they are, leaving gaps by aiming for medium resiliency means gambling with failure. You might see some benefit, but it may not be enough," he adds.

Role of community planning in wildfire resilience

Land management and intentional use of fire play crucial roles in wildfire management. Controlled burns set by firefighters can aid wildfire suppression by clearing brush and reducing the available fuel load for unexpected ignitions.

With more people moving into the WUI, however, authorities are looking more closely at where properties are being built and community planning with wildfire risk in mind.

High-risk areas will continue to pose a challenge. Many of the original residents of Paradise in Northern California have relocated since the devastating Camp Fire in 2018, which claimed the lives of 85 people.5

For the recent California wildfires, there was a misconception that the scale of devastation seen in Los Angeles was due to inadequate building codes. Rather, it was the age of the buildings that drove such extreme loss, according to Bane. Many of the homes destroyed were older structures that predated current building codes.

Rebuilding properties in accordance with contemporary codes should make communities more resilient in the future. "When you talk about making that community more resilient, it takes more than just the codes in place right now," says Gallagher's Bane. "There would have to be significant investments from the government and cities to go above and beyond what the code is requiring."

Furthermore, while wildfire-prone Southern California has highly skilled and trained firefighters, other parts of the country have a greater reliance on volunteer firefighters, who may not have the same level of training.

With the wildfire threat increasing outside of the traditional season and regions, these rural fire services could face extreme events that they lack the personnel and training to properly combat.

"With heavy fire damage also observed in parts of Europe, Asia and Australia recently, this calls for a global response and collaboration to enhance fire suppression efforts," says Gallagher Re's Bowen.

California schools set example for wildfire resiliency, reducing total cost of risk

As wildfires increasingly threaten California and other states across the US, essential facilities like public schools are proactively enhancing their resilience and fire preparedness. The underlying perspective shift is crucial as wildfires have evolved from a primarily rural and urban interface concern to a true urban challenge, one we aren't as well prepared for as we assumed.
John Chino, senior vice president for Gallagher Public Sector division, highlights 2017 as a pivotal year, marking the first significant wildfire loss for the public sector in California. The lessons learned since have led to a more robust range of mitigation strategies, better planning, and more detailed risk assessment, all crucial to reducing losses during recent events.
Public school campuses, typically surrounded by large playing fields and little vegetation, naturally mitigate fire spread, allowing fire departments to stage their operations during a fire event on these sites. The playing fields are akin to a moat surrounding the property, explains Chino, giving property owners a false sense of security that they would be protected against significant wildfire losses.
However, the unprecedented intensity of the 2017 California wildfires, with a faster spread and hotter temperatures, exposed such properties to secondary damage from smoke, soot and ash. Schools in Ventura County, for example, faced a USD20 million loss despite no direct flame contact to their main structures. It became clear that another level of preparedness was needed.

"Wrapping" buildings to protect valuable contents

Sealing buildings effectively reduces secondary damage risks. While more traditional response methods, like sealing windows and doors and shutting down HVAC systems, are still necessary, their effectiveness quickly increases as staff and students are evacuated promptly and the buildings are sealed off via a "Seal Team" provided by a commercial vendor.
"The cost of sealing a building is relatively reasonable, averaging around USD5,000 per building." According to Chino, this investment "pales in comparison to the expenses associated with smoke damage." Based on experiences from 2017 and 2018, smoke-related damage, such as having to restore entire library collections, can quickly escalate the total insurance claim costs into the seven and even eight-digit territory.
Other methods of protecting contents, including the use of fire-retardant foams or water to protect building facades, are more often included in fire response plans. Schools are also improving access to water sources and reducing surrounding vegetation. Some facilities use goats to keep the brush back in hard-to-reach areas, which are common in the steep hillsides in California.
Several of the school district self-insured pools have hired private firefighting services for rapid, focused responses. These licensed services (Class VI) complement public fire suppression efforts by proactively using water or retardant foam to shield individual buildings from sparks and embers. These licensed fire services can provide valuable support, particularly in large-scale emergencies when the local and regional services are at a maximum capacity protecting residential neighborhoods.

Using data for early warnings

Data and forecasting technology have become a crucial ally for school districts striving to build resilience. One example is Gallagher Forecast, an online analytics platform that visually transforms the client's property information into actionable insights and catastrophe risk analytics. Detailed insights help school districts make more informed decisions about the distribution of resources before, during and after an event.
While resilience measures represent a substantial financial commitment, school districts more often receive considerable value for their investment. In so doing, communities can continue to rely on the essential services these institutions provide during and after an event.
"During the Pacific Palisades and Eaton Fires, we saw that many pool members who were notified in time to evacuate their buildings and take protective measures didn't experience significant damage," says Chino.

Business and commercial building preparedness can mitigate wildfire risks

Just as communities threatened by wildfires are implementing resilience measures, businesses need to explore what mitigations are required to protect their bottom line against property and business interruption losses.

These include proactive fuel management, such as clearing undergrowth and trimming and thinning trees, creating a defensive space around properties, and integrating fire-resistant building materials into roofing and cladding. In addition, maintaining roads and other access routes enables emergency services to access affected areas more easily.

Since the Palisades and Eaton fires, there have been renewed calls to ensure water supplies are sufficient and that utilities are decentralized where possible, with a role for renewable energy and backup generators.

Improving the resilience of larger commercial spaces, like big-box retailers or manufacturing facilities, can be more complex. According to IBHS' Hedayati, they often have specific vulnerabilities, such as vehicle loading docks, which can allow fire embers to enter the building without proper mitigation, and large windows, which are more likely to fail under extreme temperatures.

Additionally, commercial buildings typically have trucks and cars parked nearby, which can increase the risk of ignition for structures, exacerbated by EVs and EV charging units.

For all businesses, regular education and awareness programs on fire safety and up-to-date emergency plans, including details of evacuation routes, assembly points and communication channels, are essential to keep employees safe.

Businesses should also test their continuity plans regularly, including emergency drills and close coordination with local fire departments to enhance the response time for tackling wildfire threats.

Collaboration among public and private actors and guided preparedness can benefit resilience building across sectors. Adequate and timely fire risk assessments can lead to a more efficient allocation of resources before, during and after wildfires, as well as to more efficient mitigation measures that can drive losses down in time.

Communities, businesses and individuals can all contribute to building safer environments with individual actions, but strategic planning from experts can make a larger-scale difference. The insurance industry continues to play a crucial role through insights, resources and expertise as it partners with clients in the public and private sectors to build resilience against wildfires.

"Engaging with local communities to promote sustainable land management and raising awareness about the consequences of our actions can make a significant difference. Let's remain hopeful and proactive," says Gallagher Re's Bowen.

"By working together to address these challenges, we can protect our environment and pave the way for positive change to ensure that we safeguard our planet for future generations."

CONNECT WITH US

Published July 2025

Sources

1Stanway, David. "South Korea's Deadly Fires Made Twice as Likely by Climate Change, Researchers Say," Reuters, 1 May 2025.

2Lindsey, Rebecca. "The Weather and Climate Influences on the January 2025 Fires Around Los Angeles," NOAA/Climate.gov, 19 Feb 2025

3"The Impact of the Bark Beetle on Wildfires," Western Fire Chiefs Association, updated 17 Sep 2024.

4"Commissioner Lara Announces Next Phase of Sustainable Insurance Strategy to Safeguard Californians' Access to Insurance," California Department of Insurance, 14 Mar 2024

5Vigliotti, Jonathan. "Paradise Residents Who Relocated After Devastating Camp Fire Still Face Extreme Weather Risks," CBSNews, 12 Jun 2024.