Losses associated with wildfires are larger and more common than ever before and this trend shows no signs of slowing down. Due to effects of climate change, increased drought, warmer and drier conditions, fire seasons have stretched in length, creating an ever more precarious situation for those exposed to wildfires. As the U.S. population increases and residential development extends farther from metro areas, more homes and businesses face wildfire threats than in years past.
The cost of these wildfires is staggeringly high and will only continue to climb. 2020 represented the costliest year for insurers in wildfire history. In response, many insurers are sharply ratcheting up prices, sometimes by a factor of 10. Some insurers are refusing to underwrite risks in wildfire-exposed geographies altogether. Those insurers that remain are choosing not to renew policies at unprecedented rates. In 2019, insurers in California declined to renew nearly one-third more homeowners' policies than they declined to cover in 2018, most commercial property insurers face similar challenges.1
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1Pender, Kathleen, "As California wildfire risk increases, insurance nonrenewals surge," San Francisco Chronicle Sept. 20, 2020.