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Forest fire insurance
Once considered secondary threats, wildfires have now become a major risk.
According to Swiss Re, global insured losses relating to forest fires are increasing by about 12% per year, the fastest growth rate of any natural hazard.
The year 2025 marked a turning point in the evolution of this risk. The Los Angeles wildfires, notably the Palisades and Eaton fires, alone generated 41 billion USD in insured losses and 58 billion USD in economic losses. These figures make the California wildfires the most memorable wildfire disaster ever recorded.
According to data published by Atlas Magazine, wildfires resulted in 70 billion USD in insured losses between 2015 and 2024, compared to just 9 billion USD during the 2005 to 2014 decade.
Another significant figure is that, over the 2015–2024 period, wildfires accounted for approximately 10% of insured losses related to natural disasters, compared with just 2% before 2015.
The nature of wildfires has, therefore, changed radically over the past decade. Once regarded as rural risks with high frequency and low severity, wildfires have become catastrophic risks with low frequency but extreme severity, capable of destroying densely populated urban communities. Furthermore, since the year 2000, the area exposed to this risk has expanded by approximately 35%, creating a land-use planning challenge. This is particularly true in the United States and Canada. In Southern Europe and North Africa, insurance pools have proven to be clearly insufficient to cover this risk which continues to expand its geographic reach.
This accumulation of insured values requires significant recourse to reinsurance. The insurability of wildfire risk depends not only on available financial capacity but also on its pricing, which in turn depends on risk prevention and management.
