Inside this article:
- Wildfire season is year-round for many western U.S. states and Canadian provinces, and 2025 is predicted to be a higher-than-average wildfire season.
- The devastating southern California wildfires in January caused more than $30 billion in insured losses and forced some carriers to exit the market.
- The California homeowners’ insurance market has recorded a $10 billion underwriting loss over the past decade.
- Wildfire mitigation strategies can position insureds for greater access to coverage and property protection.
Once a seasonal threat, wildfires are now a year-round risk—reshaping insurance markets and compounding challenges across the U.S. and Canada.
The U.S. market appeared to be moderating before the tragic wildfires in southern California in January 2025 caused additional carriers to exit the market in the county’s most populous state.
More than 37,000 acres burned, including structures in both rural and urbanized areas, according to the California Legislative Analyst’s Office. Existing carriers writing policies in California continue to seek profitability in the wake of continued risks, higher rates and tighter capacity.
Predictions are dire for Canada this year. Dry, hot conditions this spring in British Columbia and much of the Prairies means that the danger level is high for wildfires in western Canada, according to The Weather Channel.
A higher-than-average season expected in the U.S.
The elevated wildfire outlook is based on many industry predictions. Private forecaster AccuWeather predicted in April 2025 that wildfires are expected to burn around two million more acres of land in the U.S. this year compared to the typical season. CFRA Research Senior Vice President Cathy Seifert said that the Los Angeles area wildfires may impact home insurance costs nationwide through a process known as cross-subsidizing. She added that at least 12 carriers in California have either dropped coverage or discontinued new policies since 2022.
The California homeowners’ insurance market has recorded a $10 billion underwriting loss over the past decade, largely due to pricing limitations and wildfire impact, according to a report earlier this year from reinsurer Howden Re. The firm claimed that the California FAIR Plan, which provides up to $3 million in residential coverage and $20 million for commercial properties, has “struggled to meet the needs of high-value properties affected by wildfires.” Morningstar DBRS estimated insured losses of the January 2025 southern California wildfires will exceed $30 billion.
“The January wildfires in and around Los Angeles caused havoc and we’re scrambling to determine the impact,” said Sylvia Ornelas, Associate Vice President, Director, Personal Insurance, Burns & Wilcox, Woodland Hills, CA. “I expect Wildfire rates to increase again although perhaps not as significantly as past years.”
The Wildfires market had been stable after a couple of relatively moderate wildfire activity years in 2023 and 2024 by recent standards, Ornelas said. The southern California events were increasingly challenging because they hit several communities that were not considered high-CAT areas based on historical data.
“Right now, we see carriers having a hard time modeling wildfires, which causes uncertainty in the market, Ornelas said. “The wildfire season is year-round.”
Right now, we see carriers having a hard time modeling wildfires, which causes uncertainty in the market. The wildfire season is year-round.
Wildfires have forced non-admitted carriers to reassess their risks in the regional market, similar to carriers operating Southeastern states like Alabama, Florida, and Georgia with the threat of hurricanes.
Canada faces high wildfire risks in 2025
Even before June, homeowners in northern Alberta faced evacuation orders, with one county faced with a state of emergency, according to The Weather Network. An ‘extreme’ fire danger rating is in place across much of western Canada because of unseasonably dry weather. Environment and Climate Change Canada is forecasting above-normal temperatures across Alberta specifically through October.
Based on data from National Forestry Database, over 8,000 fires occur in Canada each year, burning an average of more than 2.1 million hectares. Also, lightning causes about 50% of all fires but accounts for about 85% of the annual area burned in Canada.
While the 2024 wildfire season in Canada experienced below average activity, it was a record-breaking year for wildfires the previous year. More than 17.3 million hectares of land burned in Canada from wildfires from January 1 to December 31, 2023, according to Statista, which is by far most active wildfire year in Canada since records were first kept. The number of forest fires in Canada stood at around 5,475 that year.
Unfortunately, early indications suggest 2025 will look more like 2023 than the mild spring, summer, and fall of last year.
Preparing for wildfires means instituting mitigation strategies
Insureds can increase their chances of securing the capacity they need to be made whole, and to protect their property from wildfires by implementing risk mitigation strategies. Burns & Wilcox has contracted with Wildfire Defense Systems (WDS), a private company that specializes in wildfire mitigation and loss prevention services. We offer clients in some regions this additional layer of protection for homes against losses due to wildfires.
Ornelas has clients living in southern California communities devastated by the Eaton and Pacific Palisades fires whose houses were spared from damage due to the help of mitigation strategies, even though many neighbors experienced partial or total losses.
“There are simple steps you can take to protect your property and reduce some of the wildfire risk in the eyes of carriers,” Ornelas said.
This is increasingly important because carriers can utilize real-time satellite imagery that is available online, allowing them to view the property of homeowners applying for new or renewed coverage. This technology helps carriers make decisions on insurability because it allows them to view roof condition, the amount of brush around a structure, and more.
Wildfire mitigation tips for insureds include:
- Installing high-quality roofing materials to improve resistance to wind and fire damage.
- Installation of a tile roof, and/or updating a roof at least every 25 years.
- Closing eaves around a home.
- Installing ember resistant vending within a structure.
- Limiting trees, brush, and vegetation around the property.
- Using centrally monitored alarms and water shutoff devices.
“Do not wait until it’s hot outside,” Ornelas said. “You want to stay on top of your mitigation efforts throughout the year.”
Gaining capacity requires creativity
While California is the most stressed Wildfire market, Ornelas said several Western U.S. states remains at elevated risk for carriers, including Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Washington and Wyoming. The wave of wildfires in Colorado in recent years has prompted the state to launch its own FAIR plan for wildfires. Insureds in any of those states should work with their brokers and agents to find creative ways to secure the amount of Wildfire coverage they need to be made whole in a worst-case scenario.
“We may need to get creative to find a solution for Wildfire risks, especially in California, but in other states as well,” Ornelas said. That creativity can include layering and finding markets for primary and excess fire coverage. Inflation has caused the replacement cost value (RCV) of homes to rise, while such wildfire data as brush scores and past claims can significantly alter the availability of cost and cost of replacement.
We may need to get creative to find a solution for Wildfire risks, especially in California, but in other states as well.
RCVs are particularly high in California, as much as $1,200 to $1,500 per square foot, Ornelas said. Comparatively, RCVs in other elevated wildfire risk states like Colorado may be closer to $300 per square foot, highlighting how difficult it can be for many clients to get affordable coverage in California.
For these and other reasons, homeowners may consider partnering with an experienced E&S wholesaler, especially as rates, deductibles, and coverage restrictions continue to tighten. A partner like Burns & Wilcox can help you stay ahead of market shifts, offer risk mitigation strategies, and provide access to exclusive markets.
Know your policy
Homeowners should know exactly what their policies cover, including the fine print, since carriers are increasingly adding restrictive language to terms and conditions. They often require some Residential Property Wildfire policies to have higher deductibles or unwanted supplements or sub-limits that reduce the availability of full coverage. Water damage, for example, is a potential supplement written into some policies.
Some carriers believe they can attract new business through high deductible, low-cost policies. “That strategy can attract new clients, but those insureds who suffer a loss are often left with significant out-of-pocket costs,” said Ornelas.
“Cheaper is not always better,” she added: “We always want to provide the most comprehensive coverage possible. It is imperative that you read the terms and conditions and the fine print of your policy.”
Brokers and agents can also work with insureds to itemize home contents to provide more complete coverage. Relatedly, insureds should strive to confirm accurate home values given the variability of the housing market in many western states. That may require a home inspection at least every three years so that limits are properly amended.
“We factor in inflation whenever possible at renewal,” Ornelas said.
