By Ryan D'Amario
This is the first of a three-part series of articles derived from Verisk’s new report, A Holistic Strategy for Wildfire Risk in Transition.
When wildfire activity and insured losses diverge, insurers gain insight on the complexity of this peril and why it demands an enterprise-wide view of the risk. The experience of 2025 was a case in point, captured in diverse Verisk data.
- Across the 14 states included in Verisk’s wildfire risk analysis, wildfire counts rose less than 3%, while acres burned fell nearly 60%.
- Fire and smoke claims rose 60% year over year, according to ClaimSearch.
- PCS figures show wildfire claims from declared catastrophes increased nationally by nearly 500% from 2024 to 2025, while total losses were up nearly 2,000%.
Understanding wildfire risk requires more than measuring the hazard. It requires understanding what is exposed, how vulnerable it is, and what it will cost to recover.
Industry results reported by Verisk and the American Property Casualty Insurance Association show wildfire’s sizable financial impact. The U.S. property/casualty industry saw a strong first half of 2026, with an estimated net underwriting gain of $31.7 billion, up from $11.6 billion in the first half of 2025, which was significantly affected by catastrophe losses from the Los Angeles wildfires. Risks with wildfire exposure remain harder to place, price, and manage despite more favorable market conditions for some other catastrophic risks.
It takes more than the hazard measures of fire counts and acreage to fully understand wildfire loss potential. Hazard, exposure, vulnerability, and rebuilding economics all interact at any given location.
The reconstruction cost factor
Consider how reconstruction cost demonstrates the effect of rebuilding economics on loss outcomes: U.S. Census data shows that average construction time for a contractor-built single-family home is about 63% longer than it was in 2000, while labor costs are climbing more than twice as fast as the cost of materials, according to Verisk Xactimate data. That pressure affects replacement cost adequacy long before it influences a claim, Verisk’s recent 360Value Quarterly Reconstruction Cost Analysis shows.
Faced with so many cross-currents, carriers continue to manage capacity, risk appetites, and exposure concentrations in high-hazard areas. California FAIR Plan exposure has grown 250% from 2022 to June 2026, reaching $768 billion, while Colorado has formed a new FAIR Plan, even amid a generally softening property market. Meanwhile, regulators seek simultaneously to safeguard insurers’ solvency, keep coverage available, and protect consumers’ interests. The industry can respond effectively to each of those pressures only through connected knowledge.
Building a connected view of wildfire risk
Verisk’s new report is designed to better connect the view of wildfire risk for insurers, reinsurers, risk professionals, regulators, and others interested in seeing the industry manage this peril proactively, not reactively. This view requires combining an array of signals:
- Market conditions and capacity
- Factors driving loss
- Property-level risk selection
- Near-present catastrophe modeling
- Regulatory readiness
- Claims response and recovery
- State-level variation
- Mitigation
- Community resilience
As wildfire risk continues to evolve, the goal is to help decision-makers across underwriting, claims, portfolio management, risk, and strategic functions better understand loss drivers, potential new sources of pressure, and how those trends may affect insurance availability, profitability, and market health for the long term.
Read the full report, A Holistic Strategy for Wildfire Risk in Transition.
- Catastrophe Modeling
- Claims
- Community Hazard Mitigation
- Personal Property
- Wildfire
- Catastrophes
- Claims Data Solutions
