Gallagher: Wildfire seasons expanding beyond traditional boundaries

By Mia MacGregor

July 16 - (The Insurer) - Wildfires are evolving into a year-round threat due to climate change, urbanization and changing land use, with significant incidents now occurring outside traditional wildfire seasons in regions such as the U.S., Japan and South Korea, according to a new report from Gallagher.

​​The World on Fire 2025: Impacts of an Expanding Wildfire Season report underscores the rising severity and frequency of wildfires globally, resulting in greater economic losses and higher insurance costs.

Since 2015, wildfires in the U.S. have caused more than $111 billion in direct economic damages, affecting insurer profitability, with 15 of 19 billion-dollar loss events occurring in the last decade.

Businesses face multiple impacts from wildfires, including business interruption, supply chain issues, tourism income loss and health effects from smoke and air pollution.

Utility companies risk infrastructure damage and liability for ignitions, leading to preemptive blackouts that disrupt operations. Gallagher advised businesses in high-risk areas to invest in backup power solutions to mitigate blackout impacts.

Gallagher suggested that insurers are reassessing their approach to wildfire risk, looking for more detailed and granular property risk information based on construction, occupancy, protection and exposure.

"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 U.S. property at Gallagher.

Additionally, the report noted that insurers are turning to third-party risk scoring tools to assess, price and manage these exposures.

“That wildfire score can really dictate the amount of coverage insureds get and at what cost,” Bane said. “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.”

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

The report emphasized the importance of resilience measures, including home hardening and community planning, to mitigate wildfire risks. Controlled burns and strategic land management are crucial in reducing available fuel loads and enhancing fire suppression efforts, Gallagher noted.

The insurance industry is encouraged to collaborate with clients to build resilience, with a focus on innovative solutions to safeguard communities and businesses against the growing threat of wildfires.

“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,” said Steve Bowen, chief science officer at Gallagher Re.