Wildfires have created instability within risk transfer markets. Here’s a path forward

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The escalating frequency and damage of catastrophic WU fires are accelerating faster than social systems can adapt, presenting disruptive and systemic risks. Among the most pressing: the destabilization of the insurance industry. This crisis stems from a failure to accurately capture and model risk in the built environment, including fire spread into development and the structure-to-structure nature of WU fire loss. To effectively translate wildfire hazard into a quantifiable built environment risk, policymakers and researchers need a comprehensive and collaborative systems approach that prioritizes advanced risk modeling, mandates changes to the built environment through stricter codes, and coordinates efforts across all levels of government and industry. How did we get here? A long-standing desire to reduce perceived threats and increase the value of residential development in fire-prone landscapes perpetuated a cycle of fire exclusion. Aggressively suppressing fire in the western United States has allowed excess flammable vegetation to accumulate, exacerbating hazard. Climate change made things worse by increasing fire activity and fire season duration. Landscapes loaded with highly combustible fuels, including the homes themselves, represent a debt that has become due.