Author: John Putnam Since the original wildfire article with this title was written six years ago, the frequency and severity of these real-world natural catastrophe learning laboratories continue to challenge our understanding of the insurance mechanism and its ability to assist policyholders to recover after such events. While we could focus on the expanding world of extreme natural catastrophes, this brief review will share additional thoughts or lessons on wildfire catastrophes that just keep challenging us, front-line insurance professionals. Let’s do a quick survey of the new wildfire realities that have changed in the past six years. On October 20, 2020, the East Troublesome Fire, Colorado’s second-largest fire in terms of acres burned, started near Grand Lake, Colorado. Within one day, it burned almost 100,000 acres [about half the area of Austin, Texas] and almost 500 structures. A wind-driven wildfire created so many embers that they “jumped” the Continental Divide and started fires that threatened Estes Park, Colorado. Their recovery was very challenged due to underinsurance, supply chain issues due to Covid, and a lack of contractors that could handle the volume of the resulting damage.
On December 30, 2021, the Marshall Fire ignited near Boulder, Colorado, on a day with hurricane-force winds. The fire drove into unincorporated Boulder County, Louisville and Superior, destroying almost 1,100 homes, and making this the most significant wildfire catastrophe in Colorado in terms of total insured losses. This fire occurred in an area not normally associated with wildfire risk. Those recovering struggled with underinsurance, supply chain issues, higher inflation and a lack of contractors.
In November 2024, wildfires broke out in several Northeastern states. Fortunately, few structures were lost, but seeing wildfires in this part of the country is a reminder that wildfire does not understand geographical boundaries.
On January 7, 2025, Santa Ana winds started several wildfires in Los Angeles County, California, that resulted in the loss of over 12,000 structures and many lives. While it is too early to know how this recovery will proceed, the sheer magnitude of this loss is almost incomprehensible. However, if we measure its size to that of the Waldo Canyon Fire in Colorado featured in the earlier article, it is thirty times bigger.
On March 15, 2025, hurricane-force winds associated with a massive winter storm sparked a series of wildfires in Oklahoma in areas not usually associated with wildfires, destroying more than 250 homes.
What are the takeaways from this brief survey, which does not include many other wildfire events that continue to happen throughout the Western United States? First, wildfires will occur in almost every part of the United States where there is an abundance of fuel. Second, wind-driven fires are especially damaging because firefighters are unable to fight these fires using aerial assets. With the ferocity of the winds, they are unable to keep up with their spread. Finally, if Los Angeles is the new normal, future wildfires will become even bigger and more difficult to predict and control. The earlier article asserted that catastrophic events were unlikely to affect most independent agents and their customers. While this statement remains true, it is also true that more people will experience a serious natural catastrophe in the next twenty-five years than since 2000. Assuming this is true, this makes the case for agents to commit to continual learning to better serve their customers even more critical. The two biggest areas of agent learning and advocacy are finding new processes to provide adequate limits for your policyholders and to prepare them to commit to various mitigation measures to minimize any damage that may arise from their greater risk exposure. It is still fashionable to deny the probability of these catastrophes happening. However, because most climate experts opine that extreme weather events are expected to increase significantly for the remainder of the century, it is time to recommit to the importance of changing your old practices on writing various property insurance policies and commit to new products and practices that recognize this growing threat. If not now, when will our industry recommit to learning the very important lessons that these natural disasters are teaching us? From the Editor: For more on flooding risk from John Putnam, click here for a Risk and Reality report. For John's first article on the subject regarding the Colorado wildfires, click this link. Originally Published: May 9, 2025 ______________________________________________________________________________________________________________ Copyright © 2025, Big “I" Virtual University. All rights reserved. No part of this material may be used or reproduced in any manner without the prior written permission from Big “I" Virtual University. For further information, contact jamie.behymer@iiaba.net.
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