In the wake of devastating wildfires in California earlier this year, insurers and policymakers are rethinking how they approach wildfire risks. The fires, which broke out in January, caused around $53 billion in damage, with $40 billion covered by insurance. This makes it the most expensive natural disaster in the first half of 2025, according to a report from Munich Re.
These wildfires have underscored a shift in understanding wildfire risks. Mark Bove, a meteorologist with Munich Re America, pointed out that climate change and urban development are creating year-round fire risks, rather than just during typical wildfire seasons. The January fires were fueled by strong Santa Ana winds and unusually dry conditions, which came after a period of normal rainfall that abruptly ended in November, leading to a “flash drought.”
Bove emphasized that this new reality challenges the traditional view of wildfire seasons. Factors like La Niña can lead to drier winters in Southern California, increasing the chances of wildfires even outside the usual summer and autumn peaks. He believes that while summer and late autumn will still see the most fires, there will be instances of severe wildfires occurring in winter as well.
To combat these risks, Bove advocates for better building designs and stronger codes in areas prone to wildfires. He noted that making homes wildfire-resistant adds only 1 to 3% to their value but could be the key difference between a home surviving a fire or being destroyed. California has already updated its fire codes, and Bove hopes to see broader adoption of such measures across other states.
The report from Munich Re also highlighted that global insured losses from natural disasters in the first half of 2025 reached $80 billion, the second-highest amount ever recorded. Weather events accounted for nearly all these losses, with wildfires and severe storms increasingly rivaling hurricanes in terms of financial impact.
As the Atlantic hurricane season approaches, Bove warns that hurricanes remain the primary concern for insurers in the latter half of the year. While it’s too early to predict the intensity of the upcoming season, he points out that hurricanes have historically caused the most insured losses.
Overall, the lessons learned from the California wildfires are prompting a necessary shift in how risks are assessed and managed. As communities continue to grow in high-risk areas, improving resilience through better construction practices is becoming more critical than ever.