A year after the record-breaking wildfires in Los Angeles in 2025, experts in reinsurance are warning that California’s wildfire risks have changed for good. They say insurance brokers should expect shifts in how carriers handle wildfire coverage, including changes in strategy, appetite, and pricing.
New data from Gallagher Re reveals that wildfire losses covered by insurance are no longer mostly linked to Southern California. Instead, losses in Northern and Southern California now balance out, each accounting for about the same share of the annual average industry loss. This shift marks a move towards a more detailed property market that depends heavily on catastrophe modeling.
Toby Hardman, executive vice president at Gallagher Re, explains that warmer weather and years of fire suppression have altered fuel loads, especially in Northern California. Though significant wildfire events can occur anywhere in the state, the biggest financial losses are still more likely in Southern California. Over the last decade, however, the increasing frequency and size of fires in the north have brought the overall losses in both regions closer to equal.
Southern California still has about twice as many properties in high and extreme wildfire risk zones compared to the north, with a larger potential for maximum losses. But rising fire activity in Northern California has narrowed this gap. Hardman points to the combined effect of changing weather and how humans manage fire suppression as key factors behind this trend.
Insurance companies previously focused wildfire risk efforts mainly on Southern California, but this approach is outdated. Today, carriers evaluate each policy individually, looking closely at how it fits into their overall portfolio. This detailed view affects reinsurance pricing and means brokers may face tougher questions and stricter requirements when placing coverage, even for properties in the same ZIP code.
Hardman predicts growing differences in carrier performance based on how well they manage this detailed risk evaluation. Those who excel in selecting policies with lower wildfire risk will likely do better. Regulators and reinsurers are watching closely to see which carriers come out ahead.
Recent updates to California’s Proposition 103 are pushing insurers towards more forward-looking risk management. Now, they can use catastrophe models and reinsurance costs to price policies, rather than relying on past averages. This change is a major shift and is driving carriers to integrate modeling into their underwriting processes.
Mitigation efforts like creating defensible space around homes, using fire-resistant building materials, and supporting community resilience are becoming important factors. Insurers are rewarding these steps, and brokers who highlight their clients’ mitigation may gain access to more favorable markets.
The property insurance market is starting to see more capacity returning, thanks in part to the California FAIR Plan and growth in the excess and surplus lines market. However, this recovery isn’t uniform. Hardman notes that success for carriers will depend on achieving balanced returns and embracing different views on wildfire risk.
Wildfire modeling is tricky because different tools can give very different results. This creates a chance for carriers with strong analytics to offer better prices on certain risks and helps spread the risk in California’s tough market. More carriers entering the market mean more competition and generally lower prices.
Hardman adds that bringing in carriers with varied perspectives on wildfire loss potential can lead to more affordable coverage for some consumers. This diversity in views could help provide more lasting solutions for insurance availability in California.
In short, California’s wildfire risk landscape is changing. Both Northern and Southern California now share the burden of wildfire losses more evenly, and insurers are adapting by focusing on detailed, policy-level risk and embracing new pricing methods. For homeowners and brokers alike, understanding these shifts and mitigation options is more important than ever.