Wildfires: A Devastating Force


Wildfires’ devastating damage significantly impacts the landscape, lives, infrastructure, businesses, as well as the insurance industry.


People cause an estimated 85-90% of wildfires, often resulting from unattended campfires, burning of debris, downed power lines, or intentional arson. Wildfires are also caused and exacerbated by climate change and population growth, resulting in rising temperatures, shorter winters, drought, and increased concentrations of people.

Wildfire hazard exists where there is significant vegetation in areas with low rainfall periods, particularly in climates with cool, wet winters and hot, dry summers. These hazards are also prevalent in “wildland-urban interface” areas, where man-made structures an infrastructure meet or intermingle with wildland vegetation. As urban populations increase, this creeping into wildland areas is becoming ever more prevalent.


Wildfires’ devastating damage significantly impacts the landscape, lives, infrastructure, businesses, as well as the insurance industry. An already tumultuous 2020 has also produced overwhelming destruction from wildfires across the United States, particularly in California, Colorado, and Oregon.

This is becoming an all too familiar of a trend, following the record-breaking wildfire losses witnessed in 2017 and 2018, which were the worst two back-to-back years in recorded history. Insured losses from the 2018 California “Camp Fire” alone totaled $12.5 billion.


Unlike other catastrophic (CAT) perils, wildfire has historically been hard to model and quantify. While accumulations were monitored by carriers, it was not a coverage limited to an annual aggregate, as is common for perils such as flood or earthquake. This is expected to change in response to the increase in wildfire damage inflicted in recent years.

Now more than ever, carriers are carefully monitoring and assessing areas that present significant wildfire exposures. Increasingly, accounts within exposures in these areas are experiencing significant rate increases. Specific wildfire deductibles are also more commonly deployed, some even applying on a percentage basis. Communication of exposure reduction techniques including hardscaping, roof cleaning frequency, and tree trimming can positively impact the rate and deductible applied for wildfire.

Wildfire capacity continues to shrink across the board for both property and general/excess liability lines. Exclusions for wildfire are becoming commonplace, particularly in California.

According to the insurer Factory Mutual, industries impacted the most by wildfires include those with operations involving paper and carton manufacturing, standing timber, sawmills, outdoor property, as well as steel, metal, and electronics industries.

As wildfire risks continue to increase, entities need to assess all risk transfer solutions available, including traditional insurance, parametric coverage, and CAT bonds. IMA representatives are available to discuss and review these options with you.


Like other natural disasters, wildfires draw enhanced underwriting scrutiny to exposure details and disaster preparedness. It is vital to employ and demonstrate to underwriters the use of best practices in managing risk, including:

Create a defensible space – the horizontal and vertical space around a building should be sufficient to allow disruption of flames
• Clearance zone of 100 feet from grassland exposures
• 330 feet from woodland or forest exposure

Consider construction type of exterior walls and roofs
• Exterior wall cladding made of noncombustible materials such as concrete and brick
• Fire resistant roofing material – Class A fire-rated roofs are resistant to fire and do not spread flames as quickly

Remove debris from roofs and gutters

Protect windows and frames with one-hour fire-rated shutters

Backup power generation and/or alternative production sites outside the affected areas

Consider location of business intelligence – should be located or backed up off-site

Develop emergency evacuation plan and business continuity plan
• Emergency communication plan for employees
• Written contingency plan with public fire service
• Identify backup suppliers and potentially secondary manufacturing sites for your own products

A free, easy-to-use website with interactive maps, charts, and resources created by the USDA Forest Service, which allows users to understand, explore and reduce wildfire risk, can be found: wildfirerisk.org


Additional measures and precautions are detailed in the IMA Risk Control Group’s, Guide to Wildfire Mitigation and Management Policy.
Download the file here »


Wildland Fire Risk: Guidance on minimizing risk before a wildland fire, reacting to the event, and recovering after the fire.
View the guide here »

Please be advised that this whitepaper is an educational and informational resource only. The views and statements expressed herein are not to be construed as legal advice from the authors or IMA and such communication is not protected under the attorney client privilege. Recipients should seek specific legal advice from competent legal counsel of your choice.