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Severe weather patterns are playing a key role in increasing North American wildfire risk in previously ‘low-risk’ areas

Severe weather pattern changes are rapidly rising playing a key role in increasing North American wildfire risk in areas that were previously ‘low-risk’. Four regions – the Appalachians, Southern Rocky States, Alberta and British Columbia, and Texas – are quickly becoming areas of concern for catastrophic wildfire insurance losses, shows research by Chaucer, the global specialty (re)insurance group.

Chaucer’s North American Wildfire Report found that these regions are more at risk now of experiencing longer droughts, more severe heatwaves and delays in cooler autumn and winter temperatures. Their climates share some similarities with the U.S. West Coast, which has been susceptible to devastating wildfires in recent years.

Chaucer’s report warns many catastrophe models may not be up to the task of modelling structural characteristics accurately. For example, when it comes to property risk, certain aspects of a building are critical to determine how likely it is to catch fire during an event such as, if the “defensible space” perimeter around the property is clear of vegetation or not, or information on wooden fencing and deck coverings which can allow the fire an easy path up to the house. While many models are quite sophisticated, even deploying AI to build smarter hazard components, there is a widening gap between model capability and the quality of wildfire specific exposure data. This is partly why some carriers have been reluctant to underwrite the peril.

Dana Foley, Head of Catastrophe Research at Chaucer says,

“An increase in severe weather is directly causing key wildfire risk factors to increase, which has dramatically heightened the risk of catastrophic wildfire damage in areas that were previously not of major concern for insurers.”
“This relatively rapid acceleration of risk means that many catastrophe models are out of step with the increasing risk and can’t accurately gauge the scope of potential damage. This is most prevalent at the individual risk level and how models incorporate building characteristics into estimating vulnerability.”
Dana Foley
Head of Catastrophe Research at Chaucer

Dana Foley qualifies this by saying that,

“despite these short comings, even simple modelled approaches are preferred to relying on historical loss data alone. Most regions outside of California and the West Coast have not experienced any catastrophic wildfire loss. The best way to deal with this problem is to use probabilistic approaches anchored in the best available science and data, and that is what catastrophe models were designed to do.”

Published on 06.11.2023

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