California remains the riskiest state for potential wildfire activity and loss, according to property data firm CoreLogic.
A recent report identified nearly 1.3 million Golden State homes at a moderate or greater risk of wildfire, with a reconstruction value of roughly $770 billion.
- The Los Angeles metro area is the top city with the most homes at risk. Over 245,000 greater LA-area homes face elevated wildfire risk.
By the numbers: Across the U.S., over 2.6 million homes face higher wildfire risk, with a combined reconstruction cost value of $1.2 trillion.
Colorado, and Texas are the next two states with the largest number of homes with elevated wildfire risk.
- In all 14 states have a high number of houses in the Wildland-Urban Interface (WUI).
- According to the U.S. Fire Administration, the WUI is the zone of transition between unoccupied land and human development.
What they’re saying: “Wildfires continue to pose a threat to property and livelihoods across the U.S. The events of last year and activity to date highlight the importance of insurance and risk management in safeguarding communities against such catastrophic events,” CoreLogic said in its report.
Changing Regulations: In June 2024, the California Department of Insurance (DOI) unveiled a new plan allowing insurers to use catastrophe models in ratemaking. But that’s only if they increase their policy writing in high-wildfire-risk areas.
The report cited four counties – Napa, Santa Cruz, Del Norte, and Modoc – as ideal markets for carriers who need to comply with the DOI.
Risk Mitigation: The CoreLogic report highlighted the effectiveness of wildfire mitigation strategies as demonstrated by the case of Paradise, California.
- In November 2018, the Camp Fire decimated 90% of Paradise. It is one of California’s most deadly and destructive wildfire events.
A collaborative study by CoreLogic, Milliman, and the town of Paradise revealed that combining individual home- and community-level wildfire mitigation strategies led to a 75% reduction in expected loss per property in high-risk areas.
The study concluded that the loss reduction corresponds to a 55% reduction in average insurance premiums.
“Now more than ever, a forward-thinking strategy for managing wildfire risks is essential,” the report said.
Go deeper: Check out CoreLogic’s 2024 Wildfire Risk Report for yourself.
