The January 2025 wildfires in Los Angeles have resulted in some of the highest insured losses ever recorded in the United States, with estimates ranging from $20 billion to $45 billion. Many affected households were left without insurance coverage.
Lindsey Frase, Managing Director at Howden Re and a California resident, commented on the growing threat: “Wildfires are now regarded as a primary peril, given their increasing frequency, severity, and multi-billion-dollar loss potential,” she said. “Insurers must re-evaluate underwriting models, capital allocation and pricing assumptions, putting wildfire risk on the same footing as hurricanes.”
Howden Re has released a report titled “2025 Los Angeles wildfires: a path forward,” which outlines several recommendations for addressing future wildfire risks. The report suggests reforms such as approving catastrophe modeling for rate-setting purposes, acknowledging reinsurance costs when setting rates, and investing $6 billion in mitigation strategies that could potentially reduce economic losses by half.
Wade Gulbransen, Divisional CEO for North America at Howden Re, emphasized the need for long-term solutions: “Looking ahead, the focus must be on restoring both confidence and capacity. Sustainable capital must return and remain committed so the market can move from short-term fixes to long-term stability.”