Wildfires in northern Canada are evolving into a more persistent risk for insurers due to so-called "zombie fires," or fires that smoulder underground over winter, insulated by snow and re-emerge months later, often intensifying the total area burned.
According to a report from The Guardian, the 2023 to 2024 wildfire in Donnie Creek, British Columbia, which burned over 600,000 hectares, illustrated this emerging threat.
For insurers, these multi-year fires complicate risk assessment and claims management. Traditional models that rely on historical wildfire patterns may underestimate exposure, especially in regions prone to holdover fires. Prolonged underground burns increase the likelihood of property damage, business interruptions, and evacuation-related losses. Communities in affected areas, such as those in the Northwest Territories in 2023, experienced large-scale evacuations, highlighting both the human and financial impacts insurers must anticipate.
Zombie fires also affect the broader environmental risk landscape, the report said. By consuming organic soils and seed banks, they leave landscapes more vulnerable to future fires, creating a feedback loop that increases overall wildfire risk.
For property insurers, this means higher potential claims frequency and severity. Insurers may need to reconsider coverage terms, premiums, and exclusions in northern regions, as well as evaluate reinsurance arrangements to manage aggregate exposure.
The slow, smouldering nature of these fires presents challenges for detection and emergency response. This can lead to delayed claims reporting and higher mitigation costs, increasing operational strain on insurers. Satellite monitoring and advanced modelling are becoming essential tools for assessing fire risk and estimating potential losses.
As climate change accelerates, with northern regions warming faster than the global average, zombie fires are expected to become more frequent. Insurers may face rising premiums, increased underwriting scrutiny, and new demands for risk-mitigation strategies from policyholders, including wildfire-proofing homes and improving emergency preparedness, the news outlet reported.
The emergence of zombie fires underscores the need for insurers to adapt to evolving wildfire risks, rethink traditional pricing models, and engage in proactive risk management to protect both clients and their own balance sheets.
