Lockton Re, in collaboration with Green Shield Risk Solutions, has released a new report that explores the increasing role of integrated risk tools as wildfires continue to present challenges for insurers and portfolio managers.
According to Matt Cohen (pictured above), Lockton Re’s head of global catastrophe modeling, analytics are becoming an essential component for managing wildfire exposures.
“Sound analytics at all levels of the business are becoming table stakes for any wildfire portfolio manager. The key to a resilient business? Making sure these analytics communicate with each other to create a holistic approach to wildfire management,” Cohen said.
The report examines the sharp rise in wildfire events across the western US over the last 10 years and outlines how insurers are placing greater reliance on data and modeling tools. A connected toolset enables the capture and transfer of critical property-specific characteristics throughout the insurance value chain.
Paul Brady, head of wildfire insights and mitigation at Green Shield Risk Solutions, said that including secondary modifiers in the underwriting process allows insurers to reflect mitigation measures in their models.
"Effectively capturing these details is the critical first step to unlocking significant community and portfolio-level benefits,” Brady said.
With the wildfire threat continuing to intensify, the report notes that insurers are under pressure to adopt advanced analytics that not only evaluate individual property risks but also integrate seamlessly across underwriting, modeling, and portfolio management functions. This approach supports more accurate risk profiles and enhances overall portfolio resilience.
In a separate industry analysis, Allianz has identified climate change and continued urban development as key drivers of the increased frequency and severity of wildfires, emphasizing the importance of evolving modeling capabilities and risk mitigation practices.
Lockton Re’s report also draws attention to recent wildfires in Los Angeles, which it says underscore the difficulties insurance companies face in managing exposures in wildfire-prone areas. Insurers are increasingly required to move beyond siloed systems to maintain effective wildfire strategies.
Green Shield’s analytics provide insurers with property-level insights that can be mapped directly to catastrophe models. These insights are designed to influence loss metrics such as average annual loss (AAL) and return period losses.
The reinsurance sector has shown growing appetite for wildfire-specific solutions, with carriers and reinsurers exploring new data-driven products to stabilize portfolios exposed to fire risks.
This trend is being driven by an industry-wide recognition that traditional modeling approaches may not adequately capture the volatility of wildfire behavior, particularly when influenced by localized factors such as vegetation, topography, and community-level mitigation.
Despite these advances, the insurance industry continues to face challenges related to the accuracy and consistency of wildfire risk models. Many carriers rely on proprietary risk scores or third-party catastrophe models to make underwriting decisions, often resulting in increased premiums or reduced coverage for properties deemed high risk.
However, discrepancies among these models and their varying assumptions have raised concerns about their fairness and transparency. Some insurers have been criticized for using model outputs in ways that may overestimate risk, potentially limiting market availability for certain policyholders.
Lockton Re notes that aligning underwriting tools with broader portfolio analytics can help insurers better address wildfire exposures, reduce associated costs, and maintain operational continuity in a volatile risk environment.
What are your thoughts on this story? Please feel free to share your comments below.
