Over half a year since the destructive wildfires in California, insurers and policymakers are being forced to rethink long-standing assumptions about seasonal wildfire risk, urban planning, and climate resilience.
The January wildfires caused an estimated $53 billion in total damage, $40 billion of which were insured losses, and constituted the costliest natural disaster during the first six months of 2025, according to a new Munich Re report.
The event has also highlighted a new era of year-round risk driven by climate change and urban development, according to Mark Bove (pictured), a meteorologist and SVP of natural catastrophe solutions at Munich Re America.
The LA wildfires, which broke out on Jan. 7 amid what is typically the region’s rainy season, were intensified by strong Santa Ana winds and unusually dry conditions.
Bove said the region had received normal precipitation until November, when rainfall abruptly stopped, triggering a “flash drought” that dried out vegetation and left Southern California primed for disaster.
“Events like this challenge the traditional notion of ‘wildfire season.’ La Niña conditions can dry out Southern California winters, and with climate change driving overall drier conditions, we’re going to see more fire risk outside of the summer and autumn peaks,” he said.
“Long-term, we expect these events more during summer into late autumn, but there’s variability around that. And once in a while, there will be occasions when it's drier into the winter, which can spawn more severe wildfires in Southern California during that time of year.”
One of the strongest tools for long-term risk mitigation, Bove stressed, is improved building design and stronger codes, especially in wildfire-prone areas. As chair of the research advisory committee for the Insurance Institute for Business and Home Safety (IBHS), Bove advocates for proactive resilience measures.
“Wildfire-resistant construction doesn’t cost significantly more, just 1 to 3% of a home’s value, but it can be the difference between survival and destruction,” he said.
California has strengthened its Chapter 7A fire codes in recent years, and other states like Florida and Louisiana have led the way in wind resilience. But more widespread adoption is critical, Bove argued.
“The more resiliently we build, the faster communities can recover, and the more sustainable our insurance markets will be. We all benefit when we reduce vulnerability,” he said.
According to Munich Re’s latest report, global insured losses from natural disasters in the first half of 2025 at $80 billion, the second-highest ever recorded in the first half of a year, trailing only the 2011 Tohoku earthquake and tsunami. Overall global losses reached $131 billion, with weather events accounting for 98% of insured losses.
While hurricanes have historically dominated insured catastrophe losses in the US, Bove pointed to a notable shift.
“Severe convective storms and wildfires are increasingly rivaling hurricanes in aggregate loss potential,” he said. “We’re seeing this year after year.”
A significant driver of this trend is urban sprawl into high-risk zones. Rising property values and infrastructure density amplify the financial fallout when disaster strikes.
Looking ahead to the second half of 2025, Bove identified the Atlantic hurricane season as the primary concern for US insurers. With the season’s peak still approaching, insurers are bracing for potential landfall events
“While it’s too early to say how intense the season will be, we know that hurricanes remain the biggest source of insured catastrophe losses in the second half of the year,” Bove said.
