Wildfire risk reduction in a changing climate

Damaging and disruptive wildfires produce dramatic impacts on economic growth, ecosystem health, and social shocks, and their footprint in the suite of natural hazards is growing. Losses from wildfire events reached $45BN in global insured losses over the past decade.

Wildfire is a complex hazard influenced by convoluted social and natural causes. In an environment of increasing hazard, how can society respond in a way that offsets some of that hazard with reduced vulnerability and exposure?

Our new report, developed jointly with Liberty Mutual Climate Transition Center, explores how nature-based solutions can help mitigate wildfire risk at scale — supporting both biodiversity and long-term insurability.

Despite the potential benefits, there are barriers that have limited the broader deployment of forest management for the ecosystem service of wildfire risk reduction.

The complexity of managing wildfire risk in a changing climate will require a whole-of society response, including both the public and private sector. The insurance industry is uniquely positioned to participate in this response due to its intersection of expertise covering both extreme events and the built environment.

Drawing on examples from around the world, we explore:

• How wildfire risk is increasing driven by climate change, ecosystem disturbances, and exposure growth.
• Opportunities and barriers to nature focused wildfire risk mitigation, including examples from the US, China, Portugal and New Zealand.
• Strategies insurers are using to support wildfire risk reduction, around risk expertise, identifying financial and legal roadblocks, and research opportunities between academic research and direct impacts on risk.

By investing in landscape-scale mitigation and aligning financial incentives with environmental stewardship, we can reduce risk to protect lives and to support insurability.