Wildfire mitigation efforts are becoming a greater factor in underwriting decisions, especially after the Los Angeles wildfires.
The fires destroyed or damaged 12,574 properties as of January 13, according to Nearmap. Losses as of January 23 are estimated at $28 billion, according to Karen Clark & Company.
More advanced technology for evaluating and accounting for mitigation, along with incentive programs, will be used to determine coverage decisions, according to technology providers serving insurers' underwriting operations.
"Fire suppression has been helpful over the past few years, but it is not enough when it comes to stemming the losses from catastrophic wildfires," said Ivan O'Neill, co-founder and CEO of software provider Wuuii, which helps property owners, insurers and communities with mitigation. "There's going to be much more focus on the condition of properties and whether they've taken steps to protect the house from igniting."
The Z-FIRE model for evaluating wildfire risk, from climate risk intelligence company ZestyAI, is being used by several western U.S. states, including California, where the state's insurer of last resort, FAIR Plan, began using it in 2024. Insurers including Allstate, CSAA, Berkshire Hathaway and Amica use Z-FIRE. The FAIR Plan provides Z-FIRE risk scores to its policyholders. The model is also approved for use in Texas, Nevada, Washington and Oregon.
Z-FIRE can pinpoint the risks for single homes in a neighborhood, especially when those risks vary from house to house, according to Attila Toth, CEO and founder, ZestyAI. "In the stories emerging from the Palisades fire, some properties were not destroyed when all their older neighbors were destroyed," he said. "These were not destroyed because they were built differently. Our model can differentiate even between neighboring properties."
Toth estimates that about 470,000 properties have been able to get insurance, that could not before, because the Z-FIRE model more accurately rates their risk.
Wuuii and Zesty AI are both partnered with the Insurance Institute for Business and Home Safety (IBHS) to use its data on how wildfires spread. IBHS runs the Wildfire Prepared Home program, which helps homeowners mitigate and reduce their risk. The program, begun in 2023, has certified about 1,200 homes so far, according to O'Neill.
Wuuii runs the Madronus Wildfire Defense program, which facilitates IBHS certification for FAIR Plan policyholders. The program covers 85% of California homeowners in 43 of the state's 58 counties. "We've been actively recruiting and expanding contractors and inspectors on the platform," O'Neill said.
O'Neill thinks mitigation by homeowners will reduce future wildfires. "We can take this lying down, or we can study the science and literature and adapt to the environment that we live in," he said. "That's a combination of property owners doing their part on their property, as well as how we manage the vegetation that's near communities within 100 feet. If we regularly burn these areas and thin out the brush and the chaparral, as Indigenous people did for millennia, then we burn it when we want to, not when nature decides to. We're going to have far better outcomes."
