Severe weather patterns shift North American wildfire risk landscape: Chaucer

In a recent study, global specialty (re)insurance group Chaucer has identified significant shifts in North American wildfire risk patterns, particularly in regions previously deemed ‘low-risk.’

The report reveals that areas such as the Appalachians, Southern Rockies, Alberta and British Columbia, and Texas, once considered safe from catastrophic wildfire events, are now raising alarm bells within the insurance industry.

Chaucer’s North American Wildfire Report points to changing severe weather patterns as a primary driver behind the escalating risk.

These regions are increasingly susceptible to prolonged droughts, more intense heatwaves, and disruptions in cooler autumn and winter temperatures.

Notably, their climates now bear similarities to the U.S. West Coast, which has witnessed devastating wildfires in recent years.

The report highlights a concerning discrepancy between the evolving risk landscape and existing catastrophe models. Many of these models struggle to accurately assess the potential damage due to inadequacies in accounting for structural characteristics crucial for evaluating property risk.

For instance, factors like the presence of a “defensible space” around properties—clear of vegetation—and details about wooden fencing and deck coverings can significantly impact the likelihood of a property catching fire during an event.

“An increase in severe weather is directly causing key wildfire risk factors to increase, which has dramatically heightened the risk of catastrophic wildfire damage in areas that were previously not of major concern for insurers,” Dana Foley, Head of Catastrophe Research at Chaucer said.

“This relatively rapid acceleration of risk means that many catastrophe models are out of step with the increasing risk and can’t accurately gauge the scope of potential damage. This is most prevalent at the individual risk level and how models incorporate building characteristics into estimating vulnerability,” Foley added.

Dana Foley qualifies this by saying that “despite these short comings, even simple modelled approaches are preferred to relying on historical loss data alone. Most regions outside of California and the West Coast have not experienced any catastrophic wildfire loss. The best way to deal with this problem is to use probabilistic approaches anchored in the best available science and data, and that is what catastrophe models were designed to do.”

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