The January 2025 LA Wildfires caused unprecedented losses, but those losses should have been anticipated by insurers.
Executive Summary
The LA Wildfires caused unprecedented losses, but those losses should have been anticipated by insurers. The purpose of catastrophe models is to prepare insurers for losses that haven't happened yet but could happen in the future. This article illustrates how the fires happened, why they were predictable, and how future fires can be worse. It also touches on likely long-term impacts.The purpose of catastrophe models is to prepare insurers for losses that haven’t happened yet but could happen in the future. In fact, credible models reveal that future fires could be even worse.
Evolution of the Fires
The ingredients for the recent wildfires began back in winter of 2022-2023 when record-setting atmospheric rivers soaked California with over eight inches of rain in January alone. The following winter, precipitation amounts remained above normal for most of northern and southern California. After two winters of well above average rainfall, the normally sparsely vegetated hillsides around Los Angeles were abundant with lush vegetation.
