1 of 23

Wildland fire, �Fire Departments, and Economics

Fire Underwriters Survey

September 22, 2025

1

2 of 23

Defining the Economic problem

The risk of wildfire is growing and having increasing impacts on Canadians, businesses and the communities they live and work/operate in
Climate change is a significant contributing factor
Property losses from climate change-related risks are increasing and insurers are incorporating new information into underwriting and actuarial practices
Insurers face challenges to remain profitable in the changing risk environment and may withdraw from certain markets
Reduced availability of insurance negatively impacts communities, property and business owners and creates economic challenges in communities

3 of 23

Global insured losses from Wildfires

1980 - 2020
Significant upward trend in Insured losses from wildfires as climate change results in longer, hotter and drier fire season

(Swiss Re Institute, 2021)

4 of 23

Example of market withdrawal

“…The limited exposure of reinsurers reflects a strategic reduction in their natural catastrophe risk exposure in recent years. According to a report from the Financial Times, reinsurers have raised rates and increased attachment points, prompting primary insurers to reduce their own wildfire coverage in California.

This dynamic has left many homeowners without private insurance options, pushing them toward the state’s insurer of last resort…”

(Araullo, 2025)

5 of 23

Wildfire Insurance Crisis

Wildfires contribute to more costly insurance

High insurance costs lead to underinsured homes

The underinsured struggle to recover from disasters

Without insurance, home financing is unavailable

Inaction raises costs for local, provincial and federal budgets

Less funding is available for mitigation that can break the cycle

A negative feedback loop can be created when insurers are adversely impacted by natural catastrophes that result in poor profitability or financial losses.

High losses result in insurance adjusting prices to try to remain profitable.

Increased cost of insurance leads to more homes not having insurance or being under-insured.

Homeowners who are underinsured or without insurance have great difficulty recovering from disaster-level events.

Lack of adequate insurance creates financing challenges.

Lack of adequate mitigation levels results in more funding being needed and directed toward reactive response and suppression.

Communities and property owners alike may be severely challenged to rebuild and revive their economies after large catastrophic wildfires.

In such a cycle, catastrophic losses may get worse and worse in some regions, and insurers may withdraw from markets, negatively impacting local economies and the viability of communities.

6 of 23

How Information can Help

Given the right information (system), insurers can remain profitable and can help property owners and communities to mitigate the risk of wildfire by adjusting pricing based on measured levels of mitigation and response capacity that measurably impact the risk.

In fact, this is how fire risk indexes were used to solve the original problem of urban conflagrations.

7 of 23

Quantifying Risk

– The Risk Triangle

'Risk' is the probability of a loss, and this depends on three elements, hazard, vulnerability and exposure.

Ex. with property insurance, consider the frequency and severity of the hazard; the vulnerability of the insured property to that hazard, (the extent to which it will suffer damage or loss), and the exposure of the property to the hazard, for example its value and location.

The severity of the risk can be thought of as being the area of the triangle, then by simple geometry, we know that this in turn depends on the size of each of the three 'sides' of the risk triangle. If any one component or 'side' of the triangle is zero, then there is no risk.

(Crichton, 1999)

8 of 23

Fire Risk Indexes Connect Insurers and Municipalities with an Economic Feedback Loop

Fire Risk Indexes provide simple, standardized measures of risk that are used to adjust insurance pricing.

Adjustment of insurance pricing is a key economic incentive

Proactive and long-term approach as opposed to reactive one-off approach

Emphasis on local government level data for prevention and suppression

Engineering Team Measures Risk

Measured Risk Index Published

Insurers Adjust Pricing (Economic Incentive)

Local Governments Invest in Response & Prevention

Subject Matter Experts adjust system

9 of 23

2020 - NFPA introduces�Community Risk Reduction (CRR)�Aligned with FUS / ISO methods

Becoming Standard best practice for municipal risk control

NFPA 1300 Standard on Community Risk Assessment and Community Risk Reduction Plan Development

Canadian Association of Fire Chiefs note Fire Chiefs play critical roles in CRR and FireSmart

“Economic Incentive” identified as a foundational element

(National Fire Protection Association, 2020)

10 of 23

THE FIRE INSURANCE GRADING INDEX

Property level details on levels of public fire protection

Building Data

Fire

Department

Data

Water

System

Data

GIS data:

Road networks
Property locations
Parcel Data
Zoning Data

Grades calculated and published to

ArcGIS Server

Wildfire

Data

Fire Regime
Topography
Exposure

FUS Grading Index

Web Application

FUS Grading Index

Web Service API

FUS Grading

Portfolio Analytics

Municipal Portal

Community Fire Risk Analytics

11 of 23

Canadian Wildfire Grading Index

11

12 of 23

Renowned wildfire expert Dr. Jack Cohen has often said that recent WUI Fire Disasters are not a wildfire problem, they are a structure-to-structure fire problem.

In his post disaster event analysis after the Lytton fire, ho noted that the majority of structures lost were not from vegetation fires transmission, but rather from other structures.

The IBHS re-created this graphic from Dr Cohen’s WUI Disaster Event Sequence

Pre-event

Fuels build-up over years / decades (fire deficit)
Hot, dry conditions
Extreme wind event

Large Outdoor Fire Event (Wildland fire)

Fires burning across landscape normal through fire season
Some fires become megafires with high intensity

Interface with Built Environment – WUI Event
If available resources (Fire Companies and water supplies) are overwhelmed, then…
Uncontrolled Fire Spread through Built Environment - Urban Conflagration Event (Structure to Structure Fire Spread)

13 of 23

National WUI Guide

National WUI Guide released in 2021
Provides comprehensive guidance on hazard and exposure assessment
Work is ongoing to improve and update hazard mapping and possibly integrate to National Building Code (for new construction), possibly in Table C-2, Climatic Design Data for Selected Locations

(Bénichou, 2021)

14 of 23

NRC Guide Based Determination of Base Wildfire Risk

Wildfire Hazard Level cross referenced with Location Fuels Exposure Severity

(Bénichou, 2021)

Hazard �Level	Exposure Level
Hazard �Level	Nil-Very Low	Low	Moderate	High
Nil-Very Low	Nil	Nil	Nil	Nil
Low	Nil	Low	Low	Moderate
Moderate	Nil	Low	Moderate	High
High	Nil	Low	Moderate	High

15 of 23

NRC Guide Wildfire Hazard Map of Canada

Wildfire Hazard Level

(Bénichou, 2021)

16 of 23

3 Levels of Exposure

From: Wildfire Exposure Assessment, FireSmart Canada, J. Beverly, U. of Alberta

17 of 23

Transform Vegetation Data 🡪 Exposure

Land Cover Map

WUI Zone (exposure severity) Map

Note: Canadian communities are asked to update their land cover data with new imagery and/or fuel treatment areas through the FUS data collection Portal. Data is also acquired through provincial and federal agencies.

18 of 23

WUI EXPOSURE ZONE MAPS ALIGNMENT TO BURNED AREAS

19 of 23

IN DEVELOPMENT:

SUBDIVISION SCALE RISK

Currently in internal testing - Directional Vulnerability Analysis
Subdivision scale exposure analysis (15 km)
Leverages WUI Exposure fuels analysis

(Source: Beverly, J. L., & Forbes, A. M. (2023). Assessing directional vulnerability to wildfire. Natural Hazards)

20 of 23

IN DEVELOPMENT:

STRUCTURE TO STRUCTURE FIRE SPREAD RISK

Integrating NIST HMM Method of Cataloging subdivisions. These are completed:

Structure Typology (Accessory, Dwelling, Commercial)
Structure Separation Distance
Structure Density

WUI Typology in method development

(Source: NIST Technical Note 2205 WUI Structure/Parcel/Community Fire Hazard Mitigation Methodology

21 of 23

IN DEVELOPMENT:

COMBINED RISK INDEX MODEL

Hazard (Regime Zone)

Fuels Severity (Landscape Level)

Fire Trajectories

Subdivision Vulnerability to Fire Trajectories

Structure Exposure to Fuels

Subdivision Structure to Structure Spread

Community Wildfire Resilience Grade

60%

Draft in testing

22 of 23

Key Takeaways

All Canadians benefit from strong insurance industry
Insurers require good information on risk
Canadian local governments and their Fire Departments are needed to report on

Local risk levels
Mitigation actions
Suppression capacity

Insurers can use this information to remain profitable and to adjust prices relative to risk supporting a proactive Economic Incentive for local governments and property owners to take collective action to improve and report on risk and mitigation
This system can create a sustainable long-term approach to Community Risk Reduction from WUI disasters

Canadian Fire Departments have been providing data to FUS for more than 100 years and the information has been graded and resulted in a significant Economic Incentive that helps Canadian Fire Departments secure funding to deliver emergency service levels that reduce the risk of fire losses. Insurers reference this information through the digital Canadian Fire Insurance Grading Index more than 20 million times per year and factor the information into pricing and risk selection decisions.

This information system has helped Canadian communities almost completely eliminate conflagration events from fires that started in and around buildings. Now that it is becoming increasingly common for Canadian communities to face large extreme wildland fire events, it is important to expand the information system to consider wildfire risk, mitigation and suppression capacity at property, subdivision and community scales so that the risk of WUI Event generated urban conflagrations can also be dramatically reduced.

Participation and support of the Canadian Fire Chiefs is vital to getting the data system to a point that insurers will consider it to be reliable and use it in pricing to create an Economic Incentive for risk mitigation.

Once there are strong Economic Incentives for effectively reducing the risk of conflagrations, there will be fewer and fewer catastrophic level events and the insurance marketplace will be stabilized as will the local economies of communities that are able to avoid WUI disaster events.

23 of 23

For more information, please contact the offices of �Fire Underwriters Survey��https://fireunderwriters.ca�1-800-665-5661�fireunderwriters-admin@verisk.com��michael.currie@verisk.com

23