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California wildfire catastrophe spotlights growing home insurance risk
Insurance Journal cites worldwide natural-catastrophe payouts of more than $140 billion in 2024, the fifth straight year losses exceeded $100 billion.
A severe wildfire outbreak north of Los Angeles on Jan. 7, 2025 burned or destroyed more than 18,000 homes and buildings and killed at least 31 people, underscoring the growing challenge for homeowners seeking coverage for climate-driven disasters, according to Insurance Journal.
The outlet says insurers have become more cautious about providing aid for damages linked to wildfires and other weather-related risks, as insurers rely on historical claims data to estimate future losses from similar perils.
Insurance Journal adds that in 2024 insurers worldwide paid out more than $140 billion in claims tied to natural catastrophes, marking the fifth consecutive year that annual losses surpassed $100 billion.
The article argues that traditional pricing models depend on the assumption that risks and exposures do not change dramatically, making it harder for insurers to predict costs when disasters or exposure patterns shift unexpectedly.