Wildfire Risk in 2026: The Property-Level Signals Carriers Can’t Ignore

What is the 2026 wildfire outlook for insurers? 

The 2026 wildfire season is forcing carriers to reassess wildfire exposure at the property level. ZestyAI’s analysis of 2025 fire perimeters shows that structural loss, risk concentration, and emerging drought patterns are shifting the underwriting conversation beyond traditional wildfire maps. For underwriters, actuaries, and product leaders, the priority is clear: identify which properties are most likely to be reached, damaged, or destroyed before the next fire season. 

For the full property-level analysis, state risk profiles, 2025 case studies, and regulatory overview, download the complete Wildfire Season Preview 2026. 

Key Findings

1. The 2025 wildfire season burned 5.1 million acres — below the five-year average — but destroyed 18,385 structures, more than 2.5 times the average, with nearly 90% of structural loss driven by the January Los Angeles fires.
2. Properties in ZestyAI's highest wildfire risk tier were roughly 500 times more likely to fall within a wildfire perimeter in 2025 than properties in the lowest tier.
3. Across three 2025 case studies in Oregon, Utah, and North Carolina, properties inside fire perimeters were concentrated in High or Very High risk classifications at 11 to 15 times the statewide average.
4. In 2025, California accounted for 92% of all U.S. residential properties that fell inside wildfire perimeters, even though only about 11% of its properties score High Risk.
5. Colorado's HB25-1182, effective July 1, 2026, requires insurers using wildfire models to explain scores, account for mitigation, and resolve policyholder appeals within 30 days.
6. The 2026 drought outlook shows improving conditions in California but extreme and exceptional drought developing across the central Rockies and parts of the U.S. South — expanding the wildfire risk footprint beyond traditional Western exposure zones.

Why 2025 Changed the Wildfire Risk Conversation for Carriers 

The 2025 wildfire season exposed how quickly insured loss can concentrate when fire reaches dense residential areas. Nationwide, 18,385 structures were destroyed, more than 2.5 times the 2021–2025 average. Nearly 90% of that structural loss came from the January Los Angeles fires, where the Palisades and Eaton fires destroyed nearly 16,000 structures.

Those losses showed how wildfire exposure is changing for P&C carriers. Ember-driven fire can move through dense neighborhoods far from the traditional wildland-urban interface, creating severe property loss in areas that may not look extreme through conventional wildfire maps.

For underwriting, actuarial, and product teams, the implication is direct. Wildfire risk has to be evaluated at the property level, using factors such as defensible space, roof materials, vegetation, structure characteristics, surrounding fuels, topography, and local fire behavior. Two homes in the same neighborhood can carry materially different risk based on the conditions around the individual property.

Carriers preparing for the 2026 wildfire season need visibility into which properties are most likely to be reached by fire, which are most likely to be damaged or destroyed, and where risk is concentrating across the portfolio before the next major event occurs.

ZestyAI's Wildfire Season Preview 2026 draws on property-level analysis of every residential property that fell within 2025 wildfire perimeters, three regional case studies validating model performance across distinct fire environments, and an overview of the emerging regulatory landscape reshaping how insurers assess and communicate wildfire risk.

How Wildfire Exposure Varies Across U.S. Properties

ZestyAI analyzed every residential property across the U.S. using Z-FIRE, then analyzed which properties fell within 2025 wildfire perimeters to understand where exposure actually occurred. The results show a highly uneven risk landscape, with significant variation across states, regions, and individual properties.

Nationally, roughly 91% of properties score Low Risk, 6% score Medium Risk, and 3% score High Risk under ZestyAI's Z-FIRE model. But in 2025, properties in the High Risk tier were far more likely to fall within wildfire perimeters than those in the Low Risk tier — by a factor of approximately 500. 

That separation matters for carriers because wildfire exposure is not evenly distributed across a book of business. A small share of properties can represent a disproportionate share of exposure when fire activity overlaps with dense development, vulnerable property conditions, and elevated local fire potential. 

State-level exposure adds another layer of complexity. The share of High Risk properties varies significantly by state. Montana, for instance, carries a much larger proportion of High Risk properties than the national average. But high risk-tier concentration does not alone explain where losses occur — actual exposure also depends on where fires ignite, how they spread, and how many properties sit in their path.

Three states illustrate how differently the same risk tiers translate into actual exposure:

California had only about 11% of properties in the High Risk tier in 2025, yet accounted for 92% of all U.S. properties that fell inside wildfire perimeters. The scale of fire activity, combined with dense development near wildlands and major fires moving through populated neighborhoods, turned a limited High Risk segment into a dominant share of national exposure.

Texas is weighted heavily toward the lower end of the risk spectrum, with approximately 94% of properties classified Low Risk and 2% High Risk. Fire incidence within risk tiers reflects that lower baseline exposure.

Colorado shows a more distributed profile — about 70% Low Risk, 17% Medium Risk, and 12% High Risk — with fire incidence rates that track its more balanced risk distribution.

These state profiles reinforce a core finding: wildfire exposure cannot be assessed through a single national average or a fixed risk threshold. Local fire behavior, development patterns, and property density all determine how risk translates into actual loss.

Where Wildfire Risk Is Shifting in 2026 

The 2026 wildfire outlook points to a broader and more complex risk footprint for P&C carriers.

Drought conditions are improving in parts of California, but elevated dryness is developing across the central Rockies and parts of the U.S. South. That shift matters because drought can dry fuels, stress vegetation, and make fire behavior more responsive to wind, heat, and ignition sources.

For carriers, the underwriting concern is not limited to where wildfire has historically been most severe. It is where changing fuel conditions, property density, and local weather patterns are creating new pockets of exposure.

The 2025 season already showed signs of this expansion. Major wildfire events occurred in Arizona and Oklahoma, and the Black Cove Fire in North Carolina demonstrated how quickly wildfire can become relevant in markets where it has not traditionally been treated as a primary underwriting peril. That fire was driven by dry conditions, wind, and heavy storm-damaged fuels left by Hurricane Helene.

The 2026 outlook reinforces the need for carriers to reassess wildfire exposure beyond legacy high-risk geographies. Underwriting, actuarial, and product teams should evaluate where wildfire risk is rising across the portfolio, which properties are most exposed, and whether existing pricing, eligibility, and renewal strategies reflect the current risk environment.

A static view of wildfire territory is no longer enough. Carriers need a property-level view of exposure that can adapt as drought conditions, vegetation, development patterns, and fire activity shift across regions.

How Z-FIRE Performed Across 2025 Wildfire Events 

ZestyAI evaluated Z-FIRE performance across three 2025 fires representing distinct regional settings and fire environments: a Pacific Northwest WUI fire, a Mountain West fire in rugged lower-density terrain, and a Southeast fire in a region where wildfire has not historically been a primary underwriting concern. 

Across all three events, properties inside fire perimeters were concentrated in High or Very High classifications at 11 to 15 times the statewide average. That consistency matters for carriers validating wildfire models across different geographies, fire environments, and portfolio segments. 

Flat Fire, Oregon (August 2025)

The Flat Fire was a Central Oregon wildland-urban interface fire that grew to more than 23,000 acres in under a week. Of the 107 Z-FIRE-scored properties that fell inside the perimeter, 95% had been classified as High or Very High before the fire. None were Low or Very Low.

Statewide, roughly 8 in 100 Oregon properties carry a High or Very High wildfire risk score. Inside the Flat Fire perimeter, more than 95 in 100 did — approximately 11 times the statewide average. For carriers with Central Oregon exposure, the implication is direct: the fire did not reach a random cross-section of properties. It reached a concentrated group that had already been identified as materially more exposed.

Monroe Canyon Fire, Utah (July–September 2025)

The Monroe Canyon Fire burned through rugged, lower-density terrain in south-central Utah, growing to more than 73,000 acres over 54 days. Every scored property inside the perimeter had been classified as High or Very High before the fire. 80% were Very High; 20% were High. None were Medium, Low, or Very Low.

Statewide, only 9% of Utah properties are classified as High or Very High. Inside the Monroe Canyon perimeter, that share was 100%. The Very High concentration was even sharper: only 2% of Utah properties fall in the Very High classification statewide, compared with 80% inside the perimeter.

Monroe Canyon illustrates a specific underwriting challenge: in lower-density Mountain West terrain, the affected population may be small — cabins, second homes, rural recreational properties — but the properties that fall inside a large fire perimeter are not random. They are the ones already scored highest. Geographic and ZIP-code views can show where exposure is located; property-level scores show which specific properties carry the most risk.

Black Cove Fire, North Carolina (March 2025)

The Black Cove Fire started in Polk County, North Carolina after a downed power line ignited dry vegetation in the Green River Gorge. Hurricane Helene had deposited heavy storm-damaged fuels in the area six months earlier. Drought and wind helped the fire become one of the most active early-season events in the eastern United States in 2025.

Inside the Black Cove perimeter, 84% of properties had been classified as High or Very High before the fire arrived — 64% High and 19% Very High. None were Low or Very Low. Statewide, only 5% of North Carolina properties are classified as High or Very High. Inside the perimeter, that share was 84%, more than 15 times the statewide average.

Black Cove is the most important case study for carriers reconsidering their exposure in non-traditional wildfire markets. The fire occurred in the Southeast, in a state where wildfire has not historically been treated as a primary underwriting peril. The signal was there before the fire. Carriers that treat wildfire as a Western-only concern are operating without visibility into a growing share of their exposure.

How Wildfire Modeling Regulations Are Changing in 2026 

Wildfire regulation is moving from model permission to model accountability. Carriers increasingly need to explain how wildfire scores are used, recognize mitigation, support policyholder appeals, and document model governance. 

Across the West, four states are pursuing that standard through different paths.

California has tied wildfire model adoption to coverage obligations through its Sustainable Insurance Strategy. Carriers using approved wildfire catastrophe models must write a proportional share of homes in high-risk areas relative to their statewide market presence. A carrier with 10% of the California market must write at least 8.5% of homes in high-risk zones. Meeting that obligation requires property-level risk assessment — not just catastrophe model outputs — to distinguish individual homes worth writing from those that are not.

Colorado's HB25-1182, enacted in 2025 and effective July 1, 2026, requires insurers that use wildfire risk models to explain how models are used, account for property-specific and community-level mitigation, provide annual notices about wildfire risk scores and available discounts, and create an appeal process for disputed scores. Appeals must be acknowledged within 10 days and resolved within 30 days. The law moves wildfire modeling from a permissioning question to an accountability standard.

Washington's Senate Bill 5928 would require insurers to disclose wildfire risk scores when they are used in coverage or pricing decisions, explain the factors driving the score, and provide plain-language steps homeowners can take to improve it. Wildfire scores can no longer operate as a black box.

Oregon repealed its statewide wildfire hazard map in 2025 after public pushback against classifications that were too broad to reflect property-specific characteristics. The state is now moving toward a more granular, property-level approach. For insurers, the Oregon experience illustrates the risk of relying on broad geographic classifications: when scores cannot distinguish vulnerable homes from better-protected ones, or when policyholders cannot understand what drives their rating, the regulatory and consumer response can be swift.

Beyond state-level rules, the NAIC Model Bulletin on the Use of Artificial Intelligence Systems by Insurers, adopted in December 2023, establishes national governance expectations for AI-based underwriting tools. As more states adopt the bulletin's guidance, wildfire models will increasingly be evaluated on how they are governed, tested, explained, and monitored — not only on predictive performance.

What Carriers Should Prioritize for Wildfire Underwriting in 2026 

Wildfire underwriting in 2026 requires more than identifying high-risk geographies. Carriers need a sharper operating model for how wildfire risk is segmented, monitored, validated, and explained across the policy lifecycle. 

1. Segment wildfire risk at the property level

Broad geographic proxies can miss the variation that matters most for underwriting and pricing. ZIP codes, static wildfire maps, and community-level classifications may show where exposure exists, but they cannot reliably distinguish the individual properties most likely to be reached, damaged, or destroyed.

Property-level risk segmentation gives underwriting, actuarial, and product teams a more precise view of exposure. It can support new business eligibility, renewal decisions, pricing refinement, mitigation targeting, portfolio concentration management, and reinsurance planning.

The 2025 wildfire season reinforced the need for that precision. Properties inside fire perimeters were not a random cross-section of the market. They were disproportionately concentrated in higher-risk classifications before the fires occurred.

2. Monitor mitigation and property conditions continuously

Wildfire risk changes between policy cycles. Defensible space can be cleared or allowed to regrow. Roof materials can be replaced or deteriorate. Vegetation conditions shift with drought, storms, land use, and seasonal growth.

For carriers, mitigation recognition cannot be a one-time underwriting event. It requires current data on the property and its surroundings, along with the ability to explain how mitigation affects eligibility, pricing, or renewal decisions.

This is becoming both an underwriting priority and a regulatory expectation. As states move toward greater transparency around wildfire scores, carriers need defensible ways to identify mitigation, reflect it in risk decisions, and communicate the impact to policyholders.

3. Validate wildfire models across multiple fire environments

Wildfire exposure is no longer confined to one familiar pattern. Carriers may face risk in dense California neighborhoods, Western wildland-urban interface zones, rugged Mountain West terrain, rural recreational areas, and emerging non-traditional markets in the Southeast.

Model validation should reflect that diversity. A wildfire model that performs well in one region or fire environment may not provide the same signal across an entire book of business.

Carriers should require evidence that wildfire models separate risk across the geographies and property types represented in their portfolios. That means evaluating performance against observed fire outcomes, not only relying on theoretical risk assumptions or broad hazard classifications.

4. Prepare for explainability, governance, and appeals 

Wildfire modeling is moving into a more accountable phase. Carriers increasingly need to explain how scores are used, identify the factors driving risk, recognize property-level and community-level mitigation, and support policyholder appeals.

This changes what underwriting and actuarial teams need from wildfire models. Predictive performance still matters, but it is not enough on its own. Carriers also need transparency, documentation, governance, and operational workflows that can stand up to regulatory and policyholder scrutiny.

For 2026, the strongest wildfire strategies will combine accurate risk segmentation with explainable decision-making. Carriers that can see risk clearly, act on it consistently, and explain it credibly will be better positioned for underwriting discipline, regulatory readiness, and profitable growth.

Frequently Asked Questions

What is the 2026 wildfire outlook for P&C insurers?

The 2026 wildfire outlook points to a broader and more complex risk environment for P&C insurers. Drought conditions are improving in parts of California, while elevated dryness is developing across the central Rockies and parts of the U.S. South. For carriers, the key issue is not only where fires may occur, but which properties are most likely to be reached, damaged, or destroyed when wildfire moves into populated areas.

Why do insurers need property-level wildfire risk models?

Insurers need property-level wildfire risk models because wildfire exposure can vary sharply from one home to the next, even within the same neighborhood. Defensible space, roof materials, vegetation, topography, structure characteristics, surrounding fuels, and local fire behavior can all affect whether a property is reached, damaged, or destroyed. ZIP codes, static maps, and broad geographic classifications cannot capture that variation with enough precision for underwriting, pricing, renewal, and portfolio management.

How many structures were destroyed in the 2025 wildfire season?

18,385 structures were destroyed in the 2025 wildfire season — more than 2.5 times the 2021–2025 average. Nearly 90% of that structural loss came from the January 2025 Los Angeles fires (Palisades and Eaton), which together destroyed nearly 16,000 structures and generated an estimated $40 billion in insured losses. Total acres burned in 2025 came in below the five-year average, making the divergence between acreage and structural loss the defining characteristic of the season.

How can carriers use wildfire risk scores in underwriting and pricing?

Carriers can use wildfire risk scores to segment new business, evaluate renewals, refine pricing, identify mitigation opportunities, manage portfolio concentration, and support reinsurance planning. The most useful wildfire risk scores are property-specific, explainable, and validated against observed fire outcomes, so underwriting and actuarial teams can understand both the risk level and the drivers behind it.

How much does wildfire risk vary by property?

Wildfire risk varies significantly at the property level. In ZestyAI’s analysis of 2025 wildfire perimeters, properties in the highest wildfire risk tier were roughly 500 times more likely to fall within a wildfire perimeter than properties in the lowest tier. Across case studies in Oregon, Utah, and North Carolina, properties inside fire perimeters were concentrated in High or Very High risk classifications at 11 to 15 times the statewide average.

Is wildfire risk growing outside the Western United States?

Yes. Wildfire remains a major concern in the West, but 2025 showed that wildfire exposure is also relevant in non-traditional markets. The Black Cove Fire in North Carolina occurred in a state where wildfire has not historically been treated as a primary underwriting peril. Inside the Black Cove perimeter, 84% of properties had been classified as High or Very High Risk before the fire, more than 15 times the statewide average.

Which states face elevated wildfire exposure?

Wildfire exposure depends on both the share of properties in higher-risk tiers and the location of actual fire activity. California accounted for 92% of all U.S. residential properties that fell inside wildfire perimeters in 2025, even though only about 11% of its properties score High Risk. Colorado has a more distributed profile, with approximately 12% High Risk and 17% Medium Risk. Montana carries a higher share of High Risk properties relative to the national average.

What does Colorado HB25-1182 require from insurers?

Colorado HB25-1182, effective July 1, 2026, applies to insurers that use wildfire risk models, catastrophe models, or scoring methods to assign property risk. The law requires insurers to explain how models are used, account for property-specific and community-level mitigation, provide annual notices about wildfire risk scores and mitigation discounts, and establish an appeal process for disputed scores or classifications. Appeals must be acknowledged within 10 days and resolved within 30 days.

How are wildfire modeling regulations changing for insurers?

Wildfire regulation is moving toward greater transparency, mitigation recognition, model governance, and consumer explainability. Insurers increasingly need to show how wildfire scores are used in underwriting and pricing, which factors influence those scores, how mitigation is reflected, and how policyholders can dispute or improve their classification. This shifts wildfire modeling from a purely analytical capability to an operational and regulatory requirement.

What is Z-FIRE?

Z-FIRE is ZestyAI’s property-level wildfire risk model. It produces scores designed to estimate both the likelihood that a property will fall within a wildfire perimeter and the likelihood that the property will be damaged or destroyed if exposed. The model incorporates property and environmental factors such as defensible space, roof materials, structure characteristics, vegetation, topography, and surrounding fuels.

How did Z-FIRE perform in 2025 wildfire events?

ZestyAI evaluated Z-FIRE across three 2025 wildfire events in Oregon, Utah, and North Carolina. In each case, properties inside the fire perimeter were heavily concentrated in High or Very High risk classifications before the fire occurred. Across the three case studies, that concentration was 11 to 15 times the statewide average, showing strong risk separation across different fire environments.

How many structures were destroyed in the 2025 wildfire season?

The 2025 wildfire season destroyed 18,385 structures nationwide, more than 2.5 times the 2021–2025 average. Nearly 90% of that structural loss came from the January Los Angeles fires, where the Palisades and Eaton fires destroyed nearly 16,000 structures.

What should carriers do to prepare for wildfire risk in 2026?

Carriers should reassess wildfire exposure at the property level, monitor mitigation and property conditions continuously, validate wildfire models across multiple fire environments, and prepare for greater explainability, governance, and appeals requirements. The goal is to understand which properties carry the highest wildfire exposure before the next major event occurs, then use that insight to improve underwriting, pricing, renewal, and portfolio decisions.

For the full property-level analysis, state risk profiles, case study data, and regulatory overview, download the complete Wildfire Season Preview 2026.