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Evolving natural disaster risk reveals a less obvious yet far-reaching consequence for insurers: Traditional methods of managing risk concentration can't keep up with a constantly changing risk landscape. (Credit: BuildMetrix) Evolving natural disaster risk reveals a less obvious yet far-reaching consequence for insurers: Traditional methods of managing risk concentration can’t keep up with a constantly changing risk landscape. (Credit: BuildingMetrix)

The 2018 Camp Fire in Northern California left behind devastation in many forms: burned-out businesses, incinerated homes, charred cars. In total, the fire destroyed nearly 19,000 structures and claimed the lives of 85 people. The blaze also caused another casualty: A regional insurer was forced into liquidation in part because it had taken on too much risk in areas affected by the fire.

The Camp Fire was extraordinary in its scale. It highlighted the fact that wildfires are becoming increasingly destructive and difficult to model using traditional, historical data-driven methods. But wildfires are just the beginning. Much like a hurricane, flood, earthquake, mudslide or tsunami, the Camp Fire inflicted severe damage on a specific area, and research indicates that natural disasters like these are increasing in frequency and severity.

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