In many areas of the United States, communities are facing unprecedented challenges associated with wildfires, especially as urban conflagrations have become more frequent and destructive over the past decade. This escalating wildfire risk has destabilized insurance markets, leading to cascading economic effects such as delayed real estate transactions, stalled new construction, and property value decreases.

This issue brief, which Milliman prepared on behalf of Alliance for Wildfire Resilience, summarizes at a high level the issues faced by U.S. homeowners in wildfire-exposed areas and the challenges in managing wildfire risk today. It explains how wildfire risk is affecting the sustainability of the property insurance market, which serves as a critical financial safety net for individuals, businesses, and communities. The brief also offers insights on ways federal policymakers can help reduce risk and restore sustainable insurance in wildfire-exposed areas, with benefits to economic resilience and stability.

Key areas of discussion include:

• How wildfire risk, especially increasing risk of urban conflagration, is impacting homeowners and communities
• Cascading impacts on the broader economy, from the housing market to mortgage lending to municipal bonds, and insurance sustainability
• Challenges involved for wildfire risk reduction and ways that federal policymakers can play an effective role
• Need for collaboration and coordination among stakeholders, as well as better wildfire data, models, and metrics