The January 2025 wildfires in Los Angeles County marked a historic inflection point for the insurance and real estate finance industries. Fueled by record drought and intense Santa Ana winds, the Palisades and Eaton Fires destroyed over 16,000 structures and forced the evacuation of more than 150,000 residents. The total economic toll is estimated at up to $275 billion, with insured losses ranging from $30 billion to $40 billion—making it the costliest wildfire disaster in U.S. history .  
Insurers have borne the brunt of these losses. Lloyd’s of London reported $2.3 billion in claims, while Travelers, Allstate, and Chubb each faced losses exceeding $1 billion . The state-run FAIR Plan, California’s insurer of last resort, is under severe financial strain, with estimated losses of $4 billion and concerns about its solvency .  
In response, the California Department of Insurance issued Bulletin 2025-01, imposing a one-year moratorium on policy cancellations and non-renewals in fire-affected areas . However, this measure is temporary, and the broader insurance market is undergoing significant changes. Insurers are raising premiums by 30% to 50%, reducing coverage options, and, in some cases, withdrawing from high-risk areas altogether .  
For lenders and real estate investors, these developments pose serious challenges. Properties in wildfire-prone areas are becoming increasingly difficult to insure, which in turn affects their financing and valuation. Uninsured or underinsured properties represent heightened risks for loan portfolios, potentially leading to increased defaults and asset devaluation.
ClimateCheck provides critical tools to navigate these risks. Our property-level climate risk assessments enable lenders and investors to identify high-risk assets during loan origination due diligence, integrate climate risk into underwriting processes, and develop mitigation strategies.
By leveraging our data, financial institutions can make informed decisions to protect their portfolios and comply with emerging regulatory requirements, such as California’s SB 261, which mandates that companies with over $500 million in revenue doing business in the state disclose their climate-related financial risks. This legislation underscores the growing importance of transparent climate risk reporting and the need for robust data to support it.
Next Steps:
- Assess your portfolio for wildfire and other climate-related risks using ClimateCheck’s tools.
- Comply with regulatory requirements like SB 261 by leveraging our comprehensive risk assessments.
- Integrate climate risk data into your underwriting and investment decision-making processes.
Contact us here to learn how ClimateCheck can help you manage and mitigate climate risks effectively.