Insurance Crisis Deepens as Wildfire Risk Hits Record Highs in 2025

A new study highlights an escalating insurance crisis as wildfire threats surge across North America in 2025. Over 150,000 households in California’s most vulnerable fire zones are now without insurance, with private companies increasingly pulling back from high-risk areas. The findings suggest mounting financial pressures for homeowners and potential ripple effects across real estate and lending markets.

The report, published by Montreal-based Deep Sky, analyzes insurance market data from California, Oregon, Texas, and Washington, combined with advanced fire weather modeling. It reveals a sharp decline in available home insurance, particularly in California where one in five homes in extreme fire-risk zones has lost coverage since 2019. Insurance premiums in these areas have surged by 42% since 2009, while government-backed insurance programs like the California FAIR Plan have seen enrollment spikes of over 100% in the last five years.

Deep Sky’s Fire Weather Index shows that 2025 spring fire conditions are reaching unprecedented levels, with the U.S. Southwest and northern Mexico experiencing the most dangerous spring in a decade. Canadian provinces Manitoba and Saskatchewan have already declared states of emergency, while Alberta and British Columbia brace for worsening conditions as the season peaks. Across Canada, more than 200 fires are active, half of them classified as “out of control.”

The study warns that these insurance market shifts are early indicators of broader financial risks tied to climate change. As private insurers withdraw and government programs become overburdened, property values in high-risk areas face possible collapse. Mortgage approvals are also under threat, given lenders’ reluctance to finance uninsured properties. Analysts predict a cycle where worsening climate conditions feed larger wildfires, leading to greater economic instability.

Deep Sky’s research builds on its 2024 analysis, which found extreme wildfire events, once expected once every century, are now occurring roughly every five years. The company warns that insurance market behavior may only be the first sign of deeper systemic disruptions triggered by accelerating climate change. The full report, including detailed methodologies and risk assessments, is available through Deep Sky’s website.

Article by multiple RFHC contributors, based upon information from a press release issued by Deep Sky.

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