Industry Snapshot: Wildfire Coverage is Red Hot

At the beginning of 2026, we wrote a retrospective on the 2025 Los Angeles wildfires and made some predictions about how wildfire coverage might evolve in the cat bond space. The Palisades and Easton fires were sobering events, given the loss of human life and scale of disruption to the lives of millions of Southern Californians and combined loss estimates reaching a staggering $53B in property damage and $250B in total economic losses.

According to a recent Artemis report, cat bond wildfire exposure reached a historic high of just over $5B so far in 2026. This is nearly double from what it was three short years ago in 2023, and we clearly see that this growth comes from 20 individual cat bond series issued in the first-half of 2026 plus a few mid-year deals in July. We’re seeing more wildfire cat bonds issued outright, and we’re also seeing wildfires more regularly included in multi-peril structures.

Wildfires were once considered a secondary threat but are now increasingly taking center stage. To understand why, we can always look at the increased frequency with which these events happen. And as they become more commonplace, these fires produce data used to improve models that can help make smarter predictions about when and where they’ll happen next - and how much devastation they could cause.

This increased wildfire-related cat bond issuance comes at an interesting time as we’re also in an El Niño year. El Niño historically produces conditions that result in more rainfall, particularly in California, but even in an environment with increased rainfall, the weather pattern could still lead to more wildfire risk. Perhaps it sounds counterintuitive, but consider that heavy rain is a catalyst for vegetation growth, and if a hot and dry period happens to follow, this vegetation can be expected to dry out and more easily spread wildfires. Staying in California for this example, of the top 20 most destructive wildfires the state has experienced, 13 have happened in the last 10 years.

Let’s also zoom outside of the US and consider what we’re observing overseas. Europe has been battling heatwaves all summer, with countries such as the UK, France, and Spain experiencing their hottest days on record - reaching temperatures upwards of 111 degrees Fahrenheit. As a result, the region has experienced an unusually active wildfire season.

In France, for example, a wildfire displaced over 220,000 people – a displacement that’s the largest the continent has seen since WWII. In total, there have been over 1,500 wildfires across Europe this year, according to the World Economic Forum. Just as the frequency and intensity of these events are changing here in the US, it’s also changing abroad.

Wildfires are no longer a sidelined secondary peril. As global warming increases temperatures worldwide, they are becoming a greater environmental and source of serious financial risk. It’s no wonder we’ve seen such significant growth in cat bond issuance related to losses from wildfires. We anticipate that these numbers will continue to climb this year and further into the future, as wildfire risks continue to increase in the US and across the globe.

Sources:

Artemis

Western Fire Chiefs Association

AP News

EcoDebate

World Economic Forum