Wildfire has emerged to become one of the major catastrophic perils in the US insurance market. 

Last year, western US states were hit with between $7bn and $13bn of wildfire losses. That compares to average wildfire losses incurred between 1964 to 1990 of just $100m at today's prices.

As part of its efforts to help insurers better understand the risk, RMS launched its RMS US Wildfire HD Model on the cloud-based, risk analytics platform, Risk Intelligence, in 2019.

The model suite upgrades current models which have relied on inadequate zoning and mapping products and a lack of probabilistic insight. This is to help underwriters capture the full impact of wildfire at high resolution and gain understanding of the complex behaviours that characterise fire spread, ember accumulation, and smoke dispersion.

Earlier models suffered from inadequate zoning and mapping, and a lack of probabilistic insight. RMS’s HD model rectifies that, helping underwriters capture the impacts of wildfire in detail and gain understanding of the complex behaviours that characterise fire spread, ember accumulation and smoke dispersion.

The product’s probabilistic model simulates more than 18m wildfires and claims to be the only one that covers the entire US. It also provides fire footprints that address surface fuel, topographic data, weather conditions, moisture and fire suppression. Analytics help quantify the relative contribution of burn and smoke for more relevant coverage, portfolio management decisions and new product opportunities.

Michael Young, vice president, model product development at RMS, says: "Wildfires are now causing billions of dollars of damage on an annual basis and the market is recognising that its approach to these perils needs to evolve. A deeper understanding of the impact of wildfire provides carriers with a more complete view of risk."