Wyoming, Idaho most at risk for prolonged wildfire recovery

While less populated, states with fewer housing units face more prolonged wildfire recovery risks, according to CoreLogic.

Tom Larsen, principal, insurance solutions at CoreLogic, said in a release: “It’s important to acknowledge that not all communities and their catastrophic events are the same, and the road to recovery can look drastically different. Resilience is often measured as how fast you can recover from a catastrophe — and the deeper the wound, the longer it takes to heal.”

California typically tops rankings of states facing the most significant wildfire risks because of the sheer volume of its population; however, Wyoming and Idaho actually face the most risk for prolonged wildfire recoveries, according to a review by CoreLogic.

In addition to population, the data and analytics provider factored in other wildfire property risks communities face, including reconstruction material availability, temporary housing capacity, and the potential for economic recovery.

“There’s no denying a state like California is at severe risk for wildfire destruction every year, as seen in the ongoing Dixie Fire,” Tom Larsen, principal, insurance solutions at CoreLogic, said in a release. “It’s important to acknowledge that not all communities and their catastrophic events are the same, and the road to recovery can look drastically different. Resilience is often measured as how fast you can recover from a catastrophe — and the deeper the wound, the longer it takes to heal.”

Higher percentage of housing stock at risk

Consider, for example, the volume of housing available in California and Wyoming. If a wildfire destroys 800 homes in California, the recovery and lasting impact would not be similar to an event that saw 800 homes destroyed in Wyoming since the number of lost homes would be a greater percentage of the state’s available housing.

While less populated, states with fewer housing units available face more prolonged wildfire recovery risks.

When analyzing wildfires through this lens, Wyoming, Idaho, New Mexico, Utah and Nevada face the most risk for prolonged recoveries, CoreLogic found.

Further, if a larger portion of a location’s population is displaced from the same event, the recovery time can be extended. Driving this is the potential for a shortage of local workers, who would be busy rebuilding their lives. Additionally, temporary housing, soaked up by displaced locals, would be in short supply for outside workers, CoreLogic reported.

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Commercial P&C Insurance

Commercial Office Space Set for a Strong Comeback

The sustained increase in demand for office space across the nation since late 2022 suggests that the market has moved past its lowest point, according to insights from the real estate technology platform, VTS. Demand for office space began to rise in late 2022 and continued into early 2023. Since then, the office market has experienced a period of stability and growth, supported by favorable economic factors, indicating a market rebound. This conclusion is drawn from the VTS Office Demand Index (VODI), which tracks unique new tenant tour requests for office properties in key U.S. markets. The VODI serves as an early indicator of future office leasing activity. According to the index, demand for office space has grown consistently over the past 12 months, closing the second quarter with a 17% year-over-year increase and a 34% rise from the VODI’s lowest point in December 2022. A significant shift in office-based employment patterns further supports the belief that demand for office space has stabilized. After reaching its peak in August 2022, office-based employment declined by 3.9% in early 2024. However, this trend has since stabilized, and employment growth has remained steady. Additionally, a recent decrease in work-from-home rates has fueled the renewed demand for office space. “They say you can only recognize a market bottom after it has passed, and the office space market is no exception. Following what we now see as the bottom, the national demand has gradually increased, though it remains susceptible to economic challenges,” said Nick Romito, CEO of VTS. “However, the growth observed in VODI over the past 18 months, coupled with positive trends in the office-using workforce, suggests that the market has reset, and the worst is behind us.” It’s important to note that this national trend does not impact all local markets equally. Cities like Los Angeles and New York City have seen healthy growth in office space demand, while markets such as San Francisco and Washington, D.C., have experienced prolonged stagnation. In Los Angeles, office space demand surged in the second quarter, briefly surpassing pre-COVID levels, driven by an increase in the average size of office spaces sought by tenants. New York City followed a similar overall pattern, though with some softness in the second quarter. Conversely, San Francisco’s demand for office space remains unpredictable, largely due to its tech-focused workforce, which continues to favor remote work more than other industries. “Markets heavily dependent on the tech sector, like San Francisco and Seattle, are on a markedly different post-COVID recovery path compared to more diversified markets like Los Angeles and New York City. It may take some time before we see office demand in San Francisco and Seattle return to pre-COVID levels,” added Ryan Masiello, Chief Strategy Officer at VTS.

Cyber Liability

Global IT Outage Puts Business Interruption Insurance in the Spotlight

In July, a global IT outage had a significant impact on business interruption insurance policies, overshadowing the effects on cyber insurance coverages. “This incident wasn’t a result of a malicious attack, which is why typical cyber insurance policies may not have been activated,” explained Peter McMurtrie, a partner in West Monroe’s insurance sector, in an interview with PropertyCasualty360.com. “Where coverage was applicable, factors like deductible amounts, waiting periods, and coverage limits played a critical role in determining the extent of exposure,” McMurtrie noted. “Standard policies for small businesses were less likely to offer coverage, while more complex policies for mid-sized companies and Fortune 500 corporations may have included broader triggers for non-malicious outages caused by third-party software issues.” The outage was triggered by a software update on July 19, 2024, by cybersecurity firm CrowdStrike, which affected organizations worldwide using Microsoft Windows. This interruption had far-reaching consequences, including disrupting hospital systems, media outlets, financial institutions, delaying thousands of flights, and halting daily business operations. McMurtrie emphasized that while the initial impact of the outage was similar for both large and small businesses, the ability to recover operations and whether insurance covered the loss of business income varied. “Larger companies are more likely to have advanced disaster recovery plans that ensure service redundancy following unexpected outages,” he added. “Their insurance programs also tend to cover a wider range of incidents.” According to Microsoft, the CrowdStrike update error affected over 8.5 million Windows devices globally. The incident highlighted the interconnected nature of our global ecosystem, including cloud providers, software platforms, security services, and their clients. “It’s a stark reminder of the importance of prioritizing safe deployment and disaster recovery across the tech industry,” the company said in a blog post. McMurtrie pointed out that the outage’s widespread impact was largely due to its effect on organizations that are critical to societal infrastructure—sectors like agriculture, airlines, banking, energy, government, healthcare, manufacturing, and retail. “Insurance companies base their risk appetite on their ability to understand and price risks appropriately. This becomes increasingly challenging with emerging threats,” he said. “However, I anticipate that insurers will respond by clarifying policy language, refining risk selection criteria, and possibly developing new products specifically designed for this evolving exposure.”

Wyoming, Idaho most at risk for prolonged wildfire recovery