Wildfires burned through 390 million hectares in 2025 – equivalent to 92% of the European Union’s land area – yet the costliest event of the year, the January fires in and around Los Angeles, burned just 23,000 hectares while causing more than USD 53 billion in damage.
The costliest single event during the year was the Los Angeles wildfire disaster: 30 people died, and Munich Re calculated the cost of damages at USD 53 billion, of which USD 40 billion was insured. The year’s second most expensive disaster, Myanmar’s 7.7 magnitude earthquake in March, had damages of around USD 12 billion; however its human cost exceeded 4,500 lives, with thousands more injured.
Every year, institutions across the insurance industry, international organisations, and think tanks publish aggregate figures on disaster losses. But we need to do much more to improve the quality of data on disaster-related damages and losses.
Kamal Kishore Special Representative of the United Nations Secretary-General for Disaster Risk Reduction
The global reinsurance industry’s balance sheet forms a basis for how disasters are discussed, compared, and remembered. But while these numbers make the news cycle – and draw much-needed attention to rising disaster risks – they capture only part of the story.
Beyond the insured damage to homes and businesses lies a far larger set of costs – borne by communities, ecosystems, health systems, and future development – that rarely appear on balance sheets. These invisible costs affect recovery long after the flames are extinguished, and determine whether societies emerge more resilient or more vulnerable to the next shock.
When disasters strike a major metropolitan centre – especially one that we all know and recognize from countless movies and television shows – the world sits up and takes notice. Damages and impacts are counted, catalogued, priced, and modelled. Yet even in LA, much of their damage remains systematically unmeasured. For further flung fire-affected communities and ecologies, these invisible costs are possibly greater and even less observed.
Wildfires rank among the most economically destructive hazards globally, and the costs are rising. Between 2014 and 2023, wildfires caused an estimated USD 106 billion in economic losses and USD 74 billion in insured losses globally – far exceeding losses in the previous decade, as found by the 2025 Global Assessment Report on Disaster Risk Reduction (GAR 2025). The United States accounts for most of these impacts, with nine of the ten most expensive wildfire events since 1970 occurring in the US, even before accounting for the January 2025 California wildfires, GAR 2025 shows.
A global perspective adds fuel to the fire
The countries most affected by wildfire in terms of land burned are overwhelmingly in Africa: during 2025, wildfires burned through nearly 390 million hectares worldwide (an area almost as large as the European Union), with over half of the total area (nearly 246 million hectares) in Africa. These fire-ravaged tracts of land in Africa, mostly uninsured, are home to millions who suffer losses to their subsistence livelihoods, as well as the destruction of priceless environmental and cultural heritage.
Australia – where a state of emergency has recently been declared because of extreme wildfire risks in Victoria – recorded one of the largest proportions of land affected by wildfires during 2025. But unlike many other fire-affected regions, Australia benefits from long-standing, high-quality loss data, allowing wildfire impacts to be assessed over decades rather than inferred from isolated events.
According to assessments by the Insurance Council of Australia, based on Munich Re data, Australia has ranked second only to the United States for per-capita extreme-weather financial losses over most of the past 45 years.
However, global wildfire costs appear concentrated where assets are high value and insured – which is almost certainly not where impacts are greatest.
Rising exposure is reshaping wildfire risk. As settlements expand into fire-prone areas, economic losses linked to wildfires have increased by around USD 170 million annually since 1970.
These losses do not end when the flames are extinguished. Fires damage ecosystems, destroy livelihoods, disrupt essential services, and undermine health across wide areas, often far from where they start.
Exposure is also rising rapidly. Even though total burned area has declined in some regions, the number of people living in wildfire-prone areas has grown by about 40% over the past two decades, driven largely by the expansion of settlements into high-risk zones.
Despite this, wildfire risk remains poorly quantified. In most countries, estimates of average annual loss (AAL) and probable maximum loss (PML) are missing, incomplete, or still under development. National risk profiles typically prioritise floods, storms, or earthquakes, while wildfire risk is treated qualitatively or left out altogether.
This creates a structural blind spot. When wildfire risk is not measured, it is sidelined in investment decisions, insurance design, and fiscal planning. Prevention remains underfunded, and losses continue to rise. Improving wildfire risk analytics is challenging—fire behaviour depends on interacting climatic, ecological, and human factors, and global historical loss data are inconsistent—but it is necessary. While some countries, such as the United States, Canada, and Australia, have developed partial approaches, there is still no shared global methodology that allows comparison across countries.
What counts and gets counted by the insurers
From the perspective of insurers and reinsurers – the institutions that offer insurance to insurance companies to cover megalosses – 2025 stands out as a year of exceptional wildfire losses. According to Munich Re, the estimated USD 40 billion bill to insurers makes the California blaze by far the largest insured loss on record from a wildfire event.
These damages were especially severe because of a very dry season with prolonged Santa Ana winds, and dense concentrations of high-value residential property in the fires’ paths. More than 16,000 structures were destroyed, many in some of the most expensive housing markets in the United States.
Over the past decade, wildfire-related insured losses have risen sharply. Before 2015, wildfires accounted for roughly 1% of global insured losses resulting from natural hazards. Today, that share has climbed to around 7%, with eight of the ten costliest wildfire events on record occurring since 2015, the Swiss Re figures show. The growth is partially driven by changes in the hazard – hotter, drier conditions – but largely by the rapid expansion of people and high-value assets into high-risk zones.
GAR 2025 calculated that total losses from those fires – including insured, uninsured and long-term indirect costs – are even higher, and likely to exceed USD 250 billion, making it among the most expensive disasters on record.
But most expensive doesn’t necessarily mean most destructive.
The invisible and long-term costs
“Even when data exists, it is often focused on direct impacts and not enough on indirect impacts. This is a major gap in how disaster risk is understood.” – Kamal Kishore
What insured loss figures obscure is the duration and breadth of wildfire impacts.
Property damage is only the first blow, even for those fortunate enough to be insured. Long after claims are settled, communities are knocked again and again: by the loss of productive land, degraded ecosystems, disrupted livelihoods, and long-term health consequences that can persist for years or decades.
Also missing are the cascading effects of post-fire pollution, particularly where industrial sites, hazardous waste, or infrastructure are ignited.
While wildfires typically cause fewer immediate fatalities than floods or storms, the health impacts are profound. Severe burns require specialised medical care, which is often difficult to access when roads and communications are cut.
Smoke inhalation exposes populations to extreme concentrations of particulate matter and toxic compounds, driving respiratory, cardiovascular, and ophthalmic disease.
Falling through the cracks in Los Angeles
The 2025 Los Angeles wildfires show how even in data-rich, insurance-saturated contexts, invisible costs persist. Independent estimates place total economic damage between USD 250 billion and USD 275 billion, far exceeding insured losses alone.
Beyond destroyed property, business disruption within fire perimeters is projected to result in USD 4.6–8.9 billion in lost economic output between 2025 and 2029, with knock-on effects for employment and regional growth. Low-income and immigrant workers – including gardeners, cleaners, and service staff, who often lack institutional protection – were among the most affected, losing jobs or income as homes and workplaces were destroyed.
Health impacts also extended well beyond official fatality counts. While the immediate mortality of the fires was recorded as 31, excess-mortality analysis suggests up to 440 deaths may be attributable to smoke exposure and related effects, revealing a far larger public-health toll, according to excess mortality analysis by Boston University and the University of Helsinki.
Costs for communities
Disasters detonate underlying pressures.
In Los Angeles, the fiery destruction of housing intensified an already severe affordability crisis, pushing rents higher and deepening labour shortages as displaced workers struggled to remain in the region.
Social infrastructure also went up in smoke. Around 10% of LA County’s nonprofit sector experienced service disruptions, weakening informal care networks. Supply-chain interruptions further strained local economies, slowing reconstruction and raising costs for households and businesses alike – especially smaller, family-run businesses that have fewer resources to draw on.
Public funds to support community projects evaporate. Between 1990 and 2015, California municipalities affected by wildfire experienced greater budget deficits due to higher spending on recovery, meaning less to spend on community development.
Wildfires now rank as the single largest driver of global forest loss. Fires account for record levels of tree-cover loss, including approximately 75% of forest loss in UNESCO World Heritage sites, voraciously consuming biodiversity and carbon sinks.
This has devastating consequences for water and food systems.
Wildfires increase risks of other hazards, leaving a higher likelihood of floods, landslides and erosion where the soil-anchoring and rain-trapping vegetation has been burnt away. Other hazards, especially drought and extreme heat, increase wildfire risks, driving a vicious cycle of wildfires and other disasters.
Wildfires can produce long-term change in plant species composition and structure of forest ecosystems. For many regions – including Australia, Africa, the Amazon, and Indonesia – altered fire regimes are also enabling invasive species to outcompete native vegetation, reducing ecosystem resilience.
For communities that depend on these scorched natural resources, ecological losses translate into economic and social costs.
Fires also disrupt learning, reduce productivity, and erode earning potential – particularly for children. School closures and displacement reduce learning continuity, reinforcing cycles of vulnerability. As the GAR 2025 shows, these dynamics feed into risk spirals, where loss today reduces capacity tomorrow, increasing exposure to future hazards.
Compounding the climate crisis
Between March 2024 and February 2025, global wildfire events emitted more than 8 billion tonnes of CO₂ according to the State of Wildfires Project, reinforcing climate feedback loops that intensify future fire risk. Under high-emissions scenarios, wildfire damages could triple by 2070, driven by the interaction of climate change and vulnerability.
As Munich Re note in their report on the costs of 2025’s disasters, “it is striking how many extreme events were likely influenced by climate change. This was true of the Los Angeles wildfires, multiple particularly strong hurricanes in the North Atlantic and many catastrophic floods. Numerous studies have indicated that climate change increases the frequency or severity of weather disasters – if not both.”
Making invisible costs visible
“We have ample data for large, visible disasters, but data on small- and medium-scale events remains patchy, particularly for slow-onset and creeping hazards such as drought and extreme heat.” – Kamal Kishore
What we choose to measure determines how risk is managed. As wildfire risk continues to rise, the gap between insured losses and societal impacts must be addressed.
Innovative financing mechanisms – including insurance-linked instruments that support liquidity, ecosystem recovery, and social repair – are emerging, but have yet to reach meaningful scale.
Improved data collection, particularly in insurance blind spots, would strengthen public budgeting, enable communities to access support, and improve the accuracy of risk models.
Reducing wildfire risk depends on recognising and valuing the full spectrum of impacts. That begins with making invisible costs count.
