Could LA's fires change how we prepare our homes for disaster?

Wildfires in LA
Los Angeles wildfires, Getty

The key questions of this article:

  • What can we learn from LA's wildfires?
  • Are we prepared enough for similar disasters in Australia?
  • How much of a role has climate change played in the fires?
  • How much have home insurance costs risen in recent years?
  • What next steps can help mitigate the risks and costs of fire and flood?

The wildfires in Los Angeles have sounded the alarm on the idea that climate change has escalated - that its impacts are possibly worse than we thought.

For some this might be an understatement, while for others it’s an alarmist view. We all understand the pitfalls of debating anything in 2025.

But what can’t be denied is that the LA fires have been so bad we all need to pay a bit more attention, and possibly work on a better gameplan. 

If you’ve ever been to LA during warmer months, you’ll note that it can be very hot and dry. The heat often lingers into the evening. And the winds from the nearby desert (the Santa Ana winds) can also be very strong. 

So when I’ve visited the suburbs there, it’s not been hard to imagine the prospect of dangerous fires. The conditions are precarious and even if there is water nearby in hydrants , it doesn’t seem there’s enough for a catastrophe of this scale. (Along with states such as Colorado and Arizona, water is in limited supply in California).

LA’s fires raise preparation questions

There’s a lot of tree-filled and brush-covered landscape that pops up around LA’s many long and wide roads, and to my eyes having seen bushfires play out in Sydney, it always seemed rather vulnerable. Despite its reputation as a concrete jungle, much of LA is lined with critically dry vegetation. 

We obviously have similar conditions here in Australia, which is why in Sydney at least, the constant backburning that goes on seems especially vital. If you follow the trail of news about LA’s preparation, both backburning and community inspections had been limited in recent months.

What’s also caught many off-guard is that these fires moved so swiftly and through densely populated areas. Embers carried by fierce winds made these particular outbreaks difficult to control. This should give us pause, even with backburning. As we know, windy conditions are also typical in cities such as Sydney and Melbourne.

Are we prepared enough here? Though we’re no strangers to bushfires, we rarely see them rip through dense housing the way they have in LA.

Cost of climate neglect mounts

Beyond the toll on people and communities, which is the chief concern, do we understand the potential financial costs of ignoring climate changes? 

Yes, experts have long warned us of the dangers of rising temperatures, one of the results of which is unpredictable weather. But no matter what the weather does, it seems some people both here and abroad are sitting on their hands.

I remember one recent year visiting LA and we amazingly had torrential rain for days on end. The city usually does see rain over winter - but not like this. So when unusual heavy rain occurs, I can imagine many people thinking the planet isn’t actually overheating but rather just experiencing some weather quirks. 

That’s the thing about climate change though - it’s characterised by unpredictability. It can get confusing and cause complacency. We’re seeing more storms, floods and fires, and consequently more damaged land such as soil erosion and landslides. There are multiple outcomes of uneven weather patterns.

University of California, Los Angeles (UCLA ) experts call this volatility ‘hydroclimate whiplash’, which is a rapid swing between intensely wet and dangerously dry weather.

Some of the facts

So what numbers should we pay attention to?

First, the World Meteorological Organization (WMO) has confirmed that 2024 was the warmest year on record, based on six international datasets. 

The past ten years have all been in the top 10, says the WMO

If you’re not convinced by this, consider the devastating floods in the Mediterranean last year. These were caused by intense storms fuelled by warmer air. A recent New York Times article reported that extreme precipitation leading to floods is likely to continue because the Mediterranean region is already warming 20% faster than the global average. 

So, in short, as the temperature of the air rises and essentially thickens with evaporated water, there’s potential for more water to be held in the sky.



Home insurance challenges

For our purposes at Mozo, let’s check the insurance bill: between 2022 and 2023, the average home insurance premium in Australia rose by 14%, the biggest jump in a decade.

Costs have risen across many areas of society, sure, but the cost of covering insurance has been exacerbated by bad weather. 

Major floods in eastern Australia pushed insured losses in 2022 to a record $7 billion, almost double previous records, says the Australia Institute, a public policy think tank.

Perhaps more alarmingly, since 2013 insured losses in each year have exceeded the combined losses of the five years from 2000 to 2004.

All told, insurance costs are going up and the unpredictable nature of major weather events appears to be a key factor. The expectation is that these weather events will only increase and so the cost will continue to spike. 

Weather worries

Much of the data we have points to more concerning weather ahead.

In its 2022 paper on extreme weather events, the McKell Institute noted that 432 catastrophic events were recorded globally in 2021, significantly higher than the average of 357 annual extreme weather events recorded between 2001-2020. 

While fires have been in the news of late, floods dominated these recorded events in 2021, based on information from the International Disasters Database. Beyond the obvious impact to many communities, what’s staggering here is how much this could all cost: McKell estimates that in Australia insurance could reach $35 billion per year by mid-century, an average of more than $2,500 per household per year

However, in areas at high risk of extreme weather events, insurance costs are typically multiples of national averages, say McKell’s experts.

In summary, the trajectory of insurance costs are becoming unsustainable for many households. Worse still, many households, as we have seen during these LA fires, aren’t able to secure any insurance at all. Insurance companies simply can’t afford the potential cost to their bottom line - at least under the current system(s).

Australia is not immune to these rapidly escalating costs. Here at Mozo we have reported a lot about the rising cost of living and how insurance premiums have been a major component in the overall figures of recent years.

Indeed, the Australia Institute reports that over the past 35 years insurance costs in every capital city have vastly exceeded the increase in the Consumer Price Index (CPI). 

In Brisbane, insurance costs rose by more than five times CPI. In Melbourne, the rise in insurance costs was still 2.8 times CPI even though it’s been the least impacted city on this front.



So where does this leave us?

Governments and insurers might need a new gameplan. We have many communities in vulnerable areas that are prone to floods and fires, but short of moving those people out of those homes and into new ones, how can escalating costs be mitigated?

In an interview this week, the University of Berkeley's director of the Climate Risk Initiative at UC Berkeley’s Center for Law Energy & the Environment, Dave Jones argued that the way traditional insurance is operating amid these climate catastrophes is not going to work in the long term.

The cost simply isn’t feasible for both the customer and insurer and in his view, “relaxing insurance regulations and rate increases are not going to be sufficient to outrun climate change.”

Consider Florida for a moment: Jones says just about all the national insurers have left the state because climate change is making hurricanes more extreme in Florida. These firms can’t profit, even with the state government granting them everything they have asked for in regulatory changes and higher rates.

Direct comparisons to the US are hard to make but the point is clear - more costs to insurers and reinsurers globally will ultimately impact how they act and design home insurance policies around the world.

It’s also worth noting that rules by government policymakers play a role here. In California, for example, risk modelling future fires was put on hold by the government many years ago and that was only recently changed, according to a podcast report by The Economist this past week. 

Data points to upcoming risk

Australia thankfully has a lot of data to work with, especially when it comes to floods. For example, over half a million Australian homes are at high risk of becoming uninsurable for flood damage by 2030, according to new analysis by Climate Valuation, specialists in physical climate risk analysis for individual property owners.

We know a lot more about flooding in 2025 and are in a better position to map future floods, assess the risk in these danger zones and price the risk. We also understand the need to build in less vulnerable areas and with different materials. 

Our regulators have additionally worked at making consumers more aware of flood risk, insurance costs associated with flood damage and why premiums can rise in the most at-risk areas.  

Pinpointing bushfires can be trickier, but some insurers have made strides in this area, too. Take for example Suncorp , which last year rolled out an offer to make premium reductions to eligible customers that complete a 'Bushfire Resilience Rating' assessment and meet a certain score. 

NRMA Insurance has also joined Suncorp in this initiative, with other insurers and banks indicating they will follow suit.  

New ideas for protecting homes

On top of private insurance, both Australia and America have programs and funding in place to protect home owners from disasters, but of course there are limitations to what these can pay for. 

This is why action needs to be taken rather quickly to work out a plan for those homes that can’t be insured - or where the home owner can’t afford an exorbitant cost of say flood or fire-related insurance. 

Chief executive of Climate Valuation, Dr Karl Mellon says it’s not too late if we act now. 

“Solutions are available to ensure homeowners are removed from physical and financial harm,” he said last year as part of a report on uninsurable homes in flood zones .

Confidence and peace of mind

That report offers a series of recommendations that we could look to for guidance on all of this, including grants to help home owners adapt their current homes and lower their potential risk, as well as regulation on building in danger zones. 

Anticipating different types of disasters and their potential impact is part of the issue. And yet, the ongoing work of modelling where and how disaster can strike, be it fire or flood or otherwise, remains crucial to getting a hold on the costs.

Ultimately, insurers want to feel more confident about how they account for the risk. Home owners want more options to help protect their homes. As we saw in LA, handling these challenges begins with preparation.

If we can help homeowners better understand the risks, minimise the threat and gain better control of spiking insurance costs, our communities can gain greater peace of mind, too.

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