Addressing Drought Risk in North America
Wildfires have had a devastating impact globally, and the UN projects a global increase of 14% in extreme fires by 2030. In the U.S., the 2025 Palisades and Eaton Fires in California were the costliest events of the year globally—$58 billion in economic losses and $41 billion insured—now the costliest wildfires in U.S. and world history, producing higher losses than the next two costliest wildfire years (2017 and 2018) combined.
Over 90% of U.S. wildfire losses this century occurred in the last decade alone, and it is confirmed that climate change is increasing the frequency of extreme fire weather conditions, lengthening the seasonal window when fuels are conducive to fire. As wildfire exposure to properties and forestry intensifies, many clients are reinvesting savings from their traditional renewals into parametric layers that buy down high retentions and wrap wildfire exclusions left open by traditional coverage.
Parametric wildfire insurance provides an additional source of capacity for challenging exposures. By using objective satellite data and predefined triggers, it can complement existing property programs and provide rapid financial protection when a qualifying wildfire occurs.
How our parametric wildfire cover works
Descartes offers two parametric wildfire solutions: Fire-in-a-Circle and Burnt Area. Using high-res satellite imagery, Descartes determines burnt areas and wildfire proximity (within a predefined perimeter) to assess losses quickly and objectively. Fire-in-a-Circle triggers a payout when a wildfire breaches a predefined geographic circle—direct physical damage is not required, only a declaration of loss statement. Burnt Area bases payouts on the number of hectares burned, fully scalable across any area with no on-site visit required.
Feature | Traditional insurance | Descartes’ parametric |
Claims & loss adjustment | Loss assessed on-site. Subjective, complex, open to dispute. | Triggered by independent third-party data. Objective and transparent. |
Payout timeline | Months, sometimes years, of adjustment. | Days to weeks after the event. |
Use of funds | Usually restricted to repairing physical assets. | Flexible. Covers any financial loss, including non-damage business interruption. |
Coverage | Off-the-shelf, limited room to customize. | Tailored to your exposure and budget. |
Risk period | Annual or long-term agreement. | Flexible: short-term, annual, or long-term. |
Covered Industries
Energy & Renewables
Wildfires damage solar assets, disrupt operations, and cause costly business interruptions.
Retail & Consumer Goods
Wildfires disrupt store operations, restrict access, and cause revenue losses and business interruption.
Financial Institutions
Wildfires disrupt branch operations, restrict access, and cause financial and business interruptions.
Hospitality
Wildfires damage properties, disrupt operations, and reduce occupancy and revenue.
Construction
Wildfires disrupt worksites, delay projects, and increase recovery and reconstruction costs.
Public Entities
Wildfires damage community assets, disrupt essential services, and increase recovery costs.
Manufacturing Industry
Wildfires disrupt production, damage facilities, and cause costly business interruptions.
Our case studies are all over the world
Utilizing Machine Learning and real-time monitoring from satellite imagery & IoT, our state-of-the-art technology helps businesses bounce back faster against climate, cyber and other emerging risks.
Where a parametric wildfire layer fits
Parametric is most powerful as a complement to your existing program. In today's market, it allows organizations to reinvest premium savings into closing the structural gaps a traditional policy leaves open.
The most common ways clients put it to work:
- Buy down a high deductible: reduce retained exposure where wildfire deductibles and retentions have increased significantly.
- Top up a sublimit: add capacity where traditional wildfire sub-limits are insufficient for the value of the insured assets.
- Cover non-damage business interruption: protect against indirect financial losses such as lost income and operational disruption, even where direct physical damage is limited or absent.
- Secure immediate liquidity: receive rapid funds to support recovery, reconstruction, and business continuity rather than waiting for a lengthy traditional claims process.
- Wrap an exclusion: provide an additional layer of protection for challenging wildfire exposures that traditional insurers may exclude or decline.
Who it's for
- Hospitality: protection for hotels, resorts, and other properties exposed to wildfire-related physical damage and financial disruption.
- Renewable energy: coverage for solar energy assets exposed to wildfire risk.
- Asset management: bespoke protection for high-value assets and portfolios located in wildfire-prone areas.
- Forestry & timber investments: protection for forest areas and timber investments exposed to wildfire risk.
- Carbon credits: financial protection for carbon credit-related exposures affected by wildfire.
- Viticulture: protection for vineyards exposed to wildfire and its direct and indirect financial consequences.
- Homeowners Associations & Condominium Owners Associations: additional protection for residential communities facing restrictive limits from insurers of last resort.
Parametric coverage in 4 steps
Assess
Assess and evaluate the client's wildfire exposure using Descartes' proprietary risk model.
Customize
Design a customized cover based on the client's exposure, with payout structures indexed according to wildfire proximity or burned area.
Monitor
Continuously monitor the insured location using satellite imagery and AI to determine whether a qualifying wildfire has occurred.
Payout
Receive a payout within days of the concluded coverage period, accelerating financial recovery and reconstruction.
Global Parametric Insurance Specialist
10 countries with offices around the world
20+ perils covered with best-in-class (re)insurers, written on A+ paper
150+ scientific experts: risk modelers, data scientists, and software engineers
$15B+ capacity already deployed through corporate brokers
FAQ
For more information on parametric insurance, triggers, claims processes, coverage structures: Descartes FAQ Hub
How can risk managers strengthen wildfire protection alongside their traditional program?
By reinvesting savings from traditional renewals into parametric layers that wrap wildfire exclusions, buy down high retentions, and cover non-damage business interruption—closing structural gaps a traditional wildfire policy may leave open.
What gaps does traditional wildfire insurance leave?
Slow claims processes, exclusions for indirect losses (like lost income), and limited coverage for non-physical impacts make traditional insurance insufficient for many organizations.
How does parametric coverage complement the California FAIR Plan?
The FAIR Plan provides essential baseline fire protection for California properties, but it often leaves major exposures uncovered for HOAs, COAs, and other property owners. Parametric coverage can complement it by injecting rapid liquidity after an event—buying down steep deductibles, topping up restrictive sub-limits, and filling gaps like landscaping, shared outdoor areas, and evacuation costs that the FAIR Plan excludes.
What is parametric wildfire insurance?
A type of coverage that pays out automatically when a pre-defined trigger (such as a satellite-detected burnt area) is met—no lengthy loss adjustment needed.
How has parametric wildfire insurance worked for others?
Examples include a condo association in California who secured coverage after being dropped by traditional insurers (read the case study), and a timber company in Australia protecting the financial value of its carbon credits (read the case study).
Can parametric insurance cover lost income or regulatory needs?
Yes. Beyond physical loss, it can cover lost revenue, operational costs, and compliance with lender requirements.
How is the coverage area defined for the Fire-in-a-Circle product?
The coverage area is determined by taking the insured location(s) and adding a buffer of a predefined shape, typically 100 meters, around the insured location(s). The exact geometry of the buffer area would be determined by underwriting during the quoting process, in collaboration with the broker and client.
How is the coverage area defined for the Burnt Area product?
The defined coverage area is based on shapefiles shared by the client. The coverage can account for one or hundreds of forests.
Contact Us
Whether you're quoting a complex risk, looking to break into new markets, or just curious about parametric insurance, our team is here to help you win. Reach out and we will get back to you within 48 hours.
