Advanced analytics key to managing wildfire risk: Lockton Re & Green Shield

As wildfire risk continues to rise, portfolio managers need advanced analytics that not only identify property-specific risk but also integrate these insights across the insurance value chain to build greater resiliency, according to a recent report by reinsurance broker Lockton Re and Green Shield Risk Solutions, a specialty insurance services MGU and wholesale broker.

The report highlights the dramatic surge in wildfire activity across the western US over the past decade and underscores the increasing importance of using the right analytics to navigate this challenging landscape.

The recent devastating wildfires in Los Angeles further demonstrate the growing pressure on companies and the mounting difficulty of navigating the wildfire insurance market.

As wildfires become a more pressing concern for portfolio managers, the tools used to measure risk are becoming more critical. The report emphasises the need for underwriting and portfolio management tools to work together. A connected toolset not only captures key property-specific risk characteristics but also propagates these insights into downstream analytics.

Matt Cohen, Head of Global CAT Modeling, Lockton Re, said, “Sound analytics at all levels of the business are becoming table stakes for any wildfire portfolio manager. The key to a resilient business? Making sure these analytics communicate with each other to create a holistic approach to wildfire management.”

Paul Brady, Head of Wildfire Insights and Mitigation, ISA Certified Arborist, WE-15457A, Green Shield Risk Solutions, added, “Incorporating secondary modifiers allows underwriters to apply model credits for real-world mitigation, enhancing risk assessment accuracy and potentially lowering reinsurance costs.

“Effectively capturing these details is the critical first step to unlocking significant community and portfolio-level benefits.”

Lockton Re and Green Shield Risk Solutions have collaborated to offer a solution addressing this need. By capturing key secondary risk characteristics, Green Shield’s wildfire analytics enable insurers to better differentiate high-risk properties and unlock meaningful cost savings. These detailed property-level insights are easily mapped to catastrophe models, directly influencing loss metrics such as average annual loss (AAL) and return period losses.

Combined with Lockton Re’s expertise in the reinsurance market, the downstream benefits of Green Shield’s solutions help insurers achieve more accurate risk profiles and secure favourable reinsurance terms. This alignment between underwriting and portfolio analytics helps carriers mitigate wildfire risk more effectively, reduce reinsurance costs, and build more resilient portfolios.

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