By Burning Down Buildings, Insurers Want to Change How They’re Built

The insurance industry is setting homes on fire — just to make a point.

The fires are controlled, kindled in a research lab or staged at training facilities used by fire departments. They are designed to simulate the conditions that help wildfires spread through neighborhoods and cause what the insurers call a “conflagration event,” like the one that killed 102 people and destroyed the Hawaiian town of Lahaina on Maui last August.

The message to homebuilders is stark: Homes in certain parts of the United States must now be constructed with wildfires in mind, or they most likely will not be insured, which would mean they can’t be bought with a mortgage.

In part because of climate change and the resulting increase in catastrophic storms and fires, insuring homes in some parts of the country has become a money-losing proposition for the industry. Across the United States, insurers lost $33 billion in 2023 on personal home and auto insurance, according to AM Best, a ratings agency for the industry.

In California, where fires have consumed more than roughly 220,000 acres of land in just this year, major insurers like State Farm, Allstate and Farmers have all pulled back. In some areas, they have stopped writing new policies and have canceled some existing policies. Earlier this month, State Farm asked California’s insurance regulator to approve a 30 percent rate increase for the owner-occupied home insurance it still provides in the state.

“We’ve always had insurance, it’s just been there, it’s been included in our everyday processes like getting a mortgage,” said Josh Wilkins, a retired firefighter in Idaho who now consults with insurers and property owners about reducing fire risk. But “that business model is dying,” he said. “The end users — the insurance customers — are actually going to have to do something to make sure that they keep the business model going.”

Pacific Coast Builders Conference, a trade show in Anaheim, Calif., where builders from up and down the West Coast gathered last month.Credit…Philip Cheung for The New York Times