California's financial future is under fire

In 2017, California experienced the worst fire season in history.

Five of California’s most destructive wildfires on record occurred in 2017. In fact, 2017 is the costliest year on record for insurers with total U.S. wildfire peril totaling $16 billion in losses, according to Burning Issues, Allianz’s 2017 wildfire review.

In 2018, the Golden State is still battling wildfires. Almost 4,000 fires were raging across California as of August 5, scorching more than 600,000 acres, according to the California Department of Forestry & Fire Protection. That’s more than double the acreage at this time last year, and more than quadruple the year-to-date five-year average.

Related: California wildfires were terrible last year. Will this year be worse?

The spark before the flame

The U.S. West Coast is regularly confronted with the risk of conflagration if a wildfire is sparked. The concern now centers around the fact that wildfires are increasing and wildfire season is getting longer in the Western U.S.

Humans share most of the blame when it comes to wildfires. According to 2017 paper published in the Proceedings of the National Academy of Sciences by Jennifer Balch, the director of the Earth Lab at the University of Colorado in Boulder, humans caused about 84% of all U.S. wildfires in the two decades through 2012 and have tripled the length of fire seasons.

Related: California Carr wildfire kills at least 2 and prompts mass evacuations

California’s businesses

When fires rage, everything in its path is at risk of being obliterated. The same is true for California’s wine industry.

WIneries are dependent on stable soils and consistent climates to be successful. The Golden State’s wine industry, which contributed almost $58 billion to the state economy in 2016, is looking for new ways to mitigate wildfire losses.

Allianz’s report notes that some in the wine industry predict that parts of California, France, Spain, Portugal, Australia and South Africa will become too hot and dry to produce quality wines by 2050. While many homeowners and business owners have coverage for wine country wildfires, some believe the region could see an exodus of non-specialty insurers, which once took on winery risks, leaving the market.

As wildfires are projected to increase, as well as wildfire season itself expected to lengthen in duration, the question remains: Will California rise from the ashes going forward or be extinguished in the process?

Related: California takes action to assist wildfire survivors