Industry Insights - Jon Knouse: How environmental tragedies are rewriting the rules of insurance

“As the world gets more complex and interesting, it also gets riskier, and that means we need to spend more time thinking about that risk and understanding what it takes for us to be successful in any market, a lot of which is learned behavior from actual results.”  
- Jon Knouse - Chief Property Officer, DUAL North America  

Jon Knouse is DUAL’s Chief Property Officer, overseeing underwriting strategies, decisions, proficiency, development and performance across all property lines. In the wake of the devastating wildfires in Los Angeles, specifically the Eaton and Palisades wildfires, this January, we sat down with Jon to gain deeper insight into the broader context of this disaster and where we go from here.  

Evolving the industry after the L.A. wildfires 

The Eaton and Palisade wildfires that devastated Los Angeles in January are estimated to be the most expensive natural disaster in U.S. history, according to Insurance Journal. The fires tore through more than 37,000 combined acres, claimed 30 lives, destroyed over 16,000 structures and caused an estimated $50b in losses (Wildfire Today; Georgetown). Wildfires of this magnitude are rare so early in the calendar year. Typically, the first quarter sees an average of 1.5 fire alerts, or high confidence fire warnings detected through VIIRS satellite data. In 2021, one of California’s most devastating wildfire years, there were 10 early alerts, but 2025 far surpassed that, with over 200 fire alerts between January 7th and 22nd (World Resources Institute).  

Months later, the impact continues. Communities are facing continued environmental impacts (Science), such as dangerous lead levels in soil, excess donations filling up landfills, toxic materials impacting waterfronts, questionable air quality, and dangerous lithium-ion batteries making debris cleanup challenging (LA Times). It goes without saying, risk management is becoming more complex and severe.  

Preparing for an evolving risk landscape 

“Development is a key factor in today’s increasing losses… higher value can increase exposure to loss, especially in more desired places to live, which unfortunately, have some devastating natural exposures.”
- Jon Knouse 

The US has endured many catastrophic disasters, from 9/11 in 2001 to Hurricane Katrina in 2005, and back to the Northridge Earthquake in 1994. Each event, while devastating, has reshaped how we prepare for and respond to catastrophic risk.  

In this instance, several factors were at play to make the wildfires so destructive. Los Angeles experienced a late rainy season with lower-than-average rainfall, after an intensely warm summer. In this dry environment, combined with the Santa Ana winds, the fires were able to ignite and spread quickly, particularly in urban areas, where high population density means short range embers accelerate the spread of flames. The greater Los Angeles area is just one example of how a crowded environment, where more than 12 million people reside, can become exponentially riskier. 

Development is a major factor impacting today’s increasing losses. For example, 100 years ago, Florida’s coastline, another desirable coastal location, had only a handful of homes; today, there are hundreds of thousands. Beautiful destinations often come with natural hazards, and, as population and asset values increase, insured losses naturally increase as well.  

Understanding the responsibility of the insurer 

“People spend a lot more time trying to grow assets than they do trying to protect them properly– viewing insurance as a strategic investment in risk protection can help insureds make more informed decisions, while insurers need to meet evolving consumer needs.”
- Jon Knouse 

Since the start of the insurance industry, the overarching mission has been to provide a safety net in the event of a crisis and help mitigate future risks (Investopedia). Yet, consumers rarely interact with insurers outside of such events, when competing interests are most likely to arise.  

Insurers still aim to support and restore consumers after a loss, while also accurately reflecting the risk environment and maintaining financial health that will allow for claim payments. Understanding the broader risk environment means balancing between value and exposure and adjusting premiums accordingly.  At the same time, it’s important to understand that, generally, many consumers tend to prioritize lower costs, which can sometimes come at the expense of broader coverage. These competing interests between consumers, government and insurers can create an unbalanced market. In the case of California, a combination of regulatory and market pressure contributed to a reduced insurer presence, leaving many homeowners with a lack of available, and possibly affordable, comprehensive coverage options. 

Despite these challenges, the insurance industry is resilient and dynamic. While DUAL is not active in the California homeowners’ market, companies like DUAL aim to offer flexible, innovative solutions to move the industry forward. As a program administrator, we offer specialty expertise to niche markets, on behalf of our capacity partners, paying close attention to market trends and deploying solutions in evolving industries. This role allows DUAL to be nimble and flexible when deploying capital, which in turn means we can take an active approach to problem solving.  

There is a growing emphasis within the industry on shifting focus from seeking exclusions to instead offering robust, comprehensive options, tailored to local markets. Coverage needs to be seen as an investment, rather than a commodity, and insureds should be given the tools to make informed decisions about what coverage they need to protect their assets. There are lessons to be learned from situations like the Eaton and Palisades wildfires, or even the 2023 Maui wildfires, to prevent a similar outcome in the future, but those lessons cannot be universally applied across all markets, and insurers must have the expertise to adapt those lessons across a variety of regions. 

Supporting ongoing risk mitigation and a stronger future 

“Our industry attracts a lot of bright people who are willing to step up and try to solve these problems… without insurance, the world doesn’t work.”
- Jon Knouse 

Insureds also have a role to play in proactive risk mitigation. Tailored partnerships between consumers and insurers build more resilient risk profiles and improved outcomes. Insureds can take a number of proactive steps to alleviate risk and add a layer of power to a claim in the event of a loss, such as using fire-resistant building materials, documenting assets through video, or having a customized plan to protect certain valuables.  While no strategy can eliminate risk entirely, having disaster mitigation plans in place can make a difference when it matters most. 

While disastrous events such as the Eaton and Palisade wildfires are deeply tragic and humbling, they allow the industry to evolve, building back stronger and smarter. Insurance continues to be a cornerstone of society, and the industry goal remains to be a safety net when people and property experience harm, while making the world better and safer in the process. The industry must continue to innovate, collaborate and put people first, offering holistic solutions and developing new products that balance insurer sustainability with market needs. As environmental threats escalate, insurers who lead with innovation - not inaction - will define the industry's next chapter. 

For more information about Los Angeles wildfire recovery efforts, visit emergency.lacity.gov/recovery. To learn more about DUAL North America, visit dualinsurance.com.  

The foregoing article is intended to provide general guidance and information for DUAL North America (“DUAL”) clients and business partners.   and should not be considered legal, financial or insurance advice. The views in this article are those of the individual author and not necessarily the view of DUAL. DUAL makes no warranty, express or implied, and specifically disclaims any legal liability or responsibility for the accuracy, completeness, or usefulness of any information presented. DUAL encourages its clients and business partners to reach out to their contacts at DUAL for tailored insurance solutions.