While some insurers are detaching themselves from wildfire cover, particularly in fire-prone regions such as southern California, one Bermuda-based insurer is moving closer.

“There is opportunity, because the demand remains,” said Isaac Espinoza, chief executive of Kettle Re. The Pitts Bay Road, Hamilton firm uses artificial intelligence to better model and price wildfire risk.

Since 2019 insurance premiums have shot up 42 per cent in some parts of California, while one in five homes in extreme risk areas has lost insurance coverage, according to a recent article published by climate research website Deep Sky.

Insurers became even more leery after the 2025 Los Angeles fires caused an estimated $50 billion in insured losses last January.

Mr Espinoza said: “We feel that if we take a disciplined way of underwriting and pricing this business, there is actually a reasonable opportunity. We operate in the excess and surplus space where we have more flexibility around rate, rule and form.”

He admitted there was competition; some other insurers are also taking on more wildfire risk. Higher risk means higher prices.

“Because risk can change from year to year, it is important to be dynamic with risk profiles,” Mr Espinoza said. “We update our risk models frequently. We have aligned ourselves with capacity providers, many in Bermuda, who view this as an opportunity to meet an insurance need out there at the appropriate price.”

Mr Espinoza said Kettle Re has a lot of presence in Bermuda.

“We partner with many reinsurers, so a lot of our capacity partners are there,” he said. “I always view Bermuda as being at the forefront of modelling. Kettle’s thesis is very consistent with Bermuda’s roots and what Bermuda is known for.”

Kettle Re primarily provides parametric cover. This type of insurance pays out immediately when certain predetermined conditions are met such as wind velocity, burn radius or fire proximity.

“Events in California in 2025 were horrible and places such as Palisades and Eton are nowhere near close to being rebuilt, but we are proud to say that by March 2025 we had no open claims,” Mr Espinoza said.

Kettle Re only services the Western United States, but it is often asked about possible expansion.

Mr Espinoza said if the company were to widen its geographic reach, Canada and Australia would make the most sense for expansion.

“Canada gets their fair share of wildfires that cause a lot of damage,” the CEO said. “Also, Canada and Australia are both in the developed world where the insurance market is sophisticated.”

Since the beginning of this year, Australia has been ravaged by some of the most destructive bushfires in its history. The country’s insurers have declared a catastrophe as more than 400,000 hectares have been burnt in Victoria state, 250 homes destroyed and at least one person killed.

Mr Espinoza joined Kettle Re in November 2024, two months before the California wildfires broke out. He knew he would have to deal with them, but had no idea a wildfire disaster would happen so quickly.

January 2025 was widely considered a test for Kettle Re, which had existed for five years until that point.

“We were using AI before AI was even cool,” he said. “My degree was in AI, and that was 20 years ago. People often ask us if our models changed after January 2025. The answer is no. In fact, it proved our models. We didn’t have to change much at all in terms of the assumptions.”