Australia’s bushfire reality in early 2026: Lessons from the past point toward today’s risk

Author: Iuliia Shustikova, Product Manager, Moody's

Australia started 2026 confronting a serious bushfire crisis, as last December’s extreme weather returned in early January to much of the country’s southeastern states. Prolonged heat and dry conditions have contributed to one of the most dangerous fire seasons since the catastrophic Black Summer bushfires of 2019-20, underscoring the persistent nature of climate risk on wildfire hazards.

In Victoria, over 400,000 hectares of bushland and farmland have burned—more than five times the size of Singapore. It was reported on January 13 that twelve major fires continued to burn across the state, with a total of around 30, including those in Longwood (137,000 hectares), located approximately 100 kilometers northeast of Melbourne, Walwa (102,000 hectares) at the northern edge of Victoria, Ravenswood (4,100 hectares), and other regions.

A State of Disaster has been declared in Victoria for 18 local government areas after intense bushfires erupted over the first weeks of January, following temperatures reaching above 40 degrees Celsius, strong winds (with gusts of up to 100 kilometers per hour), all fueled by a continued heatwave that entered its second month across southern Australia.

In addition to wildfires, Australia now has to contend with heavy rain and storms; on January 15, a severe storm recorded 166 millimeters (6.5 inches) of rainfall in the Mount Cowley area, on Victoria's southwest coast. Stretches of a scenic coastal route called Great Ocean Road, which had been closed due to bushfires, saw flash floods, with people trapped in cars, and nearby caravan parks flooded. Storms are predicted for the week ahead, bringing much-needed rainfall, but also new threats from flash floods and landslides.

Authorities mobilized hundreds of firefighters and more than 70 aircraft to contain the fires, but if hot, dry, and windy conditions continue, this is expected to sustain dangerous fire activity for days or weeks. Victoria's Premier Jacinta Allan said on January 12, "We will see fires continue for some time across the state, and that is why we are not through the worst of this by a long way."

The destruction has already been significant: hundreds of structures have been lost or damaged (over 700 at the time of writing this blog post), farmland has been devastated, 20,000 livestock have been killed, and power cuts have affected thousands of homes and businesses.

Fire danger has reached extreme and catastrophic levels with 26 official warnings issued by fire and weather authorities in Victoria, with parts of New South Wales also experiencing very dangerous conditions as heatwave and dry weather persist.

Australians are used to bushfire season in their country—a recurring reality shaped by climate and geography, with fires burning vast tracks of land every summer. What makes 2026 stand out is not that fires are burning but how multiple large fires, aligned with extreme conditions, have crossed into areas with property exposure. The result: homes and businesses are directly in the path of fire fronts, amplifying losses and humanitarian impacts.

 

The shadow of the Black Summer bushfires

The Black Summer bushfires of 2019-20 remain a stark reference point for both emergency management authorities and the insurance sector. Those fires, driven by record drought and intense heat, were estimated to have burned over 10 million hectares in New South Wales and more than 1.5 million hectares in Victoria, destroyed thousands of homes and critical infrastructure, and caused profound ecological and social impacts.

Comparing this 2026 event with Black Summer helps frame the scale of risk. In both cases, extreme heatwaves, strong winds, and dry fuels produced dangerously volatile conditions.

The Insurance Council of Australia (ICA) stated it had already received nearly 1,400 claims for fires in Victoria since January 7; 30 percent of property claims are total losses. While it is too early to estimate the full social and insured costs of the current fires, the loss of structures and widespread evacuations reflect how quickly weather extremes translate into humanitarian and economic impacts, particularly in rural and peri-urban communities exposed to bushfire hazards.

Comparisons between the current fires and Black Summer are inevitable, but for insurers, the more relevant lesson is not scale alone; it is how compound drivers align: prolonged drought, extreme heat, strong winds, and concurrent ignitions that stretch suppression capacity. The 2026 season demonstrates that these drivers can re-align quickly, even outside the most extreme drought years.

 

A global perspective from the 2025 January firestorm in Los Angeles

While Australia’s bushfire experience is unique in its seasonality and vegetation types, extreme wildfire events elsewhere offer a valuable perspective on the interplay of urban expansion, climate stressors, and fire behavior. In January 2025, a firestorm in the Los Angeles area, occurring in the middle of the Northern Hemisphere winter, overwhelmed established assumptions about seasonality and urban wildfire risk.

The pattern of losses in Los Angeles, where houses were destroyed, and whole neighborhoods were devastated in conditions that would once have been considered atypical, illustrates how urban conflagrations can occur when extreme wind, dry fuels, and peri-urban exposure intersect.

And a year on since the Eaton and Palisades Fires in and around Los Angeles, less than 10% of homes have been rebuilt. The recovery and rebuild process, especially for urban conflagration scenarios, looks long and arduous for all concerned. Support from insurers toward additional living expenses (ALE) and business interruption (BI) coverage could keep being extended due to the slow pace of rebuilds.

That event emphasized a growing recognition among scientists and emergency planners worldwide that wildfire risk is changing in character, timing, and impact. Australian cities are not immune to the types of destructive fires seen in Los Angeles, with the Climate Council recently identifying millions of homes on urban fringes as increasingly vulnerable if extreme conditions coincide with ignition.

While Australian conditions differ, the Los Angeles event reinforces a key point for insurers and reinsurers: losses are increasingly shaped by how hazards interact with the built environment, not solely by proximity to vegetation or historical burn footprints.

 

Looking forward

As the 2026 season continues to unfold, the immediate priority remains community safety and response. For the insurance market, however, the broader takeaway is clear: bushfire risk remains one of Australia’s most complex and consequential natural perils, requiring continuous reassessment as climate variability, exposure patterns, and fire behavior evolve.

The experience of recent seasons, both in Australia and internationally, highlights the importance of preparedness, transparency in risk assumptions, and ongoing refinement of tools used to inform pricing, capital, and reinsurance decisions in today’s climate conditions.

For more details on how Moody’s RMS tools help the market to understand the current risks, read my recent blog on our new Australia Bushfire HD Model. Moody’s RMS Event Response has the latest updates on the bushfires; clients can access the Support Center here.