27 October 2017Insurance

California wildfire insured losses at up to $3bn

Insured losses from the Tubbs, Pocket, Nuns, Atlas, Redwood, and Sulphur fires in California will be between $2 billion and $3 billion, according to estimates by catastrophe modelling firm AIR Worldwide.

The loss estimates capture residential, mobile home, commercial, and automobile losses, as well as direct business interruption losses.

Multiple wildfires exacerbated by hot, dry, and windy conditions spread across eight counties of California starting in early October. Twenty-two active wildfires were reported by CAL FIRE on October 12, consuming more than 170,000 acres and destroying more than 3,500 structures.

As of Wednesday, Oct. 25, nine wildfires were still burning in California, including the Vista Fire near Casitas Springs that erupted on Tuesday, Oct. 24. In total, more than 245,000 acres have burned, an estimated 8,700 structures have been destroyed. Thousands of acres have burned in Yuba, Sonoma, Napa, Lake, Mendocino, Butte, Nevada, and Solano counties, which were heavily impacted by the fires.

Analysis from AIR shows that losses will be dominated by residential losses, with several neighbourhoods—most notably, in Sonoma County—experiencing catastrophic loss. These estimates of insured losses are based on the assumption of nearly 100 percent take-up rates. The fact that damage from fire, including wildfire, is included in standard homeowners’ policies in California informs that assumption. The range in AIR’s loss estimates reflects uncertainty in the payment of additional living expenses resulting from mandatory evacuation of the city’s population, loss of some individual structures outside of the most affected neighbourhoods, as well as widespread but lower levels of loss due to smoke, loss of electricity, and damage from suppression efforts.

AIR’s modelled insured loss estimates do not include losses to uninsured properties, losses to land, losses to infrastructure, losses to vineyard grapes and vines, and demand surge.

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More on this story

Insurance
9 November 2017   The Travelers Companies estimated fourth-quarter catastrophe losses related to the California wildfires, including estimated recoveries from reinsurance, to be in the range of $525 million to $675 million pre-tax.
Insurance
30 October 2017   Economic losses from the wildfires impacting Sonoma, Napa, Solano, Lake, and Mendocino counties are estimated at between $6 billion and $8 billion, according to catastrophe risk modelling firm RMS.
Insurance
27 October 2017   Specialty insurer Markel said in its third-quarter 2017 results report that after the end of the reported period northern California sustained losses from several wildfires, which the company estimates to result in net incurred losses of between $40 million and $80 million before income taxes.