Catastrophe risk modelling specialist Karen Clark & Company (KCC) estimates that the insured loss (from privately insured and FAIR plan policies) to residential, commercial, and industrial properties, and autos from both the Palisades and Eaton wildfires in Los Angeles will sit close to $28 billion.
KCC becomes the latest risk modeller to release an initial estimate of the insurance industry impacts from the two large fires that have burned across Southern California since January 7th.
This estimate, which is based on the high-resolution KCC US Wildfire Reference Model, includes damage from the fires, as well as smoke, time-element losses for residents in evacuation zones whose homes were not damaged by the fire, guaranteed replacement cost coverage, and demand surge.
KCC noted that the Palisades Fire burned nearly 24,000 acres across the Santa Monica Mountains and the towns of Pacific Palisades and Eastern Malibu.
At the same time, the Eaton Fire burned over 14,000 acres across the Angeles National Forest and the towns of Altadena and Sierra Madre.
KCC expects that most of the claims will result from the Eaton fire, which emitted high concentrations of smoke that were transported across the Los Angeles basin.
“California authorities have a strong incentive to stabilize the insurance market so there will likely be efforts in place to expedite the rebuilding process, control cost increases, and avoid saddling insurers with excess and uncovered losses,” KCC commented.
The firm added: “A primary area of uncertainty in the loss estimates is the proportion of homeowners and business owners in impacted areas who are insured. KCC has assumed that the majority of properties in the area are insured either privately or through the FAIR plan, but the $28 billion estimate contemplates a small percentage that are likely uninsured.”
This estimate of insurance industry losses from the wildfires follows recent estimates from numerous risk modellers, including Verisk, who yesterday revealed that it expects losses will fall between $28 billion and $35 billion.
Moody’s RMS recently pegged losses from the wildfires at $20 billion to $30 billion, while CoreLogic suggested that losses will range between $35 billion to $45 billion, which includes losses to the FAIR Plan.
The average mid-point of the four catastrophe risk modeller estimates we’ve received so far now sits at $31.125 billion.
Read all of our coverage related to the Los Angeles, California wildfires here.
