Moody’s RMS Event Response said insured losses for the January 2025 Los Angeles fires will likely fall in the $20 billion to $30 billion range.
The Jan. 17 estimate from Moody’s RMS came a day after CoreLogic put out a statement indicating a $35 to $45 billion range of insured losses for two major fires in California. Moody’s RMS published its lower range for five fires.
Like the CoreLogic estimates, Moody’s published its range as fires still burned. But on Friday, the two largest fires were reportedly more contained.
Moody’s said the RMS Event Response estimate reflects insured losses for the private market and California FAIR Plan from fire, smoke, and evacuation impacts from the five fires including the Palisades and Eaton Fires.
According to Moody’s RMS, the FAIR Plan has more than $112 billion exposure, or 23% of its portfolio, in Los Angeles County as of September 30, 2024.
Related: Will California’s FAIR Plan Have Enough Cash for Its Wildfire Claims?
In addition to losses from property damage, including evacuation and smoke damage, the RMS estimates include business interruption losses, and additional living expenses across residential, commercial, and industrial lines.
The estimated range of losses also considers “a wide range of complex factors around reconstruction costs after the wildfires including cleanup, costs associated with permit fees, code improvements, and potential law and ordinance expenses.”
Mohsen Rahnama, Moody’s chief risk modeling officer, noted that “great uncertainty remains from numerous elements including potential insurance gaps and underinsurance given the evolving insurance landscape, high-value building and contents exposure at risk, and significant additional living expenses resulting from the evacuation of over 100,000 people.”
Rahnama also called out compliance with ordinance and law requirements as a complicating factor, referring to local building codes “that mandate seismic upgrades or modifications when rebuilding.” Another source of uncertainty related to coverage and extra expenses from high-value assets such as auto, fine art, collectibles, and valuable contents from properties in affluent neighborhoods impacted by fires.
The Moody’s RMS estimate is based on Version 2.0 of its U.S. Wildfire HD Model, which is part of the North America Wildfire HD Models suite, released in October 2024.
(Moody’s reported that it has recently submitted a petition to the California Department of Insurance for review and the certification of the model for use by carriers in future rate filings.)
In its announcement, Moody’s referred to the January 2025 fires as the “2025 Los Angeles Firestorm.” Firas Saleh, director–North America wildfire models said that while the firestorm “is the most destructive and multifaceted wildfire event in U.S. history,” it was not a “black swan” event.
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