Editor-DN
The devastating Los Angeles wildfires are poised to become one of the costliest natural disasters in US history, with estimated losses already exceeding $135 billion. According to preliminary estimates by private forecaster Ecoweather, the total damage could reach $150 billion, making it one of the country’s costliest wildfires to date, the BBC reported. .
“The fast-moving, wind-driven fires have fueled the costliest wildfire disasters in modern U.S. history,” said AccuWeather Chief Meteorologist Jonathan Porter. The sheer scale of the destruction is staggering, with over 5,300 structures destroyed by the Palisades Fire and over 5,000 structures destroyed by the Eaton Fire.
The insurance industry is bracing for a significant hit, with analysts at firms such as Morningstar and JP Morgan predicting insured losses of more than $8 billion. This could add to the existing challenges facing the industry, which is struggling to cope with the increasing frequency and severity of natural disasters. As the full extent of the loss becomes clear, insurers will be forced to reevaluate their risk assessments and pricing strategies, potentially leading to higher premiums and higher risk premiums. Areas will have fewer coverage options for homeowners.
As a result, many are turning to state government-sponsored insurance plans, which are often more expensive and offer less protection. In California, the number of policies offered through the state’s Fair Plan has doubled since 2020, from about 200,000 to 450,000 in September of last year. According to program data, the highest take-up rates have been observed in fire-affected areas.
The long-term effects of wildfires will be significant, with potential damage to property values, pressure on public finances, and impacts on health and tourism. Dennis Repmond, a senior analyst at Moody’s Ratings, warned that the fire would have a massive negative impact on the state’s broader insurance market. “Increasing recovery costs will likely increase premiums and reduce the availability of property insurance,” he added.
The 2018 camp fires in Northern California currently hold the record for the highest insured cost, at nearly $12.5 billion. However, given the high property values in the affected areas, the Los Angeles wildfires could exceed that total. Aon, a leading insurance company, has already indicated that the disaster is likely to rank among the five costliest wildfires in US history.
However, the US and California governments are yet to announce damage estimates.
