LA wildfires: Verisk estimates insured losses at between $28bn and $35bn

Verisk’s Extreme Event Solutions division estimates that the insured industry losses to property from both the Palisades and Eaton fires in Los Angeles, will fall between $28 billion and $35 billion, driven primarily by losses to residential risks.

Verisk 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.

Of the company’s up to $35 billion insured loss range, the Extreme Event Solutions team estimates that industry losses stemming from the Palisades fire will range between $20 billion and $25 billion, while losses from the Eaton fire will range between $8 billion and $10 billion.

Verisk noted that most of the losses are to residential risks, with the company adding that the areas hit in the Palisades fire includes some of the highest property values across the United States, while many of the policyholders have considerable contents exposure.

Moreover, Verisk’s estimate includes losses due to fire, and covers residential, commercial, and industrial properties and automobiles for their building, contents, and time element coverages.

Verisk’s estimate is also inclusive to losses to the California FAIR Plan, which are expected to be considerable.

This estimate of insurance industry losses from the wildfires follows recent estimates from Moody’s RMS, who pegged losses at $20 billion to $30 billion, and CoreLogic, who suggested that losses will range between $35 billion to $45 billion, which includes losses to the FAIR Plan.

The average mid-point of the three catastrophe risk modeller estimates we’ve received so far now sits at almost $32.17 billion.

Reinsurance broker Gallagher Re also updated its estimate for insured losses from the California wildfires to between $20 billion and $30 billion.

“The ongoing devastation from these deadly wildfires is truly heartbreaking. We are advancing science and risk management to help communities build resilience against disasters like these catastrophic wildfires. The amount of data and insights to support mitigation efforts continues to grow, which can help inform how communities rebuild in the wake of this disaster,” commented Rob Newbold, president of Extreme Event Solutions at Verisk.

Furthermore, the risk modelling and data analytics specialist also issued an update on the Verisk U.S. Wildfire Model Review by the California Department of Insurance (CDI), which was submitted in early January.

The company has confirmed that as of January 16th, Verisk’s petition for model review has been granted by the CDI, which indicates the next step in the process, and a formal review.

Verisk, said: “The use of catastrophe models in California is expected to provide consumers, insurers, and regulators with enhanced insights into natural disaster risks and increased insurance availability across the state.”

Read all of our coverage related to the Los Angeles, California wildfires here.