The insurance and reinsurance industry loss estimates for the California wildfires of 2017 continue to rise, with the latest being an estimate of a $13.2 billion impact from the October wildfires in northern California and the December wildfires in the south of the state, from Aon Benfield.
Reinsurance broker Aon Benfield reveals its $13.2 billion California wildfire loss estimate in a breakdown of insured loss estimates from its new Weather, Climate & Catastrophe Insight: 2017 Annual Report from catastrophe risk unit Impact Forecasting.
The report highlights roughly $14 billion of global insured wildfire losses in 2017, but the vast majority are from the two major California fire outbreaks.
The October outbreak in northern California and the wine region is estimated to have caused an economic loss of $13 billion, with $11 billion of that estimated to be covered by insurance and reinsurance. This outbreak is the fourth largest economic and insured catastrophe loss event of 2017, according to Aon Benfield’s data.
The December outbreak in southern California is estimated to have cost the economy around $3.2 billion and re/insurers an estimated $2.2 billion, according to the brokers data in the report.
So that gives a $13.2 billion insurance and reinsurance industry loss just from the two main Californian wildfire outbreaks.
Should the estimate from RMS, of up to $2.5 billion of losses to the re/insurance industry from just the Thomas wildfire in southern California, prove accurate it means the tally for California wildfires could rise even higher.
It is still early days for line of business claims such as business interruption as well, meaning the re/insurance industry loss estimates from the wildfires will likely be higher than current estimates anyway.
Overall, 2017 has been a particularly costly year for the wildfire peril and as a result the most impactful to ILS and collateralized reinsurance underwriters.
Aon Benfield’s Impact Forecasting explains some of the features of the 2017 wildfire season, “The wildfire peril had its costliest year on record for the insurance industry in 2017, with global losses nearing USD14 billion. Overall economic losses were even higher at more than USD21 billion.
“The state of California endured two massive wild re outbreaks in which more than 10,000 structures were destroyed
The October outbreak, led by the Tubbs Fire in the Napa Valley region, prompted a record USD11 billion in insurance payouts That became the costliest wildfire event in history for the insurance industry Another outbreak in December across Southern California, led by the Thomas Fire, led to another USD2 2 billion payout for insurers The Thomas Fire became the largest fire in California since reliable local records began in 1932.”
So the estimates of industry losses from the wildfires have continued to rise and there is every chance that some reserve strengthening may be required, for either traditional reinsurance or collateralized and ILS players, as we move through the coming weeks.
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