RMS puts Camp & Woolsey wildfire losses at up to $13 billion

Catastrophe risk modelling specialist RMS has estimated that industry insured losses from the Camp and Woolsey wildfires in California could reach as much as $13 billion, which is aligned with the opinions of insurance, reinsurance and ILS market sources.

RMS said that it expects the insurance and reinsurance industry will take between $7.5 billion to $10 billion of losses from the Camp wildfire and another $1.5 billion to $3 billion for the Woolsey fire.

RMS’ estimate includes property and auto damage, including burn and smoke damage, business interruption (BI), additional living expenses (ALE), and contents loss.

Notably, the risk modeller said that this is the second consecutive year in which California wildfires have caused $10 billion plus of insured losses.

Mohsen Rahnama, Chief Risk Modeling Officer, RMS, commented, “Wildfire is now a major catastrophe risk that must be rigorously managed with the best data and model science. With increasing exposure due to properties near wildland areas and ongoing climate variability, insurers, policymakers, and homeowners must adapt to the prospect of more frequent and severe wildfires.”

“In the wake of consecutive record-breaking wildfire seasons, we are hopeful that more focus will be placed on fire mitigation, safe construction practices, and community resilience. The forthcoming RMS HD Wildfire model, developed in partnership with leading insurers and fire experts, represents a step change in measuring wildfire risk, with a 50,000-year climate simulation, explicit ember and smoke simulations, and a vulnerability module calibrated on hundreds of millions of dollars of claims data. We are confident the model will contribute to the creation of safer communities that promote fire safety and awareness.”

RMS’ estimate used its forthcoming North America Wildfire High Definition (HD) Model to simulate the ignition, fire spread, ember accumulations, and smoke dispersion of the wildfires, with findings supported by damage reports from CAL FIRE as of November 18th, observations from displaced residents, and information gathered from firefighting personnel.

As we explained earlier the number of structures destroyed by the fires rose again over the weekend, to nearly 15,500.

As we said in that article, the expectation is for an industry loss of over $10 billion to insurance, reinsurance and ILS market interests, with the figure increasing in-line with the number of properties destroyed by the blazes in California.

Also read:

California wildfire losses rising, destruction nears 15,500 structures.

PG&E’s wildfire cat bond marked down for loss, traded at distressed price.

USAA cat bond & private ILS also at risk of wildfire losses: Twelve Capital.

PG&E sued over Camp wildfire, putting Cal Phoenix Re cat bond in the frame.

Wildfires could cost insurers $5bn to $10bn: Credit Suisse analysts.

Wildfires to drive up to $6bn industry insured loss – Moody’s.

Wildfire losses to hit record in 2018, pricing needs to change: A.M. Best.

Stone Ridge & CATCo fund prices dented by California wildfire threat.

Cat bond price volatility & discounts expected from wildfires: Plenum.

California wildfire most destructive ever, multi-billion losses expected.