At least 1,500 structures destroyed by wildfires in California wine region

Wildfires burning in the California counties of Napa, Sonoma and Yuba, the heart of the wine region, are now believed to have completely destroyed more than 1,500 structures, which makes these wildfires one of the most destructive on record in the state.

More than 10 people have been killed, over 100 injured and more than 20,000 evacuated in the wine region, as these wildfires took hold and spread rapidly, burning properties in their path. The town of Santa Rosa has been particularly badly impacted by the wildfires.

More than 15 separate wildfires have been reported in the region, with around 75,000 acres alight, according to reports.

California wildfires are more commonly seen on this scale in southern counties of the state, but tinder dry conditions and strong winds have fueled the fires in the wine region, which now threat to result in a sizeable insurance and perhaps reinsurance loss.

The weather forecasts suggest that conditions are going to remain difficult for firefighters in the coming days and the local authorities have suggested that many more structures will be burned before the wildfires come under control, or the weather changes.

Wildfires can cause billions of dollars of insurance and reinsurance losses and are a covered peril in some multi-peril catastrophe bonds and many collateralized reinsurance arrangements.

The largest California wildfire insured losses on record come in around the $2.75 billion to $3 billion mark, at today’s currency rates. California is considered the most exposed state, with over 260,000 properties considered at high-risk of wildfire related damages and more properties with a reconstruction cost value of over $90 billion at extreme risk of wildfire, with more than $3 trillion at risk in total across the state, according to Corelogic data.

Wildfires have also broken out in southern California, in the Orange County area, where conditions are also dry and winds fanning the flames. At this time the fires in this region have not destroyed a significant amount of structures, but officials remain concerned of the potential for wildfires to keep spreading while the weather remains hot and dry.

In northern California the so-called Tubbs Fire has been highlighted as causing particularly high levels of damage to the city of Santa Rosa, according to Impact Forecasting, reinsurance broker Aon Benfield’s catastrophe modelling unit.

“As more than a dozen wildfires continue to burn across multiple sections of California, it remains too early to provide an economic or insured loss estimate. However, given the high number of structures that local firefighters have initially identified as destroyed (1,500+), this is expected to be a significant financial cost,” Impact Forecasting explained.

Reinsurance broker JLT Re said of the fires that; “Damage is expected to be widespread, with images of burning hotels, wineries and homes emerging.”

They also report of the Tubbs Fire in Santa Rosa; “Entire blocks of the Fountaingrove neighborhood of Santa Rosa have been entirely burned already, with evacuations of two major hospitals as well as senior care facilities and hundreds of homes and businesses well under way.”

The broker also noted the potential for more wildfires to break out, especially in southern California, as weather conditions remain conducive.

It could be some time until the impact to insurance companies is fully understood, as the wildfires continue to spread and burn. Any reinsurance impact could take a little longer to manifest, but given the catastrophe loss heavy year there is always the chance of further aggregate deductible erosion (both on traditional reinsurance and any exposed ILS) should the wildfire season cause significant losses.