California wildfire claims pass $9.4bn, suggests growing industry loss

The California Department of Insurance has released its data on insurance claims filed due to the California wildfires in October, putting the total at above $9.4 billion, a number which suggests the final industry loss to insurance and reinsurance interests is likely above current estimates.

The estimates of insurance and reinsurance market losses from risk modelling firms put the California wildfires in October at up to $10.5 billion of market loss.

But, typically a figure on claims data released by a regulator is a fair distance below the eventual total re/insurance industry loss, suggesting that other market estimates that the wildfires from October could cause an industry loss of over $10 billion, perhaps closer to $12.5 billion, or even as much as $15 billion, could turn out to be more accurate.

Insurance Commissioner Dave Jones said that statewide insured losses are now above $9.4 billion, from residential and commercial claims filed as a result of the October wildfires.

The wildfires are the most costly in California state history, with the North Bay fires alone accounting for $9 billion in claimed losses, the Commissioner said.

“These numbers not only represent staggering losses to tens of thousands of Californians,” Jones said. “The October wildfires that devastated whole communities and tragically cost 44 people their lives have now proven to be the most destructive and deadliest in our state’s history.”

In collecting the loss data, more than 260 insurers reported their total claims as of December 1st. This data includes claims from more than 21,000 homes, 2,800 businesses, and over 6,100 private autos, commercial vehicles, and 788 losses from other lines of insurance business, including agricultural equipment and watercraft.

The Department said that there were 15,359 residential properties that are partial losses, 5,747 residential properties that are total losses, 2,814 commercial property claims resulting in 997 total losses, which include commercial businesses and multi-family (apartments) with four or more units.

This data from the Insurance Department signals that the eventual industry loss from these wildfires in October is likely to surpass recent estimates.

As we wrote this week, Nationwide Mutual’s massive $1.23 billion estimated loss for the Tubb’s wildfire in California alone, putting its Caelus V cat bond at risk of loss, suggests that some other insurers estimates may need to rise.

There are likely to be more claims to deal with and also issues such as business interruption and other factors that could cause claims totals to inflate, which will all increase the final tally for insurance and reinsurance capital to pay for.

The industry is now facing further losses from new Californian wildfires that broke out this week in Ventura County which one analyst said could add $2 billion to losses and around the Los Angeles region. With fire weather warnings suggesting a high risk day today as well, the chances of further losses falling to reinsurance and ILS capital are significant.

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