Update: Read our latest on the potential for multi-billion dollar losses from this fire outbreak. A northern California wildfire named the Camp Fire has destroyed more than one thousand homes and structures in less than 24 hours, with around 15,000 more threatened and the fire continuing to spread out of control.
We’re now in the accepted peak of the California wildfire season and the outbreak of the Camp Fire shows just how dangerous and unpredictable this peril can be.
Wildfire is a costly peril for insurance, reinsurance and ILS interests, with losses over the past twelve months particularly significant.
A fire weather danger warning including for Santa Ana winds was issued over the last few days and the Camp Fire ignited in Butte County, northern California around 6am local time on November the 8th, but by 8pm the same evening it had already burned 20,000 acres and roared through the town of Paradise.
Update: As of 8am on November 9th the Camp wildfire had burned 70,000 acres.
Officials from the local area said that it’s assumed catastrophic damage has occurred and that thousands of homes and structures, as well as vehicles, are likely to have been burned or destroyed in Paradise, California, as the Camp wildfire spread unhindered.
For comparison, the Carr wildfire that struck in July 2018 destroyed some 1,604 structures and has cost the insurance and reinsurance industry more than $1 billion.
CalFire officials told local media that as many as a “couple of thousand” structures could have been destroyed as the Camp Fire raged through Paradise, while the agency also said that 15,000 more are threatened as of last night local time.
So far the fire has not been contained at all, as the dangerous wildfire weather meant that it was spreading too fast for firefighters to hold it back.
More than 40,000 residents have been evacuated from the path of the Camp Fire, which is said to have been expanding the area burned at a rate of about 80 football fields per minute.
Paradise, a town of approximately 26,000 people about 85 miles north of Sacramento, has been the worst hit so far, but the full extent of the destruction remains unknown and will be until morning.
High winds and low humidity drove the rapid progression of the Camp Fire and while winds are hoped to ease today (Friday) stronger winds are forecast again for Saturday.
Officials fear the wildfire could reach the city of Chico, home to around 90,000 residents, and evacuations are being enforced.
The Camp Fire could already break into the ten most destructive California wildfires list, if the impacts to the town of Paradise are as significant as officials assume.
Wildfires have also broken out in Ventura County, threatening thousands more homes and residents in that region of California today as well.
The Woolsey Fire has spread to 7,500 acres, with 30,000 people evacuated and 1,000 structures threatened, while the Hill Fire has spread to 10,000 acres and threatens many more.
Update: The Woolsey wildfire has spread rapidly and is now threatening the city of Malibu, with evacuations being enforced in the area.
California wildfires have cost the insurance and reinsurance industry, as well as insurance-linked securities (ILS) funds, many billions of dollars in the last twelve months and these outbreaks are a reminder that the costs could rise significantly as we move through the peak of the season.
There are now two catastrophe bonds with exposure to California wildfire outbreaks, the $200m Cal Phoenix Re Ltd. (Series 2018-1) that provides third-party wildfire property liability coverage to utility owner PG&E, and the $125m SD Re Ltd. (Series 2018-1) that provides the same to Sempra Energy.
As wildfires burn out of control in California, it now becomes important for the ILS market to understand their cause and what started them, as if any wildfire has been ignited by these utility owners infrastructure it could put the cat bonds at risk.