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California wildfire damage continues, heatwave to challenge fire containment


Property damage from the severe California wildfires continues, with now close to 4,000 structures having been destroyed in recent weeks and with a heatwave and potential record temperatures forecast for the coming days, further containment of the fires looks challenging.

wildfire-image-firefightersWhen we last covered the California wildfires earlier this week the number of structures destroyed in August alone was nearing 3,000.

For the wildfire season in California to-date, the figure is now nearing 4,000, with the majority coming from the recent lightning ignited so-called Complex blazes.

In fact, just between two of the Complex fires, the CZU Lightning Complex and the LNU Lightning Complex, named after the regions these groups of wildfires have affected, the tally is at almost 3,000 structures from the pair.

Now, California weather forecasts are predicting a heatwave with possible record temperatures for the coming days and through the weekend, which threatens to make fighting these fires and containing them much more challenging and so could result in more fire growth and property damage occurring.

Recently, Moody’s Investors Service suggested insurance and perhaps reinsurance market losses from the wildfires in California were already at over $1.5 billion. By now that estimate may well have grown, as the number of homes and commercial properties destroyed by the CZU wildfire in particular has escalated significantly.

Rating agency A.M. Best also said recently that, given the early and severe start to the California wildfire season it believes 2020 could see insured losses from the fires surpassing 2017’s roughly $13 billion of costs that fell to the insurance and reinsurance market.

It’s difficult to predict where seasonal losses could end in 2020, but the damaging start does not bode well for the insurance and reinsurance market’s costs associated with wildfires in the state of California this year.

The CZU Lightning Complex wildfires, burning across San Mateo and Santa Cruz counties, looks set to be the most costly fires so far, with more residential properties destroyed rising still. Burning in a high-value area, this fire continues to contribute a significant proportion of seasonal wildfire insured losses to-date.

The CZU Lightning Complex wildfires continue to burn across almost 86,000 acres and are 46% contained.

In damage terms, the CZU wildfires have now destroyed 1,490 structures (up from 1,281 so far in just this week). Over 925 of these are residential properties, 3 are multi-residential properties, 171 are non-residential commercial properties, 3 are mixed residential/commercial properties and 388 are minor structures that have been destroyed. Another 90 homes have been damaged, 16 commercial properties damaged and 34 minor structures damaged. 7,647 additional structures are still also considered under threat from this blaze.

The LNU Lightning Complex wildfires are the next most damaging, with 1,464 structures now destroyed by these fires.

The LNU fires have now burned 375,000 acres and are much more contained again at 78%, but still burning across Napa, Sonoma, Solano, Lake & Yolo Counties.

The LNU complex wildfires have now destroyed at least 1,464 structures, up from 1,290 at the start of the week, with another 231 damaged and some 3,225 structures still under threat.

Meanwhile, the SCU Lightning Complex wildfires are still the largest at close to 391,000 acres burned and the second largest California wildfire on record, with the LNU complex wildfires a close third.

The SCU Complex fires are now 76% contained, with 70 structures destroyed, 35 minor structures also destroyed and another 17 are damaged. Only 8 structures remain under threat of this SCU set of fires as the containment has improved dramatically.

But the question is whether containment will continue to be as strong when the expected heatwave kicks in over the coming days, as this makes wildfire weather more dangerous and if the winds pick up fires could begin to spread again.

Hundreds of other wildfires continue to burn in California, with a wide area impacted and under threat and some more property damage experienced. But these three blazes remain the major threat and source of property damage that will concern the insurance and reinsurance market at this time.

Wildfires in 2020, even at this still early stage of the California season, have already burned more acres than the whole of the 2019 season. The 2020 California wildfire season has now burned more than 1.66 million acres, which is approaching the over 1.8 million burned in 2018.

Given the still early stage of the California wildfire season, the chances of a reinsurance market hit and so the potential for some losses to fall to the ILS market, continues to increase with the number of properties damaged and destroyed rising all the time.

In recent severe wildfire seasons some of the most impactful fires were seen in October and November, meaning there is much longer to go for the overall impacts to worsen as the season progresses.

Recall, in recent severe and costly wildfire seasons for the reinsurance industry, some of the most impactful and expensive blazes have been much later in the year.

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