California wildfires continue to expand, property damage & losses mounting

Over the weekend the wildfires burning in California have continue to expand, with two of the lightning complex fires now in the top three largest California wildfires on record, while losses due to property damage from the fires are increasing.

Image: Noah Berger / AP.

Wildfires currently burning in California number well into the hundreds and have burned through more than 1 million acres of land, an astonishing figure for so early on in the season.

In total, the 2020 California wildfire season has burned over 1.4 million acres and destroyed some 3,114 structures to-date.

The LNU and SCU Lightning Complex fires, which were ignited by a period of dry-lightning storms that affected the state during a heatwave, are the two largest fires, each burning more than 300,000 acres so far.

For insurance, reinsurance and insurance-linked securities (ILS) fund interests, the damage from the fires is not yet at levels to particularly trouble the sector. But this wildfire activity so early in the season is concerning and markets will be anticipating another challenging year ahead, with the potential for severe wildfire losses.

The LNU Lightning Complex wildfires, which is made up of fires including the Hennessey Fire, Aetna Fire, Walbridge Fire, Meyers Fire and Round Fire, has now burned through over 347,600 acres and is just 21% contained so far.

It makes the LNU Lightning Complex fires, which are burning in Napa, Sonoma, Solano, Lake & Yolo Counties, the second largest California wildfire on record.

The LNU fires have now destroyed at least 871 structures (residential, commercial and farm buildings), with another 234 damaged and still 30,500 structures under threat.

The SCU Lightning Complex wildfires have now burned almost 334,000 acres, making this the third largest California wildfire on record.

The SCU Complex fire is made up of numerous smaller lightning ignited blazes across Santa Clara, Alameda, Contra Costa, San Joaquin and Stanislaus Counties. It is only 10% contained so far.

Only 12 structures have been destroyed so far with this fire though, due to the more remote terrain being burned. But over 20,000 structures are threatened by this SCU set of fires.

The CZU Lightning Complex wildfires, burning across San Mateo and Santa Cruz counties, have grown to 74,000 acres, are only 8% contained and have destroyed more properties, with now 131 residential properties, 3 commercial properties and 29 minor structures destroyed, 11 residential and 1 commercial property damaged, but still more than 24,000 additional structures under threat from this blaze.

There are hundreds of other fires burning as well, some of which have destroyed additional properties and remain largely free from containment. For example, the Jones fire in Nevada has destroyed at least 21 structures, 14 being residential.

Wildfires in 2020 so far, even at this early stage of the California season, have already burned more acres than the whole of the 2019 season saw.

Red flag weather warnings persist for both northern and southern California regions, with warnings of more storms capable of producing dry lightning strikes and erratic winds, both possible fuel for the wildfires.

The costs to be borne by insurance and reinsurance market interests are growing, with the continuing potential for the wildfires to spread further into towns and cities a real concern, financially and as far as potential for much greater loss of life goes.

At this stage the chances of a reinsurance market hit and so the potential for some losses to fall to the ILS market, is growing as the number of properties damaged and destroyed increases.

These wildfires are expected to continue burning out of control, with weather forecasts continuing to cite fire danger, meaning there is the potential for the cost to the reinsurance end of the industry to increase.

It’s important to note that this is still considered the early stages of the California wildfire season, with 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.