California wildfires destroy almost 3,000 structures in August

California’s wildfires have continued to destroy properties over the weekend and while the main blazes are more under control thanks to cooler weather, the costs to insurance and potentially reinsurance markets are on the rise.

Image: Noah Berger / AP.

In our coverage last week we explained that an estimate from Moody’s Investors Service suggested insurance and perhaps reinsurance market losses from the wildfires in California were already at over $1.5 billion.

Rating agency A.M. Best also said last week 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.

We have a way to go before 2020 California wildfire losses get to that level, but with property damage continuing the costs so far for insurers are higher than in many other years at this stage of the season.

Almost 3,000 properties that could be insurable are said to have been destroyed by the 2020 wildfire season in California so far.

In just the last few weeks, the three main blazes we’ve been tracking have between them destroyed more than 2,530 structures, between 1,500 and 1,750 are likely to be residential properties we understand. The majority of the roughly 3,000 structure toll has come in August alone.

The most impactful wildfires remain the LNU and CZU complex fires, both of which have destroyed more structures in recent days.

The LNU Lightning Complex wildfire has now burned 375,000 acres and is much more contained at 58%, but still burning across Napa, Sonoma, Solano, Lake & Yolo Counties.

The LNU complex wildfires have now destroyed at least 1,209 structures, up from 1,080 when we covered the fires on Friday of last week, with another 193 damaged and some 5,378 structures still under threat.

The CZU Lightning Complex wildfires, burning across San Mateo and Santa Cruz counties, are becoming the most costly it seems at this time, with more residential properties destroyed over the weekend. Burning in a high-value area, this fire continues to contribute a significant proportion of insured losses so far.

The CZU Lightning Complex wildfires have now burned more than 84,600 acres and are now 37% contained, a further improvement in containment on last week.

But, in damage terms, the CZU wildfires have now destroyed 1,281 structures (up more than 500 since the end of last week), more than 817 of which are residential properties (up ~200), 3 multi-residential properties, 125 non-residential commercial, 1 mixed residential/commercial property and 335 minor structures destroyed, while another 84 homes have been damaged, 12 commercial properties damaged and 32 minor structures damaged, with still 6,759 additional structures considered under threat from this blaze.

The LNU and CZU complex wildfires are now in 10th and 11th place on the list of most damaging wildfires in California history.

The SCU Lightning Complex wildfires is still the largest at close to 378,200 acres and so the second largest California wildfire on record, with the LNU complex wildfires a close third.

The SCU Complex fires are now 55% contained, with 40 structures destroyed, 64 minor structures also destroyed and another 18 are damaged. More than 20,000 structures remain under threat of this SCU set of fires.

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.

Hotter weather is predicted as well, which could make fighting these ongoing wildfires more challenging in the coming week.

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.