California wildfires have put billions of dollars of property at risk and spread further over the weekend as strong winds and dry weather fanned flames. Latest estimates suggest that at least 5,700 structures, largely homes, have been completely destroyed.
The value of properties in the regions affected by the worst wildfires, in Sonoma, Napa and Santa Rosa are high, with many million dollar properties now destroyed. Additionally the wildfires have had a huge impact on California’s wine-producing region, with a number of Napa wineries destroyed and others facing significant losses as a result of these events.
For the insurance and reinsurance industry the wildfires are certain to result in a major loss, with some suggesting this could be the costliest wildfire outbreak in U.S. history.
Catastrophe risk modelling firm RMS estimated that the economic damage from the wildfires would be in a range from $3 billion to $6 billion, but that was based on fire extents as of October 12th and the wildfires kept burning over the weekend, so the range has likely shifted upwards by now.
One insurance market we spoke with suggests that seeing these events result in anything below $2 billion of insured losses would be surprising now, while others suggest a figure much higher.
The 1991 Oakland Hills, California wildfire is thought to have caused around a $2.7 billion insurance and reinsurance industry loss, in 2016 dollars, so if these wine region fires do become the most costly for the industry then we are looking at something closer to $3 billion it would seem.
While the wildfires remain uncontained they could continue to burn as long as it remains dry, meaning losses could keep rising.
CoreLogic had said that in the Napa and Santa Rosa areas there were 11,058 homes with an estimated reconstruction value of over $5 billion at significant risk of damage. So with now over half that number of structures destroyed it’s easy to see the losses approaching $3 billion.
Farmers Insurance, State Farm, Liberty, Allstate, Travelers, Nationwide Mutual, Chubb, AIG, Tokio Marine, National General, Allianz and QBE, are all among the top property insurers in the state of California, so likely to share the bulk of these losses.
Reinsurance firms and ILS funds could face a share as well, with some multi-peril and aggregate structures potentially more at risk due to these fires following the heavy toll of the hurricane season.
You can see the location of the California wildfires as well as their extent on the map below The map is zoomed on the worst areas, but if you zoom out you will see that California is facing a number of wildfire outbreaks across the state currently.