The insurance and reinsurance industry loss from the Carr wildfire in Shasta County, California, is anticipated to at least approach and possibly surpass $1 billion, as the destruction continues with now more than 1,550 structures completely destroyed and another 258 damaged by the fire.
Meanwhile, Moody’s has said that the total could reach $1.5 billion, although this is based on uncertain average property value figures at this time.
The Red Flag fire weather warning remains in force in areas of California where early season wildfires have sprung up and are expanding.
The Carr wildfire, near Redding, California, has been burning for some days now and has expanded to cover an area of almost 127,000 acres, with the burn still only 37% contained.
The containment of the Carr wildfire has been increasing steadily, but still the number of structures destroyed or damaged continues to rise.
As of the latest update, the Carr wildfire has now destroyed 1,060 residential properties, 19 commercial properties and 474 farm buildings, outbuildings and the like (which can often also be insured).
These numbers are likely to rise further, given the Carr fire is still only 37% contained and the weather conditions will remain conducive to burns, making fighting the fire more difficult.
As well as the 1,553 structures completely destroyed, another 189 residential properties, 6 commercial structures and 81 outbuildings have been damaged.
It’s important to note that auto losses from damage to vehicles are not provided by the state authorities, but are of course another contributor to the eventual insurance and reinsurance losses from the Carr wildfire.
As we wrote the other day, the Carr wildfire has now become the sixth most destructive on record in California, surpassing both of last year’s Thomas and Nuns fires.
It remains far too early to have an accurate depiction of the insurance and reinsurance industry impacts of the Carr wildfire, but given where it sits in terms of destruction, the industry is bracing itself for minimally a billion dollar loss.
Impact Forecasting, the catastrophe risk analysis arm of insurance and reinsurance broker Aon, said that it expects the economic damage from the Carr wildfire will be greater than $1 billion and said, “Insured losses are additionally anticipated to approach and/or surpass the billion-dollar threshold given the number of structures and vehicles affected.”
Adding that its estimates are, “Also based on historical comparisons to fires of similar size and magnitude in California, including the October and December 2017 fires in the state.”
There is also a rapidly spreading wildfire in the Mendocino area of California, which has destroyed and damaged more than 50 structures, however this is coming under control more quickly and containment is so far rising.
The Carr wildfire is currently set to be the largest loss of the 2018 California wildfire season and looks certain to become a billion dollar loss, which will put it among the top ten most costly U.S. wildfires ever for the insurance and reinsurance industry.
Aon’s Impact Forecasting explained, “The July 2018 fires in California follow what was the costliest year ever recorded for the insurance industry with the wildfire peril in 2017. Insurers paid out more than USD14 billion in insurance claims due to fire damage around the world, almost entirely due to the October and December events in California. In the industry’s history, only ten individual fires have prompted more than USD1 billion in payouts (2018 USD).”
After the heavy losses that the re/insurance and ILS markets suffered from last year’s California wildfires, the early start to 2018’s damaging season will be under close observation, as the dry and hot weather suggests that further damaging burns are likely throughout this year.
The Carr wildfire’s potential to create a billion dollar insurance industry loss is an early reminder of the impacts the wildfire peril can have.