Insurance and reinsurance industry losses from wildfires burning across western U.S. states including California, Oregon and Colorado are together expected to have already reached beyond $8 billion, according to the latest report from Aon’s Impact Forecasting.
The insurance and reinsurance broker’s catastrophe risk modelling, analytics and meteorology unit expects that the economic losses from the wildfires in 2020 so far already exceeds $13 billion.
It marks another year where wildfire losses to insurance, reinsurance and ILS markets are expected to be particularly impactful and with some weeks of the accepted season still to run there is every chance 2020 turns into another double-digit billion dollar wildfire insured loss year.
Back in September, catastrophe risk modeller RMS had estimated that the western U.S. states wildfires would create an industry loss of somewhere in a range from $4 billion to as much as $8 billion of insurance and reinsurance market losses.
Now, it appears the top-end of that estimate may already be blown through, as the wildfires have continued to burn and in particular some of the blazes in recent weeks in Colorado and California have been very damaging.
Aon’s Impact Forecasting highlighted that in California, the Glass Fire destroyed 1,555 structures while damaging an additional 280 and economic losses from that wildfire alone are estimated at more than $3.75 billion.
Statewide in California, more than 4.1 million acres (1.66 million hectares) have burned in 2020, resulting in 31 fatalities, and destroying at least 10,488 structures, Aon’s unit said.
Meanwhile, in Colorado, three of the top four largest fires in the state’s recorded history have occurred since July 31st 2020.
Aon’s unit also lists the Beachie Creek wildfire in Oregon as a $1.6 billion plus economic loss, with California’s Creek fire above $600 million and Oregon’s Holiday Farm fire above $550 million.
With numerous other smaller fire losses that each reach into the hundreds of millions of economic losses, it is easy to see how this year is shaping up to be another very costly one for the insurance, reinsurance and ILS market.
Overall, Aon’s Impact Forecasting puts seasonal direct economic costs from the wildfires that impacted California, Colorado, and Oregon at above $13 billion, with insurers facing payouts of above $8 billion.
It’s no wonder reinsurance capital is being called into action to support the building wildfire claims burden. Or that aggregates are being eroded in certain catastrophe bonds, as these wildfire losses add to other perils events in eating into deductibles for traditional and alternative reinsurance arrangements.