The Tubb’s wildfire which burned California in October 2017 was not ignited by equipment from Pacific Gas & Electric Co’s (PG&E) or any other utility provider, hence this particular fire cannot trigger liability claims from the insurance and reinsurance backing the firms.
The Tubb’s wildfire burned the Sonoma and Napa county and wine region of California, resulting in significant damage to properties and an eventual insurance and reinsurance industry loss that is estimated as high as $8.5 billion.
The fire burned 5,636 structures across 36,807 acres and killed 23 people, becoming the most costly wildfire of the 2017 season in California.
It has taken the California fire authorities over a year and three months to apportion liability for the Tubbs blaze, but the utilities and their re/insurers have been saved in this case as the blame for the wildfire is put on residential electrics.
CalFire said it was “a private electrical system adjacent to a residential structure” and that it found no breaches of state law.
The Tubbs fire is the second most destructive and costly on record for California, only second to the Camp wildfire from 2018.
For PG&E and other utilities there is no chance of liability costs now from the Tubbs fire.
However, 2017’s Atlas, Nuns and Thomas fires are still under investigation, as to are the 2018 wildfires of Camp and Woolsey.
Should PG&E be found liable for any of the wildfires it’s expected the utility will make a call on its insurance tower and the catastrophe bond (depending on the year of the blaze) it has in-force that provides the firm with third-party property liability coverage for wildfire damage.
Reinsurance interests are also exposed, as a number of companies had underwritten more third-party property liability in California for the utilities recently.
PG&E itself has a roughly $800 million liability insurance tower for 2017 and another roughly $1.4 billion for 2018, provided by a mix of traditional insurance and reinsurance firms. While the 2018 tower also includes the at-risk $200m Cal Phoenix Re Ltd. (Series 2018-1) catastrophe bond.
The catastrophe bond and 2018 tower capacity backers are only exposed to liability claims for the 2018 wildfires, while traditional insurance and reinsurance firms are still not off the hook for 2017’s blazes.
Another Californian electrical utility Sempra Energy also has a catastrophe bond (SD Re Ltd. 2018-1) providing property liability cover for the 2018 wildfires.