Catastrophe risk modelling specialist RMS has estimated that industry insured losses from the Camp and Woolsey wildfires in California could reach as much as $13 billion, which is aligned with the opinions of insurance, reinsurance and ILS market sources.
RMS said that it expects the insurance and reinsurance industry will take between $7.5 billion to $10 billion of losses from the Camp wildfire and another $1.5 billion to $3 billion for the Woolsey fire.
RMS’ estimate includes property and auto damage, including burn and smoke damage, business interruption (BI), additional living expenses (ALE), and contents loss.
Notably, the risk modeller said that this is the second consecutive year in which California wildfires have caused $10 billion plus of insured losses.
Mohsen Rahnama, Chief Risk Modeling Officer, RMS, commented, “Wildfire is now a major catastrophe risk that must be rigorously managed with the best data and model science. With increasing exposure due to properties near wildland areas and ongoing climate variability, insurers, policymakers, and homeowners must adapt to the prospect of more frequent and severe wildfires.”
“In the wake of consecutive record-breaking wildfire seasons, we are hopeful that more focus will be placed on fire mitigation, safe construction practices, and community resilience. The forthcoming RMS HD Wildfire model, developed in partnership with leading insurers and fire experts, represents a step change in measuring wildfire risk, with a 50,000-year climate simulation, explicit ember and smoke simulations, and a vulnerability module calibrated on hundreds of millions of dollars of claims data. We are confident the model will contribute to the creation of safer communities that promote fire safety and awareness.”
RMS’ estimate used its forthcoming North America Wildfire High Definition (HD) Model to simulate the ignition, fire spread, ember accumulations, and smoke dispersion of the wildfires, with findings supported by damage reports from CAL FIRE as of November 18th, observations from displaced residents, and information gathered from firefighting personnel.
As we said in that article, the expectation is for an industry loss of over $10 billion to insurance, reinsurance and ILS market interests, with the figure increasing in-line with the number of properties destroyed by the blazes in California.