Insurance and reinsurance industry losses from wildfires in the United States are now estimated to have reached around $11.5 billion, making 2020 the third most costly wildfire season on record for the market.
This is according to analysis by investment bank Jefferies and based on data sourced from reinsurance market players Aon, Swiss Re and Munich Re.
Jefferies noted in a recent report that industry estimates for some catastrophe losses have risen recently, which looks like it may include some of the wildfire activity.
Just earlier this month insurance and reinsurance broker Aon said that wildfire insured losses in western states including California, Colorado and Oregon had surpassed $8 billion, but Jefferies figure of $11.5 billion is now the highest seen for 2020 so far.
2020 is set to be the third most costly U.S. wildfire year on record, after 2017’s $15 billion to $17 billion and 2018’s $18 billion to $20 billion estimates.
Wildfire industry losses were lower in October, Jefferies explained. But significant blazes earlier in the season had already done their damage and the analysts note that some earlier estimates have been revised up, which could include some of the August and September fire activity.
Year-to-date, severe weather remains the largest contributor to insurance and reinsurance market losses from catastrophes in the United States, Jefferies data shows.
Hurricane activity is next, with the main losses being Hurricane Laura ($6.7bn), Hurricane Sally ($2.4bn), Hurricane Delta ($2.0bn), Hurricane Zeta ($1.9bn).
But wildfire insured losses are close behind in third and with some time still to run for the wildfire seasonal peril, the $11.5 billion of insured losses so far could rise further by the end of 2020.
It’s also notable that in 2017 and 2018 some of the most significant wildfire industry losses occurred during the last two months of the year.
November has been a little calmer, but fires are still burning in California and any severe fire weather could see the bill added to.
The 2020 wildfire industry losses have contributed to some erosion of aggregate reinsurance deductible buffers again this year, including for certain insurance-linked securities (ILS) positions.