Global catastrophe risk modeller, AIR Worldwide, has provided an insurance industry loss estimate for the California wildfires, of between $2 billion and $3 billion.
The fires started in early October, 2017, and AIR’s estimate includes insured losses from the Tubbs, Pocket, Nuns, Atlas, Redwood, and Sulphur fires in California, and includes damages to residential properties, mobile homes, commercial properties, and automobile losses, and also direct business interruption (BI) losses.
Soon after the fires started it was reported that at least 1,500 structures had been completely destroyed, which soon increased to over 5,700 structures, before reports towards the end of October claimed that more than 8,400 structures were destroyed by the fires.
AIR reports that as of Wednesday, October 25th, nine wildfires were still burning, and in total, more than 245,000 acres have burned, and around 8,700 structures.
“Fire conditions lessened on Thursday, October 26, as the high pressure system over the Great Basin began to weaken and a colder air mass spread across the northern Rockies and Plains following a cold front traveling southward,” says AIR.
Ratings agency Moody’s had suggested previously that the insured loss from the fires could cost more than $4.6 billion, while other, early industry estimates suggested an insured loss range of $5 billion to $8 billion.
“A cooling trend is forecast for the latter half of the week, along with the continued weakening of pressure across the Great Basin. Resulting offshore winds and critical fire weather are also anticipated to decrease accordingly,” says AIR.
The catastrophe risk modeller explains that its analysis shows that losses will be dominated by residential losses, and that estimates are based on the assumption of near 100% insurance take-up rates for the peril.
“The fact that damage from fire, including wildfire, is included in standard homeowners’ policies in California informs that assumption,” explains AIR.