Catastrophe risk modelling firm AIR Worldwide has updated its estimate for insurance and reinsurance market losses from the recent California wildfires, saying they are expected to be in a range from $8 billion to $10.5 billion.
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Having completed a recent damage survey, received new information about policy terms, and re-examined the replacement values of high-value homes within its industry exposure database (IED), AIR says that it now estimates the insurance industry loss from the Tubbs, Nuns, Atlas, Redwood, and Sulphur fires in California at $8 billion to $10.5 billion.
The companies initial insured loss estimate, that the wildfires would cost the sector up to $3 billion, was clearly early in the process and this new estimate is much closer to the eventual industry cost, as evidenced by recent disclosures from insurers.
Yesterday, Allstate revealed a $452 million estimate of its losses from the wildfires, the latest disclosure after firms such as Travelers, AIG, and AXIS Capital.
The loss estimate represents damage to residential, mobile home, commercial, and automobile lines of business, as well as direct business interruption losses. It also includes demand surge (increases in rebuild costs that result from shortages of labor and materials), but not extra expenses such as debris removal.
AIR said that uncertainty remains regarding the extent of losses to vineyards and wineries. Although residential losses are expected to dominate the total, AIR notes that the value of the equipment, machinery, and inventory at California wineries could exceed the contents values contemplated in its Industry Exposure Database.
