Following a second consecutive year of record wildfire losses for property & casualty insurers in 2018, wildfires have emerged as a first-tier US catastrophe peril, according to a new report from Moody’s Investors Service.
Analysts state that the 2017 and 2018 wildfires, which included six of the ten most destructive wildfires in California’s history, resulted in nearly $25 billion in P&C company losses.
In response to these high wildfire losses, Moody’s Vice President Jasper Cooper says insurers are raising rates and re-underwriting the risk particularly in wildfire-exposed regions and wildland-urban interface areas.
“At the same time, reinsurance coverage has become more expensive and difficult to obtain,” Cooper added.
Although many of the affected insurers have filed suits against Pacific Gas & Electric Company to seek reimbursement for wildfire losses, Moody’s sees significant uncertainty in relation to the amount and timing of subrogation recoveries, given PG&E’s bankruptcy.
The California-focused utility company, which filed for bankruptcy in January, revealed it was taking a $10.5 billion charge for claims connected to the Camp fire in its fourth quarter earnings.
