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California wildfire losses continue with 15,500 structures destroyed

19th November 2018 - Author: Matt Sheehan

The level of insured losses from the recent outbreak of wildfires in California looks set to rise even further, with nearly 15,500 structures now destroyed by the fires, according to the latest data from the California Department of Forestry and Fire Protection (Cal Fire).


Aftermath of the Camp Wildfire in the town of Paradise, California. Source: Noah Berger/AP

This figure has risen significantly from the 12,400 structures destroyed as of Friday 16th, as ongoing investigations by fire authorities are only now beginning to establish the full extent of the damage in some areas.

The impact on the insurance and reinsurance industries is also sure to be substantial, with losses likely to exceed the initial range of loss estimates released so far.

Recent data shows that the Camp Wildfire in Butte County has now destroyed 10,364 single residences, 259 multiple residences, 418 commercial properties and a further 2,992 minor structures.

The Camp Fire became the most destructive and deadliest wildfire in California’s history after completely devastating the town of Paradise on November 8, causing 77 deaths at present count, with more than 1,000 people still missing.

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It has burned through 150,000 acres and continues to threaten 14,500 structures despite containment now reaching 65%.

Furthermore, the Woolsey Fire, which continues to burn through the Ventura and Los Angeles Counties, has now destroyed 1,452 structures and damaged another 337, many of which are in the affluent region of Malibu and include buildings and locations used in the film and television industries.

The number of structures destroyed by the Woolsey Fire has almost tripled since the 546 reported as of Friday, although it is now 91% contained and does not pose a threat to any further structures, according to California authorities.

The Hill Fire, also in Ventura County, is now completely contained after burning through 4,531 acres, destroying four structures and damaging two more.

The combined total of properties destroyed by this recent outbreak is also higher than the collective destruction cause by the Tubbs, Nuns, Atlas and Thomas Wildfires in October and December 2017, which between them are estimated to have driven somewhere around $13 billion in insured losses.

That suggests the current industry loss estimates for this outbreak will prove to be too low, given the number of properties known to be destroyed was much higher.

Preliminary estimates from Credit Suisse put insured losses for the recent wildfires in the range of $5 billion to $10 billion, while Moody’s said $3 billion to $6 billion and Morgan Stanley put losses for the Camp Wildfire alone at between $2 billion and $4 billion.

However, these estimates were based on much earlier data and lower estimates for the number of structures destroyed by the wildfires, which suggests they will prove to be too conservative.

Catastrophe risk modeller CoreLogic has also updated its estimates and now claims that 23,044 homes with a total reconstruction cost value (RCV) of approximately $8.6 billion are at high or extreme risk of damage within the perimeters of the wildfires.

Auto and vehicle losses from the wildfires also remain uncertain at present but are sure to drive further losses for the insurance and reinsurance industries.

All three recent wildfires sprang up on November 8 and spread rapidly due to adverse weather conditions. Current estimates from Cal Fire suggest that the Woolsey Fire will be fully contained by November 22, while the Camp Fire will not be fully contained until around November 30.

Although officials have not yet disclosed a cause for the Camp Wildfire, energy supplier Pacific Gas and Electric Company (PG&E) remains under scrutiny due to reports that its power lines in the area had experienced problems shortly before the fire ignited.

If it is determined that PG&E is responsible for igniting the Camp Fire, California law would require that the company assume financial responsibility for the damages caused, thereby alleviating losses for re/insurers.

However, the situation is complicated further by PG&E’s $200 million Cal Phoenix Re Ltd. (Series 2018-1) catastrophe bond, which provides third-party property liability insurance coverage for wildfire outbreaks in California.

Insurers and reinsurers will be watching the development of the wildfires closely over the coming days as the full extent of the damage emerges and as more catastrophe risk modelling firms begin to release loss estimates.

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