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California’s deadly Camp Wildfire to cause billions of insured losses

12th November 2018 - Author: Matt Sheehan

The Camp Wildfire, which sprang up last Thursday and quickly engulfed the town of Paradise in California’s Butte County, has now claimed more than 6,700 structures and 110,000 acres, making it the most destructive wildfire on record and likely to drive multi-billion dollar losses for the re/insurance industry.

camp-wildfire-nasa

The Camp Wildfire on November 8th. Source: NASA

A further 15,500 structures also remain threatened by the Camp Wildfire, which is only 25% contained, and which will likely continue to expand as strong winds and low humidity exacerbate conditions.

The blaze has caused 31 deaths so far with another 200 people still unaccounted for, making it the joint deadliest fire in California history, and an estimated 250,000 people have been evacuated from the affected regions.

In Paradise, the impact of the wildfire has been devastating, with 6,453 homes and 260 commercial structures completely destroyed by the fire.

Meanwhile, in Southern California, the Woolsey and Hill wildfires have also expanded further, fanned by strong Santa Ana winds and dry conditions.

The Woolsey fire has burned through 85,500 acres and 179 structures in the Venture and Los Angeles counties and is only 15% contained, while the Hill fire has burned 4,351 acres and just 2 homes, at 75% containment.

It currently remains too early for the insurance and reinsurance markets to estimate what the extent of losses will be, but broker Aon has suggested that multi-billion dollar impacts are inevitable.

For comparison, the Camp Wildfire has now destroyed over one thousand more structures than the Tubbs Wildfire in October 2017, which is estimated to have cost insurers and reinsurers as much as $8 billion.

In addition to losses related to damaged properties, insurers may face significant claims for covering evacuation costs, as well as for damage to automobiles, the extent of which remains unknown at present.

Reinsurance protection is also expected to be triggered if major insurers such as AIG, Travelers, USAA and Allstate incur comparable losses to last year, when the California fires in October and December alone caused industry losses of around $13.5 billion.

“The scope of confirmed damage already attributed to the Camp and Woolsey fires indicates that a significant financial cost is likely; especially when compared to damage and resultant costs incurred from recent fires in 2017 and 2018 in Northern and Southern California,” Aon’s Impact Forecasting said. “It is anticipated that the insurance industry is facing a multi- billion-dollar aggregated payout from the November fires.”

U.S wildfire losses have already cost the insurance and reinsurance industry an estimated $1.78 billion already in 2018, prior to these latest outbreaks.

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