Global insured losses for catastrophic fire events set a new record at near $20 billion in 2018, with the majority of losses driven by wildfires in California, according to estimates from Aon.
The broker noted that wildfires caused extremely elevated losses and human casualties for a second consecutive year in 2018, with November’s Camp Wildfire becoming the deadliest and most destructive fire on record in California.
The Camp Fire alone caused $12 billion of insured losses after destroying 18,804 structures and leaving 88 dead, while California’s Woolsey and Carr Fires also caused multi-billion-dollar losses.
Industry wildfire losses were even higher than the $17 billion incurred in 2017, while economic costs last year were as high as $24 billion, according to Aon.
These estimates compare with reports from Ricardo Lara, California’s Insurance Commissioner, who revealed today that insured losses of more than $11.4 billion have been reported from the November 2018 Wildfires so far.
For perspective, only seven individual wildfires had surpassed insured losses of $1 billion (inflation-adjusted) by the end of 2016. The graph below from Aon shows that the total has now risen to 13.
The wildfire estimates came as part of Aon’s annual Weather, Climate & Catastrophe Insight report, which claimed that global re/insured catastrophe losses amounted to $90 billion in 2018, or roughly 40% of the total economic costs of $225 billion.
Aon reported that overall losses were generated by 394 natural disaster events in 2018, with weather catastrophes driving the majority of losses.
In terms of wildfires, events beyond the U.S also contributed to losses, including the Attika Wildfires in Greece, which left 100 people dead and caused extensive damage to tourist locations in Mati, Rafina, Neos Voutzas, Agia, and Marina, resulting in insured losses of almost $40 million.
Elsewhere in Europe, the combination of exceptional heat and dry conditions led to severe wildfires in Sweden that caused more than $100 million of damage losses to the forestry industry alone.
In Australia, extreme summer temperatures and expansive drought conditions led to dozens of bushfire ignitions in parts of New South Wales and Victoria, with total insured losses exceeding $55 million.
Aon attributed the recent uptick in major global wildfire events to the continued expansion of exposure and population into know fire locations, as well as weather pattern variability and elongated fire season due to climate change.
However, the high financial toll caused by this peril recently has allowed for more direct conversation between the public and private sectors in how to handle wildfire mitigation, the broker noted.
Strategies include potential changes to fire suppression tactics, re-analysing new construction into highly vulnerable fire locations, and modifying building code requirements.