The Camp and Woolsey Wildfires have continued to burn through huge areas of the Butte, Ventura and Los Angeles Counties in California, destroying a combined total of more than 10,800 structures at present count.
A house burns in Paradise, California. Source: AP
The Camp Fire has become the deadliest and most destructive wildfire in California’s history, claiming 56 lives so far, as well as 8,756 residential properties, 260 commercial properties and a further 1,301 minor structures.
It has burned through 138,000 acres in Butte County, devastating the town of Paradise, and continues to threaten 15,500 structures despite containment reaching 35%.
Further south, the Woolsey fire has destroyed 504 structures and damaged a further 96, many of which are in the affluent region of Malibu and include buildings and locations used in the film and television industries.
It has burned through 98,363 acres in the Ventura and Los Angeles Counties and is currently 52% contained, although it continues to threaten 57,000 structures according to the latest data from the California Department of Forestry and Fire Protection (Cal Fire).
The Hill Fire, also in Ventura County, is now almost entirely contained after burning through 4,531 acres, destroying two structures and damaging two more.
As the number of structures destroyed by these fires rises, so do the costs for the insurance and reinsurance industries, and they are likely to increase further as authorities gain access to affected areas and assess the damage.
Preliminary estimates from Credit Suisse put insured losses in the range of $5 billion to $10 billion, while Moody’s said $3 billion to $6 billion and A.M. Best predicted that 2018 will be a record year for wildfire losses. Morgan Stanley also put insured losses for the Camp Wildfire alone at between $2 billion and $4 billion.
The previous most damaging wildfire on record in California was the 2017 Tubbs Wildfire, which destroyed 5,636 structures and caused industry losses of around $8 billion.
Properties affected in this event were worth considerably more on average than in the hard-hit Butte County region, but losses related to the Woolsey Fire are expected to be particularly heavy for re/insurers due to the high-cost of real estate in the area around Malibu.
Auto and vehicle losses from the wildfires also remain uncertain, but are sure to drive further losses for the insurance and reinsurance industries.
All three recent wildfires sprang up last Thursday and spread rapidly due to adverse weather conditions. Current estimates from Cal Fire suggest that the Woolsey Fire will be fully contained by November 19, 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.
