The Carr wildfire in California has likely caused an estimated $1.5 billion in insured losses to date, foreshadowing another major wildfire loss event for insurers in the state, according to a report by Moody’s Investors Service Inc.

The wildfire has ravaged parts of Shasta County in or near Redding in Northern California, caused six deaths, and left substantial property damage to date, according to the property/casualty sector report published by the New York-based ratings firm on Thursday. The fire has destroyed 1,555 homes and commercial structures, damaged an additional 240 homes and structures, and burned about 121,000 acres so far, according to the California Department of Forestry and Fire Protection.

“The Carr fire portends high California wildfire losses for the remainder of 2018, following almost $12 billion of insured losses for the October and December 2017 wildfires, a credit negative for California homeowners and commercial property insurers,” Moody’s said in its report. “Based on past fires and the number of structures damaged, insured losses will run in hundreds of millions or possibly billions of dollars. Assuming Cal Fire’s estimate of 1,555 structures destroyed and an average value of almost $991,000 per structure, losses would be about $1.5 billion so far and the fire is still burning. However, the Carr fire’s average claim size will likely be significantly lower than statewide averages because home values in the affected area are relatively low. Given already-high construction demand from the 2017 wildfire losses and a strong housing market, the spike in demand for construction labor and materials following the Carr fire will lead to higher insured losses.”

Some commercial property insurers are also likely to pay business interruption claims, according to the report.

California property/casualty insurers may also be hit by wildfire losses from properties insured by the California Fair Access to Insurance Requirements Plan, which insures a disproportionate share of property in remote locations and regions with high wildfire exposure, according to the report. Each California insurer is required to participate in FAIR plan losses in direct proportion to its market shares.

The wildfires in California in October and December 2017 caused insured losses of $11.8 billion, including $10.3 billion of homeowners losses, $1.2 billion of commercial property and $294 million of claims from personal and commercial auto and other lines of business, according to the report.

“Following the 2017 wildfires, most insurers agreed to adopt the California insurance commissioner’s request for expedited claims-handling procedures,” the report said. “We expect that insurers are likely to follow similar practices for the Carr fire.”

The Carr wildfire is so far the sixth-most destructive fire in California's history, according to Cal Fire. In comparison, the 2017 October and December California wildfires collectively caused 46 deaths, destroyed more than 10,000 structures, damaged almost 1,200 structures, and burned more than 500,000 acres.