California wildfire insured losses could reach $3 billion: AIR

Industry insured losses from the recent outbreak of California wildfires will be between $2 billion and $3 billion, according to Boston-based catastrophe modeler AIR Worldwide, the company said in a statement late Thursday.

AIR said its loss estimates explicitly capture residential, mobile home, commercial and automobile losses, as well as direct business interruption losses from the Tubbs, Pocket, Nuns, Atlas, Redwood and Sulphur fires in California. The estimates were done using the AIR California wildfire model and are based on exposures as of Dec. 31, 2016, the statement said.

Losses will be dominated by residential damage, with several neighborhoods — most notably, in Sonoma County — experiencing catastrophic loss, AIR said in its statement, with estimates of insured losses based on the assumption of nearly 100% take-up rates.

AIR’s estimate range “reflects uncertainty in the payment of additional living expenses resulting from mandatory evacuation of the city’s population, loss of some individual structures outside of the most affected neighborhoods, as well as widespread but lower levels of loss due to smoke, loss of electricity, and damage from suppression efforts” the company said in its statement.

Fires exacerbated by hot, dry and windy conditions spread across eight counties of California starting in early October, according to AIR. Twenty-two active wildfires were reported by CAL FIRE on October 12, consuming more than 170,000 acres and destroying more than 3,500 structures.

As of Wednesday, nine wildfires were still burning in California, and CAL FIRE expects many of the active fires will be fully contained by the end of the week, AIR said, adding that in total, more than 245,000 acres have burned and an estimated 8,700 structures have been destroyed.