California wildfire losses likely to be in the billions of dollars: Moody’sPosted On: Aug. 26, 2020 11:57 AM CST
Ongoing California wildfires are likely to result in billions of dollars in insured losses following damage to commercial and residential properties, Moody’s Investors Service Inc. said in a report Wednesday.
Some commercial property insurers are also likely to pay business interruption claims, and the increased demand for construction labor and materials after the wildfires has the potential to push insured losses higher, Moody’s said.
Policyholders will face increased rates and non-renewals as severe wildfires are likely to continue, driven partly by climate change, Moody’s said.
As of Aug. 25, almost 1,800 residential and commercial properties had been damaged or destroyed by the wildfires, which have resulted in more than 1.5 million acres burned and at least seven fatalities, according to the California Department of Forestry and Fire Protection and other authorities.
Insured losses are around $1.5 billion so far, based on an average value of $826,000 per structure, Moody’s said.
However, there is considerable variability around this estimate because of the wide range of values for homes and commercial properties in the affected areas, Moody’s said.
The leading commercial fire insurers in California in 2019 based on direct written premiums for fire and commercial multi-peril business were Farmers Insurance Group ($736 million), Travelers Cos. Inc. ($417 million), Liberty Mutual Insurance Co. ($364 million), Chubb Ltd. ($266 million), Nationwide Mutual Insurance Co. ($250 million), and State Farm ($245 million), according to Moody’s.
As of Aug. 25, the most destructive wildfires have been the LNU Lightning Complex in Napa and surrounding counties, the CZU Lightning Complex in Santa Cruz County and the SCU Lightning Complex, primarily impacting the hills west of Silicon Valley, Moody’s said.
In 2018, property/casualty insurers paid out $13 billion in losses due to California wildfires, following $12 billion in losses in 2017.