Verisk Estimates Insured Losses for Palisades and Eaton Fires at $28B to $35B

New estimates peg insured losses to property from the Palisades and Eaton fires in Los Angels together will fall between $28 billion and $35 billion, which includes losses to the California FAIR Plan.

The estimates out on Wednesday from the Extreme Event Solutions group at Verisk is approaching some of the highest figures issued on insured losses so far, including a high of $40 billion put out last week from Keefe Bruyette & Woods analysts. Moody’s RMS Event Response estimated insured losses from wildfires will range from $20 billion to $30 billion. CoreLogic indicated a $35 to $45 billion range of insured losses for two major fires in L.A.

At one point the L.A. area had five significant ongoing wildfires. Total losses from the fires are expected to be massive. AccuWeather revised its preliminary estimate of the total damage and economic loss from the fires to between $250 billion and $275 billion.

The fires are also expected to put a strain on the FAIR Plan. FAIR Plan doesn’t have enough surplus for this level of loss, Gerald Glombicki, senior director at Fitch Ratings, said in an interview with Insurance Journal.

Verisk estimates insured losses from the Palisades fire will range between $20 billion and $25 billion, and losses from the Eaton fire will range between $8 billion and $10 billion. Most of the losses are to residential risks.

The impacted areas from the Palisades fire include some of the highest property values in the nation, and many of the policyholders have considerable contents exposure, including jewelry, fine art and other luxury goods, according to Verisk.

The modeler completed a demand surge analysis using historical construction cost data for the Los Angeles area (Los Angeles and Santa Barbara counties). Given the large number of destroyed structures from the two events, and the need for complete rebuilding, it is likely that losses stemming from debris removal coverage will be non-trivial, according to Verisk.

The estimate includes losses to residential, commercial, and industrial properties and automobiles for their building, contents, and time element coverages. It also accounts for demand surge, debris removal and estimated insured take-up rates.

Containment on the fires continues to grow. The Palisades Fire has burned 23,448 acres and is 68% contained. The Eaton Fire has burned 14,021 acres and is 91% contained, according to CalFire.

Top photo: The Palisades Fire in the Los Angeles area. Source: CalFire.

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