A new analysis by JPMorgan estimates that the overall economic losses and insured losses caused by the deadly wildfires impacting Southern California are likely to be the most costly in state history.
JPMorgan’s insurance analysts released a report on Thursday that looked at the exposure of homeowner’s and commercial property insurance lines in light of the wildfires that have devastated communities in the Los Angeles area, including Pacific Palisades and Altadena. At least five people have been killed in the fires and over 2,000 homes, businesses and other structures have been damaged or destroyed.
The report noted that nearly 30,000 acres have been impacted by the fire and nearly 15,000 houses and buildings are considered to be at risk as of Thursday — up from 13,000 as of Wednesday morning. Firefighters have struggled to contain the wildfires, which are being driven by strong Santa Ana winds.
“Expectations of economic losses stemming from the fires have more than doubled since yesterday to closer to $50 billion, and we estimate that insured losses from the event could exceed $20 billion (and even more if the fires are not controlled),” JPMorgan analysts wrote. “This would make this event significantly more severe than the 2018 Butte County Camp fires, the highest insured loss wildfires in California’s history previously (with insured losses of roughly $10 billion).”
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“Insured losses in the Butte Camp fire were close to two-thirds of economic losses (about $15 billion). That event impacted over 150,000 acres and affected over 18,000 houses/buildings,” the report said.
The 2018 Camp Fire devastated the town of Paradise and several nearby communities and caused 85 fatalities. It was caused by a downed utility transmission line during a high wind event.
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JPMorgan’s report noted that most of the damage and insured losses in the Camp Fire came from personal property losses, which accounted for 86% of the losses compared to 12% for commercial property and 2% from all other lines and auto insurance.
The ongoing wildfires in Southern California are impacting larger population centers than the Camp Fire did, and JPMorgan analysts expect that the insured losses will be higher as a result.
“While the current wildfires haven’t affected as much acreage or as many houses/buildings (thus far), more of the damage is concentrated in the affluent Pacific Palisades area, which has high value residential homes (median home price >$3 million versus <$500k in Butte County),” the analysts wrote.
“Moreover, the fires have not been contained thus far and continue to spread, implying that estimates of potential economic and insured losses are likely to increase.”
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