California fires cause $50 billion losses, raising insurance premiums and straining market, warns JPMorgan analyst.
Fires in California have caused nearly $50 billion in economic losses, doubling earlier estimates, according to JPMorgan analyst Jimmy Bhullar.
The losses include over $20 billion in insured claims, a figure that may increase if the fires continue to burn.
Ratings firm Morningstar DBRS anticipates total insured losses could exceed $8 billion, classifying this disaster as one of the most costly in US history.
Insurance loss estimates can fluctuate significantly due to ongoing events, as analysts rely on past incidents to gauge future damage.
For comparison, the 2018 Camp Fire resulted in about $12.5 billion in insured losses when adjusted for inflation.
Natural disasters like hurricanes and earthquakes usually lead to the largest financial losses, with Hurricane Katrina in 2005 incurring insured losses of $102 billion.
The ongoing fires are expected to strain California’s home-insurance market, causing premiums to rise and limiting policy options, as noted by Moody’s Ratings analyst Denise Rappmund.
Considerable losses may require private insurers to assist the state’s Fair Plan insurer, which serves homeowners denied coverage by private companies.
The impact of the fires on the Fair Plan remains unclear, but recent data shows substantial exposure in heavily affected regions, particularly Pacific Palisades, where losses could approach $6 billion.
