Fitch Ratings says that losses from the California wildlife will negatively affect the fourth-quarter earnings of companies with material property exposure in the state. However, the losses are expected to remain within the anticipated level – and the companies affected are generally the larger, national carriers with large capital bases and high insurer financial strength ratings.
A sizeable portion of the coverage is provided by the Excess and Surplus market, which may shift losses away from traditional large admitted insurers.
The Camp Fire is already the most destructive fire in the history of California, with almost 12 000 structures destroyed as at 19 November. Southern California’s Woolsey Fire has been contained after 1 600 homes and buildings were destroyed.
According to CoreLogic, over 48 000 were at ‘high’ or ‘extreme’ risk of wildlife damage from the two fires, with a total reconstruction cost of more than US$18bn. Catastrophe risk modeller Risk Management Solutions (RMS) said insured losses from both fires could reach between US$9bn and US$13bn.
According to Munich Re, the fires reflect a second consecutive year of major wildlife losses in California. The industry incurred US$11.5bn of insured losses in 2017. The state also experienced wildfires in July 2018 that generated US$845m of direct-insured losses.