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HomeBusinessCalifornia wildfires: Wells Fargo analysis shows insured losses could exceed $30B

California wildfires: Wells Fargo analysis shows insured losses could exceed $30B


devastating wildfire The impact that hit Southern California last week could cause more than $30 billion in damages, according to a new analysis.

At least 24 people have died in the outbreak of massive wildfire Los Angeles areaAt the same time, officials say that at least 12,000 structures have been damaged or destroyed in the fire.

Financial analysts at Wells Fargo Securities issued a report to clients on Sunday saying their “base case” for insured losses due to the wildfires was $30 billion, adding that total losses could range from $20 billion. Could be between $40 billion.

The Wells Fargo analysis found that overall, about 85% of losses are expected to be covered by homeowners’ insurance policies, while 13.5% are commercial property and 1.5% are personal auto losses. The base case states that the average value of property in areas affected by wildfire is about $3 million.

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In an aerial view, destroyed homes are visible as the Palisades Fire burns in Pacific Palisades, California on January 9, 2025. (Mario Tama/Getty Images/Getty Images)

“Regardless of the outcome we view this as a manageable event for insurers.” Wells Fargo Analyst wrote. He noted that on total insured losses of $40 billion this would represent a 2% hit to equity for insurers.

Under the $30 billion base case insured lossOf those, $25.5 billion will come from homeowners insurance policies, while $4.05 billion will come from commercial lines and $450 million from auto insurance policies. This would result in a small equity hit of 1.6%.

last week, JPMorgan Analyst Released a preliminary estimate that insured losses would reach $20 billion. That figure would make Southern California’s wildfires the most damaging in the state’s history, estimated by Wells Fargo at $30 billion.

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Chimneys stand amid debris after the Palisades Fire passed in Pacific Palisades, California on January 8, 2025. (Augustin Polier/AFP via Getty Images/Getty Images)

Any forecast that succeeds would make this month’s wildfire the costliest in California state history, surpassing even the 2018 Camp Fire, which caused nearly $10 billion in insured losses.

The Camp Fire affected the northern California city of Paradise and several surrounding communities, killing 85 people while affecting more than 18,000 buildings.

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Khaled Fouad (left) and Mimi Laine (right) inspect a family member’s property destroyed by the Eaton Fire on January 9, 2025 in Altadena, California. (Justin Sullivan/Getty Images/Getty Images)

The composition of insured losses from the Camp Fire detailed by JPMorgan was similar to that of the Southern California wildfires analyzed by Wells Fargo.

JPMorgan reported that personal property losses accounted for about 86%, compared to 12% for commercial property and 2% from all other lines and auto insurance. This was added because Southern California As the fires are affecting large population centres, insured losses are expected to be high as a result.

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