Gallagher Re has projected that insured losses from the recent Southern California wildfires, primarily driven by the Palisades Fire and Eaton Fire, could total between US$20 billion and US$30 billion.
These estimates encompass losses covered by the private insurance market and California’s FAIR Plan. The share of these losses ceded to reinsurers is expected to fall within the mid-to-high single-digit billions. Gallagher Re noted that while the reinsurance impact will be significant, it is not anticipated to substantially affect capital positions and should remain manageable for the industry.
The scale of property damage from these fires, which includes destruction of high-value properties and other costly assets, suggests this event could become the most expensive wildfire series on record for the insurance sector.
Gallagher Re emphasized that these figures are preliminary and may change as damage assessments continue, potentially leading to further adjustments in loss estimates.
As of Jan. 16, weather conditions have improved, aiding firefighting efforts to contain both the Palisades and Eaton fires. This shift contrasts with the extreme fire weather conditions recorded from Jan.y 7-10 and Jan. 13-15, when severe drought and high winds accelerated the fires' spread and intensified property damage across Los Angeles County.
According to updated data from CalFire, the Eaton Fire has destroyed 5,718 structures, while the Palisades Fire has resulted in the loss of 2,869 structures. Combined, these fires now rank among the five most destructive wildfires in California’s modern history. Authorities have confirmed at least 25 fatalities and numerous injuries.
The extreme fire behavior earlier in January was largely driven by a prolonged Santa Ana wind event, which brought strong, warm, and dry winds into the Los Angeles basin. Wind gusts approached 100 mph, marking the region’s most severe windstorm since 2011.
Gallagher Re attributed the severity of the fires to several contributing factors, including continued population growth and increased development in Wildland Urban Interface (WUI) areas, where many communities lack fire-resistant construction and wildfire mitigation measures.
Persistent drought conditions and increasingly volatile weather patterns, influenced by climate change, also played key roles in the January 2025 wildfire outbreak in Southern California.
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