The Extreme Event Solutions group at Verisk, a group provider of data analytics and technology, has estimated that insured property losses from the Palisades and Eaton fires will range between $28 billion and $35 billion.
These figures account for losses due to fire, including those covered under the California Fair Plan.
According to Verisk, insured losses from the Palisades fire are expected to fall between $20 billion and $25 billion, while the Eaton fire is projected to result in $8 billion to $10 billion in insured losses. The majority of these losses involve residential properties.
"The ongoing devastation from these deadly wildfires is truly heartbreaking," said Rob Newbold, president of Extreme Event Solutions at Verisk. "We are advancing science and risk management to help communities build resilience against disasters like these catastrophic wildfires. The amount of data and insights to support mitigation efforts continues to grow, which can help inform how communities rebuild in the wake of this disaster."
The Palisades fire affected areas with some of the highest property values in the United States. Many policyholders in these areas have significant contents exposure, including luxury goods such as jewelry and fine art.
Verisk conducted demand surge analysis for the Los Angeles and Santa Barbara areas using its 360Value Quarterly Residential Replacement Cost Index. Given the substantial destruction of structures and the need for rebuilding, losses related to debris removal coverage are expected to be significant, the company said.
The estimate includes losses to residential, commercial, and industrial properties, as well as automobiles, covering building, contents, and time element policies. It also accounts for demand surge, debris removal, and insured take-up rates. However, the estimates exclude certain items such as smoke damage losses, litigation-related losses and ordinance or law coverage losses, among others.
Verisk also announced an update on its US Wildfire Model review process with the California Department of Insurance (CDI). The company requested a review of its model under California Insurance Commissioner Ricardo Lara’s new catastrophe modeling and ratemaking regulation.
As of January 16, the CDI has granted Verisk’s petition for review, marking the start of the formal evaluation process.
The implementation of catastrophe models in California is expected to provide stakeholders, including consumers, insurers, and regulators, with enhanced tools to understand wildfire risks and improve insurance availability statewide.
