LA Wildfires Losses Could Top $30 Billion for Insurance Industry
Wildfires that have ravaged swaths of Los Angeles could result in losses of as much as $30 billion for the insurance industry as the blazes rage on almost a week after they ignited.
The new estimates from Wells Fargo & Co. and Goldman Sachs Group Inc. analysts significantly exceed last week’s highest prediction from JPMorgan Chase & Co. that the fires stood to cost insurers roughly $20 billion.
Home-insurance providers will bear the brunt of the cost. Allstate Corp., Chubb Ltd., American International Group. and Travelers Cos are the most exposed among the firms covered by Wells Fargo analysts, according to a note the bank sent to clients Jan. 12.
The most exposed insurers not covered by the bank include Mercury General Corp. and Cincinnati Financial Corp, according to the analysts.
Global property and casualty insurers are also beginning to acknowledge the disaster’s impact.
Japan’s Tokio Marine Holdings Inc. is “making group-wide efforts to pay insurance claims to those affected as quickly as possible,” President Satoru Komiya said at a briefing in Tokyo on Tuesday. It’s too early to estimate the impact of the LA wildfires on the insurer’s business performance, he said.
Read More: Fire-Scarred Los Angeles Braces for More Extreme Winds
Tokio Marine, along with Japan’s MS&AD Insurance Group Holdings Inc. and Sompo Holdings Inc., are collectively exposed to about 3% of insured damage from the California fires, according to an estimate from Steven Lam, an analyst with Bloomberg Intelligence.
Los Angeles is grappling with a second week of wind gusts exacerbating wildfires and hindering firefighters’ efforts to contain them. At least 24 people have died and more than 12,000 buildings across over 40,000 acres in the Pacific Palisades and Altadena neighborhoods burned to the ground.
Goldman Sachs analysts estimated insured losses between $10 billion to $30 billion, likely rising to around $40 billion when taking into account uninsured losses, according to a note dated Jan. 13. The fires are expected to have a drag on US nonfarm payrolls growth of 15,000 to 25,000 in January, the bank added.
As of Monday, the Palisades and Eaton fires remained largely uncontrolled.
Top Photo: Damaged and destroyed buildings after the Eaton Fire in Altadena, California, US, on Monday, Jan. 13, 2025. At least two rounds of vicious, dry Santa Ana winds are expected to blast through Southern California early this week, bringing powerful gusts that will challenge fire crews struggling to contain two destructive blazes and likely force thousands more residents to evacuate.