Verisk estimates Palisades, Eaton Fires insured loss $28bn-35bn

Insured losses to property for the Palisades and Eaton fires together will fall between $28bn and $35bn, the Extreme Event Solutions group at Verisk has estimated.

This estimate includes losses due to fire and is inclusive of losses to the California Fair Plan, the catastrophe risk modeller said.

Insured losses from the Palisades fire (pictured) will range between $20-25bn, Verisk estimated, while the Eaton blaze makes up the remainder of the estimate, at $8-10bn.

Most of the losses are to residential risks, Verisk noted.

“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 impacted areas from the Palisades fire include some of the highest property values in the country, and many of the policyholders have considerable contents exposure, including jewellery, fine art and other luxury goods.

Demand surge analysis was completed using historical construction cost data for the Los Angeles area, including Los Angeles County and Santa Barbara County, using Verisk’s 360Value^® Quarterly Residential Replacement Cost Index, seasonally adjusted.

Given the large number of destroyed structures from these two events, and the need for complete rebuilding, it is likely that losses stemming from debris removal coverage “will be non-trivial”, Verisk observed.

Included in this estimate are losses to residential, commercial, and industrial properties and automobiles for their building, contents, and time element coverages. This estimate accounts for demand surge, debris removal and estimated insured take-up rates.

Verisk’s loss estimates do not include the Hurst fire or other fires, smoke damage, litigation, fraudulent assignment of benefits, social inflation, guaranteed replacement cost coverage, ordinance or law coverage, uninsured properties, infrastructure, extra-contractual obligations, hazardous waste cleanup, vandalism, or civil commotion, or loss adjustment expenses.