JPMorgan estimates that insurance losses from California wildfires could reach $20 billion

A new analysis by JP Morgan estimates the total economic and insured losses resulting from the global financial crisis Deadly forest fires The impact on Southern California is likely to be the costliest in the state’s history.

Insurance analysts at JPMorgan released a report Thursday that looked at the exposure of property insurance lines to homeowners and commercial properties in light of the wildfires that have devastated communities in the United States. Los Angeles region, including the Pacific Palisades and Altadena region. At least five people were killed in the fires and more than 2,000 homes, businesses and other buildings were damaged or destroyed.

The report noted that nearly 30,000 acres were affected by the fire and nearly 15,000 homes and buildings were at risk as of Thursday — up from 13,000 as of Wednesday morning. Firefighters are struggling to contain wildfires driven by strong Santa Ana winds.

“Expectations of economic losses from the fires have more than doubled since yesterday to approach $50 billion, and we estimate insured losses from the event could exceed $20 billion (and even more if the fires are not brought under control),” JPMorgan analysts wrote. . “This would make this event far more dangerous than the 2018 Butte County Camp Fires, the previously highest insured wildfires in California history (with insured losses of approximately $10 billion).”

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“Insured losses for the Butte Camp Fire were close to two-thirds of the economic losses (about $15 billion). This event affected more than 150,000 acres and affected more than 18,000 homes/buildings,” the report said.

The 2018 Camp Fire destroyed the town of Paradise and several surrounding communities and killed 85 people. This was caused by a utility transmission line falling during high winds.

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The JPMorgan report indicated that most of the insured damages and losses in the Camp Fire came from personal property losses, which accounted for 86% of losses compared to 12% for commercial property and 2% from all other lines and auto insurance.

Ongoing forest fires Southern California It affects larger population centers than the Camp Fire, and JP Morgan analysts expect insured losses to be higher as a result.

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“Although the current wildfires have not affected a large area or many homes/buildings (yet), more damage is concentrated in the affluent Pacific Palisades area, which is home to high-value residential homes (median home price > 3 <$500,000 in Butte County, analysts wrote.

“Furthermore, the fires are not yet contained and are still spreading, meaning estimates of potential economic and insurance losses are likely to increase.”