California wildfires: Insurance losses could reach $30 billion, according to Wells Fargo analysis

the Devastating forest fires That affected Southern California over the past week could have amounted to as much as $30 billion in insured losses, according to a new analysis.

At least 24 people have been killed in a wildfire outbreak in the Krazer State Los Angeles areaWhile officials say that at least 12,000 buildings have been damaged or destroyed in the fires.

Financial analysts at Wells Fargo Securities issued a report to clients on Sunday, stating that their “base case” for insured losses due to wildfires was $30 billion, adding that total losses could fall in a range of $20 billion to $40 billion. .

Of that total, about 85% of losses are expected to come from homeowners’ insurance policies, while 13.5% are from commercial property and 1.5% from personal auto losses, the Wells Fargo analysis found. The base case indicated average property values ​​hovering around $3 million in wildfire-affected areas.

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“Regardless of the outcome, we see this as a manageable event for insurers.” Wells Fargo Analysts books. They noted that at a total insured loss of $40 billion, it would represent a 2% loss to insurers’ equity.

Under the $30 billion base case for Insured losses$25.5 billion of that will come from homeowners insurance policies compared to $4.05 billion from commercial lines and $450 million from auto insurance policies. This would cause shares to fall 1.6%.

last week, JPMorgan analysts It issued a preliminary estimate that insured losses would reach $20 billion. This figure would make Southern California’s wildfires the most damaging in the state’s history, as would Wells Fargo’s estimate of $30 billion.

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Either estimate coming to fruition would make this month’s wildfires the costliest in California history, surpassing the 2018 Camp Fire that caused about $10 billion in insured losses.

The Camp Fire affected the Northern California town of Paradise and several surrounding communities, killing 85 people and affecting more than 18,000 structures.

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The composition of insured losses from the Camp Fire described by JPMorgan was similar when compared to the ongoing Southern California wildfires analyzed by Wells Fargo.

The JP Morgan report indicated that personal property losses amounted to about 86% of losses, compared to 12% for commercial real estate and 2% for all other lines and automobile insurance. She added that because Southern California Fires affect larger population centres, and insured losses are expected to be higher as a result.

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