Gallagher Re has revised its insured loss estimates for the Southern California wildfires to a range of $20 billion to $30 billion, with the portion anticipated to be ceded to reinsurance potentially reaching the mid-to-high single-digit billions.
Although the Palisades and Eaton wildfires in Los Angeles are now expected to rank among the costliest individually identified fires ever recorded for the insurance industry, Gallagher Re noted that it should remain manageable for reinsurers.
It is worth noting that this total estimate, which is based exclusively on the Palisades Fire and Eaton Fire, includes expected losses incurred from the private insurance market and California’s FAIR Plan.
Gallagher Re’s total aggregated insured loss estimate for the wildfires has climbed significantly from the figure provided on January 13th, when Steve Bowen, the reinsurance broker’s Chief Science Officer, stated that losses would “notably exceed” the $10 billion mark.
It is also roughly in line with catastrophe risk modeller CoreLogic’s estimate of $35 billion to $45 billion and KBW’s estimate of $25 billion to $40 billion.
According to Gallagher Re, the aggregated cost from the fires will make 2025 the costliest year on record for the peril despite being two weeks into the new calendar year.
“While damage assessments remain ongoing, the scale of damage viewed in on-the-ground surveys and satellite imagery shows the enormous scale of the catastrophe in several communities,” the reinsurance broker said.
CalFire has released guidance that a minimum of 12,300 structures were damaged or destroyed, with most linked to the Eaton and Palisades fires.
“The scale of fire damage has been extensive to high-value properties and other expensive assets, including automobiles, motels, commercial businesses, historical sites, schools, religious places of worship, senior living facilities, museums, and other properties. Further assets, including expensive fine art, are also being evaluated for possible high-dollar losses,” Gallagher Re added.
At the same time, many of the destroyed properties were reportedly individually valued in the millions of dollars, including some with values exceeding $10 million.
Gallagher Re observed that the average property value in some of the hardest-hit areas included Pacific Palisades ($3.5 million), Malibu ($3.2 million), and Altadena ($1.3 million).
“For context, the Camp Fire (2018) that occurred in Paradise, CA, had a median property value of roughly $220,000 prior to that fire,” the reinsurance broker concluded.
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