Woolsey Wildfire Industry Loss At Least $2.5bn: AIR

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Includes: GLRE, HVRRF, HVRRY, SSREF, SSREY, TPRE
by: Steve Evans

The Woolsey wildfire in southern California is estimated to have caused at least a $2.5 billion insurance and reinsurance industry loss by catastrophe risk modeller AIR Worldwide.

The figure is aligned with estimates from brokers, rating agencies and other catastrophe modelling firms.

AIR said its assumption is based on 100% take-up rates in the area of southern California that was affected by the wildfire.

The risk modelling firm has not yet released any estimate for the much larger Camp wildfire.

Catastrophe risk specialist RMS RMS estimated that insurance and reinsurance market losses would be in a range between $9 billion and $13 billion across both the Woolsey and Camp wires, while reinsurance broker Aon said that the economic cost of the wildfires would "minimally exceed" $10 billion "if not much higher."

RMS pegged the Woolsey wildfire industry loss in a range from $1.5 billion to $3 billion.

Moody's most recently said that the insurance and reinsurance industry loss could be as high as $15 billion, across the two fire outbreaks.

The Woolsey Fire burned through 96,949 acres and completely destroyed 1,643 structures, while another 364 structures were damaged by the blaze.

Average property values are high in the area the Woolsey fire happened, hence the loss is anticipated to be reasonably significant despite the much smaller burn than the Camp fire, which is the one the industry is expecting the really big loss from.

AIR noted that the industry loss could be higher due to additional living expense claims resulting from mandatory evacuations, loss of some structures outside of the most affected neighborhoods, and widespread but lower levels of loss due to smoke, loss of electricity, and damage from suppression efforts.

AIR's modelled loss estimate includes insured physical damage to property (residential, mobile home, and commercial), both structures and their contents, and auto losses, as well as any direct business interruption costs.

Analysts at KBW said that the Woolsey fire loss will likely see its insured losses fall largely to primary carriers, but that there would be some reinsurance exposure through quota share, per occurrence, and aggregate covers.

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