The costs related to the wildfires wreaking havoc across large sections of Los Angeles continue to rise, with recent estimates indicating total insurance losses could reach as high as $40 billion.
This updated estimate, shared on Tuesday by analysts at Keefe Bruyette & Woods, is double their earlier brief assessment from the previous day. In a message to clients, they highlighted the “ongoing potential for increased insured losses” as the fires in the region remain largely uncontrolled. Their most optimistic scenario suggests that insured losses might be around $25 billion.
Los Angeles is bracing for an elevated fire threat at least until Wednesday, as hot, dry winds affect the area. Following a week of relentless flames, at least 24 lives have been claimed, and entire communities have been turned to ash.
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The containment efforts for the Palisades and Eaton fires, which have led to the most significant damage in the past week, were reported at 17% and 35%, respectively, as of Tuesday, according to California’s Department of Forestry and Fire Protection.
Major insurers such as Allstate Corp, Travelers Cos, and Chubb are among those anticipated to face substantial primary losses due to these fires, as noted by the KBW analysts.
Furthermore, insurers that cater to high-net-worth homeowners, including Chubb, American International Group, and Cincinnati Financial Corp, may have greater risk exposure than their usual statewide market shares might suggest, the analysts pointed out.
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