LA Wildfires Expected to Cause Insurance Losses Up to $30 Billion
The wildfires ravaging Los Angeles are now projected to result in up to $30 billion in losses for the insurance industry, nearly a week after the fires began. This new forecast, provided by analysts from Wells Fargo & Co and Goldman Sachs Group Inc, significantly exceeds earlier predictions, with JPMorgan Chase & Co estimating damages at around $20 billion last week.
Home-insurance providers are expected to bear the brunt of the financial fallout, with major insurers such as Allstate Corp, Chubb Ltd, American International Group (AIG), and Travelers Cos identified as the most vulnerable, according to Wells Fargo’s report from January 12. Other insurers, including Mercury General Corp and Cincinnati Financial Corp, are also at risk, though they were not included in the analysis.
In addition to U.S.-based companies, international insurers are beginning to assess the scale of the disaster. Japan’s Tokio Marine Holdings Inc has already taken steps to speed up claims processing for those affected, though President Satoru Komiya emphasized that it is too early to evaluate the full impact on their financial performance.
Tokio Marine, along with other Japanese firms like MS&AD Insurance Group Holdings Inc and Sompo Holdings Inc, collectively accounts for about 3% of the insured damages from the wildfires, according to Bloomberg Intelligence analyst Steven Lam.
The fires continue to wreak havoc in Los Angeles, with gusty winds exacerbating the situation and hindering firefighting efforts. At least 24 fatalities have been confirmed, and over 12,000 buildings have been destroyed across more than 40,000 acres, particularly in areas such as Pacific Palisades and Altadena.
Goldman Sachs now estimates insured losses ranging between $10 billion and $30 billion, with the overall damage—considering uninsured losses—potentially reaching $40 billion. The fires are also expected to impact U.S. job growth, with a reduction of 15,000 to 25,000 nonfarm payroll jobs in January, according to their analysis.
As of Monday, the Palisades and Eaton fires remain largely uncontrolled, with authorities continuing their efforts to contain the blazes.
