The wildfires ravaging Los Angeles are on track to become one of the costliest disasters in U.S. history, with losses already expected to surpass $135 billion (£109.7 billion). According to a preliminary estimate from private forecaster AccuWeather, total losses could range between $135 billion and $150 billion, affecting some of the most expensive real estate in the United States.
The fires have already wreaked havoc, with more than 5,300 structures destroyed by the Palisades blaze and more than 5,000 structures lost to the Eaton Fire. As authorities continue their battle to contain the fires, the total extent of the damage is still unfolding. These fires are among the fastest-moving and most wind-driven infernos in recent history, leading to what could be one of the costliest wildfire disasters the U.S. has seen.
AccuWeather’s Chief Meteorologist, Jonathan Porter, emphasized the scale of the damage, stating that the fires have already created “one of the costliest wildfire disasters in modern U.S. history.” The fires are on course to be one of the most expensive ever, outpacing even the infamous 2018 Camp Fire in northern California, which caused around $12.5 billion in insured losses.
The insurance industry is bracing for a significant blow, with analysts from firms like Morningstar and JP Morgan predicting insured losses to exceed $8 billion. Given the high property values in the affected areas, the total losses are expected to be even greater when accounting for both insured and uninsured properties.
This could place the LA wildfires among the top five costliest wildfires ever. The Camp Fire of 2018 currently holds the record for the highest insured wildfire costs, with damages estimated at $12.5 billion. While this current disaster has yet to be fully contained, it’s clear that it will be another monumental blow to the insurance sector.
While the fires are still being fought, experts warn that their long-term effects could stretch beyond just property damage. According to Porter, the aftermath of the wildfires could have prolonged negative consequences for public health, with toxic smoke impacting air quality and posing health risks to residents for months. Additionally, tourism in California, especially in areas affected by the fires, could take a significant hit as visitors avoid high-risk regions.
The wildfire season has added more strain to an already struggling insurance industry. The increasing frequency of natural disasters—such as fires, floods, and hurricanes—has led many insurers to hike premiums or even cancel policies. In response, homeowners are turning to state-run insurance programs, which are typically more expensive and offer less coverage.
In California, the number of policies through the state’s Fair Plan has more than doubled since 2020, jumping from approximately 200,000 policies to over 450,000 by September of the previous year. The Fair Plan, however, has been raising concerns about its financial stability, especially in light of the escalating disaster risks.
The fires also signal potential long-term economic issues for the state. According to Denise Rappmund, a senior analyst at Moody’s Ratings, the wildfires will have “widespread, negative impacts for the state’s broader insurance market.” Increased recovery costs are expected to drive up premiums and could lead to further reductions in the availability of property insurance.
This situation may also result in long-term damage to property values in affected areas, placing additional strain on both the insurance market and California’s public finances.
As the fires continue to devastate Los Angeles and its surroundings, the true extent of the damage is becoming clearer. What is certain is that the financial and social repercussions will be felt for years to come, as California faces one of the most significant natural disasters in its history.
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