Wildfires in California: Insured losses could exceed $30 billion, Wells Fargo analysis shows
Million Dollar Los Angeles star Josh Flagg discusses the evacuation of Los Angeles amid the flames on The Claman Countdown.
The devastating forest fires that affected Southern California over the past week could have caused more than $30 billion in losses, according to a new analysis.
At least 24 people died in the fires in the wider area Los Angeles areawhile officials say at least 12,000 structures have been damaged or destroyed by the fires.
Financial analysts at Wells Fargo Securities issued a note to clients on Sunday that said their “base case” for insured losses from the wildfires was $30 billion, adding that total losses could fall between $20 billion and $40 billion.
Within that total, about 85% of losses are expected to come from homeowner’s insurance policies, while 13.5% are commercial property losses and 1.5% are passenger car losses, according to Wells Fargo’s analysis. In the base case, the average value of real estate in areas affected by wildfires was reported to be around $3 million.
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Aerial footage shows destroyed homes as the Palisades Fire continues to burn on January 9, 2025 in Pacific Palisades, California. (Mario Tama/Getty Images/Getty Images)
“Regardless of the outcome, we see this as a manageable event for insurers,” he said Wells Fargo analysts wrote. They noted that with a total insured loss of $40 billion, this would represent a 2% hit to the insurer’s capital.
Below the base case of $30 billion insured lossesof that, $25.5 billion would come from homeowners insurance policies compared to $4.05 billion from commercial lines and $450 million from auto insurance policies. This would result in a smaller capital impact of 1.6%.
last week, JPMorgan analysts published a preliminary estimate according to which insured losses will reach 20 billion dollars. That figure would make Southern California’s wildfires the most damaging in the state’s history, as well as Wells Fargo’s estimate of $30 billion.
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Chimneys stand among the rubble after the Palisades Fire in Pacific Palisades, California, on January 8, 2025. (AGUSTIN PAULLIER/AFP via Getty Images/Getty Images)
Either estimate would make this month’s wildfires the costliest in California state history, surpassing the 2018 Camp Fire that caused about $10 billion in insured losses.
The Camp Fire engulfed the northern California city of Paradise and several nearby communities, causing 85 deaths while engulfing more than 18,000 buildings.
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Khaled Fouad (L) and Mimi Laine (R) inspect a family member’s property destroyed by the Eaton Fire on January 9, 2025 in Altadena, California. (Justin Sullivan/Getty Images/Getty Images)
The composition of insured losses from the camp fire detailed by JPMorgan was similar when compared to existing Southern California wildfires analyzed by Wells Fargo.
The JPMorgan report states that personal property losses account for about 86% of losses compared to 12% for commercial property and 2% for all other insurance and auto insurance. It was added that due to Southern California fires affect larger population centers, the insured losses are expected to be higher as a result.
