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The ongoing wildfires in Los Angeles could become the costliest in U.S. history, with insured losses potentially exceeding $20 billion, according to estimates by JPMorgan analysts. This would surpass the $12.5 billion in insured damages from the 2018 Camp Fire, previously the most expensive wildfire in the nation’s history, as reported by Artemis.
The fires, which continue to burn without containment, have already destroyed or severely damaged up to 2,000 structures. The damage is concentrated in affluent areas like Pacific Palisades, where the median home price exceeds $3 million. This concentration of high-value properties is a significant factor in the high estimated losses.
JPMorgan's analysts initially estimated insured losses between $6 billion and $13 billion but have since revised their estimates due to the extensive damage. They now predict that economic losses could reach $50 billion, with insured losses potentially exceeding $20 billion if the fires are not contained soon.
The fires pose a significant threat to the insurance and reinsurance markets, particularly affecting insurance-linked securities (ILS) and catastrophe bonds. According to CNBC, the high value of homes and businesses in the affected areas means that losses will be shared among standard homeowners insurers, insurers specializing in high-value policies, and the California FAIR plan.
As the fires continue to spread, the full extent of the damage remains uncertain, and the final insurance market losses will not be known until the fires are brought under control and damage assessments are completed.