Million Dollar Listing Los Angeles star Josh Flagg discusses evacuating Los Angeles amid flames on The Claman Countdown.
The devastating wildfires that hit Southern California last week may have caused losses exceeding $30 billion, according to a new analysis.
At least 24 people have been killed in wildfires in the greater Los Angeles area, while authorities say at least 12,000 structures have been damaged or destroyed in the fires.
Financial analysts at Wells Fargo Securities released a report to clients on Sunday that said their “base case” for insured losses from the wildfires was $30 billion, adding that total losses could be between 20 and 40 billion dollars.
Of that total, about 85% of losses are expected to come from home insurance policies, while 13.5% would be from commercial property and 1.5% would be from personal auto claims, according to the Wells Fargo analysis. The base case scenario indicates that the average property value hovers around $3 million in wildfire-affected areas.
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In an aerial view, destroyed homes are visible as the Palisades Fire continues to burn January 9, 2025 in Pacific Palisades, California. (Mario Tama/Getty Images/Getty Images)
“Regardless of the outcome, we view this as a manageable event for insurers,” Wells Fargo analysts wrote. They noted that with a total insured loss of $40 billion, this would represent a 2% loss to insurers’ equity.
In the base case of $30 billion for insured losses, $25.5 billion would come from home insurance policies, compared to $4.05 billion for commercial insurance and $450 million for home insurance policies. car insurance. This would result in stocks falling less than 1.6%.
Last week, JPMorgan analysts released a preliminary estimate that insured losses would reach $20 billion. That figure would make Southern California’s wildfires the most damaging in state history, as would Wells Fargo’s $30 billion estimate.
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Chimneys lie among the rubble after the Palisades Fire in Pacific Palisades, California, January 8, 2025. (AGUSTIN PAULLIER/AFP via Getty Images / Getty Images)
Whichever estimate pans out, this month’s wildfires would be the costliest in California state history, surpassing the 2018 Camp Fire that caused an estimated $10 billion of insured losses.
The Camp Fire affected the northern California town of Paradise and several nearby communities, killing 85 people and affecting more than 18,000 buildings.
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Khaled Fouad (left) and Mimi Laine (right) inspect a family member’s property that was 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 to that of the ongoing Southern California wildfires analyzed by Wells Fargo.
The JPMorgan report said personal property losses accounted for about 86% of losses, compared to 12% for commercial property and 2% for all other lines and auto insurance. He added that because the Southern California fires are affecting larger population centers, insured losses should be higher as a result.
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