Insured losses from the wildfires ravaging Los Angeles County could top $20 billion and run even higher unless they are brought under control, according to a note late Thursday from J.P. Morgan.
“We estimate that insured losses from the event could exceed $20 billion (and even more if the fires are not controlled),” the financial services company said.
In a Friday update, J.P. Morgan confirmed its $20 billion forecast and said the insured losses are expected “to be confined mostly to our homeowners coverage … and, to a lesser extent, commercial property.”
The update said that although the fires continue to spread, there are early signs they are being “contained.”
The revised loss forecast was double the original $10 billion estimate J.P. Morgan issued Wednesday, a reflection of how explosively fast the fires have spread.
While the preliminary estimates suggest insured losses from the wildfires spreading across Los Angeles County will be significant, primary insurers should be able to withstand the losses, according to a report late Thursday from S&P Global Ratings Inc.
“We … believe our rated primary insurers can bear the brunt of the LA wildfire losses, after strong results in the first nine months of 2024 (and likely for the year), combined with a material reduction in policy coverage in wildfire-prone areas in California,” S&P said in its report.
S&P cautioned, however, that the substantial wildfire losses in the first two weeks of 2025 could “rapidly” deplete the catastrophe budgets of U.S. primary insurers, potentially leading to earnings pressure later in the year, “especially if 2025 proves to be above-average for catastrophes.”
Also late Thursday, data and analytics company CoreLogic Inc. said the Pacific Palisades Fire has burned more than 17,000 acres “and has quickly become one of the most destructive wildfire events in the history of Los Angeles,” and may exceed the 2018 Woolsey Fire as the most destructive in Los Angeles history.
CoreLogic said at least 9,900 structures are within the Pacific Palisades fire perimeter, and the number is likely to grow. The Eaton Fire has burned over 10,000 acres and at least 11,700 structures are within its perimeter, an estimate also likely to increase, CoreLogic said.
