California wildfire insured losses could reach $8 billion: Morningstar

Wildfires that exploded in and around Los Angeles will cause “significant” insured losses, with preliminary estimates pointing to $8 billion, according to a note Thursday from DBRS Morningstar.

Such high insured losses would rank the fires “amongst the most destructive in California’s history,” Morningstar said, noting final damages will depend “on the final number of properties being affected by the wildfires.”

Meanwhile, J.P. Morgan has doubled its earlier forecast and now expects insured losses to top $20 billion.

The fires have already burned more than 1,100 homes and threaten more than 28,000 additional structures, according to local fire officials.

The 2018 Woolsey Fire, which destroyed 1,643 structures just north of Los Angeles, caused more than $6 billion in property damage, Morningstar said

Morningstar said it expects the ongoing wildfires to have a “negative but manageable impact on major property insurers active in the Californian market,” with losses also “manageable” for the global reinsurance industry.

In a separate note Thursday, Moody’s Ratings said that “commercial property losses could be significant” and are expected “to run in the billions of dollars given the high value of homes and businesses in the impacted areas.”

Denise Rappmund, vice president and senior analyst at Moody’s Ratings, said in the note that “increased recovery costs will likely drive up premiums and may reduce property insurance availability.”