These days we are witnessing hellish pictures. Los Angeles burned down.. Among the many dramatic results, while the death toll has already reached 10 and the number of displaced has exceeded 180,000, the scene is one of scorched earth, with 117 square kilometers burnt. Earth and more 10,000 buildings destroyed danger
The state begins to Calculation of economic lossesDear ones Between $52 and $57 billion. About 40 billion of these are related to houses and buildings, of which a portion (about 20 billion) will be paid by insurance. gave Insurance companiesThose who know and are prepared for the risks due to their geographic positioning are frantically trying to estimate potential insurance and reinsurance costs as a result of an ongoing event.
Houses and money burnt – significant losses
gave Fires in the Los Angeles areaWildfires may occur in California. More expensive Ever for the insurance and reinsurance market. According to analysts at investment bank JP Morgan, the loss can be estimated. is more than 20 billion dollars..
The fire is still raging and so are the estimates, which are increasing by the hour. On January 9, the number was between $6 and $13 billion, and by the early afternoon of January 10, the number had reached $20 billion. Therefore, expectations of economic losses have more than doubled and may increase.
That would make the Los Angeles fires the deadliest, surpassing the 2018 fires that caused record losses. About $10 billion. Although the number of buildings, both residential and non-residential, is currently less than in the Buttecamp fire, it is the residential area that makes the difference. In fact, by far most of the damage is concentrated in one. Rich areasPacific Palisades, where the houses are a Average price of $3.5 millionfar more than Butte County’s 500,000.
The quietest consequences: the insurance issue
Besides the loss, too sarcasm. For Californians, wildfires mean not only immediate loss, but also the inability to insure in the future. Indeed, extreme weather events, which are closer in time, put insurance companies to the test.
So for them Presenting policies is not easy anymore. For fire hazard, because “danger” is increasingly a certainty. Between 2020 and 2022, nearly 2.8 million home insurance policies were not renewed and 530,000 of those are located in the Los Angeles area that is currently burning. It is true that a portion of these contracts were not renewed at the will of the insured, but a good portion were. Obstacle By companies because it’s not easy anymore.
Here is an example. State Farmwhich announced last year that it does not intend to renew 72,000 policies. Another company, The Chubhas instead decided to no longer insure the most valuable homes in high-risk areas.
Many Californians will then switch to the Federal Insurance Agency program, which is CFP of California. This program costs more and provides less coverage than private companies, but it remains the only alternative if needed. The CFP program, which has seen a 123% and 161% increase in applications for residential and commercial insurance in recent years, respectively, estimates that it will spend About 6 billion dollars In compensation for the ongoing fire. The consequences of this spending are not yet clear, but it could threaten the existence of the program itself.
In the future, which is certainly near, extreme events will become increasingly intense and more numerous. Insuring your assets, real estate or otherwise, will be necessary to cover the effects of one of these events. But what if this type of insurance is no longer offered or if the cost increases so much that it becomes unaffordable for many people?
