The Los Angeles wildfires are set to rank among the costliest disasters in U.S. history, with projected losses surpassing $135 billion (£109.7 billion), according to preliminary estimates by private forecaster AccuWeather. The fires, fueled by strong winds and dry conditions, have devastated some of the most expensive property in the U.S.
AccuWeather forecasts losses between $135 billion and $150 billion, while insurance analysts, including those from Morningstar and JP Morgan, estimate insured losses to exceed $8 billion.
Destruction and Scope
Authorities report more than 5,300 structures have been destroyed by the Palisades blaze, while the Eaton Fire has claimed over 5,000 structures. With containment efforts ongoing, the full scale of the disaster remains uncertain.
“These fast-moving, wind-driven infernos have created one of the costliest wildfire disasters in modern U.S. history,” said AccuWeather Chief Meteorologist Jonathan Porter.
Comparison to Past Disasters
The Camp Fire of 2018 in Northern California, which caused insured losses of approximately $12.5 billion, currently holds the record for the costliest wildfire. However, the high property values affected in the current fires could place these events among the top five on the list, according to insurance giant Aon.
Impact on Insurance and Property Markets
The insurance industry, already under pressure from rising natural disaster risks, faces further challenges. Many homeowners with mortgages are required to have insurance, but companies are increasingly canceling policies or raising premiums.
In California, reliance on the state’s Fair Plan—an insurance option of last resort—has surged, with policies doubling from 200,000 in 2020 to over 450,000 by September 2023. These plans are more expensive and offer less comprehensive coverage.
Denise Rappmund, senior analyst at Moody’s Ratings, warned of widespread impacts on the broader insurance market, including higher premiums, reduced availability of property insurance, and long-term damage to property values. Public finances could also face significant strain.
Broader Implications
In addition to the financial toll, the wildfires are expected to have lasting effects on health and tourism. As recovery efforts continue, California faces mounting challenges in mitigating future risks while managing the immediate fallout from one of the most devastating wildfire seasons in its history.
