Million Dollar Listing Los Angeles star Josh Flagg discusses evacuating Los Angeles amid flames on The Claman Countdown.
THE devastating forest fires that hit Southern California over the past week may have ensured losses exceeding $30 billion, according to a new analysis.
At least 24 people have been killed in wildfires in the Greater Los Angeles areawhile 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)
“Whatever the outcome, we consider this to be a manageable event for insurers,” said the Wells Fargo Analysts wrote. They noted that with a total insured loss of $40 billion, this would represent a 2% loss to insurers’ equity.
Under the base scenario of $30 billion for insured losses$25.5 billion would come from home insurance policies, compared to $4.05 billion from commercial insurance and $450 million from auto insurance policies. 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 affect larger population centers, insured losses should therefore be higher.
