LONDON (Reuters) – The most destructive wildfires ever for Los Angeles may cause billions of dollars in insured losses, ratings agencies said on Thursday, though many homes are likely uninsured.
The wildfires burning in the Pacific Palisades, Eaton (NYSE:ETN), Hurst and other Los Angeles neighbourhoods may lead to insured losses of more than $8 billion, analysts at Morningstar DBRS said in a note. This surpasses the 2018 Woolsey fire in California, which caused more than $6 billion in losses, Morningstar said.
Jasper Cooper, senior credit officer for Moody’s (NYSE:MCO) Ratings, expected insured losses to amount to billions of dollars given the area’s high values of homes and businesses.
Homeowners have found it tough to buy insurance in catastrophe-prone states as several firms have pulled out of the market.
“These events will continue to have widespread, negative impacts for the state’s broader insurance market,” said Denise Rappmund, senior analyst at Moody’s.
“Increased recovery costs will likely drive up premiums and may reduce property insurance availability.”
Morningstar DBRS also said a larger than usual portion of the losses could be uninsured or covered under the California FAIR plan, designed to help homeowners where standard insurance is not available.
JPMorgan on Thursday estimated insured losses at $20 billion, Thomson Reuters (NYSE:TRI) publication The Insurer reported, double its estimates of a day earlier due to an escalation of the damage.