Estimated insured losses from the record-breaking western US wildfires will be between $7 billion and $13 billion, according to catastrophe risk solutions company RMS. The losses reflect estimates as of December 01 and represent an update from the previously estimated wildfire losses up to September 20, according to RMS. The ignition of the Glass Fire and the further spread of the CZU and LNU Complex Fires represent the most notable wildfire activity in California since September 20, RMS said.
RMS insured losses represent estimates from major wildfires in California, Oregon, Washington and Colorado as of December 01:
The estimate includes losses from property damage, including evacuation and smoke damage, business interruption, and additional living expenses (ALE), across residential, commercial and industrial lines. RMS said that smoke and evacuation were expected to be “significant contributors” to wildfire losses this season, accounting for about 20% of losses in California and Colorado and about 35% of losses in Oregon and Washington. The estimate also accounts for post-event loss amplification from property damage (25%-30%) and business interruption/ALE (up to 100% or greater).
Read more: RMS collaborates on catastrophe bond
“2020 represents the most destructive fire season on record, in terms of burn area in California,” said Michael Young, RMS vice president of product management. “Since August, 69 major fires that exceeded 1,000 burned acres each have burned so far. Five of the six largest-ever California wildfires have occurred in 2020, with over 4.4 million acres burned in total to date. While fires earlier in the season were dominated by ignitions sparked by the intense lightning storms in August, extreme wind-driven fires dominated the last few months. A similar phenomenon resulted in record-breaking fires in Oregon as well this season, with over 20 major fires driven by extreme winds, burning more than 1.2 million acres so far. In October, Colorado experienced its three largest destructive fires, with more than 24 major fires burning 850,000 acres in total.”
“This wildfire season reaffirms the growing catastrophic nature of this peril,” said Rajkiran Vojjala, vice president of model development for RMS. “Wildfire risk is clearly evolving, not only in California, but also in other states, as we observed in Oregon and Colorado.”
