Expected losses for insurers between $1.2bn and $1.6bn: Aon Impact Forecasting
This week’s wildfires in California are expected to produce insured losses between $1.2bn and $1.6bn, according to Impact Forecasting, a unit of Aon Corporation.
More than 80 % of the losses are expected to occur from the Witch Creek fire that merged with the Guejito and Poomacha fires.
Steven Jakubowski, chief operating officer of Impact Forecasting, said: “Our analysis of housing trends in California have shown that growth in the more fire-prone wildland-urban areas is greater than in traditional urban regions. Unfortunately, we are likely to see more catastrophic events in the future as a result of the increased housing growth.
More than two dozen fires have burned from Santa Barbara County to San Diego County, the largest of which is the Witch Creek fire in San Diego County that forced the evacuation of hundreds of thousands of people from their homes.
The Witch Creek fire was unusual in that it burned beyond historical bounds seen in previous events and into densely populated areas, including Rancho Bernardo, Poway and Rancho Santa Fe, after crossing a likely firebreak at the I-15 interstate freeway.
Jakubowski said: “California was set for a difficult year because of an extended drought that brought moisture conditions in vegetation to troublingly low levels. Indeed, California has already seen difficult fires in Griffith Park, Catalina Island, and Lake Tahoe this year. The drought combined with high temperatures, very low humidity, and extreme wind gusts which at times reached hurricane strengths combined to form a disastrous scenario.”
This week’s catastrophe follows other California losses including outbreaks in 2003, 1993, and 1991. The fire siege in 2003 resulted in losses in excess of $2bn.
Aon said the explosion in the growth of housing greatly affects likely future losses.