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CA Wildfire Losses to Reach Record Levels

The Camp and Woolsey Wildfires in California are expected to contribute to another record year for insured wildfire losses, according to A.M. Best.
CA Wildfire Losses to Reach Record Levels
November 20, 2018

The Camp and Woolsey Wildfires in California, which continue to burn through vast areas of the Butte, Ventura, and Los Angeles counties, are expected to contribute to another record year for insured wildfire losses, according to A.M. Best. The rating agency notes that the number of acres burned in 2018 is already nearly double the 2017 total and 2.5 times the five-year average, with the Camp and Woolsey fires having burned through 130,000 acres and 97,000 acres, respectively, to date.

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They have also destroyed a combined total of 8,295 structures, including buildings in the affluent area of Malibu, which has a median home value of $2.9 million and contains many buildings and locations that are used in the film and television industry. A.M. Best noted that many primary insurers limit their exposure to these kinds of high-value properties by ceding their exposure to reinsurers, meaning the Woolsey Fire in particular could entail substantial losses for the reinsurance industry. California Insurance Commissioner Dave Jones declared an emergency situation, which allows insurance companies to use out-of-state adjusters to help handle the large volume of claims resulting from the Camp and Woolsey Fires.

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A.M. Best suggests that this second consecutive year of heavy losses will spur a re-evaluation of underwriting and risk management strategies, as well as new risk-scoring models to better establish appetite and tolerances.

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