(Bloomberg) --Wildfires engulfing entire swaths of Los Angeles are expected to be one of the nation's costliest natural disasters, with insurers potentially incurring losses of more than $10 billion.
While a preliminary estimate from Morningstar DBRS points to insured losses in excess of $8 billion, some scenarios could cost insurers more than $10 billion given the expensive properties at risk, according to Bloomberg Intelligence analysts.
The wildfires add pressure to California's home insurance market, which has faced a growing crisis in recent years. Traditional insurers have pulled back from the state, blaming the rising cost of natural catastrophes and stringent pricing regulations.
State Farm General Insurance Co. and Farmers Group, a unit of Zurich Insurance Group AG, are California's main providers of homeowners' insurance. State Farm said last year that it was cutting about
The dearth of options has spurred homeowners to flock to California's FAIR plan, its last-resort insurer, whose exposure nearly tripled to $458 billion in the four years through September. The plan's exposure to Pacific Palisades, the high-cost neighborhood at the core of this week's fires, stands at about $5.9 billion.
Read More:
The total damage and economic losses — which account for uninsured damage and indirect economic impact such as lost wages wage and supply chain disruptions — are expected to land somewhere between $52 billion and $57 billion, according to a preliminary estimate from Accuweather Inc.
Read More:
Global insurers are expected to pay more than $135 billion for natural catastrophes in 2024, according to a
