
The ongoing Los Angeles wildfires are estimated to cause $20 billion in insured losses, impacting primary insurers and reinsurers alike. Analysts at KBW have assessed losses based on 2023 market shares in exposed property and auto lines, suggesting potential reinsurance recoveries under per-occurrence towers. Insurers such as Allstate, Assurant, Lemonade, and American Financial Group may face losses at or above their reinsurance retention levels.
KBW predicts the breakdown of losses as 60% from personal property, 30% from commercial property, and 10% from auto damage. While primary insurers are expected to bear most losses, reinsurance will mitigate impacts for some carriers. Analysts caution that these figures could shift as the fires continue, especially with California’s FAIR Plan’s involvement, which may pass certain costs to policyholders under specific thresholds.
Gross and net loss estimates highlight significant exposure for various carriers, with Allstate anticipated to incur $833.3 million in net losses, closely matching its retention. Meanwhile, Lemonade, Assurant, and American Financial Group are also projected to experience losses aligning with their reinsurance limits. Other insurers, like Travelers, may have smaller impacts due to high retentions or aggregate reinsurance arrangements.
Despite the financial toll, analysts believe the event will not significantly alter property catastrophe reinsurance pricing trajectories. The LA wildfires, while severe, are not expected to surpass the insured losses of last year’s Hurricane Milton.