2017 to be one of the costliest
catastrophe loss years ever,
By Danielle Ling, PropertyCasualty360.com
The October wildfires that devas- tated northern California’s Napa nd Sonoma counties are expected to be the costliest wildfire loss in
U.S. history, according to Aon Benfield.
The latest insured loss estimate is $8 billion, and the overall economic losses are
expected to be considerably greater. The
impact on insurance company ratings
may not be as severe, however.
A new report from Fitch Ratings says
that, based on recent assessments, no U.S.
reinsurance companies in its rated universe
are expected to be downgraded as a result
of losses from the California wildfires alone.
This season’s string of natural disasters — including the California wildfires
and Hurricanes Harvey, Irma and Maria
— will make 2017 one of the costliest catastrophe loss years in U.S. history, with
insured losses estimated to reach $70
billion to $100 billion. Researchers say,
in some instances, insurers could ultimately report aggregate 2017 catastrophe losses at levels that strain capital and
The California wildfires spread over
245,000 acres, hitting Napa, Sonoma,
Mendocino Lake, Solano, Butte and Yuba
counties the hardest.
The fires claimed 43 lives and injured
185 others while damaging nearly 9,300
structures and destroying roughly 8,560.
To date, the California Department of Insurance reports 19,000 residential, commercial and auto claims have been filed,
with payouts exceeding $3.3 billion.
Majority of losses in
The Fitch Ratings report says the majority of insured losses from the wildfires are
expected to be in the personal lines segments, as a large portion of the reported
structures destroyed were residential
What made these wildfires particularly devastating is that many of these
homes were not located in perceived
high-risk zones. High winds spread these
fires into urban areas, causing widespread destruction over more densely
Commercial insured losses will include
property, business interruption and crop
business. In Napa and Sonoma counties,
damage done to the wineries and vine-
yards were a major concern. Ten of the
1,200 wineries in the area were destroyed
or heavily damaged, but, according to the
Wine Institute, 90% of the year’s grapes
had already been harvested before the
Still, business interruption losses for
these wineries and other businesses are
expected to make up a moderate portion
of the total insured losses, according to
Fitch Ratings expects a large majority of the insured losses to be retained by
primary insurers. The percentage of losses
ceded to the reinsurance market will likely
be considerably less than the portion
ceded from recent hurricane events.
A number of large property & casualty
insurers have released estimates of their net
losses related to the wildfires and the associated impact on fourth-quarter earnings.
The Travelers Companies, Inc. provided a range of $525 million to $675
million before tax ($340 million to $440
million after tax). AIG reported it expects
fire losses of approximately $500 million.
The Allstate Corporation reported October 2017 estimated catastrophe losses
of $516 million before tax ($335 million
after tax), with California wildfires accounting for 90% of this total.
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