Californiat Wildfires Still Going

The wildfires in California are still going. The Santa Ana wind conditions, the primary accelerator for the recent fire outbreaks, have died down and fire crews are able to begin actively extinguishing and suppressing the fire.

In summary, the fires have burnt a cumulative total of more than 480,000 acres (almost 200,000 hectares to those constrained by the metric system) and more than 1,500 homes appear to have been lost. Personal lines insurance will comprise the bulk of the insured losses, which we currently estimate will sum to between $1 Billion and $1.5 Billion. The final loss tally could be higher if crews are unsuccessful in completing the containment of the fires due to additional winds or other extenuating conditions.

While some of these fires are presumed to have been caused by arson, California has historically had many large scale fires. Some of the more recent fires include:

The 1991 Oakland Hills Fire burnt 2,450 houses and more than 400 apartment units, producing almost $1.7 Billion in insured losses. The outcome of this fire highlighted some of the moral hazards in the then-existing "Replacement Value" insurance conditions.

A sequence of Southern California Fires of 1993 covered more than 300 square miles (~80,000 hectares), more than 1,000 structures were lost with insured losses approaching $800 Million.

The Southern California Fires of 2003 spanned more than 660,000 acres (270,000 hectares), destroyed more than 3500 homes and triggered insured losses approaching $2 billion.
San Diego and Santa Barbara counties have been the locations of some of the larger fires in California areas. These large counties, consisting of vast swaths of unsettled land, have historically contained significant amounts of vegetation that will burn in the right conditions. Some of the larger individual fires in California history have included:

Table 1. Selected Major Wildland Fires in California

The risk in California is increasing with increasing population, wealth and society's preference to live along the wildland-urban interface. This risk is mitigated by building codes which are increasingly promoting the usage of fire-resistant construction materials and local codes that are improving brush cutbacks, etc. The EQECAT California Brushfire natural catastrophe model helps clients assess the volatility in risk in their portfolios from this very real financial risk.