Devastating LA fires expected to push up insurance premiums

Los Angeles: The recent fires in upscale neighborhoods like Pacific Palisades and Malibu are causing a lot of damage. Experts say this could be the most expensive wildfire in California’s history.

Damage estimates have skyrocketed, with costs doubling in just a day. We’re talking about $50 billion in total damage and $20 billion in insured losses. And the fires are still spreading.

These numbers are way higher than past fires, like the Tubbs and Camp fires. The difference? The homes being destroyed now are worth a lot more—averaging around $3 million each.

So far, over 10,000 buildings have been lost this week. In comparison, the Camp fire took out about 18,000 buildings, but those homes were worth much less.

Experts like David Burt say the market value of homes in Pacific Palisades is around $13.5 billion. Even with all this destruction, insurance companies should be able to cover the claims.

They’ve been doing well financially, so they have the reserves to handle this. But many insurers are pulling out of high-risk areas in California, which is a big concern.

There’s been a real exodus of major insurers from the market, and homeowners are feeling the pinch. California’s insurance commissioner has stepped in to protect homeowners from losing their coverage for a year.

This is a temporary fix, but it’s needed. The state even set up a public insurance program back in 1968 for those who couldn’t find private insurance.

However, that program has grown way beyond what was intended, with its exposure rising dramatically. To bring insurers back, the commissioner is allowing them to raise premiums without geographical exclusions.

Experts are saying that the increase in extreme weather events should push for some changes in how we handle insurance and climate risks.

For now, Californians—and likely others across the U.S.—should brace for higher insurance premiums. The year has just started, and last year was filled with disasters.

Recent hurricanes have caused massive damage, and the fires in Los Angeles are estimated to cost between $135 billion and $150 billion. The state is also reporting huge economic losses from climate-related disasters.