Canadian Underwriter

California wildfires could cost insurers up to US$8 billion: Aon Benfield

November 9, 2017   by Canadian Underwriter

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Historic wildfires in portions of California last month could cost insurers as much as US$8 billion, according to Aon Benfield’s Global Catastrophe Recap for October.

FILE- In this Oct. 9, 2017, file photo, flames from a wildfire burn in Napa, Calif. California Gov. Jerry Brown joined lawmakers to request $7.4 billion in federal funding for wildfire relief and recovery efforts following a deadly cluster of fires that that tore through the heart of the state’s wine country, killing more than 40 people and leaving thousands without housing. (AP Photo/Rich Pedroncelli, File)

The report, released on Thursday by Impact Forecasting, the catastrophe modelling development centre of Aon Benfield, noted that the California Department of Insurance has cited that at least 19,000 residential, commercial and auto claims have already been filed, with payouts exceeding US$3.32 billion. “This total was expected to rise to as high as US$8 billion as additional claims are processed,” the report said. “On [an] aggregated basis, this is [the] costliest insured wildfire event ever recorded.”

The outbreak of wildfires in early October killed at least 43 people and injured 185 others. Nearly two dozen fires were ignited as the blazes – notably the Central LNU Complex Fire around the town of Santa Rosa – would “aggregate together as the most damaging event on record in the state,” the report said. Data from Cal Fire (the California Department of Forestry and Fire Protection) indicated that nearly 9,300 structures were damaged, of which more than 8,560 were destroyed. The worst damage was noted in Napa, Sonoma, Mendocino, Lake, Solano, Butte and Yuba counties.

Another significant wildfire outbreak – this time in central and northern Portugal – killed at least 45 people as the fires swept through several districts, notably Coimbra, Viseu and Castelo Branco, causing significant property and commercial damage. The Portuguese Association of Insurers indicated that the total insured losses were likely to reach US$232 million, which would be the costliest event on record for the local industry, the report said. Additional fires caused at least four fatalities in northwestern Spain.

Related: Insured losses from October wildfires top $3 billion, California insurance department reports

In Canada, a deep low pressure system brought powerful wind gusts and heavy rainfall to portions of British Columbia, Alberta, Saskatchewan and Manitoba from Oct. 16-18. Extensive damage was noted, including toppled trees and power lines, damaged vehicles, structural damage to roofs and sidings and damage caused by airborne debris. Damage to agricultural structures was additionally noted and extensive power outages ensued due to damage to the grid, the report noted. There were no reports of any casualties, but early indications were that both insured and economic losses would reach into the “tens of millions” in U.S. dollars.

On Oct. 29 and 30, heavy rainfall and gusty winds associated with the remnants of Tropical Storm Philippe brought widespread damage to parts of Ontario and Quebec. Most damage resulted from flood inundation and downed trees and power lines onto homes, businesses and vehicles. At the event’s peak, hundreds of thousands of customers were without electricity. Total insured and economic losses were also estimated into the tens of millions in U.S. dollars.

Other events that occurred in October include:

  • Hurricane Nate impacted central America in early October, causing at least 46 deaths and material losses of up to US$250 million, of which US$185 million was in Costa Rica alone;
  • Three notable storms in Europe: Windstorm Xavier impacted northern Germany and western Poland, prompting moderate damage and causing at least seven fatalities. The extratropical remnants of Ophelia, the easternmost Atlantic major hurricane (Category 3+) on record hit the British Isles in mid-October. Finally, windstorm Herwart swept through central Europe, causing at least 10 deaths and hundreds of millions (U.S. dollars) in claims payouts;
  • Super Typhoon Lan caused extensive damage in Philippines and Japan, with powerful winds and torrential rainfall. Total economic losses in Japan were likely to exceed US$1 billion;
  • Continuous rainfall prompted widespread flooding in China, Thailand and Vietnam, where at least 98 fatalities were reported. At least 121,000 homes were affected by flooding in Thailand alone; and
  • Flooding in southern Norway became one of the costliest events for the local industry in recent years. Although no fatalities were reported, the floods caused property damage and widespread disruption and left dozens of people temporarily evacuated or isolated. The Norwegian insurance sector estimated losses at US$63 million, with economic losses estimated at more than US$100 million.

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