Fitch predicts California blazes could be worst ever

Rating agency Fitch says the wildfires that continue to rage in areas of California could amount to the worst insured loss ever from wildfires. This means the damage would have to top US$1.7 billion (US$2.2 billion in 2003 dollars), the insured loss from the 1991 wildfires in the Oakland Hills area of California.
While it is still too early to say what the eventual tally will be, Fitch notes that estimates are already approaching the Oakland Hills total, with fires continuing to burn on.
The net effect, when combined with losses from Hurricane Isabel, and US$6.5 billion in first-half cat losses, could see 2003 hit the highest mark for natural catastrophe losses since 1998.
Nonetheless, the rating agency sees no imminent threat of insurer solvency concerns resulting from the fires. “While insurance losses are certain to be significant, they are expected to be within the level of losses that the insurance industry anticipates when pricing catastrophe risk into premiums,” states a press release. It adds that the bulk of companies covering fire exposure in California are large insurers with high financial strength ratings. The top carriers include State Farm, Farmers Insurance Group and Allstate. Smaller carriers with concentrated exposure in the affected areas could be more significantly impacted.
Four counties have declared states of emergency as a result of the fires Los Angeles, San Bernardino, San Diego and Ventura with San Diego hardest hit so far. About 2,000 homes have been destroyed, and more than 17 deaths have been blamed on the blazes.