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Valley and Butte wildfires caused an estimated US$1 billion in insurance losses: California Department of Insurance


January 26, 2016   by Canadian Underwriter


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Two of the most destructive fires in California’s history, the Valley and Butte Fires, caused an estimated US$1 billion in insurance losses, the California Department of Insurance (CDI) said on Monday.

The Valley and Butte wildfires ravaged nearly 150,000 acres in northern California last fall

The two wildfires ravaged nearly 150,000 acres in northern California last fall. The Valley fire destroyed 1,958 structures in Lake, Napa and Sonoma counties, resulting in approximately US$700 million in insured losses and making it the third most damaging wildfire in state history based on total structures burned, CDI said in a press release. In terms of structures lost, the Butte Fire is the seventh most destructive fire to hit California, damaging 818 structures in Amador and Calaveras counties and causing an estimated US$300 million in insured losses.

Related: Fatal California wildfires destroy 1,000 structures

“The Valley and Butte fires were sober reminders of the dangers residents can face in rural areas of the state,” said California Insurance Commissioner Dave Jones in the release. “A year-round fire season is California’s new reality. Residents and communities, especially those in high-risk fire areas, must take precautions now before the next devastating wildfire strikes.” [click image below to enlarge]

The Valley fire destroyed 1,958 structures in Lake, Napa and Sonoma counties, resulting in approximately US$700 million in insured losses and making it the third most damaging wildfire in state history based on total structures burned

Insurers impacted by the Butte and Valley fires are processing claims for residential and commercial structures, cars, personal property, farms and other items, CDI said, adding that the US$1 billion claim total does not include all surplus insurance line claims or damages to public infrastructure such as roads and utilities.

Related: California governor requests presidential major disaster declarations

To date, insurers report they have received 5,600 claims, have paid out more than US$500 million overall and expect to pay an additional US$500 million in anticipated future losses after all claims are received, processed and paid. Insurers are confident that all or most claims resulting from these fires have been reported, but should new claims be filed, these loss estimates may also increase, CDI added.

Related: 2015 insured losses from wildfires in the U.S. may total US$1.75 billion: Guy Carpenter

Losses from these fires are not expected to impact insurance industry solvency in California. The department continues to monitor wildfire claims handling to ensure the claims are paid in a timely manner so homeowners, businesses and communities can rebuild and recover as quickly as possible.

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect US$259 billion in premiums annually in the state.