Investing.com -- The ongoing wildfires in Los Angeles, specifically in the Pacific Palisades, Eaton (NYSE:ETN), Hurst, and other neighborhoods, are predicted to lead to substantial insurance industry losses, according to Morningstar DBRS.
The fires have already destroyed more than 1,100 homes and pose a threat to over 28,000 additional structures, as reported by local fire officials.
Morningstar DBRS' preliminary estimates suggest that total insured losses could exceed $8 billion, depending on the final count of properties affected by the wildfires.
In comparison, the 2018 Woolsey Fire, which occurred just north of Los Angeles and destroyed 1,643 structures, resulted in property damages exceeding $6 billion.
Despite the anticipated losses, Morningstar DBRS believes the impact on major property insurers active in the Californian market will be negative but manageable. This is due to their use of reinsurance and their high degree of diversification.
The global reinsurance industry is also expected to manage the losses without affecting their credit profiles.
The California property insurance market has been facing challenges due to high wildfire and other natural catastrophe risks, coupled with regulatory restrictions on coverage and pricing.
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