UPDATE 2-California insured fire losses said to top $1 bln
UPDATE 2-California insured fire losses saidto top $1 bln
24 October 2007
published by www.reuters.com
San Francisco, USA — Insured losses from Southern California wildfires haveexceeded $1 billion and could rival losses from some of the costliest fires inCalifornia’s history, a company that estimates catastrophic losses said onWednesday.
“It all depends on the weather,” said Tom Larsen, a senior vicepresident with EQECAT, a disaster modeling company. “If the wind keepsblowing, the dollars keep tallying.”
Wildfires burned across Southern California for a fourth day on Wednesday.More than 500,000 people have been evacuated, most in the San Diego area, andmore than 1,436 homes have been destroyed. Another 25,000 structures werethreatened statewide.
The San Diego area was ravaged by a fire in October 2003 that destroyed morethan 2,000 homes. Insured losses were $1.2 billion in 2006 dollars, making itthe second costliest wildland blaze in California’s history, according to theInsurance Information Institute (III).
The most destructive wildland fire in California was in October 1991 inresidential areas in the hills of Oakland. Its insured losses were $2.5 billionin 2006 dollars.
“This year’s fires are extreme but not unusually so,” EQECAT saidin a statement.
“The trend of the last several decades (has been) populating the’wildland-urban’ area, exposing more people and insured values to the everpresent fire risk in California,” the company said.
An EQECAT computer-generated model of brushfire losses in California carriesexpectations for $1 billion in such losses about every eight years, and $2billion in brushfire losses about every 15 years.
California Lt. Gov. John Garamendi, formerly the state’s insurancecommissioner, said in a telephone interview that it was too soon to estimatelosses from the wildfires, but he expected that insurers were well prepared tocope with them.
Ron Lane, chief of emergency services for San Diego County, said at a newsconference on Wednesday that damages would top $1 billion.
“Losses of these magnitudes, of $1 billion or up to $2 billion, areevents the industry anticipates,” Robert Hartwig, an economist andpresident of III, said during a telephone interview.
Goldman Sachs analyst Thomas Cholnoky said in a research note on Wednesdaythat because of how widespread the fires were it appeared that losses could bespread more evenly across all of the insurance companies operating in California.
He had said in a note on Tuesday that it appeared “non-traditional”companies and markets such as London-based Lloyd’s might bear the brunt of thelosses.
Cholnoky wrote on Wednesday that “attempting to identify possibleindividual company losses may not be as simple as looking at market share basedon stricter underwriting standards that many companies adopted to avoid the veryissue of brushfire exposures.”
“It’s a catastrophic event for California, but it’s not going to have amajor impact on the insurance industry,” David Bradford, chief knowledgeofficer of Advisen Ltd., an information service for the commercial insuranceindustry, said on Wednesday.
“That would require the kind of events we saw in 2005, when HurricaneKatrina cost $41 billion in insured losses. California’s not going to be closeto that.”
Allstate Insurance Co (ALL.N: Quote,Profile,Research)said in a statement on Wednesday that it had sent response units to SouthernCalifornia to help its customers affected by the wildfires. The company said theunits were in motor homes where people could meet with catastrophe specialistswho would begin handling claims.
Allstate said the units, which would be open seven days a week, were atQualcomm Stadium in San Diego and the Orange Show Fairgrounds in San Bernardino.The company said other units were due to arrive in the area later in the week.
