USA — The 11 wildfires burning in Southern Californiashould not result in large individual insurance company losses, according to arecent report by Goldman Sachs Analyst Thomas Cholnoky. Instead, he predictsnontraditional markets will witness the heaviest losses.
According to the Goldman Sachs report, “While it is likely too early toassess the ultimate industry losses that may arise out of the devastatingCalifornia brush fires, at the moment, it appears that nontraditional excess andsurplus lines, and Lloyds markets, may likely bear the brunt of the losses.”Cholnoky said the reason for this is that most traditional writers have “explicitlyavoided writing any exposures in ‘brush’ defined areas,” although he saidthe one exception is in the fires around San Diego that have jumped from brushto non-brush areas.
In the San Diego area, Cholnoky said the average home price is about$500,000, which he said means “for every 100 homes lost, it would generate$50 million in industry losses.”
The top five homeowners insurance writers in California are State Farm, with21.3 percent market share; Farmers Insurance with 16.1 percent market share;Allstate with 13 percent market share; California State Auto with 6.1 percentmarket share; and Nationwide with 4.8 percent market share.
However, Cholnoky suggested it might be misleading to use market share datato assess individual company exposures.
At press time, nearly 250,000 people have been asked to evacuate from SanDiego County, where 100,000 acres, or 156 square miles, have burned, countySupervisor Ron Roberts told the Associated Press. Across the region,40,000 acres, or 62 square miles, had burned by Sunday, including pricey homesin Malibu.
The fire is predicted to burn for another two to three days, according tofire officials.