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AIR estimates losses for California wildfires

By AIR Worldwide October 27, 2017

AIR WorldwideAIR Worldwide estimates that industry insured losses from the Tubbs, Pocket, Nuns, Atlas, Redwood, and Sulphur fires in California will be between $2 to $3 billion.

Smoke and ash from California wildfires blot out the sun over the San Diego sky. Photo by synecdoche via Wikimedia Commons.

AIR’s loss estimates explicitly capture residential, mobile home, commercial, and automobile losses, as well as direct business interruption losses. Loss estimates were derived utilizing the AIR California wildfire model and are based on exposures as of December 31, 2016.

Our analysis shows that losses will be dominated by residential losses, with several neighborhoods—most notably, in Sonoma County—experiencing catastrophic loss. Note that AIR’s estimates of insured losses are based on the assumption of nearly 100 percent take-up rates. The fact that damage from fire, including wildfire, is included in standard homeowners’ policies in California informs that assumption. Please note that total economic losses are expected to be higher than industry insured loss estimates. The range in AIR’s loss estimates reflects uncertainty in the payment of additional living expenses resulting from mandatory evacuation of the city’s population, loss of some individual structures outside of the most affected neighborhoods, as well as widespread but lower levels of loss due to smoke, loss of electricity, and damage from suppression efforts.

AIR’s modeled insured loss estimates include:

  • Insured physical damage to property (residential, mobile home, and commercial), both structures and their contents, and auto
  • Direct business interruption losses 

AIR’s modeled insured loss estimates do not include:

  • Losses to uninsured properties
  • Losses to land
  • Losses to the energy and timber industries
  • Losses to infrastructure
  • Losses to vineyard grapes and vines (please read “The Many Stages of Fire Damage to Vineyards” for additional information)
  • Loss adjustment expenses
  • Demand surge—the increase in costs of materials, services, and labor due to increased demand following a catastrophic event

Event summary

Multiple wildfires exacerbated by hot, dry, and windy conditions spread across eight counties of California starting in early October. Twenty-two active wildfires were reported by CAL FIRE on October 12, consuming more than 170,000 acres and destroying more than 3,500 structures. Winds moderated by October 16, which enabled firefighters to make progress toward containing the 15 wildfires still active across California; the confirmed death toll had risen to 40, more than 217,000 acres had burned, and approximately 5,700 structures had been destroyed.

As of Wednesday, October 25, nine wildfires were still burning in California, including the Vista Fire near Casitas Springs that erupted on Tuesday, October 24. The Church Fire that broke out in San Diego County on Saturday, October 21, was fully contained as of Tuesday, October 24. CAL FIRE expects many of the active fires will be fully contained by the end of the week. In total, more than 245,000 acres have burned, an estimated 8,700 structures have been destroyed, and 42 people have died since the fires began on October 8. Thousands of acres have burned in Yuba, Sonoma, Napa, Lake, Mendocino, Butte, Nevada, and Solano counties, which were heavily impacted by the fires.

Status from the California Statewide Fire Summary

Current conditions

Red Flag Warnings remained in effect for Southern California until 6 p.m. Wednesday from Kern County to San Diego due to strong winds with gusts up to 55 mph, low humidity, and elevated temperatures that increased fire risk. Multiple cities in Southern California have had record-breaking temperatures during the autumn heat wave. Los Angeles exceeded the previous record of 99°F set 108 years ago when thermometers soared to 104°F there on Tuesday, and Huntington Beach recorded 103°F despite its proximity to the ocean.

Fire conditions lessened on Thursday, October 26, as the high pressure system over the Great Basin began to weaken and a colder air mass spread across the northern Rockies and Plains following a cold front traveling southward.

Of the 100,000 people evacuated throughout this event, an estimated 500 remain displaced. A state of emergency was declared on October 9 for the counties of Napa, Sonoma, Yuba, Butte, Lake, Mendocino, Nevada, and Orange, and an emergency proclamation for Solano County was issued on October 10.

According to the California Governor’s Office of Emergency Services, more than 11,000 firefighters and 500 law enforcement personnel were working the fires as of Thursday, with more than 1,000 fire engines, 30 air tankers, and 70 helicopters involved in suppression efforts. The states of Oregon, Nevada, Washington, Idaho, Utah, New Mexico, Colorado, and Arizona provided an additional 177 fire engines to assist suppression efforts. The California National Guard and Nevada National Guard have dropped more than 800,000 gallons of water/retardant from more than 20 aircraft.

Forecast intensity

A cooling trend is forecast for the latter half of the week, along with the continued weakening of pressure across the Great Basin. Resulting offshore winds and critical fire weather are also anticipated to decrease accordingly.