At Least $30 Billion In Insured Losses From LA Fires; 2 Outcomes Are Certain: Higher Premiums And Cancelled Coverage

As firefighters make some progress containing the unprecedented blazes still tearing through the Los Angeles area, a clearer picture of the true extent of damage is emerging. It’s bleak. The fires have killed at least 27 people and destroyed more than 12,000 structures, including many homes in Altadena and the Pacific Palisades. Early estimates from AccuWeather project total damages and economic loss at $250 billion.

Traditionally, home insurance has helped cover the majority of costs for covered property owners from disasters and bad weather. However, climate change is fueling a new era of so-called “unnatural disasters,” from supercharged storms to cataclysmic flooding, that are triggering major shifts in the insurance market across the United States. In Los Angeles, home insurance premiums have surged in recent years as wildfire risk worsens. Some companies have pulled out of the region altogether. As the still-burning infernos continue to scorch properties, many are wondering how the insurance market will shoulder the price of losses without going bankrupt, but a newly implemented plan could pass along some of the costs to policyholders. Experts expect home insurance rates to rise even higher in the wake of the fires, which researchers recently concluded were exacerbated by climate change.

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A Climate-Shocked Market: In 2024, insured losses from natural disasters reached $140 billion as climate change “is showing its claws,” according to reinsurance company Munich Re. Consumers and companies alike are taking hits. For example, since 2021, at least nine property and casualty insurers have gone bankrupt in Florida, largely because they don’t have the money to pay out rising claims. “We’re marching steadily towards an uninsurable future in this country and across the globe, because we’re not doing enough to deal with the underlying cause,” (Ed. - UC Berkeley Climate Risk Initiative Director Dave) Jones said.

During his time as insurance commissioner, Jones led the implementation of the Climate Risk Disclosure Survey, which insurers must complete annually to help regulators understand how climate change affects the industry. These surveys have laid bare the extreme threats global warming poses to the market and property owners. Despite this, many insurance companies are investing in coal, oil and gas companies, and underwriting the fossil fuel projects that are the main contributors to rising temperatures. This has sparked backlash from climate activists, an issue my colleague Keerti Gopal recently covered in London.

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https://insideclimatenews.org/news/17012025/todays-climate-los-angeles-fires-insurance/