estimated la fire losses could top $150B

I previously recorded a Disaster Zone Podcast: Forecasting the Weather as a Business that had Jonathan Porter, quoted below, as my guest. A great listen to learn more about that company and their operations.

AccuWeather has been the source of damage estimates for the ongoing California fires impacting the greater Los Angeles area. Their most recent damage estimate is below, along with excellent commentary on what we can expect for impacts to the insurance industry.

As I’ve shared previously, the insurance industry in due for a major shakeout due to the extreme losses they are suffering from disasters of all types. Business as usual cannot be expected to continue for much longer. There will be cries for government action coming from all sectors of the economy. While immigration and tax cuts may be top priority yesterday, events like disasters have a way of changing legislative agendas. Stay tuned for the debate to begin in earnest in 2025.

“AccuWeather Global Weather Center – Jan. 9, 2025 - As fires continue to rage across Southern California and the scope of catastrophic damage, loss of life, business disruptions and other economic impacts become clearer, AccuWeather has updated and increased its preliminary estimate of the total damage and economic loss to between $135 billion and $150 billion. 

“These fast-moving, wind-driven infernos have created one of the costliest wildfire disasters in modern U.S. history,” AccuWeather Chief Meteorologist Jonathan Porter said. “Hurricane-force winds sent flames ripping through neighborhoods filled with multi-million-dollar homes. The devastation left behind is heartbreaking and the economic toll is staggering. To put this into perspective, the total damage and economic loss from this wildfire disaster could reach nearly 4 percent of the annual GDP of the state of California.”

As fires continue to burn and grow in size, as new information is confirmed and with the potential of new fires sparking in the coming days, AccuWeather experts say the estimate for total damage and economic loss may be revised upward, perhaps even substantially.

This update from AccuWeather experts, who are recognized experts in providing this data, accounts for new and additional information, including the damage and destruction of thousands of homes and businesses, damage to utilities and infrastructure, the financial impact of evacuation orders for more than 100,000 people, the long-term cost of rebuilding or relocation for people in densely populated areas whose homes were destroyed, anticipated cleanup and recovery costs, emergency shelter expenses, as well as immediate and long-term health care costs for people who were injured or exposed to unhealthy air quality from wildfire smoke. AccuWeather’s estimate also accounts for lost wages and housing displacement for thousands of people across Southern California whose jobs have been temporarily impacted, which may ultimately result in large numbers of furloughs, layoffs or businesses shutting down and jobs being eliminated. 

“Tragically, lives have been changed forever in just a matter of minutes. Many families may not be able to afford to rebuild or repair and return. Businesses may not be able to recover and jobs will be permanently lost. Thousands of people are in desperate need of help, initially the basic and life-sustaining needs of food, water and shelter, as this tragedy unfolds. Many families will face significant unexpected costs to relocate to another area in Southern California. The recovery process will be extremely expensive and emotionally challenging in the months and years to come,” Porter said.

This wildfire disaster is expected to worsen the insurance crisis in California, as the cost for insurance coverage in high-risk areas continues to increase and more insurance companies are dropping and refusing to issue new policies. Thousands of homes and businesses that were damaged or destroyed were multi-million-dollar properties, many of which may have been underinsured or uninsured. Property owners in the area have said some major insurance carriers pulled out of fire coverage for some of the impacted areas in recent months. 

“This wildfire disaster is going to be yet another major challenge for the insurance industry, and for home and business owners who are struggling to secure adequate insurance coverage in high-risk areas,” Porter said. “Families and businesses need to be able to purchase insurance at a reasonable rate, but insurance companies cannot continue absorbing huge loss after huge loss. This is a major issue that society needs to actually address in a world of increasing extreme weather impacts.”

Hurricane-force wind gusts grounded firefighting aircraft during the height of the windstorm and continue to hamper aerial firefighting efforts at times. Fires burning out of control, gusty winds and smoky conditions have also limited efforts to fully survey and assess the damage from the ground and the air. 

Gusty winds and wildfire smoke will continue to impact firefighting and containment efforts through Thursday night. AccuWeather expert meteorologists say winds on Friday are not expected to be as strong as they were earlier this week during the windstorm. Wind gusts of 40-50 miles per hour are possible in some areas of Southern California on Friday.”