Reuters
Wed, August 16, 2023
Aftermath of the wildfires in Lahaina
(Reuters) - Insured property losses from the wildfire that ravaged the resort town of Lahaina in Hawaii last week are estimated to be about $3.2 billion, catastrophe modeling firm Karen Clark & Company (KCC) said on Wednesday.
The inferno killed at least 106 people after racing from grasslands outside town into Lahaina last Tuesday.
The fire charred a 5-square-mile (13-square-km) area of town in hours and has brought with it the logistical challenges of recovery, taking a toll on many of Lahaina's 13,000 year-round residents, who are also facing the prospect of precious tourist dollars evaporating.
More than 2,200 structures fall within the fire perimeter, KCC estimated, citing an independent geospatial analysis of satellite and aerial imagery.
The majority of damaged structures were residential buildings, though many commercial buildings were affected as well, KCC said, adding that the disaster was the most destructive wildfire in Hawaii history.
The high proportion of wood frame and older construction present in the Lahaina buildings likely contributed to the damage, it said.
Insurance broker Aon last week said the extreme devastation to homes, businesses and other structures in Lahaina would likely drive economic and insured losses into the hundreds of millions of dollars.
Moody's Investors' Service said on Tuesday that estimated insured losses from wildfires on Maui in Hawaii would be at least $1 billion.
The report said large insurers such as State Farm, Tokio Marine, Allstate have exposure in Hawaii, but added the companies are expected to readily absorb the losses as their business in Hawaii is a small fraction of their overall insured portfolios.
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Saumyadeb Chakrabarty)
Maui wildfire insured losses in range from $2.5bn – $4.5bn: Bloomberg Intelligence
16TH AUGUST 2023 - AUTHOR: STEVE EVANS
Another estimate for the potential insurance and reinsurance market loss from the devastating Lahaina wildfire on the island of Maui, Hawaii, has come from Bloomberg Intelligence, whose analysts believe it could be as much as $4.5 billion.
Another estimate for the potential insurance and reinsurance market loss from the devastating Lahaina wildfire on the island of Maui, Hawaii, has come from Bloomberg Intelligence, whose analysts believe it could be as much as $4.5 billion.
Data from the property and casualty insurance equity analyst team at Bloomberg Intelligence suggests that the insurance market loss from the wildfires in Maui will come in above $2.5 billion.
They see the top-end possibility as $4.5 billion, giving a mid-point estimate of $3.5 billion.
That mid-point sits very close to the estimate released by catastrophe risk modelling specialist Karen Clark & Company, who said that the insured property loss from the wildfires would be around $3.2 billion.
Previously, analysts at RBC had said they expected the wildfire in Lahaina would drive an insurance and reinsurance industry impact of around $3 billion.
Officials had pegged the rebuilding cost of related to the wildfire that burned the historic town of Lahaina at an estimated $5.52 billion, with 2,207 structures reported to have been destroyed by the blaze.
As we’ve explained in our coverage of these terrible fires, there is significant uncertainty over insurance market losses, as on top of direct property damage and the destroyed structures, claims are also likely to come from smoke damage, burned vehicles, additional living expense claims, and buildings contents as well, which could all push the ultimate toll a bit higher for the industry.
How the fires started remains a subject of some contention and utility Hawaiian Electric has seen its share price plummet some 55% since the blaze, as some claims emerged that its equipment could have been responsible for these fires.
That could have ramifications for the insurance and reinsurance industry, of course and will raise memories of the subrogation secured in California from utility PG&E after the devastating wildfires there a few years ago.
Estimates seem to currently be pointing to an insured loss of between $3 billion and $4 billion, but the additional costs of auto claims and other expenses could drive the ultimate higher, it seems.
They see the top-end possibility as $4.5 billion, giving a mid-point estimate of $3.5 billion.
That mid-point sits very close to the estimate released by catastrophe risk modelling specialist Karen Clark & Company, who said that the insured property loss from the wildfires would be around $3.2 billion.
Previously, analysts at RBC had said they expected the wildfire in Lahaina would drive an insurance and reinsurance industry impact of around $3 billion.
Officials had pegged the rebuilding cost of related to the wildfire that burned the historic town of Lahaina at an estimated $5.52 billion, with 2,207 structures reported to have been destroyed by the blaze.
As we’ve explained in our coverage of these terrible fires, there is significant uncertainty over insurance market losses, as on top of direct property damage and the destroyed structures, claims are also likely to come from smoke damage, burned vehicles, additional living expense claims, and buildings contents as well, which could all push the ultimate toll a bit higher for the industry.
How the fires started remains a subject of some contention and utility Hawaiian Electric has seen its share price plummet some 55% since the blaze, as some claims emerged that its equipment could have been responsible for these fires.
That could have ramifications for the insurance and reinsurance industry, of course and will raise memories of the subrogation secured in California from utility PG&E after the devastating wildfires there a few years ago.
Estimates seem to currently be pointing to an insured loss of between $3 billion and $4 billion, but the additional costs of auto claims and other expenses could drive the ultimate higher, it seems.
Maui’s wildfires could send housing and insurance prices soaring
Jeronimo Gonzalez
Tue, August 15, 2023
Hawaii Department of Land and Natural Resources/Handout via REUTERS
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Jeronimo Gonzalez
The devastating wildfires in Maui — the state’s worst natural disaster and the deadliest one in the U.S. in a century — razed more than 3,400 structures valued at $3.3 billion.
Hawaii wasn’t considered very risky by underwriters. Residents paid the lowest home insurance rates in the country partly because of how rare natural disasters are in the state. The wildfires will likely make insurers reconsider policy rates and coverages. “I think insurers are going to start factoring in the increased frequency and severity of wildfires• 1 ,” a professor of risk management at Appalachian State University said.
“You’ve already seen that in California.”
1
The New York Times, Maui Fires Come at a Moment of Turmoil for the Insurance Industry
Rebuilding costs will likely be higher, especially in old towns such as Lahaina, where most infrastructure isn’t designed to withstand such high temperatures. “The bottom line is the reconstruction is going to have to account for wildfire risk that it hasn’t in past• 2 ,” said Jesse Keenan, a professor of sustainable real estate at Tulane University. “It will require new building materials and techniques that’s going to add to the overall cost of the already inflated housing construction market.”2
2
Bloomberg, Maui’s Fires Risk Pushing Up Housing Costs in Strained Market
Hawaii Gov. Josh Green had recently declared a housing emergency in the state to combat the housing shortage by making it easier to build. The wildfires are now likely to drive Hawaii’s housing prices — one of the most expensive markets in the U.S. — even higher. Partly because 40% of Maui’s housing stock is vacation rentals, the median house price there had surpassed $1 million before the fires. “Many of the displaced families are now going to be looking for local housing, raising demand for what little housing is available• 3 ,” said Justin Tyndall, an economics professor at the University of Hawaii.3
3
Fast Company, Hawaii already had a housing crisis. Maui’s fires will make it much worse
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