Devastating LA fires expected to push up insurance premiums
By AFP
January 11, 2025
The remains of townhomes destroyed by the Eaton Fire lie behind an advertising sign in Altadena, California - Copyright AFP Frederic J. Brown
Elodie MAZEIN
The fires ravaging upmarket Los Angeles districts Pacific Palisades and Malibu will be the most expensive ever to hit California, according to experts, who expect premiums to rise in a region already abandoned by many insurers.
Analysts at JPMorgan estimated that the total cost of damage and insured damage had doubled in less than 24 hours to $50 billion and $20 billion respectively. And the flames were still advancing on several fronts Friday.
These record levels already far outstrip the 2017 Tubbs fire and the 2018 Camp fire, whose estimates of insured damage have climbed, according to sources, to as much as $16 billion.
The value of the houses makes all the difference: At this stage, more than 10,000 buildings have been destroyed this week, the vast majority of them homes worth an average of $3 million.
By comparison, some 18,000 buildings were destroyed in the Camp fire in 2018, but the average house was only around $500,000.
David Burt, the founder and director of DeltaTerra, a consultancy firm specializing in climate-related financial risks, estimates that the market value of the 15,400 homes in Pacific Palisades is close to $13.5 billion.
Despite the high cost of the damage, experts believe insurance companies should have no problem compensating their customers.
According to Standard and Poor’s, the insurers are starting 2025 with comfortable reserves thanks to strong financial results over the last two years.
They have also significantly reduced their presence in the Californian regions that are highly exposed to fire risk, and are also well diversified.
The JPMorgan analysts see things the same way, insisting that, at this stage, it expects “the vast majority of losses stemming from the wildfires to be concentrated in homeowners’ insurance,” and a “significantly lesser amount” in commercial fire and personal auto.
– Insurance ‘exodus’ –
“There’s been a mass exodus of big players from the market in these parts of California,” Ben Keys, a real estate and finance professor at the Wharton School of the University of Pennsylvania, told a conference Friday.
“We’ve seen enormous non-renewals recently,” he said.
On Wednesday, California’s insurance commissioner, Ricardo Lara, announced that homeowners in areas affected by and around the fires would be protected for a year against non-renewal and cancellation of coverage.
This type of measure protected more than a million contracts in 2024.
In 1968, the coastal state set up a public insurance scheme, called FAIR, for homeowners who could no longer find a private insurer.
This “band-aid” was supposed to be temporary while people moved from one insurance policy to another, but has now expanded well beyond its intended use, lamented Keys, pointing out that its exposure had risen from $50 billion in 2018 to more than $450 billion today.
To bring companies back on board, Commissioner Lara has also initiated a reform process authorizing them to increase premiums on condition that they do not apply any geographical exclusions.
There is no longer any question of “cherry-picking” to select the best contracts, said Susan Crawford, an expert on climate and geopolitics at the Carnegie Endowment for International Peace.
“The acceleration in ferocious weather events… should trigger awareness that actually things do need to change,” she said. “We need some measure of political adjustments in reaction to rapid climate change.”
In the meantime, Californians — and perhaps Americans nationwide — should prepare for an increase in premiums; 2025 has only just begun, and the previous year was marked by some destructive disasters.
According to modelling by the specialist website AccuWeather, hurricanes Milton and Helene caused $160-$180 billion and $225-$250 billion in damage respectively.
On Wednesday, it estimated the total cost of the Los Angeles fires so far at between $135 billion and $150 billion.
The State Department published a new national strategy on climate change Friday, stating that climate-related disasters like winter storms and hurricanes had caused $182.7 billion in economic losses in 2024 — twice as much as in 2023.
By AFP
January 11, 2025
The remains of townhomes destroyed by the Eaton Fire lie behind an advertising sign in Altadena, California - Copyright AFP Frederic J. Brown
Elodie MAZEIN
The fires ravaging upmarket Los Angeles districts Pacific Palisades and Malibu will be the most expensive ever to hit California, according to experts, who expect premiums to rise in a region already abandoned by many insurers.
Analysts at JPMorgan estimated that the total cost of damage and insured damage had doubled in less than 24 hours to $50 billion and $20 billion respectively. And the flames were still advancing on several fronts Friday.
These record levels already far outstrip the 2017 Tubbs fire and the 2018 Camp fire, whose estimates of insured damage have climbed, according to sources, to as much as $16 billion.
The value of the houses makes all the difference: At this stage, more than 10,000 buildings have been destroyed this week, the vast majority of them homes worth an average of $3 million.
By comparison, some 18,000 buildings were destroyed in the Camp fire in 2018, but the average house was only around $500,000.
David Burt, the founder and director of DeltaTerra, a consultancy firm specializing in climate-related financial risks, estimates that the market value of the 15,400 homes in Pacific Palisades is close to $13.5 billion.
Despite the high cost of the damage, experts believe insurance companies should have no problem compensating their customers.
According to Standard and Poor’s, the insurers are starting 2025 with comfortable reserves thanks to strong financial results over the last two years.
They have also significantly reduced their presence in the Californian regions that are highly exposed to fire risk, and are also well diversified.
The JPMorgan analysts see things the same way, insisting that, at this stage, it expects “the vast majority of losses stemming from the wildfires to be concentrated in homeowners’ insurance,” and a “significantly lesser amount” in commercial fire and personal auto.
– Insurance ‘exodus’ –
“There’s been a mass exodus of big players from the market in these parts of California,” Ben Keys, a real estate and finance professor at the Wharton School of the University of Pennsylvania, told a conference Friday.
“We’ve seen enormous non-renewals recently,” he said.
On Wednesday, California’s insurance commissioner, Ricardo Lara, announced that homeowners in areas affected by and around the fires would be protected for a year against non-renewal and cancellation of coverage.
This type of measure protected more than a million contracts in 2024.
In 1968, the coastal state set up a public insurance scheme, called FAIR, for homeowners who could no longer find a private insurer.
This “band-aid” was supposed to be temporary while people moved from one insurance policy to another, but has now expanded well beyond its intended use, lamented Keys, pointing out that its exposure had risen from $50 billion in 2018 to more than $450 billion today.
To bring companies back on board, Commissioner Lara has also initiated a reform process authorizing them to increase premiums on condition that they do not apply any geographical exclusions.
There is no longer any question of “cherry-picking” to select the best contracts, said Susan Crawford, an expert on climate and geopolitics at the Carnegie Endowment for International Peace.
“The acceleration in ferocious weather events… should trigger awareness that actually things do need to change,” she said. “We need some measure of political adjustments in reaction to rapid climate change.”
In the meantime, Californians — and perhaps Americans nationwide — should prepare for an increase in premiums; 2025 has only just begun, and the previous year was marked by some destructive disasters.
According to modelling by the specialist website AccuWeather, hurricanes Milton and Helene caused $160-$180 billion and $225-$250 billion in damage respectively.
On Wednesday, it estimated the total cost of the Los Angeles fires so far at between $135 billion and $150 billion.
The State Department published a new national strategy on climate change Friday, stating that climate-related disasters like winter storms and hurricanes had caused $182.7 billion in economic losses in 2024 — twice as much as in 2023.
By AFP
January 9, 2025
The plume from the Palisades Fire drifts into the mountains in Topanga, California on January 9, 2025 - Copyright AFP David Swanson
Manon JACOB
Months of dry weather and recent strong winds created optimal conditions for the deadly wildfires engulfing Los Angeles, but narratives on social media falsely single out “liberal” policies — including those to increase diversity in the city’s fire force — as the culprit.
Los Angeles Fire Chief Kristin Crowley, who was appointed in 2022 after two decades of service, was singled out in a series of X posts blaming her department’s diversity, equity and inclusion (DEI) strategy.
“She boasts about being the first female and LGBTQ fire chief in the LA Fire Department. Promoting a culture of DEI is her priority. Does this make you feel safer?” the anti-LGBTQ account Libs of TikTok posted on January 8 on X.
“They prioritized DEI over saving lives and homes,” X’s billionaire owner Elon Musk, a close ally of US President-elect Donald Trump, chimed in.
But experts say such scapegoating is hardly unexpected.
From the Maui fires in 2023 and hurricanes Milton and Helene in 2024, every recent major natural disaster in the United States has systematically triggered social media narratives questioning the effort and legitimacy of first responders.
“This rhetoric is expected — and has become increasingly mainstreamed — following extreme weather phenomena and disasters,” added Sara Aniano, a disinformation analyst at the Anti-Defamation League Center on Extremism.
– Trump effect –
Social media users also attacked California Governor Gavin Newsom, echoing misleading complaints from Trump about how the state handles its water supply.
“Governor Gavin Newscum should immediately go to Northern California and open up the water main, and let the water flow into his dry, starving, burning State,” Trump wrote on his Truth Social platform, using his preferred nickname for the leader.
But most Los Angeles water comes from the city’s aqueduct, not Northern California.
At a White House briefing, US President Joe Biden pushed back against Trump’s accusations that California authorities have wasted water and said there was no room for politics in the situation.
He called for officials to be “honest” and “straightforward” with the public about the available capacity.
Trump also tried to blame a lack of water on environmentalists’ efforts to protect the smelt — a small fish that lives hundreds of miles away from the fires.
Such comments are a distraction from known impacts on the fires, such as the Santa Ana winds, and the fact that fire events in the state have been enhanced by a changing climate.
Scientists say human-caused climate change is altering weather patterns and changing how wildfires impact the US West.
Southern California had two decades of drought that were followed by two exceptionally wet years that sparked furious vegetative growth. Then the region had no significant rain for eight months. Altogether, the weather left the area packed with fuel and primed to burn.
Nearly 180,000 people across Los Angeles remain under evacuation orders, and at least five people have died, according to the Los Angeles County Sheriff’s Department.
Authorities continue to investigate the causes of the two main fires –- Palisades and Eaton –- with no evidence to support social media claims pinning blame on the homeless population or “ecoterrorists.”
Such false narratives “undercut the people and organizations trying to help” and “sow division within the community,” said Sarah Labowitz, a climate and geopolitics expert at the Carnegie Endowment for International Peace.
“It’s the exact opposite of what keeps people safe and ready to recover.”
‘Apocalyptic’: ghastly remains of Malibu come into focus
By AFP
January 10, 2025
Multi-million dollar mansions in Malibu have vanished entirely, seemingly swept into the Pacific ocean by the force of the Palisades Fire - Copyright AFP JOSH EDELSON
Andrew MARSZAL
Flying south through smoky skies down the famous Malibu coast, at first the burnt-out mansions are the exception — solitary wrecks, smoldering away between rows of intact, gleaming beachfront villas.
But draw closer to Pacific Palisades, the ground zero of Los Angeles’s devastating fires, and those small scorched ruins become sporadic clusters, and then endless rows of charred, crumpled homes.
From the air, the extent of the devastation wrought by the Palisades Fire on these two neighborhoods is starting to come into focus: whole streets in ruins, the remains of once-fabulous houses now nothing but ash and memories.
Access to this area of utter devastation has been largely closed to the public and even to evacuated residents since the fire began Tuesday.
The biggest among multiple blazes covering Los Angeles, the inferno has now ripped through over 19,000 acres (7,700 hectares) of Pacific Palisades and Malibu.
A preliminary estimate of destroyed structures was “in the thousands,” city fire chief Kristin Crowley told Thursday’s conference.
There have been at least two separate reports of human remains found in this fire alone, though officials have yet to confirm the fatal toll.
“It is safe to say that the Palisades Fire is one of the most destructive natural disasters in the history of Los Angeles,” said Crowley.
For AFP reporters surveying the scenes from a helicopter Thursday, it was hard to argue with that view.
On some of these highly coveted Malibu oceanfront plots, beloved by celebrities, skeletal frames of buildings indicated the lavish scale of what has been destroyed.
Other multi-million dollar mansions have vanished entirely, seemingly swept into the Pacific Ocean by the force of the Palisades Fire.
And looming above Malibu, a thin sliver of luxurious waterfront property, is Pacific Palisades itself — an affluent plateau of expensive real estate, now deserted.
Not the entire hilltop is blackened. Several grand homes stand unscathed. Some streets have been spared entirely.
But toward the southern end of the Palisades, grids of roads that were until Tuesday lined with stunning homes now resemble makeshift cemeteries.
Where row upon row of family homes once stood, all that remain are occasional chimneys, blackened tree stumps and charred timber.
At a press conference on Thursday, Los Angeles district attorney Nathan Hochman described walking through Pacific Palisades to the remains of his sister’s home as “apocalyptic.”
“Not since the 1990s when Los Angeles was hit with the fires, the flood, the earthquake and the riots, have I seen such disaster occur here in our city,” he said.
“This is crazy,” agreed Albert Azouz, a helicopter pilot who has flown these skies for almost a decade, observing the destruction from above on Thursday.
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