LA wildfires: Gallagher Re estimates industry insured losses at $20bn to $30bn

Having originally said that insurance and reinsurance market losses from the Los Angeles, California wildfires were likely to “notably exceed $10 billion,” reinsurance broker Gallagher Re has now issued an updated estimate range, for an industry loss of between $20 billion and $30 billion.

As we’ve been reporting, insurance industry loss estimates for the wildfires have been steadily rising in recent days, as the scale of the devastation and costs become clearer.

Insured loss estimates had been in a range of $15 billion to $25 billion, then most rose towards the upper-half of that range, while some other analysts have pegged the total at the $30 billion level and higher.

Late yesterday, CoreLogic became the first catastrophe risk modelling firm to issue a public loss estimate, with its analysis of residential and commercial exposures taking it to an industry loss estimate range of between $35 billion and $45 billion, which includes losses to the FAIR Plan.

Now, reinsurance broker Gallagher Re has issued an update to its loss assumptions for the Los Angeles, California wildfires, elevating its range.

As we said, Gallagher Re had reported a few days ago that it believed insured losses from the fires were expected to notably exceed $10 billion.

Now, the broker has said, “The total insured loss is now estimated to fall in the range of USD20 billion to USD30 billion.

“It is possible that this may require further revision as more clarity emerges, especially if an influx of claims litigation and adjustor costs result in higher-than-expected loss adjusted expenses. This total includes expected losses incurred from the private insurance market and California’s FAIR Plan.”

Gallagher Re went on to provide some clarity over how the losses may be shared between primary insurers and the reinsurance market.

“The anticipated portion that that may be ceded to reinsurance is projected to reach the mid-to-high single digit billions (USD),” the broker said. “However, this is not expected to meaningfully erode capital and should be manageable for reinsurers.

“The bulk of filed insurance claims (~75%) are expected to come from residential personal lines. The rest will be unevenly split by commercial and auto.”

Direct economic losses from the wildfires are put at roughly double the insured loss, according to Gallagher Re, which it notes would “represent a sizeable protection gap for such a series of wildfire events.”

While the Palisades and Eaton fires have not impacted as many properties as previous costly wildfire events such as the Camp fire in 2018, Gallagher Re explained that “the 2025 fires have impacted a substantially higher volume of high-net-worth assets.”

“Both fires are individually expected to rank near the top as one of the costliest US insured wildfires on record – on a nominal and loss-adjusted (2025 USD) basis,” Gallagher Re said.

Adding, “There have now been 24 individual billion-dollar insured loss wildfire events globally since 1990.”

Also read:

– LA wildfires: CoreLogic initial insured loss estimate is $35bn to $45bn.

– Alternative capital can provide wildfire capacity, but pricing a sticking point: Morningstar DBRS.

– Stone Ridge marks mutual cat bond / ILS funds the most on LA wildfires.

– Euler ILS Partners puts wildfire industry loss at $15bn-$17bn, highlights BI / ALE uncertainty.

– Wildfire losses may cause re/insurance pricing to firm as payback sought: Berenberg.

– BMS says LA wildfire insured losses likely to exceed $25bn. KBW analyses up to $40bn.

– Autonomous raises its LA wildfire loss estimate to $25bn, $18bn from Palisades fire.

– California wildfires: Subrogation topic raised, as utilities come into focus.

– ICEYE satellite analysis: Over 10,900 buildings likely destroyed in Palisades and Eaton fires.

– Catastrophe bond price movements due to LA wildfire exposure.

– Evercore ISI: LA wildfire insured loss $20bn-$25bn. Could be one event under reinsurance.

– LA wildfire losses to “notably exceed” $10bn, could approach $20bn: Gallagher Re.

– Mercury says LA wildfire losses to exceed reinsurance retention.

– LA fires: “Considerable attachment erosion” likely for some aggregate cat bonds – Steiger, Icosa.

– LA wildfires: Over 10k structures destroyed. Insured losses up to ~$20bn, economic $150bn.

– LA wildfire losses unlikely to significantly affect cat bond market: Twelve Capital.

– LA wildfires unlikely to cause meaningful catastrophe bond impact: Plenum Investments.

– JP Morgan analysts double LA wildfire insurance loss estimate to ~$20bn.

– LA wildfires: Analysts put insured losses in $6bn – $13bn range. Economic loss said $52bn+.

– LA wildfires bring aggregate cat bond attachment erosion into focus: Icosa Investments.