Costliest disaster in California history

It will take months to determine the extent of insurance damage from wildfires in Los Angeles, California, US, according to Moody's Ratings.

AccuWeather's initial estimate suggests damages could reach $150 billion.

The death toll from the fires in California is 24 and could rise. About 12,000 structures, including many magnificent villas of billionaires and Hollywood superstars, with names such as: Paris Hilton, Anthony Hopkins, Ben Affleck, Billy Crystal... were burned down.

This is the most serious fire in California history in the past 100 years.

Previously, in the past few years, many insurance companies had "fled" this land, as if they knew the disaster would happen. Houses that burned down without insurance were considered total losses.

The damage from these fires is huge and growing. It is likely that there will be a wave of insurance companies fleeing California or huge insurance costs for buildings in this beautiful but fire-prone part of the United States.

In fact, California typically sees wildfires in June and July, which can last until October. The fires of the past few days have been unusual, occurring during the coldest part of the state’s winter, and have wiped out many beautiful cities, such as the coastal city of Pacific Palisades. Neighborhoods with million-dollar mansions are now reduced to ash.

The damage is clear and extensive. Recovery for the land of America's wealthy will be difficult.

PacificPalisades luxuryhomes.gif
The beach town of Pacific Palisades was wiped out by wildfires. Photo: LA

Insurance runaway, gloomy outlook for the beautiful land

In the past, California, especially Los Angeles County, has seen frequent wildfires. This is a land famous for its beautiful landscape, many areas have ocean views, but faces the risk of major wildfires because it is located in the middle of large natural parks, with a lot of flammable grass in the dry season.

There have been recent accusations that the fires of the past few days could be due to “climate change”. However, this is a land of forest fires that have existed since ancient times, long before the creation of human emissions.

Los Angeles also experiences frequent hurricane-like winds and prolonged drought.

In recent days, winds have reached 110km/h in the mountains of Los Angeles and Ventura and have weakened but are forecast to strengthen again on the 14th-15th and the fire could spread further, causing more damage.

According to the NYT, the week-long disaster could lead to an exodus of insurance companies from the state due to the huge and increasing losses that are difficult to control. Accordingly, many insurance companies in Southern California have exhausted their financial reserves.

Insurance companies leaving this beautiful land could further increase already high insurance premiums.

One factor driving insurers away from California is that many households have recently purchased insurance plans called the Federally Backed FAIR Plan, which is more expensive and offers more comprehensive coverage than commercial plans offered by insurers. However, the number of households buying these plans has increased dramatically, and if they cannot afford to pay, the FAIR Plan will collect from insurers operating in California.

Another concern is that the financial markets in the region will be in turmoil. Without insurance, banks will not issue mortgages and people will not be able to buy houses. Real estate will plummet. This beautiful land may take a long time to rebuild.

California had already seen several major wildfires in 2017-2018, which wiped out decades of accumulated profits for many insurance companies.

California has seen a rapid increase in homeowners insurance cancellation rates in recent years. In many counties, non-renewal rates are among the highest in the country.

On January 12, sharing on the social network Truth Social, US President-elect Donald Trump criticized officials handling the wildfire in the Los Angeles area, calling them "incompetent". At the same time, he accused California Governor Gavin Newsom of refusing to sign a water restoration proclamation, allowing millions of liters of water from excess rain and snowmelt in the north to flow daily into many areas of California... Lack of water makes firefighting even more difficult.

Some opinions also say that California has not invested enough money to clean up forests and prevent the risk of fires in residential areas.

California in flames: Homes of the super-rich, mansions of Hollywood stars turned to ashes . After just one night, a wildfire burned the coastal city of Pacific Palisades with its million-dollar view villas to ashes. A series of super-rich people and Hollywood superstars such as Paris Hilton, Anthony Hopkins... lost their homes in the fire.