Insured Wildfire Loss Could Top $1.6 Billion, Says Risk Firm

NEW YORK—Insured losses from California wildfires could exceed $1.6 billion if the fires continued to spread, a risk modeling firm said Thursday.

Risk Management Solutions, which predicts and assesses insured damages, said in a statement that the wildfires which have devastated Southern California would likely cost insurers between $900 million and $1.6 billion.

"(But) if the wildfires continue to spread in this ongoing situation, losses are expected to reach or even exceed the higher end of this estimate," Risk Management Solutions said.

Thus far the wildfires that have destroyed 1,300 homes and forced the evacuation of 500,000 people are now in their fifth day, but firefighters have largely halted the spread of destruction.

Officials said cooler temperatures and weaker winds allowed them to win a measure of control for the first time and that the worst was behind them.

Though relieved that the hot, dry winds driving the flames had weakened, they conceded that offshore breezes replacing them presented a danger. Even those milder winds could trigger dangerous runs by some of the fires.

Earlier estimates by the Insurance Information Institute pegged damages at $1 billion.

Insurers such as Allstate Corp say that so far they have limited data to work with until homeowners return to their properties and make claims.

'Randomness'

On Thursday, Travelers Cos Inc Chief Executive Jay Fishman said in a conference call that the "randomness" of the fires, which destroyed one house but left the next standing, made it difficult to assess damages. Travelers insures about 2 percent of the homeowners in the affected areas, and about 6 percent of the businesses, he said.

The wildfires, which broke out over the weekend after the winds began to blow, have blackened nearly 800 square miles (2,072 sq km), claimed six lives and injured dozens of people, many of them firefighters.

San Diego County has suffered total losses in excess of $1 billion, and three of the largest fires were still burning out of control.

Officials there said that even when the fires were extinguished they would face a major cleanup and huge costs.