Insurers will be able to absorb the high cost of Los Angeles fires, according to a US agency

Insurance companies will be able to face compensation for damage caused by the destructive fires raging around Los Angeles, estimated at between $10 and $15 billion for insured properties, the S&P rating agency said on Thursday.

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“Insurers will be able to absorb losses [assurées]”, which could equal the record of $16 billion set in 2017 by the Tubbs fire in northern California, S&P said in an analysis.

According to her, the companies are starting the year with comfortable reserves thanks to the good financial results achieved in 2023 and 2024, and they have significantly reduced their presence in Californian regions very exposed to fire risks.

At this point, estimates of insured losses are between $10 billion and $15 billion.

But, according to models from the specialized site AccuWeather, the total cost (material damage, financial losses) could reach $52 to $57 billion, particularly because the affected areas, Pacific Palisades, Santa Monica, Malibu, have some of the most expensive houses. of the United States.

For example, according to AccuWeather figures, the fire that ravaged the Hawaiian island of Maui in 2023 caused between $13 and $16 billion, and hurricanes Milton et Helene in 2024 caused respectively $160 to $180 billion and $225 to $250 billion in damage.

For S&P, the insurers with the largest presence in California, Farmers Insurance (13.1% market share), State Farm (12.9%), Travelers Insurance (6.5%), Liberty Mutual, are “highly diversified” , which should also work in their favor to resist the amounts of compensation. And they may eventually increase premiums, the rating agency adds.

California Insurance Commissioner Ricardo Lara announced on Wednesday protection, for one year, for owners in affected areas and surrounding these fires, against non-renewal and termination of guarantees. This type of measure protected more than a million contracts in 2024.

“Many insurance companies have canceled the guarantees of many families who have been affected and who will be affected, which will delay or weigh on their ability to recover,” lamented Thursday Vice-President Kamala Harris, alongside the President Joe Biden, at the White House.

As a last resort, California has set up a public insurance system, called FAIR, for owners who can no longer find a private insurer. It represents the fifth-largest insurer in the state, according to S&P.