The estimated insurance and reinsurance market loss from wildfires that have affected largely the western United States in 2020 is now estimated to be some two-thirds higher, as catastrophe risk modeller RMS has lifted its loss estimate range to $7 billion and $13 billion.Previously, .Taking the mid-point of that early estimate at $6 billion and the new mid-point of the updated estimate which was released today, or $10 billion, shows a 66.6% increase in expected industry loss costs from what is destined to be the third most costly wildfire season on record for the insurance and reinsurance industry.Credit Suisse analyst Mike Zaremski highlighted that RMS’ increase includes some recent wildfire activity and so he suggests that the increase in industry loss estimate could cause some insurance carriers to increase their loss reports for the western US wildfire activity.

As a result, there could also be some further erosion of aggregate reinsurance deductibles ahead as well, as the RMS figure may be used more widely in the industry than previously reported figures by analysts.This could potentially read across into further deductible erosion for any cat bonds exposed.that the insurance and reinsurance industry losses from wildfires in the United States in 2020 were estimated to have reached around $11.5 billion after October, while broker Aon had said they would be above $8 billion.

That’s above RMS’ new mid-point and with some further wildfire activity seen in recent weeks, it is possible that the eventual industry loss pushes into the upper-end of RMS’ newly announced range.RMS has based its latest industry loss figure on more than 10,400 structures being damaged by wildfires in Northern California, 6,365 structures in Oregon and Washington, and another 948 structures being impacted in Colorado.It will be interesting to see how this increased estimate from RMS plays into insurer reporting for Q4, perhaps providing a good insight into how robustly some had reserved in the first place.———————————————————————.

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