Moody’s RMS Event Response has estimated that private market and FAIR Plan insured losses to-date from the Los Angeles, California wildfires will likely fall in a range between $20 billion and $30 billion.This estimate is derived from modelled analysis of damages related to fire, smoke, and evacuation impacts from the five fires that have burned in the region, including the two most damaging, the Palisades and Eaton Fires.“This preliminary estimate reflects impacts observed to date, with significant uncertainty as some of these fires are ongoing,” Moody’s RMS explained.The catastrophe risk modeller also said, “As damage assessments continue, many factors contribute to the uncertainty.

These include complying with ordinance and law requirements such as local building codes that mandate seismic upgrades or modifications when rebuilding, costs associated with debris removal and soil abatement that can take months – as well as coverage and extra expenses from high-value assets such as auto, fine art, collectibles, and valuable contents from properties in affluent neighborhoods impacted by the fires.“Moreover, the demand for labor and materials will further escalate costs, especially if rebuilding is accelerated.Los Angeles is set to host major global sports events in the next few years, including eight matches in June 2026 for the FIFA World Cup 26, which may force expedited rebuilding of the area’s infrastructure to support these events.” Last week, CoreLogic became the first catastrophe risk modelling firm to issue a public loss estimate, with its analysis of residential and commercial exposures , which includes losses to the FAIR Plan.

While reinsurance broker .Other analyst estimates , but some other analysts have pegged the total at the $30 billion level and higher.The Moody’s RMS Event Response team said that its estimate includes losses from: property damage, including evacuation and smoke damage; business interruption (BI); and additional living expenses (ALE) across residential, commercial, and industrial lines.

It also considers: reconstruction costs after the wildfires including cleanup; costs associated with permit fees; code improvements; and potential law and ordinance expenses.Mohsen Rahnama, Chief Risk Modeling Officer, Moody’s, said, “The ongoing Los Angeles firestorm events represent a unique and complex scenario that serves as a wakeup call for the market.As the events have unfolded over the last couple of weeks, great uncertainty remains from numerous elements including potential insurance gaps and underinsurance given the evolving insurance landscape, high-value building and contents exposure at risk, and significant additional living expenses (ALE) resulting from the evacuation of over 100,000 people.

“The wildfires caused extensive damage beyond property to critical infrastructure, including water systems and other utilities, with potential economic impacts that could be several multiples of insured property losses.This event will likely precipitate ongoing regulatory changes in California and accelerate usage of risk modeling to enable the insurance market to play its critical role in managing the dynamic risk landscape driven by exposure growth and climate change.” Firas Saleh, Director – North America Wildfire Models, Moody’s, also said, “This firestorm is the most destructive and multifaceted wildfire event in U.S.history, with unprecedented levels of urban conflagration.

However, this was not a ‘black swan’ event given the escalating wildfire risk in recent years.The comprehensive event catalog in our recently released Moody’s RMS U.S.Wildfire HD Model Version 2.0 includes numerous similar scenarios of extreme urban conflagration in exactly the same affected regions as the ongoing fires.

By capturing the risk profile comprehensively, our models provide unparalleled insights to help the market understand and prepare for these catastrophic events.” – .– .– .

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