California wildfires likely to be one of costliest catastrophes ever for insurers

Telegraph

19-02-2025

The California wildfires are likely to become 'one of the costliest insured catastrophes in history,' a London-listed insurance company has said.
Insurers are facing a 'significant loss' from the fires with $100bn (£79bn) of payouts likely, according to Conduit Re.
The business, which insures other insurance companies including various syndicates in the Lloyd's of London market, suffered $328m worth of losses in 2024 from events including hurricanes Helen and Milton. Its warning will raise fears of an even bigger blow from the catastrophic fires.
Trevor Carvey, Conduit RE's chief executive officer, said: 'The California wildfires are a tragic event for the families and communities impacted, as well as a significant loss for the industry.'
The catastrophic fires started in Pacific Palisades, an expensive neighbourhood near Santa Monica, before burning through more than 1m acres of prime California real estate since starting on Jan 7.
Twenty-nine people are known to have died in the wildfires, including Justin Mitchell, a 35-year-old man with cerebral palsy who was caught in a blaze at his home in Altadena, a Los Angeles suburb. Mr Mitchell's 67-year-old father was also killed trying to protect his son.
The raging wildfires have also destroyed more than 16,000 buildings throughout the state of California, including in prime areas like Malibu where the average house costs $5.5m, according to data from Realtor.com.
Conduit Re said it expects the California wildfires will cost the company itself between $100m and $140m. The Bermuda based firm predicted the overall cost to the insurance industry could hit more than $100bn.
The insurance industry as a whole paid out $140bn in claims in 2024.
Hurricane Katrina is the most expensive insured catastrophe ever. The cyclone that hit New Orleans in 2005 cost insurers $65bn, which is equivalent to $100bn in today's money when adjusted for inflation.
Hurricane Ian, which hit the south of Florida in 2022, is also considered to be one of the costliest insured disasters in history.
Conduit Re was started in 2020 by City veterans Neil Eckert and Trevor Carvey, who had both spent decades working in London's insurance industry before starting Conduit Re in Pembroke, Bermuda.
Bermuda, a British overseas territory with a population of 63,000 people, is one of the world's major insurance hubs due to its low tax rates and business friendly approach to regulation.
Conduit Re launched a public float on the London Stock Exchange in 2020, raising $1.1bn.