LA wildfires rake billions in losses, among costliest in US history
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The Palisades and Eaton blazes have ranked in the country's top five costliest wildfires, racking up massive damages worth billions.
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The Palisades Fire burns a residence in the Pacific Palisades neighborhood of Los Angeles, on Tuesday, January 7, 2025. (AP)
Losses resulting from the raging Los Angeles wildfire are expected to surpass $135 billion, making it one of the costliest in the history of the United States, according to AccuWeather.
On Tuesday, over 100,000 people were forced to evacuate as strong, dry winds hampered firefighting efforts and fueled the spread of the fires, which have scorched thousands of acres. The wildfires reached the Hollywood Hills on Wednesday, following other blazes in the region that have claimed at least five lives, destroyed hundreds of homes, and overwhelmed firefighting teams and water supplies.
A preliminary estimate calculated by the AccuWeather forecaster said losses are expected to hit a figure range of $135 billion to $150 billion as the flames blaze through some of the US' most expensive properties.
While damages continue piling, the insurance industry braces itself for a major blow as giants like Morningstar and JP Morgan expect company losses to spike to $8 billion and beyond.
Meanwhile, fire authorities stated the Palisades blaze engulfed at least 5,300 structures, while 5,000 have been destroyed in the Eaton fire. The toll, however, remains unfinalized as fire consumes the affected areas, despite intense efforts to contain the flames.
"These fast-moving, wind-driven infernos have created one of the costliest wildfire disasters in modern US history," according to AccuWeather Chief Meteorologist Jonathan Porter.
Before the fire broke out, the National Weather Service issued its highest alert for extreme fire conditions across much of Los Angeles County from Tuesday through Thursday, forecasting wind gusts of 50 to 80 mph (80 to 130 kph). Due to low humidity and dry vegetation from the lack of rain, the conditions were "about as bad as it gets in terms of fire weather," according to the Los Angeles office of the National Weather Service on X.
Can the US' unstable insurance industry compensate?
Compared to highly destructive wildfires the US had previously seen, insurance giant Aon said the current disaster is ranking in the country's costliest top five, given the massive losses and extensive damages to some of the highest-valued properties and structures, including uninsured ones.
Porter further states that even after the situation is brought under control, the events could have lasting impacts on health and tourism, while the insurance industry - which is already in crisis - simultaneously faces significant challenges.
In the US, homeowners with mortgages are generally required by banks to maintain property insurance. However, insurers have been raising premiums or canceling policies altogether due to increasing risks from natural disasters like wildfires, floods, and hurricanes.
As private companies withdraw from offering coverage, more people are turning to state-run home insurance programs, which typically cost more and provide less comprehensive protection.
In California, the number of policies under the state's Fair Plan surged from around 200,000 in 2020 to over 450,000 by September of last year. Areas impacted by wildfires are among those with the highest adoption rates. However, data from the program indicates growing concerns about its financial stability.
