The deadly forest fires that have devastated the greater Los Angeles region of Southern California over the past week are estimated to be the costliest in the state’s history, leaving insurers operating in the state facing significant losses .

The forest fires, which have been driven by the strong Santa Ana winds through the dry regions of the major Los Angeles areathey have killed at least 24 people while burning about 40,000 hectares. Communities such as Pacific Palisades, Malibu and Altadena have been particularly hard hit, while more than 12,000 structures have been destroyed or damaged.

Preliminary estimates have placed insured losses from wildfires as the costliest in California history. A JPMorgan analysis last week estimated insured losses could exceed $20 billion, while Wells Fargo’s weekend estimate put insured losses at $30 billion in a range of $20 billion to $40 billion of dollars Both estimates would exceed the $10 billion in insured losses caused by the 2018 Camp Fire that affected the city of Paradise and neighboring Northern California communities.

Moody’s Ratings produced an analysis last week that examined California’s largest insurers using data from S&P Global Market Intelligence based on full-year 2023 data, as annual data for 2024 is not yet available.

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The Palisades Fire devastated the large community of Pacific Palisades in Los Angeles. (Axelle/Bauer-Griffin/GC Images/Getty Images)

It was found that the insurer with the most direct home owners insurance of premiums written in California in 2023 was State Farm, which accounted for more than $2.7 billion in premiums written for residences in the Golden State.

Farmers Insurance ranked second with more than $2 billion in premiums written for California homeowners. It was followed by Liberty Mutual at $908 million, CSAA Insurance Exchange at $895 million and Mercury Insurance at $839 million. Other insurers with more than $700 million in California homeowner premiums in 2023 were Allstate ($792 million), USAA ($742 ​​million) and Auto Club ($720 million).

Moody’s Ratings found that the insurers whose California homeowner business accounted for the largest share of its total U.S. homeowner insurance policies were Mercury (19%), CSAA (15%) and Auto Club (12%).

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Aerial view of homes destroyed by the Palisades fire on January 9, 2025. (Mario Tama/Getty Images/Getty Images)

JPMorgan’s analysis also included 2023 California homeowners insurance data based on regulatory filings and data from S&P Financial. It included similar figures for written premiums, with some slight differences, and also included an estimate from insurers. market share in the California homeowners insurance market starting in 2023.

State Farm had the largest market share in California in 2023 at 19.9%, followed by Farmers Insurance at 14.9%, as well as CSAA Insurance Exchange and Liberty Mutual at 6.5% each. Other insurers with more than 5% market share in California by 2023 include Mercury Insurance (6.1%), Allstate (5.8%), Auto Club Insurance (5.8%) and USAA (5.4%) .

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Chimneys stand amid debris after the Palisades Fire broke out in Pacific Palisades, California on January 8, 2025. (AGUSTIN PAULLIER/AFP via Getty Images/Getty Images)

Despite the historically large estimates for insured losses in the Wildfires in Southern Californiawrote Wells Fargo in its analysis: “Regardless of the outcome, we see this as a manageable event for insurers,” adding that with $40 billion in insured losses “it would represent a 2.0% impact on capital.”

In recent years, several leading insurers have stopped offering new home or commercial insurance policies in fire-prone areas, while some have canceled policies or declined to renew them due to excessive risk.

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Apartments seen burning from the Eaton fire in Altadena on January 8, 2025. (Jon Putman/Anadolu via Getty Images/Getty Images)

Insurers have also increased premiums to account for the risk of wildfires and other disasters, although state law restricts such increases and requires special approval for premium increases of more than 7% and spreads increases over a period three years old

Homeowners who lost coverage or could no longer afford higher premiums and were unsuccessful in finding a private insurance policy can use California’s FAIR plan, which is the insurer of last resort and tends to charge even higher premiums.

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Moody’s Ratings found that as of September 2024, exposure under the FAIR Plan in Los Angeles County was about $112 billion, representing about 23.1% of the entire FAIR portfolio after a year-on-year growth of approximately 53%.