Wildfires cause up to $164B damage; insurance crisis looms

Google Maps' satellite imagery has exposed the extensive damage caused by recent wildfires in Los Angeles, with UCLA economists estimating losses up to $164 billion. The Palisades and Eaton fires began in early January, driven by Santa Ana winds, and consumed over 37,000 acres before being contained after more than three weeks. The fires resulted in at least 29 fatalities and destroyed over 16,240 homes and businesses.

The updated Google Maps images show neighborhoods like Pacific Palisades and Altadena devastated, with entire blocks reduced to ash. However, some areas were randomly spared from destruction. Economists have been working to estimate the financial impact of this disaster on L.A. County. A report from the UCLA Anderson Forecast estimates property damage between $95 billion and $164 billion, with insured losses potentially reaching $75 billion.

The report's authors noted that these figures are based on assumptions that may change. CoreLogic's analysis suggested lower insured losses of $35 billion to $45 billion but still marked a significant event for the insurance industry.

UCLA economists Zhiyun Li and William Yu emphasized that their estimated insured losses do not cover all expenses related to the fire. Many homeowners might be uninsured or have limited coverage under California’s FAIR Plan due to policy cancellations by major insurers like State Farm before the fires.

State Farm has paid around $1 billion on 8,700 claims so far but hasn't disclosed its total projected losses from the fires. The insurer is seeking a 22% emergency rate hike approval from California regulators.

In response to these challenges, California's insurance authority imposed a yearlong ban on policy cancellations in affected areas while introducing new rules requiring private insurers to offer policies in high-risk zones if they wish to continue operations in California.

The UCLA report predicts increased demand for rental units as displaced residents seek temporary housing solutions due to substantial home loss in L.A., affecting housing affordability goals set by regional authorities.

California Association of Realtors President Heather Ozur expressed support for affected homeowners while warning them against potential exploitation during recovery efforts.