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California burns ! Other disaster costly for insurers

by

Hubert Roy

12 November 2018 13:30

Map of fires assets in California | Source : Aon

Natural disasters accumulate to the four corners of the world this fall. This time, these are the fires in California that will force the insurers to untie their purse strings. Aon has published this morning a report in which the firm estimated that the bill for insurers is projected in the billions of dollars (G$). Up to what point ? Too early to say, since the flames are burning still.

Three separate fires devastate California at the moment : Camp Fire, Woolsey Fire and Hill Fire. The Camp Fire, which has devastated the town of Paradise, has destroyed 6 543 dwellings and 260 shops, in addition to killing 29 people. Authorities in california also report, according to Aon, that 228 people are missing. It is already assumed that the Camp Fire will be the fire, the most devastating ever to hit California in its history, adds the firm.

Of record in record

Since 1990, insured losses have exceeded nine times the cap of a billion dollars in California. However, they have exceeded this cap during the last four years, including 2018, which is not finished.

The record of insured losses has been recorded in 2017, while the insurers have paid nearly$ 16 billion to cover bush fires in the United States. It is to be noted that these amounts have almost all been paid to cover events that occurred in California, and this, from the beginning of October to the end of December.

The causes

Several factors explain that California is set on fire at the moment. First of all, there are several regions of this state have received, since 1 October, as little as 5 % of the average of normal rainfall. In addition, since the 8 November, it sales strong in California, with gusts sometimes reaching 90 miles per hour. This helps the spread of the flames. The vegetation that is dying also gives them the fuel.

Aon has also established a list of human factors. Climate change occupies an important place. Just like a bad adaptation to the new reality that comes with it. In addition, California has experienced a population growth in areas deemed to be at risk for bush fires, which also entails an increase of the housing construction.

One-third of the homes at risk

A report from the California Insurance Department estimates that in 2010, only 32.6% of the residential units of the state were in at-risk areas for bushfires, which was eight years ago, 4.46 million of real estate. As the population has increased since this time, it is likely that these numbers are on the rise, says Aon. “The increased exposure to the fires and of the population in these regions means that there are more chances that disasters expensive there arise,” says Aon in its report.

The equivalent of 440 000 soccer fields burned

Aon also asserts that the record of acres burned in California in a year were beaten… in 2018. Since the beginning of the year, Aon estimated that 1.56 million acres have burned in California, or 631 000 hectares for those who prefer the former measure.

For sport lovers, this corresponds roughly to more than 440 000 soccer fields, has calculated the Log of the insurance. Or even to more than 760 million parking spaces…

 

 

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