JPMorgan analysts' estimates of total damage and insured losses doubled in less than 24 hours, to $50 billion and $20 billion, respectively. And the flames were still advancing on multiple fronts Friday.
These record levels already far exceed the Tubbs (2017) and Camp (2018) fires, whose insured damage estimates climb, according to sources, to 16 billion.
The value of the homes makes all the difference: at this point, more than 10.000 buildings have been destroyed this week, the vast majority of them homes worth an average of three million dollars.
By comparison, some 18.000 buildings were destroyed in the Camp fire, but the average home value was $500.000.
The market value of the 15.400 homes in Pacific Palisades is nearly $13,50 billion, according to David Burt, founder and CEO of climate change financial risk advisory firm DeltaTerra.
However, experts believe that insurance companies will have no problem compensating their customers.
According to the rating agency Standard and Poor's, insurers are starting the year with comfortable reserves thanks to the good financial results achieved in two years and they have significantly reduced their presence in Californian regions highly exposed to fire risks. They are also well diversified.
The same sentiment is felt at JPMorgan, which insists that at this stage, it is mainly home guarantees that will be requested, followed by, to a lesser extent, coverage for businesses/commerce and automobiles.
"Exodus" of insurers
"There's been a mass exodus of big players from this part of California," Ben Keys, a professor of real estate and finance at the Wharton School of Economics at the University of Pennsylvania, said at a conference Friday.
According to him, the rate of non-renewal of contracts has been "huge recently" in the state.
California Insurance Commissioner Ricardo Lara announced Wednesday that homeowners in and around the fires will be protected for one year against policy cancellations and non-renewals. This type of measure protected more than a million policies in 2024.
In 1968, the coastal state set up a public insurance system, called FAIR, for owners who could no longer find a private insurer.
This "band-aid was meant to be temporary, while people move from one insurance policy to another, but it has now been extended well beyond that," Mr Keys lamented, specifying that his exposure had increased from 50 billion dollars in 2018 to more than 450 billion dollars currently.
To bring the companies back, Mr Lara also initiated a reform authorising them to increase contributions provided that they do not apply any geographical exclusions.
"There is no more cherry-picking" to select the best contracts, summarized Susan Crawford, a climate and geopolitics specialist at the Carnegie Endowment for International Peace.
According to her, "the acceleration of ferocious climatic events (…) should trigger an awareness that things must change."
"Policy adjustment measures are needed in response to rapid climate change," she argued.
In the meantime, Californians—and perhaps even Americans—can brace themselves for higher rates. Because 2025 is just beginning, and the previous year was marked by some very destructive disasters.
According to modeling by the specialized site AccuWeather, hurricanes Helene (September) and Milton (October) caused respectively 160 to 180 billion and 225 to 250 billion in damage. It estimates the total cost of the damage in Los Angeles at between 135 and 150 billion dollars.
The US State Department released a new national strategy on Friday to address climate change, saying that climate-related disasters such as droughts, wildfires, floods, winter storms and hurricanes will cause $182,7 billion in economic losses in 2024. That's twice as much as in 2023.