LA wildfires to cost Bermuda re/insurers $10bn
The January LA wildfires are expected to result in nearly $10 billion in gross losses for Bermuda re/insurers, according to a survey of over 100 firms on the island.
The Bermuda Monetary Authority said companies will pay as much as 30% of the claims from the wildfires, which were the costliest in US history and caused economic losses of $250 billion to $275 billion and $30 billion to $50 billion in insured losses.
The BMA loss estimate is based on 119 commercial re/insurers’ market claims data collected by the regulator in March.
It said the estimate included property damage, evacuation, business interruption and additional living expenses across residential, commercial and industrial lines. It also considered construction costs after the wildfires, including cleanup, permit fees, code improvements, and potential law and ordinance expenses.
“The survey results demonstrate Bermuda’s crucial role in supplying risk capacity to the US and other regions prone to catastrophes,” said Craig Swan (pictured), chief executive officer. ”The ability of US insurers to cede risk to Bermuda enables diversification of risk globally and helps stabilise insurance costs for customers residing in catastrophe danger zones.
“Nevertheless, the significant disparity between the economic and insured losses remains a societal concern, underscoring the need for stronger public-private partnerships and increased collaboration among regulators, insurers and other stakeholders to address the protection gap.
The BMA noted that Bermuda re/insurers had paid up to 30% of the claims from previous natural disasters, including:
- 30% (US$31 billion) of Hurricanes Harvey, Irma and Maria in the 2017 record-setting hurricane season
- 30% (US$6 billion) of Hurricane Ida and 20% (US$3 billion) of the Texas Winter Storm Uri in 2021
- 25% (US$13 billion) of Hurricane Ian in 2022
- 20% (US$2 billion) of Hurricane Helene and 15% (US$4 billion) of Hurricane Milton in 2024
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