Allstate this week became the first insurer to raise its estimates of property losses from last month’s wildfires in Los Angeles County, projecting $2.47 billion in losses.
The new estimate is nearly $500 million higher than the $2 billion the Northbrook, Ill.-based insurer projected earlier this month.
Since the fires swept Los Angeles County communities on Jan. 7-8, nine major insurers with customers in the burn areas have reported nearly $12.3 billion in property losses.
More than half of Allstate’s losses are expected to be covered through reinsurance, an insurance for insurance companies.
The insurer said $1.4 billion in reinsurance recoveries and an estimated California FAIR Plan assessment is expected to bring its total projected loss from the firestorms to $1.07 billion, down from a $1.1 billion projection on Feb. 5.
Allstate spokesman Nick Nottoli was unavailable to comment on the changes.
See also: FAIR Plan bailout deepens housing strains
Allstate and other insurers in California contribute to the FAIR Plan, an insurance pool that all the major private insurers support. The plan then issues policies to people who can’t get private insurance because their properties are deemed too risky to insure. It provides high premiums and basic coverage for fire damage only.
There were more than 452,000 policies on the Fair Plan in 2024, more than double the number in 2020.
The FAIR Plan is charging a $1 billion special assessment to private insurance providers, a move approved Feb. 11 by California Insurance Commissioner Ricardo Lara after a record number of FAIR Plan claims were filed after January wildfires.
As of Feb. 5, more than 33,700 insurance claims had been filed and $6.9 billion in claims had been paid, according to the state department of insurance.
Allstate’s revision comes as insurers begin to report financial damages from the Jan. 7 conflagrations that killed 29 people, destroyed more than 16,000 structures and burned 37,000 acres.
Among the largest insurers that offer property and casualty insurance in California are New York-based American International Group with $500 million in losses; Warren, N.J.-based Chubb with $1.5 billion in losses; Toronto-based Fairfax Financial Holdings with losses between $500 million and $700 million; New York-based The Travelers Cos., with a preliminary loss of $1.7 billion; and San Antonio-based United Services Automobile Association, or USAA, with $1.8 billion in losses.
On Feb. 11, Los Angeles-based Mercury General said that losses from the wildfire catastrophe would range from $1.6 billion to $2 billion.
On Feb. 18, Woodland Hills-based The Farmers Exchanges reported initial loss estimates of about $600 million.
Privately held State Farm Automobile Insurance, based in Bloomington, Ill., has not yet disclosed its losses in the fires.
State Farm General in early February requested a 22% emergency rate hike in California to cover losses from the wildfires and stop its “financial deterioration,” the company wrote in a letter filed with the state’s insurance commission.
The property insurer, the state’s largest and a subsidiary State Farm Mutual Automobile Insurance Co., said it has received more than 8,700 claims from the Jan. 7 fires in Pacific Palisades and Altadena areas. The company said it paid more than $1 billion to customers.
In a Feb. 14 letter, Lara rejected State Farm’s request for a premium hike.
Lara told State Farm executives that he needs more information before he can approve an increase. He asked the company to meet Feb. 26 at the Insurance Department’s office in Oakland for an “informal conference.”