Wildfires Leave Farmers Insurance with Lower Losses
Amid the devastation of the Los Angeles wildfires, Farmers Insurance, the state's second-largest insurer, has reported projected losses of $600 million. While significant, this figure falls below the estimated losses announced by other major insurers.
Farmers Insurance attributes its minimized losses to its prudent risk management, strong capital base, and comprehensive reinsurance program. These measures include its partnerships with Farmers Insurance Exchange, Fire Insurance Exchange, and Truck Insurance Exchange.
Despite the setbacks caused by the fires, Farmers Insurance remains committed to the California home insurance market. In December, the company announced plans to expand its coverage and policies, citing market improvements and regulatory reforms.
Notably, California law now permits insurance providers to pass on reinsurance costs to their policyholders. Reinsurance is a form of insurance that protects insurers against potential claims, mitigating the financial impact of catastrophic events.
The Los Angeles wildfires are projected to rank among the most expensive wildfires in U.S. history, with insurers potentially面临高达450亿美元的索赔。保险评级机构 S&P Global预计加州的财产保险费将上涨或 coverage options will be reduced.
State Farm, the largest home insurer in California, has yet to announce its losses. However, S&P Capital IQ estimates their losses at $6.5 billion, excluding reinsurance payments. State Farm has requested a 22% emergency rate increase, which has been denied by Insurance Commissioner Ricardo Lara until further data is provided to support the request.
Other insurers that have reported losses include Allstate with $1.1 billion, Chubb with $1.5 billion, and Travelers with $1.7 billion, which includes an estimated FAIR Plan assessment. Mercury Insurance estimates its gross losses could reach $2 billion but could net under $200 million after reinsurance and potential recoveries from Southern California Edison, if the utility is found liable for the Eaton fire.