The Los Angeles bushfires are on track to become among the costliest in US history, with losses already expected to exceed more than $50bn (£40bn).
In a preliminary estimate, private weather forecasting company Accuweather said it expects losses ranging between $52 billion and $57 billion as the fires spread in an area that includes some of the most expensive real estate in the United States.
The insurance industry is also bracing for a big hit, with analysts from firms like Morningstar and JP Morgan predicting insurance losses of more than $8 billion.
Nearly 2,000 buildings were damaged or destroyed in the fires, which also claimed at least five lives.
As authorities continue to work to contain the fires, the extent of the losses is still unfolding.
“It’s a terrible disaster,” Accuweather senior meteorologist Jonathan Porter said.
The 2018 fire that broke out in Northern California near the town of Paradise currently ranks as the disaster with the highest insurance costs, at about $12.5 billion, according to insurance giant Aon.
This fire, known as the Camp Fire, killed 85 people and displaced more than 50,000.
The high property values in this case mean it will likely end up as one of the five costliest wildfires in the United States, said Aon, who looks at insured losses.
Nearly 200,000 people in the Los Angeles area are under evacuation orders, and another 180,000 face warnings.
Even with the situation under control, Mr Porter said the events could have long-term impacts on health and tourism.
It also causes problems for the insurance industry, which was already in crisis.
Banks typically require U.S. homeowners with mortgages to obtain property insurance.
but Companies have raised prices — or eliminated coverage altogether – In the face of increasing risks of natural disasters such as fires, floods and hurricanes.
As companies stop offering coverage, people are turning in increasing numbers to home insurance plans offered by state governments, which are usually more expensive and offer less protection.
In California, the number of policies submitted through the state’s Fair Justice Plan has doubled since 2020, from about 200,000 to more than 450,000 in September of last year.
The fire-hit areas rank among the places with the highest incidence of fires, according to data from the programme, which was already warning of risks to its financial stability.
The fires will have “widespread negative impacts on the state’s broader insurance market,” said Dennis Rapmond, a senior analyst at Moody’s Ratings.
“Increasing repossession costs will likely result in higher insurance premiums and may reduce the availability of property insurance,” she said, adding that the state also faces potential long-term damage to property values and strains on public finances.