Early Thursday morning, a fast-moving fire raged through Hollywood Hills. It threatens a place synonymous with American filmmaking.
Los Angeles is already under pressure from devastating fires which have destroyed entire neighbourhoods and transformed the sky into a thick, smokey haze.
Tens of thousands are still under evacuation warnings or orders.
Wildfires scorched 27,000 acres, an area roughly the same size as 20,000 football pitches.
The Palisades Fire and the Eaton Fire, together destroying more than 2000 structures are among the most destructive.
The two fires are the most destructive in Los Angeles’ history.
Pacific Palisades is the worst hit.
Wildfires cost billions of dollars in economic losses, not just because of the destruction of property and lives.
AccuWeather estimated on Wednesday that economic costs could reach as high as $57 billion.
This is more than three times the amount forecasters estimate the wildfires will cost in Hawaii by 2023 (between $14 billion and $16 billion) but lower than what they expect for the West Coast wildfires of 2020 ($130 billion or $150 billion).
Jonathan Porter, AccuWeather’s Chief Meteorologist, stated in a Thursday press release to Euronews Business that this is one of the most destructive wildfires ever in California’s history.
He added that if a lot more structures were to burn in the next few days, the fire could become the most destructive wildfire ever in California’s modern history.
The destruction has been most severe in areas with high home values, such as Pacific Palisades.
Firas Saleh is the director of North American Wildfire Models at Moody’s.
Investors are worried about potential liability, which has led to previous legal disputes that have cost utilities billions.
Hollywood stops productions when flames threaten them
Los Angeles’ entertainment industry has been brought to a halt.
The production of major television shows such as Grey’s Anatomy NCIS and Jimmy Kimmel Live has been suspended.
The Critics Choice Awards and Oscar Nominations have been cancelled, and Disney Burbank’s headquarters as well as NBCUniversal Universal Studios Hollywood temporarily closed.
Hollywood’s fires have a far greater impact than just economic loss. They also threaten the area’s reputation as a hub for global entertainment.
Home insurance crisis deepens
California has been fighting to prevent insurers from leaving the market after wildfires of 2017 and 2018 erased over 25 years worth of profits for industry.
The recent fires may accelerate the retreat and push insurance rates even higher.
JPMorgan analysts stated in a very preliminary estimate for investors to gauge the impact, that they believe insured losses could “approach $10bn”, based on an evaluation of the affected areas.
JPMorgan warned clients that insurance firms specializing in high-value homes would face large payouts. Allstate, Travelers, and Chubb were among those most at risk in this state. Chubb focuses on properties with high net worth.
Over 100,000 Californians will lose their insurance coverage between 2019 and 2024. State Farm, the largest insurance company in California, canceled 70% of policies just last summer.
Many homeowners are forced to use the California FAIR program, an insurance plan of last resort backed by the state.
If the plan needs additional funding it may be able to draw upon private insurers in the state. This could potentially increase rates across the entire state.
JPMorgan has said that RenaissanceRe and ArchCapital were among those reinsurers who would suffer losses from the wildfires. However, analysts have predicted their losses will be less than in similar situations prior to 2023.
The post California Fires: How much will it cost US Economy? This post may change as the updates unfold.
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