Fire damage toll will top $2 billion

By: EDMOND JACOBY - Staff Writer | Tuesday, November 18, 2003 11:28 PM PST ∞

Early estimates that the fires that raged across Southern California three weeks ago would exceed $2 billion in damage apparently were right on the money. Industry sources Tuesday said that insurance company payouts on claims related to the fires in San Diego and San Bernardino counties will hit that mark.

The Cedar wildfire in San Diego County, the largest in the state's history, and the Old fire near San Bernardino, together accounted for at least 3,300 structures that were burned and 430,000 acres scorched.

The figures do not include all of the fire damage in San Diego County, nor are fires in Los Angeles and Ventura counties included in the estimate. In all, the Southern California conflagration included 10 separate fires.

"Standard & Poor's and Moody's have suggested that it could go as high as $2.5 (billion) to $3 billion in insured losses, I've seen that, but I think that's just too high," said Jerry Davies, a spokesman for the Personal Insurance Federation of California.

"The Property Claims Service of the Insurance Services Office have catastrophe team estimators who go into disaster areas shortly after a disaster occurs, and they make estimates of what they feel the actual insured dollar losses will be," Davies said. The Insurance Services Office is situated in New York and supplies statistical and interpretive information to the industry.

According to the Insurance Services Office, insured losses in the two largest fires totaled $1.06 billion for the Cedar fire, and $975 million for the Old fire, or $2.04 billion in sum.

"That is all that can be reported right now," Davies said.

"Of course, this will be an ongoing process; give it another 30 to 60 days and it may go higher, but I go by the Property Claims Service because that's part of my industry," Davies said.

The insurance industry historically has made very accurate estimates of disaster payouts.

Robert Hartwig, chief economist of the Insurance Information Institute, which works closely with the Insurance Services Office, also has pegged the insured losses in the two fires at $2.04 billion, and has said the number could rise to $2.3 billion, according to Davies.

Hartwig's estimate is based on independently gathered data from the insurance companies with policies covering properties that were damaged or destroyed in the fires, he said.

"I went to four of the town hall meetings staged by (state) Insurance Commissioner John Garamendi," Davies said.

"What I was hearing was a mix of partial and full loss," he said.

Garamendi's office released information indicating that the 12,769 claims for damage have been filed so far, and that the affected policies represent a total coverage limit of just under $3.5 billion.

"If you just add up the maximum possible payout of those 13,000 policies it doesn't take into account that many of those claims are for partial losses," Davies said.

"I personally saw many partially burned homes in San Diego, and that's where you have to be careful about using the policy limits," he said.

"I think it's going to be another 60 days, maybe even another 90 days, before we get very, very close to a final figure. And I expect that figure to be pretty close to $2.04 billion," Davies said.

Other disasters in California have cost more. The insured loss for the Northridge earthquake in 1994 exceeded $12 billion, six times the estimate for the Cedar and Old fires.

As California fires go, the champion for damage remains the blaze that engulfed San Francisco after the 1906 earthquake. Total damage estimates for the San Francisco fire approach $6 billion after adjusting for a century of inflation, but most of that loss was uninsured.

Contact staff writer Edmond Jacoby at (760) 739-6675 or ejacoby@nctimes.com.

First name only. Comments including last names, contact addresses, e-mail addresses or phone numbers will be deleted. Attempts to misrepresent your identity or impersonate any person will not be approved. All comments are screened before they appear online, so please keep them brief. Comments reflect the views of those commenting and not necessarily those of the North County Times or its staff writers. Click here to view additional comment policies.