U.S. insurers accounted for the majority of global insured losses in the first quarter, which reached the highest level in 15 years, according to Gallagher Re.
Out of $56 bn in global insured losses, approximately $50 bn occurred in the United States.
The Los Angeles wildfires in January alone resulted in $40 bn in insured losses, while severe convective storms between mid-February and the end of March added over $10 bn.
These early-year losses significantly exceeded the first-quarter decadal average of $20 bn but remained manageable for the reinsurance sector.
Gallagher Re noted that these figures mark an expensive start to the year, with the months typically associated with peak natural catastrophes still ahead. This information was detailed in the firm’s quarterly Natural Catastrophe and Climate Report.
Despite lighter activity for April 1 reinsurance renewals in the U.S. market, the Los Angeles wildfires drew considerable attention due to their financial impact.
Gallagher Re stated that these fires could affect about 2% to 2.5% of global reinsurance capital. This event is likely to prompt some insurers to reassess and reprice the risk, particularly for secondary perils, reflecting an ongoing hesitation to provide broad coverage in these areas.
The broker also projected increased scrutiny of catastrophe risks within per risk and multiline contracts, along with greater resistance to cedants seeking wider coverage.
However, property catastrophe capacity remained sufficient despite the fires. Renewal rates rose by 15% for portfolios that experienced catastrophe losses, while rates for other portfolios declined between 5% and 15%.
The total global loss estimate was high even though the quarter saw fewer billion-dollar events than usual.
For comparison, the 2018 Camp Fire in Paradise, California, destroyed more structures but resulted in insured losses of $13 bn in today’s dollars, as the median property value in Paradise was $220,000 before the event.
In contrast, the majority of losses from the Los Angeles fires involved at least 11,068 single-family homes, with much higher property values.
Gallagher Re reported average property values of $3.5 mn in Pacific Palisades, $3.2 mn in Malibu, and $1.3 mn in Altadena, significantly contributing to the overall loss figure.
