According to data collected by the Bermuda Monetary Authority, Bermuda’s insurers and reinsurers expect to pay nearly $10 billion in gross claims to U.S. policyholders and cedents for claims from the January 2025 Southern California wildfires.
The figure was reported by the Association of Bermuda Insurers and Reinsurers (ABIR) last week to demonstrate group member’s “decades-long track record of being there for Americans in their time of greatest need.”
ABIR noted that the $10 billion could represent as much as 30 percent of estimated insured losses, adding that recovery funds from Bermuda will likely exceed $10 billion when added contributions from Bermuda’s insurance-linked securities and catastrophe bond market are factored in.
Catastrophe risk modelers and analysts have estimated total insured losses from the California wildfires of at least $30 billion, while economic loss estimates are as high as $275 billion, ABIR noted. Insured loss estimates include property damage, evacuation, business interruption and additional living expenses across residential, commercial and industrial lines, as well as reconstruction costs.
In a media statement, John Huff, CEO of ABIR, noted: “The protection gap between total economic losses and insured losses remains a serious concern. Events like the California fires highlight opportunities for greater public-private cooperation to expand private insurance coverage, leaving taxpayers to bear less of the risk burden.”
The statement also made note of the assessment of the wildfire impact on the Bermuda insurance market that Fitch Ratings published in a March report stating that the losses “may pressure earnings but will not affect ratings, given ample capital levels”.
(Fitch Ratings, March 31, 2025, “California Wildfire Losses Will Pressure Bermuda (Re)Insurer Earnings“)
The Fitch report estimated that the California wildfires could have “a meaningful effect on the 2025 combined ratio” of roughly 4 points,
In 2024, Bermuda insurers and reinsurers assessed by Fitch as a group posted a 90.7 combined ratio, including 6.4 points of catastrophe losses, primarily from Hurricanes Milton and Helene as well as U.S. convective storms.
Still, shareholders equity for the group grew 16 percent in 2024, driven by underwriting gains and increased investment income from higher reinvestment rates and equity market gains, the Fitch report said.
ABIR, in its announcement last week, noted that members advocate fire risk mitigation measures, including building hardening, which have the potential to significantly reduce losses and help to lower insurance premiums. “In 2021, ABIR signed onto the Insurers’ Principles for Climate Change Adaptation, drawn up by the Insurance Institute for Business & Home Safety (IBHS), which outline active steps that that can be taken to improve the resilience of American homes, businesses and communities.”
