Largest California Wildfire: Thomas Fire Could Reach $2.5B in Insurance Losses

Thomas fire

Insurance losses from the Thomas Fire in Southern California are expected to be at a minimum of $1.0 billion and reach as high as $2.5 billion. This is according to a catastrophe model that was completed by Risk Management Solutions (RMS), a data analysis firm based in California.

These estimates only include losses that have caused damage by smoke or burning to personal property, commercial properties, and industrial businesses. Also included in the estimated insurance losses are individual living expenses and business interruptions as a result of not being able to operate. Not included in the estimates are damages toward automobiles, losses to the agricultural sector, and damages from the recent mudslides.

The Thomas Fire is going to be the largest California wildfire in the state’s history, with more than 281,000 acres being burned. In total, there have been a reported 1,063 structures that have been destroyed as a result of the fire. Historically, this would put the Thomas Fire in the same category as the 2003 Old Fire, 2015 Butte Fire, and the 2017 Atlas Fire, which have all destroyed roughly 1,000 structures.

In the past, fires that have destroyed approximately 1,000 structures have not exceeded insurance losses of $1.0 billion. This time around, the Thomas Fire is expected to surpass the $1.0-billion mark. This would put the Thomas Fire as one of the costliest wildfires to the state.


This is putting further strains on insurance companies and the state’s resources. Just a few months ago, in October, the state saw total claims of $9.4 billion from five different wildfires. From that, only one-third of the claims have been paid by insurance companies.

Thomas Fire Is Costing Millions in Losses to Ventura County’s Agriculture Industry

One greatly-impacted sector by the Thomas Fire is the agricultural industry in Ventura County. According to Henry Gonzales, the county’s agricultural commissioner, damages are estimated to be worth more than $170.0 million, with more than 10,000 acres of cropland destroyed. This would include the fire’s impact on 6,603 acres of avocado groves, 1,767 acres of lemons, and 541 acres of oranges.

Based on a letter written by Gonzales, 4,030 tons of avocados were lost (which would amount to a loss of more than $10.0 million), 7,591 tons of lemons were destroyed (worth more than $5.8 million), and 3,680 tons of oranges were also lost(amounting to a total estimated loss of roughly $3.4 million).

The fire even resulted in the cattle industry losing around 120 animals. In some situations, it was very difficult for the cattle farmers to pick everything up and leave, due to restrictions on the cattle industry.

The damage to the cropland will impact both local and abroad economies. It is still too early to observe all the damage caused. It’s possible that there are more damages that have not yet been accounted for. Therefore, the cost of the damage to crops and quantity could easily skyrocket.

Economies outside the county will be feeling the effects of the damage due to supply and demand business theory. In the short term, consumers who purchase oranges, lemons, and avocados could see price increases at local grocery stores. In the long term, the same thing could be seen because it will take years to replace the damaged crops. Also, companies would see market share being lost as a result of not producing the necessary crops for market demands. When it does come time to return to selling to the markets, there could be a struggle due to competitors taking advantage of the market conditions.

Conclusion: Impact of the Thomas Fire

Currently, estimates of the damage from the Thomas Fire are between $1.0 billion and $2.5 billion. This number could easily be increased once everything has settled down and everything is investigated.

Insurance companies tend to take their time when they must pay out for an insurance claim, as it is in this case. For instance, the October 2017 fire has only seen about one-third of total claims paid from the total amount, months after the fires have been controlled. The Thomas Fire could further delay things for individuals receiving their insurance claim money since insurance companies are still processing other fire-related claims.



Losses From Southern California Fire Could Reach $2.5B, Expert Says,” Insurance Journal, January 23, 2018.

California’s Thomas Fire insured losses at up to $2.5bn,” Intelligent Insurer, January 23, 2018.

Ventura County agriculture suffers over $170 million in damages from Thomas Fire,” VC Star, January 23, 2018.

Thomas Fire: First estimate of agricultural losses tops $171 million,” AgAlert, January 3, 2018.


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