With insurers' claim counts from the California wildfires mounting ever higher, a reinsurance expert suggested that carriers should have an easier time collecting on their reinsurance coverage than they did in 2003.
Lara Mowery, Guy Carpenter managing director in the reinsurance brokerage's Minneapolis office, said changes in contract documents since 2003 should lessen the number of disputes over California wildfire losses between reinsurers and primary insurers.
There has been an "evolving definition" of reinsurance coverage for wildfires, she explained.
Meanwhile, the Insurance Information Network of California said roughly 14,000 insurance claims have been filed. IINC and Insurance Information Institute said they now project that insurers may pay up to $1.6 billion for wind and fire damage to homes, farms, vehicles and businesses.
State Farm, the state's largest home insurer, said it has now logged over 4,300 claims for structures hit by fire with about 590 of those totally destroyed. The insurer also reported 560 auto claims with over 130 of those involving total destruction.
Steve McKay at Zurich American said the company has received about 120 claims, mainly small business, "and we expect that number to go up." He said the company knows of no major claims, and "we don't expect this to be a material event."
At Allstate a spokesperson said they intended to put out a tally of claims, but at this point too many areas were inaccessible to provide a full count.
R. Eric Martinez, Safeco executive vice president, claims, customer care and procurement, said at this point "it is too early for us to share any estimates from the California wind and wildfires. There are still some areas where we cannot get in, but clearly events will represent a fourth-quarter catastrophe."
He said the company expects to issue a press release with an estimate of Safeco's losses.
Paula Reynolds, Safeco president and CEO, said her company's losses should not be as severe as for other insurers because the company uses proprietary technology for brush mapping in writing policies and does not write on the residential high end.
On the reinsurance question, Ms. Mowery said that after California's 2003 blazes some primary insurers claimed that simultaneous fires with many separate ignition points qualified as one occurrence because all the fires were based on the same "drought condition causation."
If the different blazes were combined as one retention, it would create a higher loss figure triggering the reinsurance coverage, she noted.
As a consequence, Ms. Mowery said reinsurance brush fire contracts were developed allowing an insurer to pick a center point for a contract with coverage extending in a 150-mile radius from that location, and anything within that circle qualifies for one event.
In addition, she said some contracts were also developed to provide for wind damage occurring at the same time as the fires so the two different perils are combined into one loss occurrence.
During the recent firestorms that hit California the Santa Ana winds that roared in off the desert to push the flames were sometimes clocked at more than 85 mph.
This article updated Oct. 31, 9:42 a.m.
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