Though not as severe as the 2007 wildfire season, the 2008 season included about $640 million in direct property losses from three wildfires in the Los Angeles metropolitan area in November, California officials estimate. The current season already generated the Jesusita Fire in Santa Barbara Country this past May. Insurers face the prospect of further property losses from wildfires in 2009, with persistent drought conditions raising the potential for wildfire activity across parts of California, Nevada and the Northwest. Severe wildfire events tend to add to claims costs beyond direct property losses. These may include expenses to track and settle claims, litigation expenses and costs for additional living expenses due to mandatory evacuation orders.Wildfires in California have led to higher premium rates. The California Department of Insurance has acknowledged that recent wildfire losses and rising repair costs were factors in granting rate increases for several of the state's largest carriers.Frequent wildfire activity in California could have a broader impact on insurers, businesses and consumers. Public utilities, for example, are finding less available liability coverage and will pay more for it, potentially leading to higher utility bills in the state.Coverage complaints persist for wildfire claims, mostly due to policy language on extended replacement cost coverage, which pays a percentage above policy limits. Consumers may be "underinsured," since older policy limits may not reflect rebuilding costs.Warmer temperatures in the western United States, less snowpack and drought conditions have led wildfire experts to conclude that wildfire season has extended by two or more months.


Access a copy of this special report . BestWeek subscribers can download a PDF copy of all special reports as well as the associated spreadsheet data. Non-subscribers can access an excerpt of each special report and purchase individual reports and spreadsheet data.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com . CONTACT: A.M. Best CompanyAnalyst:Kenneth Tappen, 908-439-2200, ext. 5248 kenneth.tappen@ambest.com orAnalytical Communications:Joe Niedzielski, 908-439-2200, ext. 5549 joe.niedzielski@ambest.com orPublic Relations:Jim Peavy, 908-439-2200, ext. 5644 james.peavy@ambest.com orRachelle Morrow, 908-439-2200, ext. 5378 rachelle.morrow@ambest.com http://www.businesswire.com