Enjoy complimentary access to top ideas and insights — selected by our editors.
Wildfires sweeping across Los Angeles County last week have destroyed entire neighborhoods and wrought damages in excess of $20 billion, according to early estimates. But financial institutions forced to close branches in the face of the blazes aren’t letting the damages deter relief efforts.
Equity analysts from investment bank J.P. Morgan
Twenty-four hours after the Palisade fires began on Jan. 7, more than 11,000 acres were burning out of control, according to the
Institutions with branches in Los Angeles such as JPMorgan Chase, Citigroup and U.S. Bancorp were affected by the wildfires, with JPMorgan and Citi closing branches as permitted by the Office of the Comptroller of the Currency during disasters.
“The safety of our employees and customers is our top priority,” a Citigroup spokesperson said in a statement. “We are actively communicating with Los Angeles-area colleagues to assess their needs and how we can support them.”
Read more:
Financial institutions like banks and credit unions are no strangers to helping recovery efforts in the communities they belong to, with the $515 billion-asset
This time around, U.S. Bancorp, which has about 200 branches in the Los Angeles area and 4,000 employees, pledged $100,000 to the nonprofit United Way of Greater Los Angeles and expects to employ its network of 4,500 ATMs to collect donations for the American Red Cross, according to a spokesperson from the bank.
“Banks are in the perfect position to support communities — and they should do so by providing easy access to vetted resources that exist both within their communities and nationwide,” Rochelle Gorey, founder and CEO of Chicago-based financial services firm SpringFour, said in a previous opinion article for American Banker. “If they plan ahead, organizations can ensure that if and when a disaster strikes, they are ready to assist.”
Read more:
Learn more about how financial institutions prepared for and responded to the disaster, and click through to read the full stories on American Banker, Digital Insurance, The Bond Buyer and National Mortgage News.
California allows wildfire cat models, waits for insurance industry reaction
Article by
It’s still an open question whether insurers will implement catastrophe (cat) risk models in California, now that the state has allowed their use, and
Verisk, a global data analytics and risk assessment firm that serves many top commercial and property and casualty insurers, became the first wildfire catastrophe model provider to ask the California Department of Insurance to review its model. Verisk made the request on Jan. 2, the first day CDI
How much damage will the Los Angeles fires do to homes?
Article by
The fires raging in the Greater Los Angeles region are highlighting the tinder box the pricey homes in that region represent.
Corelogic estimates more than 456,000 homes in the Los Angeles area and Riverside metro, east of the city, are at moderate or greater risk of wildfire damage that could equate to $300 billion in reconstruction cost value. That estimate is not specific to the three blazes that erupted, which engulfed at least 45 square miles,
About 2,000 homes and other structures have been destroyed by flames, and at least five deaths were recorded. The fires began the morning of Jan. 7 with a blaze in Pacific Palisades, a wealthy coastal Los Angeles neighborhood between Santa Monica and Malibu. The area had become dry following seasonal rains late last year, said Tom Jeffrey, Corelogic senior hazard scientist.
L.A. fire loss estimated at $20 billion in early figures
Article by
As Los Angeles battles wildfires, Mayor Karen Bass is being criticized for the roughly $17 million in cuts made to the Los Angeles Fire Department’s budget.
Neither the mayor’s office, nor the city administrative office were available to comment on the hit the city’s budget could take from fire suppression costs.
This year’s Santa Ana winds topping out at 100 miles an hour — triple what the city has experienced historically — made it difficult for water planes to suppress the fires.
J.P. Morgan analysts expect losses could exceed $20 billion, double their earlier estimate, as the fires continue to burn, according to news site Artemis.
Los Angeles banks react, give back as wildfires continue
Article by
As wildfires in Los Angeles raged for a third day, banks in the area responded by closing more branches, donating to relief efforts and making sure their employees were safe.
Banks
Wells Fargo did not specify how many of its locations were out of service due to the fires, but it alluded to some closures in a statement it shared with American Banker.
Bank branches close as wildfires spread across Los Angeles
Article by
As fast-moving wildfires raged across Los Angeles County, some banks in the area were forced to close their doors out of concern for their customers and employees.
Fires have been spreading across the L.A. metropolitan region since the morning of Jan. 7, burning through thousands of acres and prompting massive evacuation orders. On Jan. 8, the Office of the Comptroller of the Currency gave banks that are affected by the unsafe conditions permission to temporarily close.
JPMorgan Chase, the nation’s largest bank by assets and the biggest deposit-holder in the L.A. metro area, confirmed that it was shutting branches in the disaster’s path. The exact number of closures was not immediately clear. As of late June 2024, JPMorgan operated about 335 branches in the metro region, according to the Federal Deposit Insurance Corp.
California issues eighth wildfire-based insurance non-renewal ban in 2024
Article by
A one-year moratorium on non-renewal of residential property insurance policies, issued Nov. 14 by the California Department of Insurance and Commissioner Ricardo Lara, is just the latest of
The
The moratoriums are part of a consumer protection law authored by Lara in 2018 as a state senator. The law requires the one-year moratoriums for any location where the governor has declared a state of emergency. They have been issued between July and November in each year, with eight so far in 2024, the highest number since nine were issued in 2021. According to the department, the moratoriums in 2024 before the most recent one collectively affected about 1 million policyholders.
California’s climate resilience fund takes aim at state’s wildfire scourge
Article by
Wildfire resilience projects became the first beneficiaries of California’s
The state’s Infrastructure and Economic Bank, charged with running the fund, announced in September that its first investment would be $25 million to support the California Wildfire Innovation Fund, an investment vehicle focused on climate solutions and managed by California-based Blue Forest Conservation, a nonprofit conservation finance organization.
The West Coast has been hammered by historic blazes in recent years, pushing climate change to the top of climate change agendas.
Benjamin Fanjoy/Bloomberg
How wildfires became a heated issue for insurance professionals
Article by
Climate change has increased the frequency and severity of wildfires, especially in the western United States, with more than 2.6 million homes in the region at risk to wildfire damage this season, according to CoreLogic’s
According to the second-quarter findings of CCC Intelligent Solutions’
The average total cost of repairs increased more than 3% in the first quarter of this year compared with early 2023, a change which the report attributes to labor rates and parts costs. Electric vehicles made up 2.4% of all repairable claims earlier this year, which is an increase of 1.6% over the same period last year, and the average EV repair cost is nearly 47% higher than repairs of non-EVs.
CoreLogic: 2.6 million homes at high wildfire risk
Article by
In August, CoreLogic released the
Over a million of these homes are at very high wildfire risk, and overall, the estimated total reconstruction cost is more than $1 trillion.
“In recent years, we’ve seen wildfires occur in unexpected places, reinforcing the need to understand the risk landscape and take mitigation action. Both insurers and consumers have a role to play to ensure adequate protection,” said Jon Schneyer, CoreLogic’s director of catastrophe response, in a press release. “These numbers may seem overwhelming, but research shows that mitigation efforts make a real difference in potential losses from wildfires. The good news is there are actions people can take to lessen the risk.”
How California builders and insurers are responding to wildfires
Article by
As the country confronts natural disasters from flooding to wildfires, California may serve as a prime example of how the mortgage industry, insurers and builders respond to the new normal.
Wildfires that have ravaged California in recent years are making the second-most-expensive state even less affordable. New building codes, retrofitting prices and the loss of houses to wildfires are all adding costs for California residents. At the same time, insurance companies have raised premiums and increased their non-renewals in higher-risk areas as they try to reduce their own risk and try to stay solvent.
Homeowners’ insurance non-renewals climbed by 31% year-over-year in 2019 compared to a 0.2% decrease from 2017 to 2018, forcing residents to sign up for the Fair Access to Insurance Requirement Plan, an “insurance of last resort” that’s considerably more expensive than the average insurance plan. In 2019, more than 190,000 policies were written for the FAIR Plan, a 36% jump from the year before.
