Moody’s RMS Estimates $4B to $6B in Economic Losses from Hawaii Wildfires

Moody’s RMS issued estimates on Tuesday showing economic losses from the recent Lahaina Conflagration and Kula wildfires in Hawaii at $4 billion to $6 billion.

The loss estimate reflects property damage, contents, and business interruption, across residential, commercial, industrial, automobile, and infrastructure assets, according to Moody’s RMS.

The loss estimation used building-level damage assessments from multiple sources, including analysis of satellite and aerial imagery in the worst-affected areas, as well as damage maps from the Maui Emergency Management Agency published on Aug 11, according to the modeler.

The economic loss estimate reflects direct and indirect losses from damage to physical assets, but it does not consider macroeconomic factors, such as expected reduction in the island’s Gross Domestic Product, government payments, or additional social costs due to the wildfires.

According to Moody’s RMS, most of the event losses are expected to be from the town of Lahaina, where more than 2,100 acres were burned nearly 2,200 structures were destroyed.

Moody’s RMS estimates the burn footprints in Lahaina and Kula wildfires include insured property value in the range of $2.5 billion to $4 billion.

Most of the economic damage is expected to be covered by insurance, in the range of 75% or more, because wildfire is a covered peril under typical insurance policies and the island has high insurance penetration rates. Extenuating factors can also drive losses higher than simple insured value estimates.

“Post-event loss amplification is expected to be high in this event due to the island effect on supply chains, high construction labor costs in general, inflationary impacts during the expected long recovery time, and potential ordinance and law requirements,” Rajkiran Vojjala, vice president modeling of Moody’s RMS, said in a statement.

Catastrophe modeler Karen Clark & Company on Tuesday issued new estimates showing the insured property losses from the Lahaina Fire in Hawaii to be around $3.2 billion. AccuWeather on Monday increased its estimate of the total damage and economic loss from the devastating wildfires burning in Hawaii to $14 to $16 billion. That update followed AccuWeather’s preliminary estimate last week of total damage and economic loss of $8 to $10 billion.

AM Best lists the top homeowners multi-peril insurers in Hawaii as of 2022 as State Farm with 35% of market share and $162 million in direct premiums written. Other top writers are Tokio Marine U.S. PC Group (12% market share), Allstate Insurance Group (8%), USAA Group (7%) and Liberty Mutual Insurance Companies (6%).

A combination of drought conditions, low humidity and localized strong wind gusts produced dangerous wildfire conditions between Aug. 8, and Aug. 11, which led to the ignition and spread of multiple wildfires across the Hawaiian Islands. The combination of Hurricane Dora to the south and a strong high-pressure area to the north produced a strong north-south pressure gradient across the central Pacific that resulted in strong easterly low-level winds towards Hawaii, according to the modeler. The resultant easterly low-level flow was also broadly associated with subsidence and an anomalously dry airmass, while wind speeds as high as 60 to 80 miles per hour were reported across the Hawaiian Islands, according to Moody’s RMS.

Related:

• Modeler: Insured Property Losses From Lahaina Fire $3.2B
• Maui Fire Is Deadliest in US in 105 Years, With 93 Killed
• Estimate of Losses From Devastating Hawaii Wildfires Increases to $14B-$16B