Hawaii wildfires: Economic losses could reach US$6bn

Economic losses from the recent Lahaina Conflagration and Kula wildfires in Hawaii could be in the region of US$4bn to US6bn, according to estimates from Moody’s RMS.

A combination of ongoing drought conditions, low humidity levels, and localised strong wind gusts produced dangerous wildfire conditions between 8th and 11th August that led to the ignition and spread of multiple wildfires across the Hawaiian Islands.

Most of the economic damage is expected to be covered by insurance, in the range of approximately 75% or more, because wildfire is a covered peril under typical insurance policies and the island has high insurance penetration rates. Additionally, several extenuating factors can 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,” said Rajkiran Vojjala, vice-president modelling, Moody’s RMS.

RMS’ loss estimates reflect property damage, contents, and business interruption across residential, commercial, industrial, vehicle and infrastructure assets.

The loss estimation process leveraged 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 11th August.

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