Firing On All Cylinders

by Locke Lord LLP

The wildfires raging in Northern California are already the worst in the state’s history.  The risk of cataclysmic fires is greater in Southern California, but the elements (fierce winds, high temperatures, and low humidity) conspired  to create this conflagration.

Containment figures are finally increasing for these massive wildfires that continue to decimate California’s wine country.  To date, no cause(s) of the fires has been determined.  CAL FIRE estimates that 5,700 structures have been destroyed and more than 200,000 acres have burned.

This far exceeds the 2,900 structures destroyed in the 1991 Oakland Hills fires and the 2,820 structures destroyed in the 2003 Cedar fire, which were the most destructive fires in California history until last week.  Needless to say, the magnitude of these fires and the amount of destruction, disruption, and fatalities is beyond the pale.

According to a report released October 16th by Moody’s, “the tragic loss of lives and substantial property damage will cause billions of dollars of insured losses.”  “These fires will be among the costliest wildfires on record for US P&C insurers, which were already hit by high third-quarter catastrophe losses from Hurricanes Harvey, Irma and Maria and the Mexico earthquakes.”

In addition to the typical claims that insurers anticipate when wildfires roll through the state (e.g., property damage, business interruption, automobile claims, relocation expenses, etc.), here there will be significant claims relating to the wine industry and its supporting infrastructure.

For the vineyards in the region that are not burned by the fires, there is still the risk that the grapes and vines will be harmed by the heat and smoke.  There are upwards of $3 billion grapes still on the vines yet to be harvested, and insureds have already started to file claims, according to Larry Chasin, CEO of Pak Programs, which specializes in custom insurance programs for wineries and vineyards.

For the vineyards that are burned and need to be replanted, it will take most of them at least three years or more to get fully operational, since at least three years is required for the vines to mature and produce viable fruit.  In addition to the actual vineyard vines, there is all of the building infrastructure supporting each facility, including barns, processing facilities, and storage areas where vast amounts of wine are aged for years before being bottled and finally sold.  All of the critical farming and irrigation equipment will need to be replaced.

Unlike most agriculture communities, California’s wine country is buttressed by a thriving tourist industry, which will also be negatively impacted.  According to Chasin, insurers are already seeing a business interruption exposure “for tasting rooms that can’t open, due to lack of power, and you may have some interruption to production too.”

In addition to the insured claims coming from the voluntary market, P&C insurers should also expect to receive claims from the California FAIR Plan program, which requires California insurers to participate in the losses of high risk properties that are unable to obtain insurance in the voluntary insurance market

On Thursday, October 12th, catastrophe modeler RMS estimated losses to range from $3 to $6 billion and, based on satellite-derived fire perimeters, calculated the total exposure to be up to $14 billion.  RMS noted that due to the “high penetration rate of wildfire coverage in standard residential and non-residential policies, this range also represents an estimate of insured losses.”  RMS noted that a higher total loss remains possible given the potential for long-term business interruption.

To put the significance of this event in context, the 2015 Valley Fire (which occurred in the less populated Lake County, north of Napa and Sonoma Counties) destroyed over 1,900 structures and 76,000 acres, resulting in approximately $900 million in insured loss, according to Property Claim Services (PCS).  Another recent natural disaster to hit the region, 2014’s 6.0 earthquake, caused at least $500 million in damage.

This had not been a good year for P&C carriers. Just finding the ‘man-power’ for adjusters, electricians, carpenters, telecommunication experts and engineers to remediate the losses in Texas, Florida, and Puerto Rico will take a herculean effort by insurers, and this is often when the industry shines, as it too must fire on all cylinders.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Locke Lord LLP | Attorney Advertising

Written by:

Locke Lord LLP

Locke Lord LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.