Experts say the fires in Los Angeles could be the costliest in US history, with insurers potentially facing losses of over $20 billion as they braced for the worst

New data indicates that the Los Angeles wildfires may become the most expensive in US history, with insurers preparing for potential losses of around $20 billion.

A J.P. Morgan Insurance analysis suggests that insured losses from the fires could surpass $20 billion if they are not brought under control. Estimated economic losses have more than doubled since Wednesday, reaching nearly $50 billion.

J.P. Morgan analysts pointed out that the Palisades Fire area is “an affluent residential area, with a median home price” exceeding $3 million.

The LA wildfires have caused extensive destruction in communities stretching from the Pacific Coast to Pasadena since they began on Tuesday.

Over 180,000 residents are under evacuation orders, and around 15,000 structures are at risk, reports the Express US.

This comes amid concerns that people living in US states frequently hit by wildfires and other natural disasters may face rising insurance rates.

According to an Axios report, there are worries that homeowners in states experiencing intensifying natural disasters may also lose coverage entirely. The report stated that if insurers decide to withdraw altogether, states will need to step in to assume the risk, which could cost people more.

Insurance giants State Farm and Allstate recently halted writing new policies in California due to concerns about massive losses from wildfires and other natural disasters. Last year, State Farm dropped a bombshell by announcing it would stop insuring 72,000 homes and apartments in California, blaming the escalating costs and heightened risk of wildfires.

A new state mandate unveiled last month requires insurance providers who have previously withdrawn home coverage from Californians to offer policies again in wildfire-prone zones if they wish to continue operating within the state.

To compensate for the expanded coverage, insurers will be allowed to pass on reinsurance expenses to California consumers, which critics argue could lead to a staggering 40 percent increase in premiums.

“Californians deserve a reliable insurance market that doesn’t retreat from communities most vulnerable to wildfires and climate change,” declared the office of Insurance Commissioner Ricardo Lara.

The Palisades Fire, erupting in the upscale Pacific Palisades area this Tuesday, has been labeled as LA’s most catastrophic wildfire ever.

Specialists point out that the hotter, drier climate is causing California’s fires to become significantly larger and more ferocious.

Out of the top 20 most devastating wildfires in California’s record books, 14 have blazed their way into history since 2015, as per data from the California Department of Forestry and Fire Protection.