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Texas Wildfires to See Insured Losses Exceeding $100 Million

Source: A.M. Best

Posted on 07 Sep 2011

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Insured losses from wildfires that have burned tens of thousands of acres in east and central Texas will top $100 million, making this year the worst on record for fire losses in the state, according to the Insurance Council of Texas.

The largest and most damaging fire, fueled by strong winds and drought conditions, destroyed nearly 500 homes and charred some 25,000 acres in Bastrop County.

Bastrop County has several subdivisions, said Mark Hanna, spokesman for the insurance council. Houses in the area include mobile homes, permanent residences, and vacation homes, he said.

Jerry Johns, president of the Southwestern Insurance Information Service in Austin, Texas, said the fires have also hit a housing development that is north and west of Austin called Steiner Ranch. Residents are being allowed back in Steiner Ranch but the fires in Bastrop were as of the afternoon of Sept. 5 "zero percent controlled," he said, noting about 25-30 homes in Steiner Ranch have been destroyed, and an equal number damaged.

"Adjusters simply can't get in to assess the damage," Johns said of Bastrop. Insurers have their catastrophe units on the ground in Austin area or are on their way, Johns said, noting future mitigation in the area "is certainly a possibility but it's too early to say yes or no."

Throughout Texas, more than 700 homes have been destroyed over the Labor Day weekend, according to the Texas Forest Service website.

Since the fire season began in November, the forest service and local fire departments have responded to more than 20,600 wildfires that have burned more than 3.5 million acres. Firefighters currently are tackling 12 large fires across the state, including a fire near Possum Kingdom Lake in Palo Pinto County that has burned more than 6,600 acres, according to the forest service.

The Possum Kingdom Lake area has been hit twice by wildfires, Hanna said. The first fire, in April, destroyed more than 160 homes and two churches.

While homes have been lost in this latest fire, the damage is not as extensive as the April fire, Hanna said. The average home value in the Possum Kingdom Lake region is $750,000, Hanna said.

Hanna called the Possum Kingdom Lake wildfire "pretty scary," with lives at stake and trapped residents forced to flee the danger by boat.

For the first six months of this year, external fire losses are just less than $100 million, Hanna said. Given the damage suffered and structures destroyed over the Labor Day weekend, losses this year will exceed the $115 million in external fire losses suffered in 2009, Hanna said.

Burn bans are in place for most of Texas, except for three counties. Farmers Insurance, the third-largest homeowners' writer by market share in Texas, has established a mobile command center in Bastrop, roughly 30 miles east of Austin. The 46-foot bus is equipped with satellite communications equipment, cell phones, laptops, drinks and emergency supplies.

The companies with the largest market share in the Texas homeowners multiperil market last year were State Farm Group, with a 29.03% market share; Allstate, with 12.57%; Farmers Insurance Group, with 12.45%; USAA Group, with 7.71%; and Liberty Mutual Insurance Cos., with 5.23%, according to BestLink, which provides online access to A.M. Best's database of insurance information.