The wildfires raging through Los Angeles have caused widespread devastation, with insured losses estimated to reach as high as $20 billion, according to analysts. The total economic impact of the fires could be as high as $150 billion, making it one of the costliest natural disasters in U.S. history. The fires, which have destroyed over 10,000 structures, have led to a significant drop in insurance stocks as companies brace for the financial impact of the disaster.

The Palisades Fire, burning between Santa Monica and Malibu, and the Eaton Fire near Pasadena, have been identified as the most destructive in Los Angeles history. These fires have consumed over 34,000 acres and have turned entire neighborhoods to ash. J.P.Morgan has doubled its forecast of insured losses to over $20 billion, while other analysts have provided estimates ranging from $8 billion to $17.5 billion.

The high value of homes and businesses in the affected areas is expected to result in large losses for property and casualty insurers with significant market share in Los Angeles. Moody's Ratings noted that it could take weeks or months to fully assess the magnitude of the insured damages, but the Los Angeles wildfires are likely to be among the most costly in the state's history.

The impact of the wildfires has been felt across the insurance sector, with stocks of major insurers such as Travelers, Allstate, Chubb, and American International Group (AIG) experiencing significant declines. European insurers like Beazley, Lancashire, and Hiscox have also seen their stocks drop. The Pacific Palisades area, known for its multimillion-dollar homes, had previously enjoyed some of the most affordable insurance rates in the country, but this is expected to change as the scale of losses becomes clear.

The wildfires have exacerbated California's ongoing insurance crisis, with many insurers reevaluating their presence in the state due to the high risk of wildfires. State Farm, the largest home insurer in California, has already dropped thousands of policies in high-risk areas, including over 1,600 in Pacific Palisades. The California Fair Access to Insurance Requirements (FAIR) Plan, the state's insurer of last resort, has seen a surge in policyholders as private insurers pull back from the market.

The economic toll of the wildfires is staggering, with AccuWeather estimating total damage and economic loss to be between $135 billion and $150 billion. This estimate includes not only the destruction of homes and businesses but also damage to infrastructure and the long-term costs of reconstruction. The fires have also led to significant displacement, with over 180,000 residents evacuating their homes.

As the fires continue to burn, the insurance industry is bracing for further losses. The situation has raised concerns about the sustainability of the insurance market in California, with some experts warning that the state's insurance crisis could worsen. The wildfires have highlighted the need for a more robust insurance framework to address the increasing frequency and severity of natural disasters driven by climate change.