Allstate said this week it is expected to lose $1.1 billion due to the Los Angeles fire, making it the second major insurer to announce the country’s most expensive fires on financial impact.

Northbrook, Illinois, said the number represents its pre-tax losses and after deducting payments obtained from reinsurance. Despite the scale of the hit, the company's fourth-quarter net revenue rose 30% to $1.9 billion.

Allstate said it had the least impact on its financial performance, reflecting its "full reinsurance plan" and began deciding to reduce its market share since 2007. Allstate owns 5.8% of the state's homeowner market in 2023, making it the sixth largest carrier. Insurers often receive reinsurance from other larger insurers to limit spending in huge wildfires and other catastrophic events.

Last year, the company also received approval for an average increase of 34% in November.

Last week, another larger insurer, Chubb Ltd., estimated that the losses from the fire would total about $1.5 billion, with financial impacts expected to be limited to the fourth quarter.

The American insurer accounted for only 2.27% of the California homeowner market in 2023, leaving it outside the state’s top 10 largest home insurers. However, according to Zillow, its focus is on providing coverage for more expensive homes, such as the main home in Pacific Palisades, which was damaged by a fire, with a median home value of $3.5 million. .

The governor, California’s largest home insurance company, has not released the losses, but asked state officials on Monday to raise an emergency tax rate of 22%, saying the fires have put the company in a horrible financial strait.

The insurance company, a subsidiary of Bloomington, Illinois, Farm Common Auto Insurance, said the company has received at least 8,700 claims and paid more than $1 billion to its customers. It is also expected to pay “significantly more” to meet the claims.

The insurance company said the rate hike was necessary to rebuild the company's capital base and therefore it would not have to "further limit" its ability to provide home insurance in the state. Industry rating agencies say they expect such premiums to increase due to the fire.

In summary, risk modelers estimate that insurance industry paying property losses, temporary housing costs and other claims caused by fire will lose between $20 billion and $45 billion. This will make spirits one of the worst natural disasters in the country, but may not be as expensive as Hurricane Katrina.

The disaster in the Los Angeles area is just the latest in a series of fires that have hit the state since the second half of the past decade. In 2018, the camp fire destroyed the town of Paradise in the foothills of the Sierra Nevada, causing $12.5 billion in insurance losses, making it the most expensive fire in U.S. history.

The fires prompted insurance companies in the easy-to-fire community to revoke policy holders and stop writing new insurance, forcing many to enter the state’s fair plan, the last resort insurer that offers limited coverage. The plan has not released IT losses yet, and it is expected to be significant.

Allstate said last year that new policies were only started writing in the state when it was proven to be sufficient approved rate hikes, and reforms by California Insurance Commissioner Ricardo Lara were allowed Implementation.

These reforms have enabled insurers to charge policyholders in California for reinsurance fees, and are now in effect.