California’s Palisades fire said to threaten 13,000 buildings as Santa Ana winds intensify

Los Angeles, California has declared a state of emergency as a fast developing wildfire situation emerged last night, with the Pacific Palisades fire now having expanded to over 3,000 acres, with many properties said burned so far and 13,000 buildings believed to be threatened at this time.

Forecasters had been warning of an extreme Santa Ana wind event occurring this week, with some meteorologists having said a worst case scenario could emerge as California has been very dry again and some areas have significant brush that has not burned in recent wildfire seasons.

More than 30,000 residents of the Pacific Palisades suburb of Los Angeles have been told to evacuate and there is terrifying footage emerging of extreme wildfire behaviour, driven by dry, warm conditions and very strong winds.

The Pacific Palisades is an affluent residential neighbourhood full of high-value properties.

The wildfire erupted late yesterday as a brush fire and expanded from just a handful of acres to more than 3,000 in a matter of hours.

More than 250,000 properties are now reported to be without power due to the fire, while evacuation orders have been enforced for areas most at risk.

Fire Chief Kristin Cowley said that 13,000 or more buildings are threatened by the Palisades fire, while California’s governor said that “many” structures had already been destroyed, although no official figures for property damage are available at this time.

With Santa Ana winds having been anticipated, at this time of year that may not always have caused concern, as typically at this time of the year California would have seen more rainfall than it has in recent months.

But it has been incredibly dry, with no atmospheric river events of any note affecting the region where the Palisades fire has broken out, meaning the forecasters were warning of a dangerous fire weather situation some days ago now.

The winds are expected to remain strong through today, Wednesday, making fire fighting very challenging and likely spreading this blaze further.

Two further brush fires have broken out in the region as well, a fire above Altadena, near the Eaton Canyon and a burn in the Sylmar suburbs, which are now being watched closely for expansion.

The developing wildfire situation around Los Angeles is a stark reminder of the wildfire peril for the insurance and reinsurance community and the devastation these fast moving fires can cause to people’s property and lives.

Rapid exposure growth into regions where fire danger can be high and hard to control has meant that of the 20 most destructive wildfires in California’s history, 15 have occurred since 2010.

The insurance and reinsurance industry remains challenged in providing sufficient capacity to cover wildfire risks in California, with the state having enacted new laws recently to assist the re/insurance industry in deploying more capital to this peril and ultimately provide more cover to homeowners there.

For the insurance-linked securities (ILS) and collateralized reinsurance markets, the amount of capital exposed to wildfire events in California has decreased significantly over the last few years, since the sector took meaningful losses from significant fire years such as 2017 through 2019.

But this event looks like it could drive a relatively meaningful insurance market loss, perhaps the first notable loss event of 2025, if the fire cannot be brought quickly under control. As ever, some alternative capital will likely have an element of exposure through reinsurance towers and quota shares of the insurers covering these losses, if the quantum escalates.