January’s 24 days of California wildfires will cause an estimated insurer loss of around $42.8 billion, according to a newly released report exploring key insurance industry trends in 2024.

Howden Re Business Intelligence calculated the figure by averaging estimates from nine different insurers, providing a composite average.

Insurer CNA had the largest loss prediction at $55 billion while Hannover Re had the smallest at $35 billion.

Evan Greenberg, Chubb executive chair and chief executive was quoted in the report as saying: “We have been shrinking our exposure in California for some time. For example, in the area where the wildfires occurred, our exposure has been reduced by 50 per cent.”

AIG executive chairman and CEO Peter Zaffino had a similar statement, saying AIG had reduced its overall exposure in California starting in 2022.

Lloyd’s had the highest share of the loss at 35 per cent, Travellers had around 28 per cent, while Bermudian based Chubb had 25 per cent. AIG was on the mid to lower end of the scale at about 7 per cent

According to Howden Re report, natural catastrophe insured losses were above $100 billion for the fifth consecutive year.

“The growing prominence of non-peak perils in 2024 underscores a shifting risk landscape,” the report stated. “As risks escalate and economic losses increase, there is heightened pressure to address the natural catastrophe protection gap.”

Mr Zaffino said the California wildfires demonstrated the increased loss from secondary perils and the magnitude of tail events that are not captured well in modelling.

Paolo Mantero, Zurich Group chief strategy officer said this is not just an insurance issue.

“The wider the gap, the more fragile the economy is,” he said.

Julian Alovisi, Howden head of research said insurers must be agile and innovative in how they approach risk, as climate risk continues to evolve.

January renewal premiums increased by 4.5 per cent, primarily driven by volume. Reinsurers experienced stable reinsurance renewals at January 1, due to greater prudence and selective focus in underwriting.

There was also a greater focus on volume to account for premium growth, as demand for reinsurance increased, driven primarily by growth of exposure, predominantly in property.

Howden Re Business Intelligence also said short-tail lines again led to favourable calendar-year reserve developments for most carriers. Lowering inflation and claims have resulted in increased reserve releases from insurers.