The fires, which have destroyed thousands of structures and are still active, are already estimated to be one of the costliest natural disasters in US history, particularly given the value of many properties destroyed in high-income areas.
One estimate several days ago put the prospective damage bill at up to US$150 billion (about $242.4 billion).
And thanks to how insurance companies work, the US disaster could see Australians paying for it.
It’s a matter of reinsurance – “the process through which insurance companies buy insurance from bigger, global companies to limit their own losses in the event of a major natural disaster” – in the words of The Australia Institute.
“It’s difficult to put a dollar figure on it for Australian consumers but, as the world’s big reinsurers push up premiums to cover their losses from natural disasters, local insurance companies will be forced to do the same,” the institute’s senior research fellow David Richardson said.
“The soaring cost of insurance has left many Australians unable to afford to insure their homes and belongings. If prices rise even further, more people will be forced out.”
He said the wildfires would have “global consequences” for years to come.
KPMG insurance and risk partner Scott Guse said he predicted premiums would rise “a couple of per cent”.
”Whilst we may have our local Australian properties that we insure with local Australian insurers, the local Australian insurers are backed very heavily by global reinsurance companies,” Guse told Today.
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“They provide the protection to the Australian companies should events like this happen.
“So those global reinsurance companies are certainly going to feel the pinch, as you said, and they’re going to rerun their Australian models and look to recoup some of the costs they’ve incurred overseas and the potential increase in risks here in Australia.”
But he said that may be mitigated in turn by Australia’s own “benign catastrophe season” – the absence of major floods, fires, or storms recently.
“So that could actually drop some prices,” he said.
