The deadliest wildfire in modern US history, which claimed the lives of over 100 people and decimated numerous homes and businesses in Hawaii, is estimated to have caused up to $6 billion in losses, according to Moody’s RMS. The global catastrophe risk modeling and solutions company released their estimate on Tuesday, which takes into account both direct and indirect losses from the damage to physical assets. However, it does not consider the impact of the wildfire on Hawaii’s gross domestic product, government spending on response efforts, or the social cost of the fires.
The estimated losses encompass various aspects such as property damage, contents, and business interruption, spanning across residential, commercial, industrial, automobile, and infrastructure assets. The report predicts that a large portion of the losses will be concentrated in the historic town of Lahaina, where the fire burned over 2,100 acres and destroyed nearly 2,200 structures. Rebuilding in this area is expected to be particularly expensive due to inflation driving up prices during the lengthy recovery process.
Although the full extent of insurance coverage is yet to be determined, it is anticipated that insurance will account for approximately 75% or more of the damage. Wildfires are typically covered under standard insurance policies, and Hawaii has a high level of insurance uptake. However, the recovery process may encounter challenges due to the “island effect” on supply chains, high construction labor costs in general, inflationary impacts, and potential ordinance and law requirements, which could amplify the post-event losses.
The Hawaii wildfires surpassed previous records, becoming the deadliest in the US in over a century. As of Tuesday, the official count of fatalities stood at 115 people, with an additional 1,100 individuals still reported missing, according to Maui County officials. The scale of devastation and the loss of life has left communities reeling and in dire need of support.
The impacts of these wildfires extend far beyond the financial losses. The destruction of homes, businesses, and infrastructure has disrupted the lives of countless individuals and shattered entire communities. Families have been displaced, and the emotional toll is immeasurable. The road to recovery will be long and arduous, necessitating not only financial resources but also resilience and unity among affected residents.
Efforts to rebuild and restore what has been lost will undoubtedly require collaboration from various stakeholders. The government, alongside insurance companies, will play a crucial role in ensuring that affected communities receive the support they need. Addressing the challenges posed by the “island effect” and high construction labor costs will require innovative solutions and adequate resources.
While the estimated financial losses provide a glimpse into the magnitude of the devastation caused by the Hawaii wildfires, they do not capture the full extent of the tragedy. The loss of lives and the profound impact on individuals, families, and communities cannot be measured in monetary terms alone. As the affected areas begin the long process of recovery, it is imperative for all stakeholders to come together and provide the necessary assistance, support, and resources to rebuild lives and communities.