IT is too early to tell whether the Los Angeles wildfires will impact home insurance rates in Jamaica but at the very least it could prolong difficult market conditions which caused premiums to soar on the island over the last two years, according to local insurance executives.

For more than a week, Los Angeles in the United States has been faced with raging fires which have killed at least 25 people, destroyed thousands of buildings, and forced tens of thousands to flee their homes. Wells Fargo and Goldman Sachs estimated, in a recent report, that the disaster will cost insurers as much as US$30 billion.

A substantial portion of the risk portfolios of Jamaican insurance companies, up to 95 per cent, is reinsured by international reinsurance providers, which means a catastrophic event overseas could have a ripple effect on premiums locally.

Paul Lalor, president of the Insurance Company of the West Indies (ICWI), said the LA wildfires are not expected to affect Jamaican home insurance policyholders immediately, as he noted that any impact will be felt in 2026 based on the events of this year.

“It’s only if it is really a massive loss to the reinsurance industry would it come back to being a problem for us,” Lalor told the Jamaica Observer as he underscored that “it’s too early to tell”.

Specifically, local policyholders could be affected negatively if reinsurance losses exceed US$100 billion in 2025, according to Jordon Tait, assistant general manager of GK General Insurance Company.

“US$100 billion in losses is what the global reinsurance market is able to manage as a regular year… when those catastrophes expand beyond US$100 billion — if it’s up to 140, 150 — it becomes an abnormal year for insurance and reinsurance,” Tait explained.

“So the accumulation of events, which could include the fires in California, if that surpasses the average number in 2025, then you could have an impact,” Taitt said.

“It can contribute to future increases in rates which will be driven globally because of the cats (catastrophes) that we are seeing,” added Taitt.

Driven by severe hurricanes, thunderstorms and floods, insured property catastrophe losses were US$140 billion in 2024, the fifth consecutive year that losses surpassed the US$100-billion mark, according to reinsurance giant Swiss Re.

The difficult market conditions in recent years — which many experts suggest have been fuelled by the effects of climate change — have driven reinsurance capital away from the region to more lucrative, less risky areas, resulting in a tightening of the market and causing huge increases in home insurance rates locally.

Peter Levy, managing director of British Caribbean Insurance Company (BCIC), told the Observer that the LA wildfires have dampened optimism for an improvement in the market over the near term.

“Before those fires there were signs that we might see an improvement in current market conditions within the next 12 months or so,” Levy said.

He noted that the optimism was against the background of recent increases in global reinsurance capital and local prices moving up to levels that reinsurers are comfortable with.

“But now, based on the scope of the wildfire losses to international insurers, the market will remain difficult for longer,” Levy continued.

“Hard to predict what that duration will be. I don’t expect things to get worse, but they won’t get better as quickly as they otherwise would have,” added Levy.