Insurers are bracing for major losses as the Caldor Fire continues to rage with evacuation orders in place around the Lake Tahoe Basin as the blaze threatens homes and businesses near the popular Californian holiday destination.


Sources said that underwriters are already receiving notices from some commercial insureds in the hospitality space that have properties in South Lake Tahoe and the adjacent area just across the border in Nevada where there are several casino resorts.

Those sources have also highlighted the potential for business interruption losses as mandatory evacuation orders have been issued.

The Caldor Fire was sparked on 14 August near Little Mountain between Omo Ranch and Grizzly Flats, approximately 50 miles east of Sacramento, with the cause of ignition currently unknown.

According to the latest update from Cal Fire, as of late Tuesday morning local time, the Caldor Fire had scorched 191,607 acres, equal to more than 299 square miles, and had destroyed 669 residential, commercial and other structures, and damaged a further 40.

Of those structures destroyed, Cal Fire said 486 were homes and 11 were commercial properties.

An update from interagency all-risk incident information management system InciWeb published on Tuesday morning said a further 33,679 structures are threatened by the Caldor Fire in the Alpine, Amador and El Dorado counties.

At the time of the update, InciWeb said the fire is just 16 percent contained, with full containment of the blaze not expected until 13 September.

The (re)insurance industry will be growing increasingly worried at the threat posed by the Caldor Blaze given its proximity to Lake Tahoe. The region, located in the Sierra Nevada mountains, is a popular recreational destination for Californians looking for a weekend getaway, notably those in San Francisco and Silicon Valley.

A mandatory evacuation order is currently in place stretching from Pleasant Valley to the west through to the south-west corner of Lake Tahoe itself, with nearly 4,000 personnel and 82 firefighting crews currently working on the blaze supported by 25 helicopters and 415 engines, among other equipment.

In the summer, Lake Tahoe provides visitors with beaches, water sports, hiking and golfing, while in the winter it is a busy ski destination.

At the lake’s southern end sits South Lake Tahoe, and the resort city on the California side of the state line is currently under a mandatory evacuation order. Across the state line in Nevada are casinos owned by Hard Rock Hotel, Hyatt Regency, Montbleu, Harveys, Crystal Bay and Harrah’s, among others.

As previously reported, the (re)insurance industry has been hit hard by wildfires in recent years. And with much of the western US having endured a period of drought with temperatures reaching record levels in recent months, there is considerable concern among carriers that wildfire activity will be particularly intense in 2021 and losses may well mount.

Top 10 Costliest Wildland Fires In The US (1) ($mn)

California has seen heightened insured losses from wildfires since 2017, when a record circa $12bn of insured losses were incurred related to the peril, around two thirds of which was attributed to the Tubbs Fire.

In 2018, the Camp Fire destroyed the town of Paradise. With more than 18,800 structures destroyed, the blaze remains the most destructive in state history. Insured wildfire losses in the state in 2018 totalled around $13bn.

While 2019 was quieter, last year saw several of the largest wildfires on record in California, albeit with a lower number of properties destroyed compared with 2017 and 2018.

A recently published study from Chaucer has shown the number of major US wildfires has risen more than 30 percent over the past 15 years. The carrier said there were 157 fires covering more than 40,000 acres between 2006 and 2010. 

The total rose to 173 between 2011 and 2015, and again to 205 for the 2016 to 2020 period.

While the Caldor Fire spreads quickly fuelled by dry brush and strong winds, firefighters continue to battle the Dixie Fire which has raged since 14 July when it was sparked 90 miles north of Sacramento.

The Dixie Fire is now the second largest on record in California having burned over 807,000 acres and impacted Butte, Lassen, Plumas, Shasta and Tehama counties. According to the latest incident update from Cal Fire, the Dixie Fire has destroyed 1,277 residential, commercial and other structures, with another 92 damaged. The fire is currently just 48 percent contained.

The largest ever fire in California was last year’s August Complex blaze which impacted Mendocino, Humboldt, Trinity, Tehama, Glenn, Lake, and Colusa counties. The fire destroyed 935 structures and scorched over 1.03 million acres.