NEW YORK - The fires ravaging upmarket Los Angeles districts Pacific Palisades and Malibu will be the most expensive ever to hit California, according to experts, who expect premiums to rise in a region already abandoned by many insurers.

Analysts at JPMorgan estimated that the total cost of damage and insured damage had doubled in less than 24 hours to US$50 billion (S$68.52 billion) and US$20 billion respectively.

And the flames were still advancing on several fronts on Jan 10.

These record levels already far outstrip the 2017 Tubbs fire and the 2018 Camp fire, whose estimates of insured damage have climbed, according to sources, to as much as US$16 billion.

The value of the houses makes all the difference: At this stage, more than 10,000 buildings have been destroyed this week, the vast majority of them homes worth an average of US$3 million.

By comparison, some 18,000 buildings were destroyed in the Camp fire in 2018, but the average house was only around US$500,000.

Mr David Burt, the founder and director of DeltaTerra, a consultancy firm specialising in climate-related financial risks, estimates that the market value of the 15,400 homes in Pacific Palisades is close to US$13.5 billion.

Despite the high cost of the damage, experts believe insurance companies should have no problem compensating their customers.

According to Standard and Poor’s, the insurers are starting 2025 with comfortable reserves thanks to strong financial results over the last two years.

They have also significantly reduced their presence in the Californian regions that are highly exposed to fire risk, and are also well diversified.

The JPMorgan analysts see things the same way, insisting that, at this stage, it expects “the vast majority of losses stemming from the wildfires to be concentrated in homeowners’ insurance,” and a “significantly lesser amount” in commercial fire and personal auto.

“There’s been a mass exodus of big players from the market in these parts of California,” Dr Ben Keys, a real estate and finance professor at the Wharton School of the University of Pennsylvania, told a conference on Jan 10.

“We’ve seen enormous non-renewals recently,” he said.