Analysts are evaluating the financial impact of the wildfires that have charred hillsides, homes, and streets in Los Angeles County, with initial estimates suggesting total insured losses could reach as high as $20 billion.

The wildfires that destroyed homes in multiple sections of the Los Angeles area will test California’s efforts to stabilize the state’s insurance marketplace after many insurers stopped issuing residential policies due to the high fire risk.

The state’s insurance industry was reformed in late 2024 to promote coverage in disaster-prone areas. Tens of billions in fire damage will stress-test the new regime.