*This fortune is prepared based on consultation with Sajunar.

A severe wildfire has erupted in Los Angeles (LA), Southern California, the worst in 60 years, causing DB Insurance, based in California, to expect losses amounting to 60 billion won.

According to the insurance industry on the 15th, the insurers selling products such as dwelling insurance in California are DB Insurance and Hyundai Marine & Fire Insurance. Hyundai Marine & Fire Insurance holds four contracts and, as the contracted locations are far from the wildfire areas, it is expected to face minimal impact. No insurance claims have been filed with Hyundai Marine & Fire Insurance yet.

In contrast, DB Insurance is expected to incur losses of hundreds of millions of won. The contracts held by DB Insurance include 34 in the vicinity of the Iten wildfire and 3 near the Palisades fire. With the fire still uncontrolled, the exact scope of damage has not been quantified. However, Hanwha Investment & Securities estimated DB Insurance's losses at 100 billion won, while Shinhan Investment & Securities estimated it at 60 billion won. Previously, DB Insurance recorded losses of 180 billion won due to wildfires in Maui, Hawaii, in 2023.

Considering that DB Insurance has fewer contracts in the LA wildfire area compared to Hawaii, losses are projected to range from 50 billion to 60 billion won. An official from DB Insurance noted, 'There are structural differences compared to the wildfires in Hawaii, so the damage from the LA wildfire will be less.'

*This fortune is prepared based on consultation with Sajunar.

The areas affected by the recent LA wildfire include Hurst, Otto, Palisades, and Iten. Among these, the fires in Palisades and Iten spread to residential areas, causing an increase in damage. As of the 14th (local time), 25 people have died, including 8 from the Palisades fire and 17 from the Iten fire. More than 12,000 structures have been engulfed in flames.

Especially, Palisades is an area where the wealthy, including Hollywood stars, reside, densely populated with high-end dwellings along the coast in LA. Malibu, near Palisades, is known as the most expensive housing market in the United States. According to the American real estate website Realtor.com, the average dwelling price in Palisades is $3.4 million (approximately 500 million won), while in Malibu, it is $4.5 million (approximately 650 million won). In contrast, areas such as Altadena and Pasadena, which were the hardest hit by the Iten wildfire, are known to be populated by working-class individuals.

Foreign media, including The Wall Street Journal (WSJ), predict that insurers will raise dwelling insurance premiums in California or stop selling the products altogether due to this wildfire incident. The dwelling insurance premiums in California are lower than the national average in the U.S., largely because it is the only state that does not include reinsurance expenses in the premiums due to regulatory constraints.

Insurance companies are struggling to cope with more frequent and larger-scale natural disasters like hurricanes, floods, and wildfires due to climate change. U.S. insurers have raised dwelling insurance premiums from an average of $1,902 in 2020 to $2,530 in 2023, a 33% increase, but warnings have emerged that they have reached a limit. State Farm, the largest dwelling insurance company in the U.S., reported a loss of approximately $6.7 billion in dwelling insurance in 2022, the highest in the company's over 100-year history.

In the U.S., it is predicted that if this trend of rising premiums continues, not only low-income individuals but even the middle class will find it difficult to maintain insurance. Christian Mumenthaler, CEO of Swiss Re, the world's second-largest reinsurer, noted in an interview with Bloomberg last April, 'The expenses associated with climate change are being passed on to insurance customers,' adding, 'This phenomenon can be confirmed statistically.'