US insurer Mercury General Corporation has so far paid out US$80m (£65m) to policyholders affected by the recent wildfires in Los Angeles, mostly for living expenses and housing contents, but is yet to determine whether the fires are classified as a single event.

Mercury says it has received many claims and is using aerial images to assist in determining whether properties are total losses. Claims continue to be reported, and Mercury has mobilized its catastrophe loss team, assisting customers with claims and replacement housing.

The company says its catastrophe reinsurance treaty allows for the combining of events that occur within a 150-mile radius as a single occurrence. Additionally, if each individual event is classified as its own catastrophic event by the Property Claims Service, each event can be considered a separate occurrence. In the case of the Palisades and Eaton wildfires, the PCS has designated each as a separate event.

Mercury says it has not yet determined if it will consider the wildfires as two separate events, adding that it will do so as more information becomes available. Under a two-event scenario, the insurer says it may elect to use reinsurance limits of up to US$1,290m for the first event and reinstated limits up to US$1,238m for the second event. In this scenario, it would be responsible for the first and second event retentions of US$150m each, and up to a US$101m reinstatement premium for total retention and reinstatement premiums of US$401m.

Meanwhile, Moody’s RMS Event Response estimates the insured losses for the LA wildfires will range between US$20-30bn based on impacts observed to date.

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