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Best’s Commentary: Smaller, Local Insurers Likely To Bear the Brunt of Maui Wildfire Damages

Smaller insurers that have a heavier concentration of business within Hawaii could be susceptible to more severe impacts to their capital plans, reinsurance and enterprise risk management programs as a result of the recent Maui wildfires, according to the new AM Best report.

According to a new Best’s Commentary, large carriers with geographic spread across the continental United States will have the capital and reinsurance coverage to absorb losses related to the wildfires that ignited on Aug. 8, 2023. These wildfires occurred in small and highly concentrated area causing devastating damages and loss of life, but were relatively contained geographically.

The AM Best report notes that while there is greater concern for the smaller, more concentrated carriers that underwrite more of their policies in Hawaii, the impacted lines of business account for more than 10% of direct premium written for just three companies, with the largest concentration being a little more than 30%.

Going forward, inflationary costs and supply chain issues, especially with demand for fire-resistant materials, may also pose challenges for insurers.

“The demand surge for such materials will increase the cost precipitously of rebuilding as well as retrofitting existing structures,” said Raymond Thomson, associate director, AM Best.

While the investigation into the origins or the Maui fires continues, there may potentially be subrogation opportunities for insurers. Similarities are being drawn to the situation with PG&E regarding the 2018 California wildfires. If investigators find that power lines were the cause and that more effective risk mitigation measures should have been taken prior to the wildfire breakout, litigation could result. The report estimates that the U.S. insurance industry has approximately $1.1 billion in bond and stock exposure to Hawaiian Electric, with 98% of exposure coming from bond holdings and life/annuity insurers accounting 95% of the exposure.

To access the full copy of this market segment report, please visit

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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