A combination of low humidity and strong winds, from a high pressure system in the North and Hurricane Dora in the South, led to wildfires spreading across the Hawaiian Island chain since Tuesday August 8.
Initial reports indicate that the island of Maui has sustained significant damage and at least 55 people have died in the fires. The town of Lahaina where over 1’000 buildings have been reported damaged or destroyed and around 1000 acres (4 km2) burned suffered most damage. Wildfires have also occurred on the Big Island of Hawaii, although no major damage has been reported, yet, and fires there have been largely contained. To put this event into perspective, the 2018 “Camp” wildfire in California, which caused the default of one CAT bond, burned 153’336 acres (620km2) and destroyed 18’000 buildings.
Even though the death toll and devastation caused by the current wildfires in Hawaii are tragic and traumatic not only for local residents but also for visitors, we do not expect a major impact on the CAT Bond market.
A few CAT Bonds cover wildfire on a standalone basis but their coverage is limited to the state of California. The majority of the bonds that cover wildfire include this risk in multiperil structures that cover all 50 states of the USA, and for those bonds, wildfire in Hawaii is only a small component, mostly below 1% of the Total Insured Value. Hence, our funds are not expected to be directly impacted by this event. We will inform you immediately if our assessment changes.