Investing.com -- The Los Angeles wildfires are projected to cause up to $30 billion in insured losses, surpassing the $12.5 billion record set by the 2018 Camp Fire, Morningstar said. .

The fires have destroyed over 12,000 structures, with leading insurers such as State Farm and Allstate (NYSE: ALL ) expected to face significant claims. High-end insurers like Chubb Ltd (NYSE: CB ) and American International Group Inc (NYSE: AIG ) could also be heavily impacted due to the value of properties damaged.

Morningstar warned of worsening challenges in California’s property insurance market, already strained by rising premiums and major insurers withdrawing from the state. The industry’s reliance on reinsurance and the FAIR Plan, a state-backed insurance pool, may face further stress.

Reinsurers have limited wildfire exposure in California, leaving primary insurers to absorb more risk. This event could reshape the pricing and availability of wildfire-related coverage, Morningstar noted.

The report calls for better fire prevention, risk-based pricing, and long-term solutions to stabilize California’s insurance market amid growing climate risks.