The LA fires have devastated Southern California. According to US Weather Service, the financial loss due to the still ongoing fires is already estimated at $135-$150 billion. Whatever the final total ends up being, the total will be a record amount. It will far exceed the damage due to the Northern California wildfire in 2017, which inflated to 2025$ was approximately $13.1 billion. Financial damages due to fires has heavy tails, which means that extreme losses are likely to occur. The probability may not be high, but it is high enough that it is expected to occur.
Data from the National Fire Protection Agency (NFPA) for the largest 24 fire losses in US history are plotted in the figure below. (The NFPA data considers 9/11 as a fire event, but I specifically exclude this from the data for multiple reasons, one of which is that 9/11 is considered to be a Black Swan event.)
I have fit a power law to this data – the power law is a good fit, as expected. The probability of an extremely high loss is not high – the chance of a $150 billion loss is only about 0.5%, but it is not out of the realm of possibility either. If you take into consideration that the damages have been increasing over time the power law underestimates the chances of an extreme event. This is partly due to population increases, but the chances of an extreme event in Southern California have also been increasing lately due to the recent drought as well as the potential for a more significant event due to climate change – wind gusts in excess of 100 mph were reported in Southern California recently. However, this was not a record. In 2011, wind gusts up to 167 mph were recorded. Widespread and catastrophic fire damages like what Southern California is experiencing is not something completely unexpected, but rather something that was bound to happen sooner or later.