The selling of insurance stocks plummets as the potential losses from the LA wildfires rise.

The wildfires in Los Angeles caused insurers to sell off sharply in the California homeowners' market on Friday.

In morning trading, the S&P 500's biggest losers were shares of , which declined 4%, while shares of and fell about 2% each.

JPMorgan reports that AllState, Chubb, and Travelers are the most exposed carriers to insured losses in the wildfires. Notably, Chubb may have a particularly high exposure due to its focus on high-net-worth clients in the region.

The fires that occurred this week in California could result in insured losses exceeding $20 billion, potentially making them the most expensive in the state's history. This estimate was made by JPMorgan on Thursday, and it is possible that the losses could increase if the fires continue to spread. The 2018 Camp Fire, which caused $12.5 billion in insured damages, was previously the most costly blaze in the country.

Moody's Ratings predicted that insured losses would exceed billions of dollars due to the high value of homes and businesses in the affected areas.

The Palisades Fire, the largest of the five blazes, has burned over 17,000 acres and destroyed more than 1,000 structures, according to California authorities. Pacific Palisades, an affluent area with a median home price of more than $3 million, was severely affected by the fire.

Southern California Edison has been requested by insurance companies to retain evidence pertaining to the catastrophic wildfires that ravaged Los Angeles, as stated in a filing to regulatory authorities.

JPMorgan believes that rising loss estimates increase the likelihood of reinsurance attachments at various insurers being breached, and certain reinsurers were also affected, declining 2% and 1.5% Friday, respectively.

— CNBC's Spencer Kimball contributed reporting.