Property & Casualty Insights
Managing the Rising Risk and Cost of Natural Disasters
MAY 5, 2026
Extreme weather and natural catastrophe losses are reshaping the risk landscape for U.S. organizations. Events once viewed as low‑frequency “peak perils” are now paired with — and often surpassed by — high‑severity, high‑frequency “secondary perils” such as severe convective storms (SCS), wildfires, and flooding.
Together, these trends increase loss volatility, constrain insurance capacity, and raise the value of proactive risk mitigation.
Natural Catastrophe Losses Remain Elevated
Preliminary analyses show that 2025 ranked as the third‑highest year on record for U.S. billion‑dollar weather and climate disasters, with 23 separate events causing approximately $115 billion in economic damage.1 While total losses declined from the record levels seen in 2023 and 2024, the frequency of events remained well above historical norms.
Globally, the loss trend remains elevated. Insured natural catastrophe losses reached approximately $107 billion in 2025, the sixth consecutive year exceeding the $100 billion threshold.2 Losses were lower than the historic peak set in 2024, largely because there was no major U.S. hurricane landfall — not because underlying risk declined.
Secondary Perils Dominate Loss Experience
Loss data from 2025 highlights a structural shift in catastrophe risk: so‑called “secondary perils” now account for the majority of insured natural catastrophe losses in the U.S. and globally.
Severe convective storms — including hail, tornadoes, and straight‑line winds — generated more than $50 billion in insured losses in 2025. That marks the third consecutive year that SCS losses exceeded that level in the U.S.3 Roofing losses were the primary driver, with hail responsible for the majority of residential and commercial property claims.
Wildfire severity also escalated. The January 2025 Los Angeles wildfires became the costliest wildfire event on record, generating more than $40 billion in insured losses and representing a significant share of total U.S. catastrophe losses for the year. Expansion into wildland‑urban interface areas — combined with prolonged drought and high-wind conditions — continues to increase wildfire exposure.
As a result, insurers are re-evaluating property risk and placing sharper emphasis on construction quality, roof condition, site‑specific mitigation, and demonstrated resilience.
Risk Mitigation Strategies That Matter
You cannot control how often catastrophes occur, but you can reduce severity and improve insurance outcomes through targeted risk management and planning.
Standard catastrophe models can overstate loss potential when property data is incomplete or lacks precision. Improve model accuracy by refining model inputs such as roof type and age, construction materials, elevation, wildfire defensible space, and flood protection.
When you support these details with verified data, underwriters can more accurately differentiate risk, improving the basis for coverage structure discussions and renewal negotiations.
Insurers are increasingly focused on tangible resilience measures that reduce damage and downtime:
- Roof upgrades: Installing impact‑ and hail‑resistant roofing materials can significantly limit losses from severe convective storms. Roof age is a key underwriting factor, with many carriers requiring full replacement to extend favorable terms.
- Flood protection: Using FEMA‑certified flood panels, improving drainage, and elevating of critical equipment can help mitigate both direct damage and operational disruption.
- Wind and hurricane resilience: Adding impact‑resistant windows and reinforced building envelopes can reduce wind‑driven water intrusion losses.
- Wildfire mitigation: Maintaining defensible space and using ember‑resistant vents and non‑combustible roofing materials to support underwriting reviews. Community‑level wildfire preparedness programs are also increasingly recognized in underwriting assessments.
According to industry research cited by the Insurance Information Institute, investments in hazard mitigation continue to demonstrate strong loss‑avoidance benefits, reinforcing the long‑term financial value of resilience strategies.
Preparedness planning is a critical component of catastrophe resilience. Effective pre‑ and post‑loss response plans clearly define who does what, when key decisions are made, and which operations come first.
When you pre‑coordinate with emergency response vendors, claims specialists, and internal response teams, you can reduce downtime, streamline claims management, and maintain business continuity after a catastrophic event.
Why Resilience Matters to Insurers
From an insurance perspective, resilience has become a central underwriting consideration. Loss frequency and repair costs keep rising due to asset concentration, construction inflation, and recurring secondary peril activity. In response, insurers are increasingly selective in deploying capacity.
Organizations that can demonstrate disciplined risk management and proactive mitigation are generally better positioned to protect insurability, manage total cost of risk, and navigate ongoing market volatility.
How USI Can Help
Don’t wait until disaster is imminent. USI can help you strengthen risk management and disaster preparedness. Our dedicated teams are on hand to:
- Identify potential risks, formulate preventive strategies, and establish robust action plans.
- disaster recovery and business continuity plans to safeguard your activities from unexpected disruptions.
- Connect you with an emergency response firm so you can receive a priority response after a major catastrophe — and keep all parties informed during the recovery period and claim process.
- Develop a written response plan in advance of any loss, tailored to your organization’s specific needs and exposures. See USI’s Hurricane and Disaster Preparedness guide for additional details.
To learn how to minimize the impact of catastrophic claims on your organization, contact your USI representative or email pcinquiries@usi.com to start the conversation today with your USI consultant to protect your assets and your bottom line.
Sources:
1 Climate Central – 2025 in Review: U.S. Billion Dollar Disasters
2 Climate Central – U.S. Billion Dollar Weather and Climate Disasters, 2025
3 Swiss Re Institute – 2025 Natural Catastrophe Loss Outlook
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