US insured catastrophe losses in 2025 were driven overwhelmingly by so-called secondary perils, despite a quiet Atlantic hurricane season with no US landfalls, according to a new analysis from Moody's.
According to the analysis, severe convective storms (SCS) produced more than $45 billion in insured losses in the US for the third year running. A March outbreak caused an estimated $8 billion to $10 billion in damage across 26 states and included the first EF5 tornado recorded in 12 years.
The analysis pointed to urban sprawl, rising repair and reconstruction costs, and social inflation as key amplifiers of SCS losses, arguing that SCS must now be treated as a primary, not secondary, peril in insurers’ portfolios. This is in line with broader market commentary that losses from perils once considered “secondary” are now comparable to traditional peak risks, with climate change amplifying both their frequency and severity.
To help carriers respond, Moody’s has rolled out its RMS US Severe Convective Storm HD Models, launched in late 2025. These models integrate high‑resolution, physics‑based hazard simulations with what Moody’s describes as the largest‑ever claims‑calibrated vulnerability dataset, capturing more than $55 billion in industry claims, to support more granular pricing and aggregation control.
In California, Moody’s estimates that the Los Angeles wildfires of early 2025 generated $20 billion to $30 billion in insured losses. The fires destroyed more than 18,000 structures, caused 30 fatalities and burned around 37,000 acres, with smoke damage emerging as a major driver of uninsured and underinsured loss.
Other market estimates underline the scale of US wildfire risk: Swiss Re has put insured losses from the broader California wildfires in January 2025 at around $40 billion, making them the standout global cat event of the year and a key driver of more than $100 billion in global natural catastrophe losses, of which $89 billion occurred in the US.
The market impact in California has been significant. Over the last several years, standard carriers have non‑renewed more than one million wildfire‑exposed policies, pushing households and small businesses toward the residual market and other alternative capacity. Moody’s notes that reliance on the state‑backed California FAIR Plan has surged, with FAIR Plan exposure in Los Angeles County alone rising by more than 50% between 2024 and 2025, concentrating risk in the state’s insurer of last resort.
Separate analysis has shown how this exposure has fed through to pricing pressure. In late 2025, California’s FAIR Plan filed for its largest rate increase in seven years, citing escalating wildfire losses, reinsurance costs and the need to strengthen surplus.
Regulatory reforms allowing the use of the Moody’s RMS US Wildfire Model 2.0 for ratemaking are described by Moody’s as a turning point for the state. By permitting more sophisticated risk‑based pricing, regulators aim to allow insurers to recognize mitigation and resilience measures - such as defensible space, hardening and community‑level risk reduction - and to price risk with greater stability, supporting a more sustainable private‑market presence in high‑hazard areas.
The 2025 experience is consistent with broader research showing that non‑peak perils, such as flooding, severe thunderstorms and wildfires, now drive a substantial share of annual cat losses.
Allianz’s 2026 Risk Barometer noted that in the first half of 2025, global economic losses from such “secondary” or non‑peak perils reached $106 billion, with insured losses estimated at $77 billion. Europe, for example, recorded its worst wildfire season on record in terms of burned area, with more than one million hectares affected.
Allianz analysts emphasized that events such as the California wildfires demonstrate how these perils can now generate losses on a scale historically associated with major windstorms or earthquakes. That shift is forcing insurers and reinsurers to reassess how they integrate emerging hazards into nat cat risk assessment, capital planning and resilience strategies.
For property carriers, that means secondary perils are no longer background volatility smoothed out by reinsurance and that they are becoming core drivers of annual combined ratios and reinsurance purchasing. Swiss Re estimates that insured losses from natural catastrophes are on track to trend toward $145 billion in 2025, with roughly a one‑in‑10 probability that total insured losses could reach $300 billion or more.
As attritional and mid‑sized cat losses rise, capacity is shifting. US excess and surplus (E&S) lines have been absorbing more of the load, particularly in high‑risk wildfire and severe storm zones. According to Moody's, E&S direct premiums reached $86.47 billion in 2023, representing 9.2% of total US direct premiums, and had grown for a fifth consecutive year by 2024.
Market participants noted that E&S carriers are increasingly writing standalone wildfire, wind and hail cover, and offering deductible buybacks as standard markets raise wind and hail deductibles to 2% to 3% and retreat from higher‑hazard geographies. They also pointed out that “secondary cat perils that are now becoming primary cat perils, such as wildfire and tornado hail,” have contributed to record natural catastrophe insured losses of $137 billion in 2024 and are expected to push insured losses higher again in 2025.
Moody’s findings sit within this wider shift - aggregate management, deductible strategy, and the balance between admitted and E&S markets are all being recalibrated as secondary peril volatility becomes a core balance‑sheet concern rather than a tail‑end complication.
