Beyond the Coastline: Insurers Confront Evolving Weather Risk Paradigm

Historically, major hurricanes have been the costliest weather events on both an insured and economic loss basis. However, secondary perils such as severe convective storms (SCS) and wildfires have recently caused outsized losses relative to prior historical assumptions. The California wildfires in January 2025 produced an estimated $40 billion in insured losses, while U.S. SCS events generated approximately $120 billion in insured losses across 2023 and 2024.^{1 , 2} These events significantly impacted insurer profitability and resulted in material underwriting changes, including rate increases and larger deductibles.

For catastrophe-exposed writers, KBRA will continue to focus on underwriting results, reserves, and overall capital positions. Current KBRA ratings reflect an expectation of moderate weather-related loss activity. Isolated downgrades may occur for insurers that experience outsized…