Given the amount of data we deal with in the insurance industry, whether our own or from third party sources, we love to go looking for trends confirming whether they exist or not.
In most forums, certainly this side of the pond, it is not a controversial statement to say climate change is impacting weather events generating insurance losses. However, within this structural change, there are faster moving cyclical trends which are clearly far more visible and tangible but unpicking the two is difficult.
The 2025 Atlantic hurricane season will be remembered as a quiet year because no hurricanes made landfall in the United States. Most predictions prior to the hurricane season were expecting a higher than average year (interestingly, this was the tenth consecutive year of higher than average storm predictions following 2015, when a strong El Niño event occurred), and despite the lack of storms making landfall, it was still only just behind the long-term average for total number of storms.
Despite there being fewer storms they were stronger in intensity, with three Category 5 storms. Only 2005 produced more in historical records. Which of these pieces of information is more pertinent as we continue to write business in 2026? Or are any of them that important in isolation?
In contrast to the relatively benign Hurricane season, 2025 continued a broader pattern of elevated losses from wildfire and severe convective storm (SCS) activity, most notably the devastating Southern Californian wildfires that occurred in January and produced an insured loss of approximately USD 40 billion.
Wildfire activity in 2025 was actually considered “moderate” in terms of total acres burned compared with some recent years, 40% less acres burned than 2024 and over 50% less than 2020 – but this masks a deeper, apparent structural shift. Over the past two decades, the U.S. has experienced a significant increase in average annual area burned, alongside longer fire seasons and more frequent large-scale events. Rising temperatures and earlier snowmelt have increased aridity and, for insurers, this has translated into more frequent high-severity loss years, even if individual seasons fluctuate. I suspect the 2025 year being assessed as “moderate” doesn’t salve the companies paying out the USD 40 billion of claims.
In Canada, it is even more stark; 2023 and 2025 are the two worst years on record: approximately six to seven times and three to four times the long-term average, respectively. This strongly implies a move away from occasional “bad” years to repeated experiences and a new norm.
More striking still is the trajectory of severe convective storms. In 2025, wind and hail events once again contributed materially to insured losses, continuing a trend seen over the past decade. The United States has experienced a sharp increase in billion-dollar severe storm events, with recent years averaging significantly more than the previous decade. These storms are now the largest contributor to insured catastrophe losses in many years, surpassing hurricanes on a frequency basis.
PCS data shows SCS events accounting for over 50% of cat claims from 2021 to 2025, up from under 45% when looking on a ten year basis. This becomes even more stark when you compare these as two five year periods; non-SCS events have only cost an additional 6% in the last five years than the previous but the increase in the cost of SCS events is up almost 37% in the same period.
As with any climate related trends, these time periods are far too short to draw absolute conclusions, but baseline risk for SCS and wildfire appears to be shifting upward. The broader evidence points toward a more volatile and loss-intensive environment across major weather perils. For hurricanes, this means continued exposure to infrequent but increasingly severe events. For wildfire, it implies a persistently elevated baseline risk, with climatic conditions supporting longer seasons and larger, more destructive fires. For SCS, the trend suggests rising frequency of loss-causing events and growing aggregate annual losses, even in the absence of headline catastrophes.
When cyclical weather patterns overlap with structural change, loss quantums can increase or decrease year to year even as the underlying risk rises. A quieter year in one peril can sit alongside higher losses in others. For insurers, this means that pricing and capital approaches based mainly on long-term averages may not reflect current and future conditions. This appears especially true for the perils of wildfire and SCS, leading to a wider range of outcomes. If cyclical trends are mistaken for a structural shifts (or vice versa), you will either miss an opportunity or underprice the new reality.
This article was published as part of London Risk Week.