Wildfires and severe convective storms again dominated the natural catastrophe loss picture in North America in 2025, keeping pressure on insurers even as overall losses fell from the previous year's peak.
According to new sigma estimates from Swiss Re Institute, natural catastrophe-related insured losses in the US and Canada totaled $900 billion in 2025, down from $117 billion in 2024 and below the first-year average of $97 billion. Economic losses reached $133.4 billion.
Analysts stressed that the lower headline figure does not signal any easing of underlying risk. Year‑to‑year volatility reflects natural variability, while the long‑term trajectory for insured losses remains upward, driven by structural changes and the growing contribution of so‑called secondary perils.
In the absence of a major US hurricane landfall, wildfires and severe convective storms (SCS) accounted for virtually all insured nat cat losses in North America last year. Swiss Re estimates that secondary perils made up 99.9% of 2025 insured nat cat losses in the region.
The largest events were the Palisades and Eaton wildfires in Los Angeles County, which together generated an estimated $40 billion of insured losses – the costliest insured wildfire event ever recorded by sigma. SCS losses from hail, tornadoes and straight‑line winds totaled $46 billion, the third‑highest year on record after 2023 and 2024.
High insurance penetration and asset concentration mean the US continues to account for most global insured nat cat losses. Swiss Re put 2025 insured losses in the US at $88.9 billion, with Canada contributing around $1.5 billion, less than half its recent five‑year average and well below the record $6.5 billion of 2024.
Despite the relatively benign Canadian outcome, Swiss Re executives warned against complacency.
“While 2025 was a relatively mild year for insured catastrophe losses in Canada, it would be a mistake to interpret that as a signal that risk is easing,” said Jolee Crosby, CEO of Swiss Re Canada. “What we are seeing across North America is a structural shift, where so‑called secondary perils, particularly wildfire and severe convective storms, are becoming the dominant drivers of insured losses.”
She cautioned that volatility is likely to persist “even in years that appear relatively benign on the surface,” with a rising baseline of losses placing greater emphasis on exposure analytics, portfolio management and moving beyond a narrow focus on traditional peak perils.
“For Canada, this shift is highly relevant,” Crosby added. “Wildfire risk is increasing not just because of changing weather patterns, but because of continued growth in exposure as communities expand into higher‑risk areas. At the same time, severe convective storms are emerging as a consistent source of loss, driven by urbanization, rising asset values and vulnerability of property.”
Swiss Re’s analysis underlines how wildfire has become one of the fastest‑growing sources of insured loss in North America. Over the past 55 years, insured wildfire losses have grown at roughly twice the pace of exposure.
The Institute estimated that only a little more than one‑third of that growth can be explained by conventional exposure drivers such as construction costs, population at risk and economic growth per capita. The remainder is linked to shifts in the risk landscape.
The single largest factor is exposure growth in high‑hazard regions, particularly the wildland‑urban interface (WUI) where development meets natural vegetation. Since 1975, population growth in high wildfire‑risk areas of the US has been about three times higher than the national average. Since 1990, exposure growth in WUI zones has outpaced that in non‑WUI areas by a factor of 1.8 in the US overall and 1.9 in California.
As of 2020, about one in three Californians lived in the WUI, and the January 2025 fires burned exclusively in Los Angeles’ WUI. Around 16,000 structures were destroyed, nearly three times the average annual number since 2016, despite the state’s burned area in 2025 being only about one‑third of the post‑2016 average.
Humans are responsible for roughly 85% of wildfire ignitions in the US, further tightening the link between population growth, exposure and hazard. That interaction complicates catastrophe modeling and capacity management for property carriers.
SCS losses have risen by around 7% a year in North America since 1970. Swiss Re attributes about 80% of this growth to exposure‑related factors, including higher asset values and development in hail‑prone regions.
Urbanization and suburban sprawl have concentrated high‑value, damage‑prone property in hail belts, while aging housing stock and the spread of rooftop solar and exterior equipment have increased vulnerability. Reconstruction costs remain elevated, with US property rebuild indices still more than a third above late‑2019 levels, keeping pressure on claim severity.
By contrast, non‑tropical cyclone flood losses account for roughly 3% of insured nat cat losses in North America and have grown by about 4% annually in real terms since 1970. Swiss Re’s decomposition suggests most of that is exposure‑driven, with mitigation measures such as defenses and building codes helping to offset hazard trends.
Looking ahead, hazard intensification is projected to lift average annual flood economic losses in the US by about 1% a year to 2050, with coastal and pluvial flooding most affected. Modeling by Swiss Re‑owned flood specialist Fathom indicated that extreme tail losses may grow more slowly than the average, reflecting some resilience from existing adaptation efforts.
The sigma study highlighted US examples where targeted adaptation has meaningfully reduced insured losses.
Programs built around the Insurance Institute for Business & Home Safety’s Fortified standards in Alabama and Louisiana have delivered lower claim frequency and severity and, in turn, premium credits of up to roughly a quarter for retrofitted homes.
The findings – reinforced by Crosby’s warning on the Canadian outlook – underline that secondary perils are now central to North American nat cat risk. Managing that shift will rely on tighter exposure management, updated models and wider use of mitigation‑linked underwriting and pricing to keep high‑risk regions insurable over the long term.
