US severe convective storms (SCS) and the 2025 Los Angeles wildfires accounted for the lion's share of global insured catastrophe losses last year, even though the Atlantic hurricane season produced no US landfalls, according to a new Moody's analysis.
Moody's estimated that SCS losses exceeded $45 billion in the US for the third consecutive year, while the LA wildfires alone generated $20 billion to $30 billion in insured losses. Together, they underline how so-called "secondary perils" have become the primary driver of catastrophe claims for many property carriers, reshaping underwriting, capital planning and reinsurance demand.
Secondary perils move to the center of the risk profile
For years, SCS and wildfire were often treated as earnings‑volatility events sitting beneath hurricane‑focused cat programs. Moody’s latest figures reinforce that this view is increasingly outdated. Wildfires and SCS now account for most insured catastrophe losses, and their frequency means they can erode earnings year after year, not just in isolated seasons.
In 2025, a March SCS outbreak caused an estimated $8 billion to $10 billion in damage across 26 states and produced the first EF5 tornado in 12 years. The loss footprint reflected not just the meteorology but also urban sprawl into hazard‑prone areas, rising construction and repair costs, and social inflation affecting bodily injury and bad faith claims.
For many carriers, these events are routinely punching through catastrophe retentions and into reinsurance, rather than remaining contained within annual budgets.
The Los Angeles wildfires highlighted a different but related challenge - large-scale catastrophe losses in highly developed urban environments. Moody's estimates the fires destroyed more than 18,000 structures, caused 30 fatalities and burned 37,000 acres, with insured losses in the $20 billion to $30 billion range.
Smoke damage emerged as a significant driver of both insured and uninsured loss. Many homes and commercial properties were rendered temporarily or permanently uninhabitable by smoke infiltration, even if they did not suffer direct flame damage. In some cases, policy language around smoke, air quality and loss of use proved decisive in determining what was covered, exposing wording sensitivities for underwriters and claims teams.
The event also hit a California market already under strain. More than one million wildfire policies have been non‑renewed in recent years as carriers have pulled back from high‑hazard zones, pushing tens of thousands of homeowners into the state’s insurer of last resort, the California FAIR Plan. Moody’s noted that FAIR Plan exposure has grown sharply, including by more than 50% in Los Angeles County between 2024 and 2025, raising questions about concentration risk and the plan’s ability to withstand another LA‑scale event.
One of the more consequential developments for insurers is regulatory approval of the Moody’s RMS US Wildfire Model 2.0 for ratemaking in California. Allowing the use of modern catastrophe models in rate filings marks a turning point in a market where lengthy regulatory lags and backward‑looking assumptions have often left rates out of sync with current risk.
Moody’s 2025 catastrophe review carries several clear signals for insurance professionals. First, SCS and wildfire are no longer peripheral to hurricane risk; they are central to annual planning. Boards and chief risk officers will need to treat them as core capital drivers, with their own risk limits, metrics and stress scenarios.
Second, concentration in fast‑growing, hazard‑exposed corridors is amplifying both attritional and mid‑sized catastrophe losses. Insurers may need to revisit aggregation controls, sublimits and deductibles for hail, wind and wildfire, and reconsider how much growth in these areas they are willing to accept.
Third, traditional reinsurance structures built primarily around hurricane peaks are being challenged by the frequency and geographic breadth of SCS and wildfire events. Multi‑year runs of $45‑plus billion in SCS losses, combined with single wildfires producing tens of billions in claims, are likely to keep pressure on US catastrophe programs, particularly aggregate covers and lower layers.
Finally, the rapid evolution of catastrophe modeling offers carriers an opportunity to differentiate. Insurers that use these tools to refine pricing, improve risk selection and actively promote resilience are likely to be better positioned than those that treat “secondary perils” as an unavoidable background noise in their cat budgets.
