As property rates fall and clients enjoy a second or even third consecutive renewal of reductions, the question on everyone's mind is when — and how — the cycle turns.
The conventional fear is that a single mega-catastrophe could snap the market back into hard conditions overnight. But brokers and underwriters interviewed by Insurance Business are pushing back on that assumption.
"I think it would take a significant event… a knockout punch, so to speak," said Blake Giannisis (pictured), Executive Vice President, North American Property Practice Leader at HUB International. "The market is heavily capitalized and there's a lot of surplus. A strong market like the one we have now can withstand a pretty big single event."
US property and casualty policyholders' surplus increased to $1.2 trillion in 2025, up from $1.1 trillion in 2024, according to preliminary figures from Verisk and the American Property Casualty Insurance Association (APCIA).
The same data showed the industry posted an estimated net underwriting gain of approximately $63 billion in 2025, a significant improvement over the $23 billion gain in 2024 and the $22 billion underwriting loss in 2023.
Capital is also flooding in from outside the traditional market. Dedicated reinsurance capital was expected to increase another 9% in 2025, following 7% increases in both 2023 and 2024, according to Guy Carpenter.
Alternative capital has surged in parallel: the total outstanding notional amount of property and cyber catastrophe bonds reached an all-time high of more than $58 billion, including 15 first-time sponsors in 2025.
The depth of capital comes amid an elevated risk environment. Speaking to Insurance Business, Will Porter, head of property US at Swiss Re Corporate Solutions, stressed that nat-cat risk, unlike pricing, has not improved. "Last year was the sixth year in a row with more than $100 billion in catastrophe losses for the industry," Porter said. "I don't know that we'd ever strung together even three years like that before. What used to be an outlier is almost the norm."
The more insidious threat, in Giannisis's view, is cumulative. "We continue to see these secondary perils generating billion-dollar losses," he said. "It's death by a thousand cuts.”
Those cuts are deepening. US severe convective storm losses reached $42 billion in the first nine months of 2025, with average per-event costs 31% higher than the previous decade, according to Moody's. The firm also said 2025 marked the third consecutive year in which US SCS losses topped $45 billion.
For Porter, that reality has retired the traditional underwriting notion of SCS. "Secondary perils… are not secondary anymore," he said. He argued that tornado and wildfire — once buried inside the catch-all "all other perils" bucket — must now be broken out and "treated as seriously as windstorm or earthquake." Better modelling helps, "but it doesn't turn a poor-quality risk into a good-quality risk."
That leaves the market in a more precarious position. Record surplus and abundant capital mean the industry can almost certainly absorb a single major catastrophe without hardening, but that strength is also what makes complacency tempting.
The scenario brokers are really watching is not one big storm, but a year of grinding billion-dollar secondary-peril losses capped by a genuine knockout blow.
"I don't think (secondary peril losses) are enough on their own," Giannisis said, "but combined with a major event, it could become the bigger influence."
