As the 2025 hurricane season approaches, the U.S. property insurance market is showing signs of cautious hope. Industry leaders are balancing the need for recovery with the reality of potential natural disasters that could strike again this year.
After several years of rising premiums and limited options, policyholders are now experiencing a more favorable environment. Insurers are starting to offer better rates and increased capacity, which is a welcome change. However, the sector is still feeling the pressure, having already recorded around $83 billion in catastrophe losses in just the first quarter of the year, according to Aon.
Blake Giannisis, an executive vice president at Hub International, highlighted the ongoing challenges, noting that wildfires alone are expected to cause about $40 billion in insured losses. He described the current situation as one of waiting and watching.
Despite these challenges, Giannisis believes the property insurance market is stabilizing after a long period of hardship. Insurers have implemented significant rate increases in previous years, which, along with better reinsurance strategies, have helped them return to profitability. He noted that the market is now experiencing rate decreases and a more stable outlook.
Nathan Baseman, an analytics executive at CAC Group, echoed this sentiment, stating that the market has softened recently, even with the threat of severe weather events like wildfires and storms. He pointed out that rates are dropping despite increased tornado and hail activity, thanks to a surge in market capacity and favorable reinsurance rates.
While the overall picture looks more positive, insurers are still on alert for what they call "secondary perils." These include threats like wildfires and severe storms, which are now taken as seriously as major hurricanes and floods. Giannisis emphasized that these dangers are becoming more prominent, especially as the frequency of smaller disasters increases.
Baseman noted that the expansion of residential and commercial developments in areas prone to tornadoes and hail has led to more claims and greater exposure for insurers. As a result, companies are adjusting their policies, including raising deductibles.
Giannisis pointed out that rising deductibles are leading clients to retain more risk, whether through higher deductibles or self-insured retentions. This shift is paving the way for alternative risk transfer strategies, such as parametric insurance, which pays out based on specific triggers rather than actual losses.
Looking ahead to the hurricane season, both Giannisis and Baseman stressed the importance of presenting clear and detailed client submissions. While the market is softening, not all clients will benefit equally from favorable rates and increased capacity. Underwriters are now focusing on proper valuations, loss control, and business continuity plans to ensure clients are prepared for potential disasters.
Meteorological forecasts for the 2025 hurricane season suggest it will be less active than usual, but still above average. The industry remains vigilant, as any significant natural disaster could quickly reverse the current trends in the insurance market. Giannisis summed it up well: "It’s all eyes on the next few months."