As the 2025 hurricane season unfolds, insurance companies prepare. Early summer is time to closely monitor hurricane forecasts, assess risks, and account for financial implications that could arise due to increased property and casualty claims.
The year 2025 has brought renewed attention to the impact of hurricanes on the insurance industry with experts projecting an above-normal hurricane season.
WaterStreet Company P&C insurance solutions allow carriers to access all the data needed to form predictions on where these costs are headed.
2025 Hurricane Season Forecasts
According to the National Oceanic and Atmospheric Administration (NOAA), 2025 is anticipated to have another above-normal hurricane season, with an above-normal chance of 60%.
The NOAA prediction includes up to 19 named storms due to warmer than average ocean temperatures, weak wind shear, high activity of West African Monsoons, and reduced trade winds.
According to the Insurance Information Institute (Triple-I), insurers may expect nine hurricanes, including four major hurricanes, between June 1st and November 30th. The Triple-I offers a strong recommendation for all to prepare, from homeowners and renters to business owners and landlords.
These predictions have important implications for insurance companies, heightening the need for a well-prepared claims process and expectations for losses resulting from hurricane-related damages.
Prepare for Costs
The forecasted above-normal hurricane season raises concerns for insurance companies due to the potential for increased payouts related to property damage and loss.
This year marks the 20th anniversary of Hurricane Katrina, which caused 1,833 fatalities and cost an estimated $201.3B when adjusted to the 2024 Consumer Price Index.
Average insured losses from natural disasters have risen 90% over the past decade, now exceeding $33 billion annually. The rising costs of reinsurance and limited availability have strained insurers, particularly in high-risk areas where building developments continue to grow.
In response, insurers have urged governments to strengthen building codes and invest in disaster mitigation strategies such as wind defenses and fire-resistant infrastructure to manage growing risks and maintain insurance affordability.
Hurricanes Past and Present
A record-breaking 28 named storms occurred in 2005, including Hurricane Katrina. The 2005 season resulted in substantial insurance losses, emphasizing the importance of accurate predictions and effective risk management strategies.
These are the top most expensive hurricanes to hit the United States by 2024 adjusted cost:
- Katrina, 2005 – $201.3 B
- Harvey, 2017 – $160 B
- Ian, 2022 – $119.6 B
- Maria, 2017 – $115.2 B
- Sandy, 2012 – $88.5 B
Comparing the predicted above-normal activity of the 2025 hurricane season to historical data and lessons learned from past devastating seasons, insurance companies are taking proactive measures to mitigate potential losses.
Improved risk assessment, enhanced claims management processes, and strategic partnerships with reinsurance companies are some of the strategies being employed to brace for the impact of the predicted hurricane season.
Hurricane Milton & Helene
In the fall of 2024, Hurricanes Milton and Helene brought unprecedented destruction to the southeastern United States, particularly Florida, with both storms ranking among the most powerful and damaging Atlantic hurricanes in recent history.
Hurricane Milton became the strongest tropical cyclone globally in 2024 and tied Hurricane Rita of 2005 as the most intense Atlantic hurricane ever recorded over the Gulf of Mexico. It was the 13th named storm of the season, peaking as a Category 5 hurricane and ultimately making landfall as a Category 3 hurricane on October 9th. The storm caused widespread flooding, spawned deadly tornadoes, and caused 45 fatalities with an estimated $34.6 billion in damage.
Just weeks earlier, Hurricane Helene struck Florida’s Big Bend region as a Category 4 hurricane with winds of 140 mph, becoming the strongest hurricane on record to hit that area and the deadliest to strike the U.S. mainland since Katrina in 2005. Helene formed on September 22nd and rapidly intensified before making landfall on September 26th. Helene ultimately caused 250 fatalities and $78.7 billion in damage, ranking as the seventh-costliest Atlantic hurricane on record when adjusted for inflation.
Together, Hurricanes Milton and Helene highlighted the growing intensity and financial toll of Atlantic storms in a year marked by record-setting natural disasters across the United States.
Hurricane Hilary
During the 2023 hurricane season, Hurricane Hilary will be remembered as a significant and unexpected event that left a lasting impact on Southern California. While hurricanes are more commonly associated with the Atlantic and Gulf coasts, the unusual trajectory of Hurricane Hilary brought unprecedented challenges to a temperate region.
As reported by Reuters, the fury of Hurricane Hilary was unleashed on Southern California, catching many residents off guard. The storm’s powerful winds and heavy rainfall resulted in widespread damage, particularly in coastal areas. Homes, infrastructure, and coastal ecosystems experienced extensive damage, prompting emergency response efforts and enhancing future preparedness strategies in regions less accustomed to hurricane threats.
AccuWeather emphasized that Hurricane Hilary’s impact serves as a reminder that no area is entirely immune to the influence of tropical systems. The storm’s trajectory was influenced by complex meteorological factors, including a marine heatwave off the California coast. In the aftermath of Hurricane Hilary, insurance companies in the region mobilized to assess the extent of the damages and process claims from policyholders. This incident underscores the importance of adaptable risk assessment models that account for the potential reach of hurricanes beyond their traditional domains.
The unexpected impact of Hurricane Hilary on Southern California serves as a reminder that climate-related events can defy geographical expectations. As climate patterns continue to change, insurance experts must remain agile in their risk assessment strategies, considering the potential for outlier events.
Risk Assessment and Mitigation
Insurance companies leverage advanced technologies and data analytics to refine risk assessment processes. Insurers can better estimate potential losses and allocate resources by analyzing weather data in a number of ways.
- Historical hurricane patterns
- Geographic vulnerability
- Building structure durability
Insurers have also invested in Catastrophe Modeling, which helps measure the impact of catastrophic events on insurance portfolios. With this technology, insurance professionals can test disaster scenarios, such as severe storms, in order to strategize the company’s response in the case of such an event.
This proactive approach enables insurance companies to offer policies with appropriate coverage limits while minimizing financial exposure.
To help prepare policyholders, insurance companies are emphasizing the importance of risk mitigation for policyholders. Education about hurricane preparedness, incentivizing property upgrades that reduce vulnerability, and promoting flood insurance are essential components of a comprehensive strategy to minimize damage and claims.
Collaboration with Reinsurers
The predicted above-normal hurricane season has also prompted insurance companies to reinforce their relationships with reinsurers. Reinsurance plays a critical role in spreading the financial risk associated with catastrophic events like hurricanes. By sharing a portion of liabilities with reinsurers, insurance companies can better manage the potential surge in claims and maintain financial stability in the face of significant losses.
WaterStreet P&C Solutions
Predictions for the 2025 hurricane season underscore the need for insurance companies to remain vigilant and prepared. Through strategic risk management and a commitment to resilience, insurance companies aim to navigate the stormy waters of the 2025 hurricane season while fulfilling their vital role in protecting communities and property.
WaterStreet Company provides insurers with cloud-based solutions and an advanced API for your solution to grow with the company. We understand the importance for carriers and MGAs to adapt to market changes. Reach out today for a demo of our solutions.
