Wildfires and severe convective storms (SCSs) drove annual aggregated insured losses in North America in 2025, according to recently released research from the Swiss Re Institute.
“In North America, wildfire losses are rising faster than economic growth, with exposures increasingly concentrated in high-risk areas,” say authors of the report, Natural catastrophes in North America in 2025: secondary peril losses at the forefront, again. “There is not just more to insure, there are also clear changes in underlying risk factors.”
In Canada, last year’s insured losses were $1.5-billion (all figures in U.S. dollars), less than half of the previous five-year average of $3.2-billion. They were also notably lower than the record high of $6.5-billion set in 2024.
The report, however, warns that 2025’s below-trend results does not signal a reduction in underlying risk, a sentiment echoed by Swiss Re Canada’s CEO, Jolee Crosby. “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,” she stated.
Secondary perils
She goes on to say that secondary perils, particularly wildfires and SCSs, are becoming the dominant drivers of insured losses. “These perils now account for the vast majority of catastrophe losses in the region, which marks a fundamental change in the industry’s risk landscape.”
The report itself, focused on both the United States and Canadian experiences together, says over the past 55 years, insured wildfire losses have grown about twice as fast as exposure.
“Exposure-related factors (construction cost, population at risk and economic growth per capita) together explain a little more than one-third of wildfire loss growth. The remaining roughly 60 per cent points to changes in the underlying risk landscape. In the case of wildfire risk, this is driven by the strong increase of high-value assets in high-risk regions, changes in weather conditions (drought and strong winds) and sources of fuel (flammable structure, linked by dry grassland that provide a pathway for fire),” they write.
Swiss Re’s flooding research, meanwhile, says patterns suggest that protection and mitigation measures like flood defenses help offset underlying risk and contain losses. “Compared with other secondary perils in North America, flood appears to be more effectively managed from a loss-growth perspective.”
Adaptation and mitigation
The report concludes, saying adaptation and mitigation measures are crucial to reducing loss potential and maintaining insurability in exposed regions. “Our findings indicate that adaptation can materially offset loss growth when implemented effectively,” they write.
In her statement, Crosby elaborates, saying there is a clear opportunity for mitigation and resilience measures. “Evidence shows that well-designed adaptation measures, from stronger building standards to targeted retrofitting, can materially reduce both the frequency and severity of losses,” she says. “For Canada, aligning incentives between insurers, governments and homeowners will be critical to maintaining long-term insurability.”
