On Thursday, government scientists unveiled their outlook for the 2025 hurricane season, forecasting a 60% probability of an above-average season.
The National Oceanic and Atmospheric Administration (NOAA) anticipates the formation of 13 to 19 named storms with sustained winds of at least 39 miles per hour. Among these, the agency expects six to ten of the storms to escalate to hurricane status, with three to five classified as major hurricanes.
Laura Grimm, the acting NOAA administrator and marine scientist, avoided addressing specific budget cuts affecting climate science, instead emphasizing the agency’s essential role in preparing communities and safeguarding lives. “Weather prediction, modeling, and protecting human lives and property are our top priority. We are fully staffed at the hurricane center and ready to respond,” she stated during a press conference in Jefferson Parish, Louisiana, commemorating the 20th anniversary of Hurricane Katrina.
Grimm also noted advancements in science and technology over the past two decades have significantly improved NOAA’s hurricane predictions, which were highly accurate last year.
In 2024, Hurricanes Helene and Milton resulted in over $37 billion in insured losses, as reported by a report from Aon.
Although these losses were substantial, the U.S. property casualty insurance industry recorded its best underwriting performance since 2013, as highlighted in a report from the Insurance Information Institute and Milliman.
However, the report cautioned that the severe wildfires in California this January and economic challenges from tariffs could adversely impact the industry’s outlook for 2025.
Insurers and reinsurers are collectively facing losses exceeding $50 billion due to the wildfires in Los Angeles.
The Midwest has also experienced severe thunderstorms this spring, with damaging hail, winds, and tornadoes. By Monday, the Storm Prediction Center had recorded 883 local tornado reports this year, representing a 35% increase compared to the average for this time of year.
Aon estimated that severe convective storms led to approximately $10 billion in insured losses during the first quarter, with an additional estimated $7 billion incurred from a three-day storm in May.
Over the past decade, yearly insured losses have averaged more than $33 billion, a staggering 90% increase from the previous 10 years.
This trend poses a significant threat to the insurance sector and its capacity to provide affordable coverage to homeowners, according to Bill Clark, CEO of Demex, a reinsurance analytics firm. He noted that the situation is worsening.
“Reinsurance costs for severe convective storm losses are at a 20-year high, and, combined with limited availability, this is leaving insurers unable to transfer most of their increasing losses,” Clark stated in an email to Finance Newso.
The increase in losses from hurricanes, wildfires, and severe storms is attributed to a rise in exposure, with more individuals residing in high-risk areas and the corresponding costs of their homes and possessions rising.
In response, the insurance industry is advocating for stronger state and local efforts to promote resilience and improve mitigation strategies. This includes enhancing building codes, investing in public works projects that safeguard properties, and implementing stringent standards for defensible spaces around buildings.
Cynthia Lee Sheng, president of Jefferson County Parish, noted the strides made in the two decades since Hurricane Katrina ravaged Louisiana, claiming 1,392 lives in 2005. The government has revamped levees, flood walls, and pumping stations.
“It’s estimated that $13 is saved for every $1 spent on mitigation efforts,” Sheng remarked. “Hurricane Katrina also transformed disaster recovery, as key agencies learned to collaborate effectively, ensuring a more coordinated and efficient response.”
— Finance Newso’s Dawn Giel contributed to this report.
