Severe convective storms, encompassing tornadoes, damaging winds, hail, and lightning, have surpassed tropical cyclones as the world's costliest insured natural disaster, with the U.S. bearing nearly 80 percent of the global insured losses from these events in 2025. Unlike hurricanes, which typically affect coastal regions, these storms can strike broad inland areas with little warning, causing significant damage.
Franklin Manchester, global insurance advisor at SAS, noted that "secondary perils" like hailstorms, severe thunderstorms, and flooding are now the primary threats to the insurance industry. Data cited by Manchester from Swiss Re indicates that secondary perils accounted for 92 percent of insured catastrophic losses globally. This shift is forcing insurers to re-evaluate risk models, which are becoming less accurate due to evolving climate risks. Consequently, homeowners are experiencing higher premiums, larger deductibles, and, in some cases, difficulty obtaining coverage.
While insurance companies have withdrawn coverage from high-risk areas like Florida and California due to losses from hurricanes, wildfires, and flooding, experts warn the problem is expanding. Manchester stated, "Unfortunately, nowhere is safe," citing Hurricane Helene's 2024 impact on Western North Carolina as an example of extreme weather hitting previously low-risk locations. He also identified flooding as a major threat, noting that it can occur anywhere and that flood maps are often outdated.
The rising cost and availability of insurance could affect the housing market. Manchester explained that while rising premiums are a concern, access to insurance is critical, as banks require it for mortgages. Expensive insurance can also diminish a home's value, particularly if it has a history of climate-related damage. Properties with prior flood-related losses, for instance, may face insurer deterrents.
Despite these concerns, climate risk has not yet become the primary deciding factor for most homebuyers. James Harris, CEO of real estate platform Breezy, stated that buyers still prioritize lifestyle, family, work, and schools. He noted that demand remains strong in popular markets like Southern California, Florida, and Texas, even with increasing awareness of extreme weather. Buyers are becoming more informed about insurance and mitigation, but desirable locations still command high demand. However, Harris anticipates that climate risk will increasingly influence purchasing decisions, particularly concerning insurance costs and building resilience against future weather events, leading to greater demands for transparency and homes built to withstand challenges.