Secondary natural catastrophe perils, including severe convective storms, wildfires, winter storms and inland floods, are becoming major drivers of insured losses, increasingly affecting insurers’ profitability and potentially their capital positions, according to a new report by Marsh Re, The Frequency Problem: Secondary Perils Hit Earnings and Can Compromise Capital.

The report, authored by Kimberly Roberts, Head of North America Peril Advisory at Marsh Re, highlights that secondary perils now account for the majority of North American insured catastrophe losses in most years. In the US, insured losses from severe convective storms have exceeded USD 30 billion annually since 2020, surpassing USD 40 billion in four of those years. By August 2026, these events had already generated approximately USD 26 billion in insured losses.

Beyond changing weather patterns, growing property exposure, higher reconstruction costs and building vulnerability are contributing significantly to the increasing losses.

The report also emphasizes the implications for reinsurance. Following the increase in reinsurance attachment points in 2023, a larger proportion of frequent, medium-sized catastrophe losses is being retained by primary insurers. Consequently, reinsurers' share of catastrophe losses has declined, placing additional pressure on insurers' underwriting results.

Marsh Re argues that insurers need to reconsider traditional catastrophe risk management approaches, placing greater emphasis on cumulative annual losses, improved exposure data, risk mitigation and more sophisticated modeling. Aggregate reinsurance covers could provide an increasingly relevant solution, although reinsurers remain selective in offering such protection.

Read the full report: The Frequency Problem: Secondary Perils Hit Earnings and Can Compromise Capital.