Building Resilience for Another Active Atlantic Hurricane Season

Building Resilience for Another Active Atlantic Hurricane Season
May 29, 2025 6 mins

Building Resilience for Another Active Atlantic Hurricane Season

Building Resilience for Another Active Atlantic Hurricane Season

Forecasters predict another above-average North Atlantic hurricane season. Businesses should use their saved premium dollars to strengthen their hurricane-prone properties and workforce, and treat risk management as a strategic asset.

Key Takeaways
  1. Oceanic and atmospheric conditions in the North Atlantic signal the potential for another above-average hurricane season.
  2. The current soft property market provides an opportunity to build business resilience for companies with hurricane-prone properties.
  3. Climate modeling helps to quantify and mitigate natural catastrophe risks to businesses and employees.

Early forecasts for the 2025 Atlantic Basin hurricane season predict slightly above-average activity. However, with ENSO-neutral conditions expected in the North Atlantic, water temperatures will play a key role in how the season develops.

  • Colorado State University is forecasting 17 named storms, four of which could become major hurricanes.1
  • Tropical Storm Risk is anticipating activity close to its 30-year climate norm, with 14 named tropical storms, seven of which may form as hurricanes.2

Current ENSO-neutral conditions are predicted to persist through the summer, however, there is a chance that weak La Niña conditions will develop later in the hurricane season. This is causing some uncertainty regarding the season's development, compounded by additional influencing factors.

Water temperatures are cooler than a year ago but are still warmer than normal. If La Niña conditions emerge, they could deliver a more conducive environment for hurricane formation. However, dust blowing west from the Sahara could reduce water surface temperatures and bring in drier air, potentially limiting hurricane formation.

“There is additional uncertainty this year in how the ENSO phase will play out,” says Dan Hartung, global head of Event Response for Aon Reinsurance Solutions. “There is more spread in the forecast models today than there was last year early in the season as to how active the season may play out. Other factors that influence activity are also difficult to predict. We saw this last year with the Saharan air layer, which suppressed storm formation in the latter half of July and first half of August.”

Weather-Related Events Continue to Grow

Natural catastrophes continue to increase in frequency and severity over the long term, including windstorms. According to Aon data, global natural catastrophe insured losses in 2024 reached $145 billion, which is slightly higher than the cumulative average of the past five years. Twenty-five years ago, insured losses were just $27 billion.

Tropical cyclones and severe convective storm (SCS) perils lead the cumulative losses since the 2000s. Further, a substantial part of cyclone-related losses is attributed to storm surge and inland flooding.

$145B

Global insured loss from natural disasters in 2024.

Source: Aon data

building-resilience-img1-2

Source: Q2 2025 U.S. Property Market Dynamics Report, Aon

While the current buyer-friendly property market provides some respite for risk managers, it can also obscure emerging risks and concerns in the long term, particularly the potential for worsening windstorm activity.

Soft Property Market: An Opportunity to Build Resilience

The late-starting 2024 hurricane season produced the top two global economic and insured loss events of the year. Hurricanes Milton and Helene caused a combined $110 billion in economic losses and $37.5 billion in insured losses, according to Aon’s 2025 Climate and Catastrophe Insight report.

These events emphasized the need for businesses with hurricane-prone properties to build resilience against hurricanes. After years of unprecedented high commercial property insurance premiums, the current soft market provides businesses and risk managers with the opportunity to do just that.

  • U.S. Property Market Summary for Q1 2025
    • The average property rate change for Q1 2025 is -8.52 percent, down from -5.45 percent in Q4 2024; rate change in April 2025 was -12.2 percent.
    • Shared and layered accounts decreased to an average of -12.12 percent.
  • Expectations: Rate Differentiation for Q2 2025
    • There was a -30 percent to flat rate change for desirable accounts/occupancies, as well as predominantly natural catastrophe-exposed accounts; April 15, 2025 data points show rate decreases of -12.2 percent on average across the Aon portfolio.
    • Businesses can expect an aggressive underwriting approach for shared and layered accounts with desirable occupancy classes and profitable historic loss ratios, with or without heavy natural catastrophe exposures.

    Source: Aon Re, Inc.

building-resilience-img2-2

Source: 2024/Q1 2025 Global Catastrophe Recap, Aon

Allocating a portion of available savings toward enhancing the efficacy of programs, including risk improvement, loss control projects and valuation projects, can help further differentiate a company’s risk in the market. Implementing a robust risk engineering program, along with a strategic approach to addressing risk concerns and recommendations, will be crucial.

“Clients could use some of the premium savings they’re experiencing at renewal and reinvest it into building resilience,” says Vincent Flood, head of Property in North America. “Consider allocating a portion of your risk management budget toward risk engineering so that if and when the market turns, those actions lead to positive discussions with underwriters at renewal.”

As climate-related challenges grow, more businesses are focusing on sophisticated data analytics and advanced climate models to mitigate property risk and build resilience. Further, by modeling the impact of weather on employees as they do for physical risks, businesses can establish solutions to protect their workers as well.

How Modeling Helps Better Assess and Mitigate Property and Employee Risks

  • 01
    Property

    Aon’s Client Trends 2025 provides businesses with valuable insights into how advanced climate models can help assess risk from extreme weather events. This includes the effects of chronic perils, such as gradual changes in temperature, and acute perils, such as hurricanes, floods and SCS.

  • 02
    Workforce

    By taking climate model data and overlaying it on workforce demographics and geographic locations, businesses can understand the cost of extreme weather on their employees. Once the risk is quantified and assessed mitigation strategies can be developed.

Embrace a Risk Capital Strategy

Consider alternative risk transfer (ART) structures to match capital to risk. ART structures such as parametric, structured solutions, captives and facultative reinsurance fuel competition and are cost effective in any market cycle. These methods enable companies to directly access much-needed capital, resulting in cost savings and customized risk management solutions. They can also fill protection gaps and help prepare businesses for the next market turn.

“A multi-pronged approach to accessing alternative risk transfer solutions maximizes access to capital in unique ways,” says Michael Gruetzmacher, head of Alternative Risk Transfer in North America. “This strategy then frees up other forms of dry powder for insureds, allowing the risk capital diversification to accrue substantial strategic benefits in times of uncertainty.”

Learn more about catastrophe preparedness and response readiness at the Aon Hurricane and Natural Catastrophe Planning and Response Site. This offers valuable resources designed to support an organization against the potential impacts of natural disasters.

Aon’s Thought Leaders
  • Vincent Flood
    U.S. National Property Practice Leader, Commercial Risk
  • Dan Hartung
    Managing Director, Reinsurance Catastrophe Analytics, United States
  • Michal Lorinc
    Head of Catastrophe Insight, Aon Impact Forecasting
  • Michael Gruetzmacher
    Head of Alternative Risk Transfer and Innovation, North America

1 Colorado State University Extended Range Forecast of Atlantic Seasonal Hurricane Activity, CSU 
2 April Forecast Update for North Atlantic Hurricane Activity in 2025, Tropical Storm Risk

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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