Hurricanes and earthquake exposures continue to exert the greatest influence on the property catastrophe reinsurance market, with wildfire and severe convective storms acting as secondary drivers. Although 2025 began with significant wildfire losses in California, reinsurers are well-positioned to handle the impact. California itself, however, remains largely dependent on the excess and surplus (E&S) market. E&S carriers retain freedom of rate and form, allowing them to price risk more precisely, while admitted carriers work with state regulators to achieve long-term rate adequacy. As a result, little near-term rate relief is expected in California; the focus remains on sourcing adequate E&S capacity for customers.

Alternative capital continues to play a major role in the CAT market. Insurance-linked securities — including catastrophe bonds — are flowing into the space at near-record levels, expanding available capacity and reinforcing the overall stability of the property reinsurance market. This influx of capital is helping support the broader softening trend and increasing flexibility for primary carriers purchasing catastrophe protection.