Natural Disasters Drive 800% Increase in 2025 Insured Losses

In the first half of 2025, global insured losses from natural disasters reached 800 billion dollars, according to preliminary estimates. This figure is nearly double the 10-year average, highlighting the increasing trend of weather-related losses in the insurance industry. The significant rise in losses has prompted insurers to tighten underwriting conditions, increase premiums, and reassess risk models.

The estimate, which includes damages from wildfires in California and severe thunderstorms in the United States, suggests that the total insured losses for the year could exceed 1500 billion dollars. This projection is based on the expectation of increased natural disaster activity during the second half of the year, particularly during the hurricane season. The report predicts that hurricane activity will be near or above average, with the potential for 3 to 5 major hurricanes, surpassing the long-term average of 3.

In 2024, hurricanes Helen, Milton, and Beryl struck the United States, causing widespread destruction and resulting in hundreds of billions of dollars in insured losses. The escalating climate risks have led insurance companies to withdraw from high-risk areas in the United States, resulting in growing insurance coverage gaps and increased financial strain on vulnerable communities.

At the beginning of 2025, the Palisades Fire swept through Southern California, burning over 23,000 acres of land, destroying homes and businesses, and forcing thousands to evacuate. The insured losses from the Los Angeles wildfires were estimated to be 400 billion dollars, making it the most costly single wildfire event on record. The report attributes the sharp increase in wildfire losses over the past decade to rising temperatures, prolonged droughts, changing rainfall patterns, and the concentration of high-value assets in urban areas.

The insurance market in California is under increasing pressure as insurers grapple with a range of climate-related risks, including wildfires, floods, and landslides. This has led several insurance companies to restrict the issuance of new policies or withdraw from certain regions of the state. The report underscores the need for insurers to adapt to the changing climate landscape and develop more robust risk management strategies to mitigate future losses.