Global insured losses from natural catastrophes are projected to reach USD 145 billion in 2025, according to the Swiss Re Institute. This increase follows a long-term annual growth trend of 5–7%, driven primarily by secondary perils such as severe thunderstorms, floods, and wildfires.
Primary perils like hurricanes and earthquakes remain the most significant risks. These events could potentially drive insured losses to USD 300 billion or more in a peak year. The institute's analysis highlights that when these primary perils strike densely populated urban areas, the resulting insured losses can significantly exceed long-term trends.
Urs Baertschi, CEO Property & Casualty Reinsurance at Swiss Re, emphasized the role of reinsurers: "In addition to helping clients with traditional risk transfer, reinsurers also provide data, risk insights and knowledge about where dangers lie. The reinsurance industry is a shock absorber when danger materialises into disaster and an essential discussion partner around risk awareness and risk prevention."
The concept of peak years is not new; 2017 was marked by Hurricanes Harvey, Irma, and Maria. Since then, underlying risks have grown due to economic expansion and urban sprawl in vulnerable areas. Climate change further compounds these risks for certain weather-related events.
Balz Grollimund from Swiss Re stated: "Our recent analysis of over 200 in-house models and the loss trend over the last 30 years show what is at stake: When a severe hurricane or a major earthquake hits an urban area in a country with significant insurance take-up, insured losses could easily reach USD300billion in that year."
The potential impact of historical hurricanes today would be much greater due to increased economic activity and population density. For instance, Hurricane Andrew would result in nearly three times its original loss if it occurred now. Conversely, while Hurricane Katrina's impact would still be substantial today due to higher housing costs, improved flood defenses have reduced exposure along its path.
In the United States alone, almost 80% of global insured losses were recorded in 2024 due to its susceptibility to various natural disasters. States like Florida face particularly high hurricane-related premiums.
Reducing potential losses from natural catastrophes is crucial for maintaining affordable insurance rates and ensuring the viability of risk transfer businesses. Mitigation measures such as flood protection systems can be highly cost-effective compared to post-disaster rebuilding efforts.
Jérôme Haegeli from Swiss Re highlighted the importance of collaboration: "Close collaboration between the public and private sectors is vital for effective protection measures to reduce losses. In addition, a well-capitalised reinsurance sector...acts as a vital shock absorber."
In summary for recent years' figures: In 2024 alone, global insured losses reached USD 137 billion due largely to hurricanes Helene and Milton among other disasters worldwide.