Insured cat losses expected to top $100bn again in 2025: Willis
With six years having passed since the insurance industry last experienced a “quiet year” for natural catastrophes, a recent biannual report from Willis suggests that the trend of annual insured losses exceeding $100 billion is set to continue in 2025.
“Worldwide, insured losses from natural catastrophes now consistently exceed $100 billion per year,” the report explained.
The report further noted, “As recently as the previous decade, high loss years (2011 and 2017, most prominently) were intermingled with ‘quiet’ years with moderate or low losses. It’s now been six years since the insurance industry last experienced a quiet year for natural catastrophe.”
The Los Angeles wildfires were, unsurprisingly, the costliest natural disaster of H1 2025. According to Munich Re, overall losses are estimated at $53 billion, with about $40 billion of that insured.
However, while devastating, the wildfires should not be considered unexpected, according to Willis.
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“Southern California has been gripped by severe drought for most of the past two decades, which raised both the odds and impacts of uncontrolled wildfire,” the firm’s report stated.
Willis added, “To adequately prepare for the next catastrophic wildfire, risk models used by insurers and reinsurers absolutely must account for elevated fire weather conditions, use up-to-the-moment fuel profiles, and be able to correctly simulate the critical transition when wildland fire turns into urban conflagration.”
Willis also highlighted the growing threat posed by severe convective storms (SCS). After back-to-back years with insured losses surpassing $50 billion, the firm argued that SCS events in the United States can no longer be considered secondary risks.
“The combination of explosive growth in exposure and more favourable environments for storm genesis has raised SCS losses to be roughly equal to losses from hurricane damage over the same time frame,” the report stated.
In terms of storm activity, the first half of 2025 ranks as the second or third-most active year on record for local reports of damaging winds and tornadoes. Hail reports, meanwhile, have remained near the long-term average, with large hailstones recorded in Texas, Oklahoma, Minnesota, and Wisconsin.
Readers will know that in addition to direct damage from strong winds and hail impacts, severe convective weather can also serve as the trigger for extreme or widespread flooding.
“A storm system that cut across the Central Great Plains in early April generated more than 150 tornadoes and caused record-setting floods across Arkansas, Tennessee, and Kentucky that closed roads and destroyed bridges across the region,” Willis noted.
On this, the firm added, “The limited penetration of flood insurance in this part of the country remains a stubborn problem, and new approaches may be required to stop the insurance protection gap from widening further.”
In related news, earlier today, Munich Re estimated that global insured losses from natural catastrophe events reached $80 billion in H1 2025, marking the second-highest H1 figure since its records began in 1980.
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