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Insured losses from climate-linked disasters were likely to go as high as $145 billion in 2025, almost six per cent more than in 2024, global reinsurer Swiss Re said in a report on April 29, 2025.
In 2024, global insured losses from disasters reached $137 billion and continued to follow the 5-7 per cent annual growth rate (in real terms) that has been the norm of recent years.
“If the trend holds, insured losses will approach $145 billion in 2025,” said the reinsurer. A reinsurer is an organisation that insures other insurance companies, providing them a safety net against large or catastrophic claims. The $145 billion figure was much above the long-term averages observed since the 1990s and the highest since 2017.
Five ‘peak loss’ years have occurred in the last 30 years, when annual losses were way above trend. The last peak loss year was 2017, when hurricanes Harvey, Irma and Maria drove global insurance losses to 111 per cent above trend.
Meanwhile, using a catastrophe risk model, Swiss Re also estimated a 1-in-10 probability that 2025 total insured losses could reach $300 billion or more, making what would be the next peak loss year.
In 2024, total economic losses from disaster events were $318 billion. Of this, just 57 per cent were insured, leaving a large global protection gap of $181 billion.
Rising weather extremes have upended and destabilised the insurance industry, driving up premium prices and pushing insurers out of high-risk markets.
For instance, in case of the Los Angeles fires that burned 23,000 hectares of land, killing at least 29 people, destroying 16,000 structures, including homes, offices, shops and public utilities, and displacing tens of thousands of residents, a dozen major insurers, accounting for 80 per cent of California market, had dropped out or restricted issuance of new policies.
Increases in insurance claims costs have led to several years of underwriting losses for insurers.
“In the long run and across geographies, a main factor determining premium rates is exposure to natural perils. We find that in California, the highest premiums are localised in areas with greatest exposures to wildfire risk. And countrywide, we see a strong correlation between average catastrophe losses per policy and homeowner premiums at state level. Increasing exposures in areas of high natural perils risk challenge insurability, highlighting the need for loss mitigation and adaption,” the report noted.
In 2024, the disasters contributing most to the accumulation of losses were hurricanes Helene and Milton, severe convective storms in the US, large-scale urban floods around the world and the highest-ever recorded natural catastrophe insured losses in Canada, according to Swiss Re.