Insurers Urged to Avoid False Security over Natural Catastrophe Losses

While insured losses from natural catastrophes were down in 2025 from a year earlier, the year still marked the sixth consecutive year with insured losses from natural catastrophes exceeding $100 billion, a new report from Willis notes.

The fact that global insured catastrophe losses topped $100 billion without a single hurricane making landfall in the US highlights the continued severity and persistence of natural catastrophe risks, Willis said.

In the latest edition of its Natural Catastrophe Review, Willis noted that while 2025 might be considered a "moderate" loss year when compared to losses in 2024, the insurance industry shouldn't allow the year-on-year decrease "to lull it into a false sense of security."

"We know physical risks continue to increase as the world warms," the Willis report said. "And sooner or later, all lucky streaks end. Insurers should act now to protect their portfolios against unsustainable accumulations of risk and prepare for a reversal of fortune."

Among the report's key points was that wildfires must be considered a core contributor to insurance portfolio volatility. Pricing can't rely exclusively on historical losses, Willis said, and wildfire models must be adjusted to present-day conditions, use detailed asset-level characteristics to supplement exposure data, and apply realistic estimates for replacement costs.

Willis also noted that risk modeling must consider compound perils, and that a warming North Atlantic is changing hurricane behavior. In addition, flood risk is no longer confined to formally defined zones, Willis said, and more intense rainfall is expected to accompany tropical storms.

"Even without any hurricanes making landfall in the United States, in 2025 insured losses from natural catastrophes were still over $100 billion worldwide," said Scott St. George, head of weather and climate research at the Willis Research Network. "That tells us the risk floor for catastrophic perils is higher than ever."