Swiss Re: Natural disaster insurance claims soar to $80B in first half of 2025

Global insured losses from natural catastrophes hit $80 billion in the first half of 2025, nearly doubling the 10-year average and signaling yet another costly year for the insurance and reinsurance industries. According to preliminary figures released by the Swiss Re Institute, this figure already exceeds half of the $150 billion projected for the full year, with the most active weather season still to come.

For insurance professionals, the implications are clear: escalating weather-related losses continue to challenge pricing, availability, and long-term risk assessment, particularly in high-exposure areas.

Historic wildfire event rocks California

The single largest loss event so far this year came early—January’s devastating wildfires in Los Angeles County caused an estimated $40 billion in insured damages, making it the largest-ever insured wildfire event by a wide margin.

Driven by an unusually long Santa Ana wind season and prolonged drought conditions, the fires destroyed more than 16,000 structures, many located in some of the country’s highest-value residential zones.

Swiss Re researchers emphasized that wildfire losses have soared due to the intersection of climate stress and real estate development. Wildfire-related insured losses, once just 1% of natural catastrophe claims before 2015, now account for 7%, with eight of the 10 costliest events occurring in the past decade.

“Growth in the wildland-urban interface (WUI) has significantly increased exposure,” the report noted. Since 1990, property development in these high-risk zones has outpaced that of lower-risk zones by nearly double—1.8x nationally, and 1.9x in California alone.

Severe storms remain persistent risk

Severe convective storms (SCS)—characterized by hail, high winds, and tornadoes—continued to be a major loss driver in the first half of the year, accounting for $31 billion in insured losses. Though down from the record-setting SCS years of 2023 and 2024, the figure still exceeds historical averages and Swiss Re’s trend estimate of $35 billion.

Storm activity included widespread hail damage and multiple tornado outbreaks across the U.S., underlining the growing costs associated with increased urbanization and inflated asset values in high-risk regions.

“Urbanisation in hazard-prone areas, rising asset values and inflation have amplified the financial impact,” the report said. As exposure and rebuilding costs rise, SCS-related losses are expected to grow.

Floods, hurricanes add to mounting risk

Beyond wildfires and thunderstorms, a magnitude 7.7 earthquake struck Myanmar in March, with insured losses estimated at $1.5 billion in Thailand alone. Meanwhile, Europe endured record-breaking heat in late June, triggering wildfires across multiple countries, and Texas experienced catastrophic flash flooding in July.

With the U.S. SCS season winding down, attention now turns to the Atlantic hurricane season, which historically peaks in September. Forecasts predict a near- to above-average season, with three to five major hurricanes—above the long-term average of three.

“Hurricanes remain among the most unpredictable and costly perils,” the report noted, referencing the 20-year anniversary of Hurricane Katrina as a reminder of the devastation major storms can cause along the Gulf and Atlantic coasts.

A call for resilience and adaptation

Jérôme Haegeli, Swiss Re’s Group Chief Economist, stressed the importance of pre-event mitigation.

“The strongest lever to increase the resilience and safety of communities is to double down on mitigation and adaptation,” Haegeli said. “Our research shows that flood protection measures like dykes, dams, and flood gates are up to ten times more cost-effective than rebuilding after the fact.”

Swiss Re advocates for a range of forward-looking strategies, including:

• Enforcing stricter building codes
• Improving zoning and land use planning
• Investing in infrastructure to withstand climate extremes
• Discouraging development in hazard-prone areas

Reinsurers’ expanding role

Balz Grollimund, Swiss Re’s Head of Catastrophe Perils, highlighted reinsurers' dual role as both risk absorbers and forward-planning partners.

“Reinsurers not only act as a shock absorber for peak risks. They also have a crucial role to help the world prepare and respond to the growing natural catastrophe risk,” he said. “Their models and tools pave the way for partnerships that provide innovative, practical answers and help communities get back on their feet faster.”

What this means for insurance professionals

For insurance agents and financial advisers, this data underscores the need to:

• Reevaluate risk exposure models, particularly for clients in wildfire- or storm-prone regions.
• Encourage stronger risk mitigation efforts among clients, including retrofitting properties and adopting hazard-resistant construction.
• Stay informed about market shifts, especially as reinsurers adjust their appetite and pricing in response to ballooning losses.
• Highlight protection gaps in both personal and commercial lines—and consider layered approaches, including excess coverage or catastrophe bonds.

With the second half of the year historically responsible for 60% of annual natural catastrophe losses, the Swiss Re Institute warns that the final tally for 2025 could well exceed the projected $150 billion—especially if hurricane activity proves more severe than expected.

This report compiled by InsuranceNewsNet staff.