Insured losses from natural disasters are on track to exceed $100 billion globally in 2025, according to a new report from Willis. This marks the seventh consecutive year that losses have reached or surpassed this significant figure, highlighting a troubling trend in the frequency and severity of such events.
The Willis Natural Catastrophe Review points to several devastating incidents already this year, with the January wildfires in Los Angeles taking center stage. These fires have become the most costly wildfire event recorded, with estimated insured losses exceeding $40 billion. This single disaster accounts for nearly one-third of the total global catastrophe losses for 2024, placing immense pressure on insurers early in the year.
Alongside the Los Angeles fires, 2025 has witnessed unprecedented wildfires in Japan and South Korea, described as the worst in a generation. The United States has also experienced a record-breaking tornado season. In Australia, a cyclone made landfall near Brisbane for the first time in 50 years, while Ireland recorded its highest wind speed ever.
Cameron Rye, a director at Willis, noted that the scale and timing of the Los Angeles wildfires have forced insurers to rethink their risk assessment models. The financial impact of these wildfires has prompted a renewed focus on how wildfire risks are evaluated, especially in areas where urban development meets wildland.
Looking ahead, the report warns that an above-average number of storms are expected for the upcoming North Atlantic hurricane season. This raises concerns that 2025 could become one of the most expensive years for both insurers and reinsurers.
Beyond the immediate financial implications, experts are increasingly worried about the broader effects of climate change. Peter Carter, head of climate practice at Willis, pointed out that the ongoing pattern of high-loss years suggests a significant shift is underway. He emphasized the need for adaptation and resilience in response to the reality of climate extremes, especially as global efforts to limit temperature rise may fall short.
As we continue into 2025, the increasing frequency of natural disasters poses both a financial burden and a call to action for communities and insurers alike.