The global insurance sector is poised to face an estimated average annual insured loss of $152 billion from natural catastrophic events, a figure that could be substantially surpassed in any given year. This projection comes from Verisk, a prominent global data analytics and technology provider, as detailed in their 2025 Global Modeled Catastrophe Losses Report from Extreme Event Solutions.
Global Insured Losses: A Shifting Landscape
In a significant revelation from Verisk's latest analysis, published on September 3rd, 2025, a critical shift in the natural hazard landscape has been identified. Traditionally, large-scale, infrequent events such as major tropical cyclones or devastating earthquakes dominated the discourse around insured losses. However, the 2025 report decisively points to a new reality: 'frequency perils' are now the primary drivers of sustained, high-impact financial burdens on the insurance industry. These perils, encompassing severe thunderstorms, harsh winter storms, widespread wildfires, and extensive inland floods, are projected to contribute approximately $98 billion annually to global insured losses. This marks a substantial 12% increase in their share compared to the previous year, 2024, now representing roughly two-thirds of the total expected losses each year.
This evolving scenario builds upon earlier forecasts; last year's report from Verisk had already pegged the average annual insured losses from natural catastrophes at $151 billion, which itself was a 13.5% jump from the $133 billion estimated in 2023. The latest report further illustrates this escalating trend, noting a $32 billion increase in non-crop global modeled insured average annual losses over 2024. Over the last half-decade, insured losses have averaged $132 billion annually, a stark contrast to the $104 billion recorded in the preceding five-year interval.
A major contributing factor to these soaring figures is the accelerated growth in exposure. Verisk’s data indicates that global property exposure in countries where models are applied has seen an average annual increase of 7% between 2020 and 2024. This surge is attributed to persistent inflationary pressures and ongoing construction activities in regions highly susceptible to natural hazards. Alarmingly, over half of the world's population now resides in urban centers that are critically exposed to various natural perils.
Rob Newbold, the President of Verisk Extreme Event Solutions, emphasized the gravity of these findings. He stated that the current modeled losses are indicative of a fundamental transformation in the risk environment. According to Newbold, these 'frequency perils' are no longer statistical anomalies but have become the 'new normal', necessitating a proactive and adaptable approach from insurers to confront this challenge head-on. He underscored the vital role of their sophisticated models in empowering the industry to anticipate and absorb these shocks with greater confidence.
Furthermore, the report highlights that global insured losses now constitute over 38% of worldwide economic losses, when adjusted for inflation, amounting to an economic average annual loss exceeding $395 billion. Despite this, significant 'protection gaps' persist across different regions. In Asia and Latin America, for instance, insured losses cover merely 12% and 32% of economic losses, respectively. This disparity is largely due to low insurance adoption rates, even as exposure and urbanization continue to intensify. Conversely, North America demonstrates a higher insurance penetration, with approximately 48% of its economic losses being insured, though wildfire risks in the region are notably on the rise. Recent examples include the January 2025 Palisades and Eaton wildfires, which collectively led to up to $65 billion in economic losses, with a substantial 60-70% covered by insurance.
The modeling firm’s report also highlighted Europe and Oceania, where certain regions have witnessed annual exposure growth rates exceeding 8%, primarily propelled by inflation and expanding urban footprints. In response to these evolving challenges, Verisk has introduced new inland flood models for Malaysia, Indonesia, and Ireland. They have also updated existing models for Australia (bushfire), Mexico (earthquake), the UK (flood), the US (severe thunderstorm), and South Korea (typhoon). Notably, the Verisk Wildfire Model for the US achieved a significant milestone by becoming the first catastrophe model to successfully complete evaluation under California’s new PRID framework, a development expected to enhance insurance availability in wildfire-prone areas.
Newbold concluded by reiterating the critical need for insurers and reinsurers to embrace forward-thinking risk models. These models, he stressed, must accurately reflect the complexities of today's built environment and the realities of a changing climate. He affirmed that Verisk’s catastrophe models, particularly when integrated with their Touchstone and Touchstone Re platforms, offer indispensable tools for companies to benchmark potential losses and manage catastrophe risk with unwavering confidence.
Reflections on Resilience in a Volatile World
As a keen observer of global trends, this report from Verisk serves as a powerful reminder of the relentless forces shaping our world and the critical role of the insurance industry in safeguarding it. The shift from large, infrequent catastrophic events to a burgeoning increase in 'frequency perils' paints a vivid picture of a planet undergoing profound changes. It’s no longer just about preparing for the 'big one,' but about adapting to a continuous barrage of smaller, yet cumulatively devastating, events. This demands not only more sophisticated modeling and risk assessment but also a broader rethinking of how communities and economies build resilience. The disparities in insurance penetration across different regions also highlight a pressing global equity issue: those most vulnerable to natural disasters often lack the financial safety nets to recover. This report is a call to action, urging us to consider how innovation in risk management can be coupled with concerted efforts towards sustainable development and robust community planning, ensuring that our societies are better equipped to face the challenges of an increasingly volatile future.
